Meridian Energy Limited · NZX:MEL
Meridian Energy — FY2024 Earnings Presentation
54 slides from Meridian Energy's earnings presentation, Aug 28, 2024
Slide 1: 2024 Annual Results Presentation
MERIDIAN ENERGY LIMITED 28 August 2024 2024 Annual Results Presentation
Slide 2: Neal Barclay – Chief Executive
2024 ANNUAL RESULTS PRESENTATION 28 August 2024 MERIDIAN ENERGY 2 Neal Barclay – Chief Executive Meridian’s completed Harapaki Wind Farm in Hawke’s Bay
Slide 3: Key points
2024 ANNUAL RESULTS PRESENTATION 28 August 2024 MERIDIAN ENERGY 3 Key points
Slide 4: Fuel scarcity
2024 ANNUAL RESULTS PRESENTATION 28 August 2024 MERIDIAN ENERGY 4 Total Meridian inflows 1 May to 15 August (ranked) Fuel scarcity GWh Dry and calm winter conditions see hydro storage at 5,000 2024 record August lows. 4,000 64% of average Meridian has experienced record low May to August 3,000 91-ye
Slide 5: NZAS demand response
2024 ANNUAL RESULTS PRESENTATION 28 August 2024 MERIDIAN ENERGY 5 NZAS demand response Option 2 (37.5MWh per hour) called on 26 June, then Option 4 (138.75MWh per hour) on 17 July. NZAS has subsequently accelerated Option 4 ramp down and reduced consumption by a further 20MWh per hour more than Opti
Slide 6: Our people
2024 ANNUAL RESULTS PRESENTATION 28 August 2024 MERIDIAN ENERGY 6 Employee engagement Our people 100% Further increase in employee engagement, top 80% quartile of New Zealand companies. 60% New operating models established in Generation 40% 72% 73% 73% 75% 75% and Retail teams. 20% Formalised wellbe
Slide 7: Our customers
2024 ANNUAL RESULTS PRESENTATION 28 August 2024 MERIDIAN ENERGY 7 Unit electricity costs (real) Our customers c/KWh Residential Commercial Industrial 40 (incl GST) (excl GST) (excl GST) Developing new propositions for customers to 30 participate through shifting their energy use. 20 1,400 customers
Slide 8: Transmission and distribution costs
2024 ANNUAL RESULTS PRESENTATION 28 August 2024 MERIDIAN ENERGY 8 Transmission and distribution costs Transpower maximum allowable revenue $M $240M for increased investment 6,000 $1,498M for 94 145 Draft Commerce Commission proposal issued in WACC and CPI 319 increases and May 2024 on 2026-30 regula
Slide 9: Our sustainability
2024 ANNUAL RESULTS PRESENTATION 28 August 2024 MERIDIAN ENERGY 9 Our sustainability Half by 30 is Meridian’s goal to cut operational emissions in half by 2030. This represents a challenging target with construction and Scope 3 emissions. Long-term net zero target to reduce absolute Scope 1-3 emissi
Slide 10: Ruakākā BESS construction
2024 ANNUAL RESULTS PRESENTATION 28 August 2024 MERIDIAN ENERGY 10 Ruakākā BESS construction All 80 battery containers now installed on site. Transpower works delay to connection to Bream Bay substation will push commissioning into early 2025. Project costs expected to be at the $186M budget. Pre-co
Slide 11: Investment in a low carbon future
2024 ANNUAL RESULTS PRESENTATION 28 August 2024 MERIDIAN ENERGY 11 Investment in a low carbon future physical -$27M financial +$172M $2B invested into new and existing assets in the last 10 years. Stable returns on assets and equity (3%-5% per annum). New generation investment of $3B to deliver at l
Slide 12: 2024 ANNUAL RESULTS PRESENTATION 28 August 2024 MERIDIAN ENERGY
2024 ANNUAL RESULTS PRESENTATION 28 August 2024 MERIDIAN ENERGY 12
Slide 13: Mike Roan – Chief Financial Officer
2024 ANNUAL RESULTS PRESENTATION 28 August 2024 MERIDIAN ENERGY 13 Mike Roan – Chief Financial Officer Ōhau A hydro station in the Mackenzie Basin, South Canterbury
Slide 14: Cash flow and EBITDAF
2024 ANNUAL RESULTS PRESENTATION 28 August 2024 MERIDIAN ENERGY 14 Operating cash flows Cash flow and EBITDAF $M 800 600 400 604 667 461 509 200 431 0 2020 2021 2022 2023 2024 Financial Year ended 30 June EBITDAF $M 1,000 800 +31% increase in operating cash flows. 600 With a +13% increase in other o
Slide 15: Dividend
2024 ANNUAL RESULTS PRESENTATION 28 August 2024 MERIDIAN ENERGY 15 Meridian’s new ordinary dividend policy Dividend Meridian’s ordinary dividend policy is to make distributions at a dividend payout Change to an operating free cash flow-based dividend ratio, within an average over time, of 80% to 100
Slide 16: Movement in EBITDAF
2024 ANNUAL RESULTS PRESENTATION 28 August 2024 MERIDIAN ENERGY 16 Movement in EBITDAF Movement in EBITDAF $M 1,000 FY24 EBITDAF +16% increase on FY23. +7 +7 900 -1 -3 -32 4% higher retail contracted sales revenue. +144 2% lower generation volumes at 133% higher 800 average price. 700 905 114% incre
Slide 17: Energy margin
2024 ANNUAL RESULTS PRESENTATION 28 August 2024 MERIDIAN ENERGY 17 Energy margin Energy margin movement $M physical -$27M financial +$172M Sales volume growth in all mass market segment, with 2,500 -$9m wholesale physical and corporate sales -0.2%. financial sales and purchases 2,000 +1,299 Lift in
Slide 18: Retail customers
2024 ANNUAL RESULTS PRESENTATION 28 August 2024 MERIDIAN ENERGY 18 Retail customers Sales volumes growth in residential (+2%), small medium business (+2%), large business (+8%), agricultural (+18%). Higher mass market net average sales price. Mass market revenue increased +$105M (+15%). -0.2% decrea
Slide 19: Generation
2024 ANNUAL RESULTS PRESENTATION 28 August 2024 MERIDIAN ENERGY 19 Meridian average generation price Generation $/MWh 200 FY24 inflows were 93% of average, lowest annual 150 inflows in seven years. 100 FY24 hydro generation decreased 5%. 173 171 130 50 Increased station capacity of Benmore (540MW to
Slide 20: Operating costs
2024 ANNUAL RESULTS PRESENTATION 28 August 2024 MERIDIAN ENERGY 20 Operating expenses Operating costs $M 300 FY24 operating costs at top end of the February 2024 revised $276M-$282M guidance range. 200 Original guidance range was $268M-$274M. 218 249 281 100 199 207 +$32M (+13%) increase in FY24 ope
Slide 21: Capital expenditure
2024 ANNUAL RESULTS PRESENTATION 28 August 2024 MERIDIAN ENERGY 21 Capital expenditure Capital expenditure $M Growth Stay in business Total 400 346 349 FY24 capital expenditure at bottom end of the 300 46 72 February 2024 revised $345M-$370M guidance range. 200 175 40 300 277 102 Original guidance r
Slide 22: Current Meridian consenting
2024 ANNUAL RESULTS PRESENTATION 28 August 2024 MERIDIAN ENERGY 22 Current Meridian consenting
Slide 23: Cost guidance
2024 ANNUAL RESULTS PRESENTATION 28 August 2024 MERIDIAN ENERGY 23 Cost guidance FY25 operating cost guidance $M 320 $302M-$308M FY25 operating costs. +5 +1 300 +6 308 +9 Increases from consenting costs, retail transformation, 280 +5 ↑ 302 finance system upgrade and remuneration increases. 260 $295M
Slide 24: Below EBITDAF
2024 ANNUAL RESULTS PRESENTATION 28 August 2024 MERIDIAN ENERGY 24 Net profit after tax (continuing operations) Below EBITDAF $M $98M increase in NPBT1 from the net change in fair 500 value of hedges2 ($309M decrease in FY23). 400 300 $18M for impairment of software assets. 415 451 429 200 +$13M inc
Slide 25: Debt and funding
2024 ANNUAL RESULTS PRESENTATION 28 August 2024 MERIDIAN ENERGY 25 Debt maturity profile at 30 June 2024 Debt and funding $M Drawn debt maturing (face value) Available facilities maturing 600 June 2024 total borrowings of $1,347M1. 400 Total funding facilities of $1,956M, of which $625M were undrawn
Slide 26: July operating results
2024 ANNUAL RESULTS PRESENTATION 28 August 2024 MERIDIAN ENERGY 26 National hydro storage (26 August 2024) July operating results GWh 6,000 Total Meridian inflows were 78% of average, lowest 5,000 July inflows since 2011. 4,000 3,000 Waitaki hydro storage at 45% of average, snow 2,000 storage at 65%
Slide 27: Neal Barclay – Chief Executive
2024 ANNUAL RESULTS PRESENTATION 28 August 2024 MERIDIAN ENERGY 27 Neal Barclay – Chief Executive Maintenance work at Meridian’s West Wind Farm near Wellington
Slide 28: FY25 targets
2024 ANNUAL RESULTS PRESENTATION 28 August 2024 MERIDIAN ENERGY 28 FY25 targets
Slide 29: Final thoughts
2024 ANNUAL RESULTS PRESENTATION 28 August 2024 MERIDIAN ENERGY 29 Final thoughts FY24 was a year of milestones. Challenging start to FY25 with record dry winter conditions. Leaning on hedge arrangements to manage lake levels. Unprecedented demand response from NZAS. Support for our C&I customers wi
Slide 30: Questions
MERIDIAN ENERGY LIMITED 28 August 2024 Questions
Slide 31: Additional information
2024 ANNUAL RESULTS PRESENTATION 28 August 2024 MERIDIAN ENERGY 31 Additional information
Slide 32: Segment results
2024 ANNUAL RESULTS PRESENTATION 28 August 2024 MERIDIAN ENERGY 32 Segment results
Slide 33: EBITDAF reconciliation to the income statement
2024 ANNUAL RESULTS PRESENTATION 28 August 2024 MERIDIAN ENERGY 33 EBITDAF reconciliation to the income statement
Slide 34: Six monthly results
2024 ANNUAL RESULTS PRESENTATION 28 August 2024 MERIDIAN ENERGY 34 Six monthly results
Slide 35: Earnings from continuing operations
2024 ANNUAL RESULTS PRESENTATION 28 August 2024 MERIDIAN ENERGY 35 Earnings from continuing operations
Slide 36: Retail
2024 ANNUAL RESULTS PRESENTATION 28 August 2024 MERIDIAN ENERGY 36 Customer connections Retail ICPs Meridian Powershop Total 400 365 363 370 330 Customers 300 310 117 117 120 75 89 +2% increase in customers since June 2023. 200 235 241 248 246 250 100 Residential, business, agri segment 0 +2% increa
Slide 37: Hydrology
2024 ANNUAL RESULTS PRESENTATION 28 August 2024 MERIDIAN ENERGY 37 Meridian's combined catchment inflows Hydrology GWh 90 year average 15,000 Inflows 10,000 FY24 inflows were 93% of historical average. July 2024 inflows were 78% of average. 5,000 0 Storage 2009 2010 2011 2012 2013 2014 2015 2016 201
Slide 38: Generation
2024 ANNUAL RESULTS PRESENTATION 28 August 2024 MERIDIAN ENERGY 38 Generation Generation GWh Hydro Wind Total 16,000 14,224 13,556 13,903 13,566 Volume 12,000 1,465 12,692 1,285 1,202 1,441 1,395 FY24 generation was -2% lower than FY23 with 8,000 lower hydro generation and higher wind 12,758 11,297
Slide 39: FY24 EBITDAF
2024 ANNUAL RESULTS PRESENTATION 28 August 2024 MERIDIAN ENERGY 39 FY24 EBITDAF Movement in EBITDAF $M Energy margin $+144M 2,500 2,000 +1,299 1,500 -1,816 1,000 +103 +7 +7 +156 -2 -2 -1 -3 -32 +406 500 905 783 0 EBITDAF Retail Wholesale Generation Cost to supply Net cost of Virtual asset Other mark
Slide 40: EBITDAF to NPAT
2024 ANNUAL RESULTS PRESENTATION 28 August 2024 MERIDIAN ENERGY 40 EBITDAF to NPAT EBITDAF to NPAT reconciliation $M 1,000 800 -334 600 -23 -57 +23 905 400 -132 +98 -18 -33 200 429 359 0 EBITDAF Depreciation and Premiums paid on Net finance costs Tax Underlying Net change in fair Asset related Premi
Slide 41: Energy margin
2024 ANNUAL RESULTS PRESENTATION 28 August 2024 MERIDIAN ENERGY 41 Energy margin Energy margin $M 5,000 4,000 +2,319 3,000 -2,723 2,000 +633 +12 -583 1,000 +543 -9 -9 +1,039 -766 1,276 +820 0 Res, SMB, Agi sales C&I sales Financial contract Generation spot Cost to supply Cost to supply Hedging fixed
Slide 42: Energy margin movement
2024 ANNUAL RESULTS PRESENTATION 28 August 2024 MERIDIAN ENERGY 42 Energy margin Energy margin movement $M 3,000 2,000 +1,299 -1,480 +50 +103 +105 -34 -2 -1 1,000 -336 +620 -180 1,132 1,276 0 Energy Margin 30 Res, SMB, Agi C&I sales Financial contract Generation spot Cost to supply Cost to supply He
Slide 43: Energy margin
2024 ANNUAL RESULTS PRESENTATION 28 August 2024 MERIDIAN ENERGY 43 Energy margin
Slide 44: Energy margin definition
2024 ANNUAL RESULTS PRESENTATION 28 August 2024 MERIDIAN ENERGY 44 Energy margin Defined as: Revenues received from sales to customers net of A non-GAAP financial measure representing energy distribution costs (fees to distribution network companies sales revenue less energy related expenses and tha
Slide 45: NZAS Demand Response Agreement
2024 ANNUAL RESULTS PRESENTATION 28 August 2024 MERIDIAN ENERGY 45 NZAS Demand Response Agreement Summary of demand response options Equivalent Usual Exercisable Reduction Usual Ramp-Down Usual Ramp-Up Usual Ramp-Up reduced Ramp- DR Period from Meridian demand Period Notice Period Period Option cons
Slide 46: Funding metrics
2024 ANNUAL RESULTS PRESENTATION 28 August 2024 MERIDIAN ENERGY 46 Funding metrics Net debt/EBITDAF is the principal metric underpinning S&P credit rating. S&P calculation of net debt/EBITDAF includes numerous adjustments to reported numbers: Borrowings adjusted for the impact of leases; and Cash ba
Slide 47: Fair value movements
2024 ANNUAL RESULTS PRESENTATION 28 August 2024 MERIDIAN ENERGY 47 Net change in fair value of hedges Fair value movements $M 500 Meridian uses derivative instruments to manage 400 interest rate, foreign exchange and electricity price 300 risk. 200 402 100 236 249 As forward prices and rates on thes
Slide 48: Proforma income statement
2024 ANNUAL RESULTS PRESENTATION 28 August 2024 MERIDIAN ENERGY 48 Proforma income statement Financial years ended 30 June 2020-2021 restated for change in presentation of realised energy hedge balances
Slide 49: Segment earnings statement
2024 ANNUAL RESULTS PRESENTATION 28 August 2024 MERIDIAN ENERGY 49 Segment earnings statement
Slide 50: Underlying NPAT reconciliation
2024 ANNUAL RESULTS PRESENTATION 28 August 2024 MERIDIAN ENERGY 50 Underlying NPAT reconciliation
Slide 51: Cash flow statement
2024 ANNUAL RESULTS PRESENTATION 28 August 2024 MERIDIAN ENERGY 51 Cash flow statement
Slide 52: Balance sheet
2024 ANNUAL RESULTS PRESENTATION 28 August 2024 MERIDIAN ENERGY 52 Balance sheet
Slide 53: Glossary
2024 ANNUAL RESULTS PRESENTATION 28 August 2024 MERIDIAN ENERGY 53 Glossary Hedging volumes buy-side electricity derivatives excluding the buy-side of virtual asset swaps Average generation price the volume weighted average price received for Meridian’s physical generation Average retail contracted
Slide 54: Disclaimer
2024 ANNUAL RESULTS PRESENTATION 28 August 2024 MERIDIAN ENERGY 54 Disclaimer The information in this presentation was prepared by Meridian Energy with companies and they should not be considered in isolation from, or construed due care and attention. However, the information is supplied in summary