Meridian Energy Limited · NZX:MEL
Meridian Energy — FY2014 Earnings Presentation
23 slides from Meridian Energy's earnings presentation, September 2014
Slide 1: Better energy
Better energy MERIDIAN ENERGY LIMITED 2014 ANNUAL RESULTS ROADSHOW PRESENTATION
Slide 2: Disclaimer
Disclaimer 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, completeness or reliability of the informatio
Slide 3: About Meridian
About Meridian
Slide 4: About Meridian
About Meridian Vertically integrated renewable generator, retailing electricity to over 290,000 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 storage Long life assets with low operat
Slide 5: 2014 Highlights
2014 Highlights
Slide 6: 2014 highlights – summary
2014 highlights – summary Biggest IPO in the country’s history, with the largest New Zealand retail investment in an IPO Financial performance ahead of Prospective Financial Information (PFI) on all key financial measures Solid cash flow has delivered higher than PFI forecast dividend for FY141 Health
Slide 7: 2014 highlights – better performance than PFI
2014 highlights – better performance than PFI FINANCIAL PERFORMANCE AGAINST PFI Strong second half performance $M maintained first half momentum 1,000 923.4 915.1 12 months to 30 June 2014 compared to PFI 800 Prospective Financial Information Outperformed all key PFI financial 600 585.3 548.4 metrics;
Slide 8: 2014 highlights – higher dividends than PFI
2014 highlights – higher dividends than PFI DIVIDENDS DECLARED Final ordinary dividend for FY14 of CPS Ordinary dividend Special dividend 14 6.82cps 12 2.00 Brings the full year ordinary dividend 10 to 11.01cps, based on 75% of free cash 8 flow 6 10.50 11.01 11.50 4 Additional special dividend of 2.0
Slide 9: 2014 highlights – focus on core business is delivering
2014 highlights – focus on core business is delivering UNDERLYING OPERATING COSTS Normalised operating cost reduction of $M Underlying Costs IPO Costs 260 6.1% Sale of surplus land and US assets 2.9 240 realised $62.2m 8.3 Improved risk profile; 250.6 220 238.1 242.5 Genesis hedge replacement 227.2 2
Slide 10: Looking Forward
Looking Forward
Slide 11: Looking forward
Looking forward Very focused on delivering FY15 PFI earnings and cash flow Completion of Arc metering business sale and Meridian smart meter deployment Further update on capital management at the 2015 interim results in February 2015 Nearing completion on two new wind farms Key decision point for NZA
Slide 12: 2014 Operating Performance
2014 Operating Performance
Slide 13: Highlights
Highlights Meridian’s residential customers have seen the benefit of reduced energy charges New Zealand's first electricity purchasing and energy management app Delivering two new wind farms in different countries concurrently, safely and on budget Highest total inflows since 1998 Powershop Australia cu
Slide 14: Retail
Retail NATIONAL DEMAND Aggregate electricity demand remains GWh 40,000 relatively flat Manufacturing demand remains subdued, 35,000 positive net migration and GDP outlook 30,000 Market switching rates remain above 20%1 25,000 Meridian’s New Zealand customer 20,000 numbers increased by 1.7% and total
Slide 15: Retail
Retail Residential, SME, Agri segment NEW ZEALAND CUSTOMERS ICPs (000) Meridian’s most recent MBIE survey 350 Meridian North Island Meridian South Island Powershop data showed a 0.3% annual decrease in 300 34 48 residential customers’ sales-based 250 16 51 55 electricity charges 200 123 149 130 115
Slide 16: Hydrology
Hydrology MERIDIAN'S COMBINED CATCHMENT INFLOWS FY14 inflows were 111% of historic GWh 14,000 average 12,000 Included the 4th driest February to 10,000 April period on record 8,000 6,000 This period coincided with the Tekapo 4,000 canal outage, lower South Island 2,000 transmission work and periods o
Slide 17: Generation
Generation MERIDIAN'S NEW ZEALAND GENERATION Meridian’s New Zealand generation in GWh 1,400 FY14 was 8.9% higher than last year, 1,200 but with large fluctuations in weekly 1,000 market share 800 New Zealand wind generation in FY14 600 was 8.0% higher than last year 400 200 Meridian’s overall average
Slide 18: 2014 Financial Performance
2014 Financial Performance September 2014
Slide 19: Summary of performance against last year
Summary of performance against last year FINANCIAL PERFORMANCE AGAINST LAST YEAR Reported financial performance for $M 1,000 12 months to 30 June 2014 923.4 915.8 FY14; 12 months to 30 June 2013 800 Operating cash flow +3.9% 585.3 584.8 600 NPAT -22.1%, from higher non cash 432.8 416.7 fair value gain
Slide 20: Earnings
Earnings EBITDAF1 ‘Like for like’ EBITDAF increase of $M 14.4% in FY14 from; 800 Cost savings 600 Higher New Zealand generation 400 659.9 volumes 641.7 476.6 584.8 585.3 200 Less acquired generation volumes 0 Mt Mercer generation 2010 2011 2012 2013 2014 Financial Year ended 30 June PFI UNDERLYING N
Slide 21: Operating cash flow and investment expenditure
Operating cash flow and investment expenditure CASH FLOW FROM OPERATING ACTIVITIES Net cash flow from operating activities $M was $16.1m (3.9%) higher than FY13 500 Includes the close out of aluminium 400 hedges following removal of aluminium 300 indexation from the NZAS contract offset 200 451.8 416.
Slide 22: Energy margin change from last year
Energy margin change from last year NEW ZEALAND ENERGY MARGIN $M 1,100 Contracted Sales Spot Exposed Net Cost of Revenue Revenue Acquired -$68.8m +$82.2m Generation +$12.9m Better mix and 1,000 higher volumes, Lower wholesale prices From lower acquired offset by price reduced spot revenue generation
Slide 23: Costs
Costs TRANSMISSION COSTS 12.1% increase in Transmission costs in $M FY14 150 Increase reflects Meridian’s majority 100 share of higher HVDC costs Increases were included in PFI 129.3 115.3 50 78.9 84.2 86.7 Accounting treatment of Australian connection assets meant total costs were 0 2010 2011 2012 2