Infratil Limited · NZX:IFT
Infratil — Trustpower — FY2021 Earnings Presentation
45 slides from Infratil's earnings presentation, May 17, 2021
Slide 1: FY2021 Investor Presentation
David Prentice - Chief Executive Kevin Palmer - Chief Financial Officer
Slide 2: Agenda
• FY2021 Overview • Strategic Update • Generation Performance • Retail Performance • FY2021 Financial Results • Questions • Additional Information 2. Investor Presentation for the year ended 31 March 2021 | 17 May 2021
Slide 3: How to ask questions
How to ask questions While you’re attending the webcast there are integrated features on the platform which allow you to send questions to the presenters. You can either ask questions via the Q&A feature and type your question, or you can use the Raise Hand feature if you would like to verbally ask
Slide 4: FY2021 Overview
Slide 5: FY2021 Overview
FY2021 Overview Strong performance in both generation and retail contributes to a positive FY2021 result. Extended dry weather sequences impacted inflows nationwide. Trustpower managed this risk through: • Careful management of our balanced portfolio of geographically dispersed run of river and high
Slide 6: Snapshot
2021 $30.7 $200.2 $94.2 1,708 Snapshot million million million GWh Group NPAT Group EBITDAF Group underlying earnings Generation Volume down 68.5% up 7.3% up 24.9% down 2.9% $154.1 $47 Final Dividend of million million 10.9c 18.5c Per share (including 1.5c per Generation EBITDAF Retail EBITDAF Earni
Slide 7: Governance and Leadership Update
Governance and Leadership Update Board of Directors: • David Gibson joined the Board effective 7 September 2020 • Peter Coman joined the Board effective 6 November 2020 • Sam Knowles retired from the Board, 24 July 2020 • Geoff Swier retired from the Board, 6 November 2020 Senior Leadership Team: •
Slide 8: Strategic Update
Slide 9: Strategic Review
Strategic Review • On 28 January 2021 Trustpower announced a strategic review of its retail business. • This review is aimed at testing market interest in the sale of its mass market retail business and exploring the business case for a standalone generation business. • On 28 April 2021 Trustpower a
Slide 10: Weather
Weather A sustained dry over much of New Zealand impacted inflows and generation out of Trustpower's hydro generation fleet. Overall Trustpower's inflows were 83% of average. Low inflows and continued gas supply issues resulted in sustained high prices. Utilisation of Trustpower controlled storage a
Slide 11: Society and Regulatory Change
Society and Regulatory Change Climate Change To contribute positively to New Zealand's climate change effort, we have: • Set new emissions reduction targets, and • Further embedded climate change risk into our asset management programme, and • Committed to reporting against the Task Force on Climate
Slide 12: Society and Regulatory Change
Society and Regulatory Change Freshwater Management • Recent Freshwater Management reforms have placed greater requirements on improving the water quality of rivers and lakes, and requiring a 'river first' approach to freshwater management. • Hydroelectricity generation does not have a significant w
Slide 13: Generation Strategy
Generation Strategy Trustpower is responding to increased demand for renewable energy as New Zealand pursues greater electrification by: Pursuing growth opportunities • Developing a diverse pipeline of value-adding generation development options that have the potential to be executed by 2030. Enhanc
Slide 14: Retail Strategy
Retail Strategy Trustpower maintains a point of difference in an increasingly price competitive retail environment by: Continuing to augment and promote our bundled utility proposition • Launch of Trustpower Mobile • High quality customer base demonstrates its value again in a difficult year Using t
Slide 15: Signposts on our road to success
Signposts on our road to success Our Customers and Community Valued We value and understand our customers and they trust us to make their lives easier. We make a positive contribution to the communities we operate in and are invested in their long-term success. Our People Valued and Cared for We pla
Slide 16: Generation
———— Generation
Slide 17: Controlled Storage
Controlled Storage Controlled Storage Hydro storage is recovering well after being drawn on to offset low inflows earlier in the year. 17. Investor Presentation for the year ended 31 March 2021 | 17 May 2021
Slide 18: Wholesale Prices
Wholesale Prices Wholesale price peaks contributed to Trustpower's strong result for FY2021. 18. Investor Presentation for the year ended 31 March 2021 | 17 May 2021
Slide 19: Waipori 2 Weir Upgrade
Waipori 2 Weir Upgrade • Seismic studies revealed two metres of block work added to our Waipori 2 Weir during the ‘60s and ‘70s was seismically unsafe, risking stored water release in a seismic event, and requiring removal. • A complex repair requiring tight control of water levels, excavation on ba
Slide 20: Cobb G5 Upgrade
Cobb G5 Upgrade • Work undertaken to upgrade one of our highest strategic value assets has significantly reduced risk exposure to long, unplanned outages. • Cobb G5 was upgraded with a monoblock runner. The custom-designed runner is geometrically identical to the existing runners, without being susc
Slide 21: Retail Performance
Slide 22: Focus on value-led propositions
Focus on value-led propositions Trustpower has been well placed to benefit from the opportunity presented by the transition from copper to fibre through the continued development of our retail strategy and customer offerings: • 80% of broadband customers now on fibre • 97% of broadband customers now
Slide 23: Churn trend continues
Churn trend continues Trustpower continues to benefit from a sustained reduction in churn as a result of its multi-product offering. The sharp dip in April reflects the cessation of acquisition activity across competitors during the nationwide lockdown. Multi-product churn remains generally lower th
Slide 24: Customer experience excellence
Customer experience excellence • We continue to build inclusive customer experiences, supporting customer choice so they can access a service channel that best suits their needs. • Proactive hardship support is enabling customers to navigate budget insecurity linked to COVID-19 impacts, delivering p
Slide 25: Heartbeat
Heartbeat • Voice of customer programme ‘Heartbeat’ was launched in June 2020, as part of our commitment to become more customer centric and deliver Call Centre NPS value to our customers. • The programme captures feedback directly from Trustpower customers at key ‘moments of truth’, measuring custo
Slide 26: Financial
FY-21- Financial
Slide 27: EBITDAF Bridge Full Year 2020-2021
EBITDAF Bridge Full Year 2020-2021 • IFRS15 non-cash adjustments were unfavourable in FY-21 compared to the prior year due to a reduction in acquisition activity in FY-21. • Sale of Trustpower’s meter asset business saw no contribution in FY-21, affecting Generation other revenue. • Elevated wholesa
Slide 28: A promising year for retail, lift in earnings from last year
A promising year for retail, lift in earnings from last year • Bad debt provisions made at the end of FY-20 were overly conservative, driving a lower bad debt expense in FY-21. • Fee revenue decreases were due to a deliberate halt to come customer charges during COVID-19 lockdowns. • Acquisition cos
Slide 29: Generation Earnings
Generation Earnings • Sale of Trustpower’s meter asset business saw no contribution in FY-21, affecting Generation other revenue. • Elevated wholesale prices more than offset lower Generation production volumes due to low inflows. • Generation other revenue predominantly relates to increased Carbon
Slide 30: Final Dividend
Final Dividend Final dividend declared of 17 cps fully imputed bringing total ordinary dividends for the year to 34 cps fully imputed. Special dividend declared of 1.5 cps fully imputed This special dividend is a ‘catch up’ for the reduced final dividend in FY2020 as a result of COVID-19 uncertainty
Slide 31: Debt capital management
Debt capital management 500 Debt facilities 31 March 2021 ($M) 400 99 $M 300 271 200 100 - 0-1 1-3 3-5 5-7 7+ Bank Senior Bonds Unutilised Bank • Increased Debt/EBITDAF position at 31 March due to large ASX market deposits 436 made during the last quarter of FY2021. This is expected to unwind signif
Slide 32: FY2022 Guidance
Slide 33: Market Guidance Update / CAPEX
Market Guidance Update / CAPEX • Trustpower will look to provide market guidance once the results of the strategic review are known. 33. Investor Presentation for the year ended 31 March 2021 | 17 May 2021
Slide 34: Thank you
Slide 35: Questions
Slide 36: How to ask questions
How to ask questions While you’re attending the webcast there are integrated features on the platform which allow you to send questions to the presenters. You can either ask questions via the Q&A feature and type your question, or you can use the Raise Hand feature if you would like to verbally ask
Slide 37: Additional Information
Slide 38: Trustpower key facts
Trustpower key facts • Tauranga based national electricity generator and retailer of energy and telco • History dates back to 1923 as the Tauranga Electric Power Board • Market capitalisation circa $2.6 billon • Key shareholders Infratil (51.0%) and TECT (26.8%) • New Zealand generation capacity (hy
Slide 39: FY-21 Overview
FY-21 Overview Key Drivers Comments • A strong result thanks to an improved retail EBITDAF of $200.2 million is up 7% contribution and the generation business taking Underlying earnings of $94.2 million is up 25% advantage of high wholesale prices • Generation below long run average and prior year G
Slide 40: Electricity Risk Management
Electricity Risk Management Trustpower has successfully managed retail price Trustpower supply/demand risk for a number of years balance in a typical year • Trustpower understands the risk of retailing without full support of a generation business. • The existing risk management tools are sufficient
Slide 41: Balanced exposure to wholesale risk
Balanced exposure to wholesale risk Overview of a typical year 41. Investor Presentation for the year ended 31 March 2021 | 17 May 2021
Slide 42: Having a robust transfer price is key to measuring retail performance
Having a robust transfer price is key to measuring retail performance Trustpower’s methodology • Establish a monthly base rate based primarily on ASX pricing (1/3 FY19 FY20 FY21 based 3 years ago, 1/3 2 years ago, 1/3 1 year ago). $000 $000 $000 • Adjust for location factors and load shape relative
Slide 43: Netback
Netback 43. Investor Presentation for the year ended 31 March 2021 | 17 May 2021
Slide 44: Non-GAAP Measures
Non-GAAP Measures 2020 2021 Profit after tax attributable to shareholders of the Company 95,071 34,023 Fair value losses / (gains) on financial instruments (16,169) 83,508 Asset impairments 7,531 - Gain on sale of metering equipment (16,431) - Change in tax treatment of commercial buildings (1,543)
Slide 45: Disclaimer
Disclaimer • While all reasonable care has been taken in the preparation of this presentation, Trustpower Limited and its related entities, directors, officers and employees (collectively "Trustpower") do not accept, and expressly disclaim, any liability whatsoever (including for negligence) for any