Contact Energy Limited · NZX:CEN
Contact Energy — Shareholder Meeting (February 2005)
64 slides from Contact Energy's shareholder meeting presentation, Feb 15, 2005
Slide 1: Origin Energy fax cover: Contact Energy Annual General Meeting
Origin energy To Company Announcements Office Facsimite 1300 300 021 Company Australian Stock Exchange Limited Date 15 February 2005 From Bill Hundy Pages 64 Subject CONTACT ENERGY ANNUAL GENERAL MEETING Attached herewith is a copy of announcements made to the New Zealand Stock Exchange by Contact E
Slide 2: Chairman's Speech - 2005 AGM
o COnTacT 15 February 2005 CHAIRMAN’S SPEECH - 2005 AGM It is a great pleasure to be addressing my first Annual General Meeting, and an even greater pleasure as Chairman to be reporting to Shareholders the excellent result achieved by Contact Energy in the year to September 2004. Before reporting th
Slide 3: Financial Performance
Financial Performance As you are aware Contact reported a tax paid profit for the financial year of $144 million, a 22 per cent increase over the prior year. Earnings per share were almost 25 cents (24.98 cents), also up 22 per cent over the prior year, whilst dividends for the year of 25 cents (ful
Slide 4: Gas exploration and Board and Governance Issues
« Encouragement of an increasing level of upstream gas exploration in New Zealand « Progressing a viable LNG option as a backstop should domestic gas resources be insufficient to meet demand « Fostering public discussion and understanding of future energy options through the Positive Energy campaign
Slide 5: Chief executive change and governance
Steve is an outstanding chief executive, respected and trusted by staff and industry peers alike. We will be sorry to lose his services when he returns to the United States to be closer to family later this year. The ownership change has also necessitated a change in balance date for Contact. We wil
Slide 6: New investments and the future for thermal fuels
In the near term, we are looking at new investments to upgrade and expand existing plant across the portfolio, that will add upwards of 1OOMW to total generating capacity. Steve Barrett will cover these plans in greater detail in his presentation. In addition to our direct investment, we also made u
Slide 7: Gas exploration in New Zealand
But the new fields of Pohokura and Kupe will not be sufficient by themselves to replace the Maui field and to power existing thermal plant, let alone allow for investment in new gas-fired plant to meet electricity demand growth. We know that New Zealand is considered highly prospective for natural g
Slide 8: Pricing
Pricing As you will be aware, electricity and gas prices have been rising as New Zealand moves to a situation of tighter supply, both in terms of generation capacity and fuel availability. We anticipate some further rises — although they are unlikely to be as significant as they have been in recent
Slide 9: Changing market fundamentals and tariffs
As | have observed, this change in market fundamentals is being reflected in tariffs to consumers, and we are investing in new energy production to stabilise prices at levels that reflect New Zealand’s changing energy landscape. With the recent investment commitments made by the industry, the Electr
Slide 10: Creating wealth for shareholders and Outlook
And secondly, to create wealth for our shareholders. In the process of doing so, we directly employ more than 700 New Zealanders, generate around 30 per cent of the country’s electricity, pay taxes to the Government, and provide electricity and gas to more around half a million homes and businesses.
Slide 11: Dividend payment dates and accounting standards
willannounce the revised payment dates once the full ramifications of the changed balance date and net cash generation and tax payment profile are fully determined. In this context | should also draw shareholders’ attention to the new Note 29 in the Annual Report (p70) discussing the impact of the c
Slide 12: Chief Executive's Speech - 2005 Annual Meeting
o Contact 15 February 2005 CHIEF EXECUTIVE’S SPEECH — 2005 ANNUAL MEETING Thank you, Grant. It’s a pleasure to be in Wellington for the Contact Annual Meeting. As New Zealand’s second largest listed company, and the most widely held New Zealand share, we've made a point of taking our meetings to Auc
Slide 13: Integrated business model and quarterly result
The result reinforces the benefits of Contact’s integrated business model and the movement in electricity tariffs to reflect tightening demand, which is now stimulating new investment in generation capacity. The integration of generation with a significant retail customer base continues to allow Con
Slide 14: Retail competition and 2004 results
In other words, retail competition is alive and well, and we look forward to more of it. 2004 was a big year for Contact. As Grant has already outlined, we achieved a record tax-paid profit of $144 million, increased dividends to shareholders, and further enhanced the strength of our balance sheet.
Slide 15: Review of past five years
After strong growth in customer numbers and the addition of generation capacity through the acquisition in early 2003 of the Taranaki Combined Cycle station at Stratford, our focus was on establishing a solid platform for the next phase of growth. We were even more critical than we are today of how
Slide 16: New gas commitments and resource consents
Today, as a result of these new gas commitments, we know with confidence that we have the gas we need to run our approximately 7OOMW of combined cycle gas turbine plants at Otahuhu-B and Stratford for the next five years or so. That is a huge step forward. And, publicly to shareholders, | want to re
Slide 17: Refocus on the New Zealand market
At the same time, it became clear to us that, with all these potential new investments, we should refocus on the New Zealand market, rather than pursue Australian opportunities. We continue to face significant challenges in New Zealand, and we saw no value for shareholders in sinking cost into an Au
Slide 18: New generation projects
« plans for 8 to 16MW of new generation by installing turbines at the existing flow- control structure known as Hawea Gates, at the top of Contact's Clutha hydro system; « upgrades to the Otahuhu-B and Taranaki Combined Cycle gas-fired plant to yield approximately 24MW of new capacity at peak load,
Slide 19: Gas exploration and LNG backstop
It is this timeframe which is driving our interest in encouraging new gas exploration and investigating the backstop option of importing Liquefied Natural Gas, or LNG. The reality is that, if new local sources of natural gas are not found in the next few years, LNG could become vital to keeping exis
Slide 20: Positive Energy campaign
We also recognised that energy issues are complex and, to many people, not especially interesting until there’s a threat of the lights going out. So we sought to communicate about these difficult, nationally important questions in a fresh and engaging way. That’s why we chose to use the animated cha
Slide 21: Positive Energy results and Healthy Homes
various publics in responsible debates about New Zealand’s future electricity supply considerations. This was especially marked among our customers. This is an important outcome as we seek strong connections that encourage loyalty and satisfaction with Contact in a competitive market. A commitment t
Slide 22: Healthy Homes programme partners
as asthma, we identified an opportunity to make energy efficiency even more relevant by linking it to health and lifestyle benefits. The result is the Contact Energy Healthy Homes programme, which Grant King and | launched with the Minister of Energy, Trevor Mallard, at Parliament last night. Health
Slide 23: Commercial rationale for Healthy Homes
Secondly, there is an opportunity here for Contact to create Positive Energy, making a difference to the lives of New Zealanders, especially the large and growing numbers suffering respiratory illnesses. And finally, if we can help our customers to get better value from the energy they already buy f
Slide 24: Contact
Fr: CONTACT
Slide 25: Annual General Meeting
CS ConTacT Annual General Meeting 15 February 2005
Slide 26: Meeting Agenda
Meeting Agenda Chairman’s Introduction Chief Executive’s Review Financial Statements Shareholder Questions Resolutions 1 to 8 General Business cS contract
Slide 27: Shareholder Voting Paper
SHAREHOLDER VOTING PAPER (For use if a poll is taken} Business 1. To authorise the directors to fix the auditors’ remuneration. . To elect Grant King as a director. . To elect Bruce Beeren as a director. . fo elect Karen Moses as a director. . To re-elect Timothy Saunders as a director. , To adopt a
Slide 28: Contact
Fr: CONTACT
Slide 29: Chairman's Address
CS ConTacT Chairman’s Address
Slide 30: Share Price Performance
Share Price Performance — Contact Share Price wee Contact, with Dividend Reinvestment —NZX50 benchmark 7.00 6.50 t 2Q a a) aleys ¢ 6.00 4.00 + POOZ/EO/SL yOOz/60/t vOOE/BO/2b yO07/80% pood/LO/L yOO?/LO/L yOOz/S0/91 vOOZ/SO/LE yood/sarrt vOOe/PO/62 yOOe POL yOOZ/EO/Re yOOz/eo/Lt yOOt/ZORS vO07/Z0/01
Slide 31: Progress on Strategic Issues
Progress on Strategic Issues Renewal of resource consents for Clutha and Wairakei Contracting to refueling gas fired plant until the end of the decade Encouraging gas exploration Progressing LNG option Positive Energy campaign Ge contract
Slide 32: Contact
Fr: CONTACT
Slide 33: New Investment
New Investment Economic growth is driving __ ...which will require at least $6 demand growth... billion in new investment over 10 years. Transmission 200 | Energy consumption ™ GOP 150 100 1973 1983 1993 2003 contract
Slide 34: Electricity Outlook
60000 Electricity Outlook Ml New Capacity >a oS oS N aS E3P Committed Renewables HE Thermai Capacity Ci1Cogen Wind {ii Geothermal mam Dry Year Hydro —- Demand 2007 2010 2011 2012 2013 2014 2015 Ge contract
Slide 35: Gas Outlook
Gas Outlook PJ/annum NZ Gas Supply/Demand Forecast - Feb 2005 (PUBLIC DATA} 306 BEG Kupe BREE Pohokura 250 EE Maui ME Mangehews 206 EES Kapuni ME McKee 150 cota Riraa/Kauri +06 (ZEA Minor Fields —e~= Demand (Reduced Metharex Consurnption) vom Demand {excl Petrochemical) 50 0 2000 260% 2002 2003 2004
Slide 36: LNG Backstop
LNG Backstop ee = oe a ~ Potential 1, Push forward cost effective renewables gap 2. Support National Exploration Activity 4. Use backstop if needed Z Z 7 7 7 2003 2007 2010 contract
Slide 37: Contact
Fr: CONTACT
Slide 38: Regulatory Priorities
Regulatory Priorities * Supporting gas exploration * Timely transmission upgrades * Balancing national and local interests in RMA consent process cS contract
Slide 39: Contact
Fr: CONTACT
Slide 40: Earnings and Dividend Performance
Earnings and Dividend Performance @ 20 3 15 m@ Earnings < 0 ™ Dividend 5 2000 2001 2002 2003 2004 t] Financial Year Ge contract
Slide 41: Contact
Fr: CONTACT
Slide 42: Chief Executive's Review
CS ConTacT Chief Executive’s Review
Slide 43: Q1 Results
Q1 Results Quarter ended 31 December Quarter ended 31 December 2004 2063 Net surplus $44.3m $27.5m Revenue $324.2m $296.7m Operating expenses $205.5m $197.8m EBITDA $118.7m $98.9m Shareholders’ equity $2,984.2m $2,422.1m Gearing 26% 33% Ge contract
Slide 44: Contact
Fr: CONTACT
Slide 45: Wholesale Electricity Prices
$/ MWh 100 80 60 40 2 > 2S Wholesale Electricity Prices 2000 2001 2002 2003 2004 Financial Year Ge contract
Slide 46: Contact Today
Contact Today New Majority Shareholder - Origin Energy $1 billion in new gas contracts and plant upgrades Important consent milestones for Clutha and Wairakei Established LNG as a viable back stop option Future energy options campaign Focus on investing in New Zealand cS contract
Slide 47: Contact Generation Additions
Contact Generation Additions Full production at Wairakei and Poihipi, 35 MW New drilling at Ohaaki, 15 MW to 25MW Wairakei Binary Plant, 145 MW New generation at Hawea Gates, 16MW Upgrades to Otahuhu B and TCC, 24MW cS contract
Slide 48: Contact
Fr: CONTACT
Slide 49: Positive Energy
Positive Energy NS 5 SS Sg contract
Slide 50: Healthy Homes
Healthy Homes contract
Slide 51: Contact
Fr: CONTACT
Slide 52: Financial Statements
CS ConTacT Financial Statements
Slide 53: Shareholder Questions
S ConTacT Shareholder Questions
Slide 54: Resolutions
Ge ConTacT Resolutions
Slide 55: Resolution 1: Auditors
Resolution 1: Auditors “That Contact's Board of Directors be authorised to fix the auditor’s remuneration.” cS contract
Slide 56: Resolution 2: Election of Director
Resolution 2: Election of Director “That Grant King be elected as a director of Contact.” cS contract
Slide 57: Resolution 3: Election of Director
Resolution 3: Election of Director “That Bruce Beeren be elected as a director of Contact.” cS contract
Slide 58: Resolution 4: Election of Director
Resolution 4: Election of Director “That Karen Moses be elected as a director of Contact.” cS contract
Slide 59: Resolution 5: Re-election of Director
Resolution 5: Re-election of Director “That Tim Saunders be re-elected as a director of Contact.” cS contract
Slide 60: Resolution 6: New Constitution
Resolution 6: New Constitution “That the constitution tabled at the meeting and signed by the Chairman of the meeting for the purpose of identification, be and is adopted as the constitution of the company, in substitution for the present constitution of the company.” cS contract
Slide 61: Resolution 7: Shareholder Proposal
Resolution 7: Shareholder Proposal Resolution 7, proposed by Mr Bulling, is: “That the company, and its subsidiaries, not make donations to, or provide financial assistance to any political party or political organisation, unless approved by shareholders at an annual meeting.” we contract
Slide 62: Resolution 8: Shareholder Proposal
Resolution 8: Shareholder Proposal Resolution 8, proposed by Mr Bulling, is: “That all donations, sponsorships and similar distributions made by the company, and its subsidiaries, be disclosed in the Annual Report. Such disclosure to be by way of listing the recipient of the funds, the amount, and t
Slide 63: Shareholder Discussion
S ConTacT Shareholder Discussion
Slide 64: Contact
Fr: CONTACT