Meridian Energy Limited · NZX:MEL
Meridian Energy — H1 FY2016 Earnings Presentation
25 slides from Meridian Energy's earnings presentation, March 2016
Slide 1: Better energy future
Better energy future MERIDIAN ENERGY LIMITED 2016 interim results roadshow presentation
Slide 2: Disclaimer
MARCH AND APRIL 2016 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 reliabil
Slide 3: Meridian and the New Zealand market
Meridian and the New Zealand market MERIDIAN ENERGY LIMITED 2016 interim results roadshow presentation
Slide 4: About Meridian
MARCH AND APRIL 2016 About Meridian Vertically integrated renewable generator, retailing electricity to over 337,000 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 a
Slide 5: The New Zealand electricity market
MARCH AND APRIL 2016 The New Zealand electricity market 5 Major generators 1 Transmission grid operator 29 Distribution businesses 26 Electricity retail brands 2 Million consumers MERIDIAN ENERGY LIMITED 2016 interim results roadshow presentation 5
Slide 6: 2016 interim results
2016 interim results MERIDIAN ENERGY LIMITED 2016 interim results roadshow presentation
Slide 7: Highlights
MARCH AND APRIL 2016 Highlights MERIDIAN ENERGY LIMITED 2016 interim results roadshow presentation 7
Slide 8: The New Zealand market
MARCH AND APRIL 2016 NATIONAL DEMAND The New Zealand market GWh 45,000 Modest demand growth in last six months -1.3% +1.3% +1.4% year on year -1.0% change Growth in most regions and sectors 40,000 (except industrial) 35,000 600MW of thermal plant closure has 30,000 occurred in the last 6 months Mark
Slide 9: The Australian market
MARCH AND APRIL 2016 LGC SPOT PRICE The Australian market AUD 90 LGC prices have responded to RET 80 target decision in June 2015 and 70 political changes in September 2015 60 Has not yet translated into investment certainty, with little new investment 50 announced 40 Jul-15 Aug-15 Sep-15 Oct-15 Nov
Slide 10: Tiwai Point smelter
MARCH AND APRIL 2016 LME SPOT ALUMINIUM PRICE Tiwai Point smelter USD/tonne 1,800 Current trading environment for the 1,700 aluminium industry is difficult 1,600 USD aluminium prices have fallen 10% since the middle of 2015 1,500 Price premia have stabilised from 1,400 Jul-15 Aug-15 Sep-15 Oct-15 Nov-
Slide 11: Wholesale and generation
MARCH AND APRIL 2016 Wholesale and generation Stay in business capital spend inside the annual $65m envelope Mill Creek wind farm performance running ahead of expectations Iconic Brooklyn turbine will be replaced in April 2016 Consent extensions gained for Central Wind and Maungharuru wind options M
Slide 12: Meridian Retail
MARCH AND APRIL 2016 Meridian Retail Segment EBITDAF up +$5m (+19%) Growth in corporate and industrial sales volumes (+4%) Growth in residential and SMB sales volumes (+6%) Lift in average sales price Corporate and industrial +4% in line with movements in the forward market Residential and SMB +2% w
Slide 13: Meridian Retail
MARCH AND APRIL 2016 Meridian Retail Launch of Xero partnership Winner of CRM contact centre award (commercial and business services) Powershop net promoter score above 46 (energy sector average is -13) Good performance on retail metrics MERIDIAN RETAIL Dec 14 Jun 15 Dec 15 Time to answer (seconds)
Slide 14: npower agreement
MARCH AND APRIL 2016 npower agreement Franchise licence agreement with RWE npower signed in November 2015 Will take the Powershop service platform and brand to the UK without Meridian carrying market exposure Staged delivery of electricity, smart meter integration, gas and dual fuel and white label
Slide 15: Concluding remarks
MARCH AND APRIL 2016 Concluding remarks Strategic focus remains unchanged: Supporting TPM and thermal retirement outcomes to maintain an open and competitive market Improving asset yield and maintaining low stay in business capex Continuing to close our retail profit gap while lifting efficiency and se
Slide 16: 2016 interim financial performance
2016 interim financial performance MERIDIAN ENERGY LIMITED 2016 interim results roadshow presentation
Slide 17: Financial performance
MARCH AND APRIL 2016 Financial performance FINANCIAL PERFORMANCE AGAINST PRIOR YEAR $M 600 Six months ended 31 December 2015 Six months ended 31 December 2014 509 500 480 400 332 324 300 206 217 194 200 159 121 112 122 115 104 117 106 100 64 60 16 28 8 0 Energy Other Trans- Operating EBITDAF NPAT Un
Slide 18: Dividends
MARCH AND APRIL 2016 Dividends Interim ordinary dividend of 5.10 cps, INTERIM DIVIDENDS DECLARED CPS +22% Ordinary dividend Special dividend 85% imputed 10 7.54 8 Is a 6% increase on the interim 6.20 2.44 dividend from last year 6 1.40 4 Capital management interim special 4.80 5.10 2 4.19 dividend o
Slide 19: Earnings
MARCH AND APRIL 2016 ENERGY MARGIN1 Earnings $M 1,000 916 924 954 ‘Like for like’ EBITDAF (excluding FY2015 800 763 474 +6% 481 477 insurance proceeds) increase of $12m 600 324 (4%) in 1H FY2016 from: 400 + Higher corporate sales volume in NZ 200 439 435 447 480 509 + Higher residential/SMB sales vo
Slide 20: Costs
MARCH AND APRIL 2016 OPERATING COSTS Costs $M Retail segment Wholesale Corporate/Elims +3% 150 Australia IPO Costs Operating costs have increased +$9m 114 116 124 112 121 6 9 16 (+8%) in 1H FY2016 100 38 23 11 19 20 Almost half of this growth is investment 50 35 40 37 38 supporting Powershop expansi
Slide 21: Below EBITDAF
MARCH AND APRIL 2016 NET PROFIT AFTER TAX Below EBITDAF $M 400 Net finance costs -$1m (-3%) from lower 300 295 247 interest on borrowings 122 230 200 -11% Positive change in fair value of treasury 113 130 75 instruments reflecting forward rate 100 173 117 117 104 changes in 1H FY2015 0 66 9 Negative c
Slide 22: Latest operating information
Latest operating information MERIDIAN ENERGY LIMITED 2016 interim results roadshow presentation
Slide 23: Market Data
MARCH AND APRIL 2016 NATIONAL DEMAND Market Data GWh 3,800 3,600 National electricity demand in January 3,400 2016 was 3.4% lower than the same 3,200 month last year 3,000 This was driven continued North Island 2,800 demand growth and lower South Island 2,600 Jan Feb Mar Apr May Jun Jul Aug Sep Oct
Slide 24: Meridian hydrology
MARCH AND APRIL 2016 MERIDIAN'S TOTAL CATCHMENT INFLOWS Meridian hydrology GWh 10,000 current year January 2016 monthly inflows were 85% 8,000 of historical average 6,000 Meridian’s Waitaki catchment storage 4,000 moved from 1,579GWh to 1,758GWh 2,000 during January 2016 0 Waitaki storage at the end
Slide 25: Meridian retail
MARCH AND APRIL 2016 MERIDIAN'S NZ CUSTOMER CONNECTIONS Meridian retail ICPs ('000) 300 Meridian’s New Zealand customer 250 56 56 55 55 55 55 56 200 connection numbers rose slightly during 104 103 103 102 102 102 102 150 January 2016 100 Retail sales volumes in January 2016 50 117 117 117 117 117 11