Contact Energy Limited · NZX:CEN
Contact Energy — Investor Day (September 2009)
25 slides from Contact Energy's investor day presentation, Sep 24, 2009
Slide 1: ASX cover note: Contact Energy presentation to Craigs Investor Day
For personal use only To Company Announcements Office Facsimile 1300 135 638 Company ASX Limited Date 24 September 2009 From Bill Hundy Pages 25 Subject CONTACT ENERGY – PRESENTATION TO CRAIGS INVESTOR DAY. Attached herewith is a copy of an announcement released to the NZX by Contact Energy today. O
Slide 2: New Zealand's leading integrated energy company
For personal use only New Zealand’s leading integrated energy company Presentation to Craigs Investor Day, Auckland 24 September 2009
Slide 3: Disclaimer
Disclaimer For personal use only This presentation may contain projections or forward looking statements regarding a variety of items. Such forward-looking statements are based upon current expectations and involve risks and uncertainties. Actual results may differ materially from those stated in an
Slide 4: Contact is often referred to as a diversified, integrated generator-retailer
Contact is often referred to as a….. For personal use only • 26% of NZ’s electricity supply – 50% natural gas – 35% hydro – 15% geothermal • 600,000 customers • 25% of electricity demand • 35% of gas demand • 50% of LPG demand diversified, integrated generator-retailer © Contact Energy Limited 3
Slide 5: Contact's portfolio flexibility historically helped manage volatility
Contact’s portfolio flexibility historically helped manage volatility For personal use only EBITDAF and Wholesale Electricity Price 600 120 500 100 400 80 Wholesale EBITDAF electricity price ($ millions) 300 60 ($/MWh) 200 40 100 20 0 0 1999 2000 2001 2002 2003 2004 2005* 2006 2007 2008 Financial Ye
Slide 6: Earnings have been relatively resilient to weather / wholesale price volatility
Earnings have been relatively resilient to weather / wholesale price volatility For personal use only Dry years Wet years 600 120 500 100 400 80 Wholesale EBITDAF electricity price ($ millions) 300 60 ($/MWh) 200 40 100 20 0 0 1999 2000 2001 2002 2003 2004 2005* 2006 2007 2008 Financial Year © Conta
Slide 7: In FY09, the loss of portfolio flexibility coincided with extreme weather and transmission constraints
In FY09, the loss of portfolio flexibility coincided with extreme weather and transmission constraints For personal use only EBITDAF and Wholesale Electricity Price 600 120 500 100 400 80 Wholesale p EBITDAF electricity price ($ millions) 300 60 ($/MWh) 200 40 100 20 0 0 1999 2000 2001 2002 2003 200
Slide 8: A quarterly view of net revenue illustrates what happened
A quarterly view of net revenue illustrates what happened For personal use only FY08 FY09 Winter 2008 Drought Spring 2008 Deluge Jan - June 2009 Transmission constraints 400 GWh hydro spilled due to Wet conditions transmission constraints Portfolio inflexibility Strategic challenges to resolve: - Tr
Slide 9: Transmission is being upgraded
Transmission is being upgraded For personal use only • $5 billion of transmission upgrades over the next 10 years – 2011/12: North Island grid upgrade (ie into Auckland) – 2012: HVDC Pole 3 – 2013: Wairakei Ring Lower South Island (not yet approved) – 2013/14: North Auckland • Which will result in:
Slide 10: Contact is investing in portfolio flexibility
Contact is investing in portfolio flexibility For personal use only • Flexible generation – 200 MW Stratford Peaker Project – Fast-start / efficient gas turbines – Cost: $250 million – In operation mid-2010 © Contact Energy Limited 9
Slide 11: For personal use only
For personal use only © Contact Energy Limited 10
Slide 12: In addition, Contact is investing in renewable generation – particularly geothermal
In addition, Contact is investing in renewable generation – particularly geothermal For personal use only © Contact Energy Limited 11
Slide 13: New generation expected to be required by about 2014
For personal use only • The requirement for new generation over the next decade will be driven by two major factors: – The growth in demand – long term average for New Zealand has been 2% but this is constrained by the economic recession in the short term – Fuel replacement as coal moves up the meri
Slide 14: For personal use only
For personal use only © Contact Energy Limited 13
Slide 15: For personal use only
For personal use only © Contact Energy Limited 14
Slide 16: For personal use only
For personal use only © Contact Energy Limited 15
Slide 17: Domestic gas supplies in the longer term appear to be limited
Domestic gas supplies in the longer term appear to be limited For personal use only • NZ’s gas supply position provides no assurance of domestic gas availability beyond the middle to the end of the next decade – New base-load gas-fired generation remains unlikely – Recent reserves downgrade reinforc
Slide 18: Long-term energy prices
Long-term energy prices For personal use only • Despite the recent economic challenges the fundamental drivers of long term electricity prices remain the same • In the absence of significant new and accessible gas reserves, wind and hydro remain the likely sources of new generation, once available g
Slide 19: Retail tariffs are below what is required to ensure new generation is built
Retail tariffs are below what is required to ensure new generation is built when required For personal use only © Contact Energy Limited 18
Slide 20: Contact is in a strong financial position
Contact is in a strong financial position For personal use only • Net debt as at 30 June 2009 was $1.1bn – 27% gearing • $685m of available credit facilities • Over-subscribed retail bond issue – $550m raised • Implemented a Profit Distribution Plan – $120m was retained in 2009 • Committed capital e
Slide 21: Distributions to shareholders
Distributions to shareholders For personal use only • Contact’s distributions are made pursuant to a Profit Distribution Plan • For the purpose of the FY09 final distribution, shareholders’ entitlements were set on the basis of the equivalent of 17 cents per share • Total cash retained in FY09 was $
Slide 22: Customers are returning to Contact
Customers are returning to Contact For personal use only © Contact Energy Limited 21
Slide 23: For personal use only
For personal use only © Contact Energy Limited 22
Slide 24: Conclusion
Conclusion For personal use only • A challenging year due to – Transmission constraints and extreme weather – Loss of portfolio flexibility • Current business issues are being addressed – Progress on HVDC pole 1 replacement – Improved transmission out of the lower South Island – Gas storage under co
Slide 25: For personal use only
For personal use only © Contact Energy Limited 24