MERIDIAN ENERGY LIMITED
GOLDMAN SACHS INVESTMENT FORUM PRESENTATION
M a r c h 2 1 5
MERIDIAN ENERGY LIMITED GOLDMAN SACHS INVESTMENT FORUM - - PowerPoint PPT Presentation
MERIDIAN ENERGY LIMITED GOLDMAN SACHS INVESTMENT FORUM PRESENTATION 2 0 1 5 r c h M a Disclaimer The information in this presentation was prepared by Meridian Energy with due care and attention. However, the information is supplied
MERIDIAN ENERGY LIMITED
GOLDMAN SACHS INVESTMENT FORUM PRESENTATION
M a r c h 2 1 5
MERIDIAN ENERGY LIMITED GOLDMAN SACHS INVESTMENT FORUM PRESENTATION March 2015
2
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 information. In addition, neither the company nor any of its directors, employees, shareholders nor any other person shall have liability whatsoever to any person for any loss (including, without limitation, arising from any fault or negligence) arising from this presentation or any information supplied in connection with it. This presentation may contain forward-looking statements and projections. These reflect Meridian’s current expectations, based on what it thinks are reasonable assumptions. Meridian gives no warranty or representation as to its future financial performance or any future matter. Except as required by law or NZX or ASX listing rules, Meridian is not obliged to update this presentation after its release, even if things change materially. This presentation does not constitute financial advice. Further, this presentation is not and should not be construed as an
purchase of Meridian Energy securities. This presentation contains a number of non-GAAP financial measures, including Energy Margin, EBITDAF, Underlying NPAT and gearing. Because they are not defined by GAAP or IFRS, Meridian's calculation of these measures may differ from similarly titled measures presented by other companies and they should not be considered in isolation from, or construed as an alternative to, other financial measures determined in accordance with GAAP. Although Meridian believes they provide useful information in measuring the financial performance and condition of Meridian's business, readers are cautioned not to place undue reliance on these non-GAAP financial measures. The information contained in this presentation should be considered in conjunction with the condensed interim financial statements, which are included in Meridian’s interim report for the six months ended 31 December 2014 and is available at: http://www.meridianenergy.co.nz/investors/reports-and-presentations/interim-results-and-reports/ All currency amounts are in New Zealand dollars unless stated otherwise.
MERIDIAN ENERGY LIMITED GOLDMAN SACHS INVESTMENT FORUM PRESENTATION March 2015
MERIDIAN ENERGY LIMITED GOLDMAN SACHS INVESTMENT FORUM PRESENTATION March 2015
Vertically integrated renewable generator, retailing electricity to
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 operating costs Benchmark operational efficiency and low capital needs
4
Hydro station Wind farm Waitaki hydro scheme
GENERATION ASSETS
Seven wind farms More than a decade of construction and
Unsubsidised in NZ with high capacity factors
MERIDIAN ENERGY LIMITED GOLDMAN SACHS INVESTMENT FORUM PRESENTATION March 2015
New Zealand Electricity Industry
1
COMMERCIAL USERS RESIDENTIAL USERS DIRECT CONSUMERS WHOLESALE ELECTRICITY MARKET GENERATION TRANSMISSION DISTRIBUTION RETAILERS Major generators State-owned national transmission grid
Distribution businesses network lines Electricity retail brands commercial customers Payments in relation to the wholesale electricity market Electricity flows
$ $ $
5
MERIDIAN ENERGY LIMITED GOLDMAN SACHS INVESTMENT FORUM PRESENTATION March 2015
MERIDIAN ENERGY LIMITED GOLDMAN SACHS INVESTMENT FORUM PRESENTATION March 2015
Highest performing NZX50 stock in 2014 with a gross return in excess of 85% Higher than forecast dividends in FY2014 11.7% gross yield on final IPO share price ($1.50) Compared with prospectus forecast yield of 8.9% FY15 interim dividend 4% higher than prospectus forecast Recently announced lift in dividend policy to 75%-90% of free cash flow In addition, targeting a progressive return of a further $625m over next 5 years, starting in August 2015
7
0.80 1.00 1.20 1.40 1.60 1.80 2.00 2.20 2.40
25 Oct 22 Nov 19 Dec 21 Jan 18 Feb 17 Mar 11 Apr 13 May 09 Jun 04 Jul 31 Jul 27 Aug 23 Sep 20 Oct 17 Nov 12 Dec 14 Jan 11 Feb
$NZ
INSTALMENT RECEIPT PRICE
MERIDIAN ENERGY LIMITED GOLDMAN SACHS INVESTMENT FORUM PRESENTATION March 2015
1.3% New Zealand demand growth in 2014, last 6 months up 2.9% on prior period Retail competition remains fierce Upcoming decision point for the Tiwai Point aluminium smelter on 1 July 2015 The Electricity Authority is expected to publish a second transmission pricing issues paper before December 2015 Uncertainty about the Renewable Energy Target (RET) in Australia has paralysed investment in renewable generation Meridian’s focus in Australia is on successfully rolling out a new retail experience
8
30,000 32,000 34,000 36,000 38,000 40,000 2009 2010 2011 2012 2013 2014 GWh
NEW ZEALAND NATIONAL DEMAND
MERIDIAN ENERGY LIMITED GOLDMAN SACHS INVESTMENT FORUM PRESENTATION March 2015
9
Major projects completed on time and under budget Mt Mercer will eliminate half a million tonnes of carbon emissions annually Mill Creek completion means that Wellington wind can now power 100,000 homes New generation control system monitors 50,000 data points around our assets Other projects progressing inside the stay in business capital envelope Waitaki refurbishment Manapouri transformer replacement
MERIDIAN ENERGY LIMITED GOLDMAN SACHS INVESTMENT FORUM PRESENTATION March 2015
10
A unique, online retail experience in New Zealand and Australia 55,000 New Zealand customers 30,000 customers in Victoria, Australia Recently launched in NSW, Australia Powershop Australia leverages existing New Zealand technology and call centre investment Exploring potential international
MERIDIAN ENERGY LIMITED GOLDMAN SACHS INVESTMENT FORUM PRESENTATION March 2015
11
Arc metering business sold and programme commenced to replace remaining 125,000 legacy meters Aggressive residential competition has seen a small decline in customer connections Meridian’s residential pricing is close to the lowest in most major networks Reduced fuel purchase obligations mean that thermal generators are able to reduce output The forward wholesale market has risen across all quarters, which may benefit commercial and industrial pricing
MERIDIAN ENERGY LIMITED GOLDMAN SACHS INVESTMENT FORUM PRESENTATION March 2015
MERIDIAN ENERGY LIMITED GOLDMAN SACHS INVESTMENT FORUM PRESENTATION March 2015
Interim financials well ahead of last year Operating cash flow +13.2% EBITDAF +20.9% Underlying NPAT +38.3% Capital projects completed Mt Mercer and Mill Creek wind farms Generation control system Total generation volumes +6.1% 271GWh of new wind production Higher winter inflows this year HVDC constraints last year
13
MERIDIAN ENERGY LIMITED GOLDMAN SACHS INVESTMENT FORUM PRESENTATION March 2015
Better than prior year performance on all major financial measures 1H FY14 included $8.3m of IPO costs, not repeated in 1H 14 1H FY15 EBITDAF includes $5.2m of insurance proceeds 1H FY15 NPAT includes $15.2m of gains on asset sales – metering business and farms
14
480 61 112 324 117 115 217 107 159 447 67 124 268 117 83 192 169 107 100 200 300 400 500 600 $M
FINANCIAL PERFORMANCE AGAINST PRIOR YEAR
6 months to 31 December 2014 6 months to 31 December 2013
Energy Margin
+$33.6m Trans- mission
Operating Costs
EBITDAF
+$56.1m NPAT
+$0.2m Underlying NPAT
+$31.8m Operating Cash Flow
+$25.3m Investment Expenditure
Dividend Declared
+$51.5m
MERIDIAN ENERGY LIMITED GOLDMAN SACHS INVESTMENT FORUM PRESENTATION March 2015
‘Like for like’ EBITDAF (excluding insurance proceeds and IPO costs) increase of 15.4% in 1H FY14 from: Additional generation from Mill Creek in NZ and Mt Mercer in Australia Higher residential/SME sales volumes Higher sell-side CFD volumes and lower acquired generation, off the back of higher NZ generation Continued cost savings and lower HVDC charges Higher interest costs on connection asset finance leases and end of project interest capitalisation
15
1Earnings before interest, taxation, depreciation, amortisation, changes in fair value of
financial instruments, impairments and gain/(loss) on sale of assets
2Net Profit after Tax adjusted for the effects of non cash fair value movements and other
353.3 294.3 277.1 268.2 324.3 306.6 182.3 307.7 317.1 100 200 300 400 500 600 700 2011 2012 2013 2014 2015 $M Financial Year ended 30 June
EBITDAF1
Interim Final half-year 123.4 98.9 88.3 83.0 114.8 95.6 7.2 74.4 111.6 50 100 150 200 250 2011 2012 2013 2014 2015 $M Financial Year ended 30 June
UNDERLYING NPAT2
Interim Final half-year
MERIDIAN ENERGY LIMITED GOLDMAN SACHS INVESTMENT FORUM PRESENTATION March 2015
Net cash flow from operating activities was $25.3m (13.2%) higher than 1H FY14 Reflects the higher energy margin and lower operating costs in 1H FY15 Includes higher income tax payments on improved EBITDAF Investment expenditure was $62.4m (36.9%) lower than 1H FY14 Reflects completion of Mill Creek and Mt Mercer wind projects Both projects were completed under budget Stay in business capital expenditure of $23.9m in 1H FY15
16
202.2 135.5 172.9 191.5 216.8 166.5 186.7 243.8 241.3 100 200 300 400 500 2011 2012 2013 2014 2015 $M Financial Year ended 30 June
CASH FLOW FROM OPERATING ACTIVITIES
Interim Final half-year 228.6 208.4 183.3 168.9 106.5 44.0 320.2 93.4 146.9 100 200 300 400 500 600 2011 2012 2013 2014 2015 $M Financial Year ended 30 June
INVESTMENT EXPENDITURE
Interim Final half-year
MERIDIAN ENERGY LIMITED GOLDMAN SACHS INVESTMENT FORUM PRESENTATION March 2015
$6.1m (9.1%) decrease in Transmission costs in 1H FY15 Benefiting from lower final costs on HVDC Pole 3 project 5% increase in 2015/16 transmission costs coming $12.6m (10.1%) decrease in reported Operating costs in 1H FY15 Adjusting for IPO costs, Operating costs have decreased $4.3m (3.7%) in 1H FY15 Absorbing costs from growth projects – new wind farms and Powershop Australia
17
42.0 41.0 54.8 66.7 60.6 42.2 45.7 60.5 62.6 20 40 60 80 100 120 140 2011 2012 2013 2014 2015 $M Financial Year ended 30 June
TRANSMISSION COSTS
Interim Final half-year 114.9 114.1 116.3 124.4 111.8 123.2 113.1 129.1 111.7 50 100 150 200 250 300 2011 2012 2013 2014 2015 $M Financial Year ended 30 June
OPERATING COSTS
Interim Final half-year