Powering today, protecting tomorrow MERIDIAN ENERGY LIMITED Interim results presentation for the six months ended 31 December 2016
22 FEBRUARY 2017 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 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 offer to sell or a solicitation of an offer to buy Meridian Energy securities and may not be relied upon in connection with any 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 2016 and is available at: http://www.meridianenergy.co.nz/investors/ All currency amounts are in New Zealand dollars unless stated otherwise. MERIDIAN ENERGY LIMITED Interim results presentation for the six months ended 31 December 2016 2
22 FEBRUARY 2017 Highlights 1 Net profit after tax adjusted for the effects of non-cash fair value movements and one-off items MERIDIAN ENERGY LIMITED Interim results presentation for the six months ended 31 December 2016 3
22 FEBRUARY 2017 Progress on strategy � TPM supplementary consultation paper released, Maintaining an implementation expected by April 2020 (latest) open market in which we can � Election year focus unlikely to be on electricity compete market structure effectively � NZ wind options ready to meet expected new supply Developing needs after 2019 opportunities � Powershop Australia launch in Queensland for earnings growth � First Powershop UK milestone met MERIDIAN ENERGY LIMITED Interim results presentation for the six months ended 31 December 2016 4
22 FEBRUARY 2017 Progress on strategy � NZAS back-to-back arrangements with other Protecting and generators in effect maximising our generation � Transmission grid resilient to a Tiwai exit asset and � Ability of HVDC to deliver energy into the North wholesale Island is robust position � Two years through a $24m redevelopment of Growing retail core customer support systems value by making things easy for our � Small/medium business focus delivering customers and segment volume growth optimising our operations � Commitment to EVs with tailored tariffs, fleet conversion and infrastructure partnerships MERIDIAN ENERGY LIMITED Interim results presentation for the six months ended 31 December 2016 5
22 FEBRUARY 2017 NATIONAL DEMAND The New Zealand market GWh year on 45,000 � Warm winter temperatures and high +1.8% year -1.4% +1.2% -1.4% change rainfall eliminated demand growth 40,000 � National demand has decreased 2.0% in Jul-Dec 2016 the last six months and 1.4% in the last -2% 35,000 Oct-Dec 2016 year -3% � Decreased South Island irrigation load in 30,000 the second half of 2016 had a significant 2012 2013 2014 2015 2016 impact on annual demand (see next Calendar year ended 31 December source: Electricity Authoirty page) � Forward ASX prices have softened during BENMORE ASX FUTURES SETTLEMENT PRICE the last three months of 2016 $/MWh 100 � Largely a reflection of near-term national 90 storage being high 80 � High retail competition and switching 70 (dominated by premises moves) persist 60 in the market 50 40 Q1 2017 Q3 2017 Q1 2018 Q3 2018 Q1 2019 Q3 2019 Q1 2020 Q3 2020 30 June 2016 30 September 2016 31 December 2016 MERIDIAN ENERGY LIMITED Interim results presentation for the six months ended 31 December 2016 6
22 FEBRUARY 2017 New Zealand demand REGIONAL DEMAND 1H FY2017 V 1H FY2016 � Climatic factors have impacted demand: � 2016 was New Zealand’s warmest year +4% on record � Soil moisture levels in South Island 0% -2% irrigation regions were higher than the +1% -1% last two years +2% � Decreased South Island load accounts for -1% -1% -2% almost 80% of the decrease in national demand in the six months to December -1% 2016 -2% � And 90% of decrease in national demand 0% in the three months to December 2016 -22% � Industrial closures have also been a -10% factor: -3% -18% � Holcim cement plant at Westport -2% � OceanaGold mine at Reefton -2% � Pacific Steel plant in South Auckland -1% Source: Electricity Authority, Meridian MERIDIAN ENERGY LIMITED Interim results presentation for the six months ended 31 December 2016 7
22 FEBRUARY 2017 NEM DEMAND The Australian market TWh 300 � Stable demand in the last year 280 � LGC prices have maintained their 260 strong performance 240 � Political uncertainty around support of 220 renewables 200 � Renewables are more politicised 2012 2013 2014 2015 2016 Calendar year ended 31 December following the major South Australian source: NemSight transmission outage from storm damage LGC SPOT PRICE AUD � Market is still reluctant to commit to 100 new renewables, calling into question the likelihood of meeting the 2020 90 target 80 70 1 Jan 16 1 Mar 16 1 May 16 1 Jul 16 1 Sep 16 1 Nov 16 1 Jan 17 source: Bloomberg source: Mercari MERIDIAN ENERGY LIMITED Interim results presentation for the six months ended 31 December 2016 8
22 FEBRUARY 2017 LME SPOT ALUMINIUM PRICE 4% Tiwai Point smelter USD/tonne appreciation 1,800 since June 2016 � Price increased from 1 January 2017 1,700 � Contract now into NZAS perpetual 12- 1,600 month termination right 1,500 � International aluminium market is improving, but remains difficult 1,400 1 Jul 16 1 Aug 16 1 Sep 16 1 Oct 16 1 Nov 16 1 Dec 16 1 Jan 17 � Positive sentiment on global demand source: London Metal Exchange and possible supply side discipline in China have driven a rally in spot prices 3% depreciation NZD USD CROSS RATE � However global demand growth is since June Daily spot 2016 forecast to moderate 0.76 � USD spot aluminium prices have risen 0.74 4% since June 2016 0.72 � Depreciating NZD USD cross rate, down 0.70 3% since June 2016 0.68 � Meridian’s modelling suggests smelter 0.66 remains cash positive after stay-in- 1 Jul 16 1 Aug 16 1 Sep 16 1 Oct 16 1 Nov 16 1 Dec 16 1 Jan 17 business capex source: Thompson Reuters MERIDIAN ENERGY LIMITED Interim results presentation for the six months ended 31 December 2016 9
22 FEBRUARY 2017 Wholesale and generation � Stay in business capital spend of $19m in 1H FY2017 � Six year, $41m refurbishment programme on Ōhau stations commenced � Record level of New Zealand generation for a six month period, 34% average generation market share � 19% increase in Australian generation volumes � NZ inflows 96% of historical average in 1H FY2017 � Meridian’s January 2017 monthly inflows were 123% of historical average � Meridian’s Waitaki catchment storage sat at 118% of historical average at the end of January 2017 MERIDIAN ENERGY LIMITED Interim results presentation for the six months ended 31 December 2016 10
22 FEBRUARY 2017 Retail � Segment EBITDAF increased $1m (2%) in 1H FY2017 � Despite 12% decline in retail contracted sales volumes � Impact of a wet spring and timing of corporate customer churn reduced contracted sales � Some offset from a 22% increase in SMB sales MERIDIAN RETAIL Dec 16 Dec 15 Dec 14 � January shows a more normal Time to answer (seconds) 26 30 93 6 month avg irrigation load and impact of recent New customer retention 1 84% 83% NM 3 6 month avg large corporate signings Cost to serve per customer 2 $144 $146 $142 6 month cost � Customer acquisition pressure Overdue debt > 30 days 3.3 4.1 5.1 $m managed within declining segment Non payment disconnections 6 month total 370 749 1,524 operating costs in 1H FY2017 E-billing takeup 71% 54% 50% as 31 Dec � 48% increase in Powershop 1 First six months of customer life Australia sales volumes 2 Excluding metering costs and including allocation of corporate costs 3 Not measured MERIDIAN ENERGY LIMITED Interim results presentation for the six months ended 31 December 2016 11
Recommend
More recommend
