2020 interim results presentation · pdf file 2020 interim results presentation. 5 dividends...

2020 Interim Results Presentation

26 FEBRUARY 2020

2020 INTERIM RESULTS PRESENTATION 226 FEBRUARY 2020

Progress on strategy

2020 INTERIM RESULTS PRESENTATION 326 FEBRUARY 2020

Progress on strategy

4

Financial performance

2020 INTERIM RESULTS PRESENTATION26 FEBRUARY 2020

5

Dividends

 Interim ordinary dividend declared of 5.70 cps, 86% imputed, unchanged from 1H FY19

 Capital management interim special dividend of 2.44 cps, unimputed

 Capital management distributions to $625M since the programme began in August 2015

 Ordinary dividend and capital management update later in 2020

Dividends declared 1H FY20 1H FY19

cents per share imputation cents per share imputation

Ordinary dividends 5.70 86% 5.70 86%

Capital management special dividends 2.44 0% 2.44 0%

Total 8.14 8.14

Source: Meridian

2020 INTERIM RESULTS PRESENTATION

5.10 5.33 5.38 5.70 5.70

2.44 2.44 2.44 2.44 2.44

7.54 7.77 7.82 8.14 8.14

0 1 2 3 4 5 6 7 8 9

10

2015 2016 2017 2018 2019

CPS

Six Months ended 31 December

Interim dividend declared Ordinary dividend Special dividend Total

26 FEBRUARY 2020

598

510

+30

+49

+8

-85 +92 -67 +65 -3 -1

300

400

500

600

700

Energy Margin 31

Dec 18

Res, SMB, Agi sales

C&I sales NZAS sales Generation spot

revenue

Cost to supply

customers

Derivative sales and purchases

Cost of derivative sales and purchases

Net VAS Other Energy Margin 31

Dec 19

$M New Zealand energy margin movement

6

New Zealand energy margin

 Customer and sales volume growth across all segments

 Mass market average price flat, upward price pressure in corporate

 Financial contract, spot generation and hedging revenues all reflected lower wholesale prices

 Those lower prices also reduced costs in the portfolio

 Higher net physical and lower net financial positions

Refer to pages 38-39 for a further breakdown of New Zealand energy margin

Source: Meridian

2020 INTERIM RESULTS PRESENTATION

Physical +$94M

Financial -$5M

26 FEBRUARY 2020

New Zealand customers

 5% sales volume growth in residential and 10% in small medium business while maintaining average sales price

 Residential, business, agri revenue increased $30M (13%)

 39% growth in corporate sales volume at a 13% higher average sales price

 Corporate sales revenue increased $49M (57%)

 Powershop was the top ranked electricity provider in Consumer NZ’s annual survey

 Meridian was the top ranked large retailer

Customer sales Customer numbers (ICPs)

Sales volume (GWh)

Average price ($/MWh)

1H FY20

Residential 205,712 801

Small medium business 42,308 546

Agricultural 40,661 592

Large business 21,605 248

Total Residential/SMB 310,286 2,187 $116

Corporate 3,313 1,474 $93

1H FY19

Residential 198,740 762

Small medium business 38,781 496

Agricultural 37,978 455

Large business 18,658 223

Total Residential/SMB 294,157 1,936 $116

Corporate 2,426 1,063 $82

72020 INTERIM RESULTS PRESENTATION26 FEBRUARY 2020

57 44

93 124

101

0

50

100

150

2015 2016 2017 2018 2019

$/MWh

Six Months ended 31 December

NZ average generation priceNew Zealand generation

 Record levels of hydro and wind generation for a first half financial year

 Major flood event in early December 2019 lifted Meridian’s 1H FY20 inflows to 136% of average

 Some moderation in wholesale prices during 1H FY20, concerns around gas supply remain

 Major outages on the HVDC between January and April 2020 for reconductoring and replacement works

 Meridian’s North Island position managed through wind generation and financial contracting

 Actual level of HVDC transfer depends on North Island reserve availability and pricing

Source: Meridian

82020 INTERIM RESULTS PRESENTATION26 FEBRUARY 2020

Source: Transpower

0

200

400

600

800

1,000

1,200

1,400

1 Jan

8 Jan

15 Jan

22 Jan

29 Jan

5 Feb

12 Feb

19 Feb

26 Feb

4 Mar

11 Mar

18 Mar

25 Mar

1 Apr

8 Apr

15 Apr

22 Apr

29 Apr

MW 2020 HVDC capacity

Pole 2 Out DC Max: 780MW

Earth Electrode Out

DC Max: 400MW

Pole 3 Out DC Max: 500MW

today

9

Australian customers

 Electricity and gas customer growth in all states and white label channels

 Reported average electricity sales price decline reflects higher amounts paid to customers for solar export

 Average gas sales price decline reflects competitive repositioning

 Powershop Australia winner of Roy Morgan’s Electricity Provider of the Year

Source: Meridian

2020 INTERIM RESULTS PRESENTATION

-500

500

1,500

2,500

3,500

4,500

5,500

Jan-17 Jun-17 Nov-17 Apr-18 Sep-18 Feb-19 Jul-19 Dec-

Powershop Australia net customer changes

electricity gas

26 FEBRUARY 2020

6566

+6 +10 -11

-12 +19 -13

0 10 20 30 40 50 60 70 80 90

Energy Margin 31

Dec 18

Electricity sales

Gas sales Generation spot revenue

Cost to supply

customers

Derivative sales and purchases

Cost of derivative sales and purchases

Energy Margin 31

Dec 19

$NZ M Australian energy margin movement

10

Australian energy margin

 Electricity and gas sales have lifted physical margin

 Drought conditions and wind farm availability impacted total generation, 13% lower than 1H FY19

 Higher net financial position

Physical -$7M

Financial +$6M

Refer to page 40 for a further breakdown of Australian energy margin

Source: Meridian

2020 INTERIM RESULTS PRESENTATION26 FEBRUARY 2020

48 50

25 20

44

49

24 18

0

10

20

30

40

50

60

NZ Wholesale NZ Retail Australia Other

$M

Six Months ended 31 December

Operating costs

2019 2018

11

Operating costs

 Operating costs 6% higher in 1H FY20  Ōhau refurbishment programme expanded,

now $75M (multi-year opex and capex) and allows a 10-year deferral of other works

 Growth in Flux UK spend, revenue recovery  FY20 operating costs expected at the top of

the $280M to $286M range previously indicated

 FY20 capex expected at the lower end of the $70M to $80M range previously indicated

 IFRS 16 reduction in full year FY20 operating costs of $6M (compared to FY19)

 Offsetting increase in lease costs and depreciation (below EBITDAF)

Source: Meridian

Total 31 December 2019 $143m Total 31 December 2018 $135m

2020 INTERIM RESULTS PRESENTATION26 FEBRUARY 2020

465

389

+88 -1 -3

-8

200

300

400

500

EBITDAF 31 Dec 18

NZ energy margin

Aus energy margin

Other revenue Transmission expenses

Operating expenses

EBITDAF 31 Dec 19

$M Group EBITDAF movement

12

EBITDAF  Record level of 1H FY20 EBITDAF1, +20% on

1H FY19 supported by higher customer sales  Higher asset maintenance/refurbishment costs

and lower Australian generation  Transmission costs include $5M Clutha Upper

Waitaki Lines Project support  Lower 2H FY20 wholesale prices and HVDC

outages will weigh on NZ earnings run rate

Source: Meridian

2020 INTERIM RESULTS PRESENTATION

332 354 329 389 465

318 303 337 449

650 657 666

838

0

200

400

600

800

1,000

2016 2017 2018 2019 2020

$M

Financial Year ended 30 June

Group EBITDAF Interim Final half-year Total

Source: Meridian

26 FEBRUARY 2020

1Earnings before interest, tax, depreciation, amortisation, changes in fair value of hedges and other significant items

0

122 131 104 144

184

111 90 102

189 233 221 206

333

0

100

200

300

400

2016 2017 2018 2019 2020

$M

Financial Year ended 30 June

Underlying npat Interim Final half-year Total

13

Below EBITDAF

1Net profit before tax 2Net profit after tax adjusted for the effects of non-cash fair value movements and other one-off items

Source: Meridian

 15% increase in depreciation from June 2019 revaluation (+$1B)

 $6M decrease in NPBT1 from fair value of electricity hedges from changing forward electricity prices ($20M increase in 1