Interim Results Briefing to Banks & Institutional Investors
26 February 2010
Half Year Profitability 125
100
75 $M 50
25
0 2000
2001
2002
2003
Net Profit after Tax
ƒ
Slide 2
2004
2005
2006
2007
2008
2009
2010
Underlying Earnings after Tax
Depreciation & amortisation has risen from $39.6m in 2008 to $51.8m in 2009, following the commissioning of Kawerau , to $ $57.6m in 2010 due to the revaluation of Kawerau.
Half Year EBITDAF & Operating Cash Flow 250
200
150 $M 100
50
0 2000
2001
2002
2003 EBITDAF
ƒ Slide 3
2004
2005
2006
2007
2008
2009
2010
Operating Cash Flow
2010 operating cash flow impacted by changes in provisional tax payments dates. Two payments were made ,one for the prior tax year (high profits) and one for current tax year. compared to one in prior periods.
Energy Margin
$M
600
60%
500
55%
400
50%
300
45%
200
40%
100
35%
0
30% 2000
2001
2002 Full Year
ƒ
Slide 4
2003
2004
2005
Half Year
2006
2007
2008
2009
2010 Interim
% Half Year to Full Year
Energy Margin represents sales less lines & metering costs, energy costs, market fees & levies , transmission connection costs and debtor and billing related costs
Energy Margin 65 60 55 50 $M $
45 40 35 30 25 20 Jul
Aug
Sep
Oct
Year to June 2008
Slide 5
Nov
Dec
Jan
Year to June 2009
Feb
Mar
Year to June 2010
Apr
May
Jun
Generation Portfolio Performance 31 December 08 GWh Geothermal
GWh
Share %
Variance GWh
%
628
18.0
640
21.7
12
1.9
2,595
74.4
2,075
70.3
(520)
(20.0)
244
70 7.0
228
77 7.7
(16)
(6 6) (6.6)
20
0.6
10
0.4
(4)
(23.5)
Total
3,487
100.0
2,953
100.0
(528)
(15.2)
Renewable Portfolio
3,223
92.5
2,715
91.8
(508)
(15.8)
Hydro Co-Gen Bio-energy
Slide 6
Share %
31 December 09
Generation Portfolio Performance 31 December 2008 3,487 GWh
31 December 2009 2,953 GWh
0% 8%
1%
0%
7%
8% 22%
18%
22%
70% 70%
74%
Hydro
Slide 7
Geothermal
Thermal
Biomass
4,500
500
4,000
450
3 500 3,500
400 350
3,000
300
2,500
250
2,000
200
1,500
150
1 000 1,000
100
500
50
0
M Mean Storage St (LHS) Slide 8
Daily Spot Price e ($/MWh))
Natio onal Stora age (GWh)
National Market Conditions
0
N ti National l Storage St (LHS)
B Benmore (RHS)
Wh k Whakamaru (RHS)
Mighty River Power Portfolio 600
450
Taupo Storrage (GWh) T
350
400
300 250
300
200 150
200
100
100
50
0
0
Waikato Generation (RHS) Taupo Storage (LHS) Slide 9
SWN Generation (RHS) Whakamaru (RHS)
Dailyy Spot Pricce ($/MWh h)
400
500
Generation Volumes & Yields 31 December 2008 GWh
VWAP/TWAP
GWh
$/MWh
VWAP/TWAP
– Kawerau
365
374
– Rotokawa
148
149
– Mokai
115
117
Geothermal
628
58.53
0.94
640
43.41
0.99
2 595 2,595
70 69 70.69
1 13 1.13
2 075 2,075
53 02 53.02
1 20 1.20
Co-Gen
244
112.86
1.71
228
77.49
1.65
Biomass
20
70.10
1.02
10
47.02
0.99
3,487
71.46
2,953
52.83
Hydro
Total
Slide 10
$/MWh
31 December 2009
500
200
450
150
400
100
350
50
300
0
250
-50
200
-100
150
-150
100
-200
50
-250
0
Net Po osition (Avverage MW W)
250
Net Position (LHS)
Slide 11
Average short position Jul – Dec 2009: 450GWh
Whakamaru (RHS)
Dailly Spot Priice ($/MW Wh)
Net Position
Retail Market Share
Slide 12
Retail Volumes & Yield 31 December 2008 GWh
$/MWh
31 December 2009 GWh
$/MWh
Sales Residential FPVV
1,193
102.8
1,379
105.9
Other FPVV
930
94 5 94.5
1 123 1,123
93 6 93.6
Spot
958
68.1
1,035
47.8
Contracts for Difference
791
553
Purchases Total NZEM Purchases
ƒ
Slide 13
3,209
Purchase VWAP/TWAP 2008: 1.11; 2009:1.10
74.0
3,638
50.3
Capital Expenditure 300
250
200 $M 150
100
50
0 2001
2002
Reinvestment
Slide 14
2003
2004
Geothermal
2005
Thermal
2006
Hydro
2007
Wind
2008
2009
2010 Interim
Other new investment
Slide 15
Net Debt & Total Assets 4,500 4,000 3,500 3,000 $M
2,500 2,000 1,500 1,000 500 0 2000
Slide 16
2001
2002
2003
2004
Total Assets
2005
2006
Net Debt
2007
2008
2009
2010 Interim
2005 – Generation assets revaluation, 2008 – Hydro and Co-generation asset revaluation, 2009 – Kawerau asset revaluation S&P confirmed BBB+ credit rating during annual review in December
Debt Maturity Profile 1,400 1,200 1 000 1,000
$M
800 600 400 200
Jan 21
Jan 20
Jan 19
Jan 18
Jan 17
FRN $300m
Yr10 Bond $30
7Yr Bond $120m
5+5 $200m
Bank Debt $150m
$250m RCAF
Bank Debt $30m
US$ 8m
Two year facility will eventually be replaced by DCM issue Continued focus on long duration debt Slide 17
Jan 16
Jan 15
Jan 14
Jan 13
Jan 12
Jan 11
Jan 10
0
Drawn debt at 31December 2009 - $860m $400m of debt raised over last six months
Ministerial Inquiry
Supportive of reforms particularly
• • •
Change in governance arrangements (EA, CCom) Increases in contract market liquidity
Too early to ascertain effect of physical/virtual asset swaps
• •
Slide 18
Preservation of the market model
Virtual swap terms still to be negotiated Uncertain impact p of swaps p on security/retail y competition p
Retail Pricing
ETS impacts post July 2010 introduction
• •
Slide 19
Expect flow-on effect on retail prices due to wholesale price uplift p
Retail acquisition remains profitable over customer life-cycle
• •
$25/tonne CO2 cap; $ p; 50% liabilityy on emissions until Dec 2012
Most competitive retail landscape since Empower days Hedge for expanding geothermal portfolio
Rising gas prices create upward pressure on wholesale price Expectations of long-term forward pricing needs to be at a level to justify new investment
Questions
Slide 20