About Mighty River Power
Slide 2
Flexible portfolio of electricity generation assets in New Zealand – hydro (1040MW), geothermal (387MW; 267MW equity interest), gas-fired co-generation (175MW). 90% renewable generation, with major geothermal share Generation assets located in the upper North Island, close to the major industry and residential load centres 402,000 retail customers with our brands, Mercury Energy, BOSCO Connect and Tiny Mighty Power. Top 10 global geothermal business – leveraging this expertise in US, Chile and Germany across 8 reservoirs
Actively pursuing future growth opportunities in geothermal generation and wind farm developments.
Highlights
Slide 3
$233.6m EBITDAF, a 22% increase on pcp NPAT up 15% to $85.2m. Underlying earnings of $88.7m, up 4% US$200m (NZ$260m) debt raised in USPP 3,504GWh total generation up 18%, with 69% increase in contribution from geothermal Geothermal 31% of generation, more than 400% up on 2007 15-year VAS, providing South Island energy hedge Retail expanded into new geographies; 49% growth in South Island sales International geothermal investment in 8 geothermal reservoirs across 3 countries $64.7m interim dividend, a 15% increase on pcp.
Financial highlights HY2011 ($m)
HY2010 ($m)
% Change
Energy Margin
340.8
278.7
+22
EBITDAF
233.6
191.2
+22
Underlying Earnings
88.7
85.5
+4
NPAT
85.2
73.9
+15
Dividend
64.7
56.2
+15
  Slide 4
Energy Margin and EBITDAF up 22%, primarily due to Nga Awa Purua geothermal plant commissioned in April 2010 Dividend up 15% on pcp (prior comparable period)
EBITDAF 260 250
12.4
240
1.4 18.3
4.4
230 220
33.7
210
$M
200
11.6
233.6
190 180 170
191.2
160 150 EBITDAF HY10 Hydro & Gas
Slide 5
Geothermal
Contracts
Sales
Other Income
Operating Expenses
EBITDAF HY11
22% increase in EBITDAF on 1H2010 Increase primarily driven by production new from Nga Awa Purua geothermal plant Increased customer sales offset by increases in operating expenses
Operating expenses 115 3.7
1.7 110 3.1
116.1
105
$M 9.8
100
97.8 95
OPEX HY10
Slide 6
Maintenance
Int'l Geo
Sales & Marketing
Other
OPEX HY11
Financial performance HY2011 ($m)
HY2010 ($m)
$m Change
% Change
FY2010 ($m)
EBITDAF
233.6
191.2
+42.4
+22
327.8
Depreciation and amortisation
-67.7
-57.7
-10.0
-98.7
Change in fair value of financial instruments
-10.2
-1.5
-8.7
8.0
-3.5
-15.0
+11.5
-31.3
4.0
0.0
+4.0
-22.0
-0.0
1.8
-1.8
-11.7
EBIT
156.2
118.8
+37.4
+31
172.1
Net interest expense
-33.5
-14.0
-19.5
+139
-30.7
Profit before income tax
122.7
104.8
+17.9
+17
141.4
Income tax expense
-37.5
-30.9
-6.6
+21
-56.8
85.2
73.9
+11.3
+15
84.6
Impairments Equity accounted earnings of interest in jointly controlled entities Equity accounted earnings of associate companies
NPAT
Slide 7
EBITDAF to NPAT 240 230
10.2
220 210 200 190
67.7
180 170 160 150
3.5
233.6
4.0
$m 140
33.5
130
120 110
37.5
100 90
80
85.2
70 EBITDAF HY11
Slide 8
Change in fair Deprecation & value of financial amortisation instruments
Impairments
Equity accounted earnings in jointly controlled entities
Net interest expense
Income tax
NPAT HY11
NPAT to Underlying Earnings HY2011 ($m)
HY2010 ($m)
% Change
FY2010 ($m)
NPAT
85.2
73.9
+15
84.6
Change in fair value of financial instruments
10.2
1.5
-8.0
Change in fair value of financial instruments of associate companies
-0.2
0.0
17.5
Change in fair value of financial instruments of interest jointly controlled entities
-5.9
0.0
21.3
3.5
15.0
31.3
-4.1
-4.9
-10.0
0.0
0.0
2.9
88.7
85.5
Impairments Income tax expense on adjustments Impact due to Legislative changes Underlying Earnings
Slide 9
+4
139.6
Capital Expenditure 400 350 300 250
$M
200 150
100 50 0 FY 2006 Reinvestment
Slide 10
FY 2007 Geothermal
FY 2008 Thermal
Hydro
FY 2009 Wind
FY 2010 Other new investment
FY 2011 Forecast Capex
Kawerau and Nga Awa Purua construction FY2007 – FY2010 No major domestic projects under construction FY2011 $1 billion new geothermal investment FY2006 – FY2010
Debt maturities (current) 400 350 300 250 $M
200 150
100 50 0 2025
2024
2023
2022
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
Facility Maturity
Slide 11
Average debt maturity profile 7.3 years at 31 December 2010, up from 5.4 at 30 June
Total debt facilities $1,210m with $985m drawn Next maturity is $200m retail bond in May 2013 and $150m bank facility in Dec 2013 Credit rating BBB+
Generation portfolio 4,000 3,500 3,000 2,500
GWh
2,000 1,500 1,000 500 0 1HY2007
1HY2008 Geothermal
  Slide 12
1HY2009 Co-generation
1HY2010 Hydro
1HY2011
Other
Geothermal 31% of generation, more than 400% up on same period in 2007 Company record production for half year
Generation flexibility 500
$180
450
$160
400
$140
350
$120
300 GWh
$100
250
$80
200
$60
150 100
$40
50
$20
0
$0 Jul
hydro
Slide 13
$/MWh
Aug
geo
Sep
swn
Oct
Hydro VWAP
Nov
Dec
Geo VWAP
SWN VWAP
Southdown (SWN) production for peak demand (Jul – Aug) and drought (Dec) High hydro (no SWN) during high inflows periods (Sep – Oct) High prices for Southdown in December drought Geothermal maintenance in September (high hydro offset)
Generation volumes HY2011
HY2010
%change
FY2010
Hydro (GWh)
2,209
2075
+6%
3,730
Geothermal (GWh)
1,092
646
+69%
1,562
204
228
-10.5%
504
0
10
-
16
3,504
2,959
+18%
5,812
Generation
Co-generation (GWh) Biomass (GWh)
Total (GWh)
Slide 14
Geothermal up 69% significant increase on HY2010 Hydro up on pcp but now only 63% of total generation Geothermal 31% of total
Carbon emissions HY2011
HY2010
% change
FY2010
249.1
192.9
+29%
418.8
Retail (kT)
35.8
36.0
-0.6%
60.5
Total (kT)
284.9
228.9
24.%
479.3
71.1
65.1
+9%
72.1
Generation (kT)
Generation carbon intensity (T/GWh)

Slide 15
Costs of carbon emissions covered by Projects to Reduce Emissions (PREs)
Portfolio dynamics 700
$120
600
$100
500
$80
400 GWh
$60
S/MWh
300 $40
200
$20
100 0
$0 Dec-2010
Nov-2010
Oct-2010
TPO Storage
Sep-2010
Aug-2010
Jul-2010
Southdown
Jun-2010
May-2010
Slide 16
Apr-2010
 
Mar-2010
Feb-2010
Jan-2010
Hydro
Wholesale Price - RHS
Wholesale prices negatively correlated to storage (Taupo, SI correlated in 2010)
Southdown production correlated to price (negatively correlated to storage)
Pricing HY2011 ($/MWh)
HY2010 ($/MWh)
$/MWh change
% change
Weighted Average Wholesale Price of Generation (GWAP)
$56.24
$52.79
$3.45
+6.5%
Weighted Average Purchase Cost (LWAP)
$58.54
$50.33
$8.21
+16.3%
$108.63
$100.54
$8.09
+8.0%
1.04
0.95
Weighted average sales price (FPVV) LWAP/GWAP ratio
 
Slide 17
Average sales price increase ($8.09/MWh) similar to purchase cost LWAP ($8.21) LWAP/GWAP ratio change reflects need to move high hydro inflows, and increased base-load geothermal generation from Nga Awa Purua. HY2010 was an outlier relative to long-term trend of 1.03
Sales HY2011
HY2010
402,000
400,000
Residential FPVV
1,445
Commercial FPVV Spot
Electricity Customers
Change (GWh)
Change (%)
1,379
66
4.8
1,085
1,106
-21
-1.9
1,098
1,035
63
6.0
512
556
-44
-7.9
Electricity sales (GWh)
Net CFD
  Slide 18
Held market share around 20% in highly competitive environment Expanded retail offer into new areas including Nelson, Invercargill, Wairarapa, Marlborough, North Canterbury
South Island retail growth 3,000.0
2,500.0
2,000.0
1,500.0
North Island South Island
1,000.0
500.0
0.0 HY09
Slide 19
HY10
HY11
South Island Fixed Price sales grew to 336GWh, up 67% from HY10 and up 510% since HY09 39,000 South Island customers, 10% of total customers South Island Fixed Price sales volumes are 13% of total Fixed Price sales
Purchases HY2011
HY2010
Change (GWh)
Change (%)
Electricity total NZEM (GWh)
3,797
3,697
100
2.7
Total generation production
3,504
2,959
545
18
Retail (PJ)
0.62
0.74
-16
Cogeneration (PJ)
2.05
2.30
-11
$7.7
$6.8
13
Purchases
Gas purchases
($/GJ)
Slide 20
Generation production grew faster than sales – reflecting sales drive in 2009/2010 ahead of Nga Awa Purua commissioning Gas volumes down due to lower Southdown use – gas costs up 13%
Domestic growth opportunities
Nga Awa Purua 140MW
- Commissioned April 2010 - achieving world-leading 96% availability after start-up
Ngatamariki
-
Slide 21
consented May 2010 focus on commercial considerations – including equipment procurement Earliest commissioning late 2013
International geothermal investments
Slide 22
Mighty River Power top 10 global geothermal operator US$250 million committed capital to partner GeoGlobal Energy (GGE) Good international geothermal growth opportunities Leveraging existing rare competencies in geothermal GGE has significant development pipeline – 3 countries, 8 reservoirs US$124 million deployed from US$250 million commitment Hudson Ranch I, California:
-
Majority shareholding of US$400m project 49.9MW under construction
On track to commissioning early 2012 US$92m of $107m commitment deployed.
International geothermal investments

Tolhuaca, Chile:
-

Weilheim, Germany:
-
Slide 23
Slim-hole drilling confirmed high temperature resource Preparation for production-scale drilling, due to start 2011 US$17m of $66m commitment deployed.
German Govt renewable energy policy Targeting low temperature geothermal resources
Two concessions acquired in Bavaria Geophysical surveys of Weilheim prospect US$11m deployed.
Strategy and outlook
$1 billion investment over 5 years contributing to strong EBITDAF result Benefit of full-year contribution from Nga Awa Purua; geothermal now over 30% Hydro only 63%; portfolio optimisation by Southdown Domestic development options:
-
Slide 24
Ngatamariki: commercial arrangements, procurement negotiations; earliest commissioning late 2013 Turitea: draft consent, 10-year lapse period; firm option to add wind
International geothermal – active pipeline of projects through GGE, not limited by domestic demand Focus on water policy – investor certainty, strategic resource for NZ Improved outlook for FY2011, EBITDAF guidance lifted from $391 million to $420-435 million
Questions?
Slide 25