Mighty River Power IPO Roadshow

Page 1

April 2013


Mighty River Power Disclaimer and Important Information You must read the following notices before reading or making any use of this presentation or any information contained in this presentation. By continuing to read, use or otherwise act on this presentation, you agree to be bound by the following terms and conditions, including any modifications to them. Mighty River Power Limited (the Company) and Her Majesty the Queen in Right of New Zealand (the Crown) have registered a combined Investment Statement and Prospectus dated 5 April 2013 (Offer Document) in relation to an initial public offering of fully paid ordinary shares in the Company, a copy of which can be obtained from within New Zealand at www.mightyrivershares.govt.nz.

Application has been made to NZX Limited (NZX) for permission to list the Company and to quote its shares on the NZX Main Board and all the requirements of NZX relating thereto that can be complied with on or before the date of this presentation have been duly complied with. However, NZX accepts no responsibility for any statement in this presentation. NZX has authorised NZX Firms to act on the Offer. The NZX Main Board is a registered market operated by NZX, which is a registered exchange, regulated under the Securities Markets Act 1988. This presentation includes certain prospective financial information, which is also contained in the Offer Document. The principal assumptions and method of calculation of the prospective financial information included in this presentation are set out in the Offer Document. The Offer Document sets out a full statement of any tax advantages of holding shares in the Company. This presentation may not be distributed to, or relied upon by, persons in the United States. In particular, the securities of the Company have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the US Securities Act), or the securities laws of any state of the United States and may not be offered or sold in the United States unless such securities are registered under the US Securities Act, or an exemption from the registration requirements of the US Securities Act and applicable US state securities laws is available. Investors in the United States are hereby notified that the sellers of the shares in the Company may be relying on the exemption from registration provided by Rule 144A of the US Securities Act. If you are in the United States, you represent and warrant that you are either (i) a “qualified institutional buyer” as defined in Rule 144A under the US Securities Act or (ii) a dealer or other professional fiduciary organised, incorporated or (if an individual) resident in the United States that is acting for an account (other than an estate or trust) held for the benefit or account of persons that are not “U.S. persons” (as defined by Regulation S under the US Securities Act) for which it has, and is exercising, investment decisions, within the meaning of Rule 902(k)(2)(i) of Regulation S under S under the US Securities Act. Securities of the Company may not be offered or sold in any jurisdiction where it is unlawful to do so. Neither the Crown nor any other person guarantees the shares, the Company or any obligations of the Company. The information in this presentation is of a general nature and does not constitute financial product advice, investment advice or any recommendation. Nothing in this presentation constitutes legal, financial, tax or other advice. The information in this presentation does not take into account the particular investment objectives, financial situation, taxation position or needs of any person. You should make your own assessment of an investment in the Company based on the Offer Document and should not rely on this presentation. In all cases, you should conduct your own research on the Company and analysis of any offer, the financial condition, assets and liabilities, financial position and performance, profits and losses, prospects and business affairs of the Company and its business, and the contents of this presentation. You should seek legal, financial, tax and other advice appropriate to your jurisdiction. All dollar values contained in this presentation are in New Zealand dollars (NZ$) unless otherwise stated.

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Mighty River Power Disclaimer and Important Information Confidentiality This presentation is confidential. You must not copy this presentation or reproduce or distribute it, in whole or in part. By accepting or viewing this presentation you acknowledge and agree to the foregoing and that this presentation and all of the information contained in it is confidential information of the Company and the Crown which is materially price sensitive. You agree that you will (i) keep strictly confidential this presentation and all confidential information contained in it and all other information made available to you in connection with it and (ii) not do anything to cause or constitute a breach of the insider trading provisions of any applicable jurisdiction. Distribution Distribution of this presentation outside New Zealand may be restricted by law. Persons who come into possession of this presentation who are not in New Zealand should seek advice on and observe any such restrictions. Any failure to comply with such restrictions may constitute a violation of applicable securities laws. No action has been taken to register any securities outside New Zealand. Financial Information The forecast financial information provided in this presentation is based on certain assumptions and accounting policies and is subject to certain risks, as fully identified in the Offer Document. There is no guarantee that forecasts will be achieved. You should be aware that certain financial data included in the presentation are “non-GAAP financial measures” under Regulation G of the United States Securities Exchange Act of 1934, as amended, including “EBITDAF” and “underlying earnings”. The disclosure of such non-GAAP financial measures in the manner included in the presentation would not be permissible in a registration statement under the US Securities Act. These non-GAAP financial measures do not have a standardized meaning prescribed by International Financial Reporting Standards and therefore may not be comparable to similarly titled measures presented by other entities, nor should they be construed as an alternative to other financial measures determined in accordance with International Financial Reporting Standards. Although the Company believes these non-GAAP financial measures provide useful information to users in measuring the financial performance and condition of the business, you are cautioned not to place undue reliance on any non-GAAP financial measures and ratios included in this presentation. Forward-Looking Statements Certain statements, beliefs and opinions contained in this presentation, particularly those regarding the possible or assumed future financial or other performance of the Company, industry growth or other trend projections are or may be forward looking statements. Forward-looking statements can be identified by the use of forward-looking terminology, including, without limitation, the terms “believes”, “estimates”, “anticipates”, “expects”, “predicts”, “intends”, “plans”, “goals”, “targets”, “aims”, “outlook”, “guidance”, “forecasts”, “may”, “will”, “would”, “could” or “should” or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors because they relate to events and depend on circumstances that may or may not occur in the future and may be beyond the Company‟s ability to control or predict which may cause the actual results or performance of the Company to be materially different from the results or performance expressed or implied by such forward-looking statements. Forward-looking statements are based on assumptions and are not guarantees or predictions of future performance. No representation is made that any of these statements or forecasts will come to pass or that any forecast result will be achieved. Similarly, no representation is given that the assumptions upon which forward-looking statements may be based are reasonable. Forward-looking statements speak only as at the date of this presentation. The forward-looking statements contained in this presentation should be read in conjunction with, and are qualified by reference to, the risk factors set out in Section 5 of the Offer Document as well as the other information in the Offer Document.

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Mighty River Power Disclaimer and Important Information Rating This presentation includes a rating of the Company by Standard & Poorâ€&#x;s Rating Service. A security rating is not a recommendation to buy, sell or hold securities in so far as such rating does not comment as to market price or suitability for a particular investor. There is no assurance that any rating will remain in effect for a given period of time or that any rating will not be revised or withdrawn entirely by a rating agency in the future if in its judgment circumstances warrant. The Company and the Crown are under no obligation to update information regarding such rating should it change over time .

Industry Information The Industry section in this presentation provides an overview of the New Zealand electricity industry generally and contains information which has been sourced from the New Zealand Government and its agencies, including the Electricity Authority, Statistics New Zealand, the National Infrastructure Unit, Transpower, NZX and the Ministries of Business, Innovation and Employment, and the Environment. How these general features of the industry affect the Companyâ€&#x;s business and an investment in shares of the Company is described further in the Offer Document. Representations, Warranties and Acknowledgements By accepting this presentation, you acknowledge and agree that you understand the contents of this notice and that you agree to abide by its terms and conditions. You acknowledge that neither you nor the Company be responsible as a fiduciary to you, your officers, employees, consultants, agents, security holders, creditors or any other person. Each recipient expressly disclaims any fiduciary relationship. Neither this presentation nor the Offer Document contain any statements made by the Joint Lead Managers and to the maximum extent permitted by law each Joint Lead Manager (its related companies and each of their respective directors, officers, employees and agents) expressly disclaims all liability under this presentation and the Offer Document, including without limitation for any false, misleading or deceptive statements, including by omission made in the presentation or in the Offer Document.

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Mighty River Power

Agenda Introduction Industry About Mighty River Power Financial Information Key Risks Offer Details

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Introduction Summary Of The Offer The Crown is selling up to 49% of Mighty River Power » IPO consists of up to 686 million shares Indicative Price Range of $2.35 - $2.80 per share

» Final Price may be above, below or within the indicative price range Indicative forecast FY14 Cash Dividend Yield1 of 4.6% – 5.5% per share » Fully imputed forecast FY14 Gross Dividend Yield 2 of 6.4% – 7.7% per share Incentives for New Zealand retail investors » Guaranteed allocation » Allocation preference for pre-registrants » Loyalty bonus shares if shares held for 24 months

Crown must continue to hold 51% - required by New Zealand Public Finance Act and Company Constitution Bookbuild conducted from 7 – 8 May 2013 1. 2.

Calculated as dividends per share for the forecast financial year divided by the Indicative Price Range Calculated as dividends per share for the respective financial year, grossed up for imputation credits expected to be attached for the dividend, divided by the Indicative Price Range

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Introduction About Mighty River Power One of New Zealand‟s largest electricity companies » Estimated market capitalisation of $3,290 - $3,920 million3 » Generates 17% of New Zealand‟s electricity4 » Supplies nearly 1-in-5 New Zealand homes and businesses5 Diversified and flexible generation portfolio » 90%+ of generation from renewable sources6

» Steady base-load geothermal, flexible hydro and gas-fired generation Investment track record and geothermal expertise » Geothermal energy provides 30% of generation output7, expected to increase to 40% with new Ngatamariki power station » Measured approach to international geothermal development opportunities Generating results » Forecast FY2014F EBITDAF of $497.9 million with assumed contribution from new Ngatamariki power station » Forecast indicative cash dividend yield of 4.6% - 5.5%8 for FY2014F Experienced Board and Management 3. 4. 5. 6. 7. 8.

Calculated as the number of Shares on issue following the Offer multiplied by the Indicative Price Range. Shares may trade within, above or below the Indicative Price Range following compl etion of the Offer Based on equity weighted generation volumes for the year ended 31 December 2012 Based on aggregated residential and business installation control points as at 31 December 2012 The proportion of total equity weighted New Zealand generation for the year ended 31 December 2012 that is generated by a renewable resource, based on Mighty River Power‟s percentage ownership of each power station For the year ended 31 December 2012 Calculated as Dividends per Share for the forecast financial year divided by the Indicative Price Range

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Introduction Historical And Prospective Financial Performance Historical And Prospective EBITDAF

$m

$m 600

180 160 140 120 100 80 60 40 20 0

$498m

$462m

$443m

500 400

Historical And Prospective Net Profit

$383m $328m

300 200 100 0 2010

2011

2012

2013F

$160m $127m

$68m

2010

2014F

$95m

$85m

2011

Financial Year

Historical And Prospective Operating Cash Flow

$m $163m

2014F

Financial Year

Historical And Prospective Underlying Earnings $162m

2013F

Impacted by fair value accounting of interest rate swaps and depreciation impacts of $2.3b of revaluations

FY2013F assumed impacted by GGE transactions and FY2014F assumed to benefit from Ngatamariki

$140m

$328m

350

$159m

$293m

300

$138m

250

$277m

$267m

2012

2013F

$200m

200

$m

180 160 140 120 100 80 60 40 20 0

2012

150 100 50 0

2010

2011

2012

2013F

2014F

Financial Year

FY2014F assumed to be impacted by non-cash accounting for jointly controlled entities

2010

2011

2014F

Financial Year

FY2014F assumed to benefit from Ngatamariki

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Introduction Historical And Prospective Dividends

Targeted dividend pay-out ratio of 90 – 110% of adjusted net profit after tax Mighty River Power revalues its assets in accordance with Crown Policy

Historical And Prospective Declared Dividend Per Share cents

$1.4 billion in geothermal investment since FY2006

14

12.0

12 10

Expected dividends per share forecast to increase 52% from FY2012 to FY2014

13.0

8

7.9

8.6

6.2

6 4

Dividends declared in FY2013 and FY2014 expected to be fully imputed Âť Supplementary dividends paid to foreign investors

2 0 2010

2011

2012

2013F

2014F

Financial Year

8 8


Mighty River Power Share Offer

Industry

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Industry New Zealand Regulatory Framework Framework has been fairly settled since 1999 after a period of significant reform in mid to late 1990s » regional electricity retail and distribution monopolies dissolved in April 1994

» Contact Energy commences trading as a state-owned generator in 1996, competing against the Electricity Corporation of New Zealand (ECNZ) » wholesale electricity market established in 1996, allowing prices to be set through a competitive bidding process » Electricity Industry Reform Act 1998 passed, requiring separation of distribution businesses from generation and retail businesses

» ECNZ split into 3 competing state-owned generators and retailers – Mighty River Power, Genesis Energy and Meridian Energy in 1999 » Contact Energy privatised and listed with NZX in 1999

Resource Management Act regulates the use of natural and physical resources Independent Regulatory Agencies – Electricity Authority (EA), Commerce Commission » Electricity Industry Act provides framework for the regulation of the electricity industry » EA oversees the electricity market » Transmission Pricing Methodology, which is currently under review with potentially significant changes to the calculation and allocation of charges being proposed

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Industry New Zealand Electricity Sector

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Industry Competitive Landscape Five large integrated generator-retailers » collectively represented 94% of New Zealand‟s generated electricity in 2012 9 » provide retail services to approximately 94% of end-users by customer numbers (ICPs)10

Currently 100% owned by the Crown » Mighty River Power » Meridian Energy » Genesis Energy NZX Main Board listed » Contact Energy (CEN) » TrustPower (TPW)

9. Generation by plant operator for the year ended 31 December 2012 equity weighted to reflect Mighty River Power‟s percentage ownership 10. As at 31 December 2012

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Industry Market Dynamics – Demand Electricity consumption increased 1.8% per annum 1997 – 2007, since 2007 relatively flat demand with demand declining in four of the last five years Residential demand has been relatively steady over last five years, but industrial consumption has declined New Zealand Aluminium Smelters reduced demand for electricity in 2012 and parent company Rio Tinto announced a review of Tiwai Point operations » accounted for approximately 13% of national demand in 2012 » negotiations between Meridian and Pacific Aluminium are continuing

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Industry Market Dynamics – Supply New Zealand‟s installed generation capacity

» more than half of generation in 2012 was from hydro generation » 73% of generation in 2012 was from renewable sources – approximately 14% of generation in 2012 was from geothermal generation New Zealand does not directly subsidise renewable generation

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Industry Market Dynamics – Prices, Integration & Contracts Market mechanisms set a clearing price matching demand to supply Tendency for inverse correlation between hydrology and wholesale electricity prices » Hydro power stations have limited storage capacity as a result of lake sizes, regulated lake levels or minimum flow constraints Generation and retailing activities integrated » Retail electricity prices determined by competition » Typical retail contracts fixed price variable volume Derivative contracts also used to hedge the risk of wholesale price movements

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Mighty River Power Share Offer

About Mighty River Power

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16


About Mighty River Power Mighty River Power Timeline

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About Mighty River Power

Our Strategy Mighty River Power’s strategy is focused on leveraging our core competencies to target sustainable growth and maximise long-term shareholder value. Our two priorities are: 1. Maximising the value of the Companyâ€&#x;s domestic generation and electricity sales business within a defined risk framework 2. Securing economically attractive international geothermal development and domestic options and developing when appropriate

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About Mighty River Power Electricity Generation Diversified and flexible generation portfolio » more than 90% of our electricity production is from renewable sources11

» complementary fuel sources – steady base-load geothermal (30%), flexible hydro (64%) and gas fired generation (6%)12 HY2013 Operating costs » averaged less than $5/MWh13 for hydro, geothermal power stations less than $10/MWh14 compared to $110 to $120/MWh15 for Southdown, largely due to the cost of gas

GWh per annum

MIGHTY RIVER POWER GENERATION PRODUCTION16 Other Thermal Hydro Geothermal 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013F2014F Financial Year 11. The proportion of total equity weighted New Zealand for the year ended 31 December 2012 that is generated by a renewable resource, based on Mighty River Power‟s percentage ownership of each power station 12. For the year ended 31 December 2012 13. Hydro operating costs include any direct costs of sales including metering, divided by the hydro generation for the corresponding period in MWh 14. Geothermal operating costs include any direct cost of sales including metering, relative to geothermal generation for the corresponding period in MWh (consolidated) 15. Southdown operating costs include the cost of gas plus any other direct costs of sales including metering, divided by the thermal generation from Southdown for the corresponding period in MWh 16. Generation by plant operator for the year ended 31 December 2012 equity weighted to reflect Mighty River Power‟s percentage ownership

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About Mighty River Power Waikato Hydro System 100% own and operate nine power stations along the Waikato River Flexible – output can be increased or decreased very quickly and efficiently Holds or beneficially owns freehold title to the land on which its hydro power stations are built Consents expire in 2041, with the next possible review period in May to November 2013

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About Mighty River Power Waikato Hydro System The Waikato Hydro System typically supports generation of 4,000 GWh annually, ranging between 3,058GWh and 5,373GWh since FY1981 Maximum storage capacity of 569GWh (Lake Taupo only) and total operational capacity of 1,044MW Outside periods of severe drought, consent conditions require a minimum flow equivalent to approximately 7.5 GWh per day

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About Mighty River Power Geothermal Power Stations Reliable renewable geothermal generation – normally runs 24/7, operation not dependent on the weather 30% of annual generation in 2012, expected to increase to about 40% with new Ngatamariki power station

Strong long-term commercial partnerships with Maori landowners to develop and harness geothermal resources Resource consents generally for 35 year terms

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About Mighty River Power Gas-fired Generation 175 MW power station that is capable of producing up to 1,400 GWh per annum  Annual average production from 2008 – 2012 of 581 GWh Southdown used to respond to peaks in the wholesale spot market price and mitigates risks from reduced hydro production Use combination of fixed-term contracts and other short-term supplies

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About Mighty River Power Electricity Sales Supplies approximately 1 in 5 New Zealand homes and business17, selling to over 390,000 customers (ICPs) through its retail brands Actively manage sales book for value, rather than total customer numbers, by optimising across customer segments

24 17. Based on aggregated residential and business installation control points as at 31 December 2012

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About Mighty River Power Customer Brands Mercury Energy 94%+ of the companyâ€&#x;s electricity sales volume for 2012

Bosco Connect Niche utility retailer to apartment customers Over 10,000 customers18

Greater than 348,000 customers18 Glo-Bug Prepay service Over 17,000 customers18

Tiny Mighty Power Retail electricity into smaller regional towns Over 14,500 customers18

Metrix Aucklandâ€&#x;s largest meter asset owner Installed more than 300,000 smart meters in the greater Auckland area18 25 18. As at 31 December 2012

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About Mighty River Power Electricity Portfolio Management Integrated generation and sales channels manage earnings variability Flexible portfolio optimises use of water and gas through time versus wholesale market purchases Creates opportunities to be „short‟ or „long‟ to take advantage of market conditions

10

19

19. 18 October 2011 has been selected as an example to illustrate the workings of the portfolio and is not intended to be representative of a typical day

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About Mighty River Power Development Opportunities

Historical development Focus on geothermal production » Nga Awa Purua (commissioned in 2010), Kawerau (commissioned in 2008) and Ngatamariki (scheduled to be commissioned in mid 2013) represent one of the largest geothermal development programmes anywhere in world

Current development 82 MW Ngatamariki geothermal station » $475 million expected cost » Scheduled to be commissioned in mid-2013

Potential domestic opportunities New major developments unlikely in next 3 - 5 years Intention to continue to secure future options » Geothermal and wind

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About Mighty River Power International Development Opportunities

International Development History Invested in the GGE Fund in 2008 to pursue its international geothermal strategy Fund almost fully deployed by December 2012, and did not raise third party capital as planned » Cash distribution of NZ$140m (US$116m) received from United States investment in 2012 » Asset impairments of NZ$88.9m taken as at 31 December 2012

» Mighty River Power took direct ownership of interests in Chile and stake in EnergySource and exited management company

Current Investments United States - EnergySource have 49.9MW geothermal plant and potential new development underway Chile – three geothermal prospects Germany – five early stage development concessions (no on-going management)

New Investment Further development dependent on full assessment of projects and if risk adjusted returns will be met – no decisions currently made Prospective financial information assumes $166.4 million of international geothermal development over FY2013F and FY2014F

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About Mighty River Power Board Experienced Board with diverse experience in sector and in large leading NZX listed companies Average tenure of around five years Crown must approve the appointment of the Chair nominated by the Board Board has adopted best practice recommendations issued by NZX and ASX

Joan Withers CHAIR

Trevor Janes DEPUTY CHAIR

Dr Michael Allen

Prue Flacks

James Miller

Tania Simpson

Keith Smith

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About Mighty River Power Management Skilled senior management team with significant experience Board has confirmed Chief Executive Doug Heffernan will remain in the role until 31 August 2014, covering the 2014 Financial Year and Results » A recruitment process for the role of Chief Executive is expected to begin in late 2013 Total shareholder return based LTI plan in place for executive management team

Dr Doug Heffernan CHIEF EXECUTIVE

William Meek CHIEF FINANCIAL OFFICER

James Munro GM RETAIL

Matthew Olde GM BUSINESS STRATEGY & SOLUTIONS

Marlene Strawson GM HUMAN RESOURCES

Mark Trigg GM DEVELOPMENT

Fraser Whineray GM OPERATIONS

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Mighty River Power Share Offer

Financial Information

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Financial Information Funding Profile Standard & Poor‟s long term credit rating BBB+19 Prospective Net Debt as at 30 June 2013 of $1,134.5 million20

19. Mighty River Power‟s BBB+ rating includes a one notch higher rating to reflect S&P‟s view of the benefit of its 100% ownership by the Crown. In the absence of Crown support, S&P views Mighty River Power‟s stand-alone credit profile as 'bbb'. S&P has noted that the one notch higher rating is likely to be maintained while the Crown owns greater than 50% of the Company. Mighty River Power‟s long-term credit rating remains subject to change 20. Calculated as prospective loans less cash and cash equivalents and loan fair value adjustments forecast as at 30 June 2013

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Prospective Financial Information Historical and Prospective Income Statement

$ million

FY2012A

FY2013F

FY2014F

Sales

1,903.5

1,766.4

1,834.1

Less: line charges

(424.2)

(460.9)

(473.1)

Other revenue

41.3

35.2

24.4

Total revenue

1,520.4

1,340.7

1,385.4

Energy costs

(761.2)

(593.5)

(591.3)

Other expenses

(297.9)

(364.6)

(296.2)

Total expenses

(1,059.1)

(958.1)

(887.5)

461.5

382.6

497.9

(158.4)

(149.9)

(169.4)

(92.8)

27.1

31.7

(4.0)

(91.4)

-

2.8

2.4

2.6

Equity accounted earnings / (losses) of interest in JCEs

(27.7)

46.4

(12.7)

EBIT

181.5

217.2

350.1

Net interest expense

(72.6)

(57.7)

(92.3)

Income tax expense

(41.3)

(64.7)

(97.4)

67.7

94.8

160.4

EBITDAF Depreciation and amortisation Change in fair value of financial instruments Impaired assets Equity accounted earnings of associate companies

Net profit for the year

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Prospective Financial Information Historical and Prospective Income Statement – Impact of International Geothermal Accounting for international geothermal is impacted by complex accounting of ownership structures (largely non-cash) Forecast cash distributions from investments in EnergySource and the John L Featherstone power stations (JCEs) in FY2013F and FY2014F are approximately $1.0 million $ million

FY2012A

FY2013F

FY2014F

-

10.9

0.8

Total expenses

(21.7)

(79.2)

(10.4)

EBITDAF

(21.7)

(68.3)

(9.6)

(2.2)

(2.8)

(1.3)

-

(88.9)

-

(27.7)

46.4

(12.7)

0.9

-

-

(50.7)

(113.6)

(23.6)

-

(1.1)

-

(50.7)

(114.7)

(23.6)

-

11.7

(19.1)

(50.7)

(103.0)

(42.7)

Total revenue

Depreciation and amortisation Impaired assets Equity accounted earnings / losses of interest in JCEs Equity accounted earnings/losses of interest in associates EBIT Interest expense Profit before income tax Income tax expense Net profit for year

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Prospective Financial Information Prospective Operational Information

FY2012A Electricity Sales

FY2014F

VWAP21 ($/MWh)

Volume (GWh)

VWAP21 ($/MWh)

Volume (GWh)

VWAP21 ($/MWh)

Volume (GWh)

115.0

5,021

117

5,190

118

5,255

FPVV sales to customers22

Financial contracts Net Sell financial contracts23

Generation Hydro Gas Geothermal (consolidated)

FY2013F

24

Geothermal (equity accounted)24 Total Average forecast electricity price 25 21. Volume weighted average energy only price sold to FPVV customers after lines, metering and fees per month 22. The difference between fixed price variable volume (FPVV) sales to FPVV customers and FPVV purchases from market arises as a consequence of a number of factors, including distribution losses arising from energy used or lost in the transmission of electricity, and unaccounted for energy occurring as a result of incorrect billing or metering 23. Financial contracts in the context are electricity financial contracts, normally CFDs

Volume (GWh)

Volume (GWh)

Volume (GWh)

1,516

1,589

2,064

Volume (GWh)

Volume (GWh)

Volume (GWh)

4,294

3,928

3,900

589

418

359

1,946

1,843

2,560

239

244

241

7,068

6,433

7,060

$60 – 70 / MWh

$60 – 70 / MWh

24. Includes share of Nga Awa Purua geothermal power station generation on a equity weighted basis, based on Mighty River Power‟s percentage ownership of the Nga Awa Purua power station. Does not include any generation from activities outside New Zealand 25. On an equity weighted basis, based on Mighty River Power‟s percentage ownership of the Mokai geothermal power station through Tuaropaki Holdings Limited. Does not include generation from international activities 26. Rates as of end of the financial year except electricity price where it is an average of the financial year. Forecast time weighted average electricity price based on Whakamaru node

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Prospective Financial Information Prospective Capital Expenditure

$ million

FY2013F

FY2014F

Hydro

27.8

31.7

Geothermal

25.9

12.7

Other

18.5

27.2

72.2

71.6

184.3

2.2

4.8

16.5

Smart metering

12.3

12.8

International geothermal

70.4

96.0

Total new investment

271.8

127.5

Total capex

344.0

199.1

Reinvestment:

Total reinvestment capex New investment Ngatamariki Other project development

Lifecycle maintenance programme currently in a relatively high expenditure period Reinvestment capital expenditure was $73.8 million in FY2012 and $57.3 million in FY2011

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Prospective Financial Information Historical and Prospective Statement of Cash Flows

$ million

FY2012A

FY2013F

FY2014F

277.0

267.3

327.9

(291.6)

(171.1)

(224.8)

Net cash provided by/(used in) financing activities

27.8

(123.7)

(103.1)

Net increase/(decrease) in cash and cash equivalents held

13.2

(27.5)

0.0

Net cash provided by operating activities Net cash used in investing activities

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Key Risks Key Risks The availability of the fuel (mainly water, geothermal fluid and gas) that Mighty River Power requires to generate electricity may reduce for a wide number of reasons Mighty River Powerâ€&#x;s power stations may not be able to generate electricity as expected if they cannot operate in the normal manner or at all If the Tiwai Point aluminium smelter were to significantly reduce its electricity consumption or cease consumption altogether, the resultant drop in demand could lead to a sustained reduction in electricity prices in general The wholesale price at which Mighty River Power sells the electricity it generates, or buys electricity to sell to customers, is subject to significant variability and may be unfavourable The volume and price at which Mighty River Power is able to sell electricity to customers may be adversely affected by competitor behaviour, economic conditions, changes in customer demand or regulatory changes Investment in geothermal development activity requires significant early stage capital and may encounter unexpected delays, increased costs, a requirement to impair assets or not be commercially viable International geothermal development faces additional risks associated with operating in jurisdictions outside of New Zealand

Changes in the regulatory environment that adversely impact Mighty River Power A single (or multiple) catastrophic event generating losses not covered by insurance Insufficient access to future capital Treaty of Waitangi and other MÄ ori claims relating to ownership and governance of land, water and geothermal resources that directly or indirectly impose additional restrictions, conditions or additional costs

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Mighty River Power Share Offer

Offer details

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Offer Details

Key Offer Terms Offer

• Offer by the Crown of ordinary shares in Mighty River Power Limited

Offer Size

• Up to 686 million existing shares (49%) including loyalty bonus shares

Offer Components

• General Offer • Institutional Offer • Participating Iwi Offer

Indicative Price Range

• $2.35 - $2.80 per share • Final price could be above, below or within range

Ownership Restrictions

• Crown must continue to hold > 51% • No holder to have a relevant interest of > 10% • Established in New Zealand Public Finance Act and Company Constitution

Joint Lead Managers

• First NZ Capital Securities Limited and Credit Suisse (Australia) Limited • Goldman Sachs New Zealand Limited • Macquarie Capital (New Zealand) Limited

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Offer Details

Indicative Key Offer Dates Retail Offer opens

15 April 2013

Retail Offer closes

3 May 2013

Institutional Offer and bookbuild

7 – 8 May 2013

Pricing announced

8 May 2013

Allocations expected to be available

10 May 2013

Expected trading on NZX (conditional) and ASX (conditional and deferred settlement basis)

10 May 2013

Allotment date

14 May 2013

Refunds paid (if any)

17 May 2013

Expected date of first dividend

30 September 2013

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Offer Details

Key Offer Statistics Indicative Price Range25

$2.35 - $2.80 per share

Indicative Market Capitalisation26

$3,290 - $3,920 million

Prospective Net Debt27

$1,134.5 million

Indicative Enterprise Value28

$4,424.5 - $5,054.5 million

Prospective Key Investment Metrics FY2013F

FY2014F

PE Ratio29

34.7x – 41.4x

20.5x – 24.4x

EV / EBITDAF Multiple30

11.6x – 13.2x

8.9x – 10.2x

Implied Cash Dividend Yield31

4.3% - 5.1%

4.6% - 5.5%

Implied Gross Dividend Yield32

6.0% - 7.1%

6.4% - 7.7%

25. The Final Price may be within, above or below the Indicative Price Range 26. Calculated as the number of shares on issue following the offer multiplied by the Indicative Price Range. Shares may trade within, above or below the Indicative Price Range following completion of the offer 27. Calculated as prospective loans less cash and cash equivalents and loan fair value adjustments forecast as at 30 June 2013 28. Calculated as the indicative market capitalisation plus net debt as at 31 December 2012 29. Calculated as indicative market capitalisation divided by net profit after tax for the respective forecast financial year

30. Calculated as enterprise value divided by EBITDAF for the respective forecast financial year 31. Calculated as dividends per share for the respective forecast financial year divided by the Indicative Price Range 32. Calculated as dividends per share for the respective forecast financial year, grossed up for imputation credits expected to be attached to the dividend, divided by the Indicative Price Range

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