OV E R V I E W
About Mighty River Power •
New Zealand’s only large, renewables dominated energy company with both hydro and geothermal generation.
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Core business based on diversified low fuel cost electricity generation portfolio (producing 15-18% of total NZ supply), complemented by sales to business and homes.
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Sales to major industrial and commercial users and through our retail brands, Mercury Energy, GLO-BUG, Bosco Connect and Tiny Mighty Power, accounting for 18% of total NZ electricity consumption.
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Top 10 global geothermal business – leveraging expertise in US, Chile and Germany.
Mighty River Power – Financial Review 2012
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OV E R V I E W
Generation & Retail Sales
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90% renewable generation, with major geothermal share, supported by multiunit, gas-fired plant in Auckland.
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Generation assets in the upper North Island, close to major industry and residential demand.
Mighty River Power – Financial Review 2012
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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 three priorities are:
1.
Maximising value of integrated domestic sales/generation within a defined risk framework.
2.
Securing economically-attractive development options and developing when appropriate.
3.
Targeting growth in global geothermal niche that provides risk-adjusted returns.
F I N A N C I A L R E SU LT S
Full-Year 2011 FY2011 ($m)
FY2010 ($m)
% Change
EBITDAF
443.1
327.8
+35
Underlying Earnings
162.2
139.6
+16
NPAT
127.1
84.6
+50
Dividend (Interim + Final)
110.4
86.5
+28
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Record total electricity generation of 6,833GWh up 17% on 2010, with new geothermal plant and better hydro conditions. 96% of generation from renewable sources.
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Geothermal output increased 40% to 2,192GWh of base-load production, with 96.5% availability of 140MW Nga Awa Purua station in first year of operation.
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Above-average rainfall in Lake Taupo and Waikato River catchments, with hydro production up 17% to 4,368GWh (compared with long-term average of about 4,000GWh).
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Total Shareholder Return (TSR) of 11.4% – reflecting 16% lift in underlying earnings plus $412 million pre-tax increase in asset valuations.
Mighty River Power – Financial Review 2012
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HIGHLIGHTS
Geothermal ‘Game-changer’ GWh
Electricity Generation – Mighty River Power
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Investment of more than $1 billion in geothermal developments over the past five years – Kawerau, Nga Awa Purua, and offshore geothermal.
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30% of Company’s total generation, will be 40% with completion of Ngatamariki in 2013. Premium renewable, not weather-dependent: base-load, runs 24/7, output 3x wind farm and 2x hydro of the same capacity.
Mighty River Power – Financial Review 2012
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HIGHLIGHTS
Geothermal ‘Game-changer’ GWh
Electricity Generation – New Zealand
SOURCE: MED ENERGY DATA FILE
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Positive change in NZ’s energy mix, with geothermal displacing coal generation.
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Mighty River Power’s lift in geothermal generation 2007-June 2011 saving New Zealand more than 2.5 million tonnes C02e (1.8 million tonnes/year on current output compared with coal).
Geothermal now #3, after hydro and gas. ‘Premium renewable’: 7% by capacity (MW), 14% by contribution (GWh).
Mighty River Power – Financial Review 2012
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HIGHLIGHTS
Market Dynamics GWh
Net New Generation vs Demand Growth (2007-2011)
SOURCE: EA/SCADA
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Virtually flat electricity demand nationally since 2007 (GFC and post Christchurch earthquakes).
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Lower running of thermal generation, displaced by base-load geothermal.
Annual generation growth over same period of 5,800GWh (1,300MW of new generation added and only 310MW decommissioned).
Mighty River Power – Financial Review 2012
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HIGHLIGHTS
Market Dynamics 160%
National Hydro Storage (2008-March 2012)
GWh
WET
140% 120% 100% 80% 60% 40% 20%
DRY
0% 2012
2011
2010
2009
2008
Average
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Dry period in mid-2000s, then from late-2008 to late-2011.
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Significant improvement in supply margins – positive demand/supply balance, supporting intense retail competition.
Recent national storage levels below-average due to dry conditions in the South Island, following three year wetter-than-normal period.
Mighty River Power – Financial Review 2012
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HIGHLIGHTS
Sales & Pricing GWh Electricity Sales – Mighty River Power
• • • •
Achieved increases in volume of FPVV sales and pricing despite lower customer numbers. Strong growth in commercial customers. Expansion into small provincial towns. Supported by a range of customer retention and attraction initiatives:
– 3-year fixed-price offers introduced in FY2011 attracting 80,000 customers (~20%) – GLO-BUG pre-payment solution based on smart meters. Mighty River Power – Financial Review 2012
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HIGHLIGHTS
Residential Pre-Pay Option Number of Pre-Pay Customers – Mighty River Power
Active community engagement
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GLO-BUG offer – technology innovation providing only smart meter based pre-pay electricity system in NZ.
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Customers in control of their spend, avoids ‘bill shock’. Supported by community and budgeting agencies. Selected as preferred provider of pre-pay services for Meridian Energy customers in Christchurch.
Mighty River Power – Financial Review 2012
GLO-BUG provides real-time information
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F I N A N C I A L R E SU LT S
Half-Year 2012 & Guidance HY2012 ($m)
HY2011 ($m)
% Change
EBITDAF
254.5
233.6
+9
Underlying Earnings
101.7
89.4
+14
NPAT
17.6
92.8
-81
Dividend (Interim)
74.8
64.7
+16
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Financial results again built on diverse and complementary portfolio, market share and pricing gains in generation and customer sales.
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Significant fall in accounting profit due to non-cash fair value movements recognised under IFRS, predominantly as a result of a global fall in long-term interest rates.
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Underlying earnings up 14% (earnings after removing significant one-off items, impairments and the change in the non-cash fair value of financial instruments).
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Full-year EBITDAF guidance in the range of $460 million-$475 million (initial guidance in October 2011 of $430 million-$450 million).
Mighty River Power – Financial Review 2012
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F I N A N C I A L R E SU LT S
Capital Expenditure $m
FY Forecast
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$1 billion new geothermal investment FY2006-FY2010.
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Ngatamariki construction commenced FY2012, with commissioning expected 2013.
Shareholder accepted lower dividends during construction phase – dividends now increased to reflect higher operating cash flows.
FY2012 capex forecast of $359 million, reflecting spend at Ngatamariki ($199 million) and investments in international geothermal projects ($80 million).
Mighty River Power – Financial Review 2012
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B U SI N E SS U P DAT E
Development & Growth Options • -
Hudson Ranch Power I – United States
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Ngatamariki – New Zealand
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49.9MW, power to grid March 2012. First of international investments to move into commercial operation. 82MW geothermal station, completion mid-2013. Construction well underway. Tolhuaca – Chile Exploratory drilling, three months behind plan.
Hudson Ranch Power I
Taheke – New Zealand Development agreement among multiple landowners. Exploration planning underway. Bavaria – Germany
Four concessions, seismic surveys underway. Exploratory drilling expected in 2H2012. Turitea – New Zealand Consented for up to 60 turbines (180MW). Puketoi – New Zealand
$466m Ngatamariki project
Consenting underway for a 53 turbines (326MW).
Mighty River Power – Financial Review 2012
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B U SI N E SS U P DAT E
Market Regulation • -
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Water allocation – Variation 6 Environment Court judgement to increase abstraction from Waikato River (3.6% to 5% above Karapiro).
Water is NZ’s most important strategic asset. Policy needs to provide certainty for investors in water-related infrastructure and land development. UTS (Undesirable Trading Situation)
Karapiro hydro station
High Court ruling to uphold UTS and confirming pricing reset to $3,200/MWh. Appeals pending. Clear rules and regulatory enforcement – important precedent for electricity customers, market participants and NZ economy. Frequency methodology change (EA) Significantly lower costs to the NZ electricity industry ($10 million) and fairer for all North Island frequency-keeping service providers.
Mighty River Power – Financial Review 2012
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B U SI N E SS U P DAT E
Profit with Purpose • • • -
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Cornerstone principles and values Vital foundation for commercial sustainability and future growth. Social Responsibility is part of Mighty River Power’s culture and DNA – integral to our business model. Maori Land Trusts Joint development approach with shared vision for sustainable harnessing of resources. Long-term partnerships, inter-generational benefits.
Tomorrow’s workforce Unlocking employee potential – leadership and development. Apprentice Programme, has 95% completion rate over six years. Extended with Contact Energy.
Support for Universities – Auckland/Canterbury. Community support and sponsorship Engagement and consultation (Puketoi, Aratiatia) Starship Foundation/Star Supporters Club , Rowing NZ, Taupo Ironman, Waikato River Trails, Movies by Moonlight.
Mighty River Power – Financial Review 2012
Waikato River Trails – 100km of previously inaccessible riverside.
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