CEN contact energy limited

Ann: FLLYR: CEN: Contact Energy Limited 2015 Full Year Results

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    • Release Date: 17/08/15 08:30
    • Summary: FLLYR: CEN: Contact Energy Limited 2015 Full Year Results
    • Price Sensitive: No
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    					CEN
    17/08/2015 08:30
    FLLYR
    PRICE SENSITIVE
    REL: 0830 HRS Contact Energy Limited
    
    FLLYR: CEN: Contact Energy Limited 2015 Full Year Results
    
    CONTACT ENERGY 2015 FULL YEAR RESULTS
    
    Name of Listed Issuer: Contact Energy Limited
    
    For the year ended: 30 June 2015
    
    This report has been prepared in a manner which complies with New Zealand
    generally accepted accounting practice and gives a true and fair view of the
    matters to which the report relates and is based on audited accounts.
    
    CONSOLIDATED INCOME STATEMENT
    
    Current Full Year NZ$m; Up/Down %; Previous Corresponding Full Year NZ$m
    
    EBITDAF (Earnings before net interest expense, tax, depreciation,
    amortisation, change in fair value of financial instruments and other
    significant items - non-statutory measure) $525m; down 10.6%; $587m
    
    PROFIT FOR THE FULL YEAR: $133m; down 43.2%; $234m
    
    EARNINGS PER SHARE: 18.2 CPS; down 43.1%; 32.0 CPS
    
    UNDERLYING EARNINGS AFTER TAX (excludes significant items that do not reflect
    the ongoing performance of the Group - non-statutory measure) $161m; down
    29.1%; $227m
    
    UNDERLYING EARNINGS PER SHARE: 21.9 CPS; down 29.4%; 31.0 CPS
    
    FINAL DISTRIBUTION*: 15.0 CPS
    * In the form of a cash dividend
    
    Record date: 2 September 2015
    
    Dividend Payment Date: 15 September 2015
    
    MEDIA RELEASE
    
    Monday 17 August 2015
    
    Intense competition impacts earnings but free cash flow improvements allow
    increased distribution to shareholders
    
    Overview of results
    
    "The commissioning of the Te Mihi geothermal power station and the retail
    system at the end of the 2014 financial year (FY14) has required much of the
    year's effort to be focussed on their successful integration. While both
    projects have created challenges in FY15, we are now positioned with a
    diverse generation portfolio that reduces our cost and increases flexibility.
    Importantly for our retail business we have maintained sales volumes as we
    navigated the stabilisation of our retail system in an increasingly
    competitive retail market. While competition has led to increased discounting
    we are now positioned to realise the benefits of our investment in the years
    ahead with early evidence of improving churn rates and credit performance.
    
    As expected from the investments made, free cash flow increased by 21 per
    cent in FY15 and with no near-term opportunities for capital investment it
    was pleasing to declare total dividends for the year of 76 cents per share"
    said Dennis Barnes, Contact's Chief Executive.
    
    Contact reported statutory profit for the year ended 30 June 2015 of $133
    million; $101 million (43 per cent) lower than the prior corresponding period
    due to continued margin pressure in the retail electricity business, an
    unfavourable movement in the fair value of financial instruments and
    transition costs from the Retail Transformation project and associated
    activities. This was partially offset by a reduction in tax expense including
    a $16 million tax adjustment for depreciation on powerhouses.
    
    Underlying earnings after tax was $161 million, $66 million (29 per cent)
    lower than FY14 reflecting lower retail margins reducing EBITDAF and
    increased depreciation and interest costs following the completion of the
    significant capital programme. Free cash flow was $363 million, up $64
    million (21 per cent) due to natural gas inventory movements and favourable
    retail collections more than offsetting the reduction in EBITDAF.
    
    In May 2015, the Contact Board of Directors announced a revised distribution
    policy to pay an average ordinary dividend equivalent to 100 per cent of
    underlying earnings after tax. In line with this policy the Board has
    resolved that the final distribution to shareholders for FY15 would be 15
    cents per share which will be unimputed following Contact's imputation credit
    balance being reduced to zero after the sale by Origin Energy. The Board also
    intends to conduct a share buyback programme commencing in the first half of
    the 2016 financial year. As part of ongoing debt refinancing, Contact is
    considering making an offer of unsecured, unsubordinated fixed rate bonds to
    institutional investors and New Zealand retail investors in the coming weeks.
    
    "We remain focused on the health, safety and well-being of our people. We are
    not satisfied with injuries to 7 of our people during a total of 3.7 million
    hours worked. While we are pleased to have reduced our Total Recordable
    Injury Frequency Rate to 1.9 in FY15, a 55 per cent improvement on FY14, we
    continue to advance our safety culture to improve our safety and overall
    business performance.
    
    The retail electricity market remains highly competitive with discounting
    dominating the market. Maintaining sales volumes has been important to us as
    we grew our share of the small business market and cooler temperatures drove
    a 1 per cent increase in residential usage per customer. This was partially
    offset by residential customer losses as we implemented our retail system.
    Pleasingly, as our system has stabilised we have reduced the rate of customer
    losses to a level below the industry average. It has been a difficult year
    for our customer business and I am pleased that through the commitment of our
    people and the patience of our customers we are now in a position to offer
    greater value than we could a year ago," Mr Barnes said.
    
    In the generation and trading business cost of energy was stable at $35 per
    megawatt hour as total generation increased 3 per cent to offset additional
    purchases. The generation from the Te Mihi geothermal power station and
    reduced thermal generation resulted in Contact's percentage of generation
    from renewable fuel increasing from 69 per cent to 76 per cent.
    
    Looking forward
    
    Contact's capital investments have positioned it well for the New Zealand
    market with limited need for further investment in the operating business.
    
    "Following a disappointing year in FY15, improvements across all areas of the
    business are expected in FY16. The completion of maintenance outages at the
    geothermal power stations will see increased availability with generation
    expected to exceed 3,300 GWh in the 2016 financial year (FY16).
    
    In the retail business, our retail system provides a platform for efficiency
    and innovation in a highly competitive market. While retail margins are
    expected to remain under pressure, I expect a reduction in the cost to serve
    our customers in FY16 that will provide a positive contribution to profits
    above the increase in interest and depreciation costs from the retail system.
    We will continue to review our pricing and product offerings to ensure that
    customers are provided with profitable services that they value.
    
    The continued operation of the Tiwai Aluminium Smelter is an important
    outcome for the whole energy sector and we are pleased to have been able to
    support the Smelter's ongoing operation. Today we have announced plans to
    complete a major maintenance that will ensure we are able to provide an
    additional 24,000 hours of efficient base load generation from our Taranaki
    combined-cycle gas-fired power station. We have also announced that we will
    be closing the Otahuhu power station from the end of September 2015. These
    decisions reflect the important role that gas-fired generation will play in
    the future, but also the transition the industry is making. Contact is well
    positioned to support this transition through the Ahuroa gas storage facility
    and if required a pipeline of thermal peaking developments.
    
    We believe we will look back at FY15 as a turning point in Contact's
    performance as its flexible asset portfolio and world class retail system
    provide the platform for Contact to improve performance and remain
    competitive in the New Zealand market.
    
    As we enter our twentieth year we are confident that Contact will prosper as
    an independent company with a diverse range of shareholders. We thank Origin
    Energy for its support over the last eleven years in getting us to this
    position.
    
    Our priorities remain the safe operation of our business, providing customers
    with the quality of service and products they expect and creating long-term
    value for our shareholders" said Mr Barnes.
    
    ENDS
    
    Investor enquiries: Fraser Gardiner 021 228 3688
    
    Media enquiries: Nicholas Robinson 027 705 3831
    End CA:00268472 For:CEN    Type:FLLYR      Time:2015-08-17 08:30:07
    				
 
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