CEN contact energy limited

Ann: HALFYR: CEN: Contact Energy Limited 2014 Hal

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    • Release Date: 18/02/14 10:30
    • Summary: HALFYR: CEN: Contact Energy Limited 2014 Half Year Results
    • Price Sensitive: No
    • Download Document  7.36KB
    					CEN
    18/02/2014 08:30
    HALFYR
    
    REL: 0830 HRS Contact Energy Limited
    
    HALFYR: CEN: Contact Energy Limited 2014 Half Year Results
    
    CONTACT ENERGY 2014 HALF YEAR RESULTS
    
    Name of Listed Issuer: Contact Energy Limited
    
    For the 6 months ended: 31 December 2013
    
    This report has been prepared in a manner which complies with generally
    accepted accounting practice and gives a true and fair view of the matters to
    which the report relates and is based on unaudited accounts.
    
    CONSOLIDATED INCOME STATEMENT
    
    Current Half Year NZ$m; Up/Down %; Previous Corresponding Half Year NZ$m
    
    EBITDAF (Earnings before net interest expense, tax, depreciation,
    amortisation, change in fair value of financial instruments and other
    significant items - non-statutory measure) $264m; up 4%; $253m
    
    PROFIT FOR THE HALF YEAR: $112m; up 27%; $88m
    
    EARNINGS PER SHARE: 15.3 CPS; up 25%; 12.2 CPS
    
    UNDERLYING EARNINGS AFTER TAX (excludes significant items that do not reflect
    the ongoing performance of the Group - non-statutory measure) $97m; up 5%;
    $92m
    
    UNDERLYING EARNINGS PER SHARE: 13.2 CPS; up 4%; 12.7 CPS
    
    INTERIM DISTRIBUTION*: 11.0 CPS
    * In the form of a cash dividend
    
    Record date: 7/03/2014
    
    Dividend Payment Date: 27/03/2014
    
    MEDIA RELEASE
    
    Tuesday 18 February 2014
    
    Continued performance improvement
    
    Overview of results
    
    "Contact's earnings have become more predictable with the reduction in gas
    take-or-pay commitments, the upgrade of the inter-island transmission link
    and investment in thermal plant flexibility. Higher than normal inflows to
    hydro schemes avoided the need to run expensive thermal generation and
    reduced energy procurement costs. With more customers on discounted prices
    Contact maintained sales volumes and customer numbers in what remains a
    highly competitive retail market" Chief Executive Dennis Barnes said.
    
    Contact reported profit after tax for the six months ended 31 December 2013
    of $112 million, up $24 million (27 per cent) compared with the prior
    corresponding period (1H13). Earnings before net interest expense, tax,
    depreciation, amortisation, change in fair value of financial instruments and
    other significant items (EBITDAF)  were $264 million, $11 million (4 per
    cent) higher than 1H13. Underlying earnings after tax  (profit for the period
    adjusted for significant items that do not reflect the ongoing performance of
    the Group) were $97 million, $5 million (5 per cent) above 1H13.
    
    The Contact Energy Board of Directors resolved that the interim distribution
    to shareholders would remain stable at 11 cents per share. The distribution
    represents a payout ratio of 83 per cent of Contact's underlying earnings
    after tax.
    
    "Our focus on delivery is continuing to raise performance across the
    business. A 42 per cent reduction from the same period last year in the total
    recordable injury frequency rate is hugely symbolic of the progress we are
    making as a company as we strive to achieve our aspiration of zero harm.
    
    We are continuing to hold market share in one of the most competitive retail
    electricity markets in the world, with our range of products and payment
    options remaining popular with customers both at home and in business. Strong
    competition and lower wholesale prices increased the number of electricity
    and gas customers on discounted products, resulting in reduced margins for
    Contact. Warmer weather and lower usage per customer resulted in a reduction
    in residential demand; however, this was more than offset by increased sales
    in the commercial and industrial business, with total sales increasing 2 per
    cent or 74 GWh.
    
    In December and January the upgrade of the inter-island transmission link saw
    increased levels of hydro generated electricity flow from south to north.
    With take-or-pay gas no longer a constraint, and the completion of our Te
    Mihi geothermal power station, we will further reduce our generation costs
    and create the opportunity to achieve an economic return for providing
    capacity when the market requires it. We envisage this will mean a reduction
    in generation from our combined-cycle gas-fired power stations with the
    Taranaki combined-cycle power station expected to be on standby during winter
    2014. All these factors contribute to making Contact's earnings more
    predictable," said Mr Barnes.
    
    The Te Mihi power station is in the final stages of commissioning and ran
    successfully at 159 MW during its four week reliability test in December
    2013. Commissioning tests revealed an issue with the hot well pumps.
    Solutions are being developed, which should see the plant operating at full
    capacity in the final quarter of the 2014 financial year. In the event that
    further modifications to the hot well pumps are required, the production
    impacts will be reduced by diverting steam to the existing Wairakei units.
    The associated commercial matters are in the process of being resolved with
    the contractor.
    
    Refinancing programme
    
    Contact will today register a five-year retail bond offer that will raise up
    to $250 million with a coupon rate of between 5.80% and 6.00% based on
    investor demand. Contact is approaching the end of our refinancing programme
    with new funding secured through a wholesale bond, a private placement with
    US institutional investors and additional bank facilities. "Our refinancing
    programme aimed to increase the duration and maintain the diversity of our
    funding sources. I am pleased that we have been able to achieve this while
    also being able to offer New Zealand investors the opportunity to take part
    in an offer that we are launching today," Mr Barnes said.
    
    Looking forward
    
    In an environment of low growth Contact will target further efficiencies,
    while significantly reduced capital expenditure will generate greater free
    cashflows. For the remainder of the 2014 financial year, Contact's focus will
    be on completing the Te Mihi geothermal power station and implementing the
    retail transformation programme. These two projects will provide lower cost
    generation and new capabilities to offer products and solutions that better
    meet customer needs.
    
    "Beyond the delivery of our key projects we will increase our attention on
    leveraging the existing asset base including identified opportunities for
    increasing production from our renewable assets. With mounting cost pressures
    and intense competition we need to find ways to reduce our costs to acquire
    and service customers and I believe our retail transformation programme can
    provide us with an advantage.
    
    We are still to contract any additional gas beyond 2014 as we manage
    regulatory and demand uncertainty. A key outcome will be determining
    Contact's role in providing the capacity the market needs to balance
    variability in wind and hydro generation.
    
    It is important that we operate in a stable regulatory environment given the
    long term nature of our industry. Consumers are seeing clear evidence that
    the current market is working with high levels of competition leading to
    lower prices. In the past six months alone we have seen customers continue to
    take-up a range of discounted products in the market with overall savings of
    up to 22 per cent on their electricity bill. We have committed to not
    increasing the energy component of our customers' bills and believe that the
    existing market structure, with improvements in transparency, will continue
    to serve New Zealand well," Mr Barnes said.
    
    ENDS
    
    Media enquiries: Shaun Jones 021 204 4521
    
    Investor enquiries: Fraser Gardiner 021 228 3688
    End CA:00247080 For:CEN    Type:HALFYR     Time:2014-02-18 08:30:06
    				
 
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