- Release Date: 18/02/14 10:30
- Summary: HALFYR: CEN: Contact Energy Limited 2014 Half Year Results
- Price Sensitive: No
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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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