Ann: HALFYR: CEN: Contact Energy Limited - HY16 Results and Half...

• Release Date: 15/02/16 08:38
• Summary: HALFYR: CEN: Contact Energy Limited - HY16 Results and Half Year Report
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15/02/2016 08:38
HALFYR
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REL: 0838 HRS Contact Energy Limited

HALFYR: CEN: Contact Energy Limited - HY16 Results and Half Year Report

CONTACT ENERGY 2016 HALF YEAR RESULTS

Name of Listed Issuer: Contact Energy Limited

For the six months ended: 31 December 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 unaudited accounts.

CONSOLIDATED INCOME STATEMENT

Current Full Year NZ$m; Up/Down %; Previous Corresponding six months NZ$m

EBITDAF (Earnings before net interest expense, tax, depreciation,
amortisation, change in fair value of financial instruments and other
significant items - non-statutory measure) $254m; down 1.2%; $257m

PROFIT/(LOSS) FOR THE PERIOD: ($116m); down 327.5%; $51m

BASIC EARNINGS PER SHARE: (15.9) CPS; down 330.4%; 6.9 CPS

UNDERLYING PROFIT (excludes significant items that do not reflect the ongoing
performance of the Group - non-statutory measure) $73m; down 3.9%; $76m

BASIC UNDERLYING PROFIT PER SHARE: 10.0 CPS; down 3.8%; 10.4 CPS

INTERIM CASH DIVIDEND: 11.0 CPS

Record date: 2 March 2016

Dividend Payment Date: 23 March 2016

MEDIA RELEASE

Monday 15 February 2016

Free cash flow improvement supports continued distribution to shareholders

Overview of results

"The first half of the 2016 financial year (1H16) was a period of significant
activity for Contact. Our ownership changed as a result of Origin selling its
majority shareholding, we played an important role in the ongoing operation
of the Tiwai aluminium smelter as we executed an 80 megawatt financial
agreement with Meridian Energy and we completed the closure and sale of our
Otahuhu thermal power station. In addition we continue to work on reforming
our customer business, have secured an additional $295 million of debt in the
US Private Placement and domestic retail bond markets at very competitive
interest rates and bought back $62 million of shares," said Dennis Barnes,
Contact Chief Executive.

Contact reported a statutory loss for the six months ended 31 December 2015
of $116 million; $167 million lower than the prior corresponding period. This
was primarily due to $257 million of impairments relating to the closure of
the Otahuhu power station and an assessment that the Taheke geothermal
resource is unlikely to be developed in the foreseeable future.

Underlying profit and EBITDAF were reasonably stable while free cash flow
improved 24% as a result of a lower tax expense and a reduction in transition
costs relating to the implementation of Contact's customer billing and
service system.

The Contact Energy Board of Directors resolved that the interim distribution
to shareholders would remain stable at 11 cents per share. The distribution
will have 7 cents imputed and represents a pay-out ratio of 111% of Contact's
underlying profit. The Board also confirmed that the $100 million share
buyback for FY16, announced in October 2015, will continue and is likely to
be completed during the second half of the financial year.

Contact's Customer business is evolving in a market where margins are coming
under increasing pressure from the growth of smaller competitors and
increased innovation and targeted offers from existing retailers. "Increasing
retail competition overlapped with the implementation and stabilisation of
our customer service and billing system which has limited our ability to
respond. I am pleased that in recent months we have started to increase our
activity with the launch of new fixed term offers and our 'Home and Bach'
offer providing customers with increased options and value", said Mr Barnes.

In the generation and trading business cost of energy improved by $4 per
megawatt hour as lower purchase volumes and improved gas costs were supported
by an increase in geothermal generation. The closure of the Otahuhu thermal
power station in September further positioned the generation portfolio for an
increasingly renewable future where the requirements for thermal support are
moving from baseload to fast-start peaking generation.

Looking forward

Contact's strategy remains centred around leveraging the integrated customer
and generation business to deliver strong cash flows for distribution to
shareholders.

"I remain confident that our focus on becoming a truly customer inspired
business will deliver improvements in the next six months and the years
ahead. To support this change I am very pleased with the appointment of Sir
Ralph Norris, Victoria Crone and Rob McDonald to our Board who all bring
significant skills and experience in transforming and operating
customer-centred businesses.

We will continue to deliver value to our customers by providing choice,
control and certainty. We are developing customer centric offers in-house and
with partners to improve customer life time value while we also target the
lowest cost to serve in the industry. Our investments in the generation
business have ensured a robust business and we have a low cost, long life and
flexible generation portfolio with a focus on safety, reliability and
resource utilisation.

As we announced in December we don't expect our FY16 EBITDAF and underlying
profit to be materially different to FY15 but continue to expect a marked
increase in operating cash flow. I do however expect that we will see further
improvement across our customer metrics as we launch new products, correct
historical pricing anomalies and improve the efficiency of our operations,"
said Mr. Barnes.

ENDS

Investor enquiries: Fraser Gardiner 021 228 3688

Media enquiries: Shaun Jones 021 204 4521

Attachments to this release comprises of:

-  NZX Appendix 1
-  2016 Half Year Report including unaudited financial statements for the six
months ended 31 December 2015
-  NZX Appendix 7
-  Media Release
-  2016 Interim Results Presentation
End CA:00277620 For:CEN    Type:HALFYR     Time:2016-02-15 08:38:02