Announcement
FLLYR: MCY: MCY - resilient performance and ambitious acquisitions
08:30am
MCY
17/08/2021 08:30
FLLYR
PRICE SENSITIVE
REL: 0830 HRS Mercury NZ Limited (NS)
FLLYR: MCY: MCY - resilient performance and ambitious acquisitions
Mercury delivers resilient financial performance, makes ambitious
acquisitions.
FY21 Financial Results Summary
[see table in attached news release]
17 August 2021 - The year ended 30 June 2021 saw Mercury deliver resilient
financial performance, along with announcing two significant acquisitions to
grow the company's scale and capabilities.
Mercury reported EBITDAF of $463 million for the period, down 6% on FY20
EBITDAF of $490 million.
The operational result was adversely impacted by a sustained period of low
inflows into Lake Taupo (for the second consecutive year) and an unplanned
outage at the Kawerau geothermal power station in June.
The financial impact of this loss of generation was more acute than previous
years due to historically high spot prices as a consequence of low national
fuel (hydro and gas) availability.
Capital expenditure (capex) of $250 million comprised $56 million of
stay-in-business capex and $194 million of growth investment. Operational
expenditure remained broadly flat for the eighth consecutive year on a
normalised basis.
Net profit after tax was $141 million, down $68 million on the previous year.
"Mercury has delivered a resilient financial performance in the face of some
challenging market headwinds," said Vince Hawksworth, Mercury Chief
Executive.
"We have also made two ambitious acquisitions that will give Mercury
additional scale and capability as we navigate a rapidly evolving landscape.
"The acquisition of Tilt Renewables' New Zealand assets will increase
Mercury's total annual generation by over 1,100GWh. It has also secured
several prospective development options."
Construction of the Turitea wind farm also continues, with the transmission
line, grid connection and northern wind farm substation fully commissioned.
First generation has been achieved and Mercury anticipates the full
completion of the 33-turbine northern section in the last quarter of 2021.
"These investments and our further pipeline of potential generation options
are a clear demonstration of Mercury's commitment to decarbonising the
electricity supply, and investing for the future," said Vince.
In addition to the extensive renewable generation pipeline, Mercury also
reached agreement to acquire Trustpower's retail business. This acquisition
is subject to various approvals and completion of the acquisition is expected
in the second half of FY22.
"We see Mercury's and Trustpower's retail businesses as highly complementary,
and this agreement would see the best of both being brought together for our
customers," said Vince.
"Trustpower's retail business is a leading multi-product utilities retailer
selling electricity, gas, fixed and wireless broadband and mobile phone
services to approximately 231,000 customers nationwide. The combined business
would have approximately 780,000 connections across both energy and telco
services.
"Bringing together the retail businesses of Mercury and Trustpower will also
give us the scale to make meaningful investment in the underlying IT systems,
driving greater innovation for our customers. Deeper integration of the two
businesses is not planned until the underlying IT systems will enable
improved customer experience.
"In combination, the Tilt and Trustpower acquisitions, along with our
pipeline of renewable generation, will ensure Mercury has the scale and
capabilities it needs to be able to thrive now and into the future," he said.
OTHER KEY OPERATIONAL RESULTS
o A second consecutive year of low rainfall saw a decrease in hydro
generation to 3,611GWh, well below the long-term average of around 4,050GWh.
o Geothermal generation for the year also decreased from 2,615GWh during the
previous financial year to 2,594GWh, due to the outage at Kawerau.
o Rationalisation of existing assets, which included:
- The sale of Mercury's interest in the US-based Hudson Ranch 1 geothermal
power station joint venture, receiving net proceeds of NZ$41 million;
- Transfer of approximately 5,000 customers served under our Bosco brand to
Mercury.
o Introduction of Thrive, a company-wide continuous improvement programme.
o Introduction of Whakapuawai, a company-wide culture and capability
programme.
DIVIDEND
The Board has approved a fully imputed final dividend of 10.2 cents per share
(cps), taking total ordinary dividends for FY21 to 17.0cps, an increase of
7.6% on FY20. The dividend will be paid on 30 September 2021. This is
Mercury's 13th consecutive year of ordinary dividend growth.
OUTLOOK
"Across the industry in New Zealand, more than $1.5 billion of investment is
already committed by the industry to the construction of renewable
infrastructure. This means the country is well placed to increase the
proportion of generation that is renewable from around 80% today to over 90%
within five years," said Prue Flacks, Mercury Chair.
"However, the current market conditions illustrate the challenge of ensuring
the right balance is struck between investment in decarbonisation, security
of supply, and ensuring energy is affordable."
"Mercury strongly supports the goal of net zero carbon emissions by 2050, and
we are well placed to play our part in achieving that goal. A key aspect is
that policy certainty is required to send the right investment signals. One
wind farm a year is required to be built to achieve net zero carbon emissions
by 2050. Delivering that outcome, while maintaining security and
affordability should be foremost in the Government's mind," she said.
GUIDANCE
Mercury's FY22 EBITDAF guidance has been set at $590 million with increased
earnings from the Turitea wind farm, newly acquired Tilt Renewables' New
Zealand assets and our Thrive programme. Guidance at the time of this report
assumes 3,900GWh of hydro production and is subject to any material events,
significant one-off expenses or other unforeseeable circumstances including
hydrological conditions. FY22 stay-in-business capex guidance is $70 million.
FY22 ordinary dividend guidance is 20.0cps, fully imputed, representing a
17.6% increase on FY21 and the 14th consecutive year of ordinary dividend
increases.
ENDS
Howard Thomas
General Counsel and Company Secretary
Mercury NZ Limited
For investor relations queries, please contact:
Tim Thompson
Head of Treasury and Investor Relations
0275 173 470
investor@mercury.co.nz
For media queries, please contact:
Shannon Goldstone
Head of Communications
027 210 5337
media@mercury.co.nz
End CA:00377361 For:MCY Type:FLLYR Time:2021-08-17 08:30:51
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