Contact Energy - CEN Chart

[tomm]

https://www.nzherald.co.nz/business/...ectid=12355074
While both the Government and Meridian pointed to the finality of the decision, analysts have speculated that constraints in the transmission network, which could force Meridian and Contact Energy to have to spill water from South Island hydro stations for several years, could set conditions for the closure to be delayed for several years.

"Meridian has put a confidential proposal to NZAS with the objective of allowing NZAS to close down the smelter over a longer period of time - Meridian has proposed up to four years," the company told the NZX.
"To date that proposal has not been accepted and Meridian's current expectation is that the smelter will close on 31 August 2021 as previously announced by NZAS."

[dibble]

Not sure borrowing to pay dividends is a reflection of a "well run" company...
Gearing was 31.4% at 30 June 2020, up from 28.3% at 30 June 2019, and $46m more was borrowed in FY20. It was either cut the final dividend by about a third, or borrow more... the "well run" company decided to borrow more. Not sure borrowing more and more to pay increasing (or even maintain) dividends is a great thing long term for a utility...

Following that logic should any company with long term debt pay a dividend? The gearing is usually what contributes to such a large div, CEN's ROE is roughly 6% so borrow at 3-4% then increase dividend and hope nothing goes wrong with cashflow (that services the debt).

[tomm]

Contact reported a drop in its net profit to $125 million in the year to the end of June.
That was down from a $345m profit the previous year, when its result was boosted by a $170m gain from the sale of its Rockgas business and its Ahuroa gas storage facility.
Its underlying profit from continuing operations was down 22 per cent at $129m.

[see weed]

Contact reported a drop in its net profit to $125 million in the year to the end of June.
That was down from a $345m profit the previous year, when its result was boosted by a $170m gain from the sale of its Rockgas business and its Ahuroa gas storage facility.
Its underlying profit from continuing operations was down 22 per cent at $129m.

That is what is written. The question is-- Are you looking forward to your nice big juicy 23c div ? I know I am.

[RTM]

That is what is written. The question is-- Are you looking forward to your nice big juicy 23c div ? I know I am.

Yes...I am looking forward to my dividend. Its a beauty. I am not an accountant (as I am sure my questions shows) and I have a couple of questions, can anyone help ?

I see they have paid out $280mil in Dividends for the year.
I also see these three statements:
Free cash flow of 290million..sounds good, lots of money.
Generated profit of $125 million EBITDAF (I'm ok with what EBITDAF means )
Continuing operations of 451 Million.
Where is the divi paid from. Is the profit of 125mil after the dividend has been paid ?

Anyone got a quick description of "Continuing operations of 451 Million " ?

[tomm]

Yes...I am looking forward to my dividend. Its a beauty. I am not an accountant (as I am sure my questions shows) and I have a couple of questions, can anyone help ?

I see they have paid out $280mil in Dividends for the year.
I also see these three statements:
Free cash flow of 290million..sounds good, lots of money.
Generated profit of $125 million EBITDAF (I'm ok with what EBITDAF means )
THIS IS WHY:

Davies said Contact's result was reasonably solid, ‘’no real surprises and although some were picking a little bit of a cut in dividend, that has been maintained. Obviously in this environment, if you can keep paying dividends than investors are going to be happy'’.
Continuing operations of 451 Million.
Where is the divi paid from. Is the profit of 125mil after the dividend has been paid ?

Anyone got a quick description of "Continuing operations of 451 Million " ?

THIS IS WHY:

Davies said Contact's result was reasonably solid, ‘’no real surprises and although some were picking a little bit of a cut in dividend, that has been maintained. Obviously in this environment, if you can keep paying dividends than investors are going to be happy'’.

[macduffy]

Yes...I am looking forward to my dividend. Its a beauty. I am not an accountant (as I am sure my questions shows) and I have a couple of questions, can anyone help ?

I see they have paid out $280mil in Dividends for the year.
I also see these three statements:
Free cash flow of 290million..sounds good, lots of money.
Generated profit of $125 million EBITDAF (I'm ok with what EBITDAF means )
Continuing operations of 451 Million.
Where is the divi paid from. Is the profit of 125mil after the dividend has been paid ?

Anyone got a quick description of "Continuing operations of 451 Million " ?

No, profit is calculated before the dividend is paid.

"Continuing operations " describes just that, as distinct from operations that were discontinued (sold, closed down or otherwise disposed of ) during the year.

[RTM]

No, profit is calculated before the dividend is paid.

"Continuing operations " describes just that, as distinct from operations that were discontinued (sold, closed down or otherwise disposed of ) during the year.

Thank you Macduffy. That is what I thought.
So profit of 125mil
And after that they paid out 280mil in dividends.
Doesn't sound ideal to my way of thinking.

Very simply...if I had a company and it made a profit of 50,000....and I paid out 100,000 in dividends, doesn't feel like my company would be very solvent.
Realise it is perhaps a bit more complex than that.

RTM

[Snoopy]

Thank you Macduffy. That is what I thought.
So profit of 125mil
And after that they paid out 280mil in dividends.
Doesn't sound ideal to my way of thinking.

Very simply...if I had a company and it made a profit of 50,000....and I paid out 100,000 in dividends, doesn't feel like my company would be very solvent.
Realise it is perhaps a bit more complex than that.

Just to explain the 'bit more complicated ' bit.

All working assets on the books are subject to depreciation and in the case of hydro-dams themselves this is usually done over 100 years. However, this does not mean such a dam will need rebuilding in 100 years. Indeed it may last 2,000 years. That means the depreciation on the books is excessive, which in turn means the real underlying profit, which can be approximated by cashflow, is rather greater than the declared profit as dictated by accounting standards.

The other thing working in favour of something like a hydro dam is that the marginal profitability of the whole power generating grid is determined by the just built most recent addition to the power generation network. A hydro dam built with the labour costs of, say, 50 years ago and which pays nothing for borrowing water to generate its power can suddenly become hugely more profitable in these circumstances. Some power generators revalue their long life generation assets frequently to take into account this increased profitability, (although Contact has chosen not to do this of late). So in the case of Contact there are hundreds of millions of dollars in asset revaluations that could be brought onto the balance sheet if they ever looked like running out of borrowing capacity.

SNOOPY

[horus1]

Snoopy the trouble is that the cost of solar is a lot cheaper than present prices especially for domestics who have been ripped of for years. If you do the solar yourself the payback is low, say 5 years . Industry do not believe this but those that have solar do.