Contact Energy - CEN Chart

[Mickey]

While it may take time to gain more customers, I do think they're on right path and with last year's worst behind them (incl Origin sell down) they can focus on their core business.

Agree sb9. With such a low barrier to churn, pricepoint is primarily the only thing they can compete on. Denis Barnes states in his report: "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".

With the improvement of their CRM and Billing Systems then they should have better data, which will aid their ability to develop improved predictive churn models to identify at risk customers and put retention programmes in place. This combined with customer aquisition campaigns to winback old customers and acquire new customers should slow the rate of decline and hopefully translate into an increase in the customer base further on down the track.

Time will tell....

[horus1]

A firm called Flick energy is saving me 20%, and has been for 6 months. It has a lower , transparent cost structure not like the established , big retailers. That is hard to beat.

[fish]

[QUOTE=Mickey;607295]Agree sb9. With such a low barrier to churn, pricepoint is primarily the only thing they can compete on. Denis Barnes states in his report: "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".



For sometime now they have been focusing on getting the right customer-those who spend big on electricity and pay their bills on time-ie companies and people who pay on time.So good price for these customers.
Their costs have fallen a lot more than anyone could have predicted.Cheaper fuel and cost to generate as well.The right action at time of low prices.

Hence increase in free cash flow which I really like.

I really dont feel they are getting the credit they deserve.

[Snoopy]

IMO it's not a good report. FCF seems to be the only rising indicator. And a 7% reduction in C&I sales is a huge decrease

From p20 of the powerpoint presentation.

"1H16 sales volume down 291GWh to 4,026 GWh" (down 7.2%).

This seems to be the decrease over all customers, (not just Commercial and Industrial).

"• M(ass) M(arket) volumes reasonably stable, although average customer numbers down 10,000. Average usage per customer increased 2%
• C&I sales down 276 GWh driven by decision not to re-sign some lower priced customers."

The above is what you are referring to xafalcon. It is the same as the total 291 GWh reduction in all sales further up on the same page.

Looking at the last monthly generation report. November 2015 C&I sales were 315GWh. November 2014 C&I sales were 380GWh. That is a 17% reduction for that one month YOY! However, given they are talking about lower priced customers, they may have been making very little money from these contracts.

"C&I electricity netback up $1/MWh reflecting expiry of lower priced contracts"

Underlying mass market sales volume is up 2%, which I found encouraging.

My main surprise in the report was the lack of imputation of the divdend. Dividend of 11cps, but only 7cps is imputed. In post tax terms, we are getting quite a big cut in the net dividend,

11cps (partially imputed)
= 7cps (fully imputed) +6cps (not imputed)
= 7cps + 0.72(4cps)
= 9.88cps

This is a net reduction of 10%, even as the 'headline' figure is unchanged.

Also there was a larger hit than I expected from the Otahuhu closure: $223m! Seems really high when they are trumpeting the sale of the Otahuhu prime Auckland development land to Stonehill Property Trust, an entity of Euroclass Design and Build for NZ$30 million!

As for
"taking an equal share in the proceeds of the sale of plant and equipment onsite",

What is that all about? What do Auckland property developers know about internationally marketing used gas turbines? Seems a really odd task to outsource!

SNOOPY

[xafalcon]

Page 20, top right "Electricity sales volume, down7% due to lower C&I sales". They are saying the drop is "due to lower C&I sales". That's how I read it anyway

Page 4 reads badly (all metrics deteriorate [compared with pcp?? hard to say since they don't note what the comparitor actually is]) with the exception of FCF

Imputation credits all used up for the special and final dividends, and perhaps some tax pre-paid to fully impute final dividend?? Partial imputation seems to be the way of the future for the generators. But yes, an effective reduction in dividend value to shareholders

Page 8 top slide is a worry for all generators, but I assume it incorporates the switching incentives being offered

Page 21 says Net 10,000 customers lost in 1H2016. Churn above market average (not sure if this is relative or absolute %). Cost to service rising. Bad and doubtful debt increased over pcp. So fewer customers, churning frequently, costing more to manage, and more bad debts. Not good at all

No idea why they weren't buying-back shares last week, when they were prepared to pay 10% higher price a month or two ago. Makes no sense at all

The outlook is crystal ball gazing until the situation with Tiwai Pt is resolved with a long therm contract.

It will be interesting to see the reports for the other generators to compare

[workingdad]

That's the negative..... on the flip side, expenses in IH are the lowest they have been in the last 5 years, FCF is the highest-

FCF last 5 IH years FCF cps 12.2, 17.6, 16.8, 22.2, 27.3

Generation costs are down over 10% from 37 to 33per MWh.

The Otahuhu land sale adds 30 million.

I'm not saying its great, just saying weighing it all up there is some good

[sb9]

https://nzx.com/companies/CEN/announcements/277702

There we've it guys, resumption of share buy back programme stating from today.

From the announcement:

Contact Energy Limited (Contact) announces that, as stated in its interim financial results, it will resume its share buyback programme from today. Contact has acquired 12.5 million shares for NZ$62 million since announcing an on-market share buyback on 15 October 2015. The announced buyback was for up to 25 million ordinary shares for an aggregate purchase price of up to NZ$100 million.

[macduffy]

Right. Suspension of the buy back recently would have been to remove any suggestion of "unfair trading" prior to the profit announcement.

[xafalcon]

I wasn't aware that their share buy-back programme had been suspended (no market announcement was made AFAIK), and I didn't see anywhere in their interim results presentation that it will resume from today either......

Or did I miss these two jems

[Hoop]