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Contact Energy Limited (NZX: CEN) Contact to build Tauhara Power Station; Raise $400m equity

Monday 15th February 2021

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New Zealand energy company Contact Energy released its interim financial results for the six months to 31 December 2020 and announced it will proceed with the development of a new 152 megawatt geothermal power station at Tauhara (near Taupō) and raise $400 million of equity to support funding of the development.

Financial performance

Contact reported a statutory profit of $78m, up 32 per cent ($19m) on the same period last year. EBITDAF increased by $25m to $246m, up 11 per cent on the prior year. Operating free cash flow for the period increased from $120m to $157m in the first six months of FY21, up 31 per cent year-on-year.

Contact CEO Mike Fuge said it had been a very heartening start to the year, in a complex environment. “We’re pleased to have delivered a strong financial result despite challenging headwinds in the form of ongoing uncertainty around gas availability, and the doubt swirling around the future of the Tiwai Point smelter until the extension announced a month ago. We’re also proud to have played our part in helping secure the financial sustainability of the unique low-carbon smelter at Tiwai until at least the end of 2024.”

The Board has approved an interim cash dividend of 14 cents per share which will be imputed up to 9 cents per share for qualifying shareholders and paid on 30 March 2021.

Tauhara geothermal development: additional $580m investment approved

The Contact Board has also confirmed the company will proceed with the $580m development of a new geothermal power station on the Tauhara field, near Taupo.

Contact Chair Rob McDonald said: “We’re absolutely delighted that market conditions now allow us to proceed with this important development for New Zealand – one which has been in the planning stages for over a decade.

Construction will begin shortly and is expected to be completed in the middle of 2023.

Equity raise

Contact has also announced a $400m equity raise. The proceeds of the equity raise will initially reduce net debt and provide financial flexibility to fund the Tauhara Project and other future growth projects.

Mr McDonald said the equity raise would give Contact the flexibility to execute on a development pipeline beyond Tauhara, comprising up to $800m of additional projects including the potential replacement and expansion of the company’s geothermal power station at Wairakei. “It will mean Contact can maintain optionality in respect of future investment decisions, which will be able to be sized and timed to meet market demand.”

The equity raise will comprise a $325m underwritten placement (Placement) and a non-underwritten offer to shareholders in New Zealand and Australia to raise up to $75 million (Retail Offer). Contact will retain the ability to accept oversubscriptions in connection with the Retail Offer at its discretion, with the objective of ensuring fairness for most retail shareholders.

Please see the links below for details:

Market release

HY21 Financial statements

Tauhara and capital management presentation

FY21 interim results presentation

NZX Corporate Action Notice

ASX Appendix 3B

Results Announcement form

Distribution notice

Source: Contact Energy Limited

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