Market Guidance Update

This announcement provides information related to earnings guidance for Manawa Energy (MNW) in relation to the FY23 and FY24 financial years.

FY23 guidance

• MNW expects EBITDAF for the year to 31 March 2023 to be around the top end of the current EBITDAF guidance of $127.5m to $140.0m. This is due to strong Q4 trading conditions, driven by solid wholesale prices and generation volumes.

• Capital expenditure guidance of $45m to $55m remains unchanged.

FY24 guidance

• MNW expects EBITDAF for the year to 31 March 2024 to be in the range of $120m to $140m.

• This is underpinned by the following assumptions:
o Wholesale prices remain materially in line with the current ASX forward curve;
o MNW’s generation volumes are approximately 1,915 gigawatt hours, including the volumes generated by KCE[1] schemes. Note that this is below the ‘long-run average’ of 1,942 gigawatt hours due to a weather-related outage at the Esk Scheme (Hawke’s Bay) and a planned Waipori Scheme (Otago) outage over summer to replace the Waipori 3 generator and undertake maintenance works;
o Average hydrological conditions;
o Around $8m operational expenditure related to our new generation development pipeline; and
o No material adverse events.

• MNW expects its FY24 capital expenditure to be in the range of $65m-$80m. This comprises the following expenditure:
o $18m-$22m for enhancements of existing generation assets;
o $22m-$28m for asset maintenance and lifecycle expenditure on existing generation assets (including KCE assets);
o $13m-$16m for new generation development activity;
o $7m-$9m for technology, regulatory, environmental, and other capital investment;
o ~$5m for the Manawa House office fit-out in Tauranga.

• MNW also expects to receive $20m-$28m of cash proceeds in FY24 from the divestment of surplus land and carbon credits.

Further information

• To better compare MNW’s financial performance between FY23 and FY24 on a like-for-like basis, three key “normalisations” are required:
o FY23 is the final year MNW receives avoided cost of transmission revenue, and this is expected to provide ~$15m of EBITDAF (net of other transmission pricing methodology changes) in FY23.
o FY23 includes April 2022 earnings from the mass market retail business (sold in May 2022), providing ~$4m of net EBITDAF.
o FY23 included one month of internal transfer pricing for electricity to the mass market retail business prior to the commencement of the Mercury CFD[2]. This provided ~$3m of EBITDAF upside.

• The following items are expected to drive a net increase in the FY24 EBITDAF result.
o The energy outlook in FY24 is expected to be favourable compared to FY23, driven by current price and volume assumptions, and changes to our hedge position (increases EBITDAF by $10m to $20m).
o Generation operational costs increase primarily as a result of abnormally high project expenditure including a significant dam safety project (reduces EBITDAF by $1m to $3m).
o New generation development operating costs increase due to additional resource and increased consenting costs and other activities expected to be undertaken in FY24 (reduces EBITDAF by $2m to $4m).

MNW management will provide a full update on asset enhancements, the new development pipeline, and other key business initiatives at the company’s full year results announcement in May 2022.

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Investor enquiries:
Phil Wiltshire
GM Corporate Services
Ph 027 582 6600
[email protected]

Media enquiries:
Paul Ford
Head of Corporate Relations
Ph 021 809 589
[email protected]

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Announcement PDF