26 Nov

TPC Investor Presentation

1 TPC Consolidated Limited (ASX:TPC) | ABN 99 073 079 268 Level 11, 201 Kent Street Sydney NSW 2000 Australia | www.tpc.com.au ASX Announcement/Press Release | 26 November 2021 TPC Consolidated Limited (ASX:TPC) Investor Presentation Cover Note TPC Consolidated Limited (ASX:TPC) (‘TPC’ or ‘the Company’), the owner and operator of leading electricity and gas retailer CovaU (pronounced “cover you”), is pleased to release its latest investor presentation. It details: • How TPC’s CovaU has evolved into a leading Australian - based electricity and gas retailer • CovaU’s competitive advantages and how they have recently been further enhanced • The success CovaU has had expanding its scale and geographic footprint • The role TPC’s CovaU is playing in Australia’s move to ‘Net Zero’ The presentation explains how TPC’s growth strategy has both organic and potential M&A components. It outlines the Company’s intention to strengthen sales verticals, further expand its geographic footprint, execute more power purchase agreements, invest further in business efficiency technologies and explore value add M&A opportunities. It a dditionally highlights why TPC is today an attractive investment proposition, given: • The steady growth in CovaU’s share of Australia’s retail energy market (electricity, gas and renewables) • The competitive edge provided by business efficiency initiatives d elivered in key areas like back - office functionality • The company’s reputation for successfully managing cost volatility risk metrics • Its ability to leverage off the decarbonisation of household and SME energy consumption • TPC’s track record of delivering on its stated multi - strand growth strategy Ends. Authorised for release by the Board of TPC. For further information, please contact: TPC Consolidated Media & Investor Enquiries Charles Huang The Capital Network Chief Executive Officer Julia Maguire M: +61 (2) 9009 6888 M: +61 2 8999 3699 E: charles.huang@tpc.com.au E: julia@thecapitalnetwork.com.au 2 TPC Consolidated Limited (ASX:TPC) | ABN 99 073 079 268 Level 11, 201 Kent Street Sydney NSW 2000 Australia | www.tpc.com.au About TPC Consolidated TPC Consolidated Limited (ASX:TPC) owns and operates leading Australian - based electricity and gas retailer CovaU (pronounced “cover you”), which offers competitively priced products to household as well as business ( Small Medium enterprises and Commercial and I ndustrial) customers. The clie nt base of TPC’s CovaU business, spread across most Australian states and territories, can choose from a wide range of products, from conventional gas and electricity through to solar , wind and ‘greenpower’ plans. TPC is focussed on further expanding CovaU ’s market presence in the energy segment of the Australian utilities sector. The Company’s expansion plans include additions to its current suite of renewables segment - related energy products, as consumers preference energy sources that accelerate the deca rbonisation process. To learn more, please visit: www.tpc.com.au www.covau.com.au TPC CONSOLIDATED LIMITED I N V E S T O R U P D A T E N O V E M B E R 2 0 2 1 Helping consumers get value for money T P C C O N S O L I D A T E D L I M I T E D I N T R O D U C T I O N I N V E S T O R U P D A T E Low cost, competitive operator Integrated In - house business model Customer service excellence High renewables generation 4 Value for money, flexibility and environmentally friendly Our product offering 2014 2015 2016 2017 5 A sustained growth trajectory A high growth retail energy utility Acquired NSW electricity and gas licences. Secured first customer Offshore operations centres in Philippines and China First to offer 24/7/365` customer service Acquired Victorian electricity and gas licences 10,000 customers Launched business insurance offering iGENO Embedded Network business launched TPC dividend: 3 cents per share declared (10,721,241 shares) $1m revenue 5,000 customers $50m annualized revenue exceeded $65m Profitable revenue TPC dividend : 3 cents per share declared (11,235,613 shares) 14,345 Billable meters 6 A sustained growth trajectory A high growth retail energy utility 16,972 Billable meters 12,555 Billable meters 23,894 Billable meters 2018 2019 2020 2021 $77m Annual revenue $85m Annual revenue $93m Annual revenue $81m Annual revenue Corporate sales team established Expanded into Queensland Expanded into South Australia Our Australian footprint is getting larger Expanding into new geographies and market segments Operating in NSW, VIC, QLD, SA, ACT & TAS in 2021 SME focus customer base 24/7 availability Electricity $68.0m Gas $24.7m Dual fuel retailer Wholly owned and operated In - house direct - sales teams 23,000 + 7 8 Building reputation as a fast growth business We’re getting industry recognition G as Plan: QLD Solar - Friendly Electricity: QLD 2020 MOZO EXPERTS CHOICE AWARDS 2 4.4 star rating on Product Review 1 2, https://mozo.com.au/energy/articles/the - winners - in - the - mozo - experts - choice - awards - for - energy - 2020 - announced 1. https://www.productreview.com.au/listings/covau 9 Key market statistics/Key metrics Corporate overview FY 2021 FY 2020 Share price ($) 1 3.50 0.95 Market capitalisation ($m) 1 39.8 10.7 EPS ($) 0.41 0.30 P/E Ratio 8.45 3.18 Dividend Yield (%) 5.1 8.4 Payout Ratio (%) 43.4 26.7 1. As at end of financial year As at November 2021 10 5 - year share price chart 2018 2020 2017 2019 2021 5.00 4.00 3.00 2.00 1.00 0.00 Notes: 1. Top - 20 shareholders as at 18 November 2021 2. Total shareholdings include shares held by key management personnel and their related entities 11 Top 20 shareholders Shareholder 1 Shareholding (M) Stake In Company (%) Mr Chiao Heng Huang 2 4.46 39.2 Barry Christopher Chan 0.70 6.2 Focus Capital Finance Limited 0.54 4.8 Megaway Group Limited 0.54 4.8 Mr Guonan Guan 0.44 3.9 Fortune Giant International Limited 0.42 3.7 Mr Jeffrey Wu Kin Ma 2 0.42 3.7 Mr Bob Cheng 0.38 3.3 Ms Wei - Chun Wu 0.35 3.1 Mr Maobin Guan 0.23 2.0 Mrs Xiaohong Xue 0.23 2.0 CX & J Pty Ltd  0.22 2.0 Mr Steven Goodarzi 2 0.21 1.9 Mr Bing Zhou 2 0.20 1.8 Global Property Services Pty Limited  0.14 1.2 Mr Chiao Ting Huang 0.11 1.0 Mr Gregory Ronald McCann 2 0.09 0.7 Mr Gang Gu 2 0.08 0.7 Mr Junwu Lian 0.07 0.6 Snowtop Wealth Management Pty Ltd 0.07 0.6 • Majority held by Directors and employees and related parties. Greg McCann Non - Executive Chairman Senior leadership roles: Managing Director Deloitte Consulting for Australia and New Zealand. 1999 to 2004 Managing Partner New South Wales 1995 to 1997 Managing Partner Queensland 1990 to 1995 Managing Partner Papua New Guinea 1987 to 1990 12 Appointed 2 April 2007 Greg has 24 years of financial and technology consulting experience with Deloitte and extensive experience with boards and senior executives at CEO level. He is currently the principal and Executive Chairman of the Excentor Group of Companies, an independent software and consulting services supplier to the Asia Pacific region, employing over 2,500 professionals. Greg has also chaired other ASX and NASDAQ listed companies and was on the board of the law firm, Lander & Rogers for over ten years. He was also Chairman of NBN Tasmania. Greg holds a Bachelor of Business (Accounting) degree and is a Fellow of the Institute of Chartered Accountants in Australia and the Australian Institute of Company Directors. Chiao - Heng (Charles) Huang Managing Director and Chief Executive Officer 13 Appointed 28 February 1996 Charles founded the Company in 1996 as an ISP whilst in his third year of studying towards a Bachelor of Mechanical Engineering degree at Sydney University. Following the deregulation of the telecommunications industry, Charles sought the opportunity to resell voice products in Australia and in 1999 he decided to transform the Company from a technology - oriented ISP to a marketing and innovation - oriented player in the prepaid calling card sector. He has successfully steered TPC Consolidated Limited (formerly Tel.Pacific Limited) from a start - up company to a public company which was listed on the Australian Securities Exchange in 2007. Charles holds a Bachelor of Mechanical Engineering degree Jeffrey Ma Executive Director, Chief Financial Officer and Company Secretary 14 Appointed 22 November 2004 Jeffrey joined the Company in 2000 with more than 15 years financial services experience. He has over 11 years of financial services experience gained with Credit Lyonnais Australia Limited, a merchant bank, where he held the position of Company Secretary and Head of Finance and Administration in his last five years and was a Member of the Management Committee. Jeffrey also worked for two years in Westfield Holdings Limited, a listed property management and development company. He has an extensive professional background, having also worked for Coopers and Lybrand (now PricewaterhouseCoopers) in Hong Kong and with a chartered accounting firm in London. He holds a Bachelor of Arts (Accounting and Financial Management) degree from the University of Sheffield, England and is a Fellow of the Institute of Chartered Accountants in England and Wales. He is also a Fellow of the Institute of Chartered Accountants in Australia and a Fellow of the Financial Services Institute of Australia. Steven Goodarzi Executive Director and Chief Strategy Officer 15 Appointed 30 November 2015 Steven joined TPC Consolidated Ltd as its Chief Strategy Officer in 2013 and founded the Company’s CovaU energy business in 2014. He has extensive management and operational experience in strategy, business development, sales and marketing across many parts of the telecommunications and IT industrial sectors, both in Australia and overseas. He has also over time developed a deep understanding of what drives financial markets, having held strategy roles specific to the Financials sector. These positions were located in a number of major money centres across Asia, North America and Europe. Immediately prior to his move to TPC Consolidated Ltd, Steven was based in Tokyo, as the Director of Strategy and Business with KVH, a Fidelity investment company. Steven is now using his experience, vision and leadership to help lead the continued evolution of TPC’s competitive energy retailer CovaU. C O R P O R AT E S T R U C T U R E I N V E S T O R U P D A T E 17 Charles Huang Chief Executive Officer Jeffrey Ma Chief Finance Officer Steven Goodarzi Chief Strategy Officer Business Analytics Manager General Manager Commercial & Marketing General Manager Technology General manager Corporate Sales Legal iGeno General Manager Retail Business Collection Pricing Wholesale Portfolio Manager Account Management Commercial Manager Financial Controller Operations Regulatory Bing Zhuo Chief Revenue Officer 18 A growing force in Australia’s retail electricity market Our corporate structure CovaU is operating in these key markets: • New South Wales • Victoria • Queensland • South Australia. Expanding into Tasmania and ACT in 2021. Our teams are present in each region to serve the customers. 19 Our competitive advantages A dual fuel retailer Green power options People in region to help customers 24/7 contact centre Multilingual support Flexible attitude 20 Customer support a key TPC strength Our superior back office Team of 100+ employees to help Experienced team at hand End - to - end in - house teams to manage business processes Quality Assurance teams 24/7 capability to help resolve customer issues Multilingual capabilities Supporting CovaU since 2014 Operations | Switching | Billing | Collections | Quality Assurance | Network NOC | In/Our bound Implemented in 2006 100+ Members strong Competitive cost per agent 21 Customer support a key TPC strength Our superior back office Up to 100% Green power Strategic Partnerships with major wind farm and solar farm developers Bespoke contract term Traceable carbon offset 22 TPC playing a role in Australia’s move to ‘Net Zero’ I N V E S T M E N T C A S E I N V E S T O R U P D A T E I N D U S T R Y D Y N A M I C S I N V E S T O R U P D A T E Profitability variability Cash management Renewable certificate cost volatility Wholesale cost volatility 25 ? Payment timeliness ? Debt management ? Hedging cost ? Sustained wholesale price spikes ? Seasonal cost variation (First half of each year experiences higher margins) ? Hedging cost ? Sustained wholesale price spikes ? Seasonal cost variation (First half of each year experiences higher margins) 0 20 40 60 80 100 120 July '20 Aug '20 Sept '20 Oct '20 Nov '20 Dec '20 Jan '21 Feb '21 Mar '21 Apr 21 May '21 NSW QLD VIC SA 26 Spot prices are marching higher Wholesale electricity pricing dynamics ? QLD Callide coal fire generator blow up ? Higher gas demand closer to winter period, coincides with Callide incident which requires additional gas - fired generator to fill the supply gap ? The prior hedge and reallocation amount has reduced the financial impact substantially. ? We have also set aside reserve funding for the prudential requirement from the Australian Energy Market Operator (AEMO). Wholesale cost volatility 27 Cash management Cash management ? Net cash used in Investing activities mainly included a $2m increase in bank deposit, representing credit support provided to AEMO. • Net cash used in Financing activities mainly included dividend payment $1.8m and repayment of borrowing $0.8m. • TPC used own operating cashflow to meet this challenge FY 2021 ($’000) FY 2020 ($’000) Receipts from customers 105,037 93,982 Net cash provided by operating activities 9,890 2,545 Net cash (used in) / provided by investing activities (2,166) 869 Net cash used in financing activities (2,553) (2,604) Net increase in cash held 5,171 810 28 TPC is leveraging off higher prices Renewable Certificate Market Prices Renewable certificate cost volatility ? Delay in Renewable projects coming to fruition. ? Certificates are held and not released into the market. 29 Three key profitability components Sensitivity of TPC’s earnings EBITBA impact Price variance 10% - 10% 17% - 15% EBITBA impact Price variance 10% - 10% 6% - 6% EBITBA impact Price variance 10% - 10% 6% - 6% Cost EBITBA relationship (Electricity) Cost EBITBA relationship (Gas) Cost EBITBA relationship (LGC) 30 Bad debts trend lower despite COVID - 19 pandemic Lower bad debts in FY21 reflects: ? Customer credit quality controls ? Higher active collection activity FY 2021 FY 2020 Bad Debts Expenses $2,686,105 $3,212,104 Bad Debts Ratio 2.87% 3.72% F I N A N C I A L S I N V E S T O R U P D A T E 32 Profit and loss TPC’s Financials Commentary FY 2021 ($m) FY 2020 ($m) Change (%) Revenue 93.6 86.3 8.4 Gross Profit 22.2 18.7 18.6 EBITDA 6.3 5.0 24.9 Profit before tax 5.3 4.0 32.4 Net Profit for the year 4.7 3.4 39.4 Key Ratios EBIT Margin (% sales) 5.7% 4.9% EPS (cents/share) 41.4 29.9 DPS (cents/share) 18.0 8.0 33 FY 2021 Revenue by Segment TPC’s Financials $68.0 m $24.7 m $1.0 m Electricity Gas Telecommunication • Total Revenues $93.7m • Electricity: 72.6% of revenues • Gas: 26.4% of revenues • Telecommunication: 1.0% of revenues 34 A robust balance sheet, with minimal gearing TPC’s Financials FY 2021 ($’000) FY 2020 ($’000) Cash and cash equivalents 7,026 1,855 Trade and other receivables 13,393 13,779 Bank deposits 3,197 1,222 Total Current Assets 28,423 18,883 Total Assets 31,790 22,289 Trade and other payables 8,957 7,532 Short term borrowing - 751 Total Current Liabilities 14,204 12,665 Total Liabilities 14,802 13,430 Debt - to - Equity Ratio 0.87 1.52 Interest Coverage 70.43 14.61 O U T L O O K I N V E S T O R U P D A T E A focus on executing growth strategy Expansion to have both organic and M&A components Increase market share 1M SME customers market size is >$9bn Strengthen sales verticals SME, Online and Corporate sales Execute more renewable PPAs Invest in business efficiency technologies Continue geographic expansion South Australia, Tasmania, ACT M&A opportunities to accelerate growth 36 37 Competitive advantages + decarbonisation process + growth strategy = Increased shareholder returns Why invest in TPC TPC has a track record for reporting increased earnings thanks to: ? Steady growth in CovaU’s share of Australia’s retail energy market (electricity, gas and renewables) ? The competitive edge provided by business efficiency initiatives in key areas like back office functionality ? Successful management of cost volatility risk metrics ? An ability to leverage off the decarbonisation of household and SME energy consumption ? A multi - strand growth strategy (expanded product range, sales verticals and geographic footprint) TPC’s CovaU is a highly efficient retail energy provider well - positioned to grow despite the multiple challenges associated with the Australian economy’s march towards ‘Net Zero’ TPC CONSOLIDATED LIMITED I N V E S T O R C O N T A C T Charles Huang, Chief Executive Officer Level 11, 201 Kent Street | Sydney, NSW, 2000 | Australia 1300 731 574 | info@tpc.com.au 39 Company legal disclaimer Disclaimer The material in this presentation is general background information about the activities of TPC Consolidated Limited and its subsidiaries, and is current at the date of this presentation, unless otherwise noted. It is information given in summary form and does not purport to be complete. It should be read in conjunction with the other periodic and continuous disclosure announcements lodged with the Australian Stock Exchange, which are available at www.asx.com.au. It is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any particular investor. These should be considered, with or without professional advice when deciding if an investment is appropriate. This presentation may contain certain “forward - looking statements” and comments about future events. Such forward – looking statements may include forecast financial information about TPC’s, statements about industry and market trends, statements about future regulatory developments and the progress of current developments and statements about TPC’s strategies and the likely outcomes of those strategies. Forward - looking statements can be identified by the use of forward - looking terminology, including, without limitation, the terms “believes”, “estimates”, “anticipates” “expects”, “predicts”, “outlook”, “guidance”, “plans”, “intends”, “should”, “could”, “may”, “will”, “would” and other similar expressions, indications of, and guidance on, future earnings and financial position and performance are also forward - looking statements. Such forward - looking statements are not guarantees of future performance and are provided as a general guide only, should not be relied on as an indication or guarantee of future performance and involve known and unknown risks, uncertainties and other factors, many of which are beyond the control of TPC. Actual results, performance or achievements could be significantly different from those expressed in or implied by any forward - looking statements. There can be no assurance that actual outcomes will not differ materially from forward - looking statements. This presentation has not been audited in accordance with Australian Auditing Standards. Nothing contained in this presentation is, or should be relied upon as, a promise, representation, warranty or guarantee as to the past, present or the future performance of TPC. TPC does not undertake any obligation to update or review any forward - looking statements or any other information contained in this presentation. This presentation does not constitute, or form part of, an offer to sell or the solicitation of an offer to subscribe for or buy any securities and nor is it intended to be used for the purpose of or in connection with offers or invitations to sell or subscribe for or buy or otherwise deal in securities. No representation of warranty, expressed or implied, is made as to the fairness, accuracy, completeness or correctness of the information, opinions and conclusions contained in this presentation. To the maximum extent permitted by law, none of TPC’s and its related bodies corporate, or their respective directors, employees or agents, nor any other person accepts liability for any loss arising from the use of this presentation or its contents or otherwise arising in connection with it, including without limitation, any liability from fault or negligence.
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