31 Oct 2012
TrustPower Limited Unaudited Financial Results for the Six Months Ended 30 September 2012
TrustPower’s profit after tax attributable to the shareholders of the Group was $69.8 million for the six months ended 30 September 2012 compared with $68.8 million for the prior period, an increase of 1.6 per cent. This includes the impact of fair value movements on financial instruments which were broadly in line with the prior period.
TrustPower’s consolidated underlying surplus after tax was $76.2 million for the half year (an increase of 0.8 per cent) compared with $75.6 million for the same period last year. Underlying surplus after tax excludes fair value movements on financial instruments and one-off adjustments impacting on the prior period such as the change of company tax rate and the removal of depreciation deductibility for long life buildings both of which took effect from 1 April 2011 and affected the comparative result.
Earnings before interest, tax, depreciation, amortisation and fair value movements on financial instruments (“EBITDAF”) increased by 2.8 per cent to $166.1 million from $161.6 million in the previous year. The primary driver of increased EBITDAF was trading gains from placement of generation to high priced periods as well as the sale of electricity forward contracts through ASX when wholesale electricity prices were firm earlier in the reporting period. Approximately $3.9 million relating to the cost of transacting currency options to hedge currency exposure was expensed during the period prior to the Group committing to the Snowtown Stage 2 wind farm investment. This amount was included in other operating expenses.
Total electricity volume sold in New Zealand was 1,986 GWh compared with 2,137 GWh in the prior year a decrease of 7 per cent. Electricity customer numbers decreased to 206,000 as at 30 September 2012 from 209,000 at 31 March 2012 and 218,000 as at 30 September 2011. Mass market sales were down 9 per cent versus prior period largely as a result of the decrease in customer numbers and to a lesser extent lower customer usage. Retail competition remained intense during the period with customer switching continuing albeit some reduction in customer churn has been experienced towards the end of the period.
Time of use sales decreased by 77 GWh to 1,076 GWh in the current period. However, this reduction was offset by 109 GWh of sales through ASX given attractive pricing available in this market.
The Company’s total New Zealand generation production of 1,292 GWh for the first six months was down 122 GWh (9 per cent) due to lower hydro and wind production compared with the prior period. Production in the current period is consistent with expected long term average. Wholesale electricity prices were firmer than the prior period as South Island hydro storage levels fell below long term average in the first quarter.
The Snowtown Wind Farm in South Australia produced 186 GWh which was 5 per cent up on prior period and in line with expected long term average.
Debt (including subordinated bonds) to debt plus equity was 37 per cent at 30 September 2012 versus 36 per cent in the previous year reflecting commencement of capital spend on the Snowtown Stage 2 wind farm.
TrustPower continues to maintain high levels of committed credit facilities. Including subordinated bonds, the Company currently has just over $1.4 billion of committed debt funding in place. As at 30 September
2012 Group net debt was $849 million. The undrawn facilities will be used to fund the Snowtown Stage 2 wind project.
During the period TrustPower successfully refinanced $108 million of subordinated bonds maturing in September 2012 with a combined retail exchange and general market offer of 7 year subordinated bonds maturing September 2019. A total of $140 million was raised at an interest rate of 6.75 per cent.
The 3.8MW hydro project at Esk Valley in the Hawkes Bay is progressing well towards target commissioning in June 2013. The decision to proceed with the 2.6MW residual flow project at the existing Arnold hydro scheme has been delayed as project economics remain under review.
Earlier this month Environment Canterbury recommended changes to the Rakaia River Water Conservation Order. These recommended changes will now proceed through governmental approval processes. The Water Conservation Order amendment is an important step to enable TrustPower to provide reliable irrigation supply to landowners in the region.
Construction of the 270MW Snowtown Stage 2 wind farm in South Australia has commenced following financial close in July this year. The project remains on target to achieve final commissioning scheduled for November 2014. TrustPower recently announced that it had discontinued exclusive discussions with a party interested in owning the 126MW Snowtown South part of the Stage 2 development. TrustPower is now considering a competitive sales process following commissioning of Snowtown South which is targeted for May 2014.
The Directors are pleased to announce an interim dividend of 20 cents per share, fully imputed, payable 14 December 2012 (record date of 30 November 2012).
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