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TrustPower AGM Chairman's Address

26 Jul 2013

TrustPower produced a solid operating performance for the 2013 financial year.

Good progress was made in implementing the Group’s growth agenda demonstrated by the commitment to invest in the 270MW Snowtown Stage 2 Wind Farm in South Australia.

TrustPower’s consolidated profit after tax for the 2013 financial year fell 6% to $123.4 million.

The Group Operating performance was considered satisfactory given lower New Zealand generation production and a challenging retail environment where pressure on margins and lower customer demand was experienced.

TrustPower announced in May this year that it had reached a conditional agreement to purchase the key assets of Energy Direct New Zealand for $13.65 million. 

The acquisition has been completed and from the start of this month TrustPower has taken over the assets of EDNZ including approximately 15,000 electricity customers and 10,000 gas customers and 37 employees based in Wanganui.

We see this as an exciting opportunity for TrustPower to grow its customer based in the lower North Island and to be involved in the retailing of gas for the first time, which we expect will enhance TrustPower’s multiproduct proposition over time.

Commissioning of the 3.8MW Esk Valley Hydro project is expected to be completed next month. While final costs are expected to be close to initial budget of around $13 million, the project has been delayed a couple of months through poor weather during the final construction phase. Once commissioned this project is expected to add around 15GWh to TrustPower’s generation portfolio.

 Construction of the 270MW Snowtown Stage 2 Wind Farm is progressing well and is on track in terms of budget and schedule. Civil works including wind turbine foundations are around 80% complete and the 28 km 275 kV transmission line is approximately 95% complete.

The first shipments of blades, towers and nacelles, together with the first of two transformers, have arrived at site and turbine erection is underway.

The first turbine is expected to be producing electricity in September. The 126MW Stage 2 South development is expected to be completed in April 2014 and the 144MW North development is expected to be completed in September 2014 and final handover of the total site completed in November 2014. This is TrustPower’s largest investment to date and it is very pleasing to report this project is tracking to plan.

TrustPower’s balance sheet as at the 2013 year end remains in good shape with shareholder’s funds over $1.5 billion and total assets close to $3 billion.

Gearing has increased as Snowtown Stage 2 is constructed.

Following the recent refinancing of shorter term bank facilities the Group has close to $1.5 billion of committed debt facilities of which over NZD 450 million remain undrawn.

TrustPower continues to develop further wind options in Australia and two sizable projects in Victoria and New South Wales are in development approval processes which are expected to be completed within the next 12 months.

Following Government approval of the variation to the Rakaia River Water Conservation Order, TrustPower is now in a position to store and distribute consented water from Lake Coleridge to improve irrigation reliability to various irrigator groups.

TrustPower has recently concluded long term storage and release agreements with Barrhill Chertsey Irrigation Limited and Central Plains Water. It is expected that these initial agreements will contribute to an additional irrigation supply area in mid Canterbury of around 40,000 ha.

TrustPower is continuing to work hard with stakeholders in the Canterbury region to provide an optimal large scale regional infrastructure solution that can provide a superior economic outcome over smaller scale alternatives.

TrustPower is also closely considering participation in other irrigation opportunities in New Zealand.

Chairman's address (full copy)

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