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TrustPower Interim Result

3 Nov 2008

TrustPower’s unaudited after tax surplus for the six months to 30 September 2008 was $66.8 million, compared with $64.3 million for the same period last year, an increase of four per cent. Earnings before Interest, Tax, Depreciation, Amortisation, and adjustments for financial instruments (“EBITDAF”) were $136.7 million versus $116.2 million for the prior period, an increase of 18 per cent.

This is a pleasing result taking into account the difficult trading conditions experienced by the Company during the first quarter.

TrustPower’s New Zealand generation assets produced 1,161 GWh for the half versus 1,106 GWh in the prior period.

Hydro production was up nine per cent on the prior period supported by strong production in the second quarter due to good rainfall in all of TrustPower’s key catchment areas. Wind production was seven per cent below prior period. Combined generation production during the second quarter improved significantly compared with the prior quarter which helped to reduce the level of spot electricity purchasing by the Company during high priced periods. The weighted average spot price of electricity purchased by the Company over the reporting period was $184 / MWh nearly three times the cost of the prior year which reflects the impact of the severe drought on the electricity market during autumn and winter this year.

Customer numbers have decreased to around 219,000 primarily as a result of the Company scaling back its customer acquisition activities during the winter period. Total electricity sold to customers in the first half was 2,254 GWh compared with 2,361 GWh sold in the prior period.

Included in carbon revenue is the revenue derived from TrustPower’s generation schemes during the reporting period which have been allocated carbon credits as well as voluntary emission reduction units sold to third parties during the reporting period.

A further 210,000 tonnes of Kyoto emission rights have been sold to off-shore counterparties during the first half of the 2009 financial year. The Company has now forward sold close to sixty percent of its Kyoto emission rights over the five years from 2008 to 2012.These forward sales have been in Euro and the Company has transacted forward foreign currency exchange contracts to provide certainty of revenue in New Zealand dollars. The Company’s balance sheet remains sound. The ratio of debt to debt plus equity was 36 per cent as at 30 September 2008 up from 30 per cent at the same time the previous year, reflecting the debt funding of the Snowtown Wind Farm and the Deep Stream hydro enhancement.

Total debt, including subordinated bonds, as at 30 September 2008 was $708 million. Unutilised group committed debt facilities as at this date were $240 million.

TrustPower has $50.5 million of subordinated bonds maturing in December 2008. The Company is making a separate announcement with respect to the refinancing of the bonds.

During the reporting period the construction of the 98.7MW Snowtown Wind Farm in South Australia was completed. Final commissioning tests are expected to be completed by the end of November. The wind farm is operating to expectation and generation production to 30 September 2008 was 79 GWh. Generation output for the 2009 financial year is expected to be around 270 GWh. TrustPower is pleased with the on time, on budget execution of the wind farm which is the Company’s first offshore project.

Resource consent has been granted for the 72 MW Wairau hydro generation scheme by the Marlborough District Council. The decision is currently under appeal by five parties to the Environment Court.

A resource consent hearing for up to 46 MW of hydro generation at Arnold, on the West Coast has been completed and a decision is awaited from the Grey District Council.

The resource consent decision for the 200 MW Lake Mahinerangi wind project in Otago was appealed to the Environment Court. The Environment Court released a preliminary decision in July 2008 granting consent for up to 100 turbines (or a maximum installed capacity of 200 MW) subject to TrustPower demonstrating that the turbines could be situated appropriately within a reduced project area. A layout that meets the Court’s requirements is being finalised and will be presented shortly.

A resource consent application for up to 240 MW of wind generation at Kaiwera Downs in Southland was granted by the Gore District Council in June 2008. The decision was appealed to the Environment Court by one party. A decision by the Environment Court is expected shortly.

TrustPower continues to actively assess other wind and hydro generation opportunities particularly in the North Island.

The Electricity Commission released its review of the Wholesale and Retail Electricity Markets. The review recommended several changes, particularly around providing electricity consumers with improved information to ensure they take full advantage of pricing offers from the competitive electricity retailers.

The Commission recently approved the upgrade investment of the HVDC inter island transmission link and signalled that it may look to review the current distorted HVDC pricing methodology.

Taking the trading results into account, the Directors have declared a partially imputed interim dividend of 16 cents per share (15 cents per share last year) and an unimputed special dividend of 10 cents per share. These dividends will be payable on 12 December 2008 to all Shareholders on the register at 28 November 2008.

The result for the first half year to 30 September 2008 was pleasing given the difficult market conditions experienced during the first quarter. At this stage the Directors are confident, despite current global financial market volatility, that the business fundamentals are sound, which augurs well for a satisfactory annual result.

BJ HARKER
CHAIRMAN

TrustPower Financial Statements
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