HomeInfratil News2009TrustPower Financial Results Six Months ended 30 September 2009

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TrustPower Financial Results Six Months ended 30 September 2009

30 Oct 2009

TrustPower’s consolidated underlying surplus after tax excluding fair value movements on financial instruments, which are inherently volatile, was $72.5 million for the six months ended 30 September 2009. This represents an increase of 6 per cent compared with $68.3 million for the same period last year.
Earnings before interest, tax, depreciation, amortisation and fair value movements on financial instruments (“EBITDAF”) grew by 13 per cent to $154.9 million from $136.7 million in the previous year.

Profit after tax attributable to the shareholders of the Company was $82.4 million for the half year compared with $66.8 million for the prior period, an increase of 23%. This includes the impact of fair value movements on financial instruments.
Operating revenue of $408.9 million was down 13 per cent on the previous year due to significantly lower electricity prices charged to those customers paying spot market prices. Spot electricity prices were significantly lower during this period as the result of plentiful hydro storage and inflows throughout the winter months of 2009.

Total electricity volume sold by the Company in New Zealand was 2,206 GWh compared with 2,253 GWh in the prior year. Customer numbers increased to 229,000 as at 30 September 2009 from 227,000 as at 31 March 2009.

The Company’s total New Zealand generation production of 1,055 GWh for the first six months was down 106 GWh on the previous year, mainly driven by lower North Island hydro production which was down 111 GWh on prior year. However, given low spot electricity prices for most of the reporting period, TrustPower did at times have the choice between procuring electricity in the spot market at low prices to meet customer demand in preference to running its own hydro generation harder.
The Snowtown Wind Farm had a good second quarter and produced 186 GWh over the first six months which was close to long term expectation.

Group operating cash flow was $110.1 million for the period versus $100.1 million in the previous year.
Debt (including subordinated bonds) to debt plus equity was 34 per cent at 30 September 2009 versus 36 per cent in the previous year.

TrustPower continues to maintain high levels of committed credit facilities. Including subordinated bonds the Company currently has just over NZD equivalent of 1 billion of committed debt funding in place. As at 30 September 2009 Group net debt was $721.3 million.

TrustPower is currently considering making an offer of senior bonds to New Zealand retail investors. If the offer proceeds, it is intended that the bonds will be unsecured unsubordinated bonds which would rank equally with TrustPower’s existing bank lenders. If the offer proceeds, more information on the offer is expected to be provided over the next few weeks.
Progress continues be made on a range of growth options in New Zealand and Australia.

TrustPower currently has consents for 420MW of wind farm development in the South Island and is well advanced with a further 118 MW of South Island hydro consents at Arnold and Wairau.

In Australia, the TrustPower Group has planning consent for up to another 235 MW of capacity at the Snowtown Wind Farm and has commenced further studies in relation to a Stage II development.
The Wairau hydro consent appeal is scheduled to be heard in the Environment Court next month and there are currently four appellants remaining in the process.

A hearing in the Environment Court for the Arnold hydro consent is set down for March 2010 where there is one appellant left in the process.

A business case is being prepared for a 30MW first stage at the Mahinerangi Wind Farm which is located near TrustPower’s Waipori hydro scheme. It is intended that existing transmission capacity will be able to be utilised which will assist the economics of the project.

Progress continues to be made in reaching agreement with landowners for potential wind farm developments at a number of sites in New South Wales, Victoria, Queensland and South Australia.

The design phase of the customer care and billing replacement project is close to completion and the detailed plan for the implementation phase is currently being worked through with Oracle.

The Government has announced proposed changes to the Emissions Trading Scheme. If the proposal is adopted, carbon emitters will face a 50% obligation on their emissions for the period 1 July 2010 to 1 January 2013 with a cap of $25 / tonne of CO2. TrustPower sees the introduction of a mechanism to incorporate the pricing of carbon as key to securing New Zealand’s renewable energy future and that the Company’s position as a renewable generator will be strengthened as a result.

The submission process following the Ministerial Review of the electricity sector has now closed and the Government is considering what policy initiatives will be required. TrustPower’s submission was broadly supportive and TrustPower welcomes confirmation of the Government’s commitment to a competitive electricity market. Any legislation changes are not expected to be enacted until mid 2010.

The process of recruiting a new Chief Executive is well advanced.
The Directors are pleased to announce an interim dividend of 19 cents per share, partially imputed to 14 cents per share, payable 11 December 2009 (record date of 27 November 2009).
The first half result for the 2010 financial year was pleasing. The Company remains well positioned to meet its customers’ needs and to pursue further development of renewable generation opportunities when it is economically justifiable.

BJ HARKER
CHAIRMAN

TrustPower Financial Results for the six months ended 30 September 2009
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