TrustPower posts profit and returns to normal trading

11.45am

Energy retailer TrustPower has signalled a return to more "normal" trading with an after tax profit of $47 million for the March year.

The Tauranga-based company last year felt the pinch of the 2001 energy crisis, posting a profit of just $1.3 million in 2002.

Risk management practises and improvements made to trading were behind the turnaround in fortunes, the company said. Those practices were likely to see the company relatively unscathed through the latest disruptions to the wholesale electricity market.

Sales revenue for the year was $654.1 million with 6500GWh of energy sold, compared with last year's $596.8 million revenue and 5906GWh.

The company is expected to announce a dividend at a special meeting on June 19 when shareholders consider the announced share buyback proposal. Last year it issued a 10c per share final dividend despite its sharply reduced profit.

TrustPower's customer numbers fell 6000 to 274,000 in the 12 months, mostly because of stiff competition in Christchurch and Wellington.

This month the company shed a total 32,000 customers in those centres, largely because of those competitive forces and because of the soaring wholesale prices of electricity in another energy crisis.

"This significant change in performance is a reflection of a return to more normal trading and generation after the setbacks during the winter of 2001," the company said in a statement.

"Although the wholesale spot price of electricity started to track up dramatically towards the end of the financial year the company's hedge positions and ability to use the storage capacity of its own hydro-schemes saw profitability maintained," it said.

It was too early in the 2004 year to predict the effect of the latest electricty market disruption, but the company's directors were confident risk management processes meant profit was unlikely to be affected.

Meanwhile, the company's financial position was strong, the purchase of the Cobb hydro-scheme for $92.5 million in March bringing fixed assets up $80.5 million to $811.9 million.

The operating surplus also included a $2.7 million profit from the sale of the Monowai hydro scheme, although that station's 36GWh annual output had been secured by TrustPower.

In the 2002-03 year the company also embarked on a pro-rata share buy-back and the issue of subordinated bonds, the latter raising at least $232 million.

"The use of these bonds provides an alternative source of funds that is cost effective compared to equity, reduces reliance on banks for debt and gives longer maturities to overall funding," the company said.

The two out of seven shares held pro-rata buy back offer at $3.70 per share closed on April 24, and acceptances had been received for 41.2 million shares, including 100 per cent of major shareholder Australian Gas and Light's holding of 40.6 million shares.

This would result in a return to shareholders of approximately $152 million, the buy back being conditional on shareholder approval at the June 19 meeting.

To comply with an exemption given by the Takeovers Panel shareholders, who accepted the offer, other than AGL, have until June 26 to withdraw.

If approved, the share buy back will significantly affect the number of shares eligible for the final dividend, it not being announced until the shareholder vote result is known.

As for windfarms, TrustPower has so far completed $2 million of writedowns on its South Australian operation to recognise an impairment in value.

It has also announced plans to double the capacity of its Tararua wind power scheme to 68MW, the expansion to be completed within 12 months.

TrustPower's shares were today unchanged at $4.50, their highest level in 12 months, having moved up from a low of $3.12.

- NZPA