TrustPower reports surplus up 11 per cent

TrustPower is reporting an 11 per cent increase in its consolidated operating surplus after tax to $81.4 million for the year ended March 31.

Earnings before interest, tax, depreciation and amortisation grew 7 per cent to $185.6 million from $173.3 million in the previous year, the company said today.

Operating revenue of $677 million was up 11 per cent on the previous year as a result of substantially higher energy prices charged to those customers paying spot market prices.

The total volume of electricity sold was 4724 GWh, down nearly 20 per cent on the 5873 GWh in the year to March 2005.

The fall was primarily due to a major industrial customer trading directly through the wholesale market rather than using TrustPower as its agent, TrustPower said.

Customer numbers reduced slightly to 220,000 at the end of the year versus 225,000 a year ago.

The New Zealand electricity market for most of the 2006 financial year was characterised by lake storage levels and inflows well below average, the company said.

That led to significantly higher spot electricity prices particularly during the second half of the financial year.

A fully imputed final dividend of 12 cents per share would be payable on June 9. With an interim dividend of 11cps, the total payout for the 2006 financial year is 23cps, compared with 19.5cps for the 2005 financial year.

TrustPower chairman Harold Titter said generation production of 1791GWh for the year was down 14 per cent on the previous year and 8 per cent on the long term average.

The lower generation was mainly due to low hydro catchment inflows during the year which became more pronounced in the last two quarters.

Lower hydro production was partially offset by a strong performance from the Tararua wind farm which produced 268GWh during the year.

That represented 45 per cent of capacity utilisation and slightly above long term expected production, Mr Titter said.

Operating expenses including energy and line costs increased 10 per cent on the previous year.

Factors in the increase included higher wholesale electricity spot prices, increases in wholesale market fees, and increasing costs related to generation development projects.

Group operating cash flow was $118.9m for the 2006 financial year, up from $110m the previous year.

Shareholders' funds had increased to $896.5m from $882.8m.

Debtors and creditors levels at year end were significantly higher than the previous year end due to the high wholesale electricity prices.

The company also had $16m of cash placed on deposit with The Market Company to support its wholesale market prudential requirements.

TrustPower continued to maintain high levels of bank credit lines, Mr Titter said.

Including subordinated bonds the company now had $710.9m of committed debt funding in place. Those debt facilities were drawn to $366.8m as at March 31.

While actively pursing its New Zealand generation development programme, the company was becoming increasingly concerned and frustrated with the regulatory environment particularly for renewable generation investment, Mr Titter said.

The uncertainty created by the withdrawal of the Government's carbon tax policy and lack of any further policy direction on carbon emission pricing made it difficult to make progress on many generation development proposals.

Another concern was the recent Electricity Commission decision to maintain the status quo on pricing of the high-voltage direct current (HVDC) link between the North and South Islands.

The decision had potentially major negative implications for developers of new South Island generation, Mr Titter said.

It was too early to make predictions about the 2007 financial year, but TrustPower was well positioned to meet customers' needs this winter.

Good inflows into TrustPower's hydro catchments during late April had improved the company's hydro storage levels.

TrustPower had a significant capital expenditure programme for the 2007 financial year, including most of the $166 million committed at year end 2006 to be spent on the third stage of the Tararua wind farm.

The 93MW expansion at Tararua was going well and commissioning of the first turbines and the final completion remained scheduled for February and July next year.

A 5MW enhancement to the Waipori hydro generation scheme was recently approved, subject to finalisation of landowner agreements and satisfactory tenders for key contracts.

The enhancement, expected to cost around $20m and produce 22GWh a year, was due to be finished in October 2007, Mr Titter said.

A resource consent hearing for the proposed 72MW Wairau hydro generation scheme in Marlborough was to start in mid June.

A resource consent application for a revised 46MW hydro generation scheme at Arnold on the West Coast was lodged at the end of March.

The company expected to lodge a resource consent application for a wind farm at Waipori in Otago for up to 300MW within the next month.

TrustPower is 35 per cent owned by Infratil, 29 per cent by the Tauranga Energy Consumer Trust and 24 per cent by Alliant Energy.

TrustPower shares were down 15c on low volumes to $7.50 in early afternoon trading, having reached a year high of $7.71 on Wednesday.

- NZPA