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Customer Growth Spurs Contact Half Year Result

2 May 2002

Robust growth in its customer base and retail sales have underpinned a solid performance by Contact Energy Ltd in the six months to March 31, 2002, Contact chief executive and managing director Steve Barrett announced today.

Net surplus was $30.1 million for the six months to 31 March 2002, compared with $35.7 million for the same period last year. However, after allowing for material, non-recurring items, Contact’s adjusted net profit for the period was $40.3 million, compared with $26.0 million for the same period last year.

“The half year result further demonstrates the benefits of Contact’s strategy to build a balanced, fully integrated energy business,” Mr Barrett said.

Total revenue for the six months to 31 March 2002 was $453.0 million, compared to $444.1 million for the previous comparable period.

While gas and wholesale electricity revenues in the six months were lower than for the equivalent period last year, this was more than offset by strong growth in retail electricity sales. These totalled $265.8 million in the six months to 31 March 2002, of which $4.8 million related to recoveries for sales made in prior periods.

After adjusting for this, retail electricity sales grew by 17 percent in the six months to 31 March 2002. Most of this increase is attributable to growth in sales volumes. Total sales to retail customers were 2,349 GWh for the six months to 31 March 2002, compared with 2,092 GWh for the prior equivalent period, an increase of 12 percent.

Contact’s total electricity and gas retail customer base stood at almost 520,000 on March 31, up from 494,000 last September.

“Growth in customers reflects the success of several retail market strategies, including the loyalty based DualEnergy and Fly Buys programmes, and through subsidiary retailer Empower’s growth,” said Mr Barrett. “Growth from these sources is also characterised by relatively low customer acquisition costs, adding further to the strength of the retail performance.”

Empower has expanded its activities into several new areas, including Christchurch, since the beginning of this year.

Mr Barrett said Contact had been and remained active in the retail and electricity hedge contract markets, and that the overall average level of hedging had increased in volume terms from around 60 percent in the first half of the last financial year to around 76 percent in the six months under review.

“Hedge prices are now more accurately reflecting the volatility of the electricity market.

“We expect Contact to maintain an average level of hedge of around 75 percent through the balance of this financial year,” said Mr Barrett. “However, the actual level for any moment in time may be different, with variation according to Contact’s generation and retail and hedge levels for that particular period in time. For example, Contact’s hedge level will tend to be lower during low demand periods such as weekends. Conversely, it will be higher during demand peaks, such as cold winter days.”

In its gas business, Contact reported slightly lower wholesale gas revenues of $65.5 million ($66.3 million in the previous period). This was due to lower sales following the loss of some low margin, large volume customers.

“We are very pleased with Contact’s performance during the first half of this year,” said Mr Barrett. “While the response to the EME bid in October absorbed resources and management time, Contact remained focused on its business.

“We look forward to building on this solid start, and to securing new, value-enhancing opportunities to build the business.”

The Contact board declared a dividend for the half year of 5.5 cents, equal to the corresponding period last year. This will be paid concurrently with the final dividend of 2.5 cents, declared after the bid for Contact by Edison Mission Energy lapsed in February.

Both dividends are fully imputed for New Zealand resident shareholders and will be paid on or around 31 May 2002 .

Ends

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