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Contact Energy Announces First Quarter Result

Contact Energy Announces First Quarter Result

Contact Energy announced today an unaudited net surplus of $18.4 million for the three-month period ended 31 December 2002 – a slight improvement on the same period last year.

The result was driven by continued strong growth in retail electricity sales, offsetting lower wholesale electricity revenues.

The net surplus declined by 9% on the adjusted result for first quarter of last year, however, a direct comparison is affected by a higher depreciation charge in this quarter arising from a revaluation of Contact’s fixed assets which took effect from 30 September 2002.

Contact Energy’s retail business continued to grow, contributing to a 50% increase in retail electricity sales compared with the first quarter last year.

As at 31 December 2002, Contact Energy’s retail electricity customer base totalled over 465,000, up 60,000 (15%) on the same time last year. The increased sales were driven by organic customer growth, and higher demand associated with the addition of more business customers.

Chief executive officer Steve Barrett said the result was pleasing, particularly given the lower wholesale electricity revenues earned during the quarter.

“The result confirms the value of Contact’s long-standing strategy to build a balanced, integrated energy business,” he said.

Mr Barrett said the higher retail load during the period as well as the decision to reduce generation during low price periods in October and November 2002 meant the company’s overall average level of hedging had increased to 112% of generation output for the quarter, compared to around 72% for the same period in the previous year.

Contact expected the average hedge level for the full financial year to be about 90%, without factoring in any addition of the Taranaki Combined Cycle (TCC) power station to Contact’s portfolio. (Contact has entered into a conditional agreement to acquire the TCC plant and announced last week that the Commerce Commission has cleared the acquisition).

Contact’s total gas revenues declined by 14%, due largely to a drop in wholesale gas sales, particularly for electricity generation. Retail gas revenue was on a par with last year.

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