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Contact Energy Announces First Half Result

Contact Energy Announces First Half Result

Contact Energy announced today a net surplus of $34 million for the six months ended 31 March 2003 – an improvement on the $30.1 million recorded in the equivalent period last year.

Contact Energy chief executive Steve Barrett said the result was achieved as a result of higher electricity revenues, supported by continuing strong retail customer growth.

Total revenue in the six months ended 31 March 2003 was $500.8 million, up from $453 million in the corresponding period. EBITDA for the period was $139.5 million, 20 per cent ahead of the corresponding period.

The Board has resolved to pay a fully imputed interim dividend of 5.5 cents per share, in line with the dividend paid in the same period of the prior year. This is consistent with earlier statements by the company that dividend growth may be deferred in the short term following major investments.

It is too early to predict the outcome for the final dividend for this financial year as this will depend on operating conditions for the remainder of the year as well any other capital commitments. However, it remains the Board’s intention that over the longer term the dividend will show growth.

“Once again, Contact’s position as an integrated energy company with a balanced portfolio of generation and retail assets has ensured stable earnings,” Mr Barrett said.

Mr Barrett said Contact had made significant progress during the past six months – namely, acquiring the $500 million Taranaki Combined Cycle power station and continuing to grow its retail electricity base. “Our total customer base now exceeds 580,000, an increase of 12 per cent on the corresponding period.

“Customer demand has also increased with a lift in average sales per customer. Total electricity retail sales are up 40 per cent on the same period, contributing to a 22 per cent increase in total electricity revenue during the period.

“Although retail electricity sales increased by 40 per cent, net retail revenue was 36 per cent lower because of the much higher cost of purchases from the wholesale market to cover our retail load.”

The average price paid by Contact for retail purchases was $76.18/MWh – 94 per cent more than the $39.23 MWh paid in the corresponding period last year.

Contact’s overall level of hedging in volume terms increased to around 100 per cent, up from around 76 per cent in the same period in the prior year. This was due to an increased retail load and forward sales in the hedge market. The company expects its average hedge level for the full financial year to be around 90 per cent.

Mr Barrett said wholesale gas revenue was 33 per cent lower than for the corresponding period because of reduced sales, particularly to other generators.

Retail gas revenue declined by four cent, with a drop in retail gas customers and volume. The total number of retail gas customers was 101,500, compared with 103,500 at the end of December 2002. The low prices offered by competing retailers in some regions meant it was not viable for Contact to compete for these customers.

Mr Barrett said the Maui gas field redetermination would lead to an adjustment in Contact’s gas supply contract with the Crown, with allocations of remaining gas currently being resolved.

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