TrustPower Limited Result
Media Statement Thursday, 31 January 2008
TrustPower Limited Result for the Nine Months Ended 31 December 2007
TrustPower's unaudited after tax surplus for the nine months to 31 December 2007 was $78.9 million, compared with $87.6 million as restated for NZIFRS adjustments, for the same period last year. The result for the period includes a reduction in tax expense of $4.5 million attributable to a lower deferred tax liability arising from the change in the corporate tax rate from 33 per cent to 30 per cent effective from 1 April 2008.
Earnings before Interest, Tax, Depreciation, Amortisation, and adjustments for Financial Instruments ("EBITDAF") were $161.8 million versus $161.0 million for the prior period. The trading environment for the nine months to 31 December 2007 has seen a continuation of the weak hydro inflows and lower than average electricity spot prices experienced throughout the financial year to date.
This was in contrast to the trading conditions experienced by the Company during the previous year when hydro inflows were significantly higher but in line with the long term average. TrustPower's own generation assets produced 1,600 GWh for the nine months versus 1,570 GWh in the prior period. Wind production has been higher for the nine month period than the previous period, boosted by the commissioning of the 93MW expansion of the Tararua Wind Farm. Hydro generation was well down on long term average and was 180 GWh lower in the nine months compared with the prior period.
TrustPower's hydro generation storage catchments are close to average levels in the South Island but are currently well below average levels in the North Island. Electricity customer numbers were up slightly at 221,000 as at 31 December 2007. Total electricity sold to customers in the nine months totalled 3,475 GWh compared with 3,508 GWh sold in the prior period. Telecommunication customers have increased to 22,000 from 16,000 at the end of the last quarter.
The Company's balance sheet remains strong. The ratio of debt to debt plus equity was 32 per cent as at 31 December 2007 up from 28 per cent at the same time the previous year. Construction on the 5 MW Deep Stream, Otago hydro generation scheme has been slower than projected due to adverse weather conditions and commissioning is now expected during March. Provisional resource consent has been received for the 72 MW Wairau hydro generation scheme in Marlborough. However, a further process is required to determine the specific conditions of the consent.
The hearing to determine the conditions of consent is currently underway. Once conditions have been finalised, subject to appeal, the Company will re-assess project economics. The resource consent hearing for up to 46 MW of hydro generation at Arnold, on the West Coast, has recommenced during January 2008. The resource consent decision approving the 200 MW Lake Mahinerangi wind project in Otago has been released. The Company is currently working through the appeal process and appeals to the Environment Court are scheduled to be heard in April 2008. A resource consent application for up to 240 MW of wind generation at Kaiwera Downs in Southland was lodged in November 2007 and a resource consent hearing is scheduled to begin at the end of March 2008. TrustPower continues to actively assess other wind and hydro generation opportunities, particularly in the North Island. The first wind turbine at Snowtown in South Australia was erected and commenced operation prior to the end of 2007.
The remainder of the project schedule is on track with progressive erection and commissioning of turbines expected during the period March to November 2008. TrustPower has reached agreement with Suzlon Energy Australia to provide an additional five S88 2.1 MW wind turbines for the Snowtown site, in addition to the 42 turbine wind farm presently under construction.
This will increase the total capacity of the wind farm to 98.7 MW with an annual expected production of 390 GWh. The expanded wind farm has been granted an amendment to the existing generation licence issued by the Essential Services Commission of South Australia.
The forecast project cost, including capitalised interest, is now expected to be approximately AUD 215 million. The additional wind turbines are expected to be commissioned within the original construction timetable. The Board has resolved that TrustPower will cease reporting on a quarterly basis from the end of the 2008 financial year.
TrustPower will continue to provide an operations report and an update on progress of generation development projects on a quarterly basis. The result for the nine months to 31 December 2007 was satisfactory given the lower than average level of hydro generation produced. At this stage the Directors are confident that the business fundamentals are sound, which augurs well for a satisfactory annual result.
BJ HARKER CHAIRMAN