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Orion announces $65.5m net profit for 2008

Media release – for immediate release 15 July 2008

Orion announces $65.5m net profit for 2008

Christchurch-based electricity network company Orion New Zealand Limited has announced a $65.5m net profit after tax for the year ended 31 March 2008, $25.8m above its forecast.

The overall result is not directly comparable with the previous year’s net profit of $60.6m due to significant unique events in each year.

The recent strategic direction of Orion has been to sell its non-core investments at opportune times. In line with this strategy, Orion sold its investment in technology company HumanWare for a $2.8m profit on sale during the year.

The improved result was also due to a $14m one-off reduction in deferred tax liability, brought about by the change in the corporate tax rate from 1 April 2008. The core electricity network net profit for 2008 was $49m post tax, $7m ahead of forecast.

The electricity network also performed very well, maintaining the consistently high level of reliability for which Orion is renowned. "Our network has been one of the most reliable and efficient in New Zealand over the last five years. On average our customers experience less than one interruption per year to their electricity supply," said Orion chairman, Craig Boyce. "Importantly we have achieved these excellent results while keeping our prices at below average levels.

"Our priority is the continued cost-effective improvement in the performance of our network.

To this end we have invested strongly in our distribution network with over $36m spent in the last year on projects to connect new customers, reinforce the network and replace ageing equipment. We also continue to look for and implement innovative solutions to sustain our high levels of reliability.

"The year was dominated by the need to respond to several significant regulatory issues, including proposed major changes to the Commerce Act. We encourage the Government to find the right balance between consumer protection and impacts on regulated entities, and create a regulatory environment that provides incentives for infrastructure investment. This is essential across the whole industry if we want to ensure that New Zealand continues to have a reliable energy supply," said Mr Boyce.

During the year Orion paid fully imputed ordinary dividends of $45m ($10m above forecast) to its ultimate shareholders – Christchurch City Council (89.3%) and Selwyn District Council (10.7%).

This has brought total tax-free distributions to shareholders since corporatisation in 1993 to more than $895m, or about $5,000 per ratepayer.

Orion forecasts a profit after tax of $45.5m for the year ended 31 March 2009. Orion distributes electricity to more than 186,000 homes and businesses in Christchurch and central Canterbury. Orion charges electricity retailers for this network delivery service and retailers, in turn, charge electricity consumers.

ends

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