Orion posts $49.9m net profit for 2009

Media release – for immediate release
14 July 2009

Orion posts $49.9m net profit for 2009

– electricity company to invest more than
$400m in network over the next decade

Christchurch-based electricity network company Orion New Zealand Limited has announced a $49.9m net profit after tax for the year ended 31 March 2009, $4.4m above its statement of intent forecast.

Orion’s solid 2009 financial year profit, and its commitment to invest more than $400m to expand and reinforce its network in the next decade, is positive news for the local economy and the community during a period of economic uncertainty, says Orion chief executive officer Roger Sutton.

“We plan to spend an average of $41m each year for the next 10 years to strengthen central Canterbury’s electricity network. We’ve got several major projects planned to increase network capacity in Christchurch city as it grows. We’re also upgrading our network in rural areas such as Rolleston to ensure we can meet growing electricity demand, especially from expanding towns and increased dairy farming,” Mr Sutton adds.

The company spent more than $36m in the 2009 financial year on projects to connect new customers, reinforce the network and replace ageing equipment. Its core electricity network net profit for 2009 was $52m after tax – $3m ahead of last year and $4m ahead of forecast.

Amidst security of supply concerns throughout New Zealand such as transmission constraints and asset failures, Orion’s focus in the 2009 financial year was on providing the Christchurch and central Canterbury community with a reliable and secure supply of electricity.

The Christchurch network is currently ranked the most reliable of the three New Zealand major centres, with on average less than half the number of power outages per customer per year than the Auckland and Wellington electricity networks.

“Our financial performance this year, and our continuing high network reliability, is evidence that we are working hard for the community. Through our results, we can reassure our customers that electricity supply in our network area is stable,” Mr Sutton says.

Orion’s overall financial result is not directly comparable with the previous year’s net profit of $65.5m due to significant one-off events in 2008 – a $14m increase in profit due to a change in the corporate tax rate and a $3m profit from the sale of its HumanWare investment.

During the year Orion paid fully imputed ordinary dividends of $44m ($7m above forecast) to its ultimate shareholders – Christchurch City Council (89.3%) and Selwyn District Council (10.7%). This has brought total cash distributions to shareholders since corporatisation in 1993 to almost $940m.

Orion forecasts a profit after tax of $42.7m for the year ended 31 March 2010. This is below its 2009 result of $49.9m, largely due to a forecast $5m decrease in revenues from new connections – a reflection of the current economic environment.

ENDS