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TrustPower Limited Interim Six Month Result

TrustPower Limited Interim Result Six Months to 30 September 2003

The Directors of TrustPower Limited are pleased to announce the result for the six months to 30 September 2003 is an after tax surplus of $36.9 million. This result, which is unaudited, compares to $23.1 million for the same period in 2002. Earnings before interest, tax, depreciation and amortisation increased by 45 per cent to $79.6 million.

Sales revenue for the period amounted to $362.2 million (2002: $322.3 million) and volume 2889 GWh (2002: 3420GWh). Customer numbers are now 227,000. Included in this half year result are net non recurring gains of $3.9 million consisting of profit on the sale of meters and customers.

The period has seen considerable volatility in hydro inflows and consequent wholesale electricity prices. At the beginning of the period the country appeared to be headed for another "electricity crisis" as inflows were at critically dry levels and as wholesale prices were often over 20 cents per unit. By the end of the period inflows and lake levels had returned to normal as had wholesale prices which were around five cents per unit (kWh).

TrustPower's strong trading performance was enhanced by the withdrawal from retailing to the Christchurch, Wellington, Auckland, and Northland residential markets, and the flexibility provided by the Company's own hydro generation storage capacity.

Generation output for the six months was 892 GWh, down nearly 15 per cent on expected output. This reflects the low inflows but it is interesting to note the Company's generation was able to offer significant protection against peak wholesale prices during the period.

As already reported in the June quarterly announcement the share buy back programme was completed as at 30 June 2003. A total of 40.9 million shares representing nearly 21 per cent of those issued were cancelled returning $151.3 million to shareholders and reducing shares on issue to 157,375,936.

The Director's have also just recently announced a proposed additional return of capital to shareholders by way of a court-ordered buy back of a proportion of each shareholder's shares, that in total, will be no less than $85 m. Subject to regulatory and shareholder approvals, this will release further capital to shareholders in a tax efficient manner, utilising the remaining $ 66.2 m of available subscribed capital.

In making the decision to return further capital to shareholders the directors have taken into account the company's future prospects including some promising opportunities for development of additional generation assets. The Directors are confident the company will have adequate resources after the return to complete any appropriate developments. The Tararua Wind Farm Stage II development is proceeding on time with the first of the 55 new turbines expected to be commissioned before Christmas 2003. Commissioning of all turbines is planned prior to winter 2004, adding a valuable asset and providing further electricity production. The proposed Wairau hydro generation development in Marlborough is proceeding to full engineering and environment feasibility with the expectation of making a Resource Consent application early in the second quarter of 2004.

During the first quarter of 2003 the TrustPower bond programme was closed after successfully raising in total $245.3 million.

At 30 September 2003 TrustPower gearing (debt / debt plus equity) stood at 43 per cent, and whilst still comparatively low, is considerably more efficient than in previous periods.

The recent announcement of the appointment of an Electricity Commission to take over both the governance of the New Zealand electricity market and to respond to Government policy and directives is of potential concern to the future commercial development of both the retail market and investment in much needed new generation plant. TrustPower is making submissions on numerous aspects currently being considered during the operational establishment of the new Commission.

Taking the trading result into account the Directors have declared an interim dividend of 17.00 cents per share.

The dividend will be payable on 19 December 2003 to all shareholders on the register on 5 December 2003. This dividend will be fully imputed and a supplementary dividend will be paid to non resident holders.

While it is too early to predict the results for the full year, TrustPower considers it is well positioned to meet both the pending regulatory and trading challenges that may ensue.

HM Titter Chairman

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