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TrustPower up for first half, planning bond issue

TrustPower up for first half, planning retail bond issue

by Pattrick Smellie

Oct 30 (BusinessWire) - TrustPower Ltd produced a moderate profit lift for the first six months of the current financial year, reporting an underlying earnings increase of 6% to $72.5 million for the six months to September 30.

The Tauranga-based electricity generator and retailer also announced it was considering a bond offering over coming weeks. If it proceeds, details of the issue will be determined by capital expenditure decisions pending on three wind and hydro projects in New Zealand and Australia.


When inherently volatile movements in changes of the fair value of financial instruments is included, the half-year result was a 23% increase in net profit to $82.4 million on the same period a year earlier, producing earnings per share of 26.1 cents, up from 21.2 cents in the prior period, but tracking below the last full year's 33.3 cents per share.


TrustPower gave no full year earnings guidance, and declared interim dividend of 19 cents per share, partially imputed to 14 cents per share, will be payable 11 December.


"The first half result was pleasing," said TrustPower's chairman Bruce Harker. "The company remains well positioned to meet its customers' needs and to pursue further development of renewable generation opportunities when it is economically justifiable."


The result reflects winter months' trading, when demand for electricity is higher. However, much lower wholesale electricity market spot prices this year than last were the main factor reducing operating earnings by 13% to $408.9 million.


The company sold 2206GWh of electricity, slightly below the 2253GWh sold in the same six months of 2008, while electricity production fell by 106GWh to 1055GWh.


The company's South Australian Snowtown windfarm had a good second quarter, and expansion by a further 235MW at that site is one of the options TrustPower is mulling.


It also has consents to build 420MW of wind generation capacity in the South Island and is well advanced with consents for a further 118MW of South Island hydro generation on the Arnold and Wairau rivers.


The company's net debt at the half was $723.1 million, with $1 billion in committed debt funding in place.


"TrustPower is currently considering making an offer of senior bonds to New Zealand retail investors," the company said in a statement to the NZX. "If the offer proceeds, it is intended that the bonds will be unsecured unsubordinated bonds which would rank equally with TrustPower's existing bank lenders."


More information would be released "over the next few weeks".


During a period of intense retail competition, the company added 2000 customers to have a total of 229,000. It is close to completing the design phase of an $18 million billing replacement project and "the detailed plan for the implementation phase is currently being worked through with Oracle".


Oracle was the supplier to Meridian Energy, which placed a similar project on hold last week.


Meridian is also returning to the market shortly with a retail fixed interest offer, following the success experienced by Contact Energy on such an offer earlier in the year.


(BusinessWire) 17:35:58

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