Mighty River - which owns the Mercury Energy retail brand, the Waikato River hydro system, some geothermal generation and the Southdown thermal station in Auckland - increased net profit from $NZ47.1 million in the previous 12 months.

It also said yesterday that it planned to invest in more power generation, particularly in geothermal fields in the central North Island.

Company chairman Rob Challinor said the results were boosted by a non-recurring gain of $NZ34.2 million resulting largely from the decision to exit the onerous Southdown power sale agreement it had with NGC, which related to a long-term gas sales contract entered into before the plant was commissioned in 1996.

Challinor said the results came after four years of hard work, balancing the generation portfolio, stabilising the company's retail base and strengthening the balance sheet. "This has enabled us to enter a phase of growth and expansion.

For the first time in the company's four-year history it had near normal inflows into its hydro system in the first half of the year.

However, hydrological conditions changed in the second half of the year when Mighty River experienced the worst inflows ever recorded from March to mid-May 2003. This was compounded by dry conditions in the South Island and concerns in the marketplace about thermal fuel supplies, which led to the possibility of shortages in late winter.

Challinor said his company was already seeing the results of the new focus on growth, with recent expansion at the Rotokawa geothermal plant and the announcement of plans to further develop the Mokai geothermal site and explore generation opportunities in the Kawerau geothermal field.