TrustPower profits surge

LISTED New Zealand electricity player TrustPower has increased its September six-monthly, after-tax surplus by more than 26% to NZ$50.7 million.

Tauranga-headquartered TrustPower told the NZX yesterday afternoon that the unaudited net surplus had climbed from NZ$40.1 million in the September 2004 half-year to NZ$50.7 million. Earnings before Interest, Tax, Deprecation and Amortisation (EBITDA) were NZ$107.3 million compared to NZ$92.0 million for the 2004 period.

The trading environment for both the first and second quarters saw below-average hydroelectricity lake storage levels and inflows leading to significantly higher spot electricity prices - the reverse of the previous half year.

TrustPower's weighted average price paid for the six months was NZ$76 per MWh versus NZ$37 per MWh for the first half of the previous period; while its totally renewable (hydro and wind) generation assets produced 999GWh (1100GWh).

Chairman Harold Titter said the company’s hydro generation storage catchments remained at satisfactory levels. This, together with purchase contracts, left TrustPower adequately positioned to meet anticipated customer demand over the remainder of the 2005-06 financial year.

Total electricity sold to customers in the latest half–year dropped by over 18% - from 3009 to 2453GWh – with most of this fall due to the impact of one large industrial customer now purchasing electricity directly from the wholesale market rather than through TrustPower.

But this had only a minor impact on TrustPower's financial results, said Titter.

Negotiations on key project contracts for the Tararua Stage III wind farm were close to finalisation and were expected to be completed shortly and the board was expected to approve the construction of this NZ$180 million, 93MW expansion to the existing Manawatu wind farm.

The project would see another 31 3MW wind turbines erected which should produce close to 350GWh of electricity per annum, enough to supply 45,000 homes.

Once Stage III was completed, the total Tararua wind farm was expected to produce more than 25% of TrustPower's total generation.

Titter said his company was pursuing several other wind farm opportunities around New Zealand, particularly in the South Island.

Progress was also being made with a major enhancement to the Arnold hydro scheme on the West Coast and a resource consent hearing was expected during the first quarter of 2006 on the small Wairau hydro generation project in Marlborough.

TrustPower's Australian wind farm investments remained under review as it was evaluating the impact of the Essential Services Commission of South Australia (ESCOSA) conditions on the future viability of its South Australian projects.

ESCOSA last month announced several technical conditions that South Australian wind projects would have to meet in order to obtain a generation license. TrustPower believed, given the variability of wind as a fuel source, that wind generators needed to be able to operate in that market as unscheduled generators.

TrustPower also declared a fully-imputed interim dividend of 11.0 cents per share, payable December 16, and its shares rose 17 cents to NZ$5.57 on the NZX yesterday.

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