Meridian Energy delivers net half-year profit

Media Release
For immediate release: 22 March 2007

Meridian Energy delivers net half-year profit of $104.5 million

State-owned energy company Meridian Energy has reported a net profit after tax of $104.5 million for the half year ended 31 December 2006 after a strong operating performance, Chief Executive Keith Turner said today.

Dr Turner said the net profit after tax result of $104.5 million compared with $113.8 million for the same period last year after excluding the operating results of Southern Hydro Pty Ltd during that time, and the non-recurring benefits of its sale. The lower net profit result was mainly due to an increase in depreciation expenses.

He said the company’s strong operating performance for the half-year was also reflected in net energy revenue of $345 million, up 8.5% from the previous corresponding half-year, and EBITDA of $247.1 million, an increase of 4.3% from the 2005 half-year (on a normalised basis).

A final $300 million dividend was paid to the Crown in October 2006, bringing the total amount distributed by the company during 2006 to $1.1 billion.

Dr Turner said the strong operating performance reflected positive conditions for hydro generation between July and December 2006, and relatively low wholesale electricity prices.

“Electricity demand continued to grow, with average weekly demand through July to December 2006 increasing by 1.9% compared with the previous period, although the financial impact of this was somewhat offset by lower wholesale market prices due to favourable hydro conditions.

“We were able to hold energy price increases below the annual rate of inflation, implementing an average 3.25% increase in energy charges across all residential and small/medium enterprise customers during the half year.

“Energy efficiency remains a key focus in residential markets. During the half year the company continued to promote energy efficient light bulbs with approximately 80,000 sold to Christchurch residents during the period.”

Dr Turner said during the period subsidiary company Arc Innovations began deploying smart meters in Christchurch and South Canterbury which are scheduled to be rolled out to about 112,000 residential and business customers over a two-year period.

“In time, this technology is expected to revolutionise energy usage in many homes and businesses and should provide a platform for us to transform our service to our electricity customers.”

He said Meridian Energy has also focused in the half year on customer acquisition and energy efficiency in the dairying industry.

“Energy supply is very important to dairy farmers and through a targeted campaign during the period we have signed up dairy producers who collectively represent more than 100 GWh in energy requirements, offering many of them smart technologies and more efficient energy supply options.”

Dr Turner said Meridian Energy had a number of renewable energy development projects underway during the six months with construction of the 58 MW White Hill wind farm in Southland remaining on track, and applications made for new water use rights on the Waitaki in respect of its 260 MW North Bank Tunnel Concept and the Hunter Downs Irrigation Project.

“We are still awaiting a final environment court decision on the 210 MW Project West Wind in Wellington and are continuing the resource consent process for the 630 MW Project Hayes in northern Central Otago.”

During the period Meridian Energy also led New Zealand’s participation in international carbon markets.

“During the half year we concluded negotiations on a sale of Kyoto credits worth more than $9 million over six years to the Swiss-based Climate Cent Foundation. The credits were allocated by the Government to our White Hill wind farm project after we demonstrated the project offered emission reductions additional to business as usual.”

ends

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