Half-year profit $94mil, $175mil special dividend

Media Release
For immediate release: Tuesday 25 March 2008

Meridian half-year profit $94 million and a $175 million special dividend

Meridian has reported a half-year after-tax result of $93.7 million for the six months ended 31 December 2007, compared with a restated profit of $116.6 million for the same period a year earlier.

Following on from the annual half-year profit, the Meridian Board has approved an interim dividend of $60.9 million. In addition, given Meridian’s financial performance for the first half of the year, the Board has also approved payment of a special dividend of $175m. With both dividend payments this brings the total dividend paid by Meridian since its inception in 1999 to $2.1 billion.

“Revaluation of Meridian’s generation assets – from $4.827 billion to $6.472 billion in the latest period – has pushed up the depreciation cost and impacted on the bottom-line result,” says Keith Turner, Chief Executive of Meridian.

Meridian’s trading earnings before interest, tax, depreciation, amortisation and financial instruments (EBITDAF) for the 2007 period were slightly higher at $253.7 million compared with $245.7 million for the previous period.

The 2007 half yearly report represents the first reporting period in which the company has adopted the New Zealand Equivalents to International Financial Reporting Standards – NZ IFRS. As required, Meridian has restated its opening balance sheet as at 1 July 2006 and has reported comparative amounts in its accounts under NZ IFRS.

“Hydro inflows were near average but as the period started with lower-than-average lake storage levels, lower levels were carried through to December.

“National demand for electricity continued to grow in the six months ended 31 December and was around 1.5 percent higher than a year earlier.“

Meridian delivered 30 percent of New Zealand’s total electricity during the period generating 6.078 GWh, up slightly from 6.048 GWh in the 2006 period.

“Although generation was lower than planned, electricity revenues were maintained, at least in part, by higher prices as a result of the lower lake levels.”

Keith Turner says the sudden and unexpected closure of the HVDC Pole 1 link across the Cook Strait is likely to have a major impact on prices during the coming winter.

“Peak capacity constraints for power sent north will push up North Island prices over time while constraints for power sent south will reduce the dry-year reserve cover for the South Island, and also push up prices.”

“To help mitigate this Meridian has accelerated the Benmore transformer upgrade which will help reduce output constraints as a result of the Pole 1 closure.”

“At a retail level Meridian is transforming its customer services, with customers enjoying the new choices, services and control over their power usage.”

“Meridian’s carbon neutral certification has attracted a great deal of interest, especially among the business community who can see the real value this delivers to them.”

“One major generation project milestone during the period was the turning of the first sod for Project West Wind, which we believe may become one of the most productive wind farms in the world with a load factor approaching 48 percent.”

Manapouri, the country’s largest hydro station, has been upgraded in a five-year refurbishment programme from 585MW to 730MW with a technical capacity of 900MW.

Meridian also gained resource consents for Project Hayes, a 176 turbine and up to 630MW wind farm planned for the Lammermoor Range in Central Otago although appeals have been lodged against this decision.

In the Waitaki catchment the North Bank Tunnel Concept and Hunter Downs Irrigation Project water consent hearings were completed. The North Bank Tunnel Concept would add between 230MW and 260MW of capacity to the Waitaki chain. The Hunter Downs Irrigation Project would irrigate 40,000 ha of farmland between the Waitaki River and Timaru.

Meridian also moved into its new five green star energy and water efficient building in October 2007.

“The Queens Wharf building is a model for environmentally sustainable design. As the leader in the field of sustainable, clean, carbon neutral electricity generation, it is important that Meridian also make the best use of all resources, including accommodation.”

ENDS

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