31 August 2010
Mighty River Power today announced underlying earnings after tax of $139.6 million for the year to 30 June 2010. Earnings before interest, tax, depreciation and amortisation and financial instruments (EBITDAF) were $327.8m. The result is within the forecast range indicated previously by the Company and, as anticipated, is significantly lower than the exceptional result achieved in the previous financial year.
In the 2009 financial year the Company enjoyed record inflows into the Waikato catchment at a time when electricity spot prices were high. This equation was reversed in 2010, with the severe Waikato drought depleting hydro storage and forcing a cut to hydro production in April, when spot prices had reached their highest point over the year.
Operating expenses were driven up by higher asset maintenance costs and increased expenditure on the acquisition and retention of retail customers in what is a highly competitive market.
Mighty River Power Chair Joan Withers said that despite the challenging conditions, the Company had delivered on a number of important growth objectives in the 2010 financial year, both in generation capacity and retail numbers.
“During the year we opened the 140MW Nga Awa Purua Geothermal Power Station – a joint venture with the Tauhara North No.2 Trust, together with the Trust we secured resource consents for the development of a geothermal power station of up to 110MW on the Ngatamariki field, and we advanced the consenting process on the Turitea wind project,” said Mrs Withers.
Mighty River Power’s retail businesses, Mercury Energy and Bosco Connect, also showed strong growth in 2010. Customer numbers increased by 30,000 to reach a total of 412,000 and market share grew to 21 percent. Having achieved extremely rapid growth over the past two years, the Company now anticipates a period of slowergrowth amidst intense competition, with a continuing focus on reducing operational expenditure and cost-to-serve.
The Company announced in May 2010 its first major international investment. Through its international partner GeoGlobal Energy (GGE), Mighty River Power has invested an initial US$92m of its $US107m commitment to US-based geothermal company EnergySource LLC. EnergySource is building a 49.9MW geothermal power station, known as Hudson Ranch I, in Southern California - one of the largest and hottest geothermal resources in the United States. GGE has also had considerable success in Chile, where it secured a range of exploration permits and an extraction permit for the proposed Tolhuaca geothermal power station in the south of the country.
“Our investment in international geothermal projects via the GGE Fund is expected to lead to strong returns and we believe has the potential to become a significant success story for New Zealand, complementing our already successful domestic geothermal programme,” Mrs Withers said.
The Nga Awa Purua Geothermal Power Station, which opened near Taupo in May, is the biggest plant of its type in the world and further increased the Company’s geothermal capacity. Geothermal generation now makes up 27 percent of Mighty River Power’s total electricity production, compared to 21 percent in the prior year, and just nine percent two years ago.
“Economic growth and quality of life are intrinsically linked to a reliable and plentiful supply of energy. The new geothermal developments that Mighty River Power and its partners have completed over the past two years have added enough new, renewable electricity capacity to power more than 240,000 homes. We are immensely proud of this growth, which will benefit New Zealanders for generations to come,” said Mrs Withers.
Net profit after tax (NPAT) for the 2010 financial year was $84.6 million, well down on the record 2009 result of 159.6m. The profit was impacted negatively by non-cash after-tax accounting adjustments totalling $54.9m. These primarily comprised movement in the fair value of financial instruments (electricity and interest rate derivatives) of $27.9m, impairments of $24.2m associated with unsuccessful developments, and other tax adjustments of $2.8m.
Our performance against key Statement of Corporate Intent targets shows a return on capital employed of 8.2 percent versus a target of 8.5 percent, resulting from lower EBITDAF. Return on average equity employed was slightly above target at 9.7 percent versus 9.6 percent, with lower interest costs offsetting the impact of lower than planned EBITDAF.
During the year Mighty River Power undertook an independent revaluation of its generation assets on a discounted cash flow basis. This resulted in a positive revaluation of $371m on those assets to a total of $4,307m.
Mighty River Power will pay a final dividend of $30.3m in September. This follows the payment in March of an interim dividend for the 2010 year of $56.2m.
The Company maintained its strong liquidity position, with $400m of new facilities negotiated during the financial year. The weighted average duration of the Company’s debt facilities is 5.4 years.
Financial highlights summary - year ended 30 June
|
$ million |
FY2010 |
FY2009 |
|
Revenue |
1,104.6 |
1,119.9 |
|
EBITDAF |
327.8 |
447.1 |
|
Depreciation and amortisation |
(98.7) |
(104.9) |
|
EBIT |
172.1 |
251.0 |
|
Net Interest |
(30.7) |
(24.2) |
|
Net profit after tax |
84.6 |
159.6 |
|
Underlying earnings |
139.6 |
211.7 |
|
Operating cash flow |
199.5 |
317.1 |
|
Capital expenditure |
(388.1) |
(289.2) |
|
Total assets |
4,894.9 |
4,388.1 |
|
Net debt |
978.9 |
585.7 |
|
Shareholders' equity |
2,689.0 |
2,621.6 |
Operating information
|
Mighty River Power Operating Information |
12 months to June 2010 |
12 months to June 2009 |
|
Electricity Customers |
412,000 |
382,000 |
|
Sales (GWh) |
|
|
|
Residential FPW |
2612 |
2355 |
|
Commercial FPW |
2245 |
1961 |
|
Spot |
2105 |
1919 |
|
Net CFD |
1247 |
1542 |
|
Weighted Average Price FPW ($/MWh) |
103 |
100 |
|
Purchases |
|
|
|
Total NZEM (GWh) |
7307 |
6609 |
|
Weighted Average Cost ($/MWh) |
61 |
64 |
|
Generation Production |
|
|
|
Hydro (GWh) |
3730 |
4350 |
|
Geothermal (GWh) |
1562 |
1303 |
|
Co-generation (GWh) |
504 |
444 |
|
Biomass (GWh) |
16 |
32 |
|
Total (GWh) |
5812 |
6129 |
|
Weighted Average Price ($/MWh) |
63 |
67 |
Five year summary
|
|
FY2006 |
FY2007 |
FY2008 |
FY2009 |
FY2010 |
|
EBITDAF ($m) |
304.0 |
315.5 |
304.6 |
447.1 |
327.8 |
|
Net profit after tax ($m) |
100.8 |
96.9 |
111.0 |
159.6 |
84.6 |
|
Operating cash flow ($m) |
195.7 |
223.9 |
207.4 |
317.1 |
199.5 |
|
Net debt ($m) |
431.2 |
429.9 |
624.7 |
585.7 |
970.9 |
ENDS
View 2010 Annual Results presentation (PDF 1,775 KB) >