Contact’s net surplus of NZ$55.3 million represented a gain of NZ$21.3 million on that recorded during the same period a year ago. EBITDA was up 36% to NZ$190.2 million.
The improved result reflected a variety of factors, including higher electricity retail and generation revenues arising from last year’s acquisition of the Taranaki Combined Cycle plant; as well as on-going strength in retail volumes, tariff adjustments, and a strong performance from wholesale electricity sales.
“TCC was the primary cause for an increase in generation volumes of 16%,” said chief executive Steve Barrett.
The average wholesale electricity price received during the period was NZ$40.4/MWh, well down on the NZ$63.4/MWh received during the comparable period last year. Relatively high hydro lake inflows during the period also resulted in lower than expected thermal fuel use.
However, enhanced management of the wholesale electricity business led to net receipts from the wholesale market rising significantly, despite total wholesale electricity revenue being 25% lower.
Total retail electricity sales increased by 18% to NZ$440.8 million reflecting significant growth in sales volumes and the impact of price adjustments. Total revenue for the half year was $567.0 million, compared to $500.8 million.
Contact’s wholesale gas revenue was only NZ$11.1 million, down from NZ$43.6 million in the same period last year, though much of this drop was due to reclassifying TCC gas as internal usage. Retail gas revenue for the half year was down 11% down, largely as a result of the loss of some large customers where margins had been uneconomic.
The Contact board decided to pay a fully imputed interim dividend of 7c per share, a 27% increase on the 2003 interim dividend, though Barrett cautioned that the growth in the half-year dividend should not be taken as an indication of likely growth in the final dividend. Furthermore, shareholders could use accumulated imputation credits if Edison Mission Energy decided to sell its 51% stake in Contact.
Barrett added that Contact now wanted to offer electricity to the one in ten customers currently not able to get Contact power and so would be rolling out retail services to the King Country, Bay of Plenty, Marlborough, Waipa, central and southern Hawke's Bay, Wairoa, Buller and Westland in the next few months.
Meanwhile, Powerco’s two largest shareholders have surprisingly decided to sell their shares in New Zealand's largest gas distributor and second biggest lines company.
The New Plymouth District Council, which owns 38.12%, and the Taranaki Electricity Trust, 11.79%, made the shock announcement Wednesday evening to sell their stakes, worth NZ$326.5 million, in light of the NGC-Powerco-Vector possible merger talks.
While surprised, as discussions are at an early stage, commentators say the sale announcements could be the local authorities trying to flush out potential buyers. Vector, the largest lines company is seen as a potential buyer for the power side of Powerco, while a merged NGC-Powerco would account for the gas reticulation, metering and associated businesses of both companies.
