Ann: HALFYR: CEN: Contact Energy Limited 2013 Hal

• Release Date: 19/02/13 10:30
• Summary: HALFYR: CEN: Contact Energy Limited 2013 Half Year Results
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CEN
19/02/2013 08:30
HALFYR

REL: 0830 HRS Contact Energy Limited

HALFYR: CEN: Contact Energy Limited 2013 Half Year Results

CONTACT ENERGY 2013 HALF YEAR RESULTS

Name of Listed Issuer: Contact Energy Limited
For the period ended: 31 December 2012

This report has been prepared in a manner which complies with generally
accepted accounting practice and gives a true and fair view of the matters to
which the report relates and is based on unaudited accounts.

CONSOLIDATED INCOME STATEMENT

Current Half Year NZ$m; Up/Down %; Previous Corresponding Half Year NZ$m

EBITDAF (Earnings before net interest expense, tax, depreciation,
amortisation, change in fair value of financial instruments and other
significant items) $253m; up 9.5%; $231m

PROFIT FOR THE HALF YEAR: $88m; up 29.4%; $68m
EARNINGS PER SHARE: 12.2 CPS; up 25.8%; 9.7 CPS

UNDERLYING EARNINGS AFTER TAX (excludes significant items that do not reflect
the ongoing performance of the Group - non-statutory measure) $92m; up 21.1%;
$76m
UNDERLYING EARNINGS PER SHARE: 12.7 CPS; up 16.5%; 10.9 CPS

INTERIM DISTRIBUTION* 11.0 CPS
*In the form of a cash dividend.

Record date: 08/03/2013
Dividend Payment Date: 26/03/2013

MEDIA RELEASE

19 February 2013

Solid first half performance

Overview of results
Contact has delivered a solid half year performance despite weakness in the
wholesale electricity market and sustained competition in the retail market.
Chief Executive Dennis Barnes says that Contact's results show the benefits
of its diverse fuel and asset portfolio and competitive customer offers. Mr
Barnes said that this clearly demonstrates Contact's increasing ability to
perform and respond to a range of market conditions.

Contact reported profit after tax for the six months ended 31 December 2012
of $88 million, $20 million (29 per cent) higher than the prior corresponding
period. Earnings Before Net Interest Expense, Tax, Depreciation,
Amortisation, Change in Fair Value of Financial Instruments and Other
Significant Items (EBITDAF)  were $253 million, up 10 per cent from $231
million in the first half of the 2012 financial year. Underlying earnings
after tax  (profit for the period adjusted for significant items that do not
reflect the ongoing performance of the Group) were $92 million, up $16
million (21 per cent).

"Again, the result demonstrates the benefits of our investments in peakers
and gas storage. The diversity of our fuel and asset portfolio has more than
offset the impact of lower wholesale prices. Our Te Mihi project made good
progress and, combined with the expiry of the Huntly swaption contract, will
make a significant contribution to earnings from the middle of 2013.

In a retail market where 30,000 customers per month switch supplier we have
been successful at retaining a stable market share in both the mass market
and commercial and industrial markets; however, margins are lower with
continued generation oversupply and the competition that this drives. We will
continue our focus on winning and keeping customers.

With our current capital investment programme coming to an end and the flat
outlook for energy demand we are taking steps to adjust the cost base and
structure of the business" Mr Barnes said.

Distribution to shareholders
The Contact Board of Directors resolved to hold the interim distribution to
shareholders at the equivalent of 11 cents per share. As indicated in the
full year announcement, the distribution will be made as a fully imputed cash
dividend and represents a payout ratio of 87% of Contact's underlying
earnings after tax.

Diverse portfolio proves it worth again
The benefits of Contact's diverse fuel and asset portfolio were again
evidenced in the first half of the 2013 financial year. Higher rainfall in
the South Island resulted in increased hydro generation displacing more
expensive thermal generation. Contact was able to actively respond by
reducing its thermal generation and purchasing a greater proportion of its
generation from the spot market while prices were lower.

The peakers and gas storage managed trading risk and enabled increased
participation in the ancillary services market.

"I have stated before that the investments we have made to increase the
diversity of our portfolio will reduce the impact that varied operating
conditions have on our performance. I am pleased to see the way we have been
able to flex the portfolio over the past six months to deliver good results
in both wet and dry conditions," Mr Barnes said.

Te Mihi power station progressing to final stages of development
Progress on building Contact's Te Mihi power station continues. Steamfield
work is largely complete and the first stages of commissioning on the power
station has commenced. The completion of Te Mihi will bring to an end a
greater than $2 billion investment programme, adding lower-cost geothermal,
and flexible thermal generation capacity and New Zealand's first gas storage
facility.

We opened the Wairakei bioreactor, a unique facility that significantly
lowers our impact on the Waikato River by removing hydrogen sulphide from
cooling fluid from the iconic Wairakei Power Station using bacteria native to
the Waikato River.  We also opened the Ohaaki wetland, a two-year project
managed by Fish & Game NZ which has transformed previously unused land
impacted by subsidence into a useful natural resource. These two projects
represent important steps in the ongoing care for the environment in which we
operate.

 "In the current low demand growth environment we will not be committing to
further generation developments in the near term. Contact maintains a range
of high quality development options with the world class resource at Tauhara
ready for execution as market signals dictate. In the meantime, our focus
will be on minimising the costs required to retain the full range of
development options we have in place," Mr Barnes said.

Customer numbers stable, retail margins remain tight
In the retail business, Mr Barnes reported that Contact had achieved an
acceptable result. Despite the market continuing to experience high levels of
customer switching, Contact's customer numbers saw a modest increase.
However, sales volumes were 1 per cent lower than the first half of the 2012
financial year. Margins decreased for electricity sales by $1 per megawatt
hour, reflecting the competition for customers in an oversupplied market. The
Online OnTime discount for customers who receive their bill online and pay on
time has continued to increase in popularity with over 40 per cent of
customers taking advantage of this product.

The Retail Transformation programme is moving into the final stages of
testing and preparing the business for the introduction of the new system.

Controlling costs a priority
In an environment of flat electricity demand it is important that we continue
to manage our cost base. We have announced to staff that we will be
restructuring the business. We recognise that workforce changes are
unsettling, particularly for any of our people who are affected and we will
support them through this transition. Restructuring is one of a number of
initiatives underway across the business to control costs.

"The proposed changes will control our costs and help us to remain
competitive for customers and shareholders" Mr Barnes said.

Safety
The health and safety of all people who work for the company remains our
number one priority.  Mr Barnes reported no improvement in the company's
safety statistics, with its total recordable injury frequency rate in line
with 30 June 2012.

"We are working to ensure every employee and contractor is focussed first and
foremost on safety and will continue to improve our leadership, culture and
systems. I am confident that the steps we are taking will bring us closer to
our goal of zero harm," said Mr Barnes.

Looking forward
For the remainder of 2013 and beyond, Contact will focus on remaining
competitive for our customers and improving our cost base.

The completion of Te Mihi will provide Contact with additional lower-cost
generation. Contact will make important decisions in the next 12 months
relating to the amount of gas we will contract and how we operate our
combined-cycle gas-fired power stations.

"We will be putting a greater emphasis on ensuring we are meeting the needs
of our customers," Mr Barnes said. In time, Retail Transformation will
provide us with new ways to engage with our customers and I want to ensure we
are totally focused on offering products and solutions that meet their
needs."

"We are working on the factors that we can control and impact, Mr Barnes
said. Completing the current asset and systems investment programme,
continuing to improve our fuel purchase costs and ensuring the organisation
is sized to match current market conditions will position Contact to grow
earnings in coming years."

ENDS

Media enquiries: Nicholas Robinson 027 705 3831

Investor enquiries: Fraser Gardiner 021 228 3688
End CA:00233077 For:CEN    Type:HALFYR     Time:2013-02-19 08:30:05