Ann: FORECAST: TRP: Earnings guidance - Transpower New Zealand

• Release Date: 14/11/14 09:26
• Summary: FORECAST: TRP: Earnings guidance - Transpower New Zealand
• Price Sensitive: No
• Download Document  2KB

					TRP
14/11/2014 09:26
FORECAST

REL: 0926 HRS Transpower New Zealand Limited

FORECAST: TRP: Earnings guidance - Transpower New Zealand

Transpower New Zealand Limited advises that the revenue forecast used to set
the financial targets in its 2014/2015 Statement of Corporate Intent (SCI),
is unlikely to be achieved. This update follows the calculation of its new
revenue path, from the determination by its regulator the Commerce
Commission, for its second regulatory control period (RCP2), and subsequent
decisions of the Commission. RCP2 runs for five years from 1 April 2015.
In comparison to its SCI, revenue is expected to reduce by $19m in Q4 of
FY2015, and at least $75m per annum thereafter. These reductions will
significantly reduce profit in FY2015 and in the following five year period.

The movement in annual revenue reflects a number of factors including:
- a decision by the Commerce Commission to reduce the allowable rate of
return from a 75th percentile to a 67th percentile cost of capital estimate;

- a decision by the Commerce Commission to update the way it models the
revenue required to meet costs;
- movements in market cost of capital benchmark rates; and
- a final decision by the Commerce Commission on Transpower's operating
expenditure allowance.
An updated revenue forecast was published at www.transpower.co.nz in July
2014, based on Transpower's revised proposal to the Commerce Commission for
RCP2, and our estimate at the time of our allowable rate of return.  Since
that forecast result, revenues are projected to reduce by $8.9m in Q4 of
FY2015, and at least $36m p.a. thereafter, due to the subsequent reductions
outlined above.
Transpower advises that it is currently working through these new forecasts
and identifying opportunities to help mitigate the impact on SCI metrics.
Any material changes that eventuate will be disclosed.
For further information, please contact:
Rebecca Wilson, Corporate Communications Manager, 04 590 6695
End CA:00257656 For:TRP    Type:FORECAST   Time:2014-11-14 09:26:44