MRP mighty river power limited (ns)

Ann: ANNREP: MRP: Mighty River Power Annual Repor

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    • Release Date: 19/10/12 17:21
    • Summary: ANNREP: MRP: Mighty River Power Annual Report 2012
    • Price Sensitive: No
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    MRP
    19/10/2012 15:21
    ANNREP
    
    REL: 1521 HRS Mighty River Power Limited
    
    ANNREP: MRP: Mighty River Power Annual Report 2012
    
    MIGHTY RIVER POWER CONTINUES TO DRIVE PERFORMANCE GAINS ACROSS ITS BUSINESS
    
    Mighty River Power's Annual Report for the financial year to 30 June 2012 has
    today been tabled in Parliament, with Chair, Joan Withers, stating the
    Company had built on the strong growth in earnings in 2011 and continued to
    drive performance gains across the business, demonstrating the increased
    resilience of the Company under different market conditions.
    
    Mrs Withers said in the report that Mighty River Power had developed from a
    hydro-only Company 13 years ago, into a strong integrated generation and
    retail electricity business with diversified fuel sources, a large geothermal
    base and powerful retail brands. The Company has invested more than $1.1
    billion into geothermal development over the past 5 years. Its latest
    project, the 82MW Ngatamariki geothermal power station, is expected to be in
    operation and contributing to earnings from mid-2013.
    
    Mrs Withers spoke of industry trends over recent years, stating, "The
    investment in significant new renewable generation capacity over the last
    five years, coupled with flat electricity demand, has resulted in New Zealand
    having a higher degree of under-utilised thermal plant than has been
    experienced for more than 15 years. As a result, we are seeing a changing
    cycle across the domestic electricity sector, following a period of high
    capital expenditure. The impact for the industry as a whole is that until
    demand picks up it is likely that less operating cash flow will be allocated
    to new domestic power projects, meaning potentially stronger balance sheets
    and higher dividend flows to owners."
    
    Executive Management
    
    Mighty River Power also confirmed today that its Chief Executive, Doug
    Heffernan, has committed to remaining with the company until 31 December
    2013, with the Board holding an option to extend his contract to 31 December
    2014, to ensure continuity of leadership as the company progresses through
    the potential Initial Public Offering and the next phase under mixed
    ownership. On completion of the initial contract term to 31 December 2013, a
    one-off retention payment of $500,000 will be made, with no further retention
    or termination payment if the Board elects to exercise its option to extend
    the contract. In agreeing to this retention arrangement, Mr Heffernan's
    contract has been varied to a fixed term, and he has waived termination
    provisions in his previous contract.
    
    "It's important for the Board to ensure certainty around managing succession
    planning and continuity of leadership at this critical time of the Company's
    evolution and we are pleased that Mr Heffernan has agreed to these contract
    changes," said Mrs Withers.
    
    Mr Heffernan has led the Company since its creation and by the end of 2013 he
    will have been at the Company for 15 years. Mr Heffernan was recently named
    Energy Executive of the Year at the 2012 Deloitte Energy Excellence Awards.
    
    International Geothermal
    
    Since Mighty River Power's Annual Report was published, the Company has
    received its first cash returns from the GeoGlobal Partners I Fund (GGE
    Fund), following EnergySource's successful post-construction refinancing of
    its John L Featherstone geothermal plant.
    
    The Southern California development was commissioned after a 21 month
    construction period and in its first quarter of operation recorded a
    world-class availability performance. This operational performance has
    supported EnergySource in successfully refinancing the project, which has now
    returned capital back to the equity participants, including the GGE Fund.
    
    "This distribution from the Fund is consistent with our business case and
    provides the first demonstration of the financial success of Mighty River
    Power's international geothermal strategy. In addition to this first
    substantial distribution, the GGE Fund will be entitled to further returns
    from the project through its continued direct investment in the project and
    through its 20% investment in EnergySource LLC," said Mighty River Power
    Chief Executive, Doug Heffernan.
    
    Through its investment in EnergySource, the GGE Fund will also have an
    ownership interest in any further development by EnergySource on the Salton
    Sea Reservoir, including the proposed 49.9MW Hudson Ranch Power II plant,
    adjacent to the John L Featherstone plant.  Drilling on this project is
    expected to begin later this year.
    
    The GGE Fund is currently seeking further capital to advance the development
    of its projects, and Mighty River Power is working with GGE to consider
    contributing further capital alongside new investors.
    
    ENDS
    
    Factsheet - International Geothermal:
    
    o The GGE Fund is an international geothermal investment fund, through which
    Mighty River Power's offshore geothermal investments are developed
    
    o In 2008, Mighty River Power made a strategic commitment to international
    geothermal development and subsequently became the cornerstone investor in,
    and 99.8% owner of the GGE Fund with a commitment of US$250 million.
    
    o US based GeoGlobal Energy LLC (GGE), acts as manager to the GGE Fund.
    Mighty River Power owns 29% of GGE and has two Directors on its Board.
    
    o The GGE Fund provided a capital injection of US$92 million into the
    EnergySource owned John L Featherstone development in May 2010, enabling its
    construction.
    
    o In May 2010 the GGE Fund purchased a 20% investment in EnergySource, a
    geothermal development company with access to the significant Salton Sea
    geothermal resources in Southern California's Imperial Valley - one of the
    largest and hottest geothermal resources in the United States.
    
    o As part of the EnergySource transaction, the GGE Fund invested US$92
    million into EnergySource's US$400 million John L Featherstone project
    originally known as the Hudson Ranch Power project, facilitating commencement
    of project construction.
    
    o The EnergySource owned 49.9MW John L Featherstone plant was successfully
    commissioned in March 2012, after a 21 month construction phase and achieved
    a capacity factor of over 99% in its first quarter of operation.
    
    o This operational performance has supported EnergySource in successfully
    refinancing the project which has now returned capital back to the equity
    participants, including the GGE Fund. Under the GGE Fund structure, cash
    received by the Fund is paid to investors in the Fund, including Mighty River
    Power as the cornerstone and 99.8% owner.
    
    o The John L Featherstone plant supplies renewable energy under a long-term
    contract to Salt River Project, an AA credit rated public power utility and
    water provider serving the greater Phoenix metropolitan area in Arizona.
    
    o Mighty River Power is not able to disclose the detailed financial and
    economic returns of the EnergySource investment due to confidentiality
    restrictions between EnergySource and GeoGlobal Energy.
    
    For further information contact:
    Katherine Litten
    Media Relations Manager
    Tel: 0272 105 337
    
    Anna Hirst
    Head of Investor Relations
    Tel: 027 517 3470
    
    About Mighty River Power
    
    Mighty River Power is one of New Zealand's largest electricity companies -
    with its core business based on reliable, low fuel-cost electricity
    generation complemented by sales to businesses and homes, which account for
    about 18.5% of New Zealand's total electricity consumption.
    
    The Company operates nine hydro power stations, four geothermal plants and a
    multi-unit gas-fired station. More than 90% of its electricity production is
    from renewable sources. Mighty River Power sells electricity through multiple
    channels and retail brands, including Mercury Energy, GLO-BUG, Bosco Connect
    and Tiny Mighty Power.
    End CA:00228679 For:MRP    Type:ANNREP     Time:2012-10-19 15:21:37
    				
 
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