Ann: FLLYR: CEN: Contact Energy Limited 2012 Full

• Release Date: 14/08/12 10:30
• Summary: FLLYR: CEN: Contact Energy Limited 2012 Full Year Results
• Price Sensitive: No
• Download Document  9KB

					

CEN
14/08/2012 08:30
FLLYR

REL: 0830 HRS Contact Energy Limited

FLLYR: CEN: Contact Energy Limited 2012 Full Year Results

CONTACT ENERGY 2012 FULL YEAR RESULTS

Name of Listed Issuer: Contact Energy Limited
For the year ended: 30 June 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 audited accounts.

CONSOLIDATED INCOME STATEMENT

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

EBITDAF (Earnings before net interest expense, income tax, depreciation,
amortisation, change in fair value of financial instruments and other
significant items) $508.7m; up 15.2%; $441.4m

UNDERLYING EARNINGS AFTER TAX (excludes significant items that do not reflect
the ongoing performance of the Group - non-statutory measure) $176.4m; up
16.9%; $150.9m
UNDERLYING EARNINGS PER SHARE: 24.95 CPS; up 4.0%; 24.00 CPS

PROFIT FOR THE FULL YEAR: $190.4m; up 26.7%; $150.3m
EARNINGS PER SHARE: 26.94 CPS; up 12.8%; 23.89 CPS

FINAL DISTRIBUTION* 12.0 CPS
*In the form of a non-taxable bonus share issue pursuant to the Profit
Distribution Plan.

Record date: 28/08/2012
Non-taxable Bonus Share Allotment Date and Dividend Payment Date: 21/09/2012

MEDIA RELEASE

14 August 2012

Investment in portfolio flexibility returns improved profit

2012 financial year in review
It has been a successful year for Contact Energy, with the promised benefits
from the company's portfolio flexibility coming to fruition and a competitive
focus on retaining and gaining customers resulting in flat customer numbers
in what has been a year of considerable customer churn, Chief Executive,
Dennis Barnes said today. Contact Energy reported an improved financial
result, with both EBITDAF and profit higher than for the same period last
year.

Contact reported profit for the year to 30 June 2012 of $190 million, $40
million (27 per cent) higher than the prior corresponding period. Earnings
Before Net Interest Expense, Income Tax, Depreciation, Amortisation, Change
in Fair Value of Financial Instruments and Other Significant Items (EBITDAF)
were $509 million, up 15 per cent from $441 million in the 2011 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 $176 million, up $25 million (17 per cent).

"Our results show substantial improvement in our underlying business
performance as we have utilised our flexible fuel and generation portfolio
and responded decisively to increased activity in the retail sector," Mr
Barnes said.

Distribution to shareholders
The Contact Energy Board of Directors resolved that the final distribution to
shareholders would be the equivalent of 12 cents per share, resulting in a
total distribution for the year of 23 cents per share. The distribution
represents a payout ratio of 93% per cent of Contact's underlying earnings
per share. Contact will utilise the Profit Distribution Plan for the last
time.

Contact's Chairman, Grant King, said "as Contact nears the end of its current
investment programme it is pleasing to see an improvement in earnings that
should see Contact revert to a cash distribution in 2013"

Generation portfolio flexing its strength
The benefits of Contact's diverse generation portfolio were realised in the
financial year 2012 (FY12) as record low hydro generation was replaced by
increased output from Contact's thermal power stations.

"I reported last year that the Ahuroa gas storage facility and the Stratford
peaker plant had been brought into service and were showing positive early
signs of contributing to the company's flexibility and that we expected gains
to be made from this investment. We also stated when the interim result was
released that we expected an improved second half result. I am pleased to
announce that we have delivered on both.

"The second half of FY12 was characterised by low hydrology and our thermal
assets, including the Stratford peaker plant, were drawn on as lower hydro
generation was replaced with thermal generation. After providing largely risk
management capacity in 1H12 (the first half of the 2012 financial year) the
Stratford peaker plant was used in both a merchant and risk capacity in 2H12
(the second half of the 2012 financial year) with full year generation of 356
GWh.

"Ahuroa gas storage was also utilised with injections in 1H12 reflecting an
oversupplied gas market and extractions in 2H12 to provide additional volume
during periods when the market needed all our thermal units. We are delighted
with this result in what has been the first full year of operation for these
new assets," Mr Barnes said.

In 1H12 Contact met its gas take-or-pay commitments for calendar year 2012
with no excess take-or-pay costs, contributing to a $24 million improvement
over the 2011 financial year. Additional savings in gas and carbon unit costs
also contributed to the improved result.

"The ongoing contribution of these assets and Contact's diverse portfolio is
evident in the FY12 financial results and we will achieve further gains from
this mix in the future," Mr Barnes said.

While wholesale prices were higher overall than the previous year, the impact
of hydro generation falling by 25 per cent meant the increased prices were
largely offset by the higher costs associated with thermal generation.

Contact has further enhanced the diversity of its generation assets during
the year as the generation portfolio added the diesel-fired Whirinaki power
station.

Retail finishes year in strong position
In retail, Mr Barnes reported that Contact had achieved a good result. A
continuation of the strategy to align load with the location of our
generation was reinforced by the dry conditions of 2H12. With around 71% of
load now located in the North Island, Contact was much better placed to deal
with transmission constraints than during the last dry period.

Overall, despite the market continuing to experience high levels of customer
churn, Contact's sales volumes were inline with the prior year with
continuing growth in commercial and industrial sales.

Competition in the mass market sector continued to be strong in FY13,
resulting in customer churn and prices that did not fully pass through the
increase in network costs therefore reducing margins. However, Contact
succeeded in this environment to maintain customer numbers and sales volumes
at almost the same levels as FY12.

Contact continued its success with commercial and industrial customers, with
total volumes increasing by 4 per cent to 4,092 GWh and margins increasing.

The Enterprise Transformation programme is now focussed on upgrading
Contact's aging customer billing and service systems.

Te Mihi development continues toward completion
Progress on building Contact's Te Mihi power station continues. The 166 MW
project is due for completion in 2013 and combined with several other
projects focussed on the care and sustainability of the Wairakei steamfield
represents a significant investment in the Wairakei geothermal resource.

The completion of Te Mihi next year will bring to an end the current
investment programme, of around 500MW of low-cost, flexible, thermal and
geothermal generation capacity and New Zealand's first gas storage facility.

"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 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 options we have
developed," Mr Barnes said.

People
Mr Barnes reported a modest improvement in the company's safety performance,
reducing its total recordable injury frequency rate by 2 per cent over the
year.

"The improvements in the safety performance of our operations business unit
shows that with a concerted effort from the whole team and the support of our
core health and safety systems we can achieve our aspiration of zero harm,"
said Mr Barnes.

Looking forward
Contact's focus will continue through the 2013 financial year to be on
delivery. Mr Barnes said that the company's priorities over the coming year
are completing Te Mihi, progressing the Enterprise Transformation programme
and continuing to focus on customers.

"An important decision in the next 18 months relates to the amount of gas we
will contract and the resulting operating regime of our combined-cycle
gas-fired power stations. The current high level of upstream exploration and
development activity gives me confidence that Contact will markedly improve
its contracted position.

Completing the current asset and systems investment programme, leveraging
existing investments to reduce costs and continuing to improve our fuel
purchase costs will position Contact to grow earnings in coming years.

ENDS

Media enquiries: Janet Carson 021 242 5723

Investor enquiries: Fraser Gardiner 021 228 3688
End CA:00225896 For:CEN    Type:FLLYR      Time:2012-08-14 08:30:04