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Power customer growth boosts Contact

Friday 14th February 2003

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Contact Energy shares went into a steep climb following third-quarter results that confirmed the company has been performing strongly even compared to the bumper 2002 year.

Tuesday's trading saw the share price jump 21c, or 5%, to $4.47.

Strong growth in sales to retail customers boosted Contact's revenue for the nine months to December while at the ebitda (earnings before interest, tax, depreciation and amortisation) level the company recorded a 21.4% improvement on the same period a year ago.

The bottom-line result was affected by one-offs and revaluations.

The $18.4 million bottom-line profit was hit by a $5.2 million increase in depreciation following last year's $843 million asset revaluation.

For the December 2001 period the reported $16.2 million profit was adjusted to $20.3 million following the writeback of expenses associated with terminating a lease. Electricity revenue rose 19%, driven by growth in the retail business ­ in December the company had 465,000 customers, up from 405,000 last March ­ and higher tariffs.

But gas sales declined by 14%, mainly because less gas was sold to other generators. Gas customers were down slightly to 103,500, with losses to other suppliers offset partly by new connections.

The company was a net generator in December with a "hedge" (ratio of generation output to the load taken up by customer demand) of 112%. The average level of hedging over the nine-month period was 72% and it expected 90% for the full financial year.

Contact reported the loss of some "large, low-margin" gas customers and said it was not viable to compete with other gas suppliers for customers in their own incumbency areas.

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