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Meridian Energy underlying half-year net profit up 4%

Wednesday 23rd February 2011

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State-owned electricity company Meridian Energy lifted half year underlying net profit 4% to $123.4 million, and is to pay the Government an interim dividend of $94.2 million.

Revenue of $1.09 billion in the six months to the end of December was 18% higher than a year earlier, while earnings before interest, taxation, depreciation, amortisation and financial instruments (ebitdaf) rose 19% to $353.3 million.

The result included $28.1 million, net of legal expenses, received following a settlement reached between Meridian and RTA Power concerning liability for electricity during a pot line outage at the Tiwai smelter in 2008, Meridian said today.

The ebitdaf improvement was driven by the RTA Power settlement, increased wholesale electricity spot prices benefiting un-contracted generation, contracted electricity sales volume growth, along with earnings from international operations.

While spot prices were higher than a year earlier, they were still relatively low, with the company's hydro storage lakes remaining above average during the six-month period, while demand was soft, Meridian said.

Despite strong retail competition, contracted electricity sales volumes within its retail segment increased from last year, reflecting an increased contribution from the Powershop brand and changes in customer mix.

Despite that, profitability of that segment was negatively affected by higher average electricity purchase prices during the six-month period.

Bottomline net profit fell 41% to $84.7 million, with the figure reflecting as a result of increased depreciation following the revaluation of generation assets and non-cash accounting adjustments for fair value movements on financial instruments.

The interim dividend of $94.2 million, combined with the 2010 final dividend, would take total dividends paid this financial year to $162.6 million.



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