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Flat Earnings for TrustPower; Price Rises Moderating

Friday 14th May 2010

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TrustPower, the NZX-listed electricity generator and retailer, reported flat before tax and adjustments earnings for the year to March 31 of $273.9 million, compared with $261.4 million in the previous financial year.

A $30 million drop in wholesale electricity revenue was the main factor reducing wholesale electricity revenue to $759.3 million, compared with $785.4 million the year before.

The stock traded last at $7.35 today, close to the level the stock has held in trading for the last year.

Gains in many smaller revenue lines mitigated the reduction in wholesale electricity revenue, allowing TrustPower to report a "profit after tax attributale to shareholders"of $119.4 million ($105.1 million in the previous financial year) and to raise total shareholder distributions for the year to 38 cents per share, from 33c in the previous year.

The final dividend of 19 cents per share, partially imputed to 13 cps, is payable June 11 (record date May 28).

In its statement to the NZX, TrustPower suggests electricity price rises "will moderate somewhat, but price rises above inflation are still likely for a period, as retail pricing aligns with the increasing long run marginal cost of new generation."

Its Australian windfarm, at Snowtown in South Australia, added around $10 million of revenue to $30.6 million but produced 4% less energy than forecast in its first full year of operation.

Cancellation of the Australian version of an emissions trading scheme was not all bad, as distortions" in existing schemes that favour solar energy are about to end, making wind generation more commercially viable."

Meanwhile, the company holds wind development options and has consent applications for 500MW of installed wind generation in the South Island, and is waiting "to pursue further development of electricity generation assets when it is economically justifiable."

The cost of abandoning early parts of a customer service IT project during the year was a relatively small $6.2 million.

TrustPower's total electricity production in New Zealand was down 5% for the year to 2,000 Gigawatt hours, and lower wholesale prices dropped TrustPower's single biggest revenue line, "electricity revenue", to $717.3 million from $785.4 million in the previous year.

Telecommunications sales revenue rose $2.6 million to $19.7 million.

The company also announced the retirement of a board member, Sir Ron Carter, who has served since 2002.

Businesswire.co.nz

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