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Revaluing skews Contact result

By Nick Stride

Friday 1st August 2003

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Contact Energy reported strong growth in revenue and operating earnings yesterday but higher depreciation charges hit the bottom line.

Adjusted for revaluations the net profit for the nine months to June was down 9% to $74.2 million.

Revenue rose 11% to $840.7 million and earnings before interest, tax, depreciation and amortisation were up 15% to $251.7 million.

An almost fully hedged position meant Contact didn't benefit from the high wholesale electricity prices over most of the period.

The bigger retail base ­ gas and electricity customers have reached 617,000 ­ and forward sales took average hedge levels to 94%, up from 77% a year ago.

Also affecting the result were the costs incurred by Contact's Empower subsidiary, which went on the offensive in Wellington and Christchurch to pick up customers after TrustPower pulled out .

The depreciation bill rose $19.5 million due to a September asset revaluation ($11.3 million) and the acquisition of the Taranaki Combined Cycle power station ($8.2 million).

Electricity sales rose 23% to $665.6 million but transmission and distribution costs were up 27% to $258.5 million.

Gas revenue fell 24% to $205.4 million, mostly because Contact sold less gas to other generators. This was offset partly by the new supply contract to Genesis Power.

Interest costs rose to $52.6 million and net debt was up from $735 million to $1.2 billion.

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