King Country Energy announces annual result – profit up 20%

Electricity generator and retailer, King Country Energy (KCE), has announced its fully audited annual result for the year ending 31 March 2012.

The Company’s consolidated profit after tax was $5.3 million for the year, compared with a $4.4 million result for the previous financial year.

Earnings before interest, tax, depreciation, amortisation, fair value movements of financial instruments and asset impairments (EBITDAF) were $11.1 million, compared with a $8.5 million result for the previous financial year.

KCE Chairman, Brian Gurney, said the year ending 31 March 2012 produced very good results which built on the previous year’s solid performance.

“This past financial year has produced a number of achievements for KCE and the result is again very healthy, reflecting further positive initiatives within the business over the twelve month period.

“The Company is very well-positioned with a solid business model, good operating cashflows and a strong platform for growth, following the recent acquisition of the other half of Mangahao power station,” said Mr Gurney.

The Company’s operating revenue decreased slightly to $32 million. Operating expenses, including wholesale electricity costs, decreased 11% on the previous year. This decrease was primarily driven by a reduction in electricity volumes purchased during the year, mainly due to the loss of large contract customers in the previous year.

“The New Zealand retail electricity market is increasingly competitive, and KCE with its relative reliance on the wholesale hedge market, is exposed to retail competition. The strength of our financial result shows that despite the increasingly competitive environment, KCE has been able to stay one step ahead and produce good returns. In the medium term, with 100% ownership of Mangahao power station, KCE is much better positioned to compete and grow its retail business,” explained Mr Gurney.

Mr Gurney noted KCE continued its conservative financial policies throughout the year, maintained a strong balance sheet, and experienced strong positive operating cashflows. The Group’s operating cashflow was $10.6 million for the year to 31 March 2012 and the year-end cash position in the Group’s balance sheet was $11.2 million.

During the financial year, KCE’s total electricity retail volume decreased by 11% to 202 GWh. The company’s total customer numbers declined through the year to 18,000 connections as a result of retail competition in the area.

Of the Company’s total retail volume, 131 GWh was generated through its own hydro generation schemes, an 11% increase from last year. The Company cited good local hydrology within certain periods relative to the national average as the main reason for the increase in generation output. In the medium term, KCE remains focused on reducing its exposure to the hedge market, exploring opportunities to add to its generation portfolio, and growing its retail business using the additional output provided by the Mangahao acquisition.

The Company announced an unimputed final dividend of 12 cents per share, payable on 10 August 2012. This, combined with the interim dividend of 12 cents per share, provides a total gross return of 24 cents per share for the financial year ended 31 March 2012. The company is currently reviewing its dividend policy for future dividends.

For more information about KCE, visit: www.kce.co.nz.