King Country Energy today announced a Net Surplus after Taxation of $1.4 million for the six months to 30 September 2009, compared with $4.7 million for the same period last year, a decrease of 70 per cent. Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) were $2.9 million, compared with $8.2 million for the prior period, a decrease of 65 per cent. This result includes a $3.6 million loss from clearing hedges in the period and the valuation of the company’s hedge portfolio under the IFRS accounting provisions. 

Net operating cashflow recorded for the six months to 30 September 2009 is $3.6 million, which meets budget expectations. This reflects actual cashflows which highlight the underlying performance of the business and excludes the valuation of the company’s hedge portfolio. 

Chairman Brian Gurney said while the reported result was disappointing, the underlying operating business performance was satisfactory with retail sales slightly ahead of budget. 

“This year has been influenced by lower than average wholesale electricity spot prices across the system, caused by high inflows in the South Island hydro catchments. Unfortunately, inflows in the North Island hydro catchments, including ours, have been lower than expected and this combined effect has adversely impacted our earnings. 

“The rain finally began falling in our hydro catchments in September, increasing our production, however, spot prices have remained low. 

“Despite these lower than expected market prices, the longer term hedge market levels have remained high which has created the need for the recent 4% retail price increase. Regrettably, the longer term hedge market prices are expected to continue to increase. 

“Regardless of the challenging conditions, King Country Energy has still achieved a satisfactory half year result,” said Mr Gurney. 

King Country Energy’s retail sales volume for the first six months of the year was 143 GWh, which is slightly ahead of budget. This increase is attributable to a slightly longer winter weather period than normal. 

Generation volumes were low for the duration of the period as a result of 10% lower than average rainfall in the hydro catchments. The total output was 62.1GWh compared to 73.6GWh for the same period last year. 

King Country Energy Chief Executive Rob Foster said the company is focused on managing its electricity supply and demand mix and strengthening its position as a strong community based retailer. 

“King Country Energy is reliant on both our own generation and the wholesale electricity hedge market to supply our customer demand. A more liquid wholesale electricity hedge market would improve our ability to secure electricity supply at reasonable pricing levels”. 

“The Company has a strong balance sheet, provides excellent customer service, and has strength in its position embedded in the community.” stated Mr Foster. 

A fully imputed dividend of 12 cents per share for the 2009 financial half year has been declared. This is consistent with last year’s dividend and is equivalent to a gross taxable dividend of 17 cents per share. The dividend will be paid on 26 November 2009 to all shareholders recorded on the share register at the close of business on 20 November 2009.