Transpower New Zealand today released its financial results for the six months ended 31 December 2014.
Net profit after tax, before net changes in the fair value of financial instruments, was $107.7 million, an increase of 8% on the prior period of $99.7 million. The result reflects the completion of our major capital build programme. Total revenue increased by $33.1 million to $526.9 million (+6.7%) on the prior period as newly commissioned assets are included in the revenue base.
Operating expenses declined by 3.2% from $140.3 million in the prior period to $135.8 million, reflecting initial gains from a number of business improvement and efficiency initiatives being implemented across the company. Increased revenue and lower operating costs improved EBITDAIF by 10.6% to $391.1 million (December 2013: $353.5 million).
Net profit after tax including net changes in the fair value of financial instruments declined to $73.8 million (Dec 2013: $153.6 million). The non-cash net loss in the fair value of financial instruments was $47.0 million, compared to a gain of $75 million in the prior period, predominately the result of movements in market interest rates. We are not in the business of trading financial instruments, which are generally held to maturity. Fair value movements are non-cash in nature and do not reflect the underlying operating performance of the business.
An interim dividend of $75.2 million (December 2013: $60 million) will be paid to the shareholder in March.
Transpower Chairman, Mark Verbiest said this period has reflected a period of transition from delivering the large build programme which is now completed, to being strongly focused on optimising our business as usual operations.
"The last six months has also been substantial on the regulatory front with the Commerce Commission finalising its determinations for our second regulatory control period (RCP2) that runs for five years from 1 April 2015."
"While we recorded a sound financial result for the first half of 2014/15, the last quarter of this financial year will include the first downward impact on revenue as a result of these regulatory determinations. This impact will continue through the remainder of RCP2, until 31 March 2020," he said.
Transpower’s half year report will be published once it is tabled in Parliament, which is expected to be in March 2015.