State energy dividends give Government lift

Meridian Energy and Solid Energy provided their owner, the Government, with a welcome boost yesterday when they both declared dividends despite reporting lower profits.

Meridian Energy nearly halved its profit but still managed to pay the Government $235.9 million in dividends in the year to June 30.

The company reported an annual after-tax profit of $128.6 million, down from $241.2 million last year.

Solid Energy declared a $34.4 million dividend - the same amount as its after-tax profit for the year ended June.

The dividend will be paid on October 31 and is the first dividend paid by the coal company since it paid $20 million in 2006.

Although the company's profit dropped by nearly two-thirds from the previous corresponding period, the company still paid the dividend at a time when the Government's books are likely to show a sea of red ink when they are opened for pre-election scrutiny on Monday.

Meridian typically generates more electricity than it is contracted to sell, but this year lower lake levels and a number of other problems with generation and transmission affected the company.

When the company generated less it had to buy more from the market at higher prices to meet contracted sales.

Spot electricity prices of $356MWh in June this year compared to $69MWh last year. The company said it also had higher employee costs and greater depreciation.

Meridian paid a total dividend of $235.9 million for the year but had previously announced a $175 million special dividend.

At the interim it said it has paid $2.1 billion of dividends to the Government since its inception in 1999.

"The winter of 2008 was a difficult and complex situation for Meridian to manage," chief executive Tim Lusk said.

Solid Energy reported earnings before interest and tax of $55.6 million for the period, down from $152.2 million last year.

Revenue was only slightly down at $552.3 million from $556.5 million.

The return on shareholders' funds slumped to 9.7% from 33.5% and the return on average assets fell to 5.7% from 19.3%.

Chairman John Palmer said that while the year was challenging for the business, with coal production and revenue down, the result was above expectations given the difficulties experienced early in the year.

The 2007 record profit was boosted by significant one-off events such as the sale of the 49% stake in Spring Creek Mine.

"There was a huge contrast in the results from the two halves of the year. In the first half we reported a small loss of $2.7 million, the result of ongoing production problems at Stockton export mine, industrial action and reduced demand from Huntly Power Station.

"By contrast, in the second half we increased production and productivity and achieved record export price settlements for all coal types."

Genesis Energy increased its profit to $99.1 million in the year ended June 30 from a restated $89.5 million last year as it generated more power.

The state owned electricity and gas supplier did not signal any price increases, saying it sets prices region by region over a period of time.

Contact Energy has announced price hikes of at least 10%, while signalling increased profits and planning to almost double director's fees.

Genesis said it was continuing to attract new customers and had not yet declared a final dividend.

Genesis owns the Huntly power station as well as hydro stations at Tongariro and Lake Waikaremoana and has 700,000 electricity and gas customers mostly in the North Island.

The company said revenue increased to $2.48 billion from $1.77 billion and it generated 9126 gigawatt hours (GWh), up from 7992 GWh.

The company increased output at Huntly when South Island hydro lake levels were decreasing in the second half of the year.

State owned enterprise Mighty River Power announced a $111 million profit for 2007/08 financial year.

The result is up on last year's $96.9 million, and chairwoman Carole Durbin said that while the company continued to explore other generation opportunities, it regarded geothermal as its number one development priority.

The company had made good progress on several fronts, notably the completion of the 100MW Kawerau geothermal power station and the start of construction on the 132MW Nga Awa Purua geothermal power station, in partnership with Tauhara North No 2 Trust.

These projects were major milestones in the company's goal of having 400MW of geothermal power by 2012, she said.

Ms Durbin said capital expenditure for the past year was $317.7 million, up $138.9 million from the previous year.