- Record EBITDAF driven by both Network and Generation businesses
- Network reliability significantly improved
- Successful drilling for Ngawha OEC4 expansion
- Zero Loss Time Injuries (LTI) – 2nd year running
Chairman Richard Krogh said the 2019 financial year was the most successful since the inception of the community owned company in 1992. The successes spanned the three key areas of profitability, service to consumers and the Ngawha expansion.
The 2018-19 financial year has been dominated by the generation expansion project at Ngawha. Drilling of the three production wells by Iceland Drilling Ltd commenced in May 2018 with early indications the wells could provide enough geothermal fluid, temperature and pressure to power the station. In the final result, production flow exceeded the volumes required and the enthalpy was better than expected, resulting in an increased expected net output from 25MW to 31.5MW. The expansion project has been successfully progressed through most of the major risk areas, without any major difficulties or significantly increased costs. Progress is such that the new station will now be commissioned in October 2020, 8 months ahead of schedule.
Top Energy Chief Executive Russell Shaw said, building on the excellent health and safety successes achieved in recent years, a wellness programme was launched which has been well received by staff. The year ended with zero loss time injuries for a second successive year.
Network reliability has improved significantly this year, with Network quality measured by average interruptions to customers (SAIDI) reducing by 131 minutes, an improvement of 27% and better than both the company and regulatory targets.
Financial Results for FY2018/19
Earnings before interest, tax, depreciation, amortisation and fair value movement of financial assets (EBITDAF) was $44.2m, $10.0m higher than last year and $3.7m above budget. The 1.5% increase in electricity consumption, combined with continual growth in new connections, contributed to strong Network performance.
In addition, Ngawha performed extremely well with higher than target generation output, which combined with the high wholesale prices experienced in the market, grew generation revenue by 7.3%.
Revenue was 11.6% higher for the Group and expenses were reduced by $2.1m, contributing to the strong EBITDAF result.
The Group reported a Net Loss after Tax (NPAT) of $10.7m, after being impacted by a significant $34.5m decrease in the fair value of financial assets.
Prudent risk management, combined with the funding obligations for the Ngawha expansion, required additional derivative contracts to be completed to manage the risks associated with both electricity price fluctuations and interest rate movements. Since then, with market movements of higher electricity prices and lower interest rates, the reporting requirements have produced a significant noncash loss.
This loss identifies a theoretical ’opportunity cost or gain’ which will fluctuate over time and is not reflective of the underlying performance of the Group. Our business case supporting the Ngawha expansion, where nearly all of these issues arise, continues to be favourable following our hedging of these electricity price and interest rate risks.
The Ngawha generation assets were also revalued, providing a $20.1m uplift, valuing the existing stations at $160m. The generation asset value is expected to increase to over $450m following the commissioning of OEC4 In October 2020.