Far North electricity network provider Top Energy has reported strong financial results in a year with significant challenges.
Underlying operating profitability (EBITDAF) exceeded the previous year's, driven by both network and generation businesses, there were significant advances on the Ngawha OEC4 expansion project, and for the third year running no lost time injuries.
Chairman Richard Krogh said the year was a most successful one for the community-owned company.
"The challenges came in the form of significant storms this year, undermining gains in network reliability in previous years, and the Covid-19 lockdown, which affected all parts of the business," he said.
Once again, the financial year had been dominated by the effort to increase generation capacity at Ngawha, much of the year being taken up with civil works, preparing the power station site and construction of the geothermal pipelines to and from the power station.
Early in the new year, parts of the plant were shipped from various locations around the world.
"While the advent of Covid-19 created some uncertainty in relation to some of the later shipments, all essential items have now been received," he said.
"The focus now is on getting the parts assembled and the fluid supply and the power delivery lines built. Progress is such that the new station will be commissioned at the end of 2020, ahead of schedule."
Chief executive Russell Shaw said building on the excellent health and safety successes achieved in recent years, a mental health initiative had been launched to improve everyone's awareness of the impact of mental health on a person's home life and their safety at work. The initiative was well received by staff, and the year ended with zero lost time injuries for a third successive year.
The target for network reliability, measured by average interruptions to customers, while better than regulatory targets, had not been achieved, however. The final outage result was 366 minutes per customer, an increase of 15 minutes over the previous year.
Meanwhile, earnings before interest, tax, depreciation, amortisation and fair value movement of financial assets was $47.3 million, up 7 per cent on the previous year and reflective of a $1.5m fall in expenses. Network financial performance remained strong, revenue growing 2.1 per cent, despite overall electricity consumption declining by 1.6 per cent.
Generation revenue was down $1.7m, the previous year having featured higher spot prices combined with slightly lower plant availability at 95.7 per cent, due to the need to replace turbine bearings during the year.
Revenue was up 2.1 per cent for the group and expenses were reduced by 4.6 per cent.
The group reported a net profit after tax of $5.1m, compared with a net loss of $15.8m the previous year. Prudent risk management and forward planning of the Ngawha expansion project included several hedge contracts, at prices that were at, or better than, the values used in the project's original business case.
The fair value adjustment on financial assets was a loss of $15.3m, arising from the group's hedging strategy. That included the impact of Covid-19, which caused a further reduction in interest rates, partly offset by lower wholesale energy prices due to the sudden drop in national demand. Energy prices also fell due to suddenly lower national demand.
The revaluation of the generation assets provided a $3.3m post-tax loss that was recorded through other comprehensive income, resulting in a decrease to the revaluation reserve. The generation asset value was expected to increase to more than $450m following the commissioning of OEC4 in late 2020.