FY14 was another year of reliable performance where Powerco continued to deliver on its track record of the consistent delivery of operational and financial results for its stakeholders.
This was achieved against the back drop of a sale process which saw Brookfield Infrastructure Partners sell its 42% interest to AMP Capital and four severe weather events1 (2013 saw no severe weather events).
For Powerco’s customers:
• The reliability of Powerco’s electricity and gas networks was better than the regulatory
quality limits notwithstanding four severe weather events in 2014 compared to none in
• When the lights did go out or the gas stopped flowing:
We restored electricity supply to urban customer in less than 3 hours more than 70% of the time and rural in less than 6 hours also more than 83% of the time even in the midst of severe weather events.
We responded to gas leaks within 60 minutes more than 95% of the time.
• $159.2 million was invested in maintaining, renewing and developing Powerco’s
electricity and gas networks, an increase of 14.6% (2013 $138.9 million);
• A record number of 8,390 scheduled maintenance, renewal and development projects were completed, an increase of 19% (2013: 7,098);
• Powerco continued to look for efficiency gains to share with its customers. Based on the most recent year for which comparative data is available, Powerco significantly outperforms the median for operational expenditure per connection point ($/ICP) and per total circuit length ($/km).
During FY14 Powerco surveyed over 5,700 people with 95% indicating that they were happy with the level of service that Powerco provides.
For Powerco’s staff and the staff of its contractors:
• There were no injuries from events with a high potential to cause death or serious injury;
• Powerco’s health and safety performance as measured by lost time injuries frequency rate and average time lost rate continued to be significantly better than industry average performance.
Total revenue was $415.5 million (2013 $401.4 million) in full compliance with the price and quality paths set for Powerco’s electricity and gas distribution businesses by the Commerce Commission. Included in this amount was $104.8 million of transmission and other pass-through costs with increases in transmission and other pass-through costs accounting for $8.3 million (59%) of the $14.1 million increase in recorded revenues. Revenue net of transmission charges and other pass-through costs was $310.7 million, an increase of $5.7 million (1.9%) on the prior year.
Ceased Hedge Accounting
To remove complexity and to aid transparency in the accounts, Powerco decided to cease hedge accounting for all existing designated hedge relationships.
This means that all valuations of derivatives used to hedge Powerco’s debt obligations and valuations of foreign currency debt (principally USD debt) will flow through the profit and loss statement.
Under Powerco’s Treasury Policy it is intended to always run foreign currency loans and related hedges to expiry and as such the unrealised gains or losses which are reported at the end of each accounting period will, except in extraordinary circumstances, never be realised by the company.
Underlying Performance of the Company
Powerco is of the opinion that both EBITDAF and Profit before Taxation adjusted to remove the impact of unrealised gains and losses are better measures of the performance of the Company showing a 1.4% and 1.6% year on year improvement respectively. Following is a table which shows Profit before Taxation with Other Gains and Losses for 2014 and 2013 removed:
Net Profit After Tax (NPAT)
The company made a net profit after tax of $91.8 million in the 12 months to 31 March 2014 compared to $62.1 million for the 12 months ended 31 March 2013, which after removing the impact of unrealised gains and losses is a 1.6% improvement in the underlying performance of the company as measured by Profit before Taxation adjusted to remove the impact of unrealised gains and losses.
Powerco’s Chair Mr John Loughlin said the results reflected the company’s resilience, stability and ongoing focus on performance improvement. He said the company was continuing its focus on being a reliable partner delivering New Zealand’s energy future.
Click here for the financial results.
1 An event is considered severe when the daily SAIDI value exceeds the boundary SAIDI value. The boundary SAIDI value is derived from historical data covering the 2004-2009 regulatory periods as specified under the Default Price – Quality path regulations. For Powerco, these severe events have been the result of storms.