Aurora Energy 2015 Annual Results – Substantial Progress on Network Investment

Chief executive Grady Cameron says, “We are proud to supply the electricity infrastructure that underpins the economic and social well-being of the communities we serve in Dunedin, Central Otago and Queenstown Lakes. During FY15, we achieved planned investments to meet growing demand, renew assets due for replacement and make improvements to the risk profile of our electricity infrastructure assets.

“Total revenue increased by $6.6 million to $99.5 million (FY14: $92.9 million), reflecting a combination of growth in consumer connections in Central Otago, the recovery of higher transmission charges in the fourth quarter, and higher energy demand. The company recorded a net profit after tax and subvention payments of $8.2 million (FY14: $7.7 million).

“Energy received into the network increased by 4.2 percent on last year to 1,408 gigawatt hours. Consumer connections increased by 1% to 85,692 and network capacity by 2% to 928 megavolt amperes.

“Capital expenditure during FY15 increased by 66 percent to $35.4 million (FY14: $21.3 million). Term borrowings increased by 12 percent to $155.5 million at year end (FY14: $138.8 million). The increases in capital expenditure and borrowings reflect the higher level of asset investment as signalled in Aurora Energy’s ten-year asset management plan. Total assets increased by $23 million to $413.9 million (FY14: $390.9 million).

“During FY15, Aurora Energy paid dividends to its shareholder, Dunedin City Holdings Limited, that were equivalent to $10.0 million, the same as last year (FY14: $10.0 million).

“As an electricity distributor, Aurora Energy operates in a highly regulated environment. The Commerce Commission sets the limits on maximum price and also sets targets for service quality. Starting 1 April 2015, Aurora Energy’s maximum allowable revenue was reduced by 4.3% for the current five-year regulatory period. The reduction and planned asset investment over the same period has the potential to constrain the level of future dividends the company is able to pay.

“Major projects carried out during FY15 included:

• Completion of the new Lindis Crossing substation, near Cromwell, livened in March 2015
• Progress in year three of a major, five-year project to modernise and upgrade our network management, control and communication systems, entering into a contract with GE for provision of the major software system
• Completion of an increased level of planned pole replacements and major vegetation management projects throughout Dunedin and Central Otago.

“Looking ahead, we plan to outlay total expenditures of $372 million between 2015 and 2025, increasing preventative maintenance and renewal investment on the Dunedin network, and catering for growing consumer demand on the Central Otago network.

“Aurora Energy’s financial position remains strong and the company is well-placed to make those planned investments,” says Mr Cameron.

Aurora Energy’s 2015 annual report is available here.

ENDS