Welcome turnaround for Hydro Tasmania bottom line

Increased rainfall and improved trading opportunities will see Hydro Tasmania report a profit for 2008/09 after three challenging years of drought, according to Chairman David Crean.

Dr Crean said this was a significant turnaround from last year’s $58 million operational loss and came despite hydro storages continuing to receive below average inflows and a business decision to focus on rebuilding hydro storages for long-term sustainable use.

While this rebuild strategy had resulted in a net import for the year across Basslink of around 2600 GWh, storages finished the 2008/09 year at 27.7 per cent full of energy, almost nine per cent higher than at the end of June 2008. Significant rains over the past two months had seen storages increase to around 40 per cent.

Hydro Tasmania’s financial results will be officially released in October and will show a stronger net profit after tax for the year, largely due to an increase in the value of its assets, and a modest operating profit of $38 million, which will see a dividend paid and together with guarantee fee payments will return $9.8 million to the State Government.

Dr Crean said this was a welcome turnaround considering the ongoing hydrological challenges and the wider impact of the global economic downturn on the markets in which Hydro Tasmania operates.

“It’s amazing what a little bit more rain can do for our business,” he said. “Our cash flow has improved, as has our equity and debt position, and we are well poised for further growth and increased returns to our shareholders – the people of Tasmania – in the next few years.

“I would emphasise that while this is a step forward we are still very sensitive to poor inflows or cost increases.”

The positive financial result was the culmination of a significant year for the business during which the groundwork was laid for further growth.

This included:

• The sale of Roaring 40s’ Asian assets in April 2009 and a refocus of its operations in Australia with all the proceeds from the sale being reinvested in the joint venture’s renewable energy projects in Australia, including the Waterloo Wind Farm in South Australia and the Musselroe Wind Farm in Tasmania.

• The purchase in August 2008 of a 51 per cent share of Momentum Energy – the only independent electricity retailer in Victoria to specialise in servicing small to medium business customers. Hydro Tasmania will purchase the remaining 49 per cent of Momentum in 2010 as it looks to diversify its revenue and customer base and improve its competitiveness in the National Electrjcity Market selling clean renewable energy.

• Reducing greenhouse emissions by 50 per cent from last year – largely as a result of the closure of the Bell Bay Power Station in April 2009. This will enable the business to remain on target to becoming Australia’s first carbon neutral generator by 2012 as part of its Climate Change Response Strategy, enhancing our brand as a world leading sustainable energy business

• Growth of Hydro Tasmania Consulting – revenue targets exceeded, increase in job numbers nationally with a new office opened in Brisbane and further growth in the Melbourne office. The business was also involved in a number of Asian projects in countries such as Malaysia and India, with the New Delhi office recording steady growth in business since it opened in 2007.

• Positioning the business to ensure it remains competitive in an increasingly tough market, particularly with the imminent commissioning of the Tamar Valley Power Station. While Tasmania will always be our primary market, we also must diversify our revenue base and look to the mainland for further growth opportunities.

• Building on our position as Australia’s leading renewable energy business and the largest manager of water in the nation to support the development of the appropriate national legislative framework to enable further growth in renewable energy across Australia.

Released by Helen Brain, 03 62305746

http://www.hydro.com.au/