KCE decreases earnings forecast due to summer drought

MEDIA RELEASE

For Immediate Release

28 March 2013

KCE decreases earnings forecast due to summer drought

Taumarunui, NZ - King Country Energy (KCE) has signalled the company’s end-of-year earnings will be lower than the forecast issued by the company in November 2012, due to extreme North Island drought conditions during February and March.

As part of the company’s half yearly result announcement in November, it provided an EBITDAF (earnings before interest, tax, depreciation, amortisation and fair value adjustments) forecast for the year to 31 March 2013 of between $14 million and $15 million.

KCE Chairman Brian Gurney today said: “At the end of January, KCE was on track to meet its original EBITDAF forecast. However, the extreme weather we’ve experienced in the King Country and Manawatu during February and March now means we expect our final EBITDAF for the year to be in the range of $12.75 million to $13.25 million.

“The unprecedented drought conditions across the North Island over the past two months have significantly reduced the output from KCE’s five hydro-electric generation plants. Reduced generation means we are more reliant on purchasing electricity from the spot market to meet our customer demand requirements.”

KCE owns hydro-electric power stations at Kuratau, Mokauiti, Piriaka and Wairere in the King Country, and the Mangahao power station in Manawatu.

In February, the total electricity generated by the company’s power stations was 66% of expected output. To date in March, generation output is 49% of expected output.

“The drought has also caused wholesale electricity prices to increase to levels that are significantly higher than our expectations. So, although KCE has some hedge supply arrangements in place to offset a portion of our reduced generation production, for most of the drought period we have been a net purchaser of electricity at elevated wholesale spot prices,” he explained.

The KCE board will announce the company’s final result following its approval of the annual accounts in mid-June 2013. -ENDS

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