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Sustainability Code: We ensure our financial practices promote long-term prosperity and enhancement of the business. We develop new products and services, as well as adapt and change our current ones, to ensure flexibility in the marketplace. |
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3This transaction was brought forward after the reporting period and is expected to be completed in October 2009. It was in progress at the time of printing. |
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Finance
Our mission: Building our financial strength and delivering sustainable returns to our owners, the people of Tasmania.
Our strategy is to continuously strive for the lowest cost and most flexible funding arrangements, and to increase the free cash flow to be available for debt reduction or
value-adding investment.
Management approach
Hydro Tasmania’s financial performance is guided by a risk management approach that complies with Treasury, Finance, Credit and Energy Trading policies that set limits and measure exposure. We report quarterly to our shareholder, the Tasmanian Government.
In 2008/09, we introduced the Trading Enterprise Value methodology, a tool for revenue forecast modelling that is expected to improve our forward planning. Its key purpose is to help us make better trading decisions and optimise the longer-term value derived from energy revenues.
We ensure our employees keep their professional qualifications up to date by supporting their professional training requirements and helping them meet their individual development plans, including additional training to meet our future needs.
Financial performance 2008/09
Hydro Tasmania recorded a significant improvement in profit and in cash generated from operations, despite the fact that our water inflows were lower than expected again this year. We recorded significant accounting gains as a result of fair value adjustments to assets and liabilities. The profit before these gains also improved substantially as a result of reduced expenditure on gas due to the closure of our only gas-fired power station and lower than expected expenses for importing electricity via Basslink.
Our focus on cost control maintained our operating expenses at a constant level over the year. Our financing expenses fell by $9.0 million, largely due to the reduction in debt as a result of the Tasmanian Government’s $220 million equity contribution in June 2008.
Hydro Tasmania acquired an initial 51 per cent stake in the Victorian retailer Momentum Energy Pty Ltd in August 2008 at a cost of $17.8 million. The remainder is expected to be acquired by August 2010 with the final sale price subject to performance conditions.3
The 2008/09 financial results include a loss before tax and fair value adjustments by Momentum Energy of $4.5 million.
The financial results are provided in table 5.
Returns to Government
Hydro Tasmania has declared a dividend of $5.3 million to be paid in the 2009/10 period. This is above expectations. Dividends are paid on profit before fair value movements and accordingly do not include the reported fair value gains or losses. Details are provided in figure 5.
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