Trustpower’s financial strength comes from prudent use of funds to provide long-term stable returns. It does this by owning a geographically diverse portfolio of generation assets, operating a vertically integrated retail business that sells all of the electricity it generates, and by bundling electricity, gas and telecommunications to develop a loyal value adding customer base.
As at 31 March 2020, net debt (including subordinated bonds) was $617.2 million, up 9.8% from $562.1 million the year before. This increase was primarily driven by the special dividend of $50 million paid in June 2019. Trustpower uses net debt/EBITDAF as the metric to measure the company’s ability to repay debt. The current level of 3.3 is broadly in line with the average of our peers.
Trustpower has recently refinanced early all of its bank facilities maturing in 2020. It is now well placed to manage any contingencies that may arise due to the uncertain future caused by COVID-19.
Trustpower has just under 313 million shares on issue on the New Zealand Stock Exchange (NZX). We have two cornerstone shareholders, Infratil Limited and Tauranga Energy Consumer Trust, plus more than 12,000 small parcel shareholders and 12,000 bond holders.
Infratil, which has been a major shareholder since Trustpower’s formation in 1994, is a specialist investor in infrastructure and utility assets. It holds 51% of voting shares.
The Tauranga Energy Consumer Trust (TECT) owns 26.8% of voting shares. TECT has also held shares since Trustpower’s formation. The Trust’s beneficiaries are account holders in Tauranga, who receive two distributions each year. The Trust also sponsors a number of community initiatives, including the TECT Bay of Plenty rescue helicopter.
Government policy settings continue to steer the economy towards increased electrification. The Climate Change Response (Zero Carbon) Amendment Act, and the associated establishment of the Climate Commission and setting of carbon reduction goals all encourage consumers to choose clean energy over fossil fuels.
We fully participate in the Government’s policy development process with a preference for market mechanisms that facilitate innovation, open access for participants and suitable social policy protections of disadvantaged communities.
Trustpower is particularly focused on climate policy, pricing and telecommunications regulation.
Over the last four years, Trustpower has sharpened its focus to be in a position to benefit from the expected decarbonisation, increased electrification and exponential growth in the demand for data. This has seen us divest our Australian operations to become solely New Zealand focused. We have commenced the rollout of smart meters, sold our existing meter asset business and outsourced our meter-reading business. We have developed wireless broadband services and completed the capability build of our mobile resale offer. Our Internet Service Provider capacity has been significantly increased and we continue to invest in infrastructure. We also acquired a 75% stake in King Country Energy, increasing our hydro generation portfolio.
We are now well positioned with the funding capacity to grow. A number of development options are under consideration by both the retail and generation parts of our business.
The telecommunications part of our business continues to grow strongly, with Trustpower well placed to capitalise on New Zealanders’ growing appetite for fast, reliable broadband. Bundling telecommunications with electricity continues to give Trustpower a competitive advantage in the fight for loyal, value-adding customers. The generation business has the flexibility to cope with volatility and the capacity to grow as demand for electricity grows.