A day after revealing a solid inter profit, AFL Energy has revealed plans to go deeper into wind energy.
On Friday the company revealed a 22% rise in underlying earnings and a small rise in interim dividend, both pointers to improved trading.
Yesterday it said it would, with a New Zealand group, build a 170 turbine strong wind farm in southern Victoria.
It was the company's second wind farm deal in two days.
Friday saw it approve the construction of Hallett 5 which, at 52 MW, is the smallest of the Hallett wind farms.
"The investment in Hallett 5 is required for AGL to meet its obligations under long term contracts with the South Australian and Victorian desalination plants as well as the recently announced Melbourne Water transaction.
"The total installed capital cost of Hallett 5 is approximately $120 million and completion is expected in December 2011," the company said.
Yesterday it revealed that it had entered into conditional arrangements for the construction of Macarthur Wind Farm in south-west Victoria.
This follows the federal government’s announcement last week of proposed changes to the operation of the Renewable Energy Target (RET) scheme.
But on Friday AGL said it had put this wind farm and others (but not Hallet 5) on hold because of uncertainty about the certificates.
Now the Macarthur Wind Farm is a goer, sort of.
AGL said it will be constructed under a joint venture between it and Meridian Energy Limited, one of New Zealand’s largest energy companies.
AGL will take all of the wind farm’s energy output and renewable energy certificates.
The contractual arrangements are subject to a number of conditions precedent, including approval by the boards of the joint venture partners.
A key consideration of AGL’s board in approving the transaction will be certainty around the final form of the legislation to give effect to the federal government’s announced changes to the RET scheme.
When constructed, the Macarthur Wind Farm will comprise 174 turbines for a total capacity of 365 megawatts which is expected to deliver approximately 945 gigawatt hours of electricity each year.
Construction is expected to take approximately 3 years from the time the conditions precedent have been satisfied.
AGL said full details of expected capital cost of construction will be announced separately after AGL has finally committed to construction.
So ignore the headlines which said that AGL Energy reported an 89% fall in first-half net profit.
That was true, as was its reaffirmation of its full year profit guidance, which doesn't seem to go together.
Nor did a small rise in interim dividend.
AGL said on Friday first half net profit was $183.7 million, down from $1.655 billion in the prior corresponding half year.
Instead, for once, focus on the underlying net profit performance is a better guide.
It was up 22% to $234.8 million for the December 2009 half year from $192.5 million in the prior first half year.
AGL declared an interim dividend of 29 cents fully franked, up from 26 cents fully franked in the first half of 2008-09.
The company reaffirmed earlier guidance for full year underlying net profit.
Both are solid indications that the board sees further improvement this half year.
"We are on track to meet our full-year (underlying NPAT) guidance of $390 million to $420 million and are well placed to continue to grow through a combination of organic growth and acquisitions," AGL said in a statement.
While the privatisation of NSW electricity assets has been delayed until later this year, AGL said it remains interested in evaluating the assets for sale if the process proceeds.
AGL shares closed up 1.9% yesterday, or 28c, at $14.65.
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