Alinta records $577m loss

The owner of the state's gas and electricity retail business, Alinta Energy, has recorded a $577 million loss after tax for the 2010 financial year, mainly due to a full year impairment charge of $670 million.

This compares to the previous corresponding period when Alinta, formerly Babcock and Brown Power, made a loss of $167.8 million.

The majority component of the impairment was a $525 million charge for the Alinta's retail unit in WA.

Most of the writedown has come in the second half of 2010. Last week Alinta pre-empted today's results by announcing a writedown of $465 for the second half of the year.

In a statement Alinta said the company faced significant increases in forecast gas prices, protracted soft gas and electricity demand and a general oversupply of generation capacity in WA resulting in lower than previously forecast electricity prices in the South West Interconnected System.

"The FY10 financial year has been challenging for the Group. Key challenges have included managing the outcome of the North West Shelf gas price arbitration, weaker than expected energy market operating conditions and the continued focus on the Group's capital structure," said CEO Ross Rolfe.

"Notwithstanding these challenges, Alinta delivered FY10 Management EBITDA of $319 million which was consistent with market guidance and the previous corresponding period on a "like for like" basis," he said.

He said Alinta's deleveraging process is well advance and a range of different options were being progressed.

See statement from Alinta below:

Alinta Energy Group (ASX:AEJ) has today released the Appendix 4E Preliminary Financial Report for the 12 months ended 30 June 2010.

The CEO, Ross Rolfe said: "The FY10 financial year has been challenging for the Group. Key challenges have included managing the outcome of the North West Shelf gas price arbitration, weaker than expected energy market operating conditions and the continued focus on the Group's capital structure. Notwithstanding these challenges, Alinta delivered FY10 Management EBITDA of $319 million which was consistent with market guidance and the previous corresponding period on a "like for like" basis1.

Alinta's deleveraging process is well advanced with a range of different options being progressed, including an equity capital markets solution, and whole of business and individual asset sales to trade buyers. Final bids from interested trade buyers are due in September 2010. Concurrently the Group has continued to work with its lenders on other deleveraging options. The Directors expect to be able to update the market once the trade bids have been received and considered and after discussions with the lending group."

Energy Markets contributed $149 million Management EBITDA, performing largely in line with the previous corresponding period on a "like for like" basis. The performance reflected higher gas costs and weaker demand from both gas and electricity commercial and industrial customers due to global economic conditions. This was partly offset by the benefit of two residential gas tariff increases in the Alinta West retail gas business. Performance of the Generation segment, with Management EBITDA of $206 million, was also principally in line with the previous corresponding period on a "like for like" basis.

NPAT declined to a loss of $577 million principally due to a full year impairment charge of $670 million. The key component of the impairment was $525 million for the Alinta West cash generating unit due to significant increases in forecast gas prices in Western Australia, protracted soft gas and electricity demand and a general oversupply of generation capacity in WA resulting in lower than previously forecast electricity prices in the South West Interconnected System.

The Appendix 4E is based on financial reports which are in the process of being audited and are due to be released not later than 30 September 2010.