Ann: Daily share buy-back notice - Appendix 3E, page-3

In my view, we are experiencing growing pains.

This year the contracted Twh in USA has more than doubled, which requires significant investment - demonstrated below.

The USA business Opex for this year is $22m on 6.3Twh of contracted load.
The Australian business Opex is $22m on 19Twh of contracted load.

Calculating this, Australia has an opex of $1.16 per Mwh, and the USA has $3.49 per Mwh.
While the US market may differ from Australia, I expect the US opex to fall relative to sold Twh over time, and to arrive somewhat closer to Australian margins.

While the margin compression in the USA has been unexpected, the margins are not markedly different from some of the historic margins in the Australian business.

Other costs are also growing pains - the growth of hedge books, and finance charges are to be expected.

The predicted slight growth in Twh to just over 7 next year seems to possibly be a prudent management of cashflow, allowing stabilisation before the next phase of growth.

Jon Stretch said that they are at least half way across the river, and can see the other side to profitable operations.