INCREASED INTEREST payments and finance costs contributed to a 40 per cent fall in profits at State-owned energy group, ESB, in the first half of last year, figures released yesterday show.
The group’s numbers also show that its ESB Electric Ireland division, which sells electricity and gas to businesses and consumers, lost more than €13 million during the six-month period.
The loss was less than half the €32.4 million deficit that division recorded during the same period in 2010.
The company yesterday published accounts for the first six months of 2011 showing that revenues increased by €33 million over the same period in 2010 to €1.38 billion.
The group’s profit before tax for the first half of 2011 fell by almost 41 per cent on the same period in 2010 to €82 million from €137 million.
Operating profits grew by 20 per cent to €212 million during the first half of 2011 from €175 million the previous year.
The group’s share of surpluses from joint ventures in Britain, Poland and Spain also increased to €10.7 million from €4.7 million.
However, a sharp increase in finance costs to €140.6 million from €42.6 million dented the ESB’s pre-tax profits.
The accounts show that the interest on its debts increased by 50 per cent to €79 million from €52 million over the period.
The group’s long-term debt on June 30th 2011 was €3.4 billion. Of this, €659 million was in bonds in euro and sterling issued in late 2010 and early 2011.
These instruments would have contributed to the increase in its interest bill between 2010 and 2011.
It also had a further private placement debt of €1 billion and long-term bank debt of €1.3 billion.
Along with the extra interest, the ESB acquired a near €50 million loss on interest rate swaps as part of its purchase of Northern Ireland Electricity (NIE) in December 2010 for €1.2 billion.
NIE lost €18.6 million in the first half of 2011. A group of other businesses that include its wind energy development operations, lost €98 million during the period, compared with €63 million during the first half of 2010.
The group’s profitable businesses were its networks and international divisions, which between them contributed an operating surplus of €211 million.
The group’s balance sheet showed that assets stood at almost €12 billion at the end of June 2011, around €100 million less than a year previously.
The Government is considering a sale of a minority stake in the company.
However, the value of the assets on its balance sheet may not give any indication of what a commercial investor would be willing to pay for part or all of the State-owned group.
Bonds issued by the group are listed on the Irish Stock Exchange. As a result, the company is obliged to publish interim accounts as well as results for the entire year.
The ESB is due to publish its annual report, which will include full-year accounts for 2011, in April.
