18 Oct 2012

Contact shareholders to get extra cash

10:25 am on 18 October 2012

Contact Energy shareholders will receive hundreds of millions of dollars in coming years as the company slashes capital expenditure and boosts its cash flow.

At the company's annual meeting in Auckland on Wednesday, shareholders were told that Contact's last major development, the Te Mihi geothermal power station in Taupo, will be completed next year.

The company is also completing a costly revamp of its billing system.

The projects cost the company about $550 million in the last year.

Chairman Grant King says Contact will not be committing to further generation developments in the near term, due to suppressed demand for power.

Mr King says the fall in expenditure will leave it with more funds to distribute, as it completes the major projects in over the next two years.

Eventually, the extra cash flow available could lead to buy backs and capital returns.

Mr King says the company will announce its cash distribution plan to shareholders next year.