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Powerco Records An Annual Result Of $ 21.7 Million


MEDIACOM-RELEASE-POWERCO

POWERCO RECORDS AN ANNUAL RESULT OF $ 21.7 MILLION

Energy network company Powerco announced today an after-tax profit of $21.657 million for the year ended 31 March 2000, this being the first year of Powerco's operation as a pure energy network distribution company.

Powerco, New Zealand's largest provincial network company, sold its generation assets, as well as its gas and electricity retail customer base following the compulsory split of line and retail businesses during 1998/99 and established itself as a network distribution company during the 1999/00 year.

Powerco chairman Barry Upson said the normal operating profit was on target with budgeted levels and was slightly higher than the profit recorded in the previous year, which amounted to $ 19.3 million.

Significantly, the profit performance had been achieved without any increase in the overall average price. The change in total revenue for the 1999/00 period reflects a full year of income from the Wairarapa operations and Central Taranaki gas network operations, which was acquired in the 1998/99 period.

Mr Upson said Powerco's track record in managing change had enabled it to adapt very quickly to the Government's industry reforms and the company was now well on track to become a significant player in the energy distribution industry. "Our intention is to expand through further acquisition, with the ultimate target of having up to 250,000 customers connected to the networks we own and operate."

He said that Powerco's efficiency gains and investment in technology improvements were paying off with a constant improvement in reliability. Over four years, the average outage per customer per year had improved from 282 minutes to just 115 minutes.

Powerco was also rated the top gas network company by Ernst & Young during the year, scoring highest in their Gas Distribution Business Performance Index which is based on an assessment of annual Information Disclosures.

Mr Upson had earlier this year announced the appointment of Mr Steven Boulton to the position of Chief Executive of Powerco. Mr Boulton has a broad executive background in the energy sectors of electricity, gas and coal and previously held the position of Chief Executive Officer with Allgas Energy Limited, a natural gas and LPG distribution and retail utility based in Brisbane.

Mr Boulton's role will be to lead the company through the series of impending industry changes and to drive the commercial business dynamics to effectively position Powerco at the leading edge of industry performance.

Powerco will focus on the goals of asset management excellence and operational excellence by deploying key strategies in the areas of business process re-alignment, risk management, maintenance management, performance management and introduction of business systems focused on safety, business quality and the environment.

Powerco's goal to increase business size and value will be achieved with development of business opportunities through acquisition, mergers and asset management of other utilities. Business value will also be achieved by focusing on increasing the rate of incremental growth in customers' connections.

Mr Upson said that strategies to respond to the potentially intrusive electricity industry regulatory regime are also being developed in parallel with a goal to source additional income streams beyond the current regulatory environment.

Early this year, it was announced that formal negotiations over a possible merger with CentralPower had commenced. The two major shareholders of both companies, Palmerston North City Council and New Plymouth District Council, had indicated their support towards the establishment of a regional energy distribution business. The Boards of both companies expect to make an announcement in relation to the merger discussions in the near future.

Directors have declared a final dividend or 29.1 cents per share to be paid on 12 June 2000, to all shareholders on the register as at 2 June 2000. The final dividend, along with the interim dividend of 18.5 cents already paid, represents a total dividend for the year of 47.6 cents per share. The final dividend is fully imputed.

ENDS...

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