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NGC Announces 51% Profit Increase

NGC Announces 51% Profit Increase, New Retail Identity

Natural Gas Corporation Holdings Limited increased net earnings by 51 percent to $31.0 million in the half year ended 31 December 2000.

Announcing the interim result today, the Chairman Mr Greg Martin said the profit increase reflected the first full period contribution of the TransAlta New Zealand Limited business. Since TransAlta became a fully owned subsidiary last November, NGC has moved quickly to reorganise management and integrate the operations of the two companies.

“Integration of the businesses enables a new approach to our business and the company will now operate under a new retail name, On energy, which replaces the TransAlta and NGC/WEL brands.”

“From tomorrow, On energy will become a prominent and familiar sight in all of the main areas where we operate – Auckland, Hamilton, Wellington, Christchurch and Dunedin – as well as in over 30 towns and cities in the North Island where we supply gas and electricity.”

“The Company’s priorities remain improving the competitiveness and service levels in its retail customer businesses and continuing to develop operational synergies to enhance bottom line performance.”

Mr Martin said the earnings for the half year included an abnormal after-tax gain of $4.7 million from a receipt relating to the contractual performance of the Taranaki Combined Cycle Power Station in Stratford. Excluding this item, net earnings from continuing business increased by 28.3 percent to $26.3 million. He described this as a satisfactory result for a period marked by challenging trading conditions and the first phase of the NGC business integration.

Mr Martin announced an interim dividend of 3 cents per share, fully imputed, which would be paid on 19 March 2001 to shareholders registered on 9 March 2001.

Mr Martin said the addition of the TransAlta business was most apparent in sales, which increased by 222 percent from $197.1 million to $635.0 million. Sales were further enhanced by a 50 percent increase in natural gas sales as a result of major new supply contracts concluded last year with electricity generator Genesis Power and with the ammonia/urea producer, Petrochem Limited. Gas volumes also reflected the commencement of deliveries under a large supply contract concluded with the New Zealand Sugar Company’s Chelsea refinery in Auckland.

He said NGC had made customer gains in natural gas and among larger electricity users, but was concerned about the extent of residential electricity customer loss.

“Since acquiring the TransAlta business, we have devoted our full attention to improving our customer service standards and it is pleasing that the initiatives we have taken to refocus our customer service resources are showing signs of success. We are more consistently achieving target performance levels and we will continue to seek ongoing improvements,” he said.

Mr Martin said it was important to recognise that NGC’s overall strengths lay in the diversity of its business. While energy retail and trading had been challenging, the Company continued to receive strong contributions from it’s gas processing, gas transportation and network, electricity and infrastructure management generation businesses.

NGC has made good progress in achieving the synergies and other strategic opportunities identified at the time of the initial investment in TransAlta. Over the next few years, NGC expected to achieve further efficiency improvements and to progressively implement wider strategic opportunities now available to the Company.

“We are now moving positively to restore our competitiveness as an electricity and gas retailer and we will continue to seek opportunities to develop all of our core activities”.

ENDS-

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