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Powerco achieves strong half year result

Powerco achieves strong half year result

Powerco, the dynamic company in the electricity and gas distribution sector, has recorded a strong half-year result, posting an unaudited post tax profit of $18.75 million for the six months to 30 September, up 6.5% on the comparable result for the same period last year.

Powerco Chairman, Barry Upson, announced today an interim dividend of 6 cents per share, subject to withholding tax, which will be paid on 25 November 2002 to shareholders on the register as at 25 October 2002. The interim dividend for the comparable period last year was 5.9 cents per share.

Factors contributing to the solid performance included the increasing synergies resulting from the amalgamation between CentralPower and Powerco in 2000, and the acquisition of the Hutt Valley and Porirua gas distribution networks in 2001/2 said Powerco Chief Executive Steven Boulton. Powerco's performance is a direct result of applying its core strategies of business growth and network management efficiency.

Mr Upson said that Powerco's record of successfully integrating new assets into the company, which includes ten mergers or acquisitions over the past decade, demonstrates how sound management has improved company performance from market opportunities. Powerco has also recently announced that agreements to purchase some of the UnitedNetworks' electricity and gas assets had been signed. With this new acquisition, Powerco's total asset base is expected to increase up to $1.7 billion by November this year, an effective doubling of Powerco's size.

This asset purchase will see Powerco become the largest energy distribution company in New Zealand in terms of network length and the second largest in terms of total consumer connections. Electricity connections will expand to 287,000 from 157,000. Gas connections will double to more than 107,000 also creating Powerco as New Zealand's largest gas distribution utility.

Mr Upson said that notice has been given to Shareholders today for a Special Meeting of Shareholders to be held on 29 October 2002 in New Plymouth to seek approval for the major transactions associated with these acquisitions. The three largest shareholders, who together hold approximately 68% of Powerco shares, have indicated their support for the transactions.

"The $100 million capital bond issue in March for the purchase of AGL Energy's gas distribution network in the Porirua Basin and Hutt Valley, which was oversubscribed, shows the confidence investors place in our growth strategies," Mr. Upson said.

Mr. Boulton said Powerco also continues to take a strong stakeholder approach to our business operations. The company's key stakeholders, including consumers and shareholders, benefit from Powerco's strategic approach to business.

Earlier this year we were pleased to announce another 12-month price freeze for our residential consumers. Our average electricity line charges for residential consumers have not risen since 1997 which in effect has delivered an approximate 10% real reduction in line charges for consumers during this period. Our network reliability has also improved; a pleasing result for consumers, delivered by our approach to business said Mr. Boulton.

Powerco's long-term credit rating from Standard & Poors is targeted to be downgraded one notch from A- to BBB+ following the UnitedNetworks' asset acquisitions. This continues to represent a strong investment grade credit rating, and demonstrates the confidence the market has in Powerco's past performance and its future prospects.

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