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Powerco Achieves Forecast

Powerco Achieves Forecast

Leading New Zealand electricity and gas distribution company Powerco, has recorded a strong audited annual result, posting a profit after tax of $38.1 million for the 12 months to 31 March 2003, from total revenue of $229.3 million. This profit is up 4.9% on the forecast issued to the market in October last year.

Powerco Chairman, Barry Upson, today announced an unimputed final dividend of 8 cents per share, which will be paid on Friday 20th June 2003 to all shareholders on the Company’s register at 5.00 p.m. on Friday 6th June 2003. The dividend is the same as forecast in the Investment Statement and Prospectus registered on 15 October 2002. This dividend brings the total dividend for the year ended 31 March 2003 to 14 cents per share.

Powerco’s solid performance is largely attributable to the successful acquisition and integration of the former UnitedNetworks Ltd assets late last year. The company’s asset base has grown from $0.8billion to $1.7billion through this process. The acquired electricity network assets include the Tauranga, Eastern and Southern Waikato, Thames and Coromandel areas with acquired gas assets including Wellington, Horowhenua, Manawatu and Hawkes Bay areas. These assets are now integrated with Powerco’s existing electricity assets in Taranaki, Wanganui, Manawatu and the Wairarapa and existing gas assets in Taranaki, the Hutt Valley and Porirua.

Coupled with these acquisitions has been Powerco’s ability to complete the integration of the network assets within a short period of three months. “I am particularly pleased that in addition to the integration issues, that for the second consecutive year, our executive management and staff were able to achieve an audited result within three weeks of Balance Date,” said Mr Upson. This achievement reflects the application and management of robust revenue, accounting and financial systems of the Powerco entity. This has been a remarkable achievement by any measure and clearly demonstrates Powerco’s strength and ability in acquiring and managing large network operations, Mr Upson said. “After doubling its size Powerco has now become New Zealand’s largest gas distributor and second largest electricity distributor with some 400,000 residential, commercial and industrial connections.

“By acquiring urban gas networks in Wellington and electricity networks in Tauranga as part of the UNL purchase, Powerco has not only increased its geographic footprint, but has also extended the synergies between its urban and rural operations which will add strength to the company’s ongoing performance, stability and sustainability, he said Powerco’s total revenue now includes a more balanced income stream from owning urban and rural electricity and gas network assets, and the operation of a number of other businesses including the management of network assets and network control functions. Powerco also earns revenue through a range of customer contracts with its operation of network services businesses based in both New Zealand and Australia said Powerco Chief Executive Steven Boulton. The 2003 year was a challenging period for our business and staff said Mr Boulton. “We successfully dealt with the largest integration ever achieved by our company in a period of only three months and simultaneously we were a strong advocate for a fair and robust regulatory system based on fact, the determination of certainty, and a balanced stakeholder perspective. A fair regulatory environment is critical for the delivery of sustainable investment in electricity infrastructure to meet the Government’s stated requirement for national economic growth,” he said. “Powerco has historically focused on the balanced stakeholder perspective and sustainable investment issues in its past performance, delivering a fair financial outcome to all stakeholders. Powerco has passed on, for the benefit of consumers, real price reductions in the order of 18% over the past 6 years whilst reliability levels, apart from severe weather anomalies, have been improving. “The performance over the past year, together with the full integration of the UNL assets has established a solid platform for moving forward into 2004,” said Mr Boulton. “While it was a hectic year for the business our results reflect the commitment and achievement orientation of our Powerco staff. “The main focus for the coming year will be on further operational consolidation, improving productivity and dealing with industry issues, but we will continue to evaluate future growth opportunities,” Mr Boulton said. Powerco’s Board remains confident that the 2004 forecast after tax earnings of $53.6 million should be achieved together with the forecast unimputed dividend payment of 16 cents per share. Powerco has approximately 290,000 electricity consumer connections and 108,000 gas consumer connections in the North Island. Powerco is a publicly listed company, listing on the NZSE in December 2000 and was included in the NZSE40 index on December 2, 2002.

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