Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


MRP increases dividends up to 110% of profit

MRP increases dividends up to 110% of profit

By Pattrick Smellie

Nov 23 (BusinessDesk) - State-owned electricity company MightyRiverPower is raising its dividend policy from 75 percent of earnings to between 90 percent and 110 percent, saying it has fewer investment needs in the near future, and sweetening its attraction for investors in its partial privatisation.

The government plans to offer up to 49 percent of the Auckland-based firm, which owns the Mercury Energy brand and a string of hydro and geothermal power plants in the central North Island, for sale in the second quarter of next year.

That assumes court action by three Maori bodies, led by the New Zealand Maori Council, fails to block the sale in the courts and that market conditions are judged appropriate for the first of three SOE power company floats.

The Maori Council's challenge to the government's decision to proceed with the sale will be heard in the High Court in Wellington next week, with Crown advisers expecting an appeal if the council's case is unsuccessful.

The dividend policy change was announced in the company's latest Statement of Corporate Intent for the years 2013 to 2015 and will apply to after tax profit, adjusted for the impact of changes in the fair value in financial instruments and any accounting impairments.

Non-cash impacts of changes in the value of financial instruments typically creates volatility in reported earnings which does not reflect underlying performance.

The 75 percent dividend payout ratio had been in place since 2010 while MRP committed more than $1 billion in capital to a series of geothermal developments both in New Zealand and offshore over the last five years.

However, demand for electricity has been static for the last three years, with no significant load growth forecast in the immediate future.

"MRP is now adjusting to the current outlook for New Zealand electricity supply and demand with less operating cash flow now allocated to new domestic projects and higher dividend flows to owners," said chair Joan Withers in a statement.

By comparison, NZX-listed Contact Energy - formerly state-owned - targets an 80 percent payout ratio "over time," according to the company website, although chairman Grant King indicated at this year's annual meeting that higher capital returns to shareholders were also on the cards because it had few capital needs in the immediate future.

Withers said "the board has gained confidence to increase the dividend pay-out ratio due to the successful execution of our geothermal strategy."

"In October we saw the first cash returns from our international investment through the GeoGlobal Energy (GGE) Fund and our Ngatamariki Power Station, near Taupo, is due for completion in mid-2013,” said Withers.

Dividends would be subject to working capital requirements, the medium term asset investment programme and a sustainable financial structure for the group, in term with the company's BBB+ credit rating, which was reaffirmed last month by Standard & Poor's.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Oceans: NOAA Declares Third Ever Global Coral Bleaching Event

As record ocean temperatures cause widespread coral bleaching across Hawaii, NOAA scientists confirm the same stressful conditions are expanding to the Caribbean and may last into the new year, prompting the declaration of the third global coral bleaching event ever on record. More>>

Scoop Business: A Decade Of Government Pre-Seed Investment

More publicly-funded science is being commercialised after a decade of government ‘pre-see’d investment, according to an independent review. More>>


Solid Energy: Plan To Shut Unprofitable Huntly East Mine

Solid Energy, the state-owned coal miner in voluntary administration, plans to shut down its unprofitable Huntly East mine and lay off 65 staff after deciding the site stands "no chance whatsoever" of finding a buyer. More>>


E Tū: Merger Creates NZ's Biggest Private Sector Union

E tū has been created by the merger of the Engineering, Printing and Manufacturing Union and Service and Food Workers’ Union. It represents more than 50,000 working New Zealanders in industries as diverse as aviation, construction, journalism, food manufacturing, mining and cleaning. More>>


Internet: NZ Govt Lifts Target Speeds For Rural Broadband

The government has lifted its expectations on faster broadband speeds for rural New Zealand as it targets increased spending on research and development in the country's information and communications technology sector, which it sees as a key driver for export growth. More>>


Banks: Westpac Keeps Core Government Transactions Contract

The local arm of Westpac Banking Corp has kept its contract with the New Zealand government to provide core transactions, but will have to share peripheral services with its rivals. More>>


Science Investment Plan: Universities Welcome Statement

Universities New Zealand has welcomed the National Statement of Science Investment released by the Government today... this is a critical document as it sets out the Government’s ten-year strategic direction that will guide future investment in New Zealand’s science system. More>>


Get More From Scoop

Search Scoop  
Powered by Vodafone
NZ independent news