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Transpower trims interim dividend despite higher revenues

Transpower trims interim dividend as grid upgrade lifts first-half revenue

By Paul McBeth

Feb. 28 (BusinessDesk) - Transpower, the state-owned national electricity grid operator, will pay a smaller interim dividend than last year, while lifting its first-half revenue after completing its North Island grid upgrade and commissioning of the Cook Strait “Pole 3” cable project.

Transpower will pay an interim dividend of $60 million, down from $92 million a year earlier. It anticipates paying total dividends of $151 million in the 2014 financial year, lower than the $295 million it paid in 2013, according to its Statement of Corporate Intent.

Net profit more than doubled to $153.6 million, including an unrealised $75 million gain in the value of its interest rate swaps, and earnings before interest, tax, depreciation, amortisation, impairment and fair value movements (EBITDAIF) gained 14 percent to $353.5 million. Revenue rose 10 percent to $493.8 million with the North Island grid and Cook Strait cable upgrades coming on stream.

“These projects will ensure a reliable and secure supply of electricity for New Zealand and importantly, also support enhanced competition in the electricity market, which puts downward pressure on end consumer bills,” said chairman Mark Verbiest. “The last of the very large projects – the North Auckland and Northland project – will be commissioned later this summer.”

Transpower’s EBITDAIF margin was 71.6 percent in the half, tracking ahead of the 70.2 percent target in its statement of intent, and an improvement on the EBITDAIF margin of 69 percent a year earlier. The company said it expects it will be “materially in line with the financial performance targets” for the 2014 year.

“Our focus will shift from big build projects to optimising our still significant capital and operating expenditure, to ensure cost effectiveness for the end consumer while maintaining the integrity of the grid,” Verbiest said. “We will continue to develop new technology initiatives that will improve security and reliability of the grid.”

Transpower has two tranches of debt listed on the NZX. Its $200 million of bonds which mature in 2019 paying annual interest of 4.65 percent last traded at $96.228 per $100 face value, while its $325 million of debt maturing in 2018, paying annual interest of 5.14 percent last traded at $101.591 per $100 face value.


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