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Vector lifts profit on Transpower agreement, tax gain

Vector lifts profit on Transpower agreement, tax benefit; Powerco results flat

By Paul McBeth

Aug. 26 (BusinessDesk) – Lines company Vector Ltd. lifted annual profit 4.1% as it booked gains from a deal with Transpower New Zealand Ltd. and a tax accounting benefit.

Net profit was $203.8 million, or 20.2 cents per share, in the 12 months ended June 30, up from $193.5 million, or 19.4 cents, the Auckland-based company said in a statement. That was bolstered by a $30.1 million gain on a deal national grid operator Transpower lay cable through Vector’s Auckland isthmus tunnel and a $20.9 million gain on last year’s tax changes. Stripping out those one-off gains, underlying profit fell 0.8% to $171.3 million.

Earnings before interest, tax, depreciation, and amortisation rose 10% to $636.6 million as the lines company enjoyed greater electricity volumes and use of its fibre network, offsetting softer gas transportation and gas wholesale earnings. That beat Forsyth Barr analyst Jeremy Simpson’s forecast of $601.1 million.

The company said it expects 2012 ebitda to be slightly above the market’s current forecast.

Earlier this month, Vector complained about the constant “tweaking” of the regulatory system which has annoyed foreign investors. The lines company is challenging the Commerce Commission’s recent decisions on what network owners can earn.

“The current regulatory environment will not deliver long-term benefits to consumers,” chief executive Simon Mackenzie said in a statement. “It also imposes a significant cost burden on our business and is devoid of commercial reality.”

The board announced a final dividend of 7.5 cents a share, taking the annual payout to 14.25 cents, just beating last year’s 14 cents a share return. The stock was unchanged at $2.40 in trading today, and has gained 6.1% this year.

In a separate statement, rival network operator Powerco Ltd. boosted earnings before interest, tax, depreciation, impairment and amortisation 12% to $199.9 million in the 12 months ended June 30, on a 1.6% gain in revenue to $363.5 million. Net profit rose 36% to $26.9 million.

Powerco’s board announced a dividend of 6.76 cents per share, down from 7 cents a year ago. The lines company has four tranches of bonds listed on the NZX’s debt market worth a total of $330 million.

According to NZX data, the $100 million 2013 tranche paying 6.39% last traded at $1.03189 in the dollar, the $50 million 2015 tranche paying 6.53% last traded at $103.848 in the dollar, the $130 million 2012 tranche paying 6.59% last traded at $103.253 in the dollar, and the $50 million 2017 tranche paying 6.74% last traded at $1.05173 in the dollar.


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