By Phil Boeyen, ShareChat Business News Editor
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Thursday 23rd August 2001 |
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The rail operator says it has considered a number of factors in making the decision, including the impact of the change program on the future capital structure and the fact that payment of dividends without attached imputation credits is an inefficient distribution to shareholders.
"The company is in the process of a major change program designed to enhance shareholder value. Furthermore, the divestment of non-core assets and businesses is anticipated to increase shareholder value,' Tranz Rail says.
"These initiatives could have a significant impact on the company's financial ratios and future funding requirements and its capital structure."
Tranz Rail says it does not presently have taxation imputation credits available to provide to shareholders and therefore believes that dividends are not a tax effective means of providing value to shareholders.
"After considering these matters, the board determined that it will not pay a dividend at the end of September 2001."
For the year ended June the rail company posted an operating surplus before tax of less than $1 million compared with $50 million last year. Tax credits ramped up its net profit to $5.5 million but that was well down on last year's $47 million surplus.
Tranz Rail has sold its passenger services and is restructuring into a freight-focused company, though it has retained passenger services on its lucrative inter-island ferry routes.
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