UnitedNetworks sees 20 percent rise in interim profit

By NZPA

Wednesday 31st July 2002

Listed utility company UnitedNetworks posted a 20 percent increase in half-year net profit of $64.24 million, ahead of its sale later this year.

UnitedNetworks, which is currently seeking a purchaser for its shares or assets, will pay a fully imputed dividend of 19 cents per share on September 6, compared with 17cps last year.

The company's operating surplus for the six months ended June was $73.64 million, up on $56.14 million for the same period last year.

Total revenue was down by 2 percent on last year, following the sale of the field services business to Siemens Energy Services in July 2001.

UnitedNetworks chief executive Dan Warnock said a rise in revenue, a $7 million reduction in financing costs, and lower costs for its electricity, gas and communications businesses boosted the company's profit.

Mr Warnock said both the gas and communications businesses were exceeding targets.

The start-up data communications business, UnitedNetworks Communications, attracted increased connections to the broadband network resulting in a significant increase in use.

The electricity business had benefited from new connection growth, because of a rise in building in some of its network areas.

UnitedNetworks has invested about $60 million per year in capital expenditures.

UnitedNetworks' share price has soared since majority shareholder, American energy company Aquila, said last month it was selling its New Zealand investment to reduce its debt.

UnitedNetworks will make a decision on the successful bidder by the end of August.

Meanwhile, Mr Warnock acknowledged that a yet-to-be-established regulatory regime for electricity networks was creating uncertainty for the sale process of UnitedNetworks.

"The bidders will have to make a call on how they think it is going," he said.

It would be different from the existing regime, which consists of disclosure regulations.

He doubted a new electricity networks price control regime would be up and running by October. He though it was more likely to be "some time next year".

The Commerce Commission still had a lot of work to do, he said.

Some analysts doubt if UnitedNetworks will be permitted to earn a 12.87 percent return on investment under the new regulatory regime, as it did in the year to March 31 2001.

It is required to disclose its returns for the March 2002 year by the end of August.

Final bids for UnitedNetworks are scheduled for late August with the successful bidder expected to be announced at the end next month.

Comments from our readers

No comments yet