Powerco touts amalgamation benefits

By Phil Boeyen, ShareChat Business News Editor

Thursday 24th May 2001

Energy company Powerco (NZSE: PWC) says its latest profit result is further evidence of the merits of last year's amalgamation with neighbouring CentralPower.

For the seven months ended March the company, which listed last December, has reported a profit of $8.82 million with sales at $74.8 million.

Powerco says its combined net profit after tax of the amalgamating companies for the year ended March was $23.65 million - 26% ahead of the full year forecast. Earnings before interest, tax, depreciation and amortisation for the period was $78.43 million, 1.1% ahead of forecast.

Powerco chief executive, Steve Boulton, says net surplus had been achieved because of increased revenues, lower integration costs and a lower tax provision offset by a one-off adjustment as a result of the rationalisation of asset values at the time of amalgamation.

He says the company has adopted the partial liability method for the treatment of deferred taxation and this reduced accounting tax by $8.5 million compared to forecast.

"This result amply demonstrates the benefits of the amalgamation between Powerco and CentralPower in terms of creating a company of greater scale.

"We have been quick to capture the benefits of this merger, completing the full integration of the two companies within two months of merger date.

Mr Boulton says merger costs were $1million less than forecast and future annual savings are now estimated at $5 million, which is $2 million ahead of the forecast figure.

Powerco is New Zealand's third largest electricity and gas network company and says it has continued to trade well since the start of the new financial year.

A dividend for the seven month period has been set at 7.7 cents per share, while directors are forecasting an increased in the dividend for the March 2002 year from 12.6 cents to 13.1 cents per share.

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