NGC resumes dividends, profits

By Phil Boeyen, ShareChat Business News Editor

Thursday 21st February 2002

Natural Gas Corporation (NZSE: NCH) is once again hailing the underlying strength of its business as it returns to profit and dividend payouts following last year's retail electricity fiasco.

In the six months ended December the company turned a profit of $16.07 million, considerably lower than the previous interim profit of $31.03 million but much more positive than the fiscal 2001 loss of more than $300 million. Interim sales at $406 million compared to $635 million previously.

Chairman, Greg Martin, announced an early return to dividend payments, with the company to pay an interim dividend of 3 cents per share. The payout is the equivalent of 100% of pre-tax earnings.

The dividend is unimputed because of the effect of last year's losses on the company's imputation credits and Mr Martin says it may be another two dividend payments before the company utilises its tax losses and resumes fully imputed dividend payments.

"NGC's return to profitability demonstrates the rapid recovery from the previously signalled after-tax loss of about $40 million from electricity retailing in July 2001, prior to the company's exit from that business.

"The latest period earnings, which compare with $31 million for the 2000 half year, include three abnormal items. Two of these relate to NGC's now discontinued electricity retailing activities. The abnormal items amounted to a loss of $24.6 million after tax."

Mr Martin says pre-abnormal earnings from continuing businesses, excluding the discontinued electricity retailing activities, increased by 80% to $47.3 million.

"The speed of our financial recovery, together with the significant improvement in earnings from our ongoing businesses, confirms the underlying strength of these activities and demonstrates their ongoing ability to contribute quality cashflows and earnings."

CEO Phil James says the return to profit has been driven by significant increases in natural gas, gas liquids and electricity generation sales, higher gas transportation volumes and the expansion of the company's energy metering business.

"In addition, margins had improved and operating and debt servicing costs had declined. The first half results have also benefited from strong generation and wholesale gas sales resulting from the cold 2001 winter and low hydro reserves."

NGC says it is now putting the electricity retailing events of last year behind it and is on target to achieve improved returns to its shareholders.

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