Fortunes contrast at lines businesses

By CHRIS DANIELS

Electricity lines companies are having a busy time coping with profit announcements, expansion plans, rumours of a sale of New Zealand's largest network and a stern warning from the Commerce Commission to two of the tiddlers.

Australian media reports last week suggested that US energy giant Aquila was likely to sell its stake in lines company UnitedNetworks by the end of the year.

Aquila is looking at how it would restructure its Australian and New Zealand assets, valued at $2.3 billion, after a ratings agency threatened to downgrade its debt to junk status.

The Kansas-based energy investment company has laid off hundreds of workers in the past week.

Network company Powerco, based in New Plymouth, has announced a further expansion into Australia.

It has spent $10 million buying three Queensland companies which provide construction and maintenance services to electricity network owners, and electrical installation work for property developers and large business customers.

Another lines company, Whakatane-based Horizon Energy Distribution, has announced an after-tax profit of $7.4 million for the year to March, up $2.4 million from the year before. This comes from revenue of $26.1 million.

A fully imputed dividend of 75c will be paid, taking dividends for the year to $1.30 a share, representing 87.7 per cent of after-tax profit.

Chairman Colin Holmes also announced a five-for-one share split, effective from June 21.

An analysis by consultants Stern Stewart reveals that during the year, Horizon increased its market value added - the difference between the capital invested in the company and its market value - by $17 million.



Horizon's continuing solid profitability meant its economic value added for last year - the surplus left after covering the cost of its capital - was an impressive $6 million.

The Commerce Commission has approved the asset valuations supplied by Buller Electricity and Gisborne's Eastland Network.

These two companies were the only ones who failed to get official approval for the valuations they provided to the commission at the end of March. This was part of an information disclosure regime aimed at ensuring the monopoly lines companies did not start overcharging.

The commission has warned both companies not to breach the act again.