NGC's generation exit lifts profit to $148m

By LIAM DANN

Energy company NGC Holdings' exit from the electricity generation business boosted its net profit to $148 million for the year to the end of June.

The sale of NGC's Taranaki Combined Cycle and Cobb Hydro power station in March improved the company's bottom line by $78.9 million after tax, according to the annual result released yesterday.

Excluding those abnormal items NGC's net earnings were still well up, at $69.1 million, compared with a profit of $34.5 million in the 2002 year.

Revenue fell to $619.7 million, from $709.7 million the previous year.

The company declared a final unimputed dividend of 5c, taking the total dividend for the year to 9c.

NGC also announced yesterday that it was increasing the amount of cash it would return to shareholders from the sale of the power stations.

It now proposes to return $525 million, up from the $475 million it signalled in May. Shareholders will receive $1.58 a share as payment for the cancellation of three in seven shares. This compares with the earlier proposal to return $1.84 per share for the cancellation of one in three shares.

Chairman Greg Martin said the decision was made because of the company's strong cash position.

It would mean a holder of 1000 shares would receive a cash payment of $677, compared with about $613 under the original proposal.

Chief executive Phil James said all of the company's ongoing business operations made a higher contribution to earnings before interest and tax this year.

NGC now operates in three core categories: energy transportation, energy metering and energy trading.

He said the metering business offered the most growth potential.

NGC had increased its market share in the interval metering market - which caters largely for big industrial power users.

It was strategically positioning itself for what it expected to be a big growth period for interval metering as a secondary market opened up for savvy householders who wanted to take control of their power purchasing.

"This is the market that is set to take off," James said. "We believe this segment will grow tenfold over the next 10 years."

The gas trading business was limited by constraints on supply while the Maui redetermination process was ongoing, he said.

The process should be complete by October. But he still expected the gas trading business to be tougher this year.

Sales were up by almost $4 million in the energy transportation sector - an encouraging trend for what was generally regarded as a mature business.