Vector says deferred tax liability changes will result in one-time $21M gain

Tuesday 15th June 2010

Vector, New Zealand’s biggest gas and electricity lines company, said changes to the treatment of deferred tax liability will result in a one-time boost to net profit of $21 million in the year ending June 30.

The Auckland-based company’s announcement follows advice from its auditors on how to account for the tax changes announced in the May 20 budget, which reduced the corporate tax rate to 28% from 30% and ended the ability to depreciate buildings.

The deferred tax liability adjustment is a “one-off, non-cash accounting entry and has no impact on Vector’s underlying profitability and cash flows, and therefore its dividend policy,” the company said.

The budget tax changes also made capital contributions taxable, which Vector estimates will reduce profit in the current financial year by $1 million.

Shares of Vector rose 1% to $2.13 on the NZX today and have gained 4% this year, while the NZX 50 Index fell 7%.

Businesswire.co.nz

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