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WEL doubles full-year profit on strong power, fibre connection growth

Friday 31st May 2019

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WEL Networks more than doubled its full-year profit as expansion of its fibre business boosted revenue and growth in the Waikato region increased residential connections and commercial volumes.

Net income rose to $31.5 million in the year ended March 31, from $13.4 million a year earlier. Revenue increased by $35 million to $210.6 million – with electricity network revenue $13.4 million higher at $134 million, fibre revenue $14 million higher at $67 million, and other revenue – mostly from the Opunake Hydro business it acquired a controlling stake in – $7.7 million higher at $9.6 million.

Operating expenses were $1.7 million higher at $95.6 million.

Chair Rob Campbell attributed the improved result to higher commercial lines consumption, customer growth across the fibre network and continued strong urban development in the Waikato region.

Third-party contributions to the power network’s development climbed to $9.9 million from $8 million the year before.

Hamilton-based WEL is the country’s sixth-largest power distributor, supplying about 92,800 homes and businesses. It is benefiting from strong growth across its region and the on-going roll-out of fibre broadband services across the central North Island.

WEL added almost 1,400 new power connections in the year through March, making it the fifth-fastest growing network after Vector, Powerco, Orion, and Wellington Electricity, according to Electricity Authority data.

The firm partnered with neighbouring Waipa Networks to participate in the Crown’s ultrafast broadband roll-out in 2012 and the venture was subsequently awarded additional contracts to connect more communities in Taranaki, Waikato and the Bay of Plenty. In 2016, WEL bought out the Crown’s interest in the partnership.

Last June, the Ultrafast Fibre business installed its 100,000th connection.

Today the firm noted that net debt increased by about $65 million to $542 million at the end of March, with the increased borrowings due to the UFB2 build and the subsequent UFB extension programme. Total assets stood at $1.2 billion, a $91 million increase in the past year.

WEL’s accounts show earnings before interest, tax, depreciation and amortisation from the electricity network increased to $71.06 million, from $57.3 million a year earlier. Fibre earnings rose to $39.6 million, from $28 million, and other earnings climbed to $4.4 million – from a $3.6 million loss the year before.

In August, WEL-controlled Opunake Hydro sold its retail customer book to Trustpower to concentrate on its generation business. At the time, Opunake said tough competition in the commercial market and volatile wholesale prices had proven too much for the business.

WEL has $150 million of bonds listed on the NZX's debt market. The notes mature in 2023 and pay annual interest of 4.9 percent. They last traded at a yield of 3.55 percent.


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