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Transpower pays $205M final dividend as it takes on debt to fund upgrade

Friday 17th August 2012

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Transpower, the state-owned electricity grid company, will pay a $205 million final dividend after opting to use more debt to fund the upgrade of its network and posting an 8 percent increase in annual profit.

Net profit rose to $84.8 million in the 12 months ended June 30, from $78.5 million a year earlier, the Wellington-based company said. The year-earlier result included a $19.7 million impairment on its North Island Grid Upgrade land portfolio. Operating revenue rose to $794.2 million from $737.2 million.

The final dividend brings Transpower's payments to the Crown to $306 million, or more than three times net profit, after the SOE reviewed its capital structure and resumed payments to the government following a seven-year hiatus. Moody's Investors Service cut Transpower's debt rating to A1 from Aa3 last year, "given the company's willingness to weaken credit metrics in favour of shareholder distributions."

Transpower is planning to spend $3 billion over the next five years to upgrade the national grid, which is groaning under increased demand and capacity bottlenecks. Total liabilities rose 32 percent to $3.4 billion in the latest year, as debt due in more than 12 months jumped 83 percent to $2.4 billion.

Chairman Mark Verbiest said the level of dividend reflects the capital restructure and next year's payment will be lower.

"I am confident that the company is well placed to manage current operations, to deliver major projects and to meet the challenges that will arise in the future," he said.

Operating expenses rose 3.9 percent to $290 million.

BusinessDesk.co.nz

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