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Transpower pays smaller dividend to govt

NZN 18/08/2016 Paul McBeth

Transpower New Zealand trimmed its dividend to the government as the state-owned company generates smaller regulated earnings from the national electricity grid it's tasked with operating.

The Wellington-based company declared a final dividend of $98.2 million, or 8 cents per share, to be paid on Sept. 20, taking the annual return to the Crown to $163 million. That met Transpower's forecast in its statement of corporate intent but was down from the $188m paid last year.

The government has been keen on squeezing cash from state-owned enterprises in recent years to get the books back in black, though Transpower's ability to generate earnings was reduced when the Commerce Commission lowered the grid operator's allowable rate of return from its cost of capital, changed its model for the amount of revenue required to meet costs and made a final decision on Transpower's operating expenditure allowance.

Transpower resumed paying dividends in the 2012 financial year once it passed the hump of an investment cycle upgrading the grid. Since then the government has pulled out $1.11 billion, and Transpower expects to make annual dividend payments of $165m between 2017 and 2019.

"We are pleased with our financial performance in the first year of our new five-year regulatory period (RCP2) which began on 1 April 2016," chairman Mark Verbiest said.

Earnings before interest, tax, depreciation, amortisation, and fair value adjustments fell 0.8 per cent to $749.4m in the 12 months ended June 30 with transmission revenue down 1 per cent to $974.1m. Net profit rose to $181m from $113.1m in 2015 due to a smaller unrealised loss on the value of financial instruments used for hedging.

Transpower's operating cash flow fell 8.7 per cent to $492.7m, though reduced outflows in investment and financing activities meant the company generated a positive net cash flow of $46m, leaving it with cash and equivalents of $79.9m as at June 30.

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