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Vector earnings up 4 per cent

NZN 23/08/2016 Jonathan Underhill

Electricity and telecommunications infrastructure company Vector, has posted a 4.7 per cent gain in adjusted full-year earnings on growth in Auckland and the expansion of its smart meter fleet.

Adjusted earnings before interest, tax, depreciation and amortisation was $473 million in the 12 months ended June 30, from $451.9m a year earlier, the Auckland-based company said in on Wednesday.

It forecast earnings on that basis to be between $460m and $475m in 2017.

Net profit rose 84 per cent to $274.4m, which it attributed to increased operating earnings, lower interest costs, favourable derivative movements and the $164m gain on the sale of Vector Gas, partly offset by a $64m write down in the value of its gas trading business.

Revenue from continuing operations fell to $1.14 billion from $1.15b.

"We signalled in February a review of the carrying value of the gas trading business," said chairman Michael Stiassny.

"We have now written down this value to reflect the steady decline in the output from the Kapuni field, the diminishing prospects of further field development due to ongoing disputes, and weak international hydrocarbon prices."

The proceeds from the sale of Vector Gas would be applied initially to debt reduction, before redeployment to support growth in Auckland, smart metering and new energy technologies, he said.

The company sold Vector Gas for $952.5m and the proceeds were used to repay $610 million of debt, reducing gearing to 43.7 per cent and net debt to $1.9 billion, from 53.4 per cent and $2.7b respectively a year earlier.

The company declared an unchanged final dividend of 8 cents a share, making 15.75 cents fully imputed for the year, up from 15.5 cents a year earlier. The increase marks the 10th straight year of dividend gains.

The shares fell 0.3 percent to $3.52 and have gained 11 per cent this year, lagging behind the NZX 50 index's 18 per cent increase.

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