Stronger sales, one- time gain boost Vector’s profit

Vector, the Auckland- based electricity and gas distributor, posted a 7 per cent gain in first- half profit, driven by stronger sales, lower finance costs and a one- time gain after a Court of Appeal ruling on a tax claim.

Profit rose to $ 107m in the six months ended December 31 from $ 100m a year earlier, Vector said. Sales rose to $ 626m from $ 591m.

Vector’s earnings included a $ 15m gain as a result of a Court of Appeal judgment in its favour in a dispute with the Inland Revenue Department over the tax treatment of payments from Transpower for access to parts of Vector’s Auckland electricity network including a tunnel and a series of land rights. First- half profit from continuing operations jumped 65 per cent excluding the contribution from Vector Gas, which was sold for $ 952.5m with proceeds used to repay $ 610m of debt.

Chairman Michael Stiassny affirmed that full- year adjusted earnings before interest, tax, depreciation and amortisation would be broadly in line with the 2016 result of $ 473m, at the top end of its guidance last August of $ 460m to $ 475m. Adjusted ebitda in the first half was $ 257m.

Vector breaks down its results to its regulated and unregulated businesses. Adjusted ebitda for its continuing regulated networks business fell 0.4 per cent to $ 195.7m, which it said reflected a 19 per cent increase in new electricity and gas connections, offset by the impact of warmer weather and “the continuing decline in household power consumption”.

Adjusted ebitda for its unregulated businesses rose 2.3 per cent to $ 84m, with growth in its New Zealand metering business and a one- time insurance gain, offsetting costs associated to expand metering in Australia, the commercialisation of new technology and ongoing low hydrocarbon prices.

The company will pay a first- half dividend of 8c a share, up from 7.75c a year earlier.