UnitedNetworks in mood to buy

By DANIEL RIORDAN

UnitedNetworks, the country's biggest electricity lines company, has boosted its net profit by 10.5 per cent and signalled its acquisitive mood.

The North Shore-based company, which also supplies gas to over half of all gas users and has a fledgling broadband communications network, made $120.8 million last year, compared with $109.3 million for 2000.

It declared a fully imputed final dividend of 18c a share, taking the total dividend for the year to 35c, compared with 33c the year before.

Chief executive Dan Warnock said United was poised for acquisitions in the gas and electricity sectors, after it had passed on several opportunities last year that were priced too high.

United has about 30 per cent of the electricity market and Mr Warnock said he believed it could go beyond 50 per cent before testing Commerce Commission boundaries.

Organic growth in the overall business was expected to be around 5 to 6 per cent and the company had hopes of matching last year's double-figure profit growth.

Despite the higher profit, operating revenue fell to $454.9 million, against $459.6 million in 2000, after the company sold its contracting field services business to Siemens Energy Services in July.

An abnormal net gain of $4 million from the sale was included in the annual result. About $2 million in revenue was lost as customers cut back during last year's supply scare.

Earnings per share lifted to 79.2c, from 72.2c.

A big portion of the company's debt was refinanced last year by issuing long-term bonds in New Zealand and Australia on more favourable terms, thereby reducing financing costs. Gearing was reduced from 63 per cent to 53 per cent.

The company is not concerned about the Government's ongoing review of the gas industry. In the meantime, it is reducing its unit connection costs and increasing its customer base.

Mr Warnock said the telco business, though small compared with its rivals, was "shaking the industry".

But citing commercial sensitivity, he again declined to provide numbers on the network, which was launched in the middle of last year and has the potential to service Auckland and Wellington inner-city businesses.

"We've got a modest investment and we have a good opportunity to get a return by bringing in a new business model," he said. "People like new guys."

ABN Amro analyst James Miller said the company could not expect the market to fully rate the telco business until it started disclosing some numbers.

At the moment, the fledgling business was probably contributing nothing to the bottom line.

"But once it starts to make a profit, if the company wants that reflected in its share price, it will have to start disclosing what's actually happening."

Mr Miller described the overall profit result as "pretty good" after what had been essentially a "quiet and steady year".

The market agreed, sending United shares 8c higher yesterday to $8.20.