KEY POINTS:
Energy distributor Vector is considering selling its Wellington electricity network for more than $500 million and may put some of the money in fibre optic telecommunications.
The listed company, which yesterday announced a 37 per cent increase in underlying June year net profit, said it had received several
approaches about its Wellington assets.
"We believe we are obligated to examine that asset in light of those offers," said chairman Michael Stiassny.
Vector had engaged investment bank Goldman Sachs JBWere to look at strategic issues and options.
Those options included an outright sale, a "marriage" or a reconfiguration.
Stiassny said the company believed the asset was worth considerably more than $500 million.
"We will trade if the price we get is well above what we believe is beneficial to us and we have something else in the infrastructure game we can play with."
Should it sell, the company would also probably pay off some debt.
The prospect of a sale comes few weeks after the departure of chief executive Mark Franklin which at the time was linked by Stiassny to a change from an ambitious growth strategy to one of consolidation.
But Stiassny and acting chief executive Simon MacKenzie indicated the company is still considering bigger moves into telecommunications and electricity generation.
"We are seriously focused on exploring if the environment is right for Vector to deliver the true broadband New Zealand is asking for," MacKenzie said yesterday.
"Vector has the ability to step up, but that must be matched by the right partnerships, incentives, return on investment and regulatory environment."
Stiassny said any larger move into telecommunications would probably be made in partnership with another company.
MacKenzie said the company was hoping for relaxation of regulations limiting lines companies' ownership of electricity generation assets.
Vector had made an initial investment in wind generation company NZ Windfarms and was testing micro wind turbines for domestic use.
This had sparked strong consumer interest.
The company's underlying net profit of $61.7 million was at the higher end of market expectations and although it gave no guidance for the current year, Stiassny said the board was not expecting a reduction.
The headline net profit of $101.7 million was inflated by a $40 million one-off gain resulting from a change in the company's deferred tax liability.
Operating profit rose 5.4 per cent to $610 million, and operating revenue was up 19.4 per cent to $1.35 billion.
The increase in revenue reflected volume and connection growth on the company's gas and electricity networks, higher energy use last year due to a return to normal cold winter conditions after a warm winter in 2005 and higher natural gas sales.
The company will pay a fully imputed 6.5c final dividend, taking dividends for the year to 13c a share.
Vector shares closed yesterday unchanged at $2.53.