Natural Gas Company reports NZ$301 loss

New Zealand energy company Natural Gas Corp (NGC) on Monday reported a net loss of NZ$301.6m ($128.3m) for the year to June 2001. The net profit was hit by abnormal losses of NZ$311.5m arising from the effects of high wholesale electricity prices and NGC’s decision to write down its electricity retailing assets, the company said in a statement.

The loss compares with last year’s NZ$43.5m profit and was at the upper end of the range forecast by NGC in June, when it warned it could post a loss of between NZ$280m and NZ$310m for the June year.

No dividend was payable on the shares, which are 66 per cent owned by the Australian Gas Light Co.

Managing Director, John Barton said, “Excluding electricity retailing, the robustness of our continuing business is evident in net earnings of $55.6m from continuing business. This was reinforced during the year by a very significant increase in natural gas sales and transported volumes.”

NGC said the write down was comprised of NZ$255.1m for goodwill and customer bases assets, NZ$48.7m from abnormally high wholesale electricity costs in June and NZ$15.0m associated with NGC’s exit from the retail business, including a write down of systems and restructuring costs.

Offsetting these was a NZ$7.3m gain, primarily from liquidated damages and insurance proceeds from the Taranaki Combined Cycle and Southdown Power Stations, NGC said.

Net earnings after tax and before abnormal items amounted to NZ$9.9m.

NGC, which exited electricity retailing on August 1, said that its exposure to high electricity prices in July would result in losses in the region of NZ$40m after tax for the next financial year.

Barton said that the company had ceased to operate as an electricity retailer because of unacceptable fluctuation in the hedge and spot markets, an inadequate framework to encourage retail competition and a belief that shareholder return could be enhanced by the move.

NGC said that it was discussing a strategic alliance with Genesis for the promotion of dual electricity and gas supplies.

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