Powerco Completes Integration Of United Networks

Powerco Completes Integration Of United Networks Assets On Time And Under Forecast

Powerco has completed the integration of the electricity and gas network assets it purchased from United Networks Ltd (UNL) last year on time, under forecast and without disruption to customers.

Powerco Chairman Barry Upson today congratulated Powerco's management and integration teams for the successful integration project.

"We set ourselves an ambitious target to create a seamless electricity and gas network business, which effectively doubled the size of the company, and we achieved it in just three months, from purchase on 1 November 2002 to completion on 31 January 2003.

"The task was significant. Our purchase of the UNL gas and electricity assets in the central and lower North Island has grown Powerco's asset base from $867 million to $1.7 billion. Combined gas and electricity consumer connections rose from 207,000 to 390,000" said Mr. Upson.

The agreement settlement, following work in progress and other business transaction wash-ups, has resulted in the final purchase price for the assets being approximately $804million, a reduction of almost $6million, from the original announced price of $810million. Powerco has also achieved the integration under forecast with the final cost being $23.5million against the forecast estimate of $25million, a saving of $1.5million, said Mr Upson.

Both outcomes are positive for Powerco, being a reduction to the cost forecast in the Investment Statement and Prospectus.

The process required the integration of the expanded electricity network capacity provided by the newly acquired networks in Tauranga, Eastern and Southern Waikato, Thames and Coromandel into Powerco's existing and widespread distribution networks in Taranaki, Wanganui, Rangitikei, Manawatu and the Wairarapa, said Powerco chief executive Steven Boulton.

The newly purchased gas pipeline networks in Wellington, Horowhenua, Manawatu and Hawke's Bay have been integrated with Powerco's existing gas networks in Taranaki, the Hutt Valley and Porirua.

"Key components of the integration process have been the transfer and alignment of our billing and revenue management systems, the aggregation of network control centers into one location at Powerco's new central network management room in New Plymouth, transfer of the asset management databases and information, and the introduction of a centralised management system for our IT infrastructure," Mr Boulton said. "At the same time we maintained business as usual for our network operations." As forecast, Powerco has employed an additional 43 people into the business during this period, with only three vacancies left to be filled.

"We welcome these new staff members and we are pleased to have 20 former UNL employees accept positions with Powerco. The former UNL staff provide continuity of the customer and business relationships and detailed knowledge of the assets and systems." "Owning, operating and managing gas and electricity distribution assets is our core business. We have been steadily expanding this capability through a series of acquisitions and mergers in the lower and central North Island over the last 10 years.

"The success of the UNL asset integration programme again demonstrates the capacity of Powerco to manage pressures from rapid growth, and now strategically positions the company as New Zealand's largest gas network company and second largest electricity network company.

"Integrating the new business within three months has only been achieved through the detailed planning developed from past acquisitions and the huge input from Powerco's staff over the last 13 weeks. The result is clear recognition of the business focus, culture and performance drive of the Powerco entity and our people," said Mr. Boulton.

Mr Boulton said that with the new scale of Powerco, the company was now looking forward to a period of consolidation.

"It's time to focus our attention on establishing further robustness to existing systems, processes and structures. Powerco will continue to establish leadership in our asset management capability as the platform to ensure changes to the commercial and regulatory environment are effectively managed for the benefit of all stakeholders."

ENDS

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