Tax Office dispute hits SP AusNet profit
SP AusNet is running up an interest bill of $350,000 a month on a multimillion-dollar dispute with the Tax Office, which is under appeal.
At the same time, the planned sale of a large slice of equity in SP AusNet, along with other assets in the group, to China's State Grid, is up in the air, with the potential for the deal to collapse if government approvals aren't received by November 16.
Earlier this year, State Grid agreed to pay more than $3 billion for equity in Singapore Power assets in Australia, including 19.9 per cent of SP AusNet.
On Tuesday, SP AusNet said a dispute with the Tax Office, warm weather and the rising use of solar energy systems combined to squeeze the September-half net profit to $97.7 million, from $166.2 million a year earlier.
This was despite the energy distributor reporting buoyant revenue growth, thanks to rises in regulated prices.
The gross profit, as measured by earnings before interest, tax, depreciation and amortisation, surged 11.3 per cent to $581.8 million on revenue growth of 8.7 per cent to $961.2 million.
The Tax Office has hit the company with two claims with a potential liability of $151.3 million - one for $87.7 million plus interest relating to the purchase of transmission assets, and $44 million plus interest relating to intellectual property deductions.
SP AusNet has brought the $87.7 million liability to account after it lost a recent court ruling.
The group is also being audited by the Tax Office over the handling of intra-group loans, which are carrying a 9 per cent interest rate at present.
The group is also battling legal action after the Victorian bushfires in the summer of 2009, which is expected to extend well into 2014, it told securities analysts.
The company also disclosed it was negotiating to buy back the management rights from Singapore Power, its controlling shareholder, which could cost $24.6 million.
The agreement is expected to be terminated before September 2015.
The interim dividend was raised to 4.18¢ from 4.1¢, with the full-year payout flagged at 8.36¢.