Sales up but profits down at State-owned utility

STATE-OWNED utility Bord Gáis will shortly begin seeking a corporate adviser to work on the sale of its energy business, which is likely to go ahead next year.

The group yesterday reported that sales grew 5 per cent to €1.6 billion but profits slipped 15 per cent to €94 million as a result of increased finance and depreciation charges.

Earlier this year the Government earmarked for sale one of the group’s key divisions, Bord Gáis Energy, along with a number of other State assets.

Group finance director Michael G O’Sullivan confirmed yesterday that Bord Gáis will take the first step in recruiting a corporate adviser to work on the sale in the coming weeks.

This will involve advertising for bids from interested parties in the official EU Journal. It is likely to be three to four months before a successful candidate is hired.

Merchant or investment banks or stockbrokers normally act as advisers in corporate sales.

New Era, the agency established to oversee the sale of State assets, will appoint a firm of its own, but Mr O’Sullivan stressed yesterday that whichever organisation Bord Gáis hires will be the lead adviser.

He explained that factors such as directors’ legal obligations and the company’s own knowledge of the market led to a decision that the board would be directly involved in the sale.

Once advisers are hired, it could take between nine and 12 months before a sale goes ahead, which means that a deal is likely to be done at some stage late next year.

Bord Gáis Energy supplies gas and electricity to consumers and businesses and operates a number of electricity generating plants.

The group’s other main division, Bord Gáis Networks, will remain in State ownership as it is considered a strategically important part of its energy infrastructure. It is responsible for the Republic’s natural gas transmission network, operates two interconnectors between Scotland and Ireland through which most of the natural gas used here is transported, and owns infrastructure in Northern Ireland and on the Isle of Man.

The Government recently charged the group with establishing Irish Water, the Republic’s new water utility, which will see it taking over from the local authorities, which are responsible for water services.

Bord Gáis yesterday said it paid a €33 million dividend to the exchequer. The group’s profits before tax slipped 15 per cent to €94 million last year from €123 million in 2010.

The fall in profits was down to an increase in net finance costs from €75 million to €86 million and an increase in depreciation charges from €132 million to €163 million.

The rise in finance costs included an increase in interest payments and debt and a fall in finance income, mainly the interest earned on cash balances.

The group increased the amount of cash held in low-interest, short-term accounts during the year to boost liquidity.

Revenues grew 5 per cent from €1.525 million to €1.6 million on the back of increased sales of electricity.