British Energy shareholders get pounds 69m special dividend

BRITISH ENERGY is paying shareholders a special dividend costing pounds 69m just weeks after the privatisation of the nuclear power generator was heavily criticised for shortchanging the taxpayer.

The move came as the company, which has held discussions about taking over the running of the Three Mile Island plant in the US, indicated it could spend up to pounds 1bn expanding into the US electricity market.

Shareholders will receive a 10p payout on top of the final dividend for the year, financed from big cost savings it has negotiated in its fuel reprocessing contracts with BNFL.

Earlier this month the National Audit Office criticised the previous government for not selling British Energy off in stages. The shares closed 18.5p higher last night at 563.5p compared with a flotation price of 203p in July 1996.

Peter Hollins, chief executive, defended the payout by saying it was only right that the savings from lower reprocessing prices should be passed on to shareholders. "If the Government had maintained a minority shareholding it would have had the benefit of this as well."

The renegotiated BNFL contract will knock pounds 1.1bn off British Energy's "back end" costs, which translates into pounds 30m more profit a year. The company is also benefiting from extensions to the operating lives of a number its nuclear reactors.

Mr Hollins was speaking as British Energy unveiled a threefold increase in profits to pounds 191m and its first covered dividend. The business is now throwing off cash at the rate of pounds 250m-pounds 300m a year while productivity has risen by 10 per cent.

The 5,000 staff are sitting on notional share option profits of pounds 62m worth pounds 12.400 each.

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