Centrica to pay out extra pounds 530m

CENTRICA YESTERDAY rewarded the loyal army of Sids who have stuck with the company since the break-up of British Gas by announcing a pounds 530m special dividend for its 1.3 million shareholders.

The 12p-a-share payout is the first dividend from Centrica, the trading and supply arm of British Gas, since it was demerged from the pipeline and exploration division, BG, two years ago.

The pounds 530m distribution, equivalent to 10 per cent of Centrica's market capitalisation, came as Centrica made its first pre-tax profit and said it planned bids for both the RAC's roadside breakdown service and National Power's giant Drax power station in Yorkshire.

Centrica's ambitious expansion plans will also see it boost its services division into a pounds 750m-a-year business within three years. Among the additional services Centrica may offer to its 15.5 million customers are car insurance, electrical repairs, home shopping and a remote diagnostic service for the "robotic" home of the future. Mortgages may also be offered alongside its successful Goldfish credit card, which now has 900,000 customers.

Centrica also claimed it was winning the war in the energy market, saying it had now signed up more than 1 million electricity customers, giving it 4 per cent of the market - more households than the smallest regional electricity company, Swalec.

The aim is to capture 4 million electricity customers to offset the 4 million gas customers it has lost since the domestic market was liberalised in 1996.

Roy Gardner, chief executive, said Centrica could do this without buying a regional electricity company. Last year Centrica spent pounds 86m building up its electricity business.

Centrica intends to bid for Drax, Britain's biggest power station with an output of 4,000 megawatts, as part of a consortium. It may pair up with one of the bidders that has pulled out of the auction for the two coal-fired stations being sold by PowerGen, Ferrybridge and Fiddlers Ferry.

There are thought to be three bidders left in the PowerGen auction - British Energy, Scottish and Southern Energy and the US utility NRG.

Mr Gardner would not be drawn on how much Centrica was prepared to bid for the RAC's motoring services arm. But it is certain to be substantially less than the pounds 450m offered by Cendant of the US before its bid was blocked.

The special 12p a share dividend is payable in June and is being accompanied by a nine for 10 share consolidation. Centrica also intends to pay a dividend of 2.5p for the current year. Pre-tax profits were pounds 89m, compared with a pounds 791m loss in 1997, after charges linked to the unwinding of take-or- pay gas contracts.