Great Portland hints it may cut dividend

Great Portland Estates, the property group, warned yesterday it might be forced to revisit its high dividend policy if Labour reduced advance corporation tax as expected in next month's Budget. Analysts said Great Portland was effectively saying it might have to cut the payment, which represents most of the group's earnings, if it became less tax efficient due to a reduction in the 20 per cent rate of ACT.

Richard Peskin, the company's chairman, said he was waiting to see the Government's review of corporate taxation but "should substantive measures be taken to alter the current relationship between the levels of corporation tax and tax credit on dividends, your board may find it appropriate to reconsider its existing dividend policy".

Mr Peskin refused to confirm that Great Portland was threatening to cut the payment to shareholders.

But he said the group's effective rate of taxation was 25 per cent, while ACT was 20 per cent. "If that relationship were to be substantially changed, I am sure that the board would look at what was in the best interests of shareholders in terms of our dividend policy," he said.

Nan Rogers, an analyst with brokers Charterhouse Tilney, said Great Portland was flagging that it might cut its dividend. That would be a radical change for a company that has in the past been seen as an "income stock", she suggested.

Great Portland, which raised pounds 97m from shareholders in February, yesterday announced a final dividend of 6.1p to maintain the annual total at 9.0p. This represented most of last year's earnings per share of 10p, which rose 5 per cent in the year to March, despite a dip in pre-tax profits from pounds 47.6m to pounds 46.0m announced yesterday.

The group announced an 8 per cent rise in net assets per share to 212p, with the growth coming from the rights cash, a pounds 55m revaluation of investment properties and retained reserves and other equity issues totalling pounds 4m.