London Electricity lifts payout by 16% despite pounds 20m provision

LONDON ELECTRICITY has shrugged off a hefty pounds 20m provision against its withdrawal earlier this year from electrical retailing to increase its dividend by 16 per cent, writes Terence Wilkinson.

Pre-tax profits for the year to 31 March rose by only pounds 3m to pounds 145.5m after the charge and earnings per share rose by just 4 per cent. Without the retailing provision earnings would have risen by 20 per cent.

Having cut its tariff by 2 per cent in April, London intends to pass on the full benefits of lower coal prices with a pounds 7.50 rebate to customers, equivalent to 2 per cent off average domestic bills, in the autumn.

In March London became the first regional electricity company to pull out of retailing after suffering further losses. Last year it decided to withdraw almost entirely from electrical contracting and appliance servicing, and as a result contracting turned round from losses of pounds 17m to a pounds 400,000 profit.

Higher-than-expected dividend increases from regional electricity companies have created the impression that the companies have been involved in a dividend race.

'We have cleaned the cupboard of skeletons, so felt able to announce a dividend increase,' John Wilson, chairman, said. 'We also cannot ignore what is going on around us and did not want to be in a position where we were outside the range.'