Centrica powers ahead with offshore wind farm plans

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The Independent Online

Centrica unveiled a major push into wind power yesterday, as it surprised investors with a promise to hike its dividend payouts. The energy group pledged to spend £500m on developing renewable energy in the UK over the next five years.

Sir Roy Gardner, the chief executive, said the group would supply enough renewable power to light up "a city the size of Birmingham" by 2010 - 1,000 megawatts of power. The group said talks with a number of potential joint venture partners, who would commit a further £500m, were underway.

The announcement came just weeks after the Government gave the green light for an ambitious programme of offshore wind farms aimed at ensuring the country uses "green" sources for 10 per cent of its power by 2010. Electricity suppliers face financial penalties if they fail to hit this target. "[This] demonstrates the confidence business has in the future of the renewable energy market," Patricia Hewitt, the Secretary of State for Trade and Industry, said.

Reporting a rise in half-year profits, Centrica said it planned to hike its dividend over the next three years. The company, which raised its interim dividend by more than one-fifth, said it would move towards a 40 per cent dividend payout ratio (calculated out of earnings per share), up from last year's 26 per cent ratio. "Our cash generation is such that we can continue to reward shareholders while also exercising our choice to grow by acquisitions," Sir Roy said.

The group also announced plans to spend £350m over the next five years buying power generation and upstream gas assets in North America to hedge its retail business.

Sir Roy buoyed speculation that the group's Goldfish credit card business would be sold - probably to its joint venture partner Lloyds TSB - after admitting its performance remained "disappointing". Losses at Goldfish ballooned to £30m in the first half against £17m a year ago, raising question marks over whether it would manage to break even by the end of the year.

The group said pre-tax profits for the six months to 30 June rose 6.3 per cent to £576m on sales up 31 per cent to £9.3bn. Underlying operating profits jumped 11 per cent to £694m helped by a strong contribution from North America. In the UK, Centrica said the main problem with its home services division, which fixes people's electrical appliances, was a lack of trained engineers. It said it was on target to create another 3,000 engineering jobs by 2006, up from 7,000.