Norweb criticises high Seeboard dividend: Rival electricity supplier says company's 17 per cent rise is 'unreasonable' while announcing its own lower return

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The Independent Online
SEEBOARD, the electricity company, drew fire from rival Norweb yesterday after announcing the sector's highest dividend rise.

Ken Harvey, Norweb's chief executive, called Seeboard's 17.5 per cent increase unreasonably high. Norweb unveiled a rise of 15 per cent. 'We have never been in a dividend race, but we are not prepared to get totally out of line with the others,' Mr Harvey said.

Both companies reported profits at the top end of forecasts. Like other electricity distributors they are cutting costs in advance of the impending regulatory clampdown.

Seeboard, which saw pre-tax profits rise 17 per cent to pounds 131.7m, lifted its total dividend to 11.75p. Sir Keith Stuart, chairman, said: 'We have gone for sensible figures. Earnings have grown almost 22 per cent. The fact that our dividend cover is strong is relevant to what we can achieve by way of dividend growth in future.'

The 12 RECs are moving towards stronger dividend cover in advance of stricter regulations. Seeboard's cover rose from 3.1 to 3.2 times, and Norweb's from 3.2 to 3.4 times.

In August, Professor Stephen Littlechild, the regulator, is expected to impose a one-off cut in distribution charges, which account for the bulk of REC profits.

Seeboard's distribution profits climbed to pounds 101m from pounds 91.9m. Electricity supply profits rose to pounds 14.5m from pounds 13.3m. And profits from retail operations were pounds 1.8m, against a pounds 600,000 loss.

As part of its cost-cutting, Seeboard is shedding another 600 jobs over three years, the majority of which will be voluntary, Sir Keith said. About 900 jobs went last year, reducing the payroll in the core business to 4,953.

The pre-tax profits came after restructuring costs of pounds 28.2m. Strong cash flow helped a bigger capital investment programme.

Pre-tax profits at Norweb rose 13.5 per cent to pounds 178.3m and it said it was on target to earn 20 per cent of operating profits from non-regulated activities before the end of the decade.

'Our strategy has been to grow dividend cover during this current regulatory period,' Mr Harvey said. 'We will need that strong cover post-1995 to achieve our goal of 6-8 per cent real dividend growth a year until the end of the decade.'

Operating profit climbed to pounds 173.5m from pounds 155.4m. Norweb's domestic electricity prices are now the lowest in Britain.