Profits up at South Wales Electricity

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The Independent Online
SOUTH WALES Electricity, boosted by the elimination of loss- making retailing activities, lower interest charges from strong cash flows and reduced losses in wholesale electricity supply, has lifted half-year pre-tax profits by 43 per cent to pounds 29.7m, writes Terence Wilkinson.

Maintaining the momentum of dividend growth set last year, South Wales, in which Welsh Water has a 15 per cent stake, has increased its interim payment by 13.8 per cent to 6.6p a share, the largest rise so far in the electricity company reporting season.

Operating profits in distribution rose by 6 per cent to pounds 30m in the six months to 30 September on the back of a 1 per cent rise in volume and a 1.7 per cent reduction in operating costs. Tariffs were cut by 0.5 per cent in June.

Pre-tax profits benefited from the absence of pounds 2.5m losses on its retailing activities, which were merged with those of South Western Electricity at the beginning of this year.

The run-down of retailing's debtors contributed towards a pounds 30m reduction in working capital, which in turn lay behind a turnaround from interest payable of pounds 1.5m to a credit of pounds 400,000.

Contracting activities recorded a pounds 1m loss but South Wales' management has moved to take a grip on wage rates among its 200 contracting employees and is expecting a 20 per cent cut in costs.