Southern Water gives sector biggest payout

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The Independent Online
SOUTHERN WATER became the latest water company to fire a shot across the bows of the regulator yesterday, as it announced the biggest interim dividend rise in the sector this year.

Martin Webster, group managing director, warned that the company would appeal to the Monopolies and Mergers Commission if it felt the return to shareholders allowed by Ofwat was too low.

He was critical of the methodology used by the regulator, Ian Byatt, in his recent paper setting out guidelines for the periodic review of water charges, which will set 'K' factors to the end of the century. K is the percentage beyond the retail price index by which companies are allowed to increase bills.

Shares in Southern rose 12p to 660p as it pushed its interim payout ahead 8.5 per cent to 7.7p. Pre-tax profits were 7.5 per cent higher at pounds 64.5m in the six months to the end of September. Non-regulated businesses performed well, contributing 7.3 per cent of trading profits. Ray King, finance director, said that adding interest gains, the non-core side made 9 per cent of profits.

He said there was more than pounds 30m cash in the bank at the half- way mark, although that would fall to single figures by the year end as the company continued its capital investment programme.

Southern also announced that it was buying 75 per cent of Greater Manchester Scientific Services for less than pounds 1m. It said the stake would enhance its existing environmental consultancy business.

Bottom Line, page 29

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