The company's 2 million customers will also benefit from a 3.5 per cent price cut from next April. Chris Hampson, chairman, said the reduction meant prices, excluding the effect of inflation and the imposition of VAT, had fallen 19 per cent since privatisation five years ago.
The moves mean Southern Electricity is the only REC not to have distributed surplus cash to shareholders this year, either through a special payout or share buyback.
Yorkshire announced a 32 per cent increase in interim profits for the six months to September. The company said it chose a special dividend because it rewarded all shareholders equally. East Midlands is the only other REC to have chosen this route ratherthan buying shares ftom a handful of institutions.
The market welcomed the announcement of a special dividend, adding 30p to the share price. Including the effect of the 90p payment, the shares closed 60p lower at 687p.
The company also said if a planned flotation of the National Grid went ahead next year, it would hand its stake to its shareholders. The Grid, expected to be worth at least £4bn, is owned by all 12 RECs.
Following the payment of the dividend, worth 90p a share, 25 Yorkshire shares will be consolidated into 22 new ones to reduce the number of shares.The Inland Revenue confirmed that the dividend would qualify for a tax credit, worth a further 20 per cent to non-tax payers.
Bryan Morgan, a director, said the decision to pay the dividend had nothing to do with the announcement earlier this week that Trafalgar House was considering a bid for Northern Electric The special dividend had been planned, and had received Inland Revenue approval, several weeks ago.
The approach from Trafalgar House, together with the recent rash of buybacks and dividends, has underlined the cash-generative attractions of the regional electricity companies.
Mr Morgan said he thought there could be bids from outside the industry once the Government's golden share expired in March 1995, but he thought mergers within the industry were less likely because of the difficulties involved in combining large and complicated computer systems.
Half-year pre-tax profits jumped from £74m to £97.6m, struck from a 10 per cent increase in turnover to £647m. Earnings per share were 26 per cent higher at £72.9m.
As well as the special dividend an interim payout of 7.92p a share is to be paid, a 15 per cent increase. The dividend is equivalent to 9p for each new share following the consolidation.
Chris Hampson, chairman, said: "These outstanding results reflect our strategy of growing the business and cutting costs. Our customers are enjoying some of the lowest electricity prices in the country."
Costs fell 15 per cent during the period as staff numbers fell by 421 to 4,542. Last July, Yorkshire announced 1,000 job losses over a three-year period. It had already shed more than 600 jobs last year.
Profits from the core distribution business jumped 23 per cent from £66.9m to £82m, thanks mainly to the reduction in the cost base.
Electricity units distributed rose 1.5 per cent during the period although, after stripping out the effect of a number of large pit closures, the underlying increase was 2.8 per cent.
Mr Hampson said the region's economy had been resilient through the recession and was at the forefront of export-led economic growth.
Supply profits more than doubled from £4.2m to £8.6m following the opening up of the market for businesses taking more than 100kW a year. Yorkshire attracted £100m of new business in areas outside its previous monopoly control.
Yorkshire also has interests in gas supply, telecoms and power generation. Mr Hampson said the decision to pay cash back to shareholders would not compromise investment in these new areas, which contributed profits of £10.6m He said the company planned to generate 20 per cent of its profits from non-regulated businesses compared with 10 per cent currently. Power generation provided profits of £6m in the half and Yorkshire announced its second combined heat and power customer, AH Marks, a chemicals manufacturer based in Bradford.
Gas supply was expanded by the acquisition of a 7 per cent stake in the Armada gas field to supply the newly formed YE Gas, established to trade in the new competitive gas market.
In telecoms, a joint venture with Kingston Communications, will be launched early next year. Yorkshire also has a 30 per cent stake in Ionica, which is developing a wireless telephone service. A proposed investment in Stockholm Energi has been called offfollowing the election of a new left-wing council in the Swedish city.Reuse content