Retailing losses hold back SW Electricity

INCREASED losses in electrical retailing and a pounds 3.8m provision in its contracting business have marred full-year results from South Western Electricity, the Bristol-based distribution company.

The company showed a 21.8 per cent rise in pre-tax profits to pounds 101.1m in the 12 months to 31 March. A final dividend of 14.1p makes a 14.9 per cent rise in the total payout to 20p a share. The increase, after a 12 per cent rise at the interim stage, is in line with the more generous approach to dividends by most other regional electricity companies.

Overall electricity profits rose by 11 per cent to pounds 103.9m. Profits from supplying domestic and other lower-voltage customers fell from pounds 89.6m to pounds 87.2m, but a switch to charging the distribution business rental on its properties accounted for this.

A pounds 3.9m squeeze on revenues resulting from a decision to lift prices by only 1.7 per cent in April 1992 was offset by a pounds 2.9m gain from the effect of favourable weather on volumes and a pounds 2.5m boost from real cost reductions.

South Western, conscious of the interest of Offer, the industry regulator, has announced a price freeze for 1993/4. John Seed, chief executive, said that a rebate of about 1 per cent was being planned for later in the year to pass through lower coal prices.

Helped by a recovery of undercharged revenues in the previous year, profits from supplying higher-voltage customers jumped from pounds 4.1m to pounds 16.7m. Losses in electrical retailing increased from pounds 400,000 to pounds 1.9m. South Western merged its operations with those of South Wales Electricity in January 1992, incurring a pounds 6.6m charge for redundancies and reorganisation.