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Thursday, May 21, 1998 Published at 22:13 GMT 23:13 UK


Powerful ambitions
image: [ Powergen has reiterated its ambitions to buy a regional electricity company ]
Powergen has reiterated its ambitions to buy a regional electricity company

Electricity generator PowerGen has stressed its ambition to buy a supply company or strike a deal in the US after reporting flat year profits.

Britain's third largest power provider said pre-tax profits before exceptionals edged up to £580m ($947m) in the year to March from £575m previously.

It paid out a total dividend of 29p, up 15%.

[ image: The power generator reported flat profits]
The power generator reported flat profits
PowerGen made an exceptional writedown of £369m after a review of its portfolio and paid a one-off windfall tax of £202m to the Government.

The company's share of the British market slipped from 21.6% to 19.5% in the year.

Chairman Ed Wallis said: "Competition in generation is intense, but we are successfully off-setting reduced market share by focusing on delivering lower operating costs, efficiency gains and new profit streams."

Finance director Peter Hickson said the company would be hit to the tune of around £60m by new, less favourable contracts to supply regional electricity companies.

Assets for sale

The company plans to put its PowerGen North Sea (PGNS) gas upstream assets up for sale, which analysts have suggested could be worth around £300m.

PowerGen also wants to buy a regional electricity company (Rec) - a move from which it and fellow generator National Power were banned by the previous Tory administration.

Southern Electric is the only independently quoted regional electricity company left of the 12 set up at privatisation.

Eight are in US hands and three others were swallowed up to form multi-utilities, although current owners might be persuaded to sell, analysts said.

Peter Hickson said PowerGen was not in any current talks, adding: "The issue for us is not just whether or not we could get government approval, it's can we actually find a Rec and if we can find a Rec, can we actually acquire it at the right price."

Eye on America

PowerGen is also eyeing possibilities in the US where it would like to find a "substantial partner."

Peter Hickson said the company had had talks with "a number of people".

On the international front, he said there had been a shift in PowerGen's focus to concentrate on key areas, but added the company aimed to generate £100m of operating profits from international business by 2001.


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