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Graham Hawker, Hyder
"I do not think the share price will get a hammering"
 real 28k

BBC Wales's business correspondent Miles Fletcher
"Hyder's financial troubles are well known"
 real 28k

Thursday, 13 July, 2000, 12:54 GMT 13:54 UK
Hyder announces drop in profits

The troubled Welsh utility group Hyder Plc has announced sharply reduced annual pre-tax profits of just under 80m, after costs for re-structuring and price crackdowns.

Without the cost of re-structuring after the takeover of Swalec, the company would have shown profits of 158m.

Including the takeover costs, the overall fall in profits on the previous figures is 130m.


What we did not know is that we would have a bill for 300m for a windfall tax

Graham Hawker, chief executive Hyder Plc
Tough price crackdowns on water and electricty that have cost the company around 70m in the past year.

The company has more than 1.5bn of debt and it is currently the subject of a hotly contested takeover battle.

Dividend

The price cuts that have seen average water bills cut by around 30 a year and electricity bills by 13 are good news for consumers.

But they have also created a substantial hole in Hyder's balance sheet and that has been reflected in the collapse of Hyder's share price.

Hyder has said it would not pay a final dividend while a two-way bid battle continues.

Earlier in the week, a senior Welsh MP called for the jobs of Hyder's 9,000 employees to be secured if a proposed takeover bid goes ahead.

Dr Richard Livsey i
Dr Richard Livsey is concerned at Hyder's future
The Welsh Liberal Democrat leader Richard Livsey , the Brecon and Radnorshire MP, described the two bids on the table for Hyder as from a "Welsh assets point of view" the choice between a "rock and a hard place."

During a debate at Westminster, Dr Livsey said Hyder was now said to be 1.5b in debt, and that the government had partly contributed to its "downfall."

Regulation

Hyder chief executive Graham Hawker said the underlying trend of the company's ventures was positive.

Mr Hawker said he did not expect the latest profit news to hit the company's share price.

Hyder is the subject of a bidding war between American-owned Western Power, and the Japanese bank Nomura.

The bids are currently on hold while the European Commission decides whether the Western Power bid is acceptable from the point of view of regulation of the industry.

Phoenix

The American bid has aroused particular concern in Wales because Western Power plans to hand control of Hyder's Dwr Cymru/Welsh Water business to the English-based United Utilities company.

"What Wales wants now from this debacle is for a phoenix to arise for consumers with good quality and value from a company based in Wales," said Dr Livsey.


What Wales wants now from this debacle is for a phoenix to arise for consumers

Richard Livsey

He called for competition regulations on the takeover to be clarified and said that all parties in the Welsh Assembly had agreed that Hyder should keep its headquarters in Wales and retain its Welsh identity.

Energy Minister Helen Liddell acknowledged that in the future Hyder must provide quality services to customers, at least as good as currently provided.

"The windfall tax was actually a consequence of the bungled privatisation of the utilities by the previous government," she said.


Stockmarket

Last week, consumer minister and Pontypridd MP Kim Howells has delivered an apparent snub to the Welsh Assembly by refusing to refer the controversial American bid to the UK Government's Competition Commission.

National Assembly members were united in their wish to have the bid closely examined by the UK authorities, but that will only now happen if WPD's bid succeeds in the stockmarket.

Nomura has already won approval for its take-over from the UK's Department of Trade and Industry.

But Nomura has made it clear that the pledge not to break up Hyder may have to be abandoned if it was forced to raise his offer.

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See also:

07 Jul 00 | Wales
Snub leads to Hyder job fears
13 Jul 00 | Business
Hyder holds back dividend
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