Thames Water justifies deferred dividend

Thames Water is delaying payment of its final dividend for at least seven months to avoid paying advance corporation tax which it might not recover.

It admitted that the move could inconvenience its small shareholders some of whom relied upon the shares for income but said that, with plans to claw back £159m of ACT over the next five years, it would add £44m in shareholder value.

Roger Carr, Thames Water's chairman, said that shareholders would be compensated for the delay with an extra 1.5p a share, lifting the final dividend to 32.7p a share.

Thames also plans to delay payment of the 2001 interim dividend by at least two months. Both delays have yet to be approved by shareholders.

The group yesterday re ported that full year pre-tax profits for the year to March 31 rose from £418.6m to £419.6m.

Operating profits of its regulated British water business rose 3% to £488m while those of its non-regulated businesses jumped 47% to £85m.