UTILITY giant ScottishPower is paying an £890 million dividend to Spanish
parent company Iberdrola after the Glasgow-based firm benefited from the
cold weather, price hikes and rising customer numbers.
The company’s gas and electricity supply division, which has more than five
million customers and has gained several hundred thousand in the past two
years, soared back into the black last year with a £170m profit, having
lost £22m in 2011.
ScottishPower said that the swing was partly due to margins in the supply
business in 2011 being “abnormally low” when some of its contracts to buy
power on the wholesale markets were more expensive than the market prices
at the time.
It stressed that the overall profit margin for the supply business last
year was 4.4 per cent, which it said was “an appropriate level of return
given the size of asset base and associated risk of running a large
competitive business”.
The group came under fire from consumer groups when it joined other energy
companies in increasing prices last autumn, with gas and electricity bills
going up by 7 per cent and taking the average annual dual-fuel bill to £1,271.
Accounts filed at Companies House showed that group revenues rose to £7.8bn
in 2012 from £7.4bn in 2011 and operating profits increased to £835.2m from
£398.5m – a rise of 110 per cent – with the pre-tax surplus also more than
doubling to £712.2m from £350m.
The inclusion of the renewables business in the accounts for the first time
added around £64m to profits. The 2011 figure had also been hit by a £169m
impairment charge in connection with its Longannet station.
The company said the dividend to its Spanish parent was higher than normal
to reflect the fact that no dividends had been paid in two of the past five
years. Total dividends paid between 2007 and 2012 stand at £1.8 billion and
the firm said in the same period more than £4bn had been invested in the UK.
Keith Anderson, who took on the role of chief corporate officer in 2011
after former chief executive Nick Horler left, received £373,000 in salary
during his first full year at the helm plus a £129,000 bonus.
The accounts also reveal that the company paid out £7,000 to each of the
Scottish National, Labour and Conservative parties for the sponsorship of
conferences and events. Staff numbers dipped to 7,526 at the year end, from
7,814.
Total taxes paid in 2012, including corporation and employment levies, rose
to £414m against £369m in 2011.
The UK accounted for 28 per cent of profits at Iberdrola last year, only
slightly below the 30 per cent achieved from its home market in Spain.
Around two-fifths of the total Iberdrola is spending on investment is being
directed to the UK, including a record £1.3bn this year, of which £550m
will go towards renewable energy projects.
Earlier this month the group unveiled the largest-ever investment plan for
its distribution network, spending £5.2bn to reduce the risk of power cuts
in rural areas.
The firm will reinforce cables and substations across the Central Belt,
Merseyside and North Wales, including some infrastructure from the 1950s.
If the company is given the green light to invest the cash by energy
regulator Ofgem then it will create about 2,500 jobs in its supply chain.
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