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.