Cadbury deal for London Electricity: News of rising full-year profits accompanies pounds 10m contract

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The Independent Online
LONDON Electricity has signed a deal worth more than pounds 10m to supply power to 16 Cadbury Schweppes sites throughout the UK.

Announcement of the contract was accompanied by news of London's pre-tax profits, which rose from pounds 145.5m to pounds 186.5m in the year to 31 March.

The company said the Cadbury agreement was London's largest out-of-area electricity supply deal. Electricity supply is very competitive and the company admitted that margins were low.

Profits were boosted by heavy cost-cutting, the disposal of London's unprofitable retail arm, and a first- time contribution from the airport distribution company, which supplies Heathrow, Gatwick and Stansted.

Sir Bob Reid, chairman, said: 'The main business has performed well, showing a 1.3 per cent increase in units distributed, with particularly noticeable growth in the large commercial sector, welcome evidence of a revival in the London economy.'

Capital spending was more than pounds 100m, and expenditure is expected to be maintained at this level for the foreseeable future, he said. London has begun work on a cable renewal scheme that would mean investing more than pounds 50m over three years.

Productivity improvements continued with a 4 per cent reduction in staff in the core business.

Profits at the regulated businesses improved pounds 2m, with the main increase coming from non-regulated companies. The airport business, bought from BAA for pounds 90m, contributed pounds 10m. 'We are very pleased with the performance,' said Roger Urwin, chief executive.

London's gas business, a joint venture with Total, was also performing well and now has 1,000 customers. It made profits of pounds 400,000. The intention was to rapidly expand the operation, though regulators have put constraints on electricity companies' move into the gas market.

A final dividend of 15.1p makes 22.5p for the year. Shares fell 16p to 571p.