Cheap gas gives boost to Hydro Electric

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The Independent Online
A SWITCH to cheap gas from the Miller North Sea field, sharply higher exports south of the border, a rainy Highland summer and lower interest charges combined to boost Edinburgh-based Hydro- Electric's half-year pre-tax profits by 66 per cent to pounds 40.6m.

The interim dividend is 10.8 per cent higher at 3.6p. On Monday Scottish Power, Hydro-Electric's Lowland compatriot, announced a 10.1 per cent half-time payout rise.

Hydro-Electric's sales through the electricity interconnector to England and Wales, partly reflecting the addition of eight new customers, jumped by 20.2 per cent to pounds 60.3m in the six months to 30 September.

The rise in exports accounted for more than half of a 7 per cent rise in overall turnover to pounds 301m at Hydro-Electric.

The north of Scotland showed improved sales with underlying volume growth of around 2 per cent, a buoyant performance compared with English generators and distributors. Retail turnover was 15 per cent higher.

Operating margins rose by 2.5 points to 16.7 per cent, helping to lift operating profits by 25 per cent to pounds 50.3m. This rise stemmed mainly from a switch to Miller gas, which is 15-20 per cent cheaper than average gas costs, at the company's Peterhead power station. Extra rain in a wet Highland summer also lowered costs of hydro- electric generation.

Pre-tax profits received an additional boost from a 38 per cent fall in interest charges to pounds 9.7m. Working capital management has helped to produce a pounds 50.5m cash inflow in the first half, lowering gearing to 20.6 per cent against 30 per cent in March.