Scottish Power in the money - but stays tight-lipped over 'takeover'

Scottish Power has delivered a sharp rise in profits but remained tight-lipped on takeover speculation swirling around the energy provider.

In a period when Scottish Power increased bills and announced plans to reduce its headcount by 700, the company said half-year profits rose by 45 per cent to £273 million and that it remained on course for strong annual results.

But chief executive Ian Russell declined to answer questions on the possible takeover of the group, following speculation it was in formal talks with Powergen owner E.ON, which is also the parent of Midlands-based Central Networks.

Mr Russell opened a conference call with journalists by warning the company would not answer any questions about the rumoured negotiations over a potential offer of up to 640p per share.

E.ON said in early September that it was considering its options regarding a possible offer for the UK-based group, but said then that it had not made an approach.

The announcement triggered the start of an offer period under takeover rules.

Mr Russell said: "As I'm sure you're aware, we are in an offer period. If we have anything to announce, we will do so in the normal manner."

Scottish & Southern Energy is also thought to be considering a tie-up with Scottish Power.

Customer numbers increased by 73,000 to 5.2 million in the half-year, contributing to the £80 million jump in profits to £90 million at the company's energy retail and wholesale division.

However, most of the improvement came from investments such as the 2004 acquisition of Kent's Damhead Creek gas turbine power station, which has increased generation capacity in the south.

The company followed the lead of other power groups in October when it said a 70 per cent rise in wholesale energy costs since April had forced it to increase bills - electricity by between five per cent and eight per cent and gas up by 12 per cent.

The job losses were part of a reorganisation designed to save £60 million a year and stemming from the agreed sale of its American division PacifiCorp.

The majority of the posts will go in the next financial year.

Meanwhile E.ON posted a seven per cent rise in ninemonth operating profit, powered by strong electricity and gas prices, broadly in line with expectations.

Earnings before interest and tax (EBIT), adjusted for non-recurring effects, rose to £3.71 billion from £3.49 billion a year earlier.