Spark sees profits soar beyond £1 million

The profits hike came as turnover soared by more than 100 per cent to £83m, accounts newly available at Companies House show.

Spark, focused largely on the rented property sector, said its progress had been driven by its growth in customer numbers.

The accounts state its customer base rose by more than 70 per cent during the year, driven by existing relationships with UK letting agencies, and the launch of new business lines such as the Spark Advance tariff, claimed to be the UK's lowest variable utility tariff.

The company, which employs 220 staff at its Borders base, also cited improvements in bad debt because of its focus on customer service. Bad debt as a percentage of turnover fell to eight per cent to eight per cent from 11 per cent, the accounts show.

Chief executive Chris Gauld: "It's nice to make a good profit number because it is good motivation and good reward and good end of year feeling for the team.

"We have invested way in excess of any profit we have made in the business. We had this programme last year of rapidly improving customer experience in the business, building new products and improving our customer systems.

"Our first seven figure profit comes off the back of that, and that's very pleasing, because it suggests that when we have the opportunity, we have got the people and the right outlook to develop the business."

The latest results from Spark show the company is benefiting £2.5 million investment drive to improve service following the launch of an Ofgem probe into Spark in 2013.

The investigation, focused on compliance with gas and electricity licensing and customer complaints legislation, remains live. Mr Gauld said the company will "hold its hands up" if it is found to have made any mistakes.

He said: "It's very pleasing to turn the corner with the business. It has been a long road but I really feel in the last couple of years we have been getting it right. It takes time for that to flow to the bottom line.

"I think this is a signal that we are now getting it right and that the future is quite rosy."

Mr Gauld, formerly of Edinburgh-based property firm Grant Management, said Spark has continued to develop systems, products and service in its current year.

Some 50 projects have been identified by the directors which will this year see it launch a new billing system at cost of more than £1 million, move into online sales and begin work with four major social housing projects. It has also moved into broadband supply.

The company, which currently has about 120,000 customers, also became the latest energy company to cut prices this week.

It said the 3.4 per cent, which will apply to customers who pay by direct debit, will amount to an average annual saving of £42 for customers supplied with both gas and electricity.

However Mr Gauld emphasised the cut was not in direct response to falling wholesale prices, noting that hedging agreements mean the energy it is now supplying was bought on the market 18 months ago. He said the fall was made possible thanks to its growth and the investment it has made in improving its efficiencies.

Mr Gauld said the energy industry should brace itself for a rough ride in the run up to the General Election in May, stating that the debate on the true cost of energy is often ill-informed.

He said: "Unfortunately there is going to be a rocky time ahead for everybody, and I think the quality of the debate and the quality of the coverage is not likely to be great.

"My focus in that kind of environment is to not get drawn into it too much. Our focus is on working very hard on our business, our team, with the confidence of knowing our customer and experience and service are good, and the confidence of knowing our business is compliant.

"All the rest will have to wash itself out."