Totally Gross Profits For Cubico?

We’ve been asking Cubico to share their financial model with us so we can assess the fairness of the Community “Wealth” Fund, but they refuse, so we’ve worked them out ourselves based on the information that is in the public domain:

• Up Front Investment by Cubico £200m *
• Average Annual Profit after Tax £147m **
• Total Profit After Tax over the 40 year life £5,889m (yes, around £6 BILLION!)
• Return on Investment 2,944%
• Payback period 2 years and 6 months
• Proportion of profit given back to community 0.4% ***

These figures are extremely conservative, and do not allow for any increased return compared to Scout Moor and Crook Hill wind farms as technology has improved.

When you put this into the following context, it feels pretty distasteful:

• The average bill payer is contributing around £2,000 a year to the subsidies businesses like Cubico receive – directly through energy bills (about £350 per household) as well as via income tax.  The community “wealth” fund generously gives us £2.40 of that back ****
• The profit – the conservatively estimated £6 BILLION – will be going out of the UK to the company that owns Cubico – a Canadian pension fund.  This is consistent with the Scout Moor 1 model, owned by Munich Re (based in Germany) 

How have we figured all this out?

Well, we have good visibility of the Scout Moor 1 and Crook Hill wind farm accounts – both are filed with Companies House.  

Cubico themselves have told us how much the community wealth fund is, and the amount of their up-front investment.  So, we can extrapolate those figures to deduce the expected profits.

One of our team has done the maths on this one.  They are a qualified accountant with 22 years’ post qualification experience in a variety of businesses – perhaps most relevantly having been the Strategic and Financial Planning Manager for Electricity North West for quite a number of years.

Unlike Cubico, our calculations spreadsheet is freely available to anyone who would like to interrogate it – in fact, we warmly invite Cubico to correct us if we have misunderstood anything!

Source

*  Reaction to plans for Scout Moor II wind farm expansion | Lancashire Telegraph

**  Scout Moor 1’s actual Profit After Tax as a % of investment (=39.05%) extrapolated pro rata to the Cubico £200m investment, and inflated at 3% per annum over the 40 year planned lifecycle of Scout Moor 2

*** Cubico have stated it will be up to £24m, although it is not clear whether this is inflated in addition, or whether it is already index linked, this figure assumes it is £24m after allowing for 3% pa inflation

**** We Challenge Claims in Cubico’s Stage 2 Consultation – Say No to Scout Moor 2