British Gas price hikes help boost annual profit 11% to more than £600m

Phil Bentley, the managing director of British Gas, formally announced his decision to leave on Wednesday as the company risked fresh anger from consumer groups by reporting an 11% increase in annual profits to over £600m, aided by domestic price rises.

The 54-year-old former BP executive who has been at the centre of rows over the scale of Big Six energy company earnings, will exit with a combined share, salary and pension package worth more than £10m.

He says he wants to go on and become a chief executive elsewhere but will be able to retire in four years time with an annual pension of £225,000 after working for British Gas for little over 12 years.

A formal statement from British Gas's parent group, Centrica, paid tribute to his role in "profit improvement" at the UK's largest domestic energy supplier.

"In his most recent role he [Bentley] has been instrumental in restructuring, reinvigorating and materially improving the performance of the business by raising customer service standards, lowering costs, increasing productivity and creating significant value from profit improvement," said the Centrica statement.

The well-signalled decision came as the wider Centrica group reported operating profits of £2.7bn – up 14% and announced plans to spend £500m buying back shares while raising the dividend 5% to 16.4p.

Nick Luff, the finance director, said it was fair to give back cash to investors given Centrica had raised £2bn for funding nuclear power stations, plans which have now been dropped.

He dismissed the suggestion the cash should be invested in operations pointing out the company was already spending £2.7bn a year building new offshore gas supplies and wind farms.

Centrica's chief executive, Sam Laidlaw, defended the profits at British Gas and the wider group saying they contributed to jobs and tax take. "It's important that Centrica makes a fair and reasonable return so that we can continue to make our contribution to society and to invest. Last year we incurred a tax charge of over £1bn and invested over £2bn to secure new sources of energy for the UK, well in excess of our profits."

Centrica said it was going to put more emphasis on its growing business in North America. It hinted that it may invest in cheap shale gas production there which could eventually be exported to Britain to supply UK homes.

British Gas raised its gas and electricity prices this winter by 6%. Ann Robinson, director of consumer policy at uSwitch, predicted that Wednesday's profit rises would grate with some customers.

"Yes, there is a huge amount of investment required to keep the lights on over the next 10 years, but there has to be a balance between energy companies making healthy profits and people going cold for fear of the cost of turning their heating on. While British Gas makes a strong case about future investment, jobs and security, I suspect there will be little sympathy, especially amongst those who have shivered at home this winter," Robinson said.