ScottishPower 2001/02 Preliminary Results Including Fourth Quarter Results to 31 March 2002.Business Editors (PART 5 of 5) GLASGOW Glasgow, city, Scotland Glasgow (glăs`gō, –kō, glăz`gō), city (1991 pop. 688,500) and council area, S central Scotland, on the river Clyde. , Scotland--(BUSINESS WIRE)--May 1, 2002 ScottishPower (NYSE NYSE See: New York Stock Exchange : SPI (1) (Stateful Packet Inspection) See stateful inspection. (2) (Service Provider Interface) The programming interface for developing Windows drivers under WOSA. )--
Three months ended Year ended 31 March
31 March 2001 31 March 2001 2001
External Operating External Operating Net
turnover loss turnover profit assets
(pound)m (pound)m (pound)m (pound)m (pound)m
United Kingdom
UK Division-
Generation,
Trading
and Supply 34.8 (3.0) 79.9 (6.3) 27.9
Infrastructure
Division
Power Systems 0.6 0.6 11.1 17.1 2.3
Southern Water - - 0.8 0.4 1.5
Appliance
Retailing 78.4 (2.2) 317.7 (8.7) 55.6
----- ----- ----- ----- -----
Other total 113.8 (4.6) 409.5 2.5 87.3
----- ----- ----- ----- -----
(ii) The segment previously described as `Telecoms' has been
redesignated `Thus' as historical data for this segment no longer
includes data relating to other telecoms operations disposed in
prior years.
(iii) In the segmental analysis turnover is shown by geographical
origin. Turnover analysed by geographical destination is not
materially different.
(iv) As required by the Utilities Act 2000, the group implemented a
new legal entity structure for certain of its UK businesses to
give effect to business separation. Following the creation of this
new legal structure on 1 October 2001, the directors reviewed the
group's segments and concluded that no changes were required to
the business segments disclosed above. However, they also reviewed
the items to be included within each segment's net assets,
particularly in relation to intra-group balances. The net assets
by segment figures above have been presented on this revised basis
and comparative figures have been restated accordingly.
(v) Unallocated net liabilities include net debt, dividends payable,
tax liabilities and investments.
3 Exceptional items
Three months ended Year ended
31 March 31 March
2002 2001 2002 2001
Notes (pound)m (pound)m (pound)m (pound)m
(a) Recognised
in arriving
at operating
profit
Continuing operations
Reorganisation costs (i),(iv) (18.5) - (18.5) (120.7)
------- ------ ------- -------
(18.5) - (18.5) (120.7)
------- ------ ------- -------
(b) Recognised after
operating profit
Discontinued operations
Loss on disposal of
and withdrawal
from Appliance Retailing (ii) - - (120.1) -
Provision for loss
on disposal
of Southern Water
before goodwill
write back (iii)(449.3) - (449.3) -
Goodwill write back
relating to
Southern Water (iii)(738.2) - (738.2) -
------- ------ ------- -------
(1,187.5) - (1,307.6) -
------- ------ ------- -------
Total exceptional items
before interest and
taxation (1,206.0) - (1,326.1) (120.7)
Restructuring of
debt portfolio (iii) (30.8) - (30.8) -
Tax on exceptional items 17.8 - 38.8 45.9
------ ------ ------- -------
Total exceptional
items(net of tax) (1,219.0) - (1,318.1) (74.8)
------- ------ ------- -------
Year ended 31 March 2002
(i) An exceptional charge of (pound)18.5 million was incurred relating
to reorganisation costs for the UK Division - Generation, Trading
and Supply and primarily represents severance and related costs.
(ii) An exceptional charge of (pound)120.1 million relates to the loss
on disposal of and withdrawal from the group's Appliance Retailing
operations. This charge includes (pound)15.1 million of goodwill
previously written off to reserves. The pre-goodwill loss of
(pound)105.0 million comprises asset impairments of (pound)54.2
million and provisions for trading losses and closure costs of
(pound)50.8 million, of which (pound)43.5 million had been
occurred by 31 March 2002.
(iii) On 23 April 2002, the group completed the sale of Aspen 4
Limited (the holding company of Southern Water plc) to First Aqua
Limited for a total consideration, before expenses, of (pound)2.05
billion including repayment and acquisition of intra-group
non-trading indebtedness and assumption by First Aqua Limited of
Southern Water's non-trading debt due to third parties. An
exceptional charge of (pound)1,187.5 million relates to the
provision for the loss on disposal of the group's Southern Water
business. This charge includes (pound)738.2 million of goodwill
previously written off to reserves. Net exceptional finance costs
of (pound)30.8 million were incurred comprising hedging and debt
redemption costs associated with the proposed refinancing of
Southern Water and the restructuring of the group's debt portfolio
in anticipation of the disposal of Southern Water.
Year ended 31 March 2001
(iv) The charge of 120.7 million related to the cost of the Transition
Plan for PacifiCorp announced on 4 May 2000 and primarily
represented severance and related costs for approximately 1,600
employees.
4 Taxation
The charge for taxation, including deferred tax, for the year ended 31
March 2002 reflects the effective rate for the year ending 31 March
2002 of 21.5% (2001 22.5%)on the profit before goodwill amortisation,
exceptional items and taxation as detailed below:
Three months ended Year ended
31 March 31 March
2002 2001 2002 2001
(pound)m (pound)m (pound)m (pound)m
(Loss)/profit on ordinary
activities before taxation (1,006.6) 151.5 (938.8) 379.7
Adjusting items
-exceptional items
before taxation 1,236.8 - 1,356.9 120.7
-goodwill amortisation 37.4 35.7 149.0 127.6
------ ------ ------ ------
Profit on ordinary
activities before
exceptional items,
goodwill amortisation
and taxation 267.6 187.2 567.1 628.0
------ ------ ------ ------
5 (Loss)/earnings and net asset value per ordinary share
(a) (Loss)/earnings per ordinary share have been calculated for all
periods by dividing the (loss)/profit for the period by the
weighted average number of ordinary shares in issue during the
period, based on the following information:
Three months ended Year ended
31 March 31 March
2002 2001 2002 2001
(Loss)/profit for the period
((pound)million) (1,035.6) 108.3 (987.1) 307.5
Basic weighted average
share capital
(number of shares, million) 1,841.5 1,832.3 1,837.8 1,830.3
Diluted weighted average
share capital
(number of shares, million) 1,844.9 1,837.3 1,840.1 1,837.4
------ ------ ------ ------
The difference between the basic and the diluted weighted average
share capital is wholly attributable to outstanding share options and
shares held in trust for the group's Employee Share Ownership Plan.
These share options are dilutive by reference to continuing operations
and accordingly a diluted EPS has been calculated which has the impact
of reducing the net (loss)/earnings per ordinary share.
(b) The calculation of (loss)/earnings per ordinary share, on a basis
which excludes exceptional items and goodwill amortisation, is
based on the following adjusted earnings:
Three months ended Year ended
31 March 31 March
2002 2001 2002 2001
(pound)m (pound)m (pound)m (pound)m
(Loss)/profit for
the period (1,035.6) 108.3 (987.1) 307.5
Adjusting items
- exceptional items
(net of
attributable taxation) 1,219.0 - 1,318.1 74.8
- goodwill amortisation 37.4 35.7 149.0 127.6
------ ------ ------ ------
Adjusted earnings 220.8 144.0 480.0 509.9
------ ------ ------ ------
Adjusted earnings per share has been presented in addition to earnings
per share calculated in accordance with FRS 14 in order that more
meaningful comparisons of financial performance can be made.
(c) Net asset value per ordinary share has been calculated based on
the following net assets and the number of shares in issue at the
end of the respective financial years (after adjusting for the
effect of shares held in trust for the group's Sharesave Schemes
and Employee Share Ownership Plan):
31 March 31 March
2002 2001
Net assets (as adjusted)((pound)million) 4,692.5 5,841.9
Number of ordinary shares in issue
at the year end (as adjusted)
(number of shares, million) 1,841.9 1,833.0
------- -------
6 Dividends
(a) Cash dividends
2002 2001
pence pence
per per
ordi- ordi-
nary nary 2002 2001
share share(pound)m (pound)m
First interim dividend paid 6.835 6.51 125.4 119.1
Second interim dividend paid 6.835 6.51 125.9 119.3
Third interim dividend paid 6.835 6.51 126.1 119.5
Final dividend 6.835 6.51 126.1 119.4
----- ----- ----- -----
Total cash dividends 27.34 26.04 503.5 477.3
----- ----- ----- -----
(b) Dividend in specie on demerger of Thus
2002 2001
(pound)m (pound)m
Demerger dividend 436.6 -
----- -----
The demerger of Thus was recorded in the group Accounts at the book
value of the net assets which were deconsolidated, (pound)421.9
million, together with (pound)14.7 million of related goodwill which
had previously been written-off to reserves, giving a dividend in
specie of (pound)436.6 million.
The demerger of Thus was recorded in the individual company Accounts
of Scottish Power plc at the book value of the cost of investment in
the ordinary and preference shares of Thus, giving a dividend in
specie of (pound)396.3 million.
7 Reconciliation of operating profit to net cash inflow from operating
activities
Year ended
31 March
2002 2001
(pound)m (pound)m
Operating profit 776.6 721.9
Depreciation and amortisation 717.0 607.9
Profit on sale of tangible fixed assets
and disposal of businesses (7.7) (19.9)
Release of deferred income (17.8) (15.1)
Movements in provisions for
liabilities and charges (93.6) 57.5
Decrease/(increase) in stocks 10.4 (13.3)
Decrease/(increase) in debtors 58.4 (137.2)
(Decrease)/increase in creditors (194.9) 209.8
------ ------
Net cash inflow from operating activities 1,248.4 1,411.6
------ ------
8 Analysis of net debt
Disposal
(excl. Other
At cash & non- At 31
1 April Cash over- cash March
2001 flow drafts) Exchange changes 2002
(pound)m (pound)m(pound)m (pound)m (pound)m (pound)m
Cash at bank 139.7 163.4 - (0.3) - 302.8
Overdrafts (52.5) 17.8 - 0.1 - (34.6)
------
181.2
Debt due after
1 year (4,868.3) (364.7) - (3.7) (106.3) (5,343.0)
Debt due within
1 year (575.4) (617.4) 4.4 (2.5) (1.3) (1,192.2)
Finance leases (19.1) (0.3) - - - (19.4)
------
(982.4)
Other deposits 90.5 38.7 (51.3) 0.1 - 78.0
------ ------ ----- ------ ------ ------
Total (5,285.1) (762.5) (46.9) (6.3) (107.6) (6,208.4)
------ ------ ----- ------ ------ ------
'Other non-cash changes' to net debt represents amortisation of
finance costs of (pound)1.5 million, finance costs of (pound)5.6
million representing the effects of the RPI on bonds carrying an RPI
coupon and the recognition of the share of debt in joint arrangements
of (pound)100.5 million.
9 Share premium reduction
The company applied to the Court of Session (`the Court') to approve a
reduction in the share premium account which had previously been
approved by the company's shareholders at an Extraordinary General
Meeting on 21 January 2002. On 5 March 2002, the Court approved the
reduction of the company's share premium account by (pound)1,500
million. This amount has been transferred to the company's profit and
loss account reserve.
10 Southern Water Services Limited - Preliminary results for the year
ended 31 March 2002
This note is included to comply with assurances given to OFWAT at the
time of the acquisition of Southern Water plc to supply financial
information for Southern Water Services Limited, the regulated
business.
Year ended
31 March
Notes 2002 2001
(a) (pound)m (pound)m
Summarised Profit and Loss Account
Company turnover from continuing operations 429.9 421.6
------ -----
Profit on ordinary activities before
exceptional item 212.8 219.7
Exceptional item (9.6) -
----- -----
Profit on ordinary activities before interest 203.2 219.7
Net interest payable (71.9) (66.3)
----- -----
Profit on ordinary activities before taxation 131.3 153.4
Taxation (38.3) (26.7)
------ -----
Profit after taxation 93.0 126.7
Dividends - (47.8)
------ -----
Profit retained 93.0 78.9
------ -----
Earnings per share ((pound)per ordinary share)(b)1,660.7 2,262.5
------ -----
Dividend per share ((pound)per ordinary share)(c) - 852.8
------ -----
31 31
March March
Note 2002 2001
Summarised Balance Sheet (a) (pound)m (pound)m
Fixed assets 2,504.8 2,340.6
Net current liabilities (823.6) (618.3)
Creditors: amounts falling
due after more than one year
Loans and other borrowings (482.1) (637.9)
Provisions for liabilities
and charges
- Deferred tax (352.1) (331.7)
- Other (3.1) (3.1)
Deferred income (37.4) (36.1)
------ ------
Net assets 806.5 713.5
------ ------
Share capital 0.1 0.1
Share premium account
and reserves 806.4 713.4
------ ------
Capital employed 806.5 713.5
------ ------
Year ended
31 March
2002 2001
Summarised Cash Flow Statement (pound)m (pound)m
Cash inflow from operating activities 199.4 336.8
Net dividends and interest (90.5) (114.5)
Ordinary taxation (32.7) (50.9)
------ ------
Free cash flow 76.2 171.4
Capital expenditure (256.8) (285.8)
Other items 4.5 4.1
------ ------
Net cash outflow before financing (176.1) (110.3)
------ ------
Financing
New loans 182.8 125.3
Repayment of loans (14.4) (11.8)
------ ------
Net cash inflow from financing 168.4 113.5
------ ------
(Decrease)/increase in cash (7.7) 3.2
------ ------
(a) Disclosure of information
The summarised profit and loss account and balance sheet for Southern
Water Services Limited have been prepared on the same basis as those
for the Scottish Power plc Accounts as disclosed in Note 1.
(b) Earnings per ordinary share
Earnings per ordinary share have been calculated by dividing the
profit for the financial year by the weighted average number of
ordinary shares in issue during the financial year, based on the
following information:
Year ended
31 March
2002 2001
Profit for the year((pound)million) 93.0 126.7
Weighted average share capital
(number of shares, million) 0.056 0.056
------ ------
(c) Dividends per ordinary share
2002 2001
pounds pounds
per per
ordi- ordi-
nary nary 2002 2001
share share(pound)m (pound)m
Interim dividend paid - 284.3 - 15.9
Proposed final dividend - 568.5 - 31.9
------ ------ ------ ------
Total dividends - 852.8 - 47.8
------ ------ ------ ------
No dividend was declared in 2001/02.
11 Summary of differences between UK and US Generally Accepted
Accounting Principles ('GAAP')
The consolidated Accounts of the group are prepared in accordance with
UK GAAP which differs in certain significant respects from US GAAP.
The effect of the US GAAP adjustments to (loss)/profit for the
financial year and equity shareholders' funds are set out in the
tables below.
(a)Reconciliation of (loss)/profit for the financial year to US GAAP:
Year ended
31 March
2002 2001
(pound)m (pound)m
(Loss)/profit for the financial year
under UK GAAP (987.1) 307.5
US GAAP adjustments:
Amortisation of goodwill (23.5) (35.9)
Disposal of businesses 279.1 -
US regulatory assets 95.3 73.8
Pensions 40.0 95.5
Impairment on demerger of Thus (243.7) -
Depreciation on
revaluation uplift 3.4 3.4
Decommissioning and mine
reclamation liabilities (21.8) (32.3)
PacifiCorp Transition Plan costs (29.9) 108.2
FAS 133 adjustment 144.5 -
Other (17.7) (0.4)
Re-classification as
extraordinary item 12.0 -
------ ------
(749.4) 519.8
Deferred tax effect of
US GAAP adjustments (67.6) (133.0)
------ ------
(817.0) 386.8
Extraordinary item (net of tax) (8.4) -
------ ------
(Loss) /profit for the financial
year under US GAAP before
cumulative adjustment for FAS 133 (825.4) 386.8
Cumulative adjustment for FAS 133 (61.6) -
------ ------
(Loss)/profit for the financial year
under US GAAP (887.0) 386.8
------ ------
(Loss)/earnings per share under US GAAP (44.91)p 21.13p
------ ------
Diluted (loss)/ earnings per share under US GAAP (44.91)p 21.05p
------ ------
(Loss)/earnings per share under US GAAP have been calculated before
the cumulative adjustment for FAS 133.
As permitted under UK GAAP, (loss)/earnings per share have been
presented including and excluding the impact of exceptional items and
goodwill amortisation to provide an additional measure of underlying
performance. In accordance with US GAAP, (loss)/earnings per share
have been presented above based on US GAAP earnings, without
adjustments for the impact of exceptional items and goodwill
amortisation. Such additional measures of underlying performance are
not permitted under US GAAP. The inclusion of exceptional items in the
determination of earnings per share in accordance with US GAAP
decreased earnings by (pound)1,039.0 million or 56.53 pence per share
for the year ended 31 March 2002. The inclusion of goodwill
amortisation decreased earnings by (pound)172.5 million or 9.39 pence
per share for the year ended 31 March 2002 and by (pound)163.5 million
or 8.93 pence per share for the year ended 31 March 2001.
(b) Effect on equity shareholders' funds of differences between UK
GAAP and US GAAP:
31 31
March March
2002 2001
(pound)m (pound)m
Equity shareholders' funds under UK GAAP 4,731.4 5,893.2
US GAAP adjustments:
Goodwill 572.3 1,349.9
Business combinations (174.2) (188.7)
Amortisation of goodwill (84.2) (172.7)
ESOP shares held in trust (38.9) (51.1)
US regulatory assets 1,042.8 661.2
Pensions 222.9 245.0
Cash dividends 126.1 119.4
Revaluation of fixed assets (54.0) (229.0)
Depreciation on revaluation uplift 8.5 11.9
Decommissioning and mine
reclamation liabilities 60.7 82.5
PacifiCorp Transition Plan costs 86.9 117.2
FAS 133 adjustment (308.2) -
Other (3.4) 12.1
Deferred tax:
Effect of US GAAP adjustments (316.9) (351.0)
Effect of differences in methodology (21.3) (37.0)
------- -------
Equity shareholders' funds under US GAAP 5,850.5 7,462.9
------- -------
FAS 133 'Accounting for Derivative Instruments and Hedging Activities'
was effective for the group from 1 April 2001. The statement
establishes accounting and reporting standards that require every
derivative instrument be recorded on the balance sheet as either an
asset or liability measured at fair value. Changes in the derivative's
fair value will be recognised concurrently in earnings unless specific
hedge accounting criteria are met.
The effect of adopting FAS 133 on earnings and equity
shareholders' funds is included in the UK GAAP to US GAAP
reconciliations as shown above. The total FAS 133 adjustment included
within equity shareholders' funds of (pound)308.2 million at 31 March
2002 is offset by (pound)328.9 million included within US regulatory
assets relating to PacifiCorp's regulated activities which have been
deferred as a regulatory asset under FAS 71 on the basis of approvals
received from Public Utility Commissions to adopt this accounting
treatment.
12 Contingent liabilities
Thus Flotation
In November 1999, the group floated a minority stake in its internet
and telecommunications business, Thus plc. This gave rise to a
contingent liability to corporation tax on chargeable gains, estimated
at amounts up to (pound)570 million.
On 19 March 2002, the group demerged its residual holding in Thus
Group plc (the new holding company of Thus plc). The charge referred
to above could still arise, in certain circumstances before 19 March
2007. Members of the ScottishPower group have agreed to indemnify Thus
Group plc for any such liability, except in circumstances arising
without the consent of the ScottishPower group.
Legal Proceedings
The group's businesses are parties to various legal claims, actions
and complaints, certain of which involve material amounts. Although
the group is unable to predict with certainty whether or not it will
ultimately be successful in these legal proceedings or, if not, what
the impact might be, the directors currently believe that disposition
of these matters will not have a materially adverse effect on the
group's consolidated Accounts.
13 Exchange rates
The exchange rates applied in the preparation of the Preliminary
Statement and quarterly Accounts were as follows:
Year ended
31 March
2002 2001
Average rate for quarters ending
30 June $1.42/(pound) $1.53/(pound)
30 September $1.44/(pound) $1.48/(pound)
31 December $1.44/(pound) $1.45/(pound)
31 March $1.43/(pound) $1.46/(pound)
------ ------
Closing rate as at 31 March $1.42/(pound) $1.42/(pound)
------ -------
(PART 5 of 5) --30--sds/ny* kam
CONTACT: ScottishPower
Dominic Fry, Group Director Corporate Communications
020 7651 2000
or
Colin McSeveny, Group Media Relations Manager
020 7651 2000
or
Andrew Jamieson, Head of Investor Relations
020 7651 2000
KEYWORD: UNITED KINGDOM INTERNATIONAL EUROPE
INDUSTRY KEYWORD: ENERGY OIL/GAS UTILITIES EARNINGS
SOURCE: ScottishPower
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