Final Results
Scottish & Southern Energy PLC
23 May 2002
N E W S R E L E A S E F R O M . . . .
Scottish and Southern Energy plc
FOR IMMEDIATE USE Ref: NR-2112 23 May 2002
PRELIMINARY RESULTS
for the year to 31 March 2002
Strong financial results
• Pre-tax profit up 7.4% to £597.2m
• Earnings per share up 7.5% to 54.7p
• £136.4m reduction in debt
Enhanced dividend policy
• Dividend up 8% to 32.4p
• Dividend target of at least 4% annual real growth extended
to March 2004
Cost savings targets exceeded
• Further 11% reduction in controllable costs
• £145m cost savings now achieved over the last three years
• New cost savings target set of at least £160m
Successful first year of NETA
• £25m contribution to profit
Major investment in renewables
• £450m investment programme well under way
• Refurbishment of six hydro stations in progress
(Note: All financial information is stated before goodwill and the impact of FRS
19 on deferred tax.)
Dr Bruce Farmer, Chairman of Scottish and Southern Energy said:
'Scottish and Southern Energy has delivered another year of good financial and
operational performance. We are focused on running our businesses well and
identifying areas where we can create additional shareholder value. Pre-tax
profit rose by 7.4% and earnings per share increased by 7.5%. Given our strong
financial position and growth prospects, we have extended our dividend target of
at least 4% real growth for an additional year, to March 2004.'
Overview
Scottish and Southern Energy delivered a good financial and operational
performance in the year to 31 March 2002, extending its track record of strong,
consistent achievement. This performance was achieved against a challenging
environment of low wholesale electricity prices, high wholesale gas prices and
the introduction of the New Electricity Trading Arrangements (NETA).
The Group achieved a 7.4% increase in profit before tax and goodwill, with
profit growth in Power Systems, Generation and Supply and in the other
businesses including the SSE Contracting Group and SSE Telecom. The foundations
for future growth have also been laid, following the achievement of a further
£25m of synergy savings, the start of a £450m investment programme in renewable
generation and opportunities in the energy supply and other businesses.
Appointment of Chief Executive
It was announced on 18 March that Jim Forbes had informed the Board that he
would like to retire during the year. The process of identifying the right
candidate to succeed him as Chief Executive is now well under way and the Board
expects to be in a position to make an announcement on the succession by the
Annual General Meeting on 25 July.
Power Systems
Operating profit went up by 2.5% to £304.1m despite the effects of the second
year of Ofgem's five-year price controls. In Scotland, the 14.3% reduction in
controllable costs, together with a 0.1% increase in units distributed, more
than offset the price control impact and profits rose by 5.4%. In England,
depreciation arising from the continued network investment and an increase in
local authority rates was offset by the 16.6% reduction in controllable costs
and a 2.1% increase in units distributed, giving a 0.8% rise in operating
profit.
This performance, combined with the investment made in the electricity network,
has reinforced the Group's position as the most efficient network operator in
the UK and means the Power Systems business is continuing to achieve a return in
excess of the notional 6.5% allowed by Ofgem on the £2.5 billion Regulated Asset
Base.
Generation and Supply
Operating profit in Generation and Supply increased by 4.0% to £303.5m in a
challenging environment of low wholesale electricity prices, high wholesale gas
prices and intense competition for supply customers. Within the overall increase
of 4%, profits in England and Wales showed a rise of 10.1%, while profits in
Scotland declined by 19.6%.
Following the introduction of NETA, the generation portfolio is now managed as
one entity, with the key objective of maximising the Group's overall profit. In
addition, following the successful integration of all the customer databases on
to a single IT system, the supply cost base is now also managed as a whole. This
means that it is more meaningful to report profits on a GB wide basis.
A number of factors have contributed to the overall increase in operating profit
for Generation and Supply. These include a good performance from the power
stations, principally Barking and Seabank, and success in the NETA balancing
market. The management of the Group's generation assets is aligned to the
management of the supply business in order to secure the margin between
wholesale purchase costs and retail sales price.
The Group has performed well under NETA being one of the best in demand and
generation forecasting and capable of operating generation plant flexibly and
reliably in the balancing market. This success has contributed £25m to the
overall operating profit for Generation and Supply, helping to offset the impact
of higher gas costs and lower retail sales volumes.
Within the Scottish market, margins have been under pressure as the wholesale
price in Scotland is fixed by direct reference to the price in England and
Wales. This has also reduced profits from interconnector exports. In addition,
an adverse fuel mix, impacted by higher nuclear output and gas costs, reduced
profits further. This was partially offset by improved hydro generation output.
In terms of energy supply customers, the Group has been relatively successful in
retaining customers and in acquiring new ones. There was a slight downward trend
in the overall number of customers in the run-up to the end of 2001. This has
been reversed since the start of 2002, with an increase of over 50,000 customers
following a variety of initiatives geared to minimising customer losses and
acquiring new domestic, industrial and commercial customers. The Group will
continue to focus on retention and cost-effective acquisition of customers but
will not seek to grow customer numbers in an unprofitable or unsustainable way.
Going forward, Scottish and Southern Energy will continue the profitable
development of its generation portfolio. The £450m investment programme in
renewable generation is now under way. It includes refurbishment of hydro power
stations to increase their output and extend their working life and the
development of new hydro and wind energy schemes. This investment will help the
supply business to meet its own Renewable Obligation target and should deliver
earnings growth in the years ahead.
In addition, a new 10MW power station to generate electricity from coal mine
methane has been developed on the site of the former Wheldale Colliery near
Castleford in Yorkshire. Following the Budget statement in April 2002, such
electricity is set to be exempt from the Climate Change Levy.
SSE Contracting Group, SSE Telecom and other businesses
Operating profit from other businesses, including SSE Contracting Group and SSE
Telecom, increased by 51.4%, contributing an additional £23.9m to operating
profit. Overall, operating profit from other businesses represented 10.4% of the
Group's operating profit.
The main increases were achieved in SSE Telecom, where operating profit grew in
excess of 75%, and the SSE Contracting Group, where operating profit increased
by over 20%.
Improved margins and a reduction in controllable costs contributed to the
increase in operating profit for the SSE Contracting Group. SSE Telecom's
increase in operating profit reflected its ability to use the existing
electricity network and related engineering skills to provide competitive
products to a wide variety of organisations. The Group's new connections
business also continues to be successful.
Cost Savings
The Group has secured an additional £25m of cost savings, representing a further
11% reduction in controllable costs in 2001/02. This takes the post-merger cost
savings to £145m, significantly exceeding the original target of £90m. Cost
savings in excess of £160m are now being targeted.
Group Capital Expenditure
Group capital expenditure and investment totalled £278.3m during the year, a
reduction of £26.0m compared with the previous year, reflecting the completion
of the Peterhead repowering and the
Seabank 2 projects.
During 2001/02, capital expenditure was focused on further upgrading the
electricity network and completing the telecoms network. Over the next few
years, capital expenditure will continue to be targeted on the electricity
network and developing renewable generation. Work has started on the
refurbishment of six hydro power stations and plans have been announced for a
£60m, 100MW windfarm in South Ayrshire.
Interest Charge
The net interest charge was £106.7m. The increase of £4.9m from the previous
year reflects the full year impact of the acquisition of SWALEC, offset by
strong improvement in cash flow.
The average interest rate for the Group was 6.4%, down from 6.5% in the previous
year. Underlying interest cover for the year was 6.9 times, the same as last
year.
Tax
The current effective tax rate has remained broadly unchanged at 22.0%. FRS 19
has now been adopted on deferred tax liabilities. As these liabilities are only
a potential exposure, discounting has been applied to reflect the long-term
nature of assets and this impacts on both the profit and loss account and the
balance sheet. The tax charge is now 26.4%, (26.1% in 2000/01) and an additional
discounted liability of £377.2m at 31 March 2002 has been recognised on the
balance sheet.
Financial Reporting Standard (FRS) 17
FRS 17 involves a significant change to the measurement and presentation of
pension scheme assets, liabilities and costs. In order to maintain and enhance
accounting transparency, FRS 17 has been adopted in full for 2001/02, with last
year's results re-stated as required.
In the profit and loss account there is a charge against operating profit of
£19.0m (£21.0m in 2000/01), reflecting current service costs, but this is more
than offset by a credit in other finance income of £24.3m (£21.0m in 2000/01)
representing the expected return on the pension scheme assets. The balance sheet
reflects a pensions asset, after deferred tax, of £64.4m (£175.0m in 2000/01).
Earnings per Share
The Group continues to focus on earnings per share before goodwill and the
impact of FRS19. On this basis, earnings per share increased by 7.5% to 54.7p.
In the three years since SSE was created earnings per share have grown by 33%, a
compound annual growth rate of 10.0%.
Dividend
The Board has recommended a full-year dividend of 32.4p, up 8% on last year.
This is significantly ahead of the target of 4% real growth for 2001/02 and
represents the second successive year in which this target has been beaten.
Given the continued strength of the business and its growth prospects, the
dividend target has been revised. From the higher base of 32.4p, the target
dividend will now be at least 4% above inflation for each of the two years until
March 2004. The Group is also committed to continued real dividend growth in the
year to March 2005.
Cash Flow and Balance Sheet
During the year to 31 March 2002, the Group reduced net debt by £136.4m to
£1,207.3m. This resulted from an improvement in the net cash flow from
operations of £166.4m to £816.6m.
The balance sheet remains one of the strongest in the global utility sector and
this was recently recognised by rating agency Standard & Poor's when it
increased the Group's long-term credit rating to AA-. During the year, a £250m,
30-year bond was issued at a coupon of 5.5%, at the time the lowest in the UK
and a £500m revolving credit facility was put in place. The market share
buy-back programme also continued, with the purchase of 850,000 shares at a cost
of £5.1m.
Shareholders' funds stood at £1,706.1m as at 31 March 2002, compared with
£1,656.2m the year before. The comparison of net debt with shareholders' funds
gives headline gearing for the Group of 70.8%, compared with 81.1% in the year
before.
Strategy and Outlook
The Group has built its reputation through the sound management of its business
and a clear focus on the importance of managing core activities well. The
development of other businesses such as the SSE Contracting Group and SSE
Telecom will also yield further opportunities for earnings growth.
The energy sector remains subject to significant change, and merger and
acquisition opportunities continue to arise. The Group continues to pursue those
that will deliver value for shareholders. At the same time, it will maintain its
disciplined approach and developments in this area will continue to be measured
against the benefits of returning value to shareholders. Following events in the
energy sector in the US during the second half of 2001, opportunities in the
short term are more likely to arise in the UK.
The future growth of the Group will be based on its core strengths and its
ability to adapt to and capitalise on the many changes which the energy sector
will face in the years ahead. The Board's confidence is reflected in a further
improvement in the dividend policy, and the Group will continue to focus on
delivering real and sustained dividend growth.
ENDS -
For further information please contact:
Scottish and Southern Energy
Alan Young - Director of Corporate Communications 0870 900 0410
Denis Kerby - Investor Relations Manager 0870 900 0410
Financial Dynamics
Andrew Dowler 020 7831 3113
Fiona Meiklejohn 020 7831 3113
There will be an analysts presentation starting at 10am at the offices of
Financial Dynamics, Holborn Gate, 26 Southampton Buildings, London.
Webcast facility: www.scottish-southern.co.uk
In addition there is a dial-in facility provided:
Date of call: 23 May 2002
Time of call: 10am (BST)
Dial in number: +44 (0) 208 781 0571
Password: scottish and southern
A replay facility will be available for 48 hours after the presentation:
Dial in number: +44 (0) 208 288 4459
Freephone: 0500 637880
Password: 684832
Group Profit and Loss Account
for the year ended 31 March 2002
Total
Total 2001
2002 (Restated)
Note £m £m
Turnover
Group and share of joint ventures 4,056.5 3,706.7
Less: share of joint ventures 50.9 121.1
_______ _______
Group turnover 4 4,005.6 3,585.6
Cost of sales (2,989.2) (2,611.1)
_______ _______
Gross profit 1,016.4 974.5
Distribution costs (225.8) (223.8)
Administrative costs (188.6) (184.5)
______ ______
Operating profit
Group 602.0 566.2
Share of joint ventures 28.8 25.4
Share of associates 35.7 37.5
______ ______
Total operating profit 4 666.5 629.1
Income from fixed asset investments 1.6 2.1
Net interest payable and similar charges 5
Group (74.2) (67.7)
Joint ventures (13.2) (11.8)
Associates (19.3) (22.3)
Other finance Income 24.3 21.0
______ ______
Profit on ordinary activities before taxation 585.7 550.4
Taxation 6 (154.6) (143.8)
______ ______
Profit on ordinary activities after taxation 431.1 406.6
Equity minority interests in subsidiary undertaking 0.5 0.4
______ ______
Profit attributable to ordinary shareholders 431.6 407.0
Dividends 7 (278.5) (257.0)
______ ______
Retained profit for the financial year 153.1 150.0
______ ______
Earnings per share (p) 8
- basic 50.3 47.6
______ ______
- adjusted basic 54.7 50.9
______ ______
- diluted 50.2 47.4
______ ______
Balance Sheets
as at 31 March 2002
Group 2001 Company 2001
2002 Restated 2002 Restated
Note £m £m £m £m
Fixed Assets
Intangible assets 211.9 223.4 - -
Tangible assets 3,609.2 3,525.9 - 1,698.2
Investments in subsidiaries 832.1 615.2
Investments in joint ventures
______ ______
Share of gross assets 209.7 263.8 - -
Share of gross liabilities (19.3) (44.9) - -
______ ______
190.4 218.9 - 20.0
Investments in associates 45.9 47.2 - 16.6
Other investments 0.2 0.2 - -
______ ______ ______ ______
236.5 266.3 832.1 651.8
______ ______ ______ ______
4,057.6 4,015.6 832.1 2,350.0
______ ______ ______ ______
Current Assets
Stocks 54.6 36.2 - 18.0
Debtors 577.0 672.3 2,987.1 624.5
Investments 23.7 31.3 - 5.3
Cash at bank and in hand 25.0 27.3 1.9 4.3
______ ______ ______ ______
680.3 767.1 2,989.0 652.1
______ ______ ______ ______
Creditors: amounts falling due 1,153.7 1,621.7 1,693.7 1,125.7
within one year
Net current (liabilities) / assets (473.4) (854.6) 1,295.3 (473.6)
______ ______ ______ ______
Total assets less current liabilities 3,584.2 3,161.0 2,127.4 1,876.4
______ ______ ______ ______
Creditors: amounts falling due
after more than one year 1,392.4 1,134.4 684.0 743.9
Provisions for liabilities and charges
Deferred taxation 427.3 401.7 - 170.2
Other provisions 9 122.6 143.0 - 118.3
______ ______ ______ ______
Net assets excluding pension asset / (liability) 1,641.9 1,481.9 1,443.4 844.0
______ ______ ______ ______
Pension asset 79.8 175.0 79.8 98.0
Pension liability (15.4) - - -
______ ______ ______ ______
Net assets including pension asset / (liability) 1,706.3 1,656.9 1,523.2 942.0
______ ______ ______ ______
Capital and reserves
Called up share capital 430.1 429.3 430.1 429.3
Share premium account 60.9 48.3 60.9 48.3
Capital redemption reserve 11.3 10.9 11.3 10.9
Profit and loss account 1,203.8 1,167.7 1,020.9 453.5
______ ______ ______ ______
Total shareholders' funds 1,706.1 1,656.2 1,523.2 942.0
Equity minority interests in subsidiary 0.2 0.7 - -
undertaking
______ ______ ______ ______
1,706.3 1,656.9 1,523.2 942.0
______ ______ ______ ______
These Accounts were approved by the Board of Directors on 23 May 2002 and signed
on their behalf by:
Ian Marchant, Finance Director Bruce Farmer CBE, Chairman
Group Cash Flow Statement
for the year ended 31 March 2002
2002 2001
Note £m £m
Net cash inflow from operating activities 10 816.6 650.2
Dividends received from joint ventures and associates 16.1 10.1
Returns on investments and servicing of finance (67.7) (67.7)
Taxation (127.8) (79.9)
______ ______
Free cash flow 637.2 512.7
Capital expenditure and financial investment (264.8) (278.4)
Acquisitions and disposals 20.0 (217.8)
Equity dividends paid (263.4) (241.6)
______ ______
Net cash outflow before management of liquid resources 129.0 (225.1)
and financing
Management of liquid resources 7.6 15.6
Financing (139.6) 227.1
______ ______
(Decrease) / Increase in cash in the year (3.0) 17.6
______ ______
Notes to the Group Cash Flow Statement
Reconciliation of net cash flow to movement in net debt
2002 2001
£m £m
(Decrease) / increase in cash in the year (3.0) 17.6
Cash inflow from decrease / (increase) in debt and lease financing 147.0 (230.9)
Cash (inflow) from decrease in liquid resources (7.6) (15.6)
______ ______
Movement in net debt in the year 136.4 (228.9)
Net debt at 1 April (1,343.7) (1,114.8)
______ ______
Net debt at 31 March (1,207.3) (1,343.7)
______ ______
Analysis of net debt As at Decrease (Increase)/ As at
1 April 2001 in cash decrease 31 March 2002
£m £m in debt £m
£m
Cash at bank and in hand 27.3 (2.3) - 25.0
Overdrafts - (0.7) - (0.7)
Other debt due within one year (600.7) - 416.1 (184.6)
______ ______ ______ ______
Net borrowings due within one year (573.4) (3.0) 416.1 (160.3)
Net borrowings due after more than one year (801.6) - (269.1) (1,070.7)
Current asset investments 31.3 - (7.6) 23.7
______ ______ ______ ______
Net debt (1,343.7) (3.0) 139.4 (1,207.3)
______ ______ ______ ______
Group Statement of Total Recognised Gains and Losses
for the year ended 31 March 2002
2001
2002 Restated
£m £m
Profit for the financial year
Group 410.3 389.5
Share of joint ventures 11.5 9.2
Share of associates 9.8 8.3
______ ______
Profit for the financial year 431.6 407.0
Actuarial loss recognised in respect of pension fund (110.6) (72.0)
______ ______
Total recognised gains and losses 321.0 335.0
Prior year adjustment for implementation of FRS19 'Deferred tax' (351.7) ______
Prior year adjustment for implementation of FRS17 'Retirement Benefits' 175.0
______
Total gains and losses recognised since last annual report 144.3
______
Group Reconciliation of Movement in Shareholders' Funds
as at 31 March 2002
2001
2002 Restated
£m £m
Total recognised gains and losses relating to the financial year 321.0 335.0
Dividends (278.5) (257.0)
______ ______
Retained profit for the year 42.5 78.0
New share capital subscribed 12.6 8.2
Premium on issue of shares to Quest 1.2 8.0
Contribution to Quest (1.3) (8.7)
Repurchase of ordinary share capital for cancellation (5.1) (11.3)
______ ______
Net addition to shareholders' funds 49.9 74.2
Opening shareholder's funds 1,656.2 1,582.0
______ ______
Closing shareholders' funds 1,706.1 1,656.2
______ ______
Opening Group shareholders' funds at 1 April 2000 were originally £1,663.7m
before a prior year reduction of £81.7m through the creation of a pension asset
of £247.0m and an increased deferred tax liability of £328.7m (note 3).
Notes on the Financial Statements
1. Financial Statements
The financial information set out in this announcement does not constitute the
Group's Statutory Accounts for the years ended 31 March 2002 or 2001 but is
derived from those Accounts. Statutory Accounts for 2000/01 have been delivered
to the Registrar of Companies, and those for 2001/02 will be delivered following
the Company's Annual General Meeting on 25 July 2002. The Auditors have
reported on those Accounts and their reports were unqualified and did not
contain statements under section 237(2) or (3) of the Companies Act 1985. This
Preliminary Announcement was approved by the Board on 23 May 2002.
2. Basis of consolidation
The Group Accounts consolidate the Accounts of Scottish and Southern Energy plc
and its subsidiary undertakings together with the Group's share of the results
and net assets of its joint ventures and associates.
The results of subsidiary undertakings acquired or sold are consolidated from
the date of acquisition, using the acquisition method of accounting. The results
of joint ventures and associates are included using the equity method of
accounting.
3. Accounting policy changes
FRS 17 - Retirement benefits has been applied fully in preparing the accounts
and involves a significant change to the measurement and presentation of pension
scheme assets, liabilities and costs. FRS 19 - Deferred Tax, including the
option to discount, has also been applied. The effect of these changes on the
Group's profit and loss account and balance sheet is as follows with comparative
figures restated as required:
Profit attributable to shareholders 31 March 31 March
2002 2001
£m £m
Impact of FRS 17
Increased charge to operating profit (19.0) (21.0)
Increased finance income 24.3 21.0
______ ______
Net increase in profit 5.3 -
Impact of FRS 19
Increased tax charge (25.6) (23.0)
______ ______
Total net profit decrease (20.3) (23.0)
______ ______
As previously reported 430.0
______
As restated 407.0
______
Net assets as at 31 March 2001 Group Company
31 March 31 March
2001 2001
£m £m
Impact of FRS 17
Creation of pension asset 250.0 140.0
Deferred tax thereon (75.0) (42.0)
______ ______
Net pension asset 175.0 98.0
Impact of FRS 19
Increase in provision for deferred tax (351.7) (172.6)
______ ______
Reduction in net assets (176.7) (74.6)
As previously reported 1,833.6 1,016.6
______ ______
As restated 1,656.9 942.0
______ ______
Notes on the Financial Statements
4. Segmental analysis
All turnover and profit before taxation arise from operations within Great
Britain and relate to continuing operations.
The Group's principal business is the generation, distribution and supply of
electricity and sale of gas in Great Britain and the transmission of electricity
in the north of Scotland. Analysis of turnover and operating profit by activity
is provided below:
Turnover
Total Internal External
turnover turnover turnover
2002 2001 2002 2001 2002 2001
£m £m £m £m £m £m
Power Systems
Scotland 243.2 225.5 186.4 180.5 56.8 45.0
England 363.8 367.2 190.5 226.7 173.3 140.5
______ ______ ______ ______ ______ ______
607.0 592.7 376.9 407.2 230.1 185.5
______ ______ ______ ______ ______ ______
______ ______ ______ ______ ______ ______
Generation and Supply 3,430.4 3,080.6 3.5 - 3,426.9 3,080.6
______ ______ ______ ______ ______ ______
______ ______ ______ ______ ______ ______
Other Businesses 566.6 387.6 218.0 68.1 348.6 319.5
______ ______ ______ ______ ______ ______
______ ______ ______ ______ ______ ______
4,604.0 4,060.9 598.4 475.3 4,005.6 3,585.6
______ ______ ______ ______ ______ ______
Operating Profit
2001
2002 Restated
£m £m
Power Systems
Scotland 117.0 111.0
England 187.1 185.7
______ ______
304.1 296.7
______ ______
Generation and Supply 292.1 286.1
______ ______
______ ______
Other Businesses 70.3 46.3
______ ______
______ ______
666.5 629.1
______ ______
The total operating profits relating to joint ventures of £28.8m (2001 - £25.4m)
and associates of £35.7m (2001 - £37.5m) are included in Generation and Supply.
Income and costs have been allocated specifically to the activity to which they
relate wherever possible. Certain costs have been apportioned or recharged
between businesses.
Notes on the Financial Statements
5. Net interest payable
Group Joint Associates
Ventures
2002 2001 2002 2001 2002 2001
£m £m £m £m £m £m
Interest receivable:
Interest from short-term deposits 2.1 0.7 - - - -
Other interest receivable 15.2 23.3 0.7 0.6 2.0 2.3
______ ______ ______ ______ ______ ______
17.3 24.0 0.7 0.6 2.0 2.3
______ ______ ______ ______ ______ ______
Interest payable and similar
charges:
Bank loans and overdrafts 31.3 37.3 - - 19.9 22.0
Other loans 51.5 47.6 13.9 12.4 1.4 2.6
Other financing charges 2.0 3.5 - - - -
Amortisation of discount 6.9 9.0 - - - -
______ ______ ______ ______ ______ ______
91.7 97.4 13.9 12.4 21.3 24.6
______ ______ ______ ______ ______ ______
Interest capitalised (0.2) (5.7) - - - -
______ ______ ______ ______ ______ ______
91.5 91.7 13.9 12.4 21.3 24.6
______ ______ ______ ______ ______ ______
______ ______ ______ ______ ______ ______
Net interest payable 74.2 67.7 13.2 11.8 19.3 22.3
______ ______ ______ ______ ______ ______
6. Taxation
Analysis of charge in the year 2001
2002 Restated
£m £m
Current tax:
UK Corporation tax on profits of the year 143.4 116.5
Adjustments in respect of previous years (24.8) (17.0)
Joint ventures 4.1 4.4
Associates 6.3 6.9
______ ______
Total current tax 129.0 110.8
______ ______
Deferred tax:
Origination and reversal of timing differences 28.1 38.9
Increase in discount (2.5) (5.9)
______ ______
Total deferred tax 25.6 33.0
______ ______
Tax on profit on ordinary activities 154.6 143.8
______ ______
7. Dividends
2002 2001
£m £m
Dividends on ordinary shares:
Interim of 9.7p (2001-9.0p) 83.7 77.3
Proposed final of 22.7p (2001-21.0p) * 194.8 179.7
______ ______
278.5 257.0
______ ______
* Payable on 27 September 2002 to shareholders on the register at close of
business on 6 September 2002.
Notes on the Financial Statements
8. Earnings per share
2002 2001 2002 2001
Earnings Restated Earnings Restated
per Share Earnings
£m Earnings pence Per Share
£m pence
Basic 431.6 407.0 50.3 47.6
______ ______ ______ ______
Adjusted - amortisation of goodwill 11.5 5.9 1.3 0.7
- deferred tax 25.6 23.0 3.1 2.6
______ ______ ______ ______
Adjusted basic 468.7 435.9 54.7 50.9
______ ______ ______ ______
Diluted 431.6 407.0 50.2 47.4
______ ______ ______ ______
The weighted average number of shares used in
each calculation is as follows:
2002 2001
Number of Number of
shares shares
(millions) (millions)
For basic and adjusted earnings per share 857.4 855.9
Effect of exercise of share options 2.2 2.6
______ ______
For diluted earnings per share 859.6 858.5
______ ______
9. Group Provisions for liabilities and charges
Onerous
Energy
Restructure Contracts Other Total
£m £m £m £m
At 1 April 2001 43.4 85.7 13.9 143.0
Profit and loss account - 6.9 4.5 11.4
Utilised during the year (15.5) (12.6) (3.7) (31.8)
______ ______ ______ ______
At 31 March 2002 27.9 80.0 14.7 122.6
______ ______ ______ ______
The restructure provision is in relation to expected costs associated with the
continuing rationalisation of the business. The costs mainly comprise employee
related costs, principally redundancy and early retirement costs. The majority
of the expenditure is expected to be incurred in the next two years.
The onerous energy contracts provision relates to the present value of out of
money purchase contracts and will be utilised over a maximum period to 2011 when
the contracts terminate. Other provisions include insurance/warranty claims and
the costs of various committed expenditures relating to hydro civil assets.
Notes on the Financial Statements
10. Reconciliation of operating profit to operating cash flows
2002 2001
£m £m
Operating profit 602.0 566.2
FRS 17 pension charge 19.0 21.0
Depreciation 186.3 173.0
Amortisation of goodwill 11.5 5.9
Customer contributions and capital grants released (15.9) (15.1)
(Profit) on disposal of tangible fixed assets (1.6) (2.9)
Increase/(decrease) in working capital and provisions 15.3 (97.9)
______ ______
Net cash inflow from operating activities 816.6 650.2
______ ______
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