SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/Amendment
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date earliest event reported) February 7, 1997
Commission Registrant, State of Incorporation, I.R.S. Employer
File Number Address and Telephone Number Identification No.
1-11299 ENTERGY CORPORATION 72-1229752
(a Delaware corporation)
639 Loyola Avenue
New Orleans, Louisiana 70113
Telephone (504) 529-5262
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Statements
and Exhibits
(a) Financial Statements of Businesses Acquired
In connection with the acquisition of London Electricity
plc. (London), described in Item 2., the financial statements
required by Regulation S-X, Rule 3-05(b) are provided herein
pursuant to Item 7(a) of Form 8-K. The financial statements are
prepared in accordance with accounting principles generally
accepted in the United Kingdom and are expressed in British
Pounds.
<PAGE>
London Electricity plc Annual Report & Accounts 1995/6
Report of the Auditors
to the members of London Electricity plc
We have audited the accompanying consolidated balance sheets
of London Electricity plc and subsidiaries as of March 31, 1996
and 1995 and the related consolidated profit and loss accounts,
statements of cash flows, statements of total recognised gains
and losses, note of historical cost group profits and losses and
reconciliation of movement in shareholders' funds, together with
notes 1 to 33 to the financial statements.
Respective responsibilities of directors and auditors
The Company's directors are responsible for the preparation
of the financial statements. It is our responsibility to form an
independent opinion, based on our audit, on those statements and
to report our opinion to you.
Basis of opinion
We conducted our audit in accordance with Auditing Standards
issued by the Auditing Practices Board in the United Kingdom,
which are similar to those followed in the United States. An
audit includes examination, on a test basis, of evidence relevant
to the amounts the disclosures in the financial statements, and
of whether the accounting policies are appropriate to the Group's
circumstances, consistently applied and adequately disclosed.
We planned and performed our audit as to obtain all the
information and explanations which we considered necessary in
order to provide us with sufficient evidence to give reasonable
assurance that the financial statements are free from material
misstatement, whether caused by fraud or other irregularity or
error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial
statements.
Opinion
In our opinion the financial statements give a true and fair
view of the state of affairs of the Company and the Group at 31
March 1996 and of the profit, total recognised gains and
cashflows of the Group for the year then ended and have been
properly prepared in accordance with the Companies Act 1985.
COOPERS & LYBRAND
Coopers & Lybrand
Chartered Accountants and Registered Auditors
London
18 June 1996
<PAGE>
Statement of Accounting Policies
The financial statements have been prepared in accordance with
applicable Accounting Standards in the United Kingdom. A summary
of the more important Group accounting policies, which have been
applied consistently, is set out below.
Basis of accounting
These financial statements have been prepared under the
historical cost accounting convention, modified to include the
investment in The National Grid Group at November 1995 valuation.
Basis of consolidation
The Group financial statements incorporate the financial
statements of the Company and all subsidiary undertakings after
eliminating intercompany transactions for the financial year. No
profit and loss account is presented for London Electricity plc
in accordance with the exemptions allowed by Section 230 of the
Companies Act 1985.
Acquisitions of subsidiary undertakings and other businesses
The results of subsidiary undertakings and other businesses
acquired during the year are included in the Group profit and
loss account from the date that control passes. In accordance
with FRS 6 and 7, on acquisition of a business, including an
interest in an associated undertaking, fair values are attributed
to the Group's share of the identifiable assets and liabilities
existing at the date of acquisition and reflecting the conditions
at that date.
Goodwill arising on the acquisition is written off immediately
against reserves. Goodwill represents the excess of the purchase
price over the fair value of identifiable net assets acquired.
Associated undertakings
An associated undertaking is one where the Group exercises
significant influence and has a long term interest. The
consolidated profit and loss account includes the Group's share
of the profits less losses and taxation of associated
undertakings and the Group balance sheet includes the investment
in these companies at the Group's share of their net assets other
than goodwill.
Turnover
Turnover represents the value of electricity consumption during
the year, including an estimate of the sales value of units
supplied to consumers between the date of the last meter reading
and the year end, rents and the invoice value of other goods sold
and services provided, exclusive of value added tax.
Operating leases
Rental costs under operating leases are charged to the profit and
loss account in the period in which they are incurred.
Pensions
The cost of providing pensions in respect of defined benefit
pension schemes is charged to the profit and loss account so as
to spread the cost of pensions over employees' working lives.
Pension surpluses and deficits arising are allocated over the
estimated average remaining service lives of current employees.
Differences between the amounts charged in the profit and loss
account and payments made to the schemes are treated as assets or
liabilities in the balance sheet.
The pension cost is assessed in accordance with the advice of
qualified actuaries.
The capital costs of ex-gratia and supplementary pensions are
charged to the profit and loss account in the accounting period
in which they are granted.
Tangible fixed assets
Tangible fixed assets are stated at cost less amounts provided to
write off assets over their useful economic life. Cost includes
staff costs where employees of the Group participate directly in
the construction of assets.
Fixed assets are depreciated from the date of commissioning and
are written off over their expected useful lives. No allowance is
made for residual values. The lives of each major class of
depreciable assets are as follows:
Years
Network Assets - (Depreciation is charged at 40
3% for 20 years followed by 2% for the remaining
20 years).
Freehold land Not depreciated
Other buildings - freehold Up to 60
Other buildings - leasehold Lower of lease period or 60
Vehicles and mobile plant 5-10
Fixtures and equipment including
computer hardware and software 3-5
Major systems development software costs are capitalised during
the development phase and depreciated from the date of
commissioning over a maximum period of 5 years.
Consumers' contributions are credited to the profit and loss
account over a 40 year period at a rate of 3% for the first 20
years followed by 2% for the remaining 20 years. No allowance is
made for residual values.
Fixed asset investments
Fixed asset investments are stated in the Group balance sheet at
cost less any provision for permanent dimimution in value, except
in the case of the Group's residual interest in the National Grid
Group, which is included in the Balance Sheet at a November 1995
valuation.
Current asset investments
Current asset investments are stated at the lower of cost and net
realisable value.
Stocks
Stocks are stated at the lower of cost and net realisable value.
The valuation of work in progress is based on the cost of labour
and materials. The cost elements of progress invoices are
deducted in arriving at the amounts stated.
Profit is taken on contracts whilst the contract is in progress,
having regard to the proportion of the total contract which has
been completed at the balance sheet date. Provision is made for
all foreseeable future losses.
Deferred taxation
Deferred taxation arises in respect of items where there is a
timing difference between their treatment for accounting purposes
and their treatment for taxation purposes. Provision is made for
deferred taxation using the liability method only where it is
anticipated that the item will crystallise within the foreseeable
future.
Price control
Charges for distribution of electricity and supply to customers
with a maximum demand under 100Kwh are subject to a price control
formula set out in the Company's Public Supply Licence which
allows a maximum charge per unit of electricity.
Differences in the charges, or in the purchase cost of
electricity, can result in the under or over recovery of revenues
in a particular year.
Where there is an over recovery of supply or distribution
business revenues against the regulated maximum allowable amount,
revenues are deferred equivalent to the over recovered amount.
The deferred amount is deducted from turnover and included in
provisions. Where there is an under recovery, no anticipation of
any potential future recovery is made.
Property clawback
Arrangements have been implemented which entitle HM Government to
a proportion of certain property gains accruing to London
Electricity plc as a result of disposals or events treated as
disposals occurring after 31 March 1990 of properties held at
that date. These arrangements will continue until 31 March 2000.
A provision for clawback in respect of property disposals is made
only to the extent that it is probable that a liability will
crystallise.
Employee Ownership Trust (ESOP)
The accounts include the assets (money market investments and
shares in NGG) of the ESOP.
Currency
References L, p and m denote UK pounds sterling, UK pence and
millions, respectively.
<PAGE>
SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN UNITED KINGDOM AND
UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRACTICES
The audited consolidated annual financial statements of the
Group are prepared in conformity with generally accepted
accounting practice in the United Kingdom ("UK GAAP"). UK GAAP
differs in certain material respects from generally accepted
accounting practice in the United States ("US GAAP"). Set out
below are certain examples of significant differences, which may
relate to the Group, between UK GAAP and US GAAP. This is not an
exhaustive list since it is not considered practicable to set out
a detailed and complete comparison between UK GAAP and US GAAP.
Consolidated annual financial statements presentation
The basic consolidated annual financial statements of a
group as presented in UK and the United States are generally the
same although the format, classification and sometimes the
content of the consolidated annual financial statements are
different.
In the UK, consolidated profit and loss accounts ("income
statements"), consolidated balance sheets and consolidated cash
flow statements are required as primary statements, together with
appropriate notes, which are formatted under specific headings
and sub-headings.
In the United States, consolidated income statements,
consolidated balance sheets and consolidated cash flow
statements, together with consolidated statements of changes in
shareholders' funds, are required as primary statements, together
with appropriate notes, which are formatted under specific
headings and sub-headings and are different headings to those
required in the UK.
Goodwill
Under UK GAAP, the Company writes off goodwill on
acquisition immediately to reserves. Goodwill represents the
excess of the purchase price over the fair value of identifiable
net assets acquired. If an acquired business is subsequently
sold, the full amount of the original purchased goodwill is
charged against income in determining the gain or loss on
disposal.
Under US GAAP, goodwill is capitalised and recorded in the
consolidated balance sheets and amortised by charges against
income over its estimated useful life or a period not to exceed
40 years. Any unamortised goodwill relating to a business sold in
the year is charged against income in determining the gain or
loss on disposal.
Deferred taxation
Under UK GAAP, deferred taxation is provided using the
liability method where in the opinion of the directors a
liability will become payable in the foreseeable future.
Under US GAAP, deferred taxation is provided on the full
liability basis. A net deferred taxation asset can be recognised,
but should be reduced by a valuation allowance if, based on the
weight of available evidence, it is more likely than not that
some portion of all the deferred tax assets will not be realised.
Fixed assets
Under UK GAAP, tangible fixed assets are carried at cost or
at a valuation. Certain land and buildings may be revalued. Any
surplus on the revaluation of land and buildings is taken
directly to non-distributable reserves. There is no definitive
guidance on criteria for the recognition of the impairment of
long-lived assets.
Under US GAAP, such revaluations are not allowable, except
in connection with the accounting requirements of business
combinations. Accordingly, land and buildings would be recorded
at historical cost and depreciation charged against income based
on the carrying value of buildings. Long-lived assets and
certain intangibles must be reviewed for impairment whenever
events or a change in circumstances indicates that the carrying
amount of an asset may not be recoverable. When the carrying
amount exceeds future cash flows an impairment is recognised.
Pensions and other post-retirement benefits
Under UK GAAP, the cost of pensions is charged against
income so as to spread the cost of pensions over employees'
working lives. Surpluses and deficits are allocated over the
average remaining service lives of employees. The Company does
not have significant post-retirement benefit obligations other
than pensions.
Under US GAAP, contributions for defined contribution
pension plans are charged against income as incurred, whilst
contributions for defined benefit pension plans are charged
against income on an accruals basis at a consistent rate which
makes full provision for the expected cost of the benefits over
the anticipated services lives of employees. For post-retirement
benefits other than pensions, the present value of the benefits
should be fully accrued for by the date the employee is fully
eligible to receive the benefits. The cost of providing the
benefits would therefore also be recognised over the anticipated
services lives of employees.
Dividends
Under UK GAAP, final ordinary dividends and the related UK
advance corporation tax are provided for in the financial year in
respect of which they are recommended by the board of directors
for approval by shareholders.
Under US GAAP, such dividends and tax are not provided for
until formally declared by the board of directors and approved by
the shareholders.
<PAGE>
London Electricity plc
Group Profit and Loss
for the year ended 31 March 1996
Excluding
National National
Grid Group Grid Group
transactions transactions Total
1995/96 1995/96 1995/96 1994/95
Note Lm Lm Lm Lm
Turnover
Continuing operations 2,3 1,278.6 (90.9) 1,187.7 1,209.4
Cost of sales 2 (842.8) 8.3 (834.5) (740.1)
------- ----- ------- -------
Gross profit 435.8 (82.6) 353.2 469.3
Net operating expenses 1,2 (253.9) (14.4) (268.3) (273.8)
Exceptional cost of restructuring 1 (20.0) (20.0) (33.0)
Less: use of prior year provision 1 8.3 - 8.3 -
------- ----- ------- -------
Operating Profit
continuing operations 3,4 170.2 (97.0) 73.2 162.5
Share of losses of associated
undertakings (2.2) - (2.2) (0.7)
Exceptional provision for losses in associated
undertaking 3 (4.5) - (4.5) -
Exceptional profit on sale of investment in
pumped storage business 2 - 70.1 70.1 -
------- ----- ------- -------
Profit on ordinary activities
before interest 163.5 (26.9) 136.6 161.8
------- ----- ------- -------
Income from investment in National
Grid Group 7 - 144.4 144.4 21.2
Net interest payable 8 (4.9) - (4.9) (1.1)
Exceptional item - premium on redemption of
Government debt 9 - - - (9.5)
------- ----- ------- -------
Profit on ordinary activities before
taxation 158.6 117.5 276.1 172.4
Taxation on profit on ordinary
activities 10 (36.0) (53.4) (89.4) (22.5)
------- ----- ------- -------
Profit on ordinary activities
after taxation 122.6 64.1 186.7 149.9
Dividends
- Distribution in specie 12 - (350.4) (350.4) .-
- Special 12 (198.7) - (198.7) -
- Interim 12 (22.9) - (22.9) (19.4)
- Final proposed 12 (47.3) - (47.3) (38.6)
------- ----- ------- -------
Retained (loss)/profit for the
financial year (146.3) (286.3) (432.6) 91.9
======= ====== ====== ======
Earnings per share 13 109.7p 83.3p
Dividends per share 38.5p 29.0p
<PAGE>
London Electricity plc
Balance Sheets
as at 31 March 1996
Group Company
1996 1995 1996 1995
Note Lm Lm Lm Lm
Fixed Assets
Tangible assets 14 783.6 730.2 720.3 673.6
Investments 15 10.6 93.4 114.6 191.7
------ ------ ------ ------
794.2 823.6 834.9 865.3
Current assets
Stocks 19 7.4 4.3 3.6 3.3
Debtors: amounts falling due:
Within one year 20 388.8 263.0 387.2 266.0
After more than one year 20 29.4 20.5 35.3 20.5
Investments 21 29.3 49.3 19.2 40.7
Cash at bank and in hand 0.4 0.7 1.2 -
------ ------ ------ ------
455.3 337.8 446.5 330.5
Creditors: amounts falling due within one year
Borrowings 22 (96.1) (59.2) (96.1) (59.2)
Other creditors 23 (388.5) (284.0) (386.9) (284.9)
------ ------ ------ ------
Net current liabilities (29.3) (5.4) (36.5) (13.6)
Total assets less current liabilities 764.9 818.2 798.4 851.7
Creditors: amounts falling due after more than one year
Borrowings 22 (197.7) (98.6) (197.7) (98.6)
Other creditors 23 (13.3) (16.1) (9.3) (11.6)
------ ------ ------ ------
(211.0) (114.7) (207.0) (110.2)
Provisions for liabilities and
charges 24 (54.2) (45.7) (49.9) (42.6)
------ ------ ------ ------
Net assets 499.7 657.8 541.5 698.9
====== ====== ====== ======
Capital and reserves
Called up share capital 25 101.7 98.8 101.7 98.8
Share premium account 27 9.6 2.9 9.6 2.9
Capital redemption reserve 27 11.0 11.0 11.0 11.0
Revaluation reserve 27 7.6 81.9 7.6 81.9
Profit and loss account 27 369.8 463.2 411.6 504.3
------ ------ ------ ------
Equity shareholders' funds 499.7 657.8 541.5 698.9
====== ====== ====== ======
The financial statements were approved by the Board of Directors
on 18 June 1996 and were signed on its behalf by:
Sir Bob Reid Chairman
Alan Towers Finance Director
<PAGE>
London Electricity plc
Group Cash Flow Statement
for the year ended at 31 March 1996
1995/96 1994/95
Note Lm Lm
Net Cash Inflow From Operating Activities 28 102.6 155.1
Returns On Investments And Servicing Of Finance
Interest received 12.3 14.4
Interest paid (12.4) (13.8)
Exceptional item - premium on redemption of
Government debt - (9.5)
Dividends received from fixed asset investments 130.9 16.4
Dividends paid (260.3) (52.5)
----- ------
Net cash outflow from returns on investments and servicing of
finance (129.5) (45.0)
----- ------
Taxation
UK Corporation tax paid (77.0) (43.0)
----- ------
Investing Activities
Purchase of tangible fixed assets (111.8) (105.0)
Consumer contributions received 14.0 17.4
Proceeds from sale of tangible fixed assets 3.8 4.6
Investment in associated undertakings (2.8) (1.7)
Repayment of loan from other investment - 0.5
Purchase of subsidiary (net of cash acquired) 29a (0.6) -
Exceptional proceeds from sale of pumped storage
business 60.1 -
Loan to associated undertaking (4.6) -
Purchase of fixed asset investments (19.1) (2.6)
Decrease in fixed term deposits greater than
3 months 14.6 112.7
----- ------
Net cash (outflow)/inflow from investing activities (46.4) 25.9
----- ------
Net cash (outflow)/inflow before financing (150.3) 93.0
Financing
Bond issue 100.9 -
Expenses paid in connection with bond issue (2.0) -
Repayment of Government debt - (70.0)
Shares issued under option schemes 9.6 1.2
Purchase of own shares (0.8) (150.4)
----- ------
Net cash inflow/(outflow) from financing 107.7 (219.2)
----- ------
Decrease in cash and cash equivalents 29b (42.6) (126.2)
===== ======
<PAGE>
London Electricity plc
Statement of Total Recognised Gains and losses
for the year ended at 31 March 1996
1995/96 1994/95
Lm Lm
Profit on ordinary activities after taxation 186.7 149.9
Other net gains recognised in reserves:
Surplus on revaluation of NGG investment 266.2 -
----- -----
Total recognized gains relating to the year 452.9 149.9
===== =====
Note of Historical Cost Profits and losses
1995/96 1994/95
Lm Lm
Profit on ordinary activities before taxation 276.1 172.4
Realisation of revaluation surpluses on
NGG investment 340.5 -
------ ------
Historical profit on ordinary activities
before taxation 616.6 172.4
====== ======
Historical cost (loss)/profit for the period retained after
taxation and dividends (92.1) 91.9
====== ======
Reconciliation of Movement in Shareholders' Funds
1995/96 1994/95
Lm Lm
Profit on ordinary activities after taxation 186.7 149.9
Dividends 12 (619.3) (58.0)
------ ------
Retained (loss)/earnings (432.6) 91.9
Shares issued under option schemes 9.6 1.2
Shares repurchased and cancelled (0.8) (150.4)
Goodwill on acquisition deducted from reserves (0.5) (1.6)
Other net recognised gains relating to the year 266.2 -
------ ------
Net decrease in equity shareholders' funds (158.1) (58.9)
Equity shareholders' funds at start of year 657.8 716.7
------ ------
Closing equity shareholders' funds 499.7 657.8
====== ======
<PAGE>
London Electricity plc
Notes to the Accounts
for the year ending 31 March 1996
1 Analysis of Net Operating Expenses
NGG Total
1995/96 1995/96 1995/96 1994/95
Lm Lm Lm Lm
Distribution 115.2 2.8 118.0 114.2
Distribution: exceptional cost of 4.2 - 4.2 6.8
restructuring
Less: use of prior year provision (1.7) - (1.7) -
Administrative 138.7 11.6 150.3 159.6
Administrative: exceptional cost of 15.8 - 15.8 26.2
restructuring
Less: use of prior year provision (6.6) - (6.6) -
----- ---- ----- -----
265.6 14.4 280.0 306.8
===== ==== ===== =====
Operating expenses
Distribution costs
Distribution costs are the cost of maintaining the network
including appropriate depreciation, rates and NGG exit charges.
Other charges from NGG are included in cost of sales.
Administrative expenses
Administrative expenses include all other operating costs.
Exceptional cost of restructuring
The charge of L20m is in respect of the continuing restructuring
of the electricity business. Of the L18.7m brought forward,
L8.3m has been utilized. A provision of L30.4m is carried
forward in the balance sheet.
Exceptional provision for losses in associated undertaking
A provision has been made for losses on gas contracts for the
period up to 31 March 1998.
2 Analysis of NGG Transactions
Turnover
This relates to a L50 discount given to residential customers
who had a point of supply as at 31 December 1995 and was part of
the agreement with HM Government following the capital
reorganization of NGG.
Cost of sales
This is in respect of the fossil fuel levy saved as a result of
the customer discount.
Operating expenses
These are exceptional costs in respect of the ESOP (L13.1m) and
professional fees for NGG transactions (L1.3m).
The ESOP was set up to purchase NGG shares to be transferred to option
holders as compensation for the loss in value of the London
Electricity shares under option. The ESOP Trustee is funded by London
Electricity to purchase from London Electricity the appropriate number
of NGG shares required in relation to unexercised options.
Funding of the ESOP is by way of interest-free limited recourse loans
by the Company.
Exceptional profit on sale of investment in pumped storage business
As part of the changes in the capital structure of NGG, prior to
listing, the pumped storage business (First Hydro Limited) was
demerged and sold to Mission Energy. The amount shown represents
London Electricity's share of the sale proceeds.
3 Analysis of Turnover, Operating Profit and Net Assets
<TABLE>
<CAPTION>
Turnover Operating profit Net assets
1995/96 1994/95 1995/96 1994/95 1995/96 1994/95
Class of business Lm Lm Lm Lm Lm Lm
<S> <C> <C> <C> <C> <C> <C>
Distribution 357.1 379.1 147.5 136.0 686.8 621.9
Supply 1,188.9 1,113.6 9.2 13.9 44.0 37.7
Private electrical 15.9 14.8 12.0 11.0 56.1 52.8
distribution systems
Other 43.2 29.6 3.0 1.6 11.5 (1.0)
NGG items (90.9) - (97.0) - - -
------- ------- ----- ----- ------ -----
1,514.2 1,537.1 74.7 162.5 798.4 711.4
Less: Inter business (326.5) (327.7) (1.5) - - -
transactions
Unallocated net - - - - (298.7) (53.6)
liabilities
------- ------- ----- ----- ------ -----
Continuing operations 1,187.7 1,209.4 73.2 162.5 499.7 657.8
======= ======= ===== ===== ====== =====
</TABLE>
Cost of Operating
Analysis of NGG items by Turnover sales costs Total
class of business Lm Lm Lm Lm
Distribution - - 9.9 9.9
Supply 90.9 (8.3) 2.3 84.9
Other - - 2.2 2.2
---- ---- ---- ----
90.9 (8.3) 14.4 97.0
==== ==== ==== ====
The exceptional cost of restructuring the business has been
charged to the Distribution business L15m (1994/95 L30m), and to
the Supply business L5m (1994/95 L3m).
The exceptional provision for losses in associated undertaking of
L4.5m has been charged to the Other class of business.
Explanation of terminology used in the profit and loss account
Distribution business
This is the transfer of electricity from the points where it is
received in bulk across the distribution systems and its delivery
to consumers.
Supply business
This is the buying and selling of electricity as suppliers.
Private electrical distribution systems
This is the operation, maintenance and expansion of private
electrical distribution systems.
Other businesses
This includes the operation of contracting, generation, building
energy management systems, transport, property and insurance
activities.
Allocation of turnover and costs
Wherever possible turnover and costs are allocated specifically
to the business to which they relate. However, because of the
integrated nature of the Group's activities, it is necessary to
recharge or apportion certain costs.
Allocation of assets and liabilities
Operating assets and liabilities are allocated or apportioned to
the business to which they relate.
Net operating assets consist of non interest bearing operating
assets (fixed assets, stocks and debtors) less non interest
bearing operating liabilities (creditors and provisions) arising
on operating activities.
Unallocated net liabilities includes other fixed asset
investments, cash, borrowings, dividends receivable and payable
and taxation.
Geographical analysis
Turnover arises entirely in the United Kingdom.
4 Operating Profit
Operating profit is stated after charging:
1995/96 1994/95
Lm Lm
Staff costs (Note 5) 85.3 110.5
Depreciation (Note 14) 41.1 38.3
Operating lease rentals:
Land and buildings 6.6 6.5
Plant and machinery 1.3 0.7
Amounts paid to Coopers & Lybrand:
Remuneration as Group auditors 0.2 0.2
Fees for other services in the 1.1 0.7
United Kingdom
and after crediting:
Rental income 2.5 3.2
Profit on disposal of fixed assets 2.6 0.8
5 Staff Costs
1995/96 1994/95
Lm Lm
Wages and salaries 97.7 104.1
Social security costs 8.1 8.5
Other pension costs (Note 31) 1.3 16.9
----- -----
107.1 129.5
Less: charged as capital expenditure (21.8) (19.0)
----- -----
Charged to the profit and loss account 85.3 110.5
----- -----
The average number of employees (including
executive directors) during the year was:
Staff grades 2,925 3,059
Industrial staff grades 1,479 1,849
----- -----
4,404 4,908
===== =====
6 Directors' Emoluments
The total emoluments of the directors, including pension
contributions paid, were as follows:
1995/96 1994/95
L L
Fees to non-executive directors 148,000 154,493
Executive directors:
fixed remuneration 554,738 610,287
annual bonus payments 66,313 106,285
pension contributions 237,954 255,079
benefits in kind 48,471 51,754
--------- ---------
1,055,476 1,177,898
========= =========
The remainder of the information required by the Companies Act
and the London Stock Exchange Listing Rules is contained in the
Report of the Remuneration Committee.
7 Income From Investment In NGG
1995/96 1994/95
Lm Lm
Interim dividend 9.2 7.1
Final dividend 0.3 14.1
NGG special dividend 113.9 -
NGG second dividend 18.0 -
NGG rights dividend 3.0 -
----- ----
144.4 21.2
===== ====
8 Net Interest Payable
1995/96 1994/95
Lm Lm
Interest receivable and similar income 11.8 13.0
Interest payable and similar charges:
Bank loans and overdraft (4.7) (2.4)
Bonds (12.0) (11.7)
----- -----
(16.7) (14.1)
----- -----
Net interest payable (4.9) (1.1)
===== =====
9 Exceptional Item - Premium On Redemption of Government Debt
1995/96 1994/95
Lm Lm
12.661% Bonds due 1999 repaid 23 - (9.5)
August 1994 ===== ====
10 Taxation on Profit on Ordinary Activities
1995/96 1994/95
United Kingdom Corporation tax at 33% Lm Lm
(1994/95 33%)
Current taxation on ordinary activities 43.7 46.9
Tax on exceptional restructuring costs (4.6) (4.7)
Deferred tax on exceptional restructuring (2.0) (6.2)
costs
Deferred tax on other provisions (1.1) (1.7)
Tax over-provided in prior years - (16.0)
----- -----
36.0 18.3
----- -----
Corporation tax reduction relating to (27.3) -
customer discount
Tax credit on NGG special dividend 22.8 -
Tax credit on NGG ordinary dividends 1.8 4.2
Corporation tax in relation to exceptional (3.6) -
ESOP costs
Corporation tax charge arising from 59.7
distribution in specie
----- -----
53.4 4.2
----- -----
89.4 22.5
===== =====
The taxation charge has been reduced by L12.8m (1994/95 L14.2m)
as a result of timing differences, principally capital allowances
and certain provisions.
No deferred taxation adjustment is considered necessary in
respect of these timing differences except as shown above.
11 Profit on Ordinary Activities After Taxation
The profit for the financial year is made 1995/96 1994/95
up as follows:
Lm Lm
Dealt with in the accounts of the holding 186.9 147.4
company
Retained by subsidiary undertakings 6.7 3.4
Retained by associated undertakings (6.9) (0.9)
----- -----
186.7 149.9
===== =====
12 Dividends
1995/96 1994/95
Lm Lm
Interim dividend of 11.5p per 50p ordinary share 22.9 19.4
(1994/95 9.5p; 11.lp on an equivalent basis)
Final proposed of 27.0p per consolidated ordinary share 47.3 38.6
(1994/95 19.5p; 22.8p on an equivalent basis)
----- -----
70.2 58.0
Distribution of NGG shares by way of specie dividend 350.4 -
Special dividend of l00p per 50p ordinary share 198.7 -
----- -----
619.3 58.0
===== =====
13 Earnings Per Share (EPS)
1995/96 1994/95
This is calculated on:
weighted average number of shares 170,208,893 180,029,001
profit on ordinary activities after taxation L186.7m L149.9m
resulting in EPS of (p) 109.7 83.3
The 1994/95 weighted average number of shares has been restated for the
6 for 7 share consolidation in January 1996.
14 Tangible Fixed Assets
<TABLE>
<CAPTION>
Other Fixtures Vehicles Deduct
Network land and and & mobile Consumers'
assets buildings equipment plant contributions Total
Group Lm Lm Lm Lm Lm Lm
<S> <C> <C> <C> <C> <C> <C>
Cost
At 1 April 1995 1,151.0 74.7 105.2 16.3 (189.3) 1,157.9
Subsidiary on
acquisition - - 5.4 - - 5.4
Additions 91.6 2.9 10.0 1.8 (14.9) 91.4
Disposals (1.2) (0.6) (1.8) (2.2) - (5.8)
------- ---- ----- ---- ------ -------
At 31 March 1996 1,241.4 77.0 118.8 15.9 (204.2) 1,248.9
------- ---- ----- ---- ------ -------
Depreciation
At 1 April 1995 386.4 18.2 60.2 9.1 (46.2) 427.7
Subsidiary on
acquisition - - 1.1 - - 1.1
Charge for the 30.8 1.6 11.5 2.6 (5.4) 41.1
year
Disposals (0.9) (0.1) (1.7) (1.9) - (4.6)
------- ---- ----- ---- ------ -------
At 31 March 1996 416.3 19.7 71.1 9.8 (51.6) 465.3
------- ---- ----- ---- ------ -------
Net book amounts
At 31 March 1996 825.1 57.3 47.7 6.1 (152.6) 783.6
------- ---- ----- ---- ------ -------
At 31 March 1995 764.6 56.5 45.0 7.2 (143.1) (730.2)
------- ---- ----- ---- ------ -------
Other Fixtures Vehicles Deduct
Network land and and & mobile Consumers'
assets buildings equipment plant contributions Total
Company: Lm Lm Lm Lm Lm Lm
Cost
At 1 April 1995 1,100.6 74.2 103.8 - (189.3) 1,089.3
Additions 86.3 2.9 9.5 - (14.9) 83.8
Disposals (0.9) (0.6) (1.6) - - (3.1)
------- ---- ----- ---- ------ -------
At 31 March 1996 1,186.0 76.5 111.7 - (204.2) 1,170.0
------- ---- ----- ---- ------ -------
Depreciation:
At 1 April 1995 384.0 18.1 59.8 - (46.2) 415.7
Charge for the year 29.3 1.7 11.0 - (5.4) 36.6
Disposals (0.9) (0.1) (1.6) - - (2.6)
------- ---- ----- ---- ------ -------
At 31 March 1996 412.4 19.7 69.2 - (51.6) 449.7
------- ---- ----- ---- ------ -------
Net book amounts:
At 31 March 1996 773.6 56.8 42.5 - (152.6) 720.3
------- ---- ----- ---- ------ -------
At 31 March 1995 716.6 56.1 44.0 - (143.1) 673.6
------- ---- ----- ---- ------ -------
</TABLE>
Group Company
1996 1995 1996 1995
Lm Lm Lm Lm
Capital commitments
Contracted for but 91.8 58.1 83.3 57.1
not provided for ==== ==== ==== ====
The net book amount of other land and buildings comprises:
Group Company
1996 1995 1996 1995
Lm Lm Lm Lm
Freehold 35.8 36.5 35.3 36.1
Long leasehold (over 50 9.3 9.2 9.3 9.2
years)
Short leasehold (50 12.2 10.8 12.2 10.8
years or less)
---- ---- ---- ----
57.3 56.5 56.8 56.1
==== ==== ==== ====
Tangible fixed assets include the following:
Group Company
1996 1995 1996 1995
Lm Lm Lm Lm
Assets in the course of 82.3 76.5 75.2 74.1
construction
Land not depreciated 16.2 16.2 16.2 16.2
---- ---- ---- ----
98.5 92.7 91.4 90.3
==== ==== ==== ====
15 Fixed Asset Investments
Group Company
1996 1995 1996 1995
Lm Lm Lm Lm
Subsidiary undertakings (Note 16) - - 103.6 108.9
Associated undertakings (Note 17) 1.4 1.4 2.9 0.7
Other investments (Note 18) 9.2 92.0 8.1 82.1
---- ---- ----- -----
10.6 93.4 114.6 191.7
==== ==== ===== =====
Other investments include 3.8 million shares in NGG which are
stated at a valuation of L7.9m and are listed on the London Stock
Exchange with a market value of L7.4m at 31 March 1996. All
other investments are unlisted.
16 Subsidiary Undertakings
Company
Shares Loans Total
Lm Lm Lm
At 1 April 1995 16.9 92.0 108.9
Additions.- - 7.5 7.5
Transfer to amounts owed by - (12.8) (12.8)
subsidiary undertakings.
---- ----- -----
At 31 March 1996 16.9 86.7 103.6
==== ===== =====
The principal operating subsidiaries included in the consolidated accounts
are listed below:
<TABLE>
<CAPTION>
Description of Proportion of
shares nominal
Name of undertaking held value of shares Principal
held activities
<S> <C> <C> <C>
Investment in
The London Power electricity
Company Ltd. Ordinary L1 100% generation
London Power Insurance
Ltd. Ordinary L1 100% Insurance
Berkeley Environmental Building energy
Systems Plc Ordinary 5p 100% management systems
London Electricity Electricity distribution
Services Ltd. Ordinary L1 100% projects
London Electricity Electrical
Contracting Ltd. Ordinary L1 100% contracting
London Electricity Provision and supply of
Transport Services Ltd. Ordinary L1 100% transport services
Combined Power Systems Supply of combined
(Southern) Ltd. Ordinary L1 100% heat and power units
Knight Debt Recovery Debt collection and
Services Ltd. Ordinary L1 100% tracing
</TABLE>
17 Interests In Associated Undertakings
Share of
post
Group acquisition
Shares Loans reserves Total
Lm Lm Lm Lm
At 1 April 1995 1.7 0.7 (1.0) 1.4
Additions 2.8 5.0 - 7.8
Transfer to subsidiary (0.7) - 0.2 (0.5)
undertakings
Transfer to debtors: amounts due - (0.4) - (0.4)
within one year
Share of retained losses in year - - (6.9) (6.9)
---- ---- ---- ----
At 31 March 1996 3.8 5.3 (7.7) 1.4
==== ==== ==== ====
Shares Loans Totals
Company Lm Lm Lm
At 1 April 1995 - 0.7 0.7
Additions 1.9 0.3 2.2
--- --- ---
At 31 March 1996 1.9 1.0 2.9
=== === ===
Proportion
Description of nominal
of shares value of
Name of undertaking held shares held Principal activities
London Total Gas Ltd. Ordinary L1 50% Gas supply
Combined Power Ordinary L1 30.83% Supply of combined
Systems Ltd. Preference L1 33.33% heat and power units
Thames Valley Power Ordinary L1 50.0% Generation and
Ltd. supply
London Total Energy Ordinary L1 50.0% Gas supply
Ltd.
18 Other Investments
Shares Loans Total
Group Lm Lm Lm
At 1 April 1995 82.1 9.9 92.0
Additions at cost 19.1 - 19.1
Transfer to other debtors - (9.9) (9.9)
Net movement in respect of distribution
in specie and
transfer to ESOP of NGG shares (92.0) - (92.0)
----- ---- -----
At 31 March 1996 9.2 - 9.2
===== ==== =====
Shares Loans Total
Company Lm Lm Lm
At 1 April 1995 82.1 - 82.1
Additions at cost 18.0 - 18.0
Net movement in respect of distribution
in specie and transfer to ESOP of
NGG shares (92.0) - (92.0)
----- ---- -----
At 31 March 1996 8.1 - 8.1
===== ==== =====
Details of unlisted investments in which the Group and Company hold more
than a 10% interest:
Proportion
Description of nominal
of shares value of
Name of undertaking held shares held
Barking Power Ltd Ordinary L1 13.5%
19 Stocks
Group Company
1996 1995 1996 1995
Lm Lm Lm Lm
Raw materials and
consumables 1.4 1.8 1.3 1.6
Work in progress 6.0 2.4 2.3 1.7
Finished goods and
goods for resale - 0.1 - -
--- --- --- ---
7.4 4.3 3.6 3.3
=== === === ===
20 Debtors
Group Company
1996 1995 1996 1995
Amounts due within one year: Lm Lm Lm Lm
Trade debtors 113.5 106.1 111.1 103.8
Unbilled consumption 77.2 68.8 77.2 68.8
Amounts owed by subsidiary
undertakings - - 16.0 6.3
Amounts owed by associated
undertakings 0.7 0.4 0.1 0.5
Other debtors 52.9 21.1 38.7 20.6
Prepayments and accrued income 8.1 3.7 7.8 3.2
Advance corporation tax
recoverable 125.1 43.6 125.1 43.6
Deferred taxation recoverable
(Note 24) 11.0 7.9 10.9 7.8
Dividends receivable 0.3 11.4 0.3 11.4
----- ----- ----- -----
388.8 263.0 387.2 266.0
===== ===== ===== =====
Amounts due after more than one year:
Advance corporation tax
recoverable 10.0 6.7 10.0 6.7
Pension scheme prepayment 19.4 9.2 19.4 9.2
Amounts owed by subsidiary
undertakings - - 5.9 -
Amounts owed by associated
undertakings - 4.6 - 4.6
---- ---- ---- ----
29.4 20.5 35.3 20.5
==== ==== ==== ====
21 Current Asset Investments
Group Company
1996 1995 1996 1995
Listed Lm Lm Lm Lm
UK investments 1.2 2.5 - -
Overseas investments 2.9 0.4 - -
---- ---- ---- ----
4.1 2.9 - -
---- ---- ---- ----
Unlisted
Money market investments 23.2 46.4 19.2 40.7
Tax certificates of
deposit 2.0 - - -
---- ---- ---- ----
25.2 46.4 19.2 40.7
---- ---- ---- ----
29.3 49.3 19.2 40.7
==== ==== ==== ====
Market value at 31 March was:
Listed investments 4.1 3.0 - -
Unlisted investments 25.2 46.4 19.2 40.7
22 Borrowings
Group Company
1996 1995 1996 1995
Amounts falling due within one year:Lm Lm Lm Lm
Short term borrowings 96.1 59.2 96.1 59.2
==== ==== ==== ====
Amounts falling due after more than one year:
8% Eurobonds repayable 28
March 2003 98.9 98.6 98.9 98.6
8 5/8% Eurobonds repayable
26 October 2005 98.8 - 98.8 -
----- ---- ----- ----
197.7 98.6 197.7 98.6
===== ==== ===== ====
The 8% Eurobonds may not be redeemed prior to 28 March 2003
except upon the occurrence of certain events. In addition, the 8
5/8% Eurobonds may be redeemed in full together with accrued
interest by either the 'Issuer' or 'Bondholders' upon the
occurrence of certain events.
Borrowing facilities
The Group had at 31 March 1996 bilateral committed borrowing
facilities of L230m of varying maturities up to seven years. The
other facilities available to the Group were short term
unsecured, uncommitted facilities of L228m and the Company has a
L150m Sterling Commercial Paper programme.
23 Creditors
Group Company
1996 1995 1996 1995
Amounts falling due within one year: Lm Lm Lm Lm
Payments received on account 11.4 7.5 7.5 6.1
Amounts owing for purchase of electricity 73.5 66.5 73.5 66.5
Amounts owed to subsidiary undertakings - - 12.5 7.6
Other trade creditors 32.6 38.1 30.9 36.9
Corporation tax 86.9 55.4 83.9 54.1
Advance corporation tax 64.6 20.9 64.6 20.9
Other taxation and social security 3.6 3.8 3.3 3.4
Other creditors 43.3 20.8 40.4 20.4
Advance payments on extension of VAT 5.2 14.5 5.2 14.5
Accruals and deferred income 20.1 17.9 17.8 15.9
Proposed dividends 47.3 38.6 47.3 38.6
----- ----- ----- -----
388.5 284.0 386.9 284.9
===== ===== ===== =====
Amounts falling due after more than one year:
Trade creditors - 1.0 - 1.0
Other creditors 11.1 8.4 7.1 8.4
Accruals and deferred income 0.1 4.6 0.1 0.1
Advance payments on extension of VAT 2.1 2.1 2.1 2.1
----- ----- ---- ----
13.3 16.1 9.3 11.6
===== ===== ==== ====
24 Provisions For Liabilities & Charges
Restructuring
Group Insurance costs Other Total
At 1 April 1995 16.3 18.7 10.7 45.7
Utilised in the year (0.6) (8.3) (2.6) (11.5)
Transferred from profit and loss
account 0.3 20.0 (0.3) 20.0
---- ---- ---- ----
At 31 March 1996 16.0 30.4 7.8 54.2
==== ==== ==== ====
Restructuring
Company Insurance costs Other Total
At 1 April 1995 13.7 18.7 10.2 42.6
Utilised in the year (0.6) (8.3) (2.6) (11.5)
Transferred from profit and loss
account (0.8) 20.0 (0.4) 18.8
---- ---- ---- ----
At 31 March 1996 12.3 30.4 7.2 49.9
==== ==== ==== ====
Deferred taxation
The amount provided for deferred taxation and the amounts for
which provision has not been made are as follows:
Group Company
1996 1995 1996 1995
Provided in accounts: Lm Lm Lm Lm
At 1 April (7.9) - (7.8) -
Transfer from profit and
loss (3.1) (7.9) (3.1) (7.8)
----- ---- ----- ----
At 31 March (11.0) (7.9) (l0.9) (7.8)
===== ==== ===== ====
Provided in accounts:
Accelerated capital
allowances - - - -
Other timing differences (11.0) (7.9) (10.9) (7.8)
----- ---- ----- ----
(11.0) (7.9) (10.9) (7.8)
===== ==== ===== ====
Group Company
Potential liability 1996 1995 1996 1995
not provided: Lm Lm Lm Lm
Accelerated capital
allowances 184.1 173.5 177.6 169.5
Other timing differences (6.5) (11.2) (6.4) (11.6)
----- ----- ----- -----
177.6 162.3 171.2 157.9
===== ===== ===== =====
Total potential deferred taxation liability is computed at a
Corporation tax rate of 33% (31 March 1995 33%).
The Directors do not consider that any deferred taxation
provision is required in respect of the revaluation of NGG
shares.
25 Share Capital
Group and Company
1996 1995
Lm Lm
Authorised
257,142,857 ordinary shares of 58 1/3p each
(1994/95 300,000,000 ordinary shares 150.0 150.0
of 50p each) ===== =====
Allotted, called up and fully paid
174,290,836 ordinary shares of 58 1/3p each
(1994/95 197,695,699 ordinary shares 101.7 98.8
of 50p each) ===== =====
Share options
During the year options were exercised on 5,104,982 (1994/95,
513,399) ordinary shares at L4.83, L3.03, L3.00, L2.61 and L1.75
for a total consideration of L9.6m (1994/95 L1.2m).
Share repurchase
The following share repurchase took place during the year:
On 18 January 1996, 839,573 shares with a nominal value of 8 1/3p
at a price of L1.00.
These fractional shares were subsequently cancelled and resulted
in a decrease of less than L0.lm in share capital which was
transferred to the capital redemption reserve. They arose from
the share consolidation of every seven existing ordinary shares
into six new ordinary shares and represented the fractional
element.
The total repurchase cost was L0.8m which has been charged
against profit and loss reserves.
Special Rights Redeemable Preference Share
The Special Rights Redeemable Preference Share was redeemed at
par on 31 March 1995 and converted, following the resolution
passed at the Annual General Meeting held on 4 August 1995, into
two ordinary shares of 50 pence each. This share, which could
only be held by the Secretary of State for Energy or another
person acting on behalf of HM Government, did not carry any
rights to vote at general meetings but entitled the holder to
attend and speak at such meetings.
26 Share Options
(a) The Executive Share Option Scheme
An approved share option scheme for executive directors and
senior executives whereby an option to purchase the shares of the
Company is issued and may be exercised between the third and
tenth anniversaries of the date of grant.
Options have been granted to eligible employees and executive
directors to subscribe for ordinary shares in the Company in
accordance with the rules of the scheme.
(b) The Sharesave Scheme
An approved share option scheme where the options to purchase the
shares of the Company are linked to a five year savings contract.
All staff who met a qualifying period of employment prior to the
Grant Date were eligible to participate.
The rules of the Executive Share Option Scheme and Sharesave
Scheme include provisions for early exercise of the options in
certain circumstances.
<TABLE>
<CAPTION>
Number of shares for
which rights are
Date Subscription exercisable
Options granted and
outstanding at options price per Period within which 1996 1995
31 March 1996 were: granted share options are exercisable L L
<S> <C> <C> <C> <C> <C>
Executive share option
scheme
1 Jan. 1991 2.61 17/1/94-17/1/2001 30,000 280,000
2 Jan. 1992 3.00 14/1/95-14/1/2002 129,000 356,000
3 July 1993 4.83 20/7/96-20/7/2003 475,800 512,800
4 Mar. 1994 5.71 28/3/97-28/3/2004 22,767 22,767
5 April 1995 5.92 3/4/98-3/4/2005 75,077 -
6 April 1995 6.04 13/4/98-13/4/2005 14,551 -
Sharesave
1 Dec. 1990 1.75 1/3/96-1/9/96 161,115 4,896,557
2 Sept. 1992 3.03 30/12/97-30/6/98 892,282 992,658
</TABLE>
27 Retained Profit And Reserves
Group Company
Lm Lm
Share premium account
At 1 April 1995 2.9 2.9
Premium on options exercised 6.7 6.7
--- ---
At 31 March 1996 9.6 9.6
--- ---
Capital redemption reserve
At 1 April 1995 11.0 11.0
Nominal value of shares repurchased - -
---- ----
At 31 March 1996 11.0 11.0
==== ====
Revaluation reserve
At 1 April 1995 81.9 81.9
Revaluation surplus on NGG 266.2 266.2
Revaluation surplus transferred to profit and loss account in
respect of NGG:
Distribution in specie (333.2) (333.2)
Sale of shares to ESOP (7.3) (7.3)
------ ------
At 31 March 1996 7.6 7.6
====== ======
Profit and loss account
At 1 April 1995 463.2 504.3
Revaluation surplus realised on NGG:
Distribution in specie 333.2 333.2
Sale of shares to ESOP 7.3 7.3
Shares repurchase (0.8) (0.8)
Goodwill written off on investment in
associated undertaking (0.5) -
Retained loss for the year (432.6) (432.4)
------ ------
At 31 March 1996 369.8 411.6
====== ======
Total reserves at 31 March 1996 398.0 439.8
====== ======
The cumulative amount of goodwill charged to reserves is L48.6m
(1994/95 L48.1m).
The revaluation reserve is in respect of the NGG investment which
is included in other investments in Note 18.
28 Reconciliation Of Profit On Ordinary Activities Before
Interest to Net Cash Inflow from Operating Activities
1995/96 1994/95
Lm Lm
Profit on ordinary activities before interest 136.6 161.8
Depreciation 41.1 38.3
Increase/(decrease) in provisions and
liabilities 8.4 (4.4)
Gain on sale of tangible fixed assets (2.6) (0.8)
Exceptional profit on sale of investment in pumped storage
business (70.1) -
Share of loss of associated undertakings 6.7 0.7
Increase in pension fund prepayment (10.1) (2.4)
ESOP 7.9 -
----- -----
117.9 193.2
===== =====
Movements in working capital
Decrease/(increase) in stocks (2.6) 0.3
Increase in trade debtors (15.5) (20.3)
Increase in other debtors (17.0) (5.2)
Increase/(decrease) in trade creditors 5.7 (4.9)
Increase/(decrease) in other creditors 16.2 (19.3)
Increase/(decrease) in other taxation and
social security (0.2) 0.1
Increase/(decrease in accruals and
deferred income (1.9) 11.2
----- -----
Total working capital movements (15.3) (38.1)
===== =====
Net cash inflow from operating activities 102.6 155.1
29a Purchase Of Subsidiary Undertaking ===== =====
Net assets acquired on acquisition of Combined Power System
(Southern) Ltd were L0.9m including cash of L0.1m. Goodwill
arising on the acquisition is L0.5m. Cash consideration in
aggregate was L1.4m.
29b Analysis Of Cash And Cash Equivalents
1995/96 1994/95 1995/96 1994/95 1993/94
Movements Movement
Lm Lm Lm Lm Lm
Cash at bank and in hand 0.4 0.7 10.5 (0.3) (9.8)
Current asset investments 29.3 49.3 224.9 (20.0) (175.6)
Less:
Tax certificates of deposit - - (2 8) - 2.8
Short term investments
greater than 3 months (16.7) (31.3) (144.0) 14.6 112.7
Short term borrowings (96.1) (59.2) (2.9) (36.9) (56.3)
----- ----- ------ ----- ------
(83.1) (40.5) 85.7 (42.6) (126.2)
===== ===== ====== ===== ======
The movement in current asset investments excludes items of
greater than 3 months duration.
30 Analysis Of Changes In Financing
Share Capital
Share premium redemption Cash
capital account reserve inflow
Lm Lm Lm Lm
At 1 April 1995 98.8 2.9 11.0 -
Nominal values of shares repurchased
and cancelled - - - -
Shares issued under option scheme 2.9 6.7 - 9.6
----- --- ---- ---
At 31 March 1996 101.7 9.6 11.0 9.6
===== === ==== ===
Cash flow movements
Shares were issued under option schemes for a total consideration
of L9.6m (1994/95 L1.2m). Shares were repurchased for a total
cost of L0.8m (1994/95 L150.4m).
Borrowings
1995/96 1994/95
1995/96 1994/95 1993/94 Movement Movement
Lm Lm Lm Lm Lm
12.661% Bonds due 1999 - - 70.0 0.0 (70.0)
8% Eurobonds due 2003 98.8 98.6 98.4 0.2 0.2
8 5/8% Bonds due 2005 100.9 - - 100.9 -
Expenses of Bond issue (2.0) - - (2.0) -
Issue costs amortised (0.6) (0.4) (0.2) (0.2) (0.2)
----- ---- ----- ---- -----
197.1 98.2 168.2 98.9 (70.0)
===== ==== ===== ==== =====
31 Pension Commitments
The principal pension scheme available to employees of London Electricity
plc has been the Electricity Supply Pension Scheme (ESPS). Since April 1994
new employees have been offered membership of a defined contribution
scheme.
The ESPS provides pensions and related benefits based on the final
pensionable pay of employees throughout the electricity supply industry.
The assets of the scheme are held in a separate trustee administered fund.
The scheme was unitised with effect from 31 March 1989 and an actuarial
valuation carried out at that date apportioned the assets of the ESPS
between the various participating employers (Groups). The most recent
formal actuarial valuation of the London Electricity Group for the purpose
of determining contribution rates was carried out at 31 March 1995 by Bacon
& Woodrow, consulting actuaries. The valuation method adopted was the
attained age method.
The principal assumptions were that the investment return would exceed
salary increases by 3.0% and exceed future pension increases by 4.5% per
annum.
At the valuation date, the actuarial value of the assets relating to London
Electricity Group was L672.8 million, which represented 108.1% of the
actuarial value of the accrued benefits. Accrued benefits include all
benefits for pensioners and former members as well as benefits based on
service to date for active members, allowing for future salary rises. The
resultant surplus is being used to increase benefits to members and to
facilitate reductions in employer and employee contributions.
In order to calculate the pension charge in accordance with the
Group's accounting policy, a separate actuarial valuation was
prepared by Bacon & Woodrow, consulting actuaries. This valuation
was determined using the projected unit credit method, and
resulted in a regular annual pension charge of 10.2% of
pensionable pay. This regular cost has been reduced by the
benefit of an actuarial surplus arising using this method, which
is being spread over 10 years, being the average remaining
service life of employees. The resulting net charge to profit in
the year was Lnil (1994-95 L8.5 million).
A prepayment of L19.4 million (31 March 1995 L9.2 million) is
included in debtors greater than one year, as a result of
spreading the surplus.
Executive directors and certain senior employees are also
entitled to join the London Electricity Executives pension scheme
from which further benefits based on final pensionable pay are
available. Under the Company's defined contribution scheme the
charge to profit is the contribution paid by the Company for the
year. The amount paid is not yet material.
The total net charge for pension schemes in the accounts is L0.3
million (1994-95 L8.8 million).
Contributions payable by the Company arising from ex-gratia
pensions and early retirement were L1 million (1994-95 L8.1
million).
32 Lease Obligations
The annual commitments of the Group under non-cancellable
operating leases are as follows:
Land and 1996 Land and 1995
buildings Other buildings Other
Lm Lm Lm Lm
Expiring within
One year 0.4 0.4 - 0.2
Two to five years inclusive 0.2 1.1 0.1 0.5
Over five years 6.5 - 5.7 -
--- --- --- ---
7.1 1.5 5.8 0.7
=== === === ===
33 Contingent Liabilities
The Group has an interest in a joint venture, Barking Power Ltd.,
a company formed to build and operate a gas fired power station.
The Group is committed to contributing up to L1.9m over a period
of one year for subordinated loan stock and equity.
Since the year end, the Group has subscribed L5m for a 11.3%
stake in London & Continental Railway and paid L5.6m to purchase
the private distribution networks at North Pole International
depot, Waterloo International station and Manchester
International depot from European Passenger Services Ltd. The
Group expects to invest, over the next seven years, between L50m
and L75m in infrastructure costs for the Channel Tunnel Rail
link.
We may be called upon to subscribe up to a further L5m for equity
during the next few years.
Other than those noted above, there were no other material
contingent liabilities or guarantees apart from those given in
respect of certain subsidiaries in the ordinary course of
business.
(b) Pro Forma Financial Information
The accompanying unaudited pro forma condensed consolidated
financial information has been prepared in accordance with
generally accepted accounting principles in the United States.
Amounts are expressed in U.S. dollars. The purchase price
allocation for London Electricity plc is based on preliminary
information. The unaudited pro forma financial information
should be read in conjunction with the related notes thereto.
The accompanying unaudited pro forma condensed statement of
consolidated income for the year ended December 31, 1996 has been
prepared assuming the acquisition of London Electricity plc
occurred on January 1, 1996.
The pro forma condensed statement of consolidated income has
been prepared for comparative purposes only and does not purport
to be indicative of the results of operations that would have
resulted had the combination been in effect on the date
indicated, that have resulted since the date of acquisition or
that may result in the future.
Entergy Corporation
Pro Forma Condensed Statement of Consolidated Income
For the year ended December 31, 1996
(in thousands, except share data)
Pro-Forma Entergy Corp.
London Adjustments and Subsidiaries
Historical (Note 1) (Note 2) Pro Forma
Operating Revenues $7,163,526 $2,110,085 $9,273,611
Operating Expenses 5,484,805 1,875,408 53,109 (a) 7,413,322
---------------------------------------------------
Operating Income 1,678,721 234,677 (53,109) 1,860,289
Other Income (46,964) (19,889) (66,853)
(Deductions)
Interest Charges 790,571 28,176 137,673 (b) 956,420
---------------------------------------------------
Income Before 841,186 186,612 (190,782) 837,016
Income Taxes
Income Taxes 421,159 49,345 (50,722) (c) 419,782
---------------------------------------------------
Net Income $420,027 $137,267 ($140,060) $417,234
===================================================
Earnings from continuing
operations per average
common share $1.83 $1.82
Average number of common
shares outstanding 229,084,241 229,084,241
=========== ===========
1. On February 21, 1997, the Company acquired London
Electricity plc, for approximately $2.1 billion. The acquisition
was financed with $1.7 billion of debt that is non-recourse to
Entergy Corporation, and $392 million provided by Entergy
Corporation. The Company has accounted for this acquisition
using the purchase method of accounting whereby the purchase
price is allocated to assets and liabilities based on fair market
value, with the remainder allocated to the distribution license
of London Electricity plc which is an identifiable intangible
asset.
2. The pro forma condensed statement of consolidated income
reflects the following adjustments in order to present the
historical results of operations of London Electricity plc for
the period prior to its inclusion in the consolidated financial
statements:
a) primarily an increase in depreciation and amortization
expense resulting from applying the purchase method of accounting
to the London Electricity plc fixed assets and distribution
license;
b) primarily additional interest expense associated with
debt incurred to purchase London Electricity plc at an average
interest rate of 7.2%;
c) adjustment to income tax expense to provide for a 33%
United Kingdom statutory income tax rate for the twelve months
ended December 31, 1996.
The following unaudited pro forma condensed consolidated
balance sheet as of December 31, 1996 has been prepared assuming
the acquisition of London Electricity plc occurred on December
31, 1996.
Entergy Corporation
Pro Forma Condensed Consolidated Balance Sheet
December 31, 1996
(in thousands)
Pro Forma Entergy
Adjustments Corp.
Assets Historical London (Note 1) Pro Forma
Current Assets $2,362,533 $618,056 ($100,000) (a) $2,880,589
Other Property and
Investments 930,073 26,574 956,647
Utility Plant, net 16,223,123 1,417,445 865,647 (b) 18,506,215
Deferred Debits and Other
Assets 3,450,565 - 1,565,478 (b) 5,016,043
---------------------------------------------------
Total Assets $22,966,294 $2,062,075 $2,331,125 $27,359,494
===================================================
Liabilities and
Shareholders' Equity
Current Liabilities $1,882,567 $640,108 ($42,823) (c) $2,479,852
Deferred Credits and Other
Liabilities 5,924,067 153,939 1,232,544 (d) 7,310,550
Long Term Debt 7,590,804 339,145 2,070,287 (e) 10,000,236
Preferred Securities 927,941 - 927,941
Common Shareholders'
Equity 6,640,915 928,883 (928,883) (f) 6,640,915
---------------------------------------------------
Total Liabilities and $22,966,294 $2,062,075 $2,331,125 $27,359,494
Shareholders' Equity ===================================================
1. The pro forma condensed consolidated balance sheet reflects
the following adjustments in order to present the historical
financial position of London Electricity plc prior to its
inclusion in the consolidated financial statements:
(a) To record cash portion of purchase price.
(b) Primarily allocation of purchase price to assets and
liabilities based on fair market value, in accordance with
purchase accounting principles.
(c) Adjustment of London Electricity plc's accounting
policies and presentations to that of the Company.
(d) Primarily the deferred tax effect of the step-ups to
fair market value.
(e) To record acquisition indebtedness.
(f) To eliminate shareholder's equity in London Electricity
plc.
Item 7. Financial Statements, Pro Forma Financial Statements
and Exhibits,
continued
(c) Exhibits
23.1 Consent of Coopers & Lybrand, Chartered
Accountants and Registered Auditors.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
ENTERGY CORPORATION
By: /s/Louis E. Buck
Louis E. Buck
Vice President and Chief Accounting Officer
Dated: April 21, 1997
Exhibit 23.1
Consent of independent accountants
We consent to the incorporation by reference in Post-
Effective Amendment Nos. 2, 3,4A and 5A on Form S-8 and the
related Prospectuses to the registration statement of
Entergy Corporation on Form S-4 (File Numbers 33-54298) and
on Form S-3 (File Numbers 333-02503 and 333-22007) of our
report dated June 18, 1996, on our audits of the
consolidated financial statements of London Electricity plc,
as of March 31, 1996 and March 31, 1995 and for the each of
the two years in the period ended March 31, 1996, which
report is included in this Report on Form 8-K.
Yours faithfully
COOPERS & LYBRAND
Coopers & Lybrand
London
England
April 14, 1997
