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Powergen plc - Return on equity FS-10
1998 Mar Mar Mar
1999 9 mths 1998 1997 1996
$m $m $m $m $m
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Earnings
US GAAP net income 1,688 (276) 66 722 627
Re-negotiation of gas contract portfolio 206 566
Plant portfolio rationalisation and restructuring 527
Reorganisation and restructuring costs 104
Provisions for gas take-or-pay contracts 101
Release of provision for liability and damage claims (120)
Release of provision for litigation claims (41)
Disposal of fixed assets and investments (1,184) 3 (104)
Windfall taxation 303
Goodwill amortisation 108 47
US GAAP net income before non-recurring -------------------------------------------------------------
items and goodwill amortisation 922 340 896 719 466
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Opening shareholders' funds 1,898 2,448 2,720 3,161 2,657
Return on equity
Before non-recurring items and goodwill amortisation 48.6% 13.9% 32.9% 22.7% 17.5%
After non-recurring items and goodwill amortisation 88.9% -11.3% 2.4% 22.8% 23.6%
Explanation of exceptional items (net of tax)
Re-negotiation of gas contract portfolio Agreements to pay an amount in exchange for modifications to
long-term gas supply contracts
Plant portfolio rationalisation and restructuring Value of coal and oil-fired plant reduced following a review of
Group's UK plant portfolio, and associated business restructuring
costs charged, mainly committed severance costs
Reorganisation and restructuring costs Costs of restructuring and integrating the UK business consequent
upon the acquisition of Powergen Energy in July 1998. Includes
committed severance payments and reorganisation costs
Provisions for gas take-or-pay contracts Provision against certain gas take-or-pay purchase contracts
where the contracted price, on gas volumes in excess of planned
generation or trading requirements, was higher than anticipated
future gas prices ie onerous contracts
Release of provision for liability and damage claims Followed an actuarial review of funds held by Group's captive
and release of provision for litigation claims insurance company to cover liability and damage claims and a
reassessment of provisions for litigation
Disposal of fixed assets and investments 1999 Sale of Fiddler's Ferry and Ferrybridge C power stations to
Edison Mission Energy
(pounds) 150 million of the (pounds) 1,296 million proceeds was
received in advance in respect of the provision of services under
warranty arrangement, under US GAAP.
1998 9 months Sale of Powergen North Sea Limited and 50% of Powergen
Renewables Limited.
March 1997 Sale of 20.3% stake in Midlands Electricity plc
Windfall taxation Government tax on all UK utilities
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