Viridian Group PLC

1
Viridian Group PLC

• Preliminary results for the
• year ended 31 March 2002

2
Philip RogersonChairman

3
Financial highlights

• Turnover increased by 14 to 730m (2001 - 641m)
• Operating profit1 of 97.7m (2001 - 107.5m)
• Pre-tax profits1 of 69.8m (2001 - 89.6m)
• EPS2 of 46.8p (2001 - 59.8p)
• Exceptional charges of 71.9m
• Dividends increased from 30.6p to 31.4p per share
• 1 Pre exceptional items and goodwill amortisation
• 2 Pre exceptional items, goodwill amortisation
  and deferred taxation

4
Strategy

• Strategy
• Maximise efficiency of core regulated assets
• Develop all-Ireland energy business
• Maximise potential of businesses outside energy
  sector
• TD price control review
• Energy markets in Ireland
• Moyle Interconnector
• Huntstown and Energia
• Businesses outside energy sector
• Sale of Open Direct Consumer Financial Services
  business
• Restructuring at Sx3
• nevada

5
Patrick BourkeGroup Finance Director
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Profit summary
2002 exceptional m
2002 Total m
2002 pre exceptional m
Year to 31 March
Turnover Operating costs Goodwill
amortisation/impairment Joint venture/associates E
xceptional costs Profit before interest and
tax Interest Profit/(loss) before
taxation Taxation - current - deferred (FRS
19) Profit/(loss) after tax
- - - (26.0) (41.3) (4.6) 71.9 - (71.9) 1.0 - (70
.9)
730.0 (632.3) 97.7 (31.4) (47.4) (4.6) 14.3 (21.8)
(7.5) (7.6) (7.5) (22.6)
730.0 (632.3) 97.7 (5.4) (6.1) - 86.2 (21.8) 64.4
(8.6) (7.5) 48.3
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Exceptional items
Year to 31 March 02 m
m

Goodwill impairment relating to Sx3
acquisitions Write-downs and provisions
relating to nevada Lislyn - closure costs in
RoI Sx3 - costs of restructuring Loss on
disposal of OD Consumer Financial Services
40.8 0.5 3.3 1.3
26.0 41.3 4.6 71.9
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Profitability by business
Year to 31 March 02 m
Year to 31 March 01 m
Transmission and Distribution Power Procurement /
SONI NIE Supply Other regulated activities Total
NIE NIE Powerteam Energia Sx3 Open Direct -
retained Open Direct - sold Other Operating
profit pre exceptional items and goodwill
73.5 4.6 8.4 0.6 87.1 1.7 2.5 (5.9) 8.3 5.7 (1.7)
97.7
67.3 4.8 9.7 0.6 82.4 0.8 (0.4) 13.5 8.0 5.3 (2.1)
107.5
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Earnings per share and dividends
Year to 31 March 02 pence
Year to 31 March 01 pence
46.8 (54.3) (5.7) (4.1) (17.3) 31.42 1.5x
59.8 - (6.0) (3.4) 50.4 30.61 2.0x
EPS pre exceptional items, goodwill and deferred
tax Exceptional items Deferred tax Goodwill
amortisation Basic EPS Total
dividend Dividend cover (pre exceptional items,
goodwill and deferred tax)
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Balance sheet
31 March 02 m
31 March 01 m restated
Tangible fixed assets Intangible fixed
assets JVs/associates and other
investments Working capital Provisions Deferred
income Net debt Net assets
794.7 86.5 36.1 (3.3) (87.7) (161.7) (368.6) 296.0
1,030.0 59.9 1.4 (9.3) (112.8) (199.5) (535.2) 234
.5
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Cashflow
Year to 31 March 02 m
Year to 31 March 01 m
Cashflow Working capital movements Cashflow from
operating activities Interest Taxation Capital
expenditure and financial investment Acquisitions
and disposals Dividends paid Financing Net debt
movement Opening net debt Net debt
130.0 (11.5) 118.5 (25.7) (8.5) (210.7) - (41.1) 0
.9 (166.6) (368.6) (535.2)
131.5 (34.4) 97.1 (15.1) (12.1) (184.1) (67.3) (37
.2) 1.3 (217.4) (151.2) (368.6)
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Patrick HarenGroup Chief Executive
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Transmission and Distribution

• Operating profit of 73.5m (2001 - 67.3m)
• Network capital expenditure of 80.6m (2001 -
  92.4m)
• Focus on efficiency and cost reduction
• Growth in units distributed of 1.9 number of
  customers increased to 710,000

14
TD price control review -timetable

• Consultation paper issued by Ofreg
• NIE response
• Initial proposals issued by Ofreg
• NIE response
• Final proposals to be issued by Ofreg
• NIE response

15 November 2001 7 January 2002 26 March
2002 10 May 2002 due 19 June 2002 due July
2002
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NIEs response to Ofregs initial proposals

• Significant parts of initial proposals
  unacceptable
• Extreme assumptions for the building blocks
• NIEs proposal
• In line with precedent
• TD prices flat in real terms X 2
• Comparable with SHE, Swalec and SWEB

16
Regulatory building blocks

• Operating expenditure
• Capital expenditure
• Regulatory Asset Base
• Cost of capital

17
Other NIE businesses

• PPB / SONI
• Operating profit of 4.6m (2001 - 4.8m)
• Price controls to be extended
• NIE Supply
• Operating profit of 8.4m (2001 - 9.7m)
• Price control in place until March 2005
• NIE Powerteam
• Operating profit of 1.7m (2001 - 0.8m)
• External sales representing 17 of total

18
Interconnectors
Moyle

• Moyle Interconnector - 500MW link completed
• N/S interconnectors - upgraded to 600MW

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Independent generation and supply

• Huntstown Power Company
• Construction on budget and on schedule
• Euro 220m limited recourse facility
• Fuel purchase and energy sale agreement with
  Energia
• Energia
• Operating profit of 2.5m (2001 - 0.4m loss)
• Maximum capacity available through VIPP auction
• Building off-take to match HPC output

20
Sx3
Year to March 2002 m
Year to March 2001 m
Turnover - organic - acquisitions Operating
(loss)/profit - organic - acquisitions
breakdown restated pre goodwill amortisation
61.8 50.2 112.0 (2.2) (3.7) (5.9)
68.8 39.9 108.7 6.5 7.0 13.5
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Sx3

• Substantially increased costs across all
  businesses
• Inadequate forecasting and control weaknesses
• Existing business lower revenues, lower margins
  and downturn in demand for training
• First Software slower conversion of orders to
  revenue delays in iWorld development
• Review of major contracts
• iWorld amortisation

22
Sx3

• Substantial strengthening of senior management
  team
• Interim manager with MD responsibilities
• New finance director, externally recruited
• Profit centre MDs - external recruitment
• New financial controllers/commercial contract
  managers
• Replacement of matrix management structure
• Four new profit centres
• Much simpler structure
• Reinforced accountability for profit and cash
• New management reporting/control systems
• Refocussing of the business/closures

23
Sx3

• Manpower reductions of 20
• Exceptional restructuring costs of 3.3m
• Target cost reductions of more than 10m
• Good pipeline in managed services contracts
• Strong order book for iWorld

24
Open Direct
Year to 31 March 02 m
Year to 31 March 01 m
Consumer Financial Services Retail
Credit Insurance broking Continuing
businesses Property Fleet Solutions Insurance
captive Total
5.3 8.0 13.3
5.7 8.3 14.0
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Sale of OD ConsumerFinancial Services

• Sale to management backed by Alchemy
• Principal terms
• c.111.4m total consideration
• 1.25m premium to net assets
• 8m consideration deferred
• Net proceeds
• 18.9m repayment of securitisation facility
• 2.5m estimated costs
• 82.0m received
• Loss on disposal of 1.3m

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nevada

• Revenues 30.7m (2001 - 17.1m)
• Share of operating loss pre goodwill 5.5m (2001
  - 3.2m)
• Significant contract wins
• Energis situation
• Write-downs and provisions totalling 40.8m

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Summary

• Management of TD price control review is a key
  task
• Well positioned for energy opportunities in
  Ireland
• Repositioning unregulated interests
• Exit of OD Consumer Financial Services
• Focus on Sx3 trading performance
• nevada

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Viridian Group PLCQuestions