Viridian Group PLC

1
Viridian Group PLC

• Preliminary results for the
• year ended 31 March 2005

2
Dipesh ShahChairman
3
Financial highlights

• Turnover increased to 943.7m (2004 - 834.2m)
• Pro-forma profit before interest and tax1
  increased 15 to 129.0m (2004 - 112.5m)
• Pro-forma EPS2 increased 14 to 60.8p (2004 -
  53.3p)
• Sx3 disposal delivers significant shareholder
  value
• Dividends increased by 4.5 from 33.66p to 35.18p
  per share

1 Pro-forma figure based on NIEs regulated
entitlement and pre exceptional items and
goodwill amortisation 2 Pro-forma figure based on
NIEs regulated entitlement and pre exceptional
items, goodwill amortisation and deferred taxation
4
Strategy

• Strongly focused on energy markets
• NIE maximising efficiency of regulated
  electricity infrastructure
• Viridian Power Energy growing an integrated
  energy business in competitive markets across
  Ireland
• Investment in generation is central to our
  strategy construction of Huntstown 2 due to
  start summer 2005
• To deliver shareholder value through consistent
  performance and sustainable dividend growth
• Committed to delivering real dividend growth
  across TD regulatory period

5
Patrick BourkeGroup Finance Director
6
Profit summary
2005 m
2004 m
Profit before interest and tax Interest Profit
before taxation Taxation - current - deferred
Profit after tax Pro-forma EPS
112.5 (25.0) 87.5 (16.7) (1.8) 69.0 53.3p
129.0 (24.4) 104.6 (23.5) 0.3 81.4 60.8p
Pro-forma, based on NIEs regulated entitlement
and pre exceptional items and goodwill
amortisation
7
Earnings per share
2005 pence
2004 pence
53.3 (5.0) (1.7) (1.4) 10.7 55.9
60.8 (8.3) (1.7) 0.2 - 51.0
Pro-forma EPS Under-recovery 15.8m (2004 -
9.5m) Goodwill amortisation Deferred
tax Exceptional credit (2004 - 13.4m) Basic EPS
8
Profitability by business
2005 m
2004 m

• 71.4
• 6.5
• 6.4
• 4.6
• (1.3)
• 87.6
• 25.2
• 2.4
• 13.8
• -

• NIE
• - Transmission and Distribution
• - Power Procurement / SONI
• - NIE Supply
• - Powerteam
• - Other
• Viridian Power Energy
• Other (mainly property)
• Disposals
• - Sx3 (sold April 2005)
• - Fleet (sold November 2003)

• 73.9
• 5.6
• 5.8
• 2.4
• (1.0)
• 86.7
• 18.3
• -
• 7.1
• 0.4

Profit before interest and tax
129.0
112.5
Pro-forma, based on NIEs regulated entitlement
and pre exceptional items and goodwill
amortisation
9
Under-recovery 2004/05

• NIE under-recovery 15.8m
• Contributory factors include
• Fuel and pipeline transportation cost increases
  above tariff assumptions
• Increases in provisions for decommissioning
  generating plant in Northern Ireland no longer
  operating
• Higher entitlement due to inflation above tariff
  assumptions
• Offset by recovery of last years under-recovery

10
Cash flow
2005 m
2004 m
Cash flow from operating activities Interest Taxat
ion Capital expenditure Disposals Dividends
paid Financing Net cash flow Translation
difference Opening net debt Net debt Net assets
167.3 (26.8) (19.2) (80.7) 135.6 (43.6) 1.7 134.3
5.1 (522.1) (382.7) 277.0
194.8 (23.6) (18.6) (83.1) - (45.5) 3.3 27.3 (4.5)
(382.7) (359.9) 301.3
11
Sx3 disposal

• Sale completed on 25 April 2005
• Cash consideration of 155m received
• Estimated book gain of 100m
• Exceptional gain will be reported in 2005/06

12
Return of capital

• Return of c100m
• B share scheme share consolidation
• Treats all shareholders equally
• Shareholders can elect to receive capital or
  income
• Circular to shareholders to be posted shortly

13
Patrick HarenGroup Chief Executive
14
Transmission Distribution

• Operating profit of 71.4m (2004 - 73.9m)
• Total capital expenditure of 72.5m (2004 -
  66.4m) before customer contributions
• Network capital expenditure in line with
  regulatory allowance
• Market opening expenditure on systems to be
  recovered over 5 years, earning regulated return
  of 6.5
• Increase in customer numbers to 758,000 units
  distributed increased by 1.1

Based on regulatory entitlement
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Other NIE businesses

• PPB/SONI
• Operating profit of 6.5m (2004 - 5.6m)
• PPB price control extension to March 2006 agreed
• SONI proposal submitted to Ofreg for extension
  to March 2008
• NIE Supply
• Operating profit of 6.4m (2004 - 5.8m)
• Price control extension to March 2007 agreed
• Powerteam
• Operating profit of 4.6m (2004 - 2.4m)
• External sales representing 41 of total

Based on regulatory entitlement
16
Viridian Power Energy

• Operating profit increased to 25.2m (2004 -
  18.3m)
• Volume growth in both markets
• Increased profits in RoI offset by
• Lower profits in NI
• Looking to grow electricity supply position
  through combination of generation assets and
  wholesale contracts
• NI power from Scotland and NI
• RoI power from Huntstown 1 imports from
  Scotland, NI and VIPP from ESB

17
Generation

• Huntstown 1 - 343MW
• Availability of 98 (excluding planned outage)
• Major planned outage successfully completed
• Gas requirements more than 60 hedged for 2005/06
• CO2 fully covered for 2005/06
• Huntstown 2 - 400MW
• Construction due to start summer 2005
• Commissioning expected autumn 2007
• Separate CO2 allocation from 1 January 2008

18
Supply market NI

• Large energy user (LEU) sector Energia market
  share c50
• SME sector Energia market share c8
• Energia plans to retain customer base in NI

19
Supply market RoI

• LEU sector Energia market share c33
• LVMD/SME sector Energia market share c6
• Growth in customer base planned to match output
  of Huntstown 2

20
VPE - looking ahead

• Renewables
• Meet NI obligation effective from 1 April 2005
• Pursue further opportunities for surplus ROCs
• RoI - new support mechanism announced
• Single Electricity Market
• High level design published by regulators
• Gross mandatory pool with capacity payments
• Final design in June 2005 following consultation
• Target date for implementation July 2007

21
Sx3
13.8m
H2
Operating profit (m)
7.1m
H2
3.4m
H1
H2
H1

• Operating profit of 13.8m (2004 - 7.1m)
• Operating margin target exceeded
• Sx3 remains provider of IT and business services
  to Viridian

22
Summary

• Northern Ireland Electricity
• TD emphasis is on cost reduction
• Seeking further price control extensions for
  other regulated businesses
• Powerteam focus on costs to TD
• Viridian Power Energy
• Strong operating performance
• Construction of Huntstown 2 due to start this
  summer
• Well placed for further opportunities
• Sx3 disposal delivers significant shareholder
  value
• Committed to delivering real dividend growth
  across TD regulatory period