Notes to the consolidated financial statements – analysis of items in the primary statements
8. Discontinued operations
Discontinued operations are businesses that have been sold, or which are held for sale. They include our former wireless infrastructure operations in the UK and US, and the Basslink electricity interconnector in Australia, that were classified as businesses held for sale during the year ended 31 March 2007. Businesses held for sale at 31 March 2008 comprise the Ravenswood generation station in New York City (representing our merchant electricity generation operations), together with KeySpan Communications and KeySpan Engineering Associates that were acquired as part of the KeySpan acquisition on 24 August 2007.
The wireless infrastructure operations in the UK and US were sold on 3 April 2007 and 15 August 2007 respectively, while the Basslink electricity interconnector business was sold on 31 August 2007. The sale of the Ravenswood generation station was agreed on 31 March 2008 for consideration of $2.9bn. Completion of the sale is dependent upon regulatory approval and is expected during summer 2008.
Results of discontinued operations
| 2008 £m |
2007 £m |
2006 £m |
|
|---|---|---|---|
| Revenue | 201 | 383 | 493 |
| Operating costs | (166) | (321) | (382) |
| Operating profit before exceptional items, remeasurements and stranded cost recoveries | 35 | 117 | 131 |
| Exceptional items (i) | – | (55) | (20) |
| Total operating profit from discontinued operations | 35 | 62 | 111 |
| Net finance costs before remeasurement finance income | – | (2) | (4) |
| Remeasurement finance income (ii) | 8 | 37 | – |
| Profit before tax from discontinued operations | 43 | 97 | 107 |
| Taxation | (7) | (11) | (45) |
| Profit after tax from discontinued operations | 36 | 86 | 62 |
| Gain on disposal of wireless operations | 1,506 | – | – |
| Gain on disposal of Basslink electricity interconnector | 80 | – | – |
| Gain on disposal of gas distribution networks | – | – | 2,636 |
| Gain on disposal of discontinued operations before tax | 1,586 | – | 2,636 |
| Taxation | (4) | – | (31) |
| Gain on disposal of discontinued operations | 1,582 | – | 2,605 |
| Total profit for the year from discontinued operations | |||
| Before exceptional items, remeasurements and stranded cost recoveries | 28 | 104 | 77 |
| Exceptional items, remeasurements and stranded cost recoveries | 1,590 | (18) | 2,590 |
| 1,618 | 86 | 2,667 |
(i) The exceptional item for the year ended 31 March 2007 reflects an impairment of goodwill within the US wireless infrastructure operations. Exceptional items for the year ended 31 March 2006 related to a fine (£15m) incurred in respect of a breach of health and safety laws in 1999 and to restructuring costs (£5m).
(ii) Remeasurement finance income for the year ended 31 March 2008 comprised £8m of mark-to-market gains on financial instruments (2007: £13m) and for the year ended 31 March 2007 an additional £24m relating to the recognition of gains on the termination of a hedging arrangement.