Operating results for the half-year are ahead of management expectations.
Lattice Group plc (Lattice) is today issuing this trading statement ahead of the close period prior to the announcement on 26 November 2002 of the results for the half-year ending 30 September 2002.
Transco
Transco has made good progress against its financial targets for its new 5-year price control starting in April 2002. It has also performed well against the required standards of safety and customer service.
Transco's turnover is expected to be ahead of the same period last year due to volume growth, particularly in the power generation sector, and marginally increased transportation tariffs (This comparison excludes the one-off NTS entry capacity auction proceeds of some £250 million in the same period last year.).
Transco’s monthly controllable operating expenditure is on track to meet Ofgem's month-by-month profile by March 2003 and no increase is foreseen in the £230 million overall cost of restructuring. Its performance against the new System Operator incentive mechanisms has got off to an encouraging start.
Transco’s initial performance against the new mains replacement incentive mechanism established by Ofgem has been favourable. Importantly from the point of view of safety regulation, Transco is on target to meet the HSE’s requirement for 2002 as regards the decommissioning of medium pressure ductile iron mains.
Telecoms
A number of parties have registered non-binding bids to acquire Lattice's 186k business.
In this connection and in light of the statements made at the announcement of the merger with National Grid Group, the Board intends to complete the write down of the Lattice Group's telecoms interests, except SST. This will be shown as an operating exceptional item, amounting to around £170 million before tax.
Merger with National Grid Group
Our proposed merger with National Grid Group to form National Grid Transco remains on track for completion during the autumn of this year.
Cautionary statement
This announcement contains certain “forward-looking” statements regarding Lattice Group plc (“Lattice”), including statements pertaining to Lattice’s financial condition, results of operations, cash flow, dividends, business strategies, capital and other expenditure and other matters. Certain of this information is neither reported financial results nor other historical information. Because these forward-looking statements are subject to assumptions, risks and uncertainties, actual future results may differ materially from those expressed in or implied by such statements. Many of these assumptions, risks and uncertainties relate to factors that are beyond Lattice’s ability to control or estimate precisely, such as future market conditions, currency fluctuations, the behaviour of market participants, the actions of governmental regulators, delays in obtaining or adverse conditions contained in regulatory approvals, competition and industry restructuring, changes in economic conditions, changes in energy market prices, changes in historical weather patterns, changes in laws, regulations or regulatory policies, developments in legal or public policy doctrines, technological developments, the availability of new acquisition opportunities or the timing and success of current and future merger and acquisition activities. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this announcement. Lattice does not undertake any obligation to publicly release any revisions to these forward-looking statements whether as a result of new information, future events or otherwise.