SOURCE: Scottish Power PLC

August 10, 2005 02:01 ET

Scottish Power PLC announces 2005/06 1st Quarter Results to 30 June 2005

GLASGOW, UK -- (MARKET WIRE) -- August 10, 2005 --

SCOTTISH POWER plc

2005/06 1st QUARTER RESULTS to 30 June 2005

Highlights

- Continuing businesses pre IAS 39
-        Operating profit* of GBP178 million, up 39%
-        Profit before tax* of GBP147 million, up 41%
-        Earnings per share* of 5.75 pence, up 31%
-        Capital investment of GBP205 million

- Total group pre IAS 39
-        Earnings per share* of 8.79 pence, up 17%
-        Dividend per share of 5.20 pence for the quarter, up 5%

- Sale of PacifiCorp is on track
-        Shareholder approval received
-        Filings submitted to state utility commissions, FERC and NRC

The table below represents the results for our continuing businesses which
exclude PacifiCorp.

Full Year    Continuing Businesses                           Quarter 1
   2004/05   GBP million                                2005/06   2004/05
     4,595   Revenue                                      1,084       956

       580   Operating profit, as adjusted*                 178       128
       459   Profit before tax, as adjusted*                147       105
     19.04   Earnings per share, as adjusted* (pence)      5.75      4.39

       673   Operating profit                               163       144
       552   Profit before tax                              114       121
     22.60   Earnings per share (pence)                    4.51      5.00

Note: The group's results have been prepared in accordance with IFRS for the
first time. Comparative figures for the previous year have also been restated on
this basis. IAS 39 ("Financial Instruments: Recognition and Measurement") has
been applied prospectively with effect from 1 April 2005. As shown in the table
above, the main focus of our results is on our three continuing businesses, as
PacifiCorp is now reported as a discontinued operation.

Items marked * represent the results of our operations adjusted to (i) exclude
the effects of IAS 39 on current quarter results; (ii) for 2004/05, exclude the
impact on results of contracts which were previously marked to market or
otherwise fair valued but are now subject to IAS 39; and (iii) in relation to
PacifiCorp, include depreciation and amortisation charges on non-current assets
held for sale, which under IFRS are not recognised in the group reported results
from 24 May 2005. Reconciliations from the reported to the adjusted results are
provided in Notes 7 and 10 to the quarterly Accounts. As a consequence of these
adjustments, the results for both periods are presented on a comparable basis.
ScottishPower believes that the adjusted measures provide a better comparison of
underlying business performance.

Ian Russell, ScottishPower Chief Executive, said:
"The year has started well with earnings growth from our continuing businesses
of 31%* compared with the same quarter last year. Both UK businesses have
performed strongly in the quarter and we expect PPM Energy's full year profit to
be ahead of last year. The process to approve the sale of PacifiCorp is on track
to complete between May and November 2006. Our trading outlook for the full year
remains unchanged."

CHIEF EXECUTIVE'S REVIEW

Following the announcement in May that we had agreed to sell PacifiCorp, these
quarterly results focus on our three continuing businesses - Infrastructure
Division, UK Division and PPM Energy, and report PacifiCorp as a discontinued
operation. The results are prepared under IFRS for the first time, and in order
to present the results on a comparable basis, we have excluded the impact of
contracts subject to IAS 39 from the discussion of our adjusted results.

The strong increase in operating profit this quarter of GBP50 million*, or 39%, is
largely attributable to the Infrastructure Division's good performance following
the recent regulatory reviews; and the UK Division's significant growth in
customer numbers and investment in generation plant last year. Investment for
growth in our continuing businesses was GBP133 million, representing 65% of the
total spend and primarily related to expenditure on our windfarm developments in
the UK and the US.

In July, we announced the sale of our underground natural gas storage project at
Byley to E.ON UK plc for GBP96 million. As part of the deal we also negotiated a
15-year gas storage contract which gives us secure access to reliable gas
storage with high deliverability. The sale, combined with securing the gas
storage contract, presents an attractive opportunity for ScottishPower to
immediately maximise value from the development for shareholders.

The process to approve the sale of PacifiCorp to MidAmerican is on track. In
June, the first of the regulatory filings was completed with the Nuclear
Regulatory Commission. In July, ScottishPower shareholders approved the sale at
the Extraordinary General Meeting and filings were submitted to the six state
utility commissions where PacifiCorp operates and to the Federal Energy
Regulatory Commission. As previously announced, we expect that the sale of
PacifiCorp will be completed between May and November 2006. PacifiCorp's trading
results were in line with our expectations.

Trading for the group has been in line with our expectations and our trading
outlook for the full year remains unchanged. The UK Division has benefited in
this quarter from the profile of last year's customer growth and plant
acquisitions, whereas the growth in PPM Energy's contribution from the expansion
of its windfarm developments and gas storage business is expected to be
delivered largely in the fourth quarter.

INVESTING FOR GROWTH - CONTINUING BUSINESSES

Net capital investment for our continuing businesses in the quarter was GBP205
million, of which GBP133 million (65%) was invested for growth, primarily focused
on expansion of the UK Division's and PPM Energy's windfarm portfolios.

Infrastructure Division's net capital investment was GBP65 million, with GBP16
million (25%) invested for organic growth, including expenditure on windfarm
connections and system reinforcement. Other net investment of GBP49 million mainly
consisted of refurbishment of substations and replacement of switchgear and
overhead lines.

The UK Division's net capital investment was GBP55 million, including GBP33 million
(60%) invested for growth. Growth investment related primarily to windfarm
developments at: the 100 MW Black Law site, where 42 turbines are now
operational; the 30 MW windfarm at Beinn Tharsuinn where infrastructure and grid
work are progressing well; and the 16 MW windfarm at Coldham.

PPM Energy's net capital investment for the quarter was GBP85 million, with GBP84
million of this invested for growth. This comprised GBP77 million of wind
generation spend, including investment in our Klondike II, Shiloh, Elk River and
Maple Ridge windfarms, and GBP7 million on the expansion of our gas storage
facilities.

Forecast capital investment for our continuing businesses remains consistent
with our expectations at GBP1 billion for the full year, with some 70% for growth.
This balanced programme of expenditure will aim to achieve at least the allowed
rate of return in our Infrastructure Division, with opportunities for enhanced
returns through incentive mechanisms and non-regulated investments. Investments
in our competitive businesses will aim to achieve returns of at least 300 basis
points above each of our competitive businesses' weighted average cost of
capital.

OPERATIONAL PERFORMANCE - CONTINUING BUSINESSES

Infrastructure Division

Infrastructure Division's operating profit rose by GBP22 million to GBP123 million.
Regulated income increased by GBP27 million in the quarter mainly as a result of
the implementation on 1 April of the Distribution Price Control Review and
Transmission Price Control Extension, which included higher allowances for
taxation and pension costs and an increased return on the cost of capital; each
quarter of this year should benefit from higher revenues. The quarter on quarter
growth was partly offset by a one-off rebate of GBP6 million received in the first
quarter of last year and operating efficiencies offset higher depreciation.

We are confident of achieving, and where possible outperforming, over the
five-year period of the review, the new incentive targets for network
performance. This would result in reduced fault times for our customers,
minimise the risk of financial penalty from Ofgem and provide the potential for
incentive revenue. Initiatives driving effectiveness include deploying a greater
proportion of the workforce to restore customers to the network; improved
scheduling and monitoring of repairs; programmes targeted at worst performing
circuits; and a re-prioritised maintenance programme. Network reinforcement
projects, including the GBP30 million, five-year, Liverpool city centre
regeneration programme, are on schedule.

There continues to be significant activity in the area of infrastructure to
support renewables, including both the implementation of recent Ofgem proposals
and the development and eventual regulatory approval of future infrastructure
requirements. The Renewable Energy Transmission Study, amounting to GBP190
million, includes upgrades to the two Anglo-Scottish interconnectors and the
Denny to Beauly line. Details of the Denny to Beauly line were announced on 25
July.

On 1 April 2005, the British Electricity Trading and Transmission Arrangements
("BETTA") were successfully introduced with National Grid assuming operational
control of the Great Britain ("GB") transmission system, including balancing of
generation and demand in Scotland. ScottishPower retains network ownership and
all associated responsibilities including development of the network.

UK Division

UK Division's adjusted operating profit for the first quarter was up GBP47 million
to GBP56 million*, compared to the equivalent period last year. The increase
included a full quarter's operating profit of GBP24 million* from Damhead Creek
and Brighton power plants compared to a partial quarter's operating profit of GBP3
million for the equivalent period last year. The substantial growth in customer
numbers achieved during 2004/05 of 865,000, combined with the effective
management of our generation portfolio in the new BETTA environment, and the
benefits from our forward commodity procurement strategy, added GBP34 million to
gas and electricity margins. Other net operating costs, excluding Damhead and
Brighton, increased by GBP8 million due to higher customer servicing costs
reflecting the growth in customer numbers, and higher depreciation charges.

Customer numbers increased by over 52,000 to 5.16 million in the quarter
reflecting the Division's focus on gaining profitable customers through this
period of high wholesale prices. The business has performed well in the first
quarter of the new BETTA environment. Our generating plant has proven itself to
be highly competitive on a GB-wide basis, has performed strongly in the
Balancing Mechanism and is supporting our increasing customer demand. Our
forward commodity procurement strategies have ensured that we are substantially
covered for the coming winter across all commodities, including carbon dioxide
emissions.

With 42 turbines, totalling approximately 100 MW, now operational at Black Law,
ScottishPower is the largest windfarm generator in the UK. Renewable development
remains a key part of our business strategy and, with the second phase of
turbines under construction at Black Law together with construction at Coldham
and Beinn Tharsuinn, ScottishPower now has 255 MW operational and 73 MW under
construction in the UK.

PPM Energy

PPM Energy's adjusted operating profit of GBP6 million* was in line with the
equivalent quarterly period last year. Adjusted dollar operating profit
increased by $1 million to $9 million*. The performance of core assets,
optimisation and trading contributed an additional $20 million to PPM Energy's
results in the quarter. This was partly offset by a reduction in the
contribution from contracted gas storage of $10 million, due to timing of
earnings, which are generated upon the withdrawal of gas, expected to come later
in the year. The contribution from contracted wind generation decreased by $2
million in the quarter, and operating costs, including depreciation, increased
by $7 million as the business continued to grow.

Construction at the 75 MW Klondike II windfarm was completed ahead of schedule
with operation beginning in June. In July, construction of the 150 MW Shiloh
wind project in California commenced and PPM Energy also signed long-term
agreements to sell 125 MW of the proposed Shiloh windfarm. Construction of the 1
98 MW joint venture Maple Ridge windfarm in upstate New York is continuing.
Other windfarm projects being constructed include Elk River (150 MW) and Trimont
(100 MW). Together these windfarm developments, totalling 574 MW, are expected
to be operational this year and, upon completion, will qualify for Production
Tax Credits ("PTCs"). By the end of this year, PPM Energy will have about 1,400
MW of wind energy under its control, well on target toward its goal of at least
2,300 MW online by 2010. Approximately 90% of PPM Energy's wind output is now
sold under long-term contract. In August, President Bush signed the US Energy
Bill that included a two-year extension of PTCs which will allow for the
continued growth of the US wind energy market. PPM Energy is actively working to
secure adequate turbine supplies for the next two years.

FINANCIAL REVIEW

The group's results have been prepared in accordance with IFRS for the first
time, with prior year comparatives restated on a consistent basis, except for
the adoption of IAS 39, which has been applied prospectively from 1 April 2005.
As a consequence of our agreement to sell PacifiCorp, each line description of
the Group Income Statement now excludes items directly associated with the
disposal, as these items are now netted within a separate discontinued
operations line for both the current and prior year. Similarly, for the current
year only, PacifiCorp's balance sheet is aggregated within either assets or
liabilities held for sale. The classification of corporate costs has also been
reviewed and these are now included within unallocated income and expenses,
together with the results of non-regulated activities, which will be retained by
the group, and were previously reported within the PacifiCorp business,.

External group revenue from continuing operations increased by GBP128 million for
the quarter to GBP1,084 million. Infrastructure Division's revenue increased by
GBP45 million mainly due to a change in billing arrangements under BETTA, whereby
transmission exit costs previously charged internally to UK Division are now
billed externally to National Grid, who then recharge UK Division and also as a
result of increased external regulatory income following the recent price
control reviews. UK Division's revenue rose by GBP116 million, primarily as a
result of increased customer numbers and tariff rises within the retail
electricity and gas markets, which were required due to increasing commodity
prices. PPM Energy's revenue reduced by GBP25 million due to lower sales from
energy management activities, renewable generation and contracted gas storage
assets. Unallocated revenues reduced by GBP8 million due to lower Synfuel
royalties.

Adjusted operating profit from continuing operations increased by GBP50 million to
GBP178 million* in the quarter, as improvements in Infrastructure Division and UK
Division performance were partly offset by an adverse movement in unallocated
income and expenses due to lower Synfuel royalties and one-off gains in the
prior year. Details of the adjustments made to each of our business segments to
exclude the effects of IAS 39 on current year results and, for 2004/05 only, the
impact on results of proprietary trading and other contracts which are now
subject to IAS 39, are shown in the table below. Discontinued operations have
also been adjusted to include depreciation and amortisation charges on
non-current assets held for sale, which under IFRS are not recognised in the
group's reported results from 24 May 2005.

                                                    Un-
                                                  allo-          Pacifi-
                         Infra-                   cated    Total    Corp
                      structure       UK    PPM  income/ contin- discon-
GBPm                   Division Division Energy (expense)   uing  tinued 

------------------------------------------------------------------------
June 2004 UK GAAP 
Reported Segments         101.1     23.6    8.5        -   133.2   116.7
Reallocated Corporate
items                      (0.5)     0.3   (0.1)     1.7     1.4    (1.4)
Reallocated PacifiCorp
non-regulated                 -        -      -     11.1    11.1   (11.1)
------------------------------------------------------------------------
June 2004 UK GAAP 
Adjusted Segments         100.6     23.9    8.4     12.8   145.7   104.2
IFRS  adjustments           0.6     (0.1)   0.2     (0.5)    0.2     7.6
Associates & Jointly
Controlled Entities        (0.2)    (1.1)  (0.2)       -    (1.5)      -
------------------------------------------------------------------------
June 2004 IFRS Reported
Segments                  101.0     22.7    8.4     12.3   144.4   111.8
Adjust for items now
within scope of IAS 39        -    (13.3)  (2.7)       -   (16.0)   (0.2)
------------------------------------------------------------------------
June 2004 Adjusted
Segments*                 101.0      9.4    5.7     12.3   128.4   111.6
========================================================================
------------------------------------------------------------------------
June 2005 IFRS
Reported Segments         123.0     44.6    2.6     (7.0)  163.2   140.3
IAS 39 adjustments            -     11.6    3.3        -    14.9    (0.8)
Adjust for depreciation
and amortisation on 
non-current assets 
held for resale               -        -      -        -       -   (23.0)
------------------------------------------------------------------------
June 2005 Adjusted
Segments*                 123.0     56.2    5.9     (7.0)  178.1   116.5
========================================================================

Reported operating profit from continuing operations was GBP163 million for the
quarter compared to GBP144 million for the equivalent period last year. The
increase of GBP19 million was attributable to the improvement in adjusted
operating profit being partly offset by adverse movements from the impact of IAS
39. As shown in the table above, the adoption of IAS 39 in the current quarter
reduced operating profit for continuing operations by GBP15 million as a result of
the unwind of opening balance sheet positions of GBP19 million, offset by the fair
value of unrealised gains relating to operating derivatives of GBP3 million and
hedge ineffectiveness of GBP1 million.

Further reconciliations of previously reported financials statements under UK
GAAP to IFRS, including a segmental operating profit reconciliation for the year
ended 31 March 2005, are included within Note 10 to the quarterly Accounts.

Reported net finance costs for continuing operations were GBP25 million higher for
the quarter at GBP49 million mainly as a result of GBP18 million of adverse IAS 39
adjustments primarily associated with the convertible bond issued in 2003/04.
Higher net debt and an increase in net interest charges associated with the US
bonds issued in March 2005, also contributed to higher net finance costs.

Adjusted profit before tax for continuing operations was GBP42 million higher for
the quarter at GBP147 million* due to the favourable operating performance at
Infrastructure Division and UK Division, partly offset by higher adjusted net
finance costs. Reported profit before tax was GBP7 million lower than last year,
at GBP114 million, with the improvement in adjusted operating profit being more
than offset by adverse movements from the impact of IAS 39 on both operating and
financing derivatives and other increases in net finance costs.

The tax charge for continuing operations was GBP31 million for the quarter
compared to a charge of GBP29 million for the equivalent period last year, and the
effective tax rates were 27% and 24%, respectively. The implementation of IFRS
has increased the effective rate of tax for both the current and prior year
quarters. Looking forward, we anticipate that IAS 39, in particular, may result
in further tax rate volatility.

Adjusted earnings per share for continuing operations of 5.75 pence* were 1.36
pence ahead of the first quarter last year. Reported earnings per share for
continuing operations of 4.51 pence were 0.49 pence lower than the first quarter
last year, as business growth has been more than offset by the adverse effect of
IAS 39. Adjusted earnings per share for the total group of 8.79 pence*, were
1.29 pence ahead of the first quarter last year, whilst reported earnings per
share for the total group were 5.90 pence compared to 8.10 pence for the
equivalent period last year. The reduction was mainly due to the impact of IAS
39, partly offset by continuing operations' growth and the non-depreciation of
PacifiCorp's non-current assets from 24 May.

Net cash from operating activities for continuing operations, was GBP159 million
and represented cash generated from operations of GBP181 million and net tax and
interest payments of GBP22 million. Net cash used in investing activities
represented a net outflow of GBP270 million and primarily related to expenditure
associated with our capital investment programme. Net cash from financing
activities represented a net outflow of GBP117 million and primarily consisted of
dividend payments of GBP141 million. After adjusting for the cash inflow from the
increase in borrowings of GBP6 million and for adverse non-cash movements of GBP108
million, primarily relating to the effect of foreign exchange, net debt for
continuing operations was GBP2,387 million at 30 June 2005, GBP342 million higher
than at 1 April 2005. Net debt in relation to discontinued operations is now
disclosed within assets and liabilities held for sale.

Net assets of GBP4,344 million were GBP387 million higher than at 31 March 2005. An
increase of GBP265 million, net of tax, arose on the implementation of IAS 39 in
respect of operating and financing derivatives held at 1 April 2005. In the
quarter the subsequent movements in the value of these and new derivatives,
which qualify for hedge accounting, increased net assets by GBP385 million. This
increase arose principally within the UK Division as a consequence of an
effective economic hedging strategy and rising commodity prices. Net assets
reduced by GBP139 million as a result of the revaluation of the group's pension
obligations, mainly in relation to the US schemes and by a further GBP124 million
primarily relating to dividends, tax movements and the reclassification of
PacifiCorp's minority interests, partly offset by the profit for the quarter.

The dividend for the first quarter of 2005/06 will be 5.20 pence per share,
payable on 28 September 2005. The ADS dividend will be confirmed in a separate
announcement today. The dividend for each of the first three quarters of 2005/06
is set at 5.20 pence per share with the balance of the total dividend to be set
in the fourth quarter. We aim to grow dividends broadly in line with earnings
and we expect to continue this policy following the sale of PacifiCorp and the
return of capital to shareholders.

DISCONTINUED OPERATIONS - PACIFICORP

The profit for the period from discontinued operations represents the post-tax
earnings of PacifiCorp's regulated activities, together with the impact of
hedging PacifiCorp's dollar earnings and disposal proceeds and the interest rate
differential benefit arising from our balance sheet hedging. The continuation of
our balance sheet hedging strategy means that the anticipated proceeds from the
disposal are substantially hedged at an exchange rate of approximately $1.80.

PacifiCorp's adjusted operating profit of GBP117 million* was GBP5 million higher
than the equivalent period last year. PacifiCorp's adjusted dollar operating
profit was $200 million* for the quarter, compared to $189 million*. The
increase of $11 million was primarily due to higher regulated revenues and lower
net power costs.

As shown in Note 5 to the quarterly Accounts, reported post-tax earnings reduced
by GBP32 million to GBP26 million for the quarter. Reported operating profit
increased by GBP29 million in the quarter, mainly due to lower depreciation and
amortisation costs as under IFRS PacifiCorp's non-current assets were no longer
subject to these charges from 24 May. Net financing costs increased by GBP70
million and included GBP18 million of IAS 39 adjustments in respect of financing
derivatives and a GBP46 million loss following de-designation of net investment
hedges. As a result of lower profit and the impact of IFRS, the tax charge
reduced by GBP9 million.

PacifiCorp's net capital investment was GBP133 million for the quarter, with GBP68
million (51%) invested for organic growth. Of this, GBP40 million was invested in
building new generation, namely the first phase of the 525 MW Currant Creek
plant, which was completed on schedule and is now operational, and the
construction of the 534 MW Lake Side plant. A further GBP28 million was invested
in new connections and network reinforcement.

On 5 May 2005, PacifiCorp filed a general rate case request in Washington for
approximately $39 million related primarily to increased operating costs, with
resolution expected in April 2006. In Idaho, a request that was originally filed
in January 2005, for approximately $15 million is progressing with an outcome
expected by the autumn of this year. In Oregon, the $102 million general rate
case continues, with resolution of the case expected in September.

In July 2005, the US district court judge dismissed the $1 billion lawsuit filed
against PacifiCorp by the Klamath tribes. The final judgment in the case will be
subject to appeal to the 9th Circuit Court of Appeals. A final decision from the
9th Circuit Court of Appeals would be expected to take 18 to 24 months.

INVESTOR TIMETABLE

Key investor dates going forward are as follows:

17 August 2005           Shares go ex-dividend for the first quarter
19 August 2005           Last date for registering transfers to receive the 
                         first quarter dividend
28 September 2005        First quarter dividend payable
10 November 2005         Announcement of results for the second quarter and half 
                         year ending 30 September 2005

Safe Harbor

Some statements contained herein may include statements regarding our
assumptions, projections, expectations or beliefs about future events. These
statements are intended as "Forward-Looking Statements" within the meaning of
the "safe harbor" provisions of the Private Securities Litigation Reform Act of
1995. All statements with respect to us, our corporate plans, future financial
condition, future results of operations, future business plans, strategies,
objectives and beliefs and other statements that are not historical facts are
forward looking. Statements containing the words "may", "will", "expect",
"anticipate", "believe", "intend", "estimate", "continue", "plan", "project",
"target", "on track to", "strategy", "aim", "seek", "will meet" or other similar
words are also forward-looking. These statements are based on our management's
assumptions and beliefs in light of the information available to us. These
assumptions involve risks and uncertainties which may cause the actual results,
performance or achievements to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements.

We wish to caution readers and others to whom forward-looking statements are
addressed, that any such forward-looking statements are not guarantees of future
performance and that actual results may differ materially from estimates in the
forward-looking statements. We undertake no obligation to revise these
forward-looking statements to reflect events or circumstances after the date
hereof. Important factors that may cause results to differ from expectations
include, for example:

-    the success of reorganisational and cost-saving or other strategic efforts, 
     including the proposed sale of PacifiCorp;
-    any regulatory changes (including changes in environmental regulations) 
     that may increase the operating costs of the group, may require the
     group to make unforeseen capital expenditures or may prevent the regulated
     business of the group from achieving acceptable returns;
-    the outcome of general rate cases and other proceedings conducted by 
     regulatory commissions;
-    the cost, feasibility and eventual outcome of hydroelectric facility 
     relicensing proceedings;
-    future levels of industry generation and supply, demand and pricing, 
     political stability, competition and economic growth in the relevant areas 
     in which the group has operations;
-    the availability of acceptable fuel at favorable prices;
-    weather and weather-related impacts;
-    the availability of operational capacity of plants;
-    adequacy and accuracy of load and price forecasts that could impact the 
     hedging strategy and costs to balance electricity load and supply;
-    timely and appropriate completion of the Request for Proposals process, 
     unanticipated construction delays, changes in costs, receipt of required 
     permits and authorizations, and other factors that could affect future 
     generation plants and infrastructure additions;
-    the impact of interest rates and investment performance on pension and
     post-retirement expense;
-    the impact of new accounting pronouncements on results of operations; and
-    development and use of technology, the actions of competitors, natural 
     disasters and other changes to business conditions.

Further Information:
Jennifer Lawton  Head of Investor Relations                 0141-636-4527
Colin McSeveny   Group Media Relations Manager              0141-636-4515


Group Income Statement 
for the three months ended 30 June 2005
                                                         Three months
                                                        ended 30 June

                                                       2005        2004
                                         Notes         GBPm        GBPm
-----------------------------------------------------------------------
Continuing operations
Revenue                                      2      1,084.0       955.6 
Cost of sales                                        (747.5)     (660.6)
Transmission and distribution costs                   (76.6)      (68.2)
Administrative expenses                               (88.5)      (86.4)
Fair value losses on operating derivatives   2        (14.9)          -
Other operating income                                  7.4         5.5
Share of loss of jointly controlled 
entities                                               (0.8)       (1.5)
Share of profit of associates                           0.1           -
-----------------------------------------------------------------------
Operating profit                             2        163.2       144.4
Finance income                                         48.8        45.3
Fair value losses on financing derivatives            (18.1)          -
Finance costs                                3        (79.8)      (69.1)
-----------------------------------------------------------------------
Net finance costs                                     (49.1)      (23.8)
-----------------------------------------------------------------------
Profit before tax                                     114.1       120.6
Income tax expense                           4        (30.8)      (29.0)
-----------------------------------------------------------------------
Profit for the period from continuing 
operations                                             83.3        91.6
Discontinued operations
Profit for the period from discontinued 
operations                                   5         25.6        57.8
-----------------------------------------------------------------------
Profit for the period                                 108.9       149.4
-----------------------------------------------------------------------
Attributable to:
Equity holders of Scottish Power plc                  108.3       148.4
Minority interests
- equity (continuing operations)                        0.6         0.1
- non-equity (discontinued operations)                    -         0.9
-----------------------------------------------------------------------
                                                      108.9       149.4
-----------------------------------------------------------------------
Basic earnings per share                     7
- Continuing operations                                4.51p       5.00p
- Discontinued operations                              1.39p       3.10p
-----------------------------------------------------------------------
- Continuing and discontinued operations               5.90p       8.10p
-----------------------------------------------------------------------
Diluted earnings per share                   7
- Continuing operations                                4.48p       4.89p
- Discontinued operations                              1.39p       2.95p
-----------------------------------------------------------------------
- Continuing and discontinued operations               5.87p       7.84p
-----------------------------------------------------------------------

The Notes on pages X to X form part of these Accounts.

Group Statement of Recognised Income and Expense
for the three months ended 30 June 2005
                                                         Three months
                                                        ended 30 June

                                                       2005        2004
                                                       GBPm        GBPm
-----------------------------------------------------------------------
Gains on effective cash flow hedges recognised        385.0           -
Exchange movement on translation of overseas 
results and net assets                                139.9        44.3
Losses on net investment hedges                      (172.1)      (44.3)
Actuarial (losses)/gains on retirement benefits      (138.8)       83.9
Tax on items taken directly to equity                 (21.6)      (30.2)
Cumulative adjustment for the implementation of 
IAS 39 (net of tax)                                   264.5           -
-----------------------------------------------------------------------
Net income recognised directly in equity              456.9        53.7
Gain removed from equity and recognised in the 
period                                                 (8.9)          -
Tax on items transferred from equity                    2.5           -
Profit for the period                                 108.9       149.4
-----------------------------------------------------------------------
Total recognised income and expense for the period    559.4       203.1
-----------------------------------------------------------------------
Attributable to:
Equity holders of Scottish Power plc                  558.8       202.1
Minority interests
- equity                                                0.6         0.1
- non-equity                                              -         0.9
-----------------------------------------------------------------------
                                                      559.4       203.1
-----------------------------------------------------------------------

Group Statement of Changes in Equity
for the three months ended 30 June 2005
                                                         Three months
                                                        ended 30 June

                                                       2005        2004
                                                       GBPm        GBPm
-----------------------------------------------------------------------
Profit for the period                                 108.9       149.4
Net income recognised directly in equity              456.9        53.7
Gain removed from equity and recognised in period 
(net of tax)                                           (6.4)          - 
Dividends                                            (139.4)     (112.9)
Share capital issued                                   12.1         9.5
Consideration paid in respect of purchase of own 
shares held under trust                                (1.9)      (27.9)
Credit in respect of employee share awards              2.3         1.4
Consideration received in respect of sale of own 
shares held under trust                                 6.9         4.4
Reclassification of non-equity minority interests on 
implementation of IAS 32                              (52.5)          -
Net movement in non-equity minority interests             -        (4.3)
-----------------------------------------------------------------------
Net movement in equity                                386.9        73.3
Opening equity                                      3,957.1     4,574.8
-----------------------------------------------------------------------
Closing equity                                      4,344.0     4,648.1
-----------------------------------------------------------------------

The Notes on pages X to X form part of these Accounts.

Group Cash Flow Statement
for the three months ended 30 June 2005
                                                         Three months
                                                        ended 30 June

                                                       2005        2004
                                         Note          GBPm        GBPm
-----------------------------------------------------------------------
Continuing operations
Operating activities
Cash generated from operations                        180.8        44.6
Interest paid                                         (32.5)      (46.9)
Interest received                                      18.5        23.9
Income taxes paid                                      (2.9)      (10.9)
Reallocation (to)/from discontinued 
operations                                             (4.8)        9.6
-----------------------------------------------------------------------
Net cash from operating activities                    159.1        20.3
-----------------------------------------------------------------------
Continuing operations
Investing activities
Purchase of property, plant and equipment            (222.8)     (102.0)
Purchase of intangible assets                          (0.9)       (3.9)
Deferred income received                                5.6         4.2
Proceeds from sale of property, plant and 
equipment                                               0.4         0.4
(Purchase)/sale of fixed asset investments            (12.1)        1.4
Equity investment in discontinued operations          (67.4)          -
Dividend received from discontinued 
operations                                             27.4        26.7
Purchase of subsidiaries                                  -      (318.6)
Sale of businesses and subsidiaries                       -        (0.8)
-----------------------------------------------------------------------
Net cash used in investing activities                (269.8)     (392.6)
-----------------------------------------------------------------------
Continuing operations
Financing activities
Issue of share capital                                 12.1         9.5
Dividends paid to company's equity holders           (140.9)     (112.9)
Net consideration received/(paid) in respect 
of own shares held under trust                          5.6       (23.5)
Proceeds from/(repayments of) borrowings                5.8       (82.3)
Reallocation from discontinued operations                 -        67.7
-----------------------------------------------------------------------
Net cash used in financing activities                (117.4)     (141.5)
-----------------------------------------------------------------------
Net decrease in net cash and cash equivalents 
- continuing operations                              (228.1)     (513.8)
Net (decrease)/increase in net cash and cash 
equivalents - discontinued operations        5        (17.2)       15.3
-----------------------------------------------------------------------
Net decrease in net cash and cash equivalents        (245.3)     (498.5)
-----------------------------------------------------------------------

Movement in Net Cash and Cash Equivalents from Continuing Operations
for the three months ended 30 June 2005

                                                         Three months
                                                        ended 30 June

                                                       2005        2004
                                         Note          GBPm        GBPm
-----------------------------------------------------------------------
Continuing operations
Net cash and cash equivalents at 
beginning of period - continuing 
operations                                          1,629.9     1,312.8
Increase in net cash and cash equivalents  
on implementation of IAS 39                             0.7           -
Net decrease in net cash and cash 
equivalents                                          (228.1)     (513.8)
Effect of foreign exchange rate changes                 4.7         1.6
IAS 39 movement                                         1.6           -
-----------------------------------------------------------------------
Net cash and cash equivalents at end of 
period - continuing operations             (i)      1,408.8       800.6
-----------------------------------------------------------------------

(i) Net cash and cash equivalents from continuing operations at 30 June 2005 comprises cash and cash equivalents of 
GBP1,410.3 million less bank overdrafts of GBP1.5 million.

Reconciliation of Net Movement in Net Cash and Cash Equivalents to Movement in Net Debt
for the three months ended 30 June 2005

                                                         Three months
                                                        ended 30 June

                                                                 2005
                                                                 GBPm
---------------------------------------------------------------------
Net debt at end of previous period - as reported under UK 
GAAP                                                         (4,147.0)
Net debt at end of previous period - discontinued 
operations                                                    2,236.8
---------------------------------------------------------------------
Net debt at end of previous period - continuing 
operations                                                   (1,910.2)
IFRS adjustments to net debt at end of previous period 
- continuing operations                                        (117.0)
Increase in net debt on implementation of IAS 39 on 
1 April 2005 - continuing operations                            (17.8)
---------------------------------------------------------------------
Net debt at 1 April 2005 as restated under IFRS - continuing 
operations                                                   (2,045.0)
Continuing operations:
Decrease in net cash and cash equivalents                      (228.1)
Inflow of net cash and cash equivalents from increase in debt    (5.8)
Foreign exchange                                                (67.8)
IAS 39 movement                                                 (26.1)
Other non-cash and cash equivalent movements                    (13.7)
---------------------------------------------------------------------
Net debt at end of period - continuing operations            (2,386.5)
---------------------------------------------------------------------

The Notes on pages X to X form part of these Accounts.

Group Balance Sheet
as at 30 June 2005
                                         30 June     30 June    31 March
                                            2005        2004        2005
                                Notes       GBPm        GBPm        GBPm
------------------------------------------------------------------------
Non-current assets
Intangible assets
- goodwill                                  92.5     1,879.3       885.1
- other intangible assets                  147.1       390.5       409.5
Property, plant and equipment            4,964.3     8,959.5     9,334.9
Investments accounted for 
using the equity method                     67.1        68.2        53.1
Other investments                              -       126.6       120.3
Trade and other receivables                  2.0        57.9        56.2
Derivative financial instruments           715.5           -           -
Finance lease receivables                  163.9       176.1       158.4
------------------------------------------------------------------------
Non-current assets                       6,152.4    11,658.1    11,017.5
------------------------------------------------------------------------
Current assets
Inventories                                276.1       306.8       185.4
Trade and other receivables                853.4     1,216.1     1,675.5
Derivative financial instruments           860.3           -           -
Finance lease receivables                   18.2        25.5        17.3
Cash and cash equivalents                1,410.3       844.4     1,747.8
Assets classified as held for sale   5   7,048.0           -           -
------------------------------------------------------------------------
Current assets                          10,466.3     2,392.8     3,626.0
------------------------------------------------------------------------
Total assets                            16,618.7    14,050.9    14,643.5
------------------------------------------------------------------------
Current liabilities
Loans and other borrowings                (245.5)     (544.7)     (547.1)
Obligations under finance leases           (12.8)      (19.8)      (14.5)
Derivative financial instruments          (335.6)          -           -
Trade and other payables                (1,143.9)   (1,220.5)   (1,632.9)
Current tax liabilities                   (328.9)     (245.8)     (338.9)
Short-term provisions                       (2.3)     (130.9)      (80.1)
Liabilities classified as held for 
sale                                 5  (4,717.5)          -           -
------------------------------------------------------------------------
Current liabilities                     (6,786.5)   (2,161.7)   (2,613.5)
------------------------------------------------------------------------
Non-current liabilities
Loans and other borrowings              (3,460.6)   (4,580.4)   (5,362.2)
Obligations under finance leases           (77.9)     (179.9)     (158.8)
Derivative financial instruments          (342.7)          -           -
Trade and other payables                       -           -        (2.7)
Retirement benefit obligations            (247.1)     (512.0)     (635.5)
Deferred tax liabilities                  (850.7)   (1,111.1)   (1,161.4)
Long-term provisions                       (27.9)     (273.2)     (182.2)
Deferred income                           (481.3)     (584.5)     (570.1)
------------------------------------------------------------------------
Non-current liabilities                 (5,488.2)   (7,241.1)   (8,072.9)
------------------------------------------------------------------------
Total liabilities                      (12,274.7)   (9,402.8)  (10,686.4)
------------------------------------------------------------------------
Net assets                           2   4,344.0     4,648.1     3,957.1
------------------------------------------------------------------------
Equity
Share capital                              934.1       931.1       932.7
Share premium                            2,305.4     2,283.9     2,294.7
Other reserves                             430.5       424.7       430.5
Hedge reserve                              639.0           -           -
Translation reserve                        494.3       484.6       484.6
Retained (loss)/earnings                  (463.1)      466.2      (241.1)
------------------------------------------------------------------------
Equity attributable to equity holders
of Scottish Power plc                    4,340.2     4,590.5     3,901.4
Minority interests
- equity                                     3.8         3.5         3.2
- non-equity                                   -        54.1        52.5
------------------------------------------------------------------------
Total equity                             4,344.0     4,648.1     3,957.1
------------------------------------------------------------------------
Net asset value per ordinary share   7     236.0p      250.2p      212.9p
------------------------------------------------------------------------

The Notes on pages X to X form part of these Accounts.

Approved by the Board on 10 August 2005 and signed on its behalf by

Charles Miller Smith Chairman  Simon Lowth Executive Director,Finance     
                               and Strategy




Notes to the quarterly Accounts
For the three months ended 30 June 2005 

1 Basis of preparation

(a) The quarterly Accounts have been prepared in accordance with International Financial Reporting Standards ("IFRS") 
issued by the International Accounting Standards Board ("IASB") and which have either been endorsed by the European 
Union ("EU") or where there is a reasonable expectation of endorsement by the EU as at 31 March 2006. With the 
exception of financial instruments, these quarterly Accounts have been prepared on the basis of the group's accounting
policies under IFRS set out on pages 173 to 178 of the group's Annual Report & Accounts for the year ended 31 March 
2005. Due to the continuing work of the IASB, further standards, amendments and interpretations could be applicable for
the group's Accounts for the year ending 31 March 2006 as practice continues to evolve. Consequently, the group's 
accounting policies may change prior to the publication of those Accounts. On transition to IFRS, the group has taken 
advantage of the following exemptions contained within IFRS 1 'First-time Adoption of International Financial
Reporting Standards':
- Business combinations: The group has elected not to restate business combinations accounted for prior to 1 
  April 2004, the group's date of transition to IFRS. Acquisitions after this date, namely Damhead Creek and Brighton 
  Power Station, have been restated to comply with IFRS 3 'Business Combinations';
- Revaluation as deemed cost: Manweb distribution assets, which were last revalued in 1997, have been deemed to 
  be recorded at cost;
- Employee benefits: The cumulative actuarial losses relating to retirement benefits at the date of transition to IFRS
  have been recognised in retained earnings;
- Financial instruments: The group has elected not to prepare comparative information in accordance with IAS 32 
 'Financial Instruments: Disclosure and Presentation' and IAS 39 'Financial Instruments: Recognition and Measurement'. 
  These standards have been applied with effect from 1 April 2005. The combined incremental effect of the
  implementation of IAS 32 and IAS 39 on the group's balance sheet at 1 April 2005, based on the portfolio of contracts 
  in place at this date, was an increase in net assets of GBP213 million, net of deferred tax of GBP91 million, and after 
  reclassification of non-equity minority interests as liabilities. The quarterly Accounts for the period ended 30
  June 2005 have been prepared in accordance with the financial instruments accounting policies under IFRS set out on
  pages 187 to 190 of the group's Annual Report & Accounts for the year ended 31 March 2005. The comparative figures 
  have been prepared on the basis of the financial instruments accounting policies as set out on pages 176 to 177 of 
  the group's Annual Report & Accounts for the year ended 31 March 2005; and 
- Share-based payment: The group has applied IFRS 2 'Share-based Payment' to equity instruments granted after 7 
  November 2002 only. 
The group has elected not to take advantage of the IFRS 1 exemption to reset the foreign currency translation reserve 
to zero at the date of transition to IFRS.

(b) The format of the Group Income Statement has been prepared in accordance with the requirements of IAS 1 
'Presentation of Financial Statements' and reflects the impact of the adoption of IAS 32 and IAS 39 with effect from 1
April 2005. The effects of accounting for derivatives in  accordance with IAS 39 have been included in the Group
Income Statement under the line item 'Fair value losses on operating derivatives' to the extent they relate to 
operating activities, and 'Fair value losses on financing derivatives' to the extent they relate to financing 
activities. These line items comprise;
- the unwind, during the quarter, of the opening mark-to-market position of the group's contracts within the scope of 
  IAS 39 at 1 April 2005, to the extent that they do not qualify for hedge accounting. In future quarters this unwind 
  will comprise the unwind of the immediately prior quarter's balance sheet mark-to-market position;
- the mark-to-market movements during the quarter; and
- cash-flow hedge ineffectiveness (as defined in IAS 39).

(c) The quarterly Accounts are unaudited but have been formally reviewed by the auditors and their report to the 
company is set out on page X. The information shown for the year ended 31 March 2005 does not constitute statutory 
Accounts within the meaning of Section 240 of the Companies Act 1985 and has been extracted from the IFRS Financial
Information set out on pages 173 to 184 of the group's Annual Report & Accounts for the year ended 31 March 2005, as
amended for the adoption of IFRS 5 'Non-current Assets Held for Sale and Discontinued Operations'. The group's 
Annual Report & Accounts for the year ended 31 March 2005, prepared under UK GAAP, have been filed with the Registrar 
of Companies. The report of the auditors on these Accounts was unqualified and did not contain a Statement under 
either Section 237(2) or Section 237(3) of the Companies Act 1985.

(d) The relevant exchange rates applied in the preparation of these quarterly Accounts were $1.86/GBP (average rate for 
the three month period to 30 June 2005), $1.79/GBP (closing rate as at 30 June 2005), $1.81/GBP (average rate for the three
month period to 30 June 2004), $1.81/GBP (closing  rate as at 30 June 2004) and $1.89/GBP (closing rate as at 31 
March 2005).

2 Segmental information

For management purposes, the group is currently organised into three continuing operating divisions, Infrastructure 
Division - Power Systems, UK Division - Integrated Generation and Supply, and PPM Energy and therefore reports its 
primary segment information on this basis. PacifiCorp, the group's regulated US business, is included within the 
discontinued operations segment following the group's decision to dispose of the business. The results of this 
discontinued operation are disclosed in Note 5.

The group has also reviewed the classification, for segmental purposes, of revenue, operating profit, total assets and
total liabilities relating to corporate activities (previously allocated across business segments) and to the
non-regulated businesses, previously included within the PacifiCorp segment, which are not included in the sale 
of PacifiCorp. These are now included within 'Unallocated' in the segmental analyses below. A reconciliation of 
operating profit for the quarter ended 30 June 2004 under UK GAAP on the previous segmental basis to operating profit
under IFRS on the revised segmental basis is provided in Note 10(c).

(a) Revenue by segment
                                Three months ended 30 June
                       Total revenue    Inter-segment    External revenue
                                            revenue
                       2005     2004     2005     2004     2005     2004
                Notes  GBPm     GBPm     GBPm     GBPm     GBPm     GBPm
------------------------------------------------------------------------
Continuing 
operations
United Kingdom
Infrastructure 
Division - Power 
Systems               203.1    169.1    (71.2)   (82.3)   131.9     86.8
UK Division - 
Integrated 
Generation and 
Supply                840.3    727.2     (3.9)    (6.8)   836.4    720.4
------------------------------------------------------------------------
United Kingdom 
total               1,043.4    896.3    (75.1)   (89.1)   968.3    807.2
------------------------------------------------------------------------
Continuing 
operations
United States
PPM Energy            113.3    137.9        -        -    113.3    137.9
------------------------------------------------------------------------
United States 
total                 113.3    137.9        -        -    113.3    137.9
------------------------------------------------------------------------
Unallocated 
revenue       (i)                                           2.4     10.5
------------------------------------------------------------------------
Total        (ii)                                       1,084.0    955.6
------------------------------------------------------------------------

(i) Unallocated revenue comprises revenue of the non-regulated businesses, previously included within the PacifiCorp 
segment, which are not included in the sale of PacifiCorp.

(ii) In the segmental analysis revenue is shown by geographical origin. Revenue analysed by geographical destination
is not materially different.


(b) Operating profit by segment                                    
                               Three months ended 30 June
                                 Associates and jointly
                           Group     controlled entities      Total
                                                    
                       2005     2004     2005     2004     2005     2004
                Note   GBPm     GBPm     GBPm     GBPm     GBPm     GBPm
------------------------------------------------------------------------
Continuing 
operations
United Kingdom
Infrastructure 
Division - Power 
Systems               123.9    101.2     (0.9)    (0.2)   123.0    101.0
UK Division - 
Integrated 
Generation 
and Supply             44.3     23.8      0.3     (1.1)    44.6     22.7
------------------------------------------------------------------------
United Kingdom 
total                 168.2    125.0     (0.6)    (1.3)   167.6    123.7
------------------------------------------------------------------------
Continuing 
operations
United States
PPM Energy              2.7      8.6     (0.1)    (0.2)     2.6      8.4
------------------------------------------------------------------------
United States 
total                   2.7      8.6     (0.1)    (0.2)     2.6      8.4
------------------------------------------------------------------------
Unallocated 
(expense)/
income          (i)    (7.0)    12.3        -        -     (7.0)    12.3
------------------------------------------------------------------------
Total                 163.9    145.9     (0.7)    (1.5)   163.2    144.4
------------------------------------------------------------------------

(i) Unallocated (expense)/income comprises corporate office costs and the operating results of the non-regulated 
businesses, previously included within the PacifiCorp segment, which are not included in the sale of PacifiCorp.

(c) Fair value losses on operating derivatives
Included in operating profit above are fair value losses on operating derivatives as follows:

                           Three months ended 30 June
                    Unwind of     Unrealised     Hedge           Total
                     opening   (gains)/losses ineffectiveness
                     position

                    2005   2004   2005   2004   2005   2004   2005   2004
                    GBPm   GBPm   GBPm   GBPm   GBPm   GBPm   GBPm   GBPm
-------------------------------------------------------------------------
Continuing 
operations
United Kingdom
Infrastructure 
Division
- Power Systems        -      -      -      -      -      -      -      -
UK Division - 
Integrated
Generation and 
Supply              21.5      -   (9.2)     -   (0.7)     -   11.6      -
-------------------------------------------------------------------------
United Kingdom 
total               21.5      -   (9.2)     -   (0.7)     -   11.6      -
-------------------------------------------------------------------------
Continuing 
operations
United States
PPM Energy          (2.6)     -    5.8      -    0.1      -    3.3      -
-------------------------------------------------------------------------
United States 
total               (2.6)     -    5.8      -    0.1      -    3.3      -
-------------------------------------------------------------------------
Total               18.9      -   (3.4)     -   (0.6)     -   14.9      -
-------------------------------------------------------------------------

(d) Total assets and liabilities by segment

                            Total assets          Total liabilities
                    30 June  30 June 31 March  30 June  30 June 31 March
                       2005     2004     2005     2004     2005     2004
                Note   GBPm     GBPm     GBPm     GBPm     GBPm      GBPm
-------------------------------------------------------------------------
Continuing 
operations
United Kingdom
Infrastructure 
Division - 
Power Systems       3,181.4  3,007.2  3,157.8   (647.4)  (852.1)   (694.9)
UK Division - 
Integrated  
Generation and 
Supply              3,637.8  2,057.0  2,579.0   (894.8)  (711.3)   (805.1)
-------------------------------------------------------------------------
United Kingdom 
total               6,819.2  5,064.2  5,736.8 (1,542.2)(1,563.4) (1,500.0)
-------------------------------------------------------------------------
Continuing 
operations
United States
PPM Energy          1,106.9    693.9    667.5   (418.6)  (131.6)   (195.2)
-------------------------------------------------------------------------
United States 
total               1,106.9    693.9    667.5   (418.6)  (131.6)   (195.2)
-------------------------------------------------------------------------
Total continuing 
operations          7,926.1  5,758.1  6,404.3 (1,960.8)(1,695.0) (1,695.2)
-------------------------------------------------------------------------
Discontinued 
operations 
- PacifiCorp 
(United States)     7,048.0  6,842.5  5,916.1 (4,717.5)(1,013.4) (1,068.4)
Unallocated 
assets/
(liabilities)  (i)  1,644.6  1,450.3  2,323.1 (5,596.4)(6,694.4) (7,922.8)
-------------------------------------------------------------------------
Total              16,618.7 14,050.9 14,643.5(12,274.7)(9,402.8)(10,686.4)
-------------------------------------------------------------------------

(i) Unallocated assets/(liabilities) include net debt,tax liabilities, retirement benefit obligations, investments 
and treasury-related derivatives. Unallocated assets/(liabilities) at 30 June 2004 and 31 March 2005 relate to both 
continuing and discontinued operations. Unallocated assets/(liabilities) at 30 June 2005 relate solely to continuing
operations. All assets/(liabilities) relating to PacifiCorp at 30 June 2005 are included in Discontinued operations - 
PacifiCorp (United States).

(ii) Investments in associates and jointly controlled entities included in Total assets by segment are as follows: 
Infrastructure Division - Power Systems GBP1.9 million (30 June 2004 GBP5.5 million, 31 March 2005 GBP3.2 million), UK 
Division - Integrated Generation and Supply GBP11.3 million (30 June 2004 GBP31.9 million, 31 March 2005 GBP11.1 million), 
PPM Energy GBP53.9 million (30 June 2004 GBP22.3 million, 31 March 2005 GBP38.8 million) and Unallocated assets/(liabilities) 
GBPnil (30 June 2004 GBP8.5 million,31 March 2005 GBPnil).

3 Finance costs
                                                       2005        2004
                                                       GBPm        GBPm
-----------------------------------------------------------------------
Interest charge                                        54.3        40.6
Unwinding of discount on provisions                     0.2         3.2
Interest on retirement benefit obligations             25.3        25.3
-----------------------------------------------------------------------
Total                                                  79.8        69.1
-----------------------------------------------------------------------

The net amount credited to net finance costs in respect of retirement benefits for the quarter ended 30 June 2005 is 
GBP2.6 million (2004 GBP1.6 million) after crediting the expected return on retirement benefit assets of GBP27.9 million 
(2004 GBP26.9 million) included within finance income.

4 Income tax expense

Income tax expense includes deferred tax and is computed as follows:

(a) Tax is calculated on the profits for the period, before taking account of the income statement effect of any 
adjustments to the measurement and classification of financial instruments required by IAS 39, at the anticipated 
annual effective rate applicable to these profits.

(b) Adjustments to profit arising from the application of measurement and classification rules for financial
instruments contained in IAS 39 are tax effected, as appropriate, at the applicable territorial rate.

(c) One-off charges or credits to income taxes relating to prior-year items are recognised in the quarter in which 
they arise.

5 Discontinued operations

On 24 May 2005, the group entered into a sale agreement to dispose of PacifiCorp, the group's regulated US business. 
This operation has been classified as a disposal group held for sale and a discontinued operation in accordance with
IFRS 5 as of that date.

The results of the discontinued operation, which have been included in the Group Income Statement, are as follows:

                                                         Three months
                                                        ended 30 June
                                                       2005       2004
                                           Notes       GBPm       GBPm
----------------------------------------------------------------------
Revenue                                               517.4      525.2
Fair value gains on operating derivatives               0.8          -
Depreciation and amortisation                (i)      (32.1)     (54.2)
Other net operating costs                            (345.8)    (359.2)
----------------------------------------------------------------------
Operating profit                                      140.3      111.8
Net finance costs                           (ii)      (94.5)     (24.8)
----------------------------------------------------------------------
Profit before tax                                      45.8       87.0
Attributable tax expense                              (20.2)     (29.2)
----------------------------------------------------------------------
Profit after tax                                       25.6       57.8
----------------------------------------------------------------------

(i) The depreciation and amortisation charge for the quarter ended 30 June 2005 of GBP32.1 million represents the 
depreciation and amortisation charged for the period until 23 May 2005. Under IFRS, non-current assets held for sale 
are not subject to depreciation or amortisation and therefore, the above results, did not include charges of GBP23.0 
million in relation to depreciation and amortisation for the period from 24 May 2005 to 30 June 2005.

(ii) An analysis of net finance costs for the periods ended 30 June 2005 and 30 June 2004 is given below:
                                 
                                                         Three months
                                                        ended 30 June
                                                       2005       2004
                                                       GBPm       GBPm
----------------------------------------------------------------------
Interest charge                                        45.6       49.7
Interest receivable                                    (4.9)     (11.0)
Net interest cost on retirement benefit obligations     1.0        1.4
----------------------------------------------------------------------
                                                       41.7       40.1
----------------------------------------------------------------------
Other finance items allocated to discontinued 
operations
Fair value losses on financing derivatives             18.1          -
Interest rate differential                            (11.4)     (15.3)
Loss following de-designation of net investment 
hedges                                                 46.1          -
----------------------------------------------------------------------
                                                       52.8      (15.3)
----------------------------------------------------------------------
Net finance costs                                      94.5       24.8
----------------------------------------------------------------------

Net finance costs include the UK/US interest rate differential benefit of GBP11.4 million (2004 GBP15.3 million) and the 
loss following de-designation of net investment hedges of GBP46.1 million (2004 GBPnil) arising from the group's US dollar
hedging programme relating to PacifiCorp's net assets. This programme will terminate following completion of the sale 
of PacifiCorp.

The cash flows of the discontinued operation, which have been included in the Group Cash Flow Statement, are as
follows:

                                                         Three months
                                                        ended 30 June
                                                       2005       2004
                                                       GBPm       GBPm

----------------------------------------------------------------------
Net cash from operating activities                     85.3       41.5
Net cash used in investing activities                 (67.7)    (108.2)
Net cash (used in)/provided by financing activities   (34.8)      82.0
----------------------------------------------------------------------
Net (decrease)/increase in net cash and cash 
equivalents - discontinued operations                 (17.2)      15.3
----------------------------------------------------------------------

5 Discontinued operations continued

The major classes of assets and liabilities comprising the operations classified as held for sale are as follows:
                                                               30 June
                                                                  2005
                                                                  GBPm
----------------------------------------------------------------------
Goodwill                                                         838.9
Other intangible assets                                          193.3
Property, plant and equipment                                  4,908.0
Investments                                                      137.0
Inventories                                                      103.2
Trade and other receivables                                      473.2
Derivative financial instruments                                 295.2
Cash and cash equivalents                                         99.2
----------------------------------------------------------------------
Total assets classified as held for sale                       7,048.0
----------------------------------------------------------------------
Loans and other borrowings                                    (2,610.5) 
Derivative financial instruments                                (423.4)
Trade and other payables                                        (348.9)
Retirement benefit obligations                                  (528.7)
Deferred tax liabilities                                        (526.6)
Provisions                                                      (177.8)
Deferred income                                                 (101.6)
----------------------------------------------------------------------
Total liabilities classified as held for sale                 (4,717.5)
----------------------------------------------------------------------
Net assets of disposal group                                   2,330.5
----------------------------------------------------------------------

Cumulative amounts (net of tax) recognised directly in equity at 30 June 2005 relating to discontinued operations
include net foreign exchange gains of GBP484.6 million included in the translaton reserve, hedge gains of GBP57.1 million 
included in the hedge reserve and net actuarial losses on retirement benefits of GBP62.4 million included in retained
loss. 

6 Dividends
                                  Three months
                                 ended 30 June
                             2005         2004             Three months
                        pence per    pence per            ended 30 June
                         ordinary     ordinary       2005          2004
                            share        share       GBPm          GBPm
-----------------------------------------------------------------------
Dividend paid for the 
quarter ended 31 March       7.65         6.25      139.4         112.9
-----------------------------------------------------------------------
Proposed first interim 
dividend                     5.20         4.95       96.0          91.1
-----------------------------------------------------------------------

The proposed first interim dividend of 5.20 pence per ordinary share is payable on 28 September 2005 to shareholders
on the register at 19 August 2005. A first interim dividend of 4.95 pence per share was declared in respect of the
three months ended 30 June 2004. The proposed first interim dividend was approved by the Board on 10 August 2005 and
has not been included as a liability in these Accounts.

7 Earnings and net asset value per ordinary share

(a) Earnings per ordinary share have been calculated for both periods by dividing the profit for the period 
(as adjusted for minority interests) by the weighted average number of ordinary shares in issue during the period, 
based on the following information:
                                                         Three months
                                                        ended 30 June
                                                      2005         2004
-----------------------------------------------------------------------
Basic earnings per share
Profit attributable to equity holders of Scottish 
Power plc (GBP million)
- Continuing                                          82.7         91.5
- Discontinued                                        25.6         56.9
- Continuing and Discontinued                        108.3        148.4
Weighted average share capital (number of shares, 
million)                                           1,834.1      1,831.8
-----------------------------------------------------------------------
Diluted earnings per share
Profit attributable to equity holders of Scottish 
Power plc (GBP million)
- Continuing                                          82.7         94.4
- Discontinued                                        25.6         56.9
- Continuing and Discontinued                        108.3        151.3
Weighted average share capital (number of shares, 
million)                                           1,843.9      1,929.8
-----------------------------------------------------------------------

The difference between the basic and diluted weighted average share capital is attributable to outstanding share
options and shares held in trust for the group's employee share schemes and, for the three months ended 30 June 
2004, the group's convertible bonds.

7 Earnings and net asset value per ordinary share continued

(b) As explained in Note 1(a), the group has applied IAS 32 and IAS 39 from 1 April 2005 and, as permitted by IFRS 1,
comparative figures have not been restated.  In order to provide a more comparable measure of performance, 
quarter-on-quarter, an adjusted earnings per share has been calculated. For the current quarter, this adjusted measure 
excludes the effect of fair value gains and losses on derivative financial instruments for which there was no
equivalent in the prior quarter. For the prior quarter, the measure excludes the effect on profit of acquisition 
accounting fair value adjustments relating to commodity contracts which have been accounted for under IAS 39 from 1 
April 2005 but which are included in the prior quarter's results on an accruals accounting basis under the group's 
previous UK GAAP policies. This is in line with the adjustments made to the group's balance sheet at 1 April 2005 on 
implementation of IAS 39, as set out on pages 68 to 70 of the group's Annual Report & Accounts for the year ended 31 
March 2005. The prior quarter's results have also been adjusted to exclude the profit from proprietary trading, to be 
consistent with the exclusion, in the current quarter, of IAS 39 fair value gains and losses. As a consequence of these
adjustments, the results for both periods are presented on a comparable, contract-cost basis. The directors believe 
that the adjusted measure of earnings per share provides a better comparison of underlying business performance.

                                           Three months ended 30 June
                                       Continuing                   Total
                                    2005       2004       2005       2004
Adjusted basic earnings per 
share                        Note   GBPm       GBPm       GBPm       GBPm
-------------------------------------------------------------------------
Profit attributable to 
equity holders of Scottish 
Power plc                           82.7       91.5      108.3      148.4
Adjusting items
- onerous contract 
releases/intangible assets 
charges relating 
to commodity contracts in 
prior quarter                          -      (11.9)         -      (11.9)
- proprietary trading profit 
in prior quarter                       -       (4.1)         -       (4.3)
- fair value losses on 
operating derivatives in 
current quarter                     14.9          -       14.1          -
- fair value losses on 
financing derivatives in 
current quarter                     18.1          -       36.2          -
- loss following 
de-designation of net 
investment hedges             (i)      -          -       46.1          -
- PacifiCorp depreciation 
24 May - 30 June             (ii)      -          -      (23.0)         -
- tax on adjusting items           (10.2)       5.0      (20.4)       5.1
-------------------------------------------------------------------------
Adjusted profit attributable 
to equity holders of 
Scottish Power plc                 105.5       80.5      161.3      137.3
-------------------------------------------------------------------------
Weighted average share 
capital (number of shares, 
millions)                        1,834.1    1,831.8    1,834.1    1,831.8
-------------------------------------------------------------------------
Adjusted basic earnings 
per share                           5.75p      4.39p      8.79p     7.50p
-------------------------------------------------------------------------

(i) The profit from discontinued operations includes a loss of GBP46.1 million following de-designation of net 
investment hedges subsequent to the impairment of PacifiCorp goodwill at 31 March 2005. As there is no equivalent 
charge in the prior quarter, the adjusted profit for Total operations above excludes this loss.

(ii) IFRS 5 requires that depreciation and amortisation of non-current assets of a disposal group held for sale is 
ceased from the date the disposal group is classified as held for sale. Therefore, no charge for depreciation or 
amortisation of PacifiCorp's non-current assets for the period 24 May 2005 to 30 June 2005 has been included in the 
Group Income Statement. In order to provide a comparison with the prior period, the adjusted profit above includes the
charge that would have been recognised had IFRS 5 not been applied.

(c) Net asset value per ordinary share has been calculated based on the net assets (after adjusting for minority 
interests) and the number of shares in issue (after adjusting for the effect of shares held in trust) at the end of the
respective financial periods:
                                       30 June      30 June    31 March
                                          2005         2004        2005
-----------------------------------------------------------------------
Net assets (as adjusted) (GBP million) 4,340.2      4,590.5     3,901.4
Number of ordinary shares in issue at 
the period end (as adjusted) 
(number of shares, million)            1,838.9      1,834.9     1,832.3
-----------------------------------------------------------------------
8 Contingent liabilities

In May 2004, PacifiCorp was served with a complaint filed in the US District Court for the District of Oregon by the Klamath Tribes of Oregon and certain of the Klamath Tribes' members. The claim generally alleges that PacifiCorp and its predecessors affected the Klamath Tribes' federal treaty rights to fish for salmon in the headwaters of the Klamath River in southern Oregon by building dams that blocked the passage of salmon upstream to the headwaters beginning in 1911. The claim seeks in excess of $1.0 billion in damages. In February 2005, PacifiCorp filed a motion for summary judgement seeking dismissal of the Klamath Tribes' claims as untimely under the applicable statute of limitations. On 14 April 2005, the magistrate judge issued an opinion recommending that PacifiCorp's motion for summary judgement be granted and the case be dismissed as untimely. The Klamath Tribes filed their objections on 2 May 2005. PacifiCorp filed its response on 11 May 2005. On 14 July 2005 the district court entered a judgement dismissing the Klamath Tribes' case against PacifiCorp. On 22 July 2005 the Klamath Tribes filed a motion to amend the judgement which PacifiCorp opposed on 3 August 2005. Any final order will be capable of appeal by the affected party and a decision from any such appeal is expected to take 18 to 24 months.

There have been no material changes to the group's contingent liabilities disclosed in the 2004/05 Annual Report & Accounts other than disclosed above.

9 Subsequent events

On 27 July 2005, the group announced the sale of its underground natural gas storage project at Byley to E.ON UK plc for GBP96 million. The transaction also includes ScottishPower securing a 15-year gas storage contract for a proportion of the facility's capacity.

10 Reconciliation of previously reported financial statements under UK GAAP to IFRS

The reconciliations of equity at 1 April 2004 (the group's date of transition to IFRS) and at 31 March 2005 (the date of the group's last UK GAAP financial statements) and the reconciliation of loss for the year ended 31 March 2005, as required by IFRS 1, including significant accounting policies, were included in the group's Annual Report & Accounts for the year ended 31 March 2005.

The reconciliation of profit for the three months ended 30 June 2004, the reconciliation of equity at 30 June 2004, and an explanation of the differences in the consolidated statement of cash flows for the three months ended 30 June 2004 have been included below. An updated reconciliation of loss for the year ended 31 March 2005 has also been included in these Accounts following the reclassification of PacifiCorp as a discontinued operation in accordance with IFRS 5.

10 Reconciliation of previously reported financial statements under UK GAAP to IFRS continued

(a) Reconciliation of the group profit and loss account under UK GAAP to the group income statement under IFRS for the quarter ended 30 June 2004

                                                   Other
                                                    IFRS
                                             adjustments
                                        IFRS   ---------
                                     Reclass      Income
                                  UK ificat-       taxes
                                GAAP    Ions      IAS 12
                                GBPm    GBPm        GBPm
Continuing operations
Revenue                      1,481.3   (0.5)           -
Cost of sales                (962.4)       -           -
------------------------- ---------- -------   ---------
Gross profit                   518.9   (0.5)           -
Transmission and
distribution costs           (148.9)       -           -
Administrative expenses      (156.3)       -           -
Other operating income           6.2       -           -
------------------------- ---------- -------   ---------
Operating profit
before jointly
controlled entities
and associates                 219.9   (0.5)           -
Share of profit/(loss)
of jointly
controlled entities              0.2   (1.7)           -
Share of profit
of associates                    0.2   (0.2)           -
------------------------- ---------- -------   ---------
Operating profit before
goodwill amortisation          250.3   (2.4)           -
Goodwill amortisation         (30.0)       -           -
------------------------- ---------- -------   ---------
Operating profit               220.3   (2.4)           -
Finance income                  30.8     5.5           -
Finance costs                 (80.7)   (3.3)           -
------------------------- ---------- -------   ---------
Net finance costs             (49.9)     2.2           -
------------------------- ---------- -------   ---------
Profit on ordinary
activities before
goodwill amortisation
and taxation                   200.4   (0.2)           -
Goodwill amortisation         (30.0)       -           -
------------------------- ---------- -------   ---------
Profit before tax              170.4   (0.2)           -
Income tax expense            (54.1)     0.2       (2.7)
------------------------- ---------- -------   ---------
Profit for the period
from
continuing operations          116.3       -       (2.7)
------------------------- ---------- -------   ---------
Discontinued operations
Profit for the period
from
discontinued operations            -       -           -
------------------------- ---------- -------   ---------
Profit for the period          116.3       -       (2.7)
                                       -----   ---------
Minority interests
- equity (continuing
operations)                    (0.1)
- non-equity
(discontinued operations)      (0.9)
------------------------- ---------- -------   ---------
Profit for the period
after minority interests       115.3
------------------------- ---------- -------   ---------
Earnings per share:
Basic earnings per
ordinary share                 6.29p
------------------------- ---------- -------   ---------
Diluted earnings
per ordinary share             6.12p
------------------------- ---------- -------   ---------

                                  Other IFRS adjustments
                               ----- -------      ---- ---------
                           Property,
                               plant             Empl-    Share-
                                 and              oyee     based
                              equip-  Leases     bene-      pay-
                                ment IAS 17/      fits     ments
                              IAS 16 IFRIC 4    IAS 19    IFRS 2
                                GBPm    GBPm      GBPm      GBPm
Continuing operations
Revenue                            -       -         -         -
Cost of sales                      -     1.8         -         -
------------------------- ---------- ------- --------- ---------
Gross profit                       -     1.8         -         -
Transmission and
distribution costs               0.3       -         -         -
Administrative expenses          0.1       -       6.0       0.5
Other operating income             -       -         -         -
------------------------- ---------- ------- --------- ---------
Operating profit
before jointly
controlled entities
and associates                   0.4     1.8       6.0       0.5
Share of profit/(loss)
of jointly
controlled entities                -       -         -         -
Share of profit
of associates                      -       -         -         -
------------------------- ---------- ------- --------- ---------
Operating profit before
goodwill amortisation            0.4     1.8       6.0       0.5
Goodwill amortisation              -       -         -         -
------------------------- ---------- ------- --------- ---------
Operating profit                 0.4     1.8       6.0       0.5
Finance income                     -     2.6      35.5         -
Finance costs                      -   (3.4)    (35.4)         -
------------------------- ---------- ------- --------- ---------
Net finance costs                  -   (0.8)       0.1         -
------------------------- ---------- ------- --------- ---------
Profit on ordinary
activities before
goodwill amortisation
and taxation                     0.4     1.0       6.1       0.5
Goodwill amortisation              -       -         -         -
------------------------- ---------- ------- --------- ---------
Profit before tax                0.4     1.0       6.1       0.5
Income tax expense             (0.1)     0.5     (2.2)         -
------------------------- ---------- ------- --------- ---------
Profit for the period
from
continuing operations            0.3     1.5       3.9       0.5
------------------------- ---------- ------- --------- ---------
Discontinued operations
Profit for the period
from
discontinued operations            -       -         -         -
------------------------- ---------- ------- --------- ---------
Profit for the period            0.3     1.5       3.9       0.5
                          ---------- ------- --------- ---------
Minority interests
- equity (continuing
operations)
- non-equity
(discontinued operations)
------------------------- ---------- ------- --------- ---------
Profit for the period
after minority interests
------------------------- ---------- ------- --------- ---------
Earnings per share:
Basic earnings per
ordinary share
------------------------- ---------- ------- --------- ---------
Diluted earnings
per ordinary share
------------------------- ---------- ------- --------- ---------



                             Other IFRS adjustments
                          -------  --------- ---------

                             Busi-             Discon-
                              Ness              tinued
                           combin-     Good-   operat-
                            Ations      will      ions
                            IFRS 3    IFRS 3    IFRS 5     IFRS
                              GBPm      GBPm      GBPm     GBPm
Continuing operations
Revenue                          -         -   (525.2)    955.6
Cost of sales                (0.4)         -     300.4  (660.6)
------------------------- --------  -------- ---------  -------
Gross profit                 (0.4)         -   (224.8)    295.0
Transmission and
distribution costs               -         -      80.4   (68.2)
Administrative expenses          -      30.0      33.3   (86.4)
Other operating income           -         -     (0.7)      5.5
------------------------- --------  -------- ---------  -------
Operating profit
before jointly
controlled entities
and associates               (0.4)      30.0   (111.8)    145.9
Share of profit/(loss)
of jointly
controlled entities              -         -         -    (1.5)
Share of profit
of associates                    -         -         -        -
------------------------- --------  -------- ---------  -------
Operating profit before
goodwill amortisation        (0.4)         -   (111.8)    144.4
Goodwill amortisation            -      30.0         -        -
------------------------- --------  -------- ---------  -------
Operating profit             (0.4)      30.0   (111.8)    144.4
Finance income                   -         -    (29.1)     45.3
Finance costs                (0.2)         -      53.9   (69.1)
------------------------- --------  -------- ---------  -------
Net finance costs            (0.2)         -      24.8   (23.8)
------------------------- --------  -------- ---------  -------
Profit on ordinary
activities before
goodwill amortisation
and taxation                 (0.6)         -    (87.0)    120.6
Goodwill amortisation            -      30.0         -        -
------------------------- --------  -------- ---------  -------
Profit before tax            (0.6)      30.0    (87.0)    120.6
Income tax expense             0.2         -      29.2   (29.0)
------------------------- --------  -------- ---------  -------
Profit for the period
from
continuing operations        (0.4)      30.0    (57.8)     91.6
------------------------- --------  -------- ---------  -------
Discontinued operations
Profit for the period
from
discontinued operations          -         -      57.8     57.8
------------------------- --------  -------- ---------  -------
Profit for the period        (0.4)      30.0         -    149.4
                          --------  -------- ---------  -------
Minority interests
- equity (continuing
operations)
- non-equity
(discontinued operations)
------------------------- --------  -------- ---------  -------
Profit for the period
after minority interests
------------------------- --------  -------- ---------  -------
Earnings per share:
Basic earnings per
ordinary share                                            8.10p
------------------------- --------  -------- ---------  -------
Diluted earnings
per ordinary share                                        7.84p
------------------------- --------  -------- ---------  -------

(b) Reconciliation of the group profit and loss account under 
UK GAAP to the group income statement under IFRS for the year 
ended 31 March 2005

                                                       Other
                                                        IFRS
                                                 adjustments
                                          IFRS      --------
                                       reclass        Income
                               UK      ificat-         taxes
                             GAAP         ions        IAS 12
                             GBPm         GBPm          GBPm

Continuing
operations
Revenue                   6,848.8        (2.9)             -
Cost of sales           (4,567.2)            -             -
------------------      ---------   ----------        ------
Gross profit              2,281.6        (2.9)             -
Transmission
and distribution
costs                     (606.2)            -             -
------------------      ---------   ----------        ------
Administrative
expenses before
goodwill
amortisation and
exceptional item          (511.3)            -             -
Goodwill
amortisation              (117.5)            -             -
Exceptional item
- impairment
of goodwill               (927.0)            -             -
------------------      ---------   ----------        ------
Administrative
expenses                (1,555.8)            -             -
Other operating
income                       33.0            -             -
------------------      ---------   ----------        ------
Operating profit
before jointly
controlled
entities
and associates              152.6        (2.9)             -
Share of
profit/(loss)
of jointly
controlled
entities                      2.2        (4.4)             -
Share of profit
of associates                 3.8        (1.6)             -
------------------      ---------   ----------        ------
Operating profit
before
goodwill
amortisation
and exceptional
item                      1,203.1        (8.9)             -
Goodwill
amortisation              (117.5)            -             -
Exceptional item
- impairment
of goodwill               (927.0)            -             -
------------------      ---------   ----------        ------
Operating profit            158.6        (8.9)             -
Finance income              150.2         33.3             -
Finance costs             (338.1)       (26.2)             -
------------------      ---------   ----------        ------
Net finance costs         (187.9)          7.1             -
------------------      ---------   ----------        ------
Profit on ordinary
activities
before goodwill
amortisation,
exceptional
item and tax              1,015.2        (1.8)             -
Goodwill
amortisation              (117.5)            -             -
Exceptional
item - impairment
of goodwill               (927.0)            -             -
------------------      ---------   ----------        ------
(Loss)/profit
before tax                 (29.3)        (1.8)             -
Income tax expense        (274.1)          1.8        (16.3)
------------------      ---------   ----------        ------
(Loss)/profit
from continuing
operations for
the financial year        (303.4)            -        (16.3)
------------------      ---------   ----------        ------
Discontinued
operations
Loss for the
financial year
from discontinued
operations                      -            -             -
------------------      ---------   ----------        ------
Loss for the
financial year            (303.4)            -        (16.3)
                                      --------        ------
Minority
interests
- equity
(continuing
operations)                 (1.3)
- non-equity
(discontinued
operations)                 (3.4)
------------------      ---------   ----------        ------
Loss for the
financial year
after minority
interests                 (308.1)
------------------      ---------   ----------        ------
Loss per share:
Basic loss per
ordinary share          (16.83) p
------------------      ---------   ----------        ------
Diluted loss
per ordinary share      (16.83) p
------------------      ---------   ----------        ------

                               Other IFRS adjustments
                     ------------------------------------------
                   Property,
                       plant                Empl-          Share-
                         and                 oyee           based
                      equip-   Leases       bene-  Impair-   pay-
                        ment  IAS 17/        fits     ment  ments
                      IAS 16  IFRIC 4      IAS 19   IAS 36 IFRS 2
                        GBPm     GBPm        GBPm     GBPm   GBPm

Continuing
operations
Revenue                    -        -           -        -      -
Cost of sales              -      7.2           -        -      -
------------------  -------- -------- ----------- -------- ------
Gross profit               -      7.2           -        -      -
Transmission
and distribution
costs                    1.3      0.1           -        -      -
------------------  -------- -------- ----------- -------- ------
Administrative
expenses before
goodwill
amortisation and
exceptional item         0.4        -        14.3        -    0.4
Goodwill
amortisation               -        -           -        -      -
Exceptional item
- impairment
of goodwill                -        -           -      5.0      -
------------------  -------- -------- ----------- -------- ------
Administrative
expenses                 0.4        -        14.3      5.0    0.4
Other operating
income                     -        -           -        -      -
------------------  -------- -------- ----------- -------- ------
Operating profit
before jointly
controlled
entities
and associates           1.7      7.3        14.3      5.0    0.4
Share of
profit/(loss)
of jointly
controlled
entities                   -        -           -        -      -
Share of profit
of associates              -        -           -        -      -
------------------  -------- -------- ----------- -------- ------
Operating profit
before
goodwill
amortisation
and exceptional
item                     1.7      7.3        14.3        -    0.4
Goodwill
amortisation               -        -           -        -      -
Exceptional item
- impairment
of goodwill                -        -           -      5.0      -
------------------  -------- -------- ----------- -------- ------
Operating profit         1.7      7.3        14.3      5.0    0.4
Finance income             -      9.4       142.7        -      -
Finance costs              -   (16.7)     (142.1)        -      -
------------------  -------- -------- ----------- -------- ------
Net finance costs          -    (7.3)         0.6        -      -
------------------  -------- -------- ----------- -------- ------
Profit on ordinary
activities
before goodwill
amortisation,
exceptional
item and tax             1.7        -        14.9        -    0.4
Goodwill
amortisation               -        -           -        -      -
Exceptional
item - impairment
of goodwill                -        -           -      5.0      -
------------------  -------- -------- ----------- -------- ------
(Loss)/profit
before tax               1.7        -        14.9      5.0    0.4
Income tax expense     (0.5)      4.1       (5.1)        -      -
------------------  -------- -------- ----------- -------- ------
(Loss)/profit
from continuing
operations for
the financial year       1.2      4.1         9.8      5.0    0.4
------------------  -------- -------- ----------- -------- ------
Discontinued
operations
Loss for the
financial year
from discontinued
operations                 -        -           -        -      -
------------------  -------- -------- ----------- -------- ------
Loss for the
financial year           1.2      4.1         9.8      5.0    0.4
                    -------- -------- ----------- -------- ------
Minority
interests
- equity
(continuing
operations)
- non-equity
(discontinued
operations)
------------------  -------- -------- ----------- -------- ------
Loss for the
financial year
after minority
interests
------------------  -------- -------- ----------- -------- ------
Loss per share:
Basic loss per
ordinary share
------------------  -------- -------- ----------- -------- ------
Diluted loss
per ordinary share
------------------  -------- -------- ----------- -------- ------


                        Other IFRS adjustments
                       ------------------------

                         Busi-            Discon-
                          ness             tinued
                       combin-    Good-    operat
                        ations     will      ions
                        IFRS 3   IFRS 3    IFRS 5         IFRS
                          GBPm     GBPm      GBPm         GBPm

Continuing
operations
Revenue                      -        - (2,250.9)      4,595.0
Cost of sales           (10.0)        -   1,288.1    (3,281.9)
------------------   ---------  ------- ---------    ---------
Gross profit            (10.0)        -   (962.8)      1,313.1
Transmission
and distribution
costs                        -        -     311.1      (293.7)
------------------   ---------  ------- ---------    ---------
Administrative
expenses before
goodwill
amortisation and
exceptional item             -        -     115.8      (380.4)
Goodwill
amortisation                 -    117.5         -            -
Exceptional item
- impairment
of goodwill                  -        -     922.0            -
------------------   ---------  ------- ---------    ---------
Administrative
expenses                     -    117.5   1,037.8      (380.4)
Other operating
income                       -        -       1.2         34.2
------------------   ---------  ------- ---------    ---------
Operating profit
before jointly
controlled
entities
and associates          (10.0)    117.5     387.3        673.2
Share of
profit/(loss)
of jointly
controlled
entities                     -        -         -        (2.2)
Share of profit
of associates                -        -         -          2.2
------------------   ---------  ------- ---------    ---------
Operating profit
before
goodwill
amortisation
and exceptional
item                    (10.0)        -   (534.7)        673.2
Goodwill
amortisation                 -    117.5         -            -
Exceptional item
- impairment
of goodwill                  -        -     922.0            -
------------------   ---------  ------- ---------    ---------
Operating profit        (10.0)    117.5     387.3        673.2
Finance income               -        -   (123.4)        212.2
Finance costs                -        -     190.1      (333.0)
------------------   ---------  ------- ---------    ---------
Net finance costs            -        -      66.7      (120.8)
------------------   ---------  ------- ---------    ---------
Profit on ordinary
activities
before goodwill
amortisation,
exceptional
item and tax            (10.0)        -   (468.0)        552.4
Goodwill
amortisation                 -    117.5         -            -
Exceptional
item - impairment
of goodwill                  -        -     922.0            -
------------------   ---------  ------- ---------    ---------
(Loss)/profit
before tax              (10.0)    117.5     454.0        552.4
Income tax expense         3.0        -     149.7      (137.4)
------------------   ---------  ------- ---------    ---------
(Loss)/profit
from continuing
operations for
the financial year       (7.0)    117.5     603.7        415.0
------------------   ---------  ------- ---------    ---------
Discontinued
operations
Loss for the
financial year
from discontinued
operations                   -        -   (603.7)      (603.7)
------------------   ---------  ------- ---------    ---------
Loss for the
financial year           (7.0)    117.5         -      (188.7)
                     ---------  ------- ---------    ---------
Minority
interests
- equity
(continuing
operations)
- non-equity
(discontinued
operations)
------------------   ---------  ------- ---------    ---------
Loss for the
financial year
after minority
interests
------------------   ---------  ------- ---------    ---------
Loss per share:
Basic loss per
ordinary share                                        (10.56)p
------------------   ---------  ------- ---------    ---------
Diluted loss
per ordinary share                                     (9.46)p
------------------   ---------  ------- ---------   ----------
(c) Reconciliation of operating profit by segment under UK GAAP on previous segmental basis to operating profit by segment under IFRS on revised segmental basis

As explained in Note 2, the group has revised its segmental analysis such that (i) corporate activities and (ii) the non-regulated businesses, previously included within the PacifiCorp segment, which are not included in the sale of PacifiCorp, are now classified as 'Unallocated'. Reconciliations of operating profit before goodwill amortisation and exceptional item under UK GAAP for the three months ended 30 June 2004 and for the year ended 31 March 2005 on the previous segmental basis to operating profit before exceptional item under IFRS on the revised segmental basis are set out in the table below.

The reconciliations of operating profit have been extended to adjust for the impact on operating profit of the fair value adjustments relating to commodity contracts which have been accounted for under IAS 39 from 1 April 2005 but which were included in the prior period's results on an accruals accounting basis under the group's previous UK GAAP policies. The prior period results have also been adjusted to exclude the profit from proprietary trading, to be consistent with the exclusion, in the current period, of IAS 39 fair value gains and losses from adjusted operating profit. This is consistent with the adjustments made to earnings per share as explained in Note 7.

-------------------------------  ---------    -------- ---------

                                 Three months ended 30 June 2004
                                   Infras-          UK       PPM
                                  tructure    Division    Energy
                                  Division
                                      GBPm        GBPm      GBPm
-------------------------------  --------- -----------   -------
Operating profit* under UK GAAP
- previous segmental basis           101.1        23.6       8.5
Reallocation of corporate costs      (0.5)         0.3     (0.1)
Reallocation of PacifiCorp
non-regulated businesses                 -           -         -
-------------------------------  ---------     -------  --------
Operating profit*
under UK GAAP -
revised segmental basis              100.6        23.9       8.4
IFRS adjustments                       0.6       (0.1)       0.2
Reclassification of
associates and jointly
controlled entities                  (0.2)       (1.1)     (0.2)
-------------------------------    -------      ------   -------
Operating profit*
under IFRS -
revised segmental basis              101.0        22.7       8.4
Adjustment for contracts
now within the scope of IAS 39           -      (13.3)     (2.7)
-------------------------------     ------      ------    ------
Adjusted operating profit*
under IFRS -
revised segmental basis              101.0         9.4       5.7
-------------------------------  ---------      ------ ---------



-------------------------------     ---------     ------    ---------

                                   Three months ended 30 June 2004
                                  Unallocated      Total   PacifiCorp
                                      income/ continuing discontinued
                                    (expense)
                                         GBPm       GBPm         GBPm
-------------------------------     ---------     ------    ---------
Operating profit* under UK GAAP
- previous segmental basis                  -      133.2        116.7
Reallocation of corporate costs           1.7        1.4        (1.4)
Reallocation of PacifiCorp
non-regulated businesses                 11.1       11.1       (11.1)
-------------------------------     ---------     ------    ---------
Operating profit*
under UK GAAP -
revised segmental basis                  12.8      145.7        104.2
IFRS adjustments                        (0.5)        0.2          7.6
Reclassification of
associates and jointly
controlled entities                         -      (1.5)            -
-------------------------------     ---------     ------    ---------
Operating profit*
under IFRS -
revised segmental basis                  12.3      144.4        111.8
Adjustment for contracts
now within the scope of IAS 39              -     (16.0)        (0.2)
-------------------------------     ---------     ------    ---------
Adjusted operating profit*
under IFRS -
revised segmental basis                  12.3      128.4        111.6
-------------------------------     ---------     ------    ---------




                                     Year ended 31 March 2005
                                     Infras-        UK       PPM
                                    tructure  Division    Energy
                                    Division
                                        GBPm      GBPm      GBPm
-------------------------------    ---------    ------ ---------
Operating profit* under UK GAAP
- previous segmental basis             416.3     180.5      58.6
Reallocation of corporate costs          8.7      15.3       1.3
Reallocation of PacifiCorp
non-regulated businesses                   -         -         -
-------------------------------    ---------    ------ ---------
Operating profit*
under UK GAAP - revised
segmental basis                        425.0     195.8      59.9
IFRS adjustments                         2.2     (8.6)       0.6
Reclassification of
associates and jointly
controlled entities                      0.2     (1.9)     (0.5)
-------------------------------    ---------    ------ ---------
Operating profit*
under IFRS - revised
segmental basis                        427.4     185.3      60.0
Adjustment for contracts
now within the scope
of IAS 39                                  -    (91.8)     (1.4)
-------------------------------    ---------    ------ ---------
Adjusted operating profit*
under IFRS -
revised segmental basis                427.4      93.5      58.6
-------------------------------    ---------    ------ ---------

                                      Year ended 31 March 2005
                                 Unallocated      Total   PacifiCorp
                                     income/ continuing discontinued
                                   (expense)
                                        GBPm       GBPm         GBPm
-------------------------------    ---------     ------    ---------
Operating profit* under UK GAAP
- previous segmental basis                 -      655.4        541.7
Reallocation of corporate costs       (38.2)     (12.9)         12.9
Reallocation of PacifiCorp
non-regulated businesses                39.1       39.1       (39.1)
-------------------------------    ---------     ------    ---------
Operating profit*
under UK GAAP - revised
segmental basis                          0.9      681.6        515.5
IFRS adjustments                       (2.6)      (8.4)         19.2
Reclassification of
associates and jointly
controlled entities                      2.2          -            -
-------------------------------    ---------     ------    ---------
Operating profit*
under IFRS - revised
segmental basis                          0.5      673.2        534.7
Adjustment for contracts
now within the scope
of IAS 39                                  -     (93.2)        (0.1)
-------------------------------    ---------     ------    ---------
Adjusted operating profit*
under IFRS -
revised segmental basis                  0.5      580.0        534.6
-------------------------------    ---------     ------    ---------

* before goodwill amortisation and exceptional item for UK GAAP and before exceptional item for IFRS.

(d) Earnings/(loss) per ordinary share under IFRS for the year ended 31 March 2005

Earnings/(loss) per ordinary share under IFRS for the year ended 31 March 2005 are summarised below together with the information on which the calculations are based.

                                       Year ended 31 March 2005
                                   Continuing Discontinued      Total
                                         GBPm         GBPm       GBPm
-------------------------------- ------------ ------------ ----------
Basic earnings /(loss) per share
Earnings /(loss) per share             22.60p     (33.16)p   (10.56)p
Profit/(loss) attributable to
equity
holders of Scottish Power plc          413.70     (607.10)   (193.40)
(GBP million)
Weighted average share capital       1,830.80     1,830.80   1,830.80
(number of shares, million)
-------------------------------- ------------ ------------ ----------
Diluted earnings/(loss) per
share
Earnings /(loss)per share              22.03p     (31.49)p    (9.46)p
Profit/(loss) attributable to
equity holders of Scottish Power       424.70     (607.10)   (182.40)
plc (GBP million)
Weighted average share capital       1,928.00     1,928.00   1,928.00
(number of shares, million)
-------------------------------- ------------ ------------ ----------



                                       Year ended 31 March 2005
                                   Continuing Discontinued      Total
                                         GBPm         GBPm       GBPm
-------------------------------- ------------ ------------ ----------
Adjusted basic earnings per
share
Profit/ (loss) attributable to          413.7      (607.1)    (193.4)
equity holders of Scottish Power
plc
Adjusting items
- onerous contract releases/
intangible assets charges
relating to commodity contracts        (92.4)            -     (92.4)
- proprietary trading profit            (0.8)        (0.1)      (0.9)
- impairment of PacifiCorp                  -        922.0      922.0
goodwill
- tax on adjusting items                 28.1            -       28.1
-------------------------------- ------------ ------------ ----------
Adjusted profit attributable to         348.6        314.8      663.4
equity holders of Scottish Power
plc
-------------------------------- ------------ ------------ ----------
Weighted average share capital        1,830.8      1,830.8    1,830.8
(number of shares, millions)
-------------------------------- ------------ ------------ ----------
Adjusted basic earnings per            19.04p       17.20p     36.24p
share
-------------------------------- ------------ ------------ ----------


(e) Reconciliation of the group balance sheet under UK GAAP to IFRS as at 30 June 2004

                                                       Other
                                                        IFRS
                                                    adjustments
                                            IFRS     ---------
                                         reclass   Divid-    Income
                                     UK  ificat-     ends     taxes
                                   GAAP     ions   IAS 10    IAS 12
                                   GBPm     GBPm     GBPm      GBPm
---------------------        ---------- -------- -------- ---------
Non-current assets
Intangible assets
- goodwill                      1,849.4        -        -         -
- other intangible assets          51.2    320.8        -         -
Property, plant and             9,237.2  (320.8)        -         -
equipment
Investments accounted for
using the equity method            68.2        -        -         -
Other investments                 126.6        -        -         -
Trade and other receivables           -     57.9        -         -
Finance lease receivables             -     83.9        -         -
---------------------        ---------- -------- -------- ---------
Non-current assets             11,332.6    141.8        -         -
---------------------        ---------- -------- -------- ---------
Current assets
Inventories                       306.8        -        -         -
Trade and other receivables     1,343.8  (127.7)        -         -
Finance lease receivables             -     10.3        -         -
Cash and cash equivalents         844.4        -        -         -
---------------------        ---------- -------- -------- ---------
Current assets                  2,495.0  (117.4)        -         -
---------------------        ---------- -------- -------- ---------
Total assets                   13,827.6     24.4        -         -
---------------------        ---------- -------- -------- ---------
Current liabilities
Loans and other borrowings      (548.4)      3.7        -         -
Obligations under finance             -        -        -         -
leases
Trade and other payables      (1,551.2)    239.8     91.1         -
Current tax liabilities               -  (245.1)        -         -
Short-term provisions                 -  (130.9)        -         -
---------------------        ---------- -------- -------- ---------
Current liabilities           (2,099.6)  (132.5)     91.1         -
---------------------        ---------- -------- -------- ---------
Non-current liabilities
Loans and other borrowings    (4,585.5)      5.1        -         -
Obligations under finance             -   (15.1)        -         -
leases
Retirement benefit                    -  (134.8)        -         -
obligations
Deferred tax liabilities      (1,267.9)        -        -      23.7
Long-term provisions            (527.7)    252.9        -         -
Deferred income                 (584.5)        -        -         -
---------------------        ---------- -------- -------- ---------
Non-current liabilities       (6,965.6)    108.1        -      23.7
---------------------        ---------- -------- -------- ---------
Total liabilities             (9,065.2)   (24.4)     91.1      23.7
---------------------        ---------- -------- -------- ---------
Net assets                      4,762.4        -     91.1      23.7
---------------------        ---------- -------- -------- ---------
Equity
Share capital                     931.1        -        -         -
Share premium                   2,283.9        -        -         -
Revaluation reserve                41.2   (41.2)        -         -
Capital redemption reserve         18.3        -        -         -
Merger reserve                    406.4        -        -         -
Translation reserve                   -    486.5        -       1.0
Retained earnings               1,023.9  (445.3)     91.1      22.7
---------------------        ---------- -------- -------- ---------
Equity attributable to
equity
holders of Scottish Power       4,704.8        -     91.1      23.7
plc
Minority interests
- equity                            3.5        -        -         -
- non-equity                       54.1        -        -         -
---------------------        ---------- -------- -------- ---------
Total equity                    4,762.4        -     91.1      23.7
---------------------        ---------- -------- -------- ---------
Net asset value per
ordinary share                   256.4p
---------------------        ---------- -------- -------- ---------


                                      Other IFRS adjustments
                                       --------------------
                                         Pro-
                                       perty,
                                        plant             Empl-
                                          and              oyee
                                       equip-   Leases    bene-
                                         ment  IAS 17/     fits
                                       IAS 16  IFRIC 4   IAS 19
                                         GBPm     GBPm     GBPm
--------------------------------   ---------- -------- --------
Non-current assets
Intangible assets
- goodwill                                  -        -        -
- other intangible assets                   -        -        -
Property, plant and equipment             0.4     54.3   (15.2)
Investments accounted for
using the equity method                     -        -        -
Other investments                           -        -        -
Trade and other receivables                 -        -        -
Finance lease receivables                   -     92.2        -
--------------------------------   ---------- -------- --------
Non-current assets                        0.4    146.5   (15.2)
--------------------------------   ---------- -------- --------
Current assets
Inventories                                 -        -        -
Trade and other receivables                 -        -        -
Finance lease receivables                   -     15.2        -
Cash and cash equivalents                   -        -        -
--------------------------------   ---------- -------- --------
Current assets                              -     15.2        -
--------------------------------   ---------- -------- --------
Total assets                              0.4    161.7   (15.2)
--------------------------------   ---------- -------- --------
Current liabilities
Loans and other borrowings                  -        -        -
Obligations under finance leases            -   (19.8)        -
Trade and other payables                    -        -        -
Current tax liabilities                     -    (0.7)        -
Short-term provisions                       -        -        -
--------------------------------   ---------- -------- --------
Current liabilities                         -   (20.5)        -
--------------------------------   ---------- -------- --------
Non-current liabilities
Loans and other borrowings                  -        -        -
Obligations under finance leases            -  (164.8)        -
Retirement benefit obligations              -        -  (377.2)
Deferred tax liabilities                (0.1)     20.9    136.2
Long-term provisions                        -        -        -
Deferred income                             -        -        -
--------------------------------   ---------- -------- --------
Non-current liabilities                 (0.1)  (143.9)  (241.0)
--------------------------------   ---------- -------- --------
Total liabilities                       (0.1)  (164.4)  (241.0)
--------------------------------   ---------- -------- --------
Net assets                                0.3    (2.7)  (256.2)
--------------------------------   ---------- -------- --------
Equity
Share capital                               -        -        -
Share premium                               -        -        -
Revaluation reserve                         -        -        -
Capital redemption reserve                  -        -        -
Merger reserve                              -        -        -
Translation reserve                         -    (0.1)    (2.7)
Retained earnings                         0.3    (2.6)  (253.5)
--------------------------------   ---------- -------- --------
Equity attributable to equity
holders of Scottish Power plc             0.3    (2.7)  (256.2)
Minority interests
- equity                                    -        -        -
- non-equity                                -        -        -
--------------------------------   ---------- -------- --------
Total equity                              0.3    (2.7)  (256.2)
--------------------------------   ---------- -------- --------
Net asset value per
ordinary share
--------------------------------   ---------- -------- --------



                                       Other
                                       IFRS
                                    adjustments
                                  --------------
                                   Busi-
                                    ness
                                 combin-     Good-
                                  ations      will
                                  IFRS 3    IFRS 3      IFRS
                                    GBPm      GBPm      GBPm
-------------------------------- ------- --------- ---------
Non-current assets
Intangible assets
- goodwill                             -      29.9   1,879.3
- other intangible assets           18.5         -     390.5
Property, plant and equipment        3.6         -   8,959.5
Investments accounted for
using the equity method                -         -      68.2
Other investments                      -         -     126.6
Trade and other receivables            -         -      57.9
Finance lease receivables              -         -     176.1
-------------------------------- ------- --------- ---------
Non-current assets                  22.1      29.9  11,658.1
-------------------------------- ------- --------- ---------
Current assets
Inventories                            -         -     306.8
Trade and other receivables            -         -   1,216.1
Finance lease receivables              -         -      25.5
Cash and cash equivalents              -         -     844.4
-------------------------------- ------- --------- ---------
Current assets                         -         -   2,392.8
-------------------------------- ------- --------- ---------
Total assets                        22.1      29.9  14,050.9
-------------------------------- ------- --------- ---------
Current liabilities
Loans and other borrowings             -         -   (544.7)
Obligations under finance leases       -         -    (19.8)
Trade and other payables           (0.2)         - (1,220.5)
Current tax liabilities                -         -   (245.8)
Short-term provisions                  -         -   (130.9)
-------------------------------- ------- --------- ---------
Current liabilities                (0.2)         - (2,161.7)
-------------------------------- ------- --------- ---------
Non-current liabilities
Loans and other borrowings             -         - (4,580.4)
Obligations under finance leases       -         -   (179.9)
Retirement benefit obligations         -         -   (512.0)
Deferred tax liabilities          (23.9)         - (1,111.1)
Long-term provisions                 1.6         -   (273.2)
Deferred income                        -         -   (584.5)
-------------------------------- ------- --------- ---------
Non-current liabilities           (22.3)         - (7,241.1)
-------------------------------- ------- --------- ---------
Total liabilities                 (22.5)         - (9,402.8)
-------------------------------- ------- --------- ---------
Net assets                         (0.4)      29.9   4,648.1
-------------------------------- ------- --------- ---------
Equity
Share capital                          -         -     931.1
Share premium                          -         -   2,283.9
Revaluation reserve                    -         -         -
Capital redemption reserve             -         -      18.3
Merger reserve                         -         -     406.4
Translation reserve                    -     (0.1)     484.6
Retained earnings                  (0.4)      30.0     466.2
-------------------------------- ------- ---------  --------
Equity attributable to equity
holders of Scottish Power plc      (0.4)      29.9   4,590.5
Minority interests
- equity                               -         -       3.5
- non-equity                           -         -      54.1
-------------------------------- ------- --------- ---------
Total equity                       (0.4)      29.9   4,648.1
-------------------------------- ------- --------- ---------
Net asset value per
ordinary share                                        250.2p
-------------------------------- ------- --------- ---------
(f) Group Cash Flow Statement under IFRS for the quarter ended 30 June 2004

The consolidated statement of cash flows prepared in accordance with FRS 1 'Cash flow statements' (Revised) presented substantially the same information as that required under IFRS. Under IFRS, however, there are certain differences from UK GAAP with regard to the classification of items within the cash flow statement and with regard to the definition of cash and cash equivalents.

Under UK GAAP, cash flows were presented separately for operating activities, dividends received from joint ventures, returns on investments and servicing of finance, taxation, capital expenditure and financial investment, acquisition and disposals, equity dividends paid, management of liquid resources and financing. Under IFRS, only three categories of cash flow activity are reported: operating activities, investing activities and financing activities.

Under IFRS, items which under UK GAAP would have been included within management of liquid resources fall within the definition of cash and cash equivalents.

The requirements of IAS 38 state that certain non-current assets, namely capitalised software and hydroelectric relicensing costs, previously included within tangible assets,are reclassified as intangible assets. This has resulted in GBP23.4 million being reclassified from the purchase of property, plant and equipment to the purchase of intangible assets of which GBP3.9 million relates to continuing operations.

IFRIC 4 contains guidance on the identification of lease arrangements. The group's arrangements have been assessed against the criteria contained in IFRIC 4 to determine, firstly, whether any arrangements qualify for lease accounting and, secondly, against the criteria in IAS 17 to determine whether the leases should be categorised as operating or finance leases. The identification of additional finance leases has resulted in GBP3.2 million being reclassified from cash generated from operations to interest paid all of which relates to discontinued operations

(g) Notes to Income Statement Reclassifications

Certain income statement items, previously reported under UK GAAP, have been reclassified to comply with the format of the group's Accounts as presented under IFRS. The reclassifications below do not have any effect on the group's previously reported net income.

(i) IAS 28/31 - Associates/jointly controlled entities

The group's share of the operating profit, interest and tax of associates and jointly controlled entities has been combined and disclosed on one line as share of profits of associates and jointly controlled entities in accordance with IAS 28 and IAS 31.

(ii) IAS 17 - Leases

Net income in relation to finance leases in the US of GBP0.5 million (year ended 31 March 2005 GBP2.9 million) has been reclassified from revenue to finance income (GBP5.5 million) (year ended 31 March 2005 GBP33.3 million) and finance costs (GBP5.0 million) (year ended 31 March 2005 GBP30.4 million) in accordance with IAS 17. Under UK GAAP, these were accounted for on a net cash investment basis and qualified for linked presentation under FRS 5.

(h) Notes to Balance Sheet Reclassifications

Certain balances, previously reported under UK GAAP, have been reclassified to comply with the format of the group's Accounts as presented under IFRS. None of these reclassifications have any effect on the group's previously reported net assets or shareholders' funds.

(i) IAS 1 - Presentation of financial statements

Trade and other receivables falling due after more than one year of GBP33.9 million at 30 June 2004, previously reported as part of Current assets, have been reclassified and included within Non-current assets.

Finance lease receivables falling due after more than one year of GBP83.9 million at 30 June 2004, previously reported as part of Current assets, have been reclassified and included within Non-current assets.

Finance lease receivables due within one year of GBP10.3 million at 30 June 2004, previously included within Trade and other receivables, have been shown separately on the face of the balance sheet.

Provisions for liabilities and charges due within one year of GBP130.9 million at 30 June 2004, previously presented within Non-current liabilities, have been reclassified and shown within Current liabilities.

Obligations under finance leases of GBP15.1 million at 30 June 2004, previously presented within Loans and other borrowings, have been shown separately on the face of the balance sheet.

(ii) IAS 12 - Income taxes

Current corporate tax balances of GBP245.1 million at 30 June 2004, previously included within Trade and other payables falling due within one year, have been shown separately on the face of the balance sheet.

(iii) IAS 19 - Employee benefits

Pensions and other post-retirement benefits of GBP134.8 million at 30 June 2004, previously included within Provisions for liabilities and charges and Trade and other payables, have been shown separately on the face of the balance sheet. Although this separate presentation is not required by IAS 19 'Employee Benefits', this presentation has been adopted in view of the significance of these balances as accounted for under IAS 19.

(iv) IAS 21 - The effects of changes in foreign exchange rates

Cumulative exchange gains and losses of GBP486.5 million at 30 June 2004, net of related hedging gains and losses and taxation, are required by IAS 21 to be shown as a separate reserve. These were previously included within retained earnings.

Under IAS 21, all monetary items are required to be separately measured and presented at the closing balance sheet rate whereas UK GAAP permitted the use of the exchange rate specified in the contract. As a result, foreign currency debt is translated at the closing exchange rate and the group's related derivatives have been separately presented on the balance sheet rather than disclosing the net hedge position that existed under UK GAAP. At 30 June 2004, derivatives currently showing a gain of GBP24.0 million and GBP0.4 million have been included within Non-current and Current trade and other receivables respectively. Those derivatives currently showing a loss of GBP13.9 million and GBP4.2 million have been reclassified from Loans and other borrowings and included within Non-current and Current trade and other payables respectively.

(v) IAS 38 - Intangible assets

Certain Non-current assets at 30 June 2004, being capitalised software of GBP258.8 million and hydroelectric relicensing costs of GBP62.0 million, previously included within tangible assets have been reclassified as Intangible assets as required by IAS 38.

(vi) IFRS 1 - First-time adoption of IFRS

The revaluation reserve of GBP41.2 million at 30 June 2004, previously recognised in respect of the revaluation of the group's Manweb distribution assets has been reclassified to retained earnings. IFRS permits previously revalued tangible assets to be recognised at deemed cost at the date of the group's transition to IFRS. The group has applied this exemption in preparing its balance sheet in accordance with IFRS.

The group has elected not to take advantage of the IFRS 1 exemption to reset the translation reserve to zero at the date of the transition.

(i) Notes to IFRS Remeasurements

The IFRS remeasurements do not include any adjustments for IAS 32 and IAS 39 which have been applied by the group prospectively from 1 April 2005 in accordance with the exemptions set out in IFRS 1.

(i) IAS 10 - Events after the balance sheet date

Dividends in respect of the group's ordinary shares declared after the balance sheet date are not accrued in the balance sheet as required by IAS 10.

Previously, under UK GAAP, such dividends were accrued in the balance sheet.

(ii) IAS 12 - Income taxes

Under UK GAAP, deferred tax is provided based on timing differences, whilst IFRS has a wider scope and requires deferred tax to be provided on temporary differences.

In accordance with the requirements of IFRS, additional deferred tax has been provided on the temporary difference arising on acquisitions where the assets and liabilities acquired at fair value differ to their tax base.

(iii) IAS 16 - Property, plant and equipment

The group calculates its depreciation charge in respect of property, plant and equipment based on cost less estimated residual values at current prices as required by IAS 16.

Previously, under UK GAAP, the group calculated its depreciation charge for property, plant and equipment based on cost or revalued amounts less estimated residual values at prices prevailing at the time of the initial recognition of the asset or subsequent revaluation.

(iv) IAS 17/IFRIC 4 - Leases

The group has finance leases where it acts as a lessor and funds these through non-recourse debt. Under UK GAAP, these were accounted for on a net cash investment basis and qualified for linked presentation whereby the non-recourse debt was offset against the receivable in accordance with FRS 5. Under IFRS, such leases are required to be accounted for as a receivable at an amount equal to the net investment in the lease and, unlike FRS 5, there is no concept of linked presentation in relation to non-recourse debt. The effect of this adjustment is to present separately a finance lease receivable of GBP106.5 million and GBP108.6 million of non-recourse debt. Income from finance leases for the quarter ended 30 June 2004 increased by GBP1.7 million (year ended 31 March 2005 GBP4.9 million), net of a tax credit of GBP0.4 million (year ended 31 March 2005 GBP3.7 million).

IFRIC 4 contains specific guidance on the identification of lease arrangements. The arrangements have been assessed against the criteria contained in IAS 17 to determine whether the leases should be categorised as operating or financing. As a consequence, new finance lease arrangements have been recognised on the balance sheet, resulting in the recognition of additional Property, plant and equipment of GBP54.3 million and additional obligations under finance leases of GBP76.0 million. Profit before tax reduced by GBP0.3 million for the quarter ended 30 June 2004 (year ended 31 March 2005 GBP1.2 million).

(v) IAS 19 - Employee benefits

Pensions and other post-retirement benefits have been accounted for in accordance with IAS 19. The group's accounting policy for pensions and other post-retirement benefits requires separate recognition of the operating and financing costs of defined benefit pension schemes and other post-retirement benefit arrangements in the income statement. IAS 19 permits a number of options for the recognition of actuarial gains and losses relating to defined benefit pension schemes and other post-retirement benefits. The group's accounting policy is to recognise any actuarial gains and losses in full immediately in the statement of recognised income and expense. Accordingly the pension scheme deficits and the obligations relating to other post-retirement benefits are included as liabilities in the balance sheet.

Previously, under UK GAAP, the group's policy was to recognise a charge for its defined benefit pension schemes and other post-retirement benefits in arriving at operating profit. This cost comprised the regular cost of providing pensions and other post-retirement benefits and a charge or credit relating to the amortisation of actuarial gains and losses over the average remaining service lives of the employees covered by the relevant arrangements. The difference between the cumulative charge for pensions and other post-retirement benefits and the cumulative contributions paid in respect of those arrangements was previously recognised as an asset or liability in the balance sheet.

(vi) IAS 36 - Impairment

The goodwill associated with PacifiCorp was reviewed for impairment under both UK GAAP and IFRS, as required where there is an indicator of impairment. At 31 March 2005, this resulted in a charge for impairment under IFRS which was GBP5.0 million lower compared to the charge under UK GAAP, as a result of the lower net assets of PacifiCorp under IFRS.

(vi) IFRS 2 - Share-based payments

The group's employee share and share option schemes have been accounted for in accordance with IFRS 2 'Share-based payments'. This requires that a charge be recognised, using a fair value model, for all of the group's share and share option schemes.

Previously under UK GAAP, the group accounted for the cost for certain of its share and share option schemes based on an intrinsic value model.

(vii) IFRS 3 - Business combinations

Under UK GAAP, goodwill is required to be amortised over its estimated useful economic life. On transition to IFRS, the balance of goodwill recognised under UK GAAP at that time was "frozen". No future amortisation will be charged, although an annual review for impairment is required.

Under IFRS 3, the fair values attributed to deferred tax and intangible assets on acquistions differ from those under UK GAAP.

(viii) IFRS 5 - Discontinued operations

As a result of the group's decision to sell PacifiCorp, PacifiCorp has been treated as a disposal group held for sale and a discontinued operation in accordance with IFRS 5. As a consequence of the classification as a discontinued operation, the net profit of PacifiCorp has been shown in one line in the income statement.

The results of discontinued operations include the UK/US interest rate differential benefit and the loss following de-designation of net investment hedges arising from the group's US dollar hedging programme relating to PacifiCorp's net assets and the impact of the US dollar earnings hedges relating to the results of PacifiCorp. This programme will terminate following completion of the sale of PacifiCorp.

11 Summary of differences between IFRS and US Generally Accepted Accounting Principles ('GAAP')

The consolidated Accounts of the group are prepared in accordance with IFRS which differs in certain significant respects from US GAAP. The effect of the US GAAP adjustments to profit for the period and equity shareholders' funds are set out in the tables below.

                                                        Three months
                                                       ended 30 June
                                                        2005     2004
(a) Reconciliation of profit for the                    GBPm     GBPm
financial period to US GAAP:
---------------------------------                 ----------  --------
Profit for the period under IFRS                       108.3    148.4
attributable to equity holders of Scottish
Power plc
US GAAP adjustments:
US regulatory net assets                              (12.7)   (11.3)
Retirement benefit obligations                         (8.5)    (3.6)
Decommissioning, environmental and mine               (11.9)    (2.6)
reclamation liabilities
Derivative financial instruments                        78.6    106.6
Other                                                    1.6    (3.0)
---------------------------------                 ----------  --------
                                                       155.4    234.5
Deferred tax effect of US GAAP adjustments            (12.0)   (14.1)
---------------------------------                 ----------  --------
Profit for the period under US GAAP                    143.4    220.4
---------------------------------                 ----------  --------
Profit for the period under US GAAP                     GBPm     GBPm
consists of (loss)/profit from:
- continuing operations                                149.0    137.7
- Discontinued operations                              (5.6)     82.7
---------------------------------                 ----------  --------
- continuing and Discontinued operations               143.4    220.4
---------------------------------                 ----------  --------
Earnings per share under US GAAP
- continuing operations                                8.12p     7.52p
- Discontinued operations                            (0.30)p     4.51p
---------------------------------                 ----------  --------
- continuing and Discontinued operations               7.82p    12.03p
---------------------------------                 ----------  --------
Diluted earnings per share under US GAAP
- continuing operations                                8.08p     6.70p
- Discontinued operations                            (0.30)p     4.29p
---------------------------------                 ----------  --------
- continuing and Discontinued operations               7.78p    10.99p
---------------------------------                 ----------  --------
                                                     30 June   30 June
(b) Effect on equity attributable to                    2005      2004
equity holders of Scottish Power
plc of differences between IFRS and US                  GBPm      GBPm
GAAP:
---------------------------------                 ----------   --------
Equity attributable to equity holders of             4,340.2   4,590.5
Scottish Power plc under IFRS
US GAAP adjustments:
Goodwill                                               572.3     572.3
Business combinations                               (201.50)   (198.6)
Amortisation of goodwill                               156.6     153.0
Impairment of goodwill                               (485.7)         -
US regulatory net assets                               545.6     705.9
Retirement benefit obligations                         626.1     393.5
Revaluation of fixed assets                           (59.8)    (54.0)
Depreciation on revaluation uplift                      12.4      12.4
Decommissioning, environmental and mine               (76.1)    (17.9)
reclamation liabilities
Derivative financial instruments                     (214.3)     144.0
Other                                                   17.4    (12.7)
Deferred tax:
Effect of US GAAP adjustments                        (363.7)   (457.1)
Effect of differences in methodology                       -         -
---------------------------------                 ----------  --------
Equity attributable to equity holders of             4,869.5   5,831.3
Scottish Power plc under US GAAP
---------------------------------                 ----------  --------
The derivative financial instruments adjustment for the three month period ended 30 June 2005 represents the difference between accounting for derivative financial instruments under IFRS and US GAAP. Both IAS 39, the IFRS financial instruments standard, and FAS 133, the US GAAP equivalent, require all derivative financial instruments, as defined by the respective standard, to be marked to market value. Both standards provide specific exemptions to this requirement; however the exemptions allowed are different between the standards, giving rise to a GAAP difference. The equivalent adjustment for the three month period ended 30 June 2004 represented the difference in accounting for derivative financial instruments under the group's former UK GAAP accounting policies for such items (which applied until the adoption of IAS 39 on 1 April 2005) and US GAAP.

In addition, the effect of changes in the fair value of certain long-term contracts entered into to hedge PacifiCorp's future retail resource requirements, which are being marked to market value in accordance with FAS 133, are subject to regulation in the US and are therefore deferred as regulatory assets or liabilities under US GAAP pursuant to FAS 71 'Accounting for the Effects of Certain Types of Regulation'. No comparable standard exists under IFRS and therefore no regulatory assets or liabilities are recognised under IFRS in respect of these contracts. The derivative financial instruments adjustment included within equity shareholders' funds at 30 June 2005 of GBP(214.3) million includes a net liability of GBP65.0 million which is subject to regulation and is therefore offset by a US regulatory asset of GBP 65.0 million included within 'US regulatory net assets' above.

Included within equity attributable to equity holders of Scottish Power plc under US GAAP at 30 June 2005 are net assets held for sale of GBP2,399.2 million.

Independent Review Report to Scottish Power plc

Introduction

We have been instructed by the company to review the financial information, contained in the quarterly report, which comprises the Group Income Statement, the Group Statement of Recognised Income and Expense, the Group Statement of Changes in Equity,the Group Cash Flow Statement, the Movement in Net Cash and Cash Equivalents from Continuing Operations, the Reconciliation of Net Movement in Cash and Cash Equivalents to Movement in Net Debt, the Group Balance Sheet and the related notes. We have read the other information contained in the quarterly report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information.

Directors' responsibilities

The quarterly report, including the financial information contained therein, is the responsibility of, and has been approved by the directors.

As disclosed in Note 1 'Basis of preparation', the next annual financial statements of the group will be prepared in accordance with accounting standards adopted for use in the European Union. This quarterly report has been prepared in accordance with the basis set out in Note 1 'Basis of preparation'.

The accounting policies are consistent with those that the directors intend to use in the next annual financial statements. As explained in Note 1 'Basis of preparation', there is, however, a possibility that the directors may determine that some changes are necessary when preparing the full annual financial statements for the first time in accordance with accounting standards adopted for use in the European Union. The IFRS standards and IFRIC interpretations that will be applicable and adopted for use in the European Union at 31 March 2006 are not known with certainty at the time of preparing this quarterly financial information.

Review work performed

We conducted our review in accordance with guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A review consists principally of making enquiries of group management and applying analytical procedures to the financial information and underlying financial data and, based thereon, assessing whether the disclosed accounting policies have been applied. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with Auditing Standards and therefore provides a lower level of assurance than an audit. Accordingly we do not express an audit opinion on the financial information. This report, including the conclusion, has been prepared for and only for the company. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Review conclusion

On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the three months ended 30 June 2005.

PricewaterhouseCoopers LLP
Chartered Accountants
Glasgow
10 August 2005


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