BGYA Brit Energy Csh

RNS No 5396a
BRITISH ENERGY PLC
5th September 1997


BRITISH ENERGY plc
UPDATED INFORMATION ON RECENTLY-SIGNED CONTRACTS FOR FUEL SERVICES

On 4 June 1997 British Energy announced that it had entered into new contracts
with British Nuclear Fuels plc ("BNFL") covering additional fuel services with
a total value of some #1.5 billion and had negotiated improved terms for its
existing contracts with BNFL.  We announced that the new contracts and changes
to existing contracts would together result in a saving of some #10 million in
fuel costs for the current financial year.   We have now completed our review
of the cash flow impact and the accounting treatment of the new contracts, as
summarised below.

CASH FLOWS

British Energy has now evaluated the impact of these new contracts on its
estimated cash flows in respect of nuclear liabilities.   The principal effect
as at 31 March 1997, the date of the last published accounts, would have been
a reduction of #0.4 billion from #5.6 billion to #5.2 billion in total nuclear
liabilities on a discounted basis, based on current estimates of station lives
and lifetime output projections.  Of the #5.2 billion, #3.8 billion was
accrued at 31 March 1997.  As a result, on a discounted basis, #1.4 billion
(rather than #1.8 billion) remains to be charged to operating profit in future
years.

The table below sets out a pro forma statement at 31 March 1997 which shows
the differences in the discounted values of the projected payments before and
after the signing of the new contracts.  All figures are calculated on the
basis of current estimates of station lives and lifetime outputs, and are
shown at current price levels discounted at 3% in line with the Company's
accounting policies to reflect the fact that the payments concerned will not
fall due for a number of years.


(# billion)       Back End    Back End Fuel  Decom-   Total
Discounted at     Fuel Costs  Costs -        missioning  
3% pa             Contracted  Uncontracted   
          
Before New            3.0          1.8         0.8     5.6
Contracts (per
1996/97 Accounts)

After New             3.6          0.8         0.8     5.2
Contracts

Decrease/(increase)  (0.6)          1.0         ---     0.4


As a result of the new contracts, the proportion of back end fuel obligations
covered by fixed price (index-linked) contracts has increased from 62% to 82%
on a discounted basis.

On an undiscounted basis, total projected payments have reduced by #1.1
billion from #14.0 billion to #12.9 billion.  Excluding decommissioning of
#4.3 billion which is unchanged, back end fuel payments have reduced from #9.7
billion to #8.6 billion.   Under the terms of the new and amended BNFL
contracts and in accordance with the projected pattern of payments for
uncontracted amounts, the revised back end fuel payments at 31 March 1997 are
now expected to become payable as follows:

                   Back End Fuel Payments    
(# million)(1)   Before New    After New     Decrease/
                 Contracts(2)  Contracts     (increase)
                                             
                                             
Within one year    288           288           -

2-5 years        1,204         1,207           (3)

6-10 years       1,433         1,164           269

11-25 years      2,412         2,468           (56)

26-50 years      1,269         823             446

51 years and     3,165         2,675           490
over

Total            9,771         8,625         1,146

(1)   Current Money Values, Undiscounted
(2)   Based on British Energy Annual Accounts 1996/97, note 22, page 48.

PROFIT AND LOSS ACCOUNT

Of the #0.4 billion reduction in total projected payments referred to above,
some #100 million is a backlog adjustment relating to fuel already burnt.
This adjustment will be taken to the profit and loss account as an exceptional
credit in 1997/98.

The new and amended BNFL contracts enable British Energy to allocate the fuel
volumes and payments over revised time periods.  As a result, for accounting
purposes British Energy can bring forward into earlier years some of the
profit and loss account benefits of the revised payment terms at the expense
of later years by averaging contract prices over approximately 10 years.  This
arrangement, which has no effect on the cash payments, will result in a
further reduction in fuel costs of some #20 million in 1997/98, in addition to
the #10 million previously announced.




Contacts:    Doug McRoberts      0131 527 2020       (Media Enquiries)
             Anne Campbell       0171 389 3406       (Media Enquiries)
             Paul Heward         0171 389 3468       (Investor Relations)




END

Brit Energy Csh (LSE:BGYA)
Historical Stock Chart
From May 2024 to May 2024

Brit Energy Csh (LSE:BGYA)
Historical Stock Chart
From May 2023 to May 2024