Achieving Strategic Aims

• Turnover up 6.0% to £1,531 million
• Operating profit up £1 million at £325 million
• Profit before tax (before exceptionals) down £7 million to £240 million
• Earnings per share (before exceptionals) up 0.4% to 16.12p
• Dividend per share up 10.3% to 8.27p
• PacifiCorp merger on track for completion in 1999
• Value to be realised through telecom flotation
• Making strong representations to Regulators regarding price reviews

Murray Stuart, Chairman of ScottishPower, said:

"In the first six months of the year we have made good progress towards completion of the merger with PacifiCorp and have announced our intention to float a minority stake in our Internet and telecom business, under the new name Thus, while ensuring that strong operational performance in each of our businesses has been achieved.

The PacifiCorp transaction is progressing in line with our programme. We have achieved the major regulatory approvals at both a federal level and in four of the six States and we continue to see opportunities to deliver value for shareholders from the integration of the two companies.

We continue to perform well in the fully competitive energy markets. We have gained over 1.3 million new contracts, while retaining approximately 90% of our domestic electricity customers. Our Dual Fuel offer has proved successful, with 465,000 customers welcoming the opportunity to receive a combined gas and electricity package. We now supply energy to 12% of the total UK domestic electricity market and to 5% of the total UK domestic gas market.

Profits were restrained by continued investment in our growing Energy Supply and Internet and telecom businesses with the result that operating profit was up £1 million at £325 million. Profit, before tax and exceptional charges, of £240 million, was £7 million lower than in the equivalent period in the previous year. In the lead-up to the flotation of Thus, an exceptional charge of £55 million has been taken as a result of costs, principally asset write-downs, arising from our withdrawal from fixed radio access and mobile telephony. This may be offset at the year-end by profit on the flotation. Earnings per share before exceptionals increased by 0.4% to 16.12p, while the interim dividend per share was increased by 10.3% to 8.27p.

The challenges ahead will be to deliver value from the integration of PacifiCorp into the ScottishPower group, to win new customers and sell more to existing customers in our Energy Supply business and to continue to realise efficiencies in our infrastructure businesses. Our financial performance to date is in line with our expectations. However, the UK utility market is becoming increasingly competitive and we are concerned that the Ofgem and OFWAT regulatory reviews, if implemented in their current forms, would have serious implications for customer service, infrastructure investment and shareholder returns. We are pressing both Regulators vigorously to reconsider their positions."

For Further Information:
Ian Robinson, Chief Executive    0171 628 5646 (am)

Ian Russell, Deputy Chief Executive and Finance Director or
Colin McSeveny, Group Media Manager    020 7651 2000 (pm)

Andrew Grant, Brunswick   0171 404 5959