Speaking at the Company's Annual General Meeting held earlier today, Murray Stuart, Chairman of ScottishPower said:

"It is now just over five weeks since shareholders approved the merger with PacifiCorp and the proposal to create a holding company for the Scottish Power Group. The merger with PacifiCorp was approved by a very large majority, over 99% of the votes cast. On 17th June, the shareholders of PacifiCorp also approved the merger by an 88% majority of the votes cast.

Since the EGM we have continued to make good progress towards completion of the PacifiCorp merger. To date, we have secured the necessary federal approvals and also approval from the State of California. In each of the five remaining states in which PacifiCorp operates, the regulatory staff have recommended approval of the merger, subject to conditions, and we are currently progressing through the state regulatory hearings. We are confident that we will complete the merger later this year.

As I stated at the Extraordinary General Meeting, we are proud to have the opportunity, with shareholder support, to build a large Scottish electricity company into a UK multinational company: a company serving customers with electricity, gas, water, telecommunications and a large national chain of shops. Indeed, over one in five of the UK population are served by your company. We will soon become an international utility business, probably ranked in the top ten of its type in the world, and moreover headquartered in Glasgow.

The new holding company proposal is scheduled for Court approval at the very end of this month and is independent of the completion of the merger with PacifiCorp expected later this year. The ScottishPower share buy-back of up to £500 million pounds, which shareholders approved on 15th June, commenced on 21st June.

The financial results of the Group for the year ended 31st March 1999 were satisfactory. Group turnover grew to £3.24 billion pounds, an increase of 3.6% largely due to growth in our gas and telecommunications businesses. Pre-tax profit was £644 million pounds, an increase of £4 million pounds over last year, and earnings per share at 42.42p were up 2.8% on a comparable basis. At £754 million pounds, our capital investment saw an increase of £97 million pounds. We are recommending a final dividend of 15.0p net per share which, together with the interim dividend, will result in an increase of 10.3% over last year. The final dividend will be paid on 4th October 1999 to shareholders on the register at 25th June 1999.

I am pleased to state that the trading performance of the Group has continued to be satisfactory in the first three months of the current year, and is in accordance with our expectations.

On conclusion of the PacifiCorp merger, we shall move in the year 2000 to payment of dividends quarterly, a proposal approved at the recent EGM. It is our aim to deliver real dividend growth. This will be re-examined once the outcome of the UK regulatory reviews, which take effect in the year 2000, is known.

Major developments continue in our UK business. Full competition in electricity has been achieved by the industry this year. The full effects of this, measured in gain and loss of customers, are still evolving. To the end of June we had gained over 875,000 gas customers and some 260,000 electricity customers and lost 240,000 in electricity. This loss rate was in line with our expectations. In this competitive period, we intend to be successful and to retain our position as one of the industry leaders.

Key regulatory reviews of ScottishPower, Manweb and Southern Water are currently underway and the outcome will be known later in the year. The Group has always sought, within the geographic franchises it serves, to provide the highest standards of performance and efficiency.

We take the view that our relationship with our Regulators should be a constructive one. Nonetheless, the process of regulation must recognise and encourage good performance and allow acceptable long-run rates of return to encourage further investment and provide incentives to secure greater efficiencies.

The end of the millennium is now close and ScottishPower has undertaken stringent measures to deal with any problems which may arise within our operations as a result of the "Millennium Bug". There is a specially formed programme group working under the direction of Ian Russell, the Deputy Chief Executive and Finance Director, and the Chief Executive's Committee reviews progress at each of its meetings. The Board reviews the preparations frequently.

We deeply and particularly regret the inconvenience and frustration to our customers at the end of December last year, when we were unfortunate enough to have the most violent storms in thirty years, covering nearly all our franchise area in Scotland. All our staff worked exceptionally hard under difficult conditions to rectify the damage. We are undertaking a broad range of measures to reduce any future difficulties should such extreme weather recur on such a large scale.

Our newest and fastest growing business is ScottishTelecom. We are currently reviewing with advisers the most appropriate course for its development, either as a continuing part of the group or in some other form of ownership. We expect to decide by the end of the Summer.

ScottishPower is not only about financial results and acquisitions. The Annual Report shows an extract from The Times newspaper which has ranked ScottishPower top in an ongoing survey of FTSE 100 companies. This survey recognises good corporate governance, share price performance, brand strength and ethical policies.

On the environment, we have a well developed management structure and clear objectives on environmental care. The State and Regulatory Authorities prescribe standards for our industry, which place a huge and demanding range of requirements upon us. We seek to observe these requirements and to meet, and in some cases to exceed, the necessary standards as quickly as possible. Critics sometimes seek levels of achievement which would be impractical for both the State and the Industry. We seek to balance and safeguard, within reason, your interests as shareholders and those of our employees and other stakeholders. Last year we won a national award for our Environment Report. This year we again appeared in the upper quintile of the Business in the Environment league table - the only utility to do so.

We are also pleased this year to have been awarded The Sir George Earle Trophy, which is the UK's premier award for occupational health and safety.

The Chief Executive's Review contains examples of our commitment to the communities we serve. Through ScottishPower Learning, we have provided training for over 1,000 young people and our support for the Government's New Deal programme has already provided places for almost 200 job seekers. During the year we opened six community learning centres and carried out 27 community projects, to say nothing of our commitment to the Learn to Swim programme in Southern Water which has now taught 250,000 children to swim. Our support for the Arts has continued, and the Royal Scottish National Orchestra, Scottish Opera, Welsh Opera, and The Royal Liverpool Philharmonic Orchestra have all benefited, as has the Twentieth Century Gallery in the new National Museum of Scotland.

ScottishPower welcomes the new Scottish Parliament and Welsh Assembly. We are committed to the future economic prosperity of Scotland as one of the largest industrial businesses, working from our headquarters here in Glasgow. It is important that the new administrations achieve in Scotland and Wales a level playing field with the rest of the United Kingdom in this highly competitive world.

During the year Sir Ronald Garrick retired from the Board after 7 years' service as a non-executive director. We are grateful to him for his contribution to our development and his wise counsel. Duncan Whyte, an executive director, who during his 11 years' service with the Company carried out a number of key Board and management roles, left us on 31st May to become Chief Executive of The Weir Group plc. We wish him every good fortune in his new role and thank him for his valuable contribution to the Group.

Charles Berry and Alan Richardson joined the Board in April as executive directors, after successful senior management roles with us, and we are delighted to have their contribution at Board level. On completion of the merger with PacifiCorp, Keith McKennon, Chairman and Chief Executive of PacifiCorp, will join us as a non-executive Deputy Chairman; and two of his PacifiCorp Board colleagues, Nolan Karras and Robert Miller, will become non-executive directors of ScottishPower.

ScottishPower is now a major company and prospectively a major international utility. We believe that, in such circumstances, the Board complement should expand its skills and experience, and therefore I am delighted to announce that Charles Miller Smith, Chairman of ICI plc and a non-executive director of HSBC, the major international banking group, has agreed to join the Board from 1 August 1999 as a non-executive Deputy Chairman. Charles is a Scot, educated in Glasgow and at St. Andrew's University. He had a long and successful career with Unilever before becoming Chief Executive of ICI and, since April this year, Chairman of ICI.

Today should have been my last day at ScottishPower, after over 9 years as a Board member and 7 as Chairman. This has been postponed until the merger is finalised and the preliminary integration tasks completed some time in early 2000. The Board has the matter of my succession well in hand and we expect to announce the appointment of my successor as Chairman at the beginning of the year 2000.

Since privatisation ScottishPower has developed from its local beginnings as the South of Scotland Electricity Board, to a major international and highly regarded company headquartered in Glasgow - which I expect to be at least 10th largest of its kind in the world."

Further Information:
Sue Clark,                  Director of Corporate Affairs                     0141 636 4560
Andrew Jamieson,        Investor Relations Manager                    0141 636 4527
Gordon Laidlaw,            Media Relations Manager                       0141 636 4515