ANNEX C
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14D-9C
SOLICITATION/RECOMMENDATION STATEMENT UNDER
SECTION 14(D)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
SCOTTISH POWER PLC
(Name of Subject Company)
SCOTTISH POWER PLC
(Name of Person(s) Filing Statement)
Ordinary shares of 42p each (“Ordinary Shares”)
American Depositary Shares (“ADSs”), each of which represents four Ordinary Shares
(Title of Class of Securities)
81013T804
(CUSIP Number of Class of Securities)
Sheelagh Duffield
Company Secretary
1 Atlantic Quay
Glasgow G2 8SP
Scotland
0141-636-4544
(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of the Person(s) Filing Statement)
With a Copy to:
Richard C. Morrissey
Sullivan &; Cromwell LLP
1 New Fetter Lane
London EC4A 1AN
England
011 44 20 7959 8900
| x | Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer |
EnergyNetworks
Executive Team Road Shows
ScottishPower
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Agenda
BUSINESS PERFORMANCE IN 06/07
- LOOKING FORWARD TO 07/08
FRONTLINE ORGANISATION
HEALTH AND SAFETY
IBERDROLA
ScottishPower
EnergyNetworks
2006/07 Scorecard
Profit (£m) 525 2
Cash (%) 91.7 3
Return on Investment (%) 15.4 4
No. of Lost Time Accidents 11 3
Cash Spent (£m) 477 5
Investment Allowance (£m) 290 3+
Cost Allowance (£m) 114 1
Customer Interruptions (per 100) 57 3
Customer Minutes Lost (cust/year) 71.3 1
Secure a fair outcome
from Transmission Review (£m) 782 4
Deliver production plan
efficiency (%) 106 3
Overall Rating 3
ScottishPower
EnergyNetworks
2006/07 Successes and Challenges
Successes
Accelerated Network Controllable Points Programme
225km of EHV and HV OH lines rebuilt
Restoring front-line supervision – early wins with Production Model
Opened new OMC in North at Kirkintilloch
Won silver health award
Challenges
Resourcing to meet major capital programme
Struggling to deliver on frontline – resource pinch-points, structural issues
Improving efficiency to meet OFGEM targets– overheads and ownership
Seeing lower revenues due to shifting patterns of energy usage – regulatory debate needed
Zero Accident culture and aspiration
ScottishPower
EnergyNetworks
NCP Programme – why it’s so important
06/07
07/08
744
Number of Points
SPD
1031
£16.1m
£9.1m
£m
CML Benefit (cust /year)
7
-
375
Number of Points
SPM
825
£13.2m
£6.2m
£m
7
CML Benefit (cust /year)
It is working but there is more to do…
ScottishPower
EnergyNetworks
Storms Exceptional Events
Reporting No. of No. Faults CI CML
Year Events in 24 Hrs claimed claimed
2006/07 7 758 11.4 34.3
2005/06 1 81 1.28 3.43
We are rising to the challenge!
ScottishPower
EnergyNetworks
Investment
06/07 07/08
SPD 130.8 138.4
SPM 122.8 145.1
SPT 91.2 138.4
SPPS 15.8 9.2
Total 360.60 431.10
Investment and renewable energy make us the
fastest growing network in the UK
ScottishPower
EnergyNetworks
Customer Performance
Customer Minutes Lost: SPD
SPM
Customer Interruptions: SPD
SPM
Average Time to Restoration: SPD
SPM
Telephone Response Rate
70.1 57.4 58.9 42.7 116 134 4.2 78.2 61.0 65.7
46.0
119
132
4.2
58.0
48.5
60.8
46.7
95
105
4.3
2005/06
Actual
2006/07
Forecast
2007/08 Budget
NCPs and other investment helps,
but frontline restoration performance critical
ScottishPower
EnergyNetworks
Our Competitors – Performance 2005/2006
CI Performance
CML Performance
DNO 05/06 CI 05/06 Target CI% Above / Below Target Status
EDFE EPN 68.2 90.3 24%
WPD S Wales 82.7 99.7 17%
UU 49.8 57.2 13%
EDFE SPN 79.3 90.5 12%
EDFE LPN 32.8 36.2 9%
SP Manweb 42.7 46.7 8%
SSE Hydro 89.0 96.2 7%
CE NEDL 69.6 74.5 7%
SSE Southern 85.9 91.0 6%
CN East 73.9 77.9 5%
WPD S West 81.6 84.5 3%
SP Distribution 58.9 60.9 3%
CE YEDL 68.2 68.7 1%
CN West 110.6 109.4 -1%
DNO 05/06 CML 05/06 Target CML% Above / Below Target Status
WPD S Wales 43.1 72.2 40%
UU 47.5 59.8 21%
EDFE EPN 58.9 73.7 20%
WPD S West 50.6 62.2 19%
CN East 66.5 80.1 17%
CN West 85.3 102.3 17%
EDFE LPN 34.4 40.2 14%
EDFE SPN 72.5 81.4 11%
SSE Hydro 89.2 95.9 7%
CE NEDL 69.1 71.4 3%
CE YEDL 67.1 68.5 2%
SSE Southern 87.8 82.0 -7%
SP Distribution 70.1 64.9 -8%
SP Manweb 57.4 51.8 -11%
HEADING FOR A PENALTY OF £9M IN CURRENT YEAR
ScottishPower
EnergyNetworks
Our Competitors – Opex Spend
Actual Net Opex DPCR4 allowance Status
Year ended 31 March 2006 2006
£m (05/06 prices)
CN WEST 56 54
CN EAST 64 57
UU 49 52
CE NEDL 37 37
CE YEDL 44 44
WPD S Wales 31 34
WPD S WEST 47 41
EDFE LPN 43 45
EDFE SPN 53 47
EDFE EPN 76 70
SP Distribution 53 48
SP Manweb 54 39
SSE Hydro 30 33
SSE Southern 56 59
Opex – It’s not what you’ve got, it’s what you do with it!
ScottishPower
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07/08 – Our Challenges
Progress towards Zero Accidents and world class Health and Safety performance
Continue to deliver big investment programme
Drastically improve our customer performance
Work smarter to meet Ofgem cost targets
ScottishPower in a new context - Iberdrola
Learn from others and from ourselves …
ScottishPower
EnergyNetworks
Implementing a Zone-Based Structure
What
A zone-based organisation that focuses on the local delivery of elements of operations,
maintenance and construction
Maintain the benefits of areas of functional focus
Build on the success of the central approach to Investment Delivery and, in Operations, to incident
management
Build on the production model that is being established across the business
Establish plans for 7 local delivery zones in Scotland, and 6 zones in England & Wales
Why
Creates an ownership focus on the local network
Increased customer focus
More resources available to flex
Re-engages the local engineers by placing them into the local delivery team
Allows a local focus on network performance
Resolves issues such as the remote co-ordination of LV repairs
We have listened…
ScottishPower
EnergyNetworks
Customer & Performance – Zone Model
Sample Zone (Draft)
Production Assign
Required Resource to
Zone
Zone
Lead
Maintenance
Leader
Support
Network
Engineers
LV Network
Leader
Construction
Leader
Work in progress…
ScottishPower
EnergyNetworks
Proposal - Zones
Zone
Main Location
Other locations covered
Dumfries & Stranraer
Dumfries
Stranraer/Tongland
Ayrshire
Kilmarnock
Borders
Berwick
Gala
Edinburgh & Lothians
Telferton
Central & Fife
Bonnybridge
Glenrothes
Glasgow
Cambuslang
SVC
Lanarkshire
Cambuslang
Motherwell
Functional Centres
Kirkintilloch Bellshill
Bonnybridge Cambuslang
Work in progress…
ScottishPower
EnergyNetworks
Proposal - Zones
Zone Main Location Other locations covered
Mersey Lister Drive
Wirral Prenton Chester West
Cheshire Midpoint Warrington
North Wales Llandudno Rhyl/Caernarfon/Mona/ Porthmadoc
Aberystwyth Aberystywth Newtown
Oswestry/Dee Valley Oswestry Mold/Wrexham
Functional Centres
Prenton Lister Drive
Wrexham
Work in progress…
ScottishPower
EnergyNetworks
Next Steps
Implementation team developing zone based structure & activities in more detail
Implementation Team has spoken to over 300 people so far and will continue to arrange meetings
to get feedback on delivery plans
Discussion underway to reach enabling agreements that will allow Zones to be implemented
Focus on local implementation and ownership
Commence a review of stand by and shift-working
Full implementation of Production Model to enable industrial allocation to zones
Each Zone will have a Zone Lead who will be responsible for managing the day to day delivery of
work within the zone. This role will be advertised shortly
Plan is to move to Zone based structure by 1 October 2007
We have listened – it is now up to us all…
ScottishPower
EnergyNetworks
Progress towards Zero Accidents
- DuPont Review
zero accidents
John Duggan, Senior Consultant, DSR
Survey divided equally between Scotland & North West
Benchmarked against DuPont and EU/UK industries
Sample inspections of documents
Interviews with circa 200 people
Visits to 14 office and depot sites
Observations at over 50 work sites
ScottishPower
EnergyNetworks
Principal Strengths
– as noted by DuPont
zero accidents
Commitment – of senior managers
Electrical & Mechanical Standards – best practice
Feedback from field staff – cost not an issue for safety
Weekly safety call and mindset
General Safety Standards
Employee Communication & Consultation
Overall H&S Planning Process
Risk Assessment – START Process
Audits, Inspections & Monitoring
Contractors Safety – alignment with SP EN standards
ScottishPower
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DuPont’s
- Principal Recommendations
zero accidents
Non-operational authorisations – comparable to operational
Supervision & Support – increase and adopt production model
Production Model:Shifts – review shift working supervision
Managers’ visibility – safety role models
Live working – debate future business value
LV working – evaluate injuries for self-authorising staffs
Golden Rules – define what is really important
Reporting – encourage wider incident reporting
Zero Accidents – reinforce it’s for ALL accidents, not just LTA’s
Behavioural Safety Auditing – implement for all staffs
Line managers’ role – supervision not auditing
Contractors’ Safety metrics – monitor these with EN data
Sharing best practice – across SP group
ScottishPower
EnergyNetworks
The Dynamics of
Safety Culture Change
Injuries
Personal Commitment
Self-Managing
Self-Discipline
Self-Responsibility
Personal Goals
Care for Self
Management Commitment
Condition of Employment
Discipline
Rules
Supervisory Control
Value for People
Team Building
Team Commitment
Development in Team
Help Others Conform
Value for Each Other
Team Goals
Time
Interdependent
Independent
Dependent
So I Don’t Get Hurt
So I Don’t Get Caught
So No one Gets Hurt
DU PONT®
Bradley Curve
ScottishPower
EnergyNetworks
Iberdrola and ScottishPower
Iberdrola has doubled in size and results since 2001
Design and execution of a successful strategy
Combined ScottishPower and Iberdrola is better placed to meet challenges of European Utilities
Combination of expanded geographical presence
Greater diversification
Larger economies of scale
Increased financial strength
ScottishPower
EnergyNetworks
Iberdrola – Some Stats
Iberdrola
Employees 16155
No. of customers served by network 16 million
Generating capacity 30384Mw
Renewable generation 4434Mw
Iberdrola reached the highest quality supply level in its history in 2005 through:
Investment
Daily dedication of an expert and efficient team
ScottishPower
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Trade Union Visit
to Iberdrola
Delegation of TU representatives from ScottishPower recently visited Spain
Iberdrola attaches great value to the skills and experience of the business management and
employees of ScottishPower
Iberdrola’s existing relationship with the Spanish TUs is very strong
Committed to negotiation and proceeding with agreement
Does not envisage changing the principal locations
Does not intend to dispose of any material fixed assets
ScottishPower identity to be retained
ScottishPower
EnergyNetworks
Voting
Court meeting on 30 March 2007
Every vote counts
Scheme will only be approved if a majority in number of SP shareholders vote in favour
(either by proxy or in person)
Such majority holds 75% or more in value
Helpline – Freefone 0800 023 2559
ScottishPower
EnergyNetworks
This announcement has been made available to shareholders of Scottish Power plc (“ScottishPower”). If Iberdrola, S.A. (“Iberdrola”) conducts a tender offer for securities of the ScottishPower, ScottishPower will file a Solicitation/Recommendation Statement on Schedule 14D-9. Investors are urged to read this document when it is filed by ScottishPower with the U.S. Securities and Exchange Commission (the “SEC”), as it will contain important information. The Solicitation/Recommendation Statement and other public filings made from time to time by ScottishPower with the SEC are available without charge from the SEC’s website at www.sec.gov and at ScottishPower’s principal executive offices in Glasgow, Scotland. This announcement does not constitute an offer for sale of any securities or an offer or an invitation to purchase any securities in any jurisdiction. The new Iberdrola shares and Iberdrola ADSs will only be distributed to existing ScottishPower shareholders and ADS holders. The new Iberdrola shares and Iberdrola ADSs to be issued to ScottishPower shareholders and ADS holders have not been, and if they are issued pursuant to a scheme of arrangement will not be, registered under the U.S. Securities Act of 1933, as amended, or under the securities laws of any state, district or other jurisdiction of the United States, and no regulatory clearances in respect of the registration of the new Iberdrola shares or Iberdrola ADSs have been, or if issued pursuant to a scheme of arrangement will be, applied for in any jurisdiction. In the United States, if the new Iberdrola shares and Iberdrola ADSs are issued pursuant to a scheme of arrangement, they will be issued in reliance upon the exemption from the registration requirements of the U.S. Securities Act of 1933, as amended, provided by Section 3(a)(10) thereof. Under U.S. securities laws applicable to such circumstances, ScottishPower shareholders and ADS holders who are affiliates of ScottishPower or Iberdrola prior to, or will be affiliates of Iberdrola after, the Effective Date will be subject to certain U.S. transfer restrictions relating to the new Iberdrola shares and Iberdrola ADSs received in connection with the Scheme. Loan notes that may be issued in connection with the transaction have not been and will not be registered under the US Securities Act or under the relevant securities laws of any state or territory or other jurisdiction of the United States. Accordingly, loan notes may not be offered or sold in the United States, except in a transaction not subject to, or in reliance on an exemption from, the registration requirements of the US Securities Act and state securities laws. Cautionary note regarding forward looking statements This document contains statements about ScottishPower that are or may be forward looking statements, including for the purposes of the US Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts included in this document may be forward looking statements. Without limitation, any statements preceded or followed by or that include the words “targets”, “plans”, “believes”, “expects”, “aims”, “intends”, “will”, “should”, “may”, “anticipates”, “estimates”, “synergies”, “cost savings”, “projects”, “strategy”, or words or terms of similar substance or the negative thereof, are forward looking statements. Forward looking statements include statements relating to the following: (i) the expected timetable for completing this transaction, future capital expenditures, expenses, revenues, earnings, synergies, economic performance, indebtedness, financial condition, dividend policy, losses and future prospects of ScottishPower or the enlarged Iberdrola group; (ii) business and management strategies and the expansion and growth of ScottishPower’s or the enlarged Iberdrola group’s operations and potential synergies resulting from the Offer; and (iii) the effects of government regulation on ScottishPower’s or the enlarged Iberdrola group’s business. These forward looking statements are not guarantees of future performance. They have not been reviewed by the auditors of ScottishPower. These forward looking statements involve known and unknown risks, uncertainties and other factors which may cause them to differ from the actual results, performance or achievements expressed or implied by such forward looking statements. These forward looking statements are based on numerous assumptions regarding the present and future business strategies of such persons and the environment in which each will operate in the future. Investors are cautioned not to place undue reliance on the forward looking statements, which speak only as of the date they were made. All subsequent oral or written forward looking statements attributable to ScottishPower or the enlarged Iberdrola group or any of their respective members, directors, officers or employees or any persons acting on their behalf are expressly qualified in their entirety by the cautionary statement above. All forward looking statements included in this document are based on information available to ScottishPower on the date hereof. Persons receiving this Offer should not place undue reliance on such forward looking statements, and ScottishPower does not undertake any obligation to publicly update or revise any forward looking statements.
ScottishPower
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Any Questions?
You are our competitive advantage …
ScottishPower
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| /s/ Scottish Power plc | ||||
| (Registrant) | ||||
| Date: March 12th, 2007 | By: | /s/ Mrs Sheelagh Duffield | ||
| Mrs Sheelagh Duffield | ||||
| Company Secretary | ||||