Annual Report and Accounts
Jersey Electricity Company Limited
15 December 2005
The Jersey Electricity Company
Preliminary Announcement of Annual Results
Year Ended 30 September 2005
At a meeting of the Board of Directors held on 14 December 2005, the final
accounts for the Group for the year to 30 September 2005 were approved, details
of which, are attached.
The financial information set out in the announcement does not constitute the
Company's statutory accounts for the years ended 30 September 2005 or 2004, but
is derived from those accounts. Statutory accounts for 2004 have been delivered
to the Jersey Registrar of Companies and those for 2005 will be delivered in
early 2006. The auditors have reported on those accounts and their reports were
unqualified.
A final gross dividend of 77.5p (62p net of tax) on the Ordinary and 'A'
Ordinary shares in respect of the period ended 30 September 2005 was recommended
which, together with the interim gross dividend of 50p (40p net of tax), makes a
total gross dividend for the year of £1.275 (£1.02p net of tax) on each £1
share.
The dividend will be paid on 31 March 2006 to those shareholders registered in
the books of the Company on 10 March 2006. A dividend on the 5% cumulative
participating preference shares of 1.5% (2004 1.5%) payable on 3 July 2006 was
also recommended.
The Annual General Meeting of the Company will be held on 14 March 2006.
P.J. Routier
Company Secretary
Direct telephone number : 01534 505253
Direct fax number : 01534 505515
Email : proutier@jec.co.uk
15 December 2005
The Powerhouse,
PO Box 45,
Queens Road,
St Helier,
Jersey JE4 8NY
THE JERSEY ELECTRICITY COMPANY LIMITED
Preliminary Announcement of Annual Results
Year ended 30 September 2005
The Chairman, Derek Maltwood, comments :
'I am pleased to report on another year of outstanding performance by the
Company and its people. Group profits have risen by 5% in the year, despite a
slight fall in profits in our core, electricity supply business. Our customers
remained sheltered from escalating global energy costs, by the fixed price
agreement under which we have imported power from Europe throughout the past
three years. The expiry of this contract in December, 2005 exposes our
electricity supply business to high and volatile power prices in the European
wholesale market. Your Board is convinced that the Company's longer term growth
interests are best served by maintaining electricity's reputation in Jersey, for
price competitiveness and stability. It believes too, that tariff restraint is
especially appropriate in the context of the new Competition Law and a
Competition Regulatory Authority seeking to establish competitive behaviour in a
constrained market. As a result, your Board has decided to pass on to customers
the 55% increase in the cost of imported power, over the next two to three
years, rather than immediately, and this will reduce profits in our core
business over that period.'
________________________________________________________________________________
Group turnover for the year to 30 September 2005 at £57.2m was at a very similar
level as in the year ended 30 September 2004. The Energy business contributed
£44.2m of the Group turnover which was £1.0m above last year due to a 1.3%
increase in units sold and a rise in tariffs.
Our electricity tariff increase of 2.5% in 2005 was the first since January 2001
and contrasted with dramatically increased heating oil and gas prices in
Jersey's energy market. Again this year we won more than 80% of the significant
growth in this market arising from the Island's buoyant property development
sector. Our three year fixed price power contract with Electricite de France
expired on 1 December 2005, since when our realignment with the European
wholesale power market has increased our costs for imported power by 55%.
Tariff rises for customers will, however, be phased in over a two to three year
period rather than the full increase being applied immediately. In January 2006
tariffs will rise by an average of 9.7% and we have announced that a similar
increase can be expected in 2007. We have mitigated our power purchasing risks
for 2006 and have negotiated the facility to cap or fix our procurement costs on
a rolling basis for the following year, as opportunities arise.
Turnover in our Retail business rose by 7% to £5.7m, despite a difficult
business climate, due to a strong performance in the second half of the
financial year. Diversification away from the retailing of core white and brown
products, where demand has fallen, into mobile phones and computers has aided
performance. Turnover in the Property business rose 4% to £2.1m but fell in
Building Services from £3.7m to £2.3m due to delays in the refurbishment of
supermarkets, in particular. Turnover in our Other businesses segment fell by
£0.5m to £2.9m with the primary reason being the sale in October 2004 of our
small loss making JET telecommunications business.
Profit on ordinary activities, before tax and exceptional costs, for the year to
30 September 2005 rose by 5% to £7.4m. Profit on ordinary activities, after
exceptional costs, rose 35% from £5.5m in 2004. Profit in the Energy business
fell by £0.6m to £5.9m with increased unit sales and tariffs offset by higher
electricity import costs largely due to the strengthening of the euro against
sterling. In our Property division there was a 4% increase in core rental income
due to higher occupancy rates but profits were down £0.3m to £0.8m due to a
book loss of £0.3m on the sale of our Commercial House property in St Helier,
Jersey on 30 September 2005 for £6.8m (against an original cost, before
revaluations, of £0.7m). The Retail Appliance Sales business decreased profits
marginally to £0.1m. The Building Services business produced profits £0.1m lower
than 2004, at £0.1m, due to a lower level of sales. Other businesses, including
joint ventures and associates, produced a profit of £0.1m against losses of
£0.8m in 2004. The improvement results from a number of factors: losses at our
Newtel associate in 2004 no longer impact Group profits, reduced losses in our
Foreshore joint venture, the exit from our JET telecommunications business and
improved performance in Jendev and Jersey Energy.
Interest received in 2005 was £0.4m compared to interest paid of £0.1m last year
as bank deposits increased in the year. The cash at bank at the year end was
£10.9m. The net cash inflow of £8.0m during the year was £0.6m higher than in
2004 mainly due to a lower level of capital expenditure and investment spend.
Cash on the sale of the Commercial House property was not received until early
October 2005. The taxation charge for the year was £1.8m consistent with 2004.
Group earnings per share, excluding the impact of exceptional costs, rose 7% to
£3.66 compared to £3.41 in 2004. Earnings per share including the impact of
exceptional charges were £3.66 compared to £2.40 in the previous year.
Dividends for the year rose by 11% from a gross level of 115.0p (92.0p net of
tax) in 2004 to a proposed 127.5p (102.0p net of tax) for 2005 consistent with
the rise in earnings per share in the year. Dividend cover, excluding
exceptional costs, fell marginally to 3.6 times.
From 1 October 2005 the Group will comply with the International Financial
Reporting Standards (IFRS). The first financial information to be reported by
the Group in accordance with IFRS will be for the six months ending 31 March
2006. An IFRS Transition Statement will be issued with the 2005 Annual Report
and Accounts which will detail the likely impact on the main financial
performance indicators by re-stating the 2005 year end figures under IFRS.
THE JERSEY ELECTRICITY COMPANY LIMITED
Consolidated Profit and Loss Account
for the year ended 30 September 2005
Notes 2005 2004
£ 000 £ 000
Turnover:
Group and share of joint venture 2 57,214 57,684
Less: Share of joint venture turnover (1,118) (771)
Group turnover 56,096 56,913
Cost of sales (32,078) (32,039)
Gross profit 24,018 24,874
Net operating expenses (16,623) (16,808)
Group operating profit 7,395 8,066
Share of operating loss in joint venture (355) (517)
Share of associate's operating loss - (417)
Exceptional item - impairment of investment 3 - (1,545)
Profit on ordinary activities before interest and
taxation 2 7,040 5,587
Net interest 354 (101)
Profit on ordinary activities before taxation 7,394 5,486
Tax on profit on ordinary activities (1,755) (1,759)
Profit on ordinary activities after taxation 5,639 3,727
Minority Interest (33) (42)
Profit on ordinary activities after taxation and
minority interest 5,606 3,685
Dividends paid and proposed (1,572) (1,418)
Retained profit for the group and share of joint
venture loss 4,034 2,267
Earnings per ordinary share (basic and diluted) £3.66 £2.40
Earnings per ordinary share (basic and diluted)
excluding exceptional items £3.66 £3.41
THE JERSEY ELECTRICITY COMPANY
Consolidated Statement of Total Recognised Gains and Losses
for the year ended 30 September 2005
2005 2004
£ 000 £ 000
Profit on ordinary activities after taxation and minority
interest 5,606 3,685
Unrealised surplus on revaluation of plant 82 11
Unrealised surplus/(deficit) on revaluation of investment
properties 2,370 (18)
Total recognised gains since last annual report and accounts 8,058 3,678
Consolidated Note of Historical Cost Profits and Losses
for the year ended 30 September 2005
2005 2004
£ 000 £ 000
Profit on ordinary activities before taxation (after minority interest) 7,361 5,444
Difference between the historical cost depreciation charge
and the actual depreciation charge for the year calculated
on the revalued amount 435 884
Realised profit on sale of investment property 6,243 -
Historical cost profit on ordinary activities before taxation 14,039 6,328
(after minority interest)
Historical cost profit for the year retained after taxation,
minority interest and dividends 10,712 3,151
THE JERSEY ELECTRICITY COMPANY
Balance Sheets
30 September 2005
Group Group Company Company
2005 2004 2005 2004
£ 000 £ 000 £ 000 £ 000
Fixed Assets
Intangible fixed assets - 100 - -
Tangible fixed assets 119,756 126,183 119,756 126,181
Investments:
subsidiary - - 477 477
other investments 5 5 5 5
joint venture - - 1,951 2,251
Share of associate's net assets - - - -
Share of joint venture gross assets 526 542
Share of joint venture gross liabilities (3,428) (3,071)
Loans to joint venture 3,651 2,951
Net joint venture assets 749 422 - -
120,510 126,710 122,189 128,914
Current Assets
Stocks and work in progress 3,927 2,584 3,834 2,500
Debtors due within one year 14,020 9,501 13,903 9,285
Debtors due after more than one year 7,069 6,973 7,069 6,973
Cash at bank and in hand 12,240 2,890 12,168 2,865
37,256 21,948 36,974 21,623
Creditors
Amounts falling due within one year 10,841 10,678 10,839 10,647
Net Current Assets 26,415 11,270 26,135 10,976
Total assets less current liabilities 146,925 137,980 148,324 139,890
Creditors
Amounts falling due after more than one year 13,395 11,387 13,332 11,296
Provisions for Liabilities and Charges
Pensions and similar obligations 495 487 495 487
Deferred taxation 11,792 11,346 11,792 11,346
25,682 23,220 25,619 23,129
121,243 114,760 122,705 116,761
Capital and Reserves
Called-up share capital - Equity 1,532 1,532 1,532 1,532
- Non-equity 235 235 235 235
Reserves - Equity 119,435 112,949 120,938 114,994
Shareholders' Funds 121,202 114,716 122,705 116,761
Equity minority interest 41 44 - -
121,243 114,760 122,705 116,761
THE JERSEY ELECTRICITY COMPANY LIMITED
Consolidated Cash Flow Statement
for the year ended 30 September 2005
2005 2004
£ 000 £ 000
RECONCILIATION OF OPERATING PROFIT TO
NET CASH INFLOW FROM OPERATING ACTIVITIES
Group operating profit 7,395 8,066
Depreciation and amortisation charges 7,313 7,793
Loss on sale of fixed assets 258 -
(Increase)/decrease in stocks & work in progress (1,343) 377
Decrease/(increase) in debtors 2,195 (24)
Increase in creditors 246 1,077
NET CASH INFLOW FROM OPERATING ACTIVITIES 16,064 17,289
Returns on investments and servicing of finance 319 (101)
Taxation (779) (336)
Capital and investment expenditure (6,108) (8,209)
Dividends paid (1,516) (1,243)
INCREASE IN CASH 7,980 7,400
RECONCILIATION OF NET CASHFLOW
Increase in cash 7,980 7,400
Net funds/(debt) as at beginning of year 2,890 (4,510)
Net funds as at end of year 10,870 2,890
Net funds comprise of:
Cash at bank and in hand 12,240 2,890
Overdraft (1,370) -
Net funds as at end of year 10,870 2,890
THE JERSEY ELECTRICITY COMPANY LIMITED
Notes to the accounts
Year ended 30 September 2005
1. Basis of Preparation
The accounts have been prepared on the basis of the accounting policies set out
in the Group 2004 Annual Report and Accounts.
2. Turnover and profit
The contributions of the various activities of the Group to turnover (including
joint venture) and profit are listed below:
Turnover Profit/(loss)
2005 2004 2005 2004
Principal activities: £000 £000 £000 £000
Energy 44,231 43,232 5,932 6,549
Building Services 2,258 3,712 141 154
Retail Appliance Sales 5,712 5,351 70 106
Property 2,100 2,010 830 1,107
Other 2,913 3,379 67 (784)
57,214 57,684 7,040 7,132
Exceptional item:
Impairment of investment in associate - (1,545)
Profit on ordinary activities before interest and 7,040 5,587
taxation
The information currently available to report the net assets of each business
class as a reportable segment is limited, as each business operates as a
division of the Group and therefore in certain instances there is no reasonable
basis to allocate the Group net assets to each business class. On a geographical
basis, the Group's material operations are conducted within the Channel Islands.
3. Exceptional Item - impairment of investment in associate
The exceptional charge of £1,545,000 that was disclosed in 2004 was for the
write-down in the previous year of the investment in Newtel Holdings Limited
following an impairment review. There was no related tax benefit associated with
this charge.
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