Half Yearly Report

RNS Number : 5196G

Jersey Electricity PLC

13 May 2011

 

                                               

       

 

Jersey Electricity plc

 Interim Management Report

for the six months ended 31 March 2011

At a meeting of the Board of Directors held on 12 May 2011, the Board approved the Interim Management Report for the Group for the six months ended 31 March 2011 and declared an interim dividend of 4.25p compared to 4.05p for 2010 (re-stated following the 20 for 1 share split of the Ordinary and 'A' Ordinary shares approved at the 2011 AGM). The dividend will be paid on 30 June 2011 to those shareholders registered in the books of the Company on 10 June 2011.

The Interim Management Report is attached and will be available to the public on the Company's website www.jec.co.uk.

The Interim Management Report for 2011 has not been audited or reviewed by our external auditors nor have the results for the equivalent period in 2010. The results for the year ended 30 September 2010 have been extracted from the statutory accounts which had an unqualified audit opinion.

M.P. Magee                                                               P.J. Routier

Finance Director                                                        Company Secretary

Direct telephone number : 01534 505321                     Direct telephone number: 01534 505253

Direct fax number : 01534 505466                               Direct fax number : 01534 505515

Email : [e-mail]                                           Email : [e-mail]

13 May 2011

The Powerhouse,

PO Box 45,

Queens Road,

St Helier,

Jersey JE4 8NY

 

Jersey Electricity plc

Unaudited Interim Management Report

for the six months to 31 March 2011

Financial Summary	6 months 2011	6 months 2010	% increase/(decrease)
Electricity Sales -kWh (000)	373,832	366,628	2%
Turnover	£55.7m	£55.7m	0 %
Profit before tax	£6.9m	£7.5m	(8)%
Profit in Energy business	£4.7m	£4.4m	7%
Earnings per share	18.0p	19.6p*	(8)%
Net dividend proposed per ordinary share	4.25p	4.05p *	5%

* Earnings and dividends per share have been re-stated to reflect the 20 for 1 share split approved at the 2011 AGM

Group turnover at £55.7m was at the same level as in 2010 and profit before tax in the first half of 2011 was £6.9m being 8% lower than in the same period last year. Cost of sales was £0.6m lower with a reduction in the Energy business offset by an increase in our other business units due to higher turnover. Operating expenses were £1.1m higher than in 2010 with an increase in maintenance costs in our Energy business being the main reason. The fall in profits was a result of non-recurring revenues of £1.2m received in the prior year, and if excluded, the year-on-year rise in profits was around 9%. Earnings per share fell by 8% in line with profit movements.  

Electricity revenues in the first half of 2011 were 1% lower than in 2010 at £42.2m. Unit sales volumes were up 2% but this was offset by the year-on-year impact of the 5% decrease in customer tariffs from January 2010. Energy profits rose from £4.4m in 2010 to £4.7m mainly as a result of a lower cost of sales offset by higher overhead costs. Imported low-carbon electricity from France met 97% of our power requirements during the half year, which was higher than the 89% in the previous year. 

The principal risks and uncertainties identified in our last Annual Report have not materially altered in the interim period.  We announced to customers that following our tariff reduction of 5% from 1 January 2010 prices would remain frozen at current levels until at least the end of 2011. Our power purchase and foreign exchange requirements are materially hedged for the remainder of this financial year. In addition, around 70% of our forward imported power and foreign exchange requirements for 2012 have been hedged.

During late March 2011 a new ten year power importation framework for the period from 2013 to 2022 was struck by Jersey Electricity, along with our neighbours Guernsey Electricity, with our existing supplier EDF. This followed a tendering process involving another two of the largest electricity utilities in Europe and ensures a continuation of reliable, low-carbon imported electricity to the Channel Islands into the next decade.

Despite the tough trading conditions currently prevailing in markets our Retailing business saw year-on-year revenues rise 13% to £8.6m and profits increase by £0.1m to £0.5m. Profits from our Property portfolio fell by £0.3m to £0.9m due to the back-dated settlement of a rent review with one of our tenants which increased profits in the corresponding period last year. Our Building Services business produced profits of £0.2m being up £0.1m due to increased turnover. Our remaining business units produced profits of £0.5m being £0.8m less than in 2010. However the figures last year included £1m received from our former associate Newtel for fibre optic lease rentals and the part repayment of a loan previously written off. Interest received at £0.1m was at the same level as last year.

Cash, including short-term investments, fell £1.0m to £21.7m during the last six months, with operating cash produced from trading activity offset by £5.9m of electricity infrastructure investment. In terms of capital expenditure, the South Hill Switching Station project to reinforce the 90 kV network continued during this period and is due to be completed in August 2011.

The pension scheme surplus as at 31 March 2011 is £10.7m against a surplus of £1.8m at 30 September 2010. Since the last financial year end, assets have increased due to market performance and liabilities have fallen due to an increase in corporate bond yields resulting in increase in the retirement benefit surplus in our balance sheet.

Dividends paid increased substantially during this period, as in addition to the final dividend declared at the last AGM, a special dividend of £1m was paid on 31 March 2011 as indicated in our last Annual Report and Accounts.

Your Board proposes to pay an interim net dividend of 4.25p (2010: 4.05p re-stated following the 20 for 1 share split of the Ordinary and 'A' Ordinary shares approved at the 2011 AGM). Your Board aims to deliver sustained real growth each year and the proposed interim dividend is a 5% year on year increase.  

Responsibility statement

We confirm to the best of our knowledge:

(a) the condensed set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting';

(b) the Interim Management Report includes a fair review of the information required by the Disclosure and Transparency Rule DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and

(c) the Interim Management Report includes a fair review of the information required by the Disclosure and Transparency Rule DTR 4.2.8R (disclosure of related party transactions and changes therein); and

(d) this half yearly financial report contains certain forward-looking statements with respect to the operations, performance and financial condition of the Company. By their nature, these statements involve uncertainty since future events and circumstances can cause results and developments to differ materially from those anticipated. The forward-looking statements reflect knowledge and information available at the date of preparation of this half yearly financial report and the Company undertakes no obligation to update these forward-looking statements. Nothing in this half yearly financial report should be construed as a profit forecast.

G.J. GRIME - Chairman       C.J.AMBLER - Chief Executive            12 May 2011

INVESTOR TIMETABLE FOR 2011

10 June	Record date for interim ordinary dividend
30 June	Interim ordinary dividend for year ending 30 September 2011
1 July	Payment date for preference share dividends
End July	Interim Management Statement - nine months to 30 June 2011
15 December	Preliminary announcement of full year results

 

 

 

 

Condensed Consolidated Income Statement (Unaudited)

			Six months ended 31 March				Year ended 30 September
	Note		2011 £000		2010 £000		2010 £000
Revenue	2		55,714		55,706		98,889
Cost of sales			(39,154)		(39,713)		(68,845)
Gross profit			16,560		15,993		30,044
Revaluation of investment properties			-		-		2,391
Operating expenses			(9,775)		(8,661)		(18,226)
Group operating profit before joint venture			6,785		7,332		14,209
Share of profit/(loss) of joint venture			(21)		30		26
Group operating profit	2		6,764		7,362		14,235
Interest receivable			155		166		338
Finance costs			(5)		(7)		(13)
Profit from operations before taxation			6,914		7,521		14,560
Taxation	3		(1,377)		(1,490)		(2,185)
Profit from operations after taxation			5,537		6,031		12,375
Minority interest			(21)		(31)		(60)
Profit for the period attributable to the equity holders of the parent company			5,516		6,000		12,315
Attributable to:
Owners of the company			5,537		6,031		12,375
Minority interest			(21)		(31)		(60)
Profit for the period attributable to the equity holders of the parent company			5,516		6,000		12,315
EARNINGS PER SHARE
-     basic and diluted			18.0p		19.6p		40.2p
DIVIDENDS PER SHARE
-     paid	4		9.45p		5.90p		9.95p
-     proposed	4		4.25p		4.05p		5.90p

Condensed Consolidated Statement of Comprehensive Income (Unaudited)

			Six months ended 31 March				Year ended 30 September
			2011 £000		2010 £000		2010 £000
Profit for the period/year			5,516		6,000		12,315
Other comprehensive income
Actuarial gain on defined benefit scheme			8,375		4,278		5,158
Fair value gain/(loss) on cash flow hedges			1,711		(1,193)		(1,212)
Tax related components to other comprehensive income			(2,017)		(514)		(860)
Total comprehensive income for the period/year			13,585		8,571		15,401
Attributable to:
Owners of the company			13,606		8,602		15,461
Minority Interest			(21)		(31)		(60)
			13,585		8,571		15,401

Condensed Consolidated Statement of Changes in Equity (Unaudited)

	Share	Retained	Other	Total
	capital	earnings	reserves	reserves
	£000	£000	£000	£000
At 1 October 2010	1,532	139,396	756	141,684
Total recognised income and expense for the period	-	5,516	-	5,516
Unrealised  gains on hedges (net of tax)	-	-	1,368	1,368
Actuarial gain on defined benefit scheme (net of tax)	-	6,701	-	6,701
Equity dividends paid by Jersey Electricity plc	-	(2,895)	-	(2,895)
As at 31 March 2011	1,532	148,718	2,124	152,374
At 1 October 2009	1,532	126,074	1,726	129,332
Total recognised income and expense for the period	-	6,000	-	6,000
Unrealised losses on hedges (net of tax)	-	-	(994)	(994)
Actuarial gain on defined benefit scheme (net of tax)		3,565	-	3,565
Equity dividends paid by Jersey Electricity plc	-	(1,808)	-	(1,808)
As at 31 March 2010	1,532	133,831	732	136,095
At 1 October 2009	1,532	126,074	1,726	129,332
Total recognised income and expense for the period	-	12,315	-	12,315
Unrealised losses on hedges (net of tax)	-	-	(970)	(970)
Actuarial gain on defined benefit scheme (net of tax)		4,056	-	4,056
Equity dividends paid by Jersey Electricity plc	-	(3,049)	-	(3,049)
As at 30 September 2010	1,532	139,396	756	141,684

Condensed Consolidated Balance Sheet (Unaudited)

			As at 31 March				As at 30 September
			2011 £000		2010 £000		2010 £000
NON-CURRENT ASSETS
Intangible assets			17		60		29
Property, plant and equipment			122,150		119,399		120,944
Investment property			14,928		12,635		14,928
Retirement benefit surplus			10,720		1,426		1,795
Other investments			1,627		1,803		1,677
Total non-current assets			149,442		135,323		139,373
CURRENT ASSETS
Inventories			7,189		7,026		7,573
Trade and other receivables			19,730		18,560		15,958
Derivative financial instruments			2,096		357		387
Short-term investments - cash deposits			12,525		9,980		17,920
Cash and cash equivalents			9,150		8,263		4,756
Total current assets			50,690		44,186		46,594
TOTAL ASSETS			200,132		179,509		185,967
CURRENT LIABILITIES
Trade and other payables			13,429		13,244		14,116
Current tax payable			3,373		3,083		2,066
Total current liabilities			16,802		16,327		16,182
NET CURRENT ASSETS			33,888		27,859		30,412
NON-CURRENT LIABILITIES
Trade and other payables			16,662		15,264		15,907
Financial liabilities - preference shares			235		235		235
Deferred tax liabilities			14,019		11,555		11,932
Total non-current liabilities			30,916		27,054		28,074
TOTAL LIABILITIES			47,718		43,381		44,256
NET ASSETS			152,414		136,128		141,711
EQUITY
Share capital			1,532		1,532		1,532
Other reserves			2,124		732		756
Retained earnings			148,718		133,831		139,396
Equity attributable to the owners of the Company			152,374		136,095		141,684
Minority interest			40		33		27
TOTAL EQUITY			152,414		136,128		141,711

 

Condensed Consolidated Cash Flow Statement (Unaudited)

		Six months ended 31 March				Year ended 30 September
	Note	2011 £000		2010 £000		2010 £000
CASH FLOWS FROM OPERATING ACTIVITIES
Operating profit before joint venture		6,785		7,332		14,209
Depreciation and amortisation charges		3,968		3,873		7,997
Revaluation of investment property		-		-		(2,391)
Pension operating charge less contributions paid		(550)		(700)		(348)
Profit/(loss) on sale of fixed assets		-		(3)		-
Operating cash flows  before movement in working capital		10,203		10,502		19,467
Decrease/(increase) in inventories		384		(956)		(1,502)
(Increase)/decrease in trade and other receivables		(3,722)		(3,555)		(1,065)
Increase in trade and other payables		834		827		1,809
Interest received		106		31		312
Preference dividends paid		(5)		(4)		(9)
Income taxes paid		-		-		(1,572)
Net cash flows from operating activities		7,800		6,845		17,440
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment		(5,894)		(3,627)		(8,669)
Investment in intangible assets		(43)		(29)		-
Proceeds from disposal of  property		-		-		21
Repayment of long-term loan		50		50		150
Short-term investments		5,395		(1,780)		(9,720)
Net cash flows from investing activities		(492)		(5,386)		(18,218)
CASH FLOWS FROM FINANCING ACTIVITIES
Equity dividends paid	4	(2,914)		(1,832)		(3,102)
Net cash flows used in financing activities		(2,914)		(1,832)		(3,102)
Net increase in cash and cash equivalents		4,394		(373)		(3,880)
Cash and cash equivalents at beginning of period/year		4,756		8,636		8,636
Cash and cash equivalents at end of period/year		9,150		8,263		4,756

Notes to the Condensed Interim Accounts (Unaudited)

1.         Accounting policies

 

Basis of preparation

The interim accounts for the six months ended 31 March 2011 have been prepared on the basis of the accounting policies set out in the 30 September 2010 annual report and accounts using accounting policies consistent with International Financial Reporting Standards (IFRS) and in accordance with IAS 34 'Interim Financial Reporting'.

IFRIC 18 'Transfers of assets from customers' was adopted during the period. IFRIC 18 is effective for transfer of assets received on or after 1 July 2009. This standard clarifies the requirements for agreements in which an entity receives cash to construct an item of property, plant or equipment (or receives such assets from a customer) that the entity must then use either to connect the customer to a network or to provide the customer with ongoing access to a supply of goods or services (such as a supply of electricity, gas or water). The contributed assets will be recognised initially at fair value, and the related income will be recognised immediately, or if there is a future service obligation, over the relevant service period. Jersey Electricity plc has an ongoing obligation to maintain and replace such assets within our network and therefore its current accounting policy to treat customer contributions for new connections as deferred revenues, which are released to the income statement over the estimated operational lives of the related assets, has been retained. Therefore the adoption of IFRIC 18 has not had an impact on prior year figures or the period covered in these condensed interim accounts.

Jersey Electricity plc has considerable financial resources and, as a consequence, the directors believe that it is well placed to manage its business risks successfully despite the current uncertain economic outlook. The directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the annual financial statements.

2.         Turnover and profit

The contributions of the various activities of the Group to turnover and profit are listed below:

                                                                          Six months ended                                                             Year ended

	31 March 2011			31 March 2010			30 September 2010
	External	Internal	Total	External	Internal	Total	External	Internal	Total
Revenue	£000	£000	£000	£000	£000	£000	£000	£000	£000
Energy	42,186	94	42,280	42,589	121	42,710	74,475	281	74,756
Building Services	2,552	189	2,741	1,908	107	2,015	4,283	237	4,520
Retail	8,603	30	8,633	7,648	24	7,672	14,410	50	14,460
Property	1,110	344	1,454	1,519	348	1,867	2,619	696	3,315
Other	1,263	335	1,598	2,042	313	2,355	3,102	655	3,757
	55,714	992	56,706	55,706	913	56,619	98,889	1,919	100,808
Inter-segment elimination			(992)			(913)			(1,919)
			55,714			55,706			98,889
Operating profit
Energy			4,717			4,400			7,742
Building Services			201			129			240
Retail			508			383			465
Property			854			1,181			1,858
Other			484			1,269			1,539
Operating profit before property revaluation			6,764			7,362			11,844
Revaluation of investment  properties			-			-			2,391
Operating profit			6,764			7,362			14,235

Notes to the Condensed Interim Accounts (Unaudited)

Materially, all the Group's operations are conducted within the Channel Islands. All transfers between divisions are at an arm's-length basis.

The assets and liabilities of the Group are not reported on as there has been no significant movement in the values in the six months to 31 March 2011.

3.         Income tax

	Six months ended             31 March				Year ended 30 September
	2011 £000		2010 £000		2010 £000
Current income tax	(1,307)		(1,385)		(1,940)
Deferred income tax	(70)		(105)		(245)
Total income tax	(1,377)		(1,490)		(2,185)

For the period ended 31 March 2011 and subsequent periods, the Company is taxable at the rate applicable to utility companies of 20%.

4.         Dividends

	Six months ended     31 March				Year ended 30 September
	2011 £000		2010 £000		2010 £000
Distributions to equity holders and by subsidiaries in the period	2,914		1,832		3,102

The distribution to equity holders in the period consisted of £1,899,680 (124p net of tax per share) in respect of the final dividend for 2010. A special dividend of £996,000 (65p net of tax per share) was also made to all ordinary shareholders to distribute the proceeds received from our associate Newtel from the sale of assets. This was prior to the 20 for 1 share split approved at the 2011 AGM and therefore the total 189p of dividend paid has been re-stated at 9.45p. Figures for previous periods have also been re-stated to reflect the impact of the share split. In addition £19,000 was paid by subsidiaries to minority interests for the six months to 31 March 2011.

The Directors have declared an interim dividend of 4.25p per share, net of tax (2010 - 4.05p) for the six months ended 31 March 2011 to shareholders on the register at the close of business on 10 June 2011. This dividend was approved by the Board on 12May 2011 and has not been included as a liability at 31 March 2011.

5.         Pensions

In consultation with the independent actuaries to the scheme, the valuation of the pension scheme assets and liabilities has been updated to reflect current market discount rates, current market values of investments and actual investment returns applicable under IAS 19 'Employee Benefits', and also consideration given as to whether there have been any other events that would significantly affect the pension liabilities.

Notes to the Condensed Interim Accounts (Unaudited)

6.         Related party transactions

The Company currently leases the La Collette Power Station site from its largest shareholder, the States of Jersey, for a peppercorn rent of £1,000 per annum. This lease was subject to a rent review as at June 2006 and the Company is in dispute with its landlord. The information usually required by IAS 37 Provisions, 'Contingent liabilities and contingent assets', is not disclosed on the grounds that it may prejudice the outcome of the dispute.  

	Value of    electricity  services supplied by Jersey Electricity		Value of goods  & other services supplied by Jersey Electricity		Value of goods & services purchased by Jersey Electricity		Amounts due to  Jersey Electricity		Amounts due by  Jersey Electricity
For the 6 months ended 31 March	2011	2010	2011	2010	2011	2010	2011	2010	2011	2010
	£000	£000	£000	£000	£000	£000	£000	£000	£000	£000
The States of Jersey	3,914	3,818	1,254	724	161	230	995	681	-	-
JT Group Limited	781	765	653	164	64	71	168	136	-	16
Jersey Post Int Limited	73	78	-	-	30	44	11	15	6	6
Jersey New Waterworks Ltd	342	407	3	1	26	43	51	-	-	-
Foreshore Limited	282	276	376	369	5	6	115	207	-	-
Newtel Limited	15	13	118	124	2	1	-	-	-	-

The States of Jersey is the Company's majority and controlling shareholder. Jersey New Waterworks is majority owned and controlled by the States of Jersey. JT Group Limited and Jersey Post International Limited are both wholly owned by the States of Jersey. All transactions are undertaken at an arm's length basis.

As at the 31 March 2011 Foreshore Limited had a long-term loan, to the value of £400,000 (2010: £550,000) due to Jersey Electricity plc.

During April 2011 the Company sold all shares held in its associate Newtel Limited.

 

END

 

 

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