Half Yearly Report

RNS Number : 7956C

Jersey Electricity PLC

08 May 2012

 

                                               

       

 

Jersey Electricity plc

 Interim Management Report

for the six months ended 31 March 2012

The Board approved the Interim Management Report for the Group for the six months ended 31 March 2012 and declared an interim dividend of 4.50p compared to 4.25p for 2011. The dividend will be paid on 29 June 2012 to those shareholders registered in the books of the Company on 8 June 2012.

The Interim Management Report is attached and will be available to the public on the Company's website www.jec.co.uk/investor-relations/financial-reports.aspx

The Interim Management Report for 2012 has not been audited or reviewed by our external auditors nor have the results for the equivalent period in 2011. The results for the year ended 30 September 2011 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]

4 May 2012

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 2012

Financial Summary	6 months 2012	6 months 2011	% increase/(decrease)
Electricity Sales -kWh (000)	357,724	373,832	(4)%
Turnover	£54.2m	£55.7m	(3)%
Profit before tax	£6.4m	£6.9m	(7) %
Profit in Energy business	£4.5m	£4.7m	(4)%
Earnings per share	16.66p	18.00p	(7) %
Net dividend proposed per ordinary share	4.50p	4.25p	6 %

Turnover at £54.2m was 3% lower than in 2012 and profit before tax in the first half of 2012 was £6.4m, being 7% below the same period last year. Cost of sales was £1.0m lower mainly due to a reduction in units sold in our Energy business. Operating expenses at £9.8m were at the same level as last year. Earnings per share fell by 7% in line with profit movements.  

Electricity revenues in the first half of 2012 were 4% lower than in 2011 at £40.5m. Unit sales volumes were down 4% due to temperatures being above the seasonal norm in the winter period with 5 out of the 6 months being milder than both last year and the long-term average. Energy profits fell from £4.7m in 2011 to £4.5m mainly as a result of lower unit sales offset by lower costs. We generated only 1% of our electricity on-island (compared to 3% last year) as imported low-carbon electricity from France met 93% of our power requirements during the half year. The remaining 6% came from the new Energy from Waste plant, owned by the States of Jersey, which is now fully operational.   

Customer tariffs rose by an average of 2.9% on 1 May 2012, being our first increase in over 3 years, and will remain frozen until at least the end of 2012. Our power purchase and foreign exchange requirements are materially hedged for the remainder of this financial year. In addition, around 90% and 70% of our needs for 2013 and 2014 respectively have also been hedged. Our goal is to deliver competitive and stable customer tariffs, whilst maintaining a reasonable return for our shareholders.  

Despite the tough trading conditions currently prevailing in markets our Retailing business saw year-on-year revenues rise 7% to £9.2m but profits fell by £0.2m to £0.3m. The increased revenues were primarily from an increase in turnover of £1m, to £2.4m, in our internet day2dayshop.com operation, with the remaining segments impacted by margin pressures. Profits from our Property portfolio remained at £0.8m. Our Building Services business produced profits of £0.2m being at the same level as 2011 despite lower turnover. Our remaining business units produced profits of £0.4m being £0.1m less than in 2011. Interest received at £0.2m was at the same level as last year.

Cash, including short-term investments, fell £7.1m to £17.4m during the last six months, with operating cash produced from trading activity offset by £11.6m of electricity infrastructure investment spend. The project to import, and refurbish two used diesel engines, commenced during the period with the plant having arrived in Jersey in March. It is scheduled to be completed by quarter 1 next year at a cost of around £10m of which around £6m has been spent to date. The engines replace two units within our existing generating fleet which have recently come to the end of their useful lives and will provide additional on-island flexibility and resilience.

The pension scheme deficit as at 31 March 2012 was £2.0m against a deficit of £4.4m at 30 September 2011. Since the last financial year end assets have increased due to market performance but this was largely offset by a rise in liabilities due to a fall in corporate bond yields which reduced the discount rate.  

Your Board proposes to pay an interim net dividend of 4.50p (2011: 4.25p). We continue to aim to deliver sustained real growth each year, excluding any special dividends, and the proposed interim dividend is a 6% year on year increase. Dividends paid during this period were lower than last year because a special dividend of £1m was paid on 31 March 2011, in addition to the normal dividend stream.

The principal risks and uncertainties identified in our last Annual Report have not materially altered in the interim period but it is worth highlighting three particular risk areas, due to updated circumstances.

-     On 29 April 2012 an electrical fault occurred on a section of the Channel Islands Electricity Grid between Guernsey and Jersey. The circuit remains out of service but has not affected power flows between France and Jersey. Further testing has located the approximate site of the problem area within the sub-sea cable. Discussions are taking place with the cable manufacturer to organise additional detailed testing to confirm the initial findings and establish the exact nature of the fault. Insurance arrangements exist for such eventualities and from initial discussions it is currently felt that this is an insured risk.

-     The Jersey Competition and Regulatory Authority initiated an electricity market review in Jersey in May 2012. We view our existing model, which seeks to provide a fair balance of reward to all our stakeholders, without large regulatory costs, as being a successful and sustainable framework particularly in the context of being based on an island serving fewer than 50,000 customer premises and our obligations around maintaining security of supply.

-     Our day2dayshop.com internet operation and Foreshore, our data centre joint venture, have both been impacted by the abolition by the UK Government, on 1 April 2012, of the Low Value Consignment Relief (LVCR) previously applicable to goods valued at less than £15 sold to the UK. The business units have both implemented plans to seek alternative markets to mitigate this change in tax treatment and its impact on their respective business models.           

Your Board is satisfied that Jersey Electricity plc has sufficient resources to continue in operation for the foreseeable future, a period of not less than 12 months from the date of this report. Accordingly, we continue to adopt the going concern basis in preparing the condensed financial statements.

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            4 May 2012

INVESTOR TIMETABLE FOR 2012

8 June	Record date for interim ordinary dividend
29 June	Interim ordinary dividend for year ending 30 September 2012
2 July	Payment date for preference share dividends
End July	Interim Management Statement - nine months to 30 June 2012
21 December	Preliminary announcement of full year results

 

 

Condensed Consolidated Income Statement (Unaudited)

			Six months ended 31 March				Year ended 30 September
	Note		2012 £000		2011 £000		2011 £000
Revenue	2		54,169		55,714		100,494
Cost of sales			(38,138)		(39,154)		(69,989)
Gross profit			16,031		16,560		30,505
Loss on revaluation of investment properties			-		-		(115)
Operating expenses			(9,768)		(9,775)		(19,553)
Group operating profit before joint venture			6,263		6,785		10,837
Share of loss of joint venture			(28)		(21)		(86)
Group operating profit	2		6,235		6,764		10,751
Interest receivable			175		155		327
Finance costs			(4)		(5)		(11)
Profit from operations before taxation			6,406		6,914		11,067
Taxation	3		(1,271)		(1,377)		(2,423)
Profit from operations after taxation			5,135		5,537		8,644
Attributable to:
Owners of the company			5,103		5,516		8,593
Minority interest			32		21		51
Profit for the period attributable to the equity holders of the parent company			5,135		5,537		8,644
EARNINGS PER SHARE
-     basic and diluted			16.66p		18.00p		28.05p
DIVIDENDS PER SHARE
-     paid	4		6.50p		9.45p		13.70  p
-     proposed	4		4.50p		4.25p		6.50  p

Condensed Consolidated Statement of Comprehensive Income (Unaudited)

			Six months ended 31 March				Year ended 30 September
			2012 £000		2011 £000		2011 £000
Profit for the period/year			5,135		5,537		8,644
Other comprehensive income
Actuarial gain/(loss) on defined benefit scheme			2,165		8,375		(6,640)
Fair value (loss)/gain on cash flow hedges			(1,624)		1,711		100
Tax related components relating to other comprehensive income			(108)		(2,017)		1,308
Total comprehensive income for the period/year			5,568		13,606		3,412
Attributable to:
Owners of the company			5,536		13,585		3,361
Minority Interest			32		21		51
			5,568		13,606		3,412

Condensed Consolidated Statement of Changes in Equity (Unaudited)

	Share	Retained	Other	Total
	capital	earnings	reserves	reserves
	£000	£000	£000	£000
At 1 October 2011	1,532	138,477	836	140,845
Total recognised income and expense for the period	-	5,103	-	5,103
Unrealised  losses on hedges (net of tax)	-	-	(1,299)	(1,299)
Actuarial gain on defined benefit scheme (net of tax)	-	1,732	-	1,732
Equity dividends paid by Jersey Electricity plc	-	(1,992)	-	(1,992)
As at 31 March 2012	1,532	143,320	(463)	144,389
At 1 October 2010	1,532	139,396	756	141,684
Total recognised income and expense for the period	-	5,516	-	5,516
Unrealised gain 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 2010	1,532	139,396	756	141,684
Total recognised income and expense for the period	-	8,593	-	8,593
Unrealised gain on hedges (net of tax)	-	-	80	80
Actuarial loss on defined benefit scheme (net of tax)		(5,314)	-	(5,314)
Equity dividends paid by Jersey Electricity plc	-	(4,198)	-	(4,198)
As at 30 September 2011	1,532	138,477	836	140,845

Condensed Consolidated Balance Sheet (Unaudited)

			As at 31 March				As at 30 September
			2012 £000		2011 £000		2011 £000
NON-CURRENT ASSETS
Intangible assets			36		17		60
Property, plant and equipment			134,597		122,150		128,330
Investment property			14,813		14,928		14,813
Retirement benefit surplus			-		10,720		-
Other investments			1,534		1,627		1,557
Total non-current assets			150,980		149,442		144,760
CURRENT ASSETS
Inventories			6,148		7,189		6,451
Trade and other receivables			19,411		19,730		15,361
Derivative financial instruments			-		2,096		486
Short-term investments - cash deposits			11,200		12,525		17,745
Cash and cash equivalents			6,227		9,150		6,787
Total current assets			42,986		50,690		46,830
TOTAL ASSETS			193,966		200,132		191,590
CURRENT LIABILITIES
Trade and other payables			14,182		13,429		15,878
Derivative financial instruments			1,137		-		-
Current tax payable			2,864		3,373		1,820
Total current liabilities			18,183		16,802		17,698
NET CURRENT ASSETS			24,803		33,888		29,132
NON-CURRENT LIABILITIES
Trade and other payables			17,611		16,662		17,152
Retirement benefit deficit			1,963		-		4,420
Financial liabilities - preference shares			235		235		235
Deferred tax liabilities			11,562		14,019		11,226
Total non-current liabilities			31,371		30,916		33,033
TOTAL LIABILITIES			49,554		47,718		50,731
NET ASSETS			144,412		152,414		140,859
EQUITY
Share capital			1,532		1,532		1,532
Other reserves			(463)		2,124		836
Retained earnings			143,320		148,718		138,477
Equity attributable to the owners of the Company			144,389		152,374		140,845
Minority interest			23		40		14
TOTAL EQUITY			144,412		152,414		140,859

 

Condensed Consolidated Cash Flow Statement (Unaudited)

		Six months ended 31 March				Year ended 30 September
	Note	2012 £000		2011 £000		2011 £000
CASH FLOWS FROM OPERATING ACTIVITIES
Operating profit before joint venture		6,263		6,785		10,837
Adjustment for disposal of shares in associate		-		-		(59)
Adjustment for repayment of long-term loan by associate		-		-		(136)
Depreciation and amortisation charges		4,034		3,968		8,212
Revaluation of investment property		-		-		115
Pension operating charge less contributions paid		(303)		(550)		(438)
(Loss)/profit on sale of fixed assets		(24)		-		6
Operating cash flows  before movement in working capital		9,970		10,203		18,537
Decrease in inventories		303		384		1,122
(Increase)/decrease in trade and other receivables		(3,956)		(3,722)		617
Increase in trade and other payables		87		834		2,326
Interest received		81		106		309
Preference dividends paid		(5)		(5)		(9)
Income taxes paid		-		-		(2,067)
Net cash flows from operating activities		6,480		7,800		20,835
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment		(11,579)		(5,894)		(14,940)
Investment in intangible assets		(4)		(43)		(31)
Net proceeds from disposal of  fixed assets		17		-		17
Repayment of long-term loan		-		50		186
Disposal of shares in associate		-		-		59
Short-term investments		6,545		5,395		175
Net cash flows from investing activities		(5,021)		(492)		(14,534)
CASH FLOWS FROM FINANCING ACTIVITIES
Equity dividends paid	4	(2,020)		(2,914)		(4,270)
Net cash flows used in financing activities		(2,020)		(2,914)		(4,270)
Net increase in cash and cash equivalents		(560)		4,394		2,031
Cash and cash equivalents at beginning of period/year		6,787		4,756		4,756
Cash and cash equivalents at end of period/year		6,227		9,150		6,787

Notes to the Condensed Interim Accounts (Unaudited)

1.         Accounting policies

 

Basis of preparation

The interim accounts for the six months ended 31 March 2012 have been prepared on the basis of the accounting policies set out in the 30 September 2011 annual report and accounts using accounting policies consistent with International Financial Reporting Standards (IFRS) and in accordance with IAS 34 'Interim Financial Reporting'.

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 2012			31 March 2011			30 September 2011
	External	Internal	Total	External	Internal	Total	External	Internal	Total
Revenue	£000	£000	£000	£000	£000	£000	£000	£000	£000
Energy	40,525	129	40,654	42,186	94	42,280	74,486	326	74,812
Building Services	2,299	118	2,417	2,552	189	2,741	4,716	232	4,948
Retail	9,227	32	9,259	8,603	30	8,633	16,499	67	16,566
Property	1,058	344	1,402	1,110	344	1,454	2,216	688	2,904
Other	1,060	318	1,378	1,263	335	1,598	2,577	654	3,231
	54,169	941	55,110	55,714	992	56,706	100,494	1,967	102,461
Inter-segment elimination			(941)			(992)			(1,967)
			54,169			55,714			100,494
Operating profit
Energy			4,540			4,717			7,678
Building Services			193			201			220
Retail			327			508			476
Property			813			854			1,652
Other			362			484			840
Operating profit before property revaluation			6,235			6,764			10,866
Loss on revaluation of investment  properties			-			-			(115)
Operating profit			6,235			6,764			10,751

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 2012.

Notes to the Condensed Interim Accounts (Unaudited)

3.         Income tax

	Six months ended             31 March				Year ended 30 September
	2012 £000		2011 £000		2011 £000
Current income tax	1,044		1,307		1,820
Deferred income tax	227		70		603
Total income tax	1,271		1,377		2,423

For the period ended 31 March 2012 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
	2012 £000		2011 £000		2010 £000
Distributions to equity holders and by subsidiaries in the period	2,020		2,914		3,202

The distribution to equity holders in the period consisted of £1,991,600 (6.50p net of tax per share) in respect of the final dividend for 2011. In addition £28,000 was paid by subsidiaries to minority interests for the six months to 31 March 2012.

The Directors have declared an interim dividend of 4.50p per share, net of tax (2011 - 4.25p) for the six months ended 31 March 2012 to shareholders on the register at the close of business on 8 June 2012. This dividend was approved by the Board on 16 May 2012 and has not been included as a liability at 31 March 2012.

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
Six months ended 31 March	2012	2011	2012	2011	2012	2011	2012	2011	2012	2011
	£000	£000	£000	£000	£000	£000	£000	£000	£000	£000
The States of Jersey	3,911	3,914	1,157	1,254	1,632	161	734	995	1	-
JT Group Limited	770	781	107	653	97	64	247	168	-	-
Jersey Post Int Limited	50	73	-	-	22	30	-	11	-	6
Jersey New Waterworks Ltd	516	342	6	3	42	26	69	51	-	-
Foreshore Limited	269	282	378	376	5	5	163	115	-	-

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 2012 Foreshore Limited had a long-term loan, to the value of £400,000 (2011: £400,000) due to Jersey Electricity plc.

 

END

 

 

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