Interim Results
Jersey Electricity Company Limited
20 May 2003
The Jersey Electricity Company
preliminary announcement of Interim Results
for the six months ended 31 March 2003
At a meeting of the Board of Directors held on 19 May 2003, the Board approved
the Interim Statements for the Group for the six months ended 31 March 2003 and
declared an interim dividend of 41p (32.8p net of tax) compared to 37p gross
(29.6p net) in 2002 on the Ordinary and 'A' Ordinary shares. The dividend will
be paid on 29 August 2003 to those shareholders registered in the books of the
Company on 15 August 2003.
The Interim Statements follow herewith and will be sent to all shareholders in
due course, following which, copies will be made available to the public at the
Company's registered office, Queens Road, St Helier, Jersey, JE4 8NY.
P.J. Routier
Company Secretary
Direct telephone number: 01534 505253
Direct fax number: 01534 505553
Email: proutier@jec.co.uk
20 May 2003
The Powerhouse,
PO Box 45,
Queens Road,
St Helier,
Jersey JE4 8NY
Directors' Statement
Financial Summary 6 months 2003 6 months 2002 % rise/(reduction)
--------------------------------------------------------------------------------------------------------------
Electricity sales - kWh (000) 327,190 316,590 3%
Group turnover £32.7m £32.5m 1%
Profit before tax £4.1m £2.8m 46%
Earnings per share £2.06 £1.34 54%
Gross dividend per ordinary share 41p 37p 11%
Cash generated in the 6 month period £0.3m £4.4m (93)%
--------------------------------------------------------------------------------------------------------------
Profit margins continued recent years' trend of recovery to industry norms. At
£4.1m for the first half of 2003 it was 46% higher than in the same period last
year as electricity sales resumed their pattern of strong growth and costs were
reduced by increased electricity importation.
Effective from December 2002, the commercial terms of a new three-year supply
agreement benefited from our first opportunity to exploit emerging competition
in the European electricity market, enabling power imports to increase to 97% of
the electricity we supplied. This, together with the effectiveness of our Euro
price hedging mechanism, allowed the renewal of our pledge for the third
successive year not to increase electricity prices, irrespective of continuing
volatility in World oil markets and sustained high inflation in the Jersey
economy. The resulting competitive advantage at a time of escalating gas and
heating oil prices is evidenced by strong growth in our market share.
Profits in our Contracting business have been falling in recent years as
cost-of-living wage increases in Jersey's labour market have undermined its
ability to compete with overseas contractors attracted to Jersey's buoyant
construction market. In view of this trend, losses of £0.3m to the half-year and
a poor forward order book, the Contracting business will be rationalised by year
end. Notice has been given of redundancies that, together with restructuring
costs, are expected to cost £1m in the second half.
We achieved a 17% increase in profits from our Electrical Retailing business to
£0.2m with gross margins being maintained and lower overheads negating a 2%
reduction in 'like for like' sales. Profits from our Property portfolio grew by
12% to £0.5m in the first half, reflecting increased rentals from our Internet
Data Centre. Our joint venture company Foreshore Limited performed to
expectations, with our 50% share of start-up losses held at £0.3m. Losses at our
associated telecommunications company Newtel Limited remained unchanged at £0.3m
as it prepares to exploit Public Telecommunications Operators Licences awarded
this year by the competition authorities in Jersey and Guernsey.
As a result of consultation with all affected parties throughout the last six
months, the Company proposes to inject a lump sum of £7m into its occupational
Pension Scheme in the second half-year, to eliminate approximately half of the
current deficit. It also proposes to increase its contribution rate from the
current 14% to around 20% of employees' salaries. The presumption of continued
cost of living rises to existing pensioners which have previously been made on a
discretionary basis, accounted for £11m of the deficit as at 30 September 2002
and the Company regrets the need to interrupt this pending recovery of an
acceptable funding position.
Borrowings reduced only slightly from £1.5m to £1.2m during the last six months,
as operating cash produced by trading activity was absorbed by £4.5m of capital
expenditure and the cost of a redundancy programme within our power generation
business, announced last year, in anticipation of the reduced power plant
operating regime.
Full year results will be impacted by the costs of rationalisation at our
Contracting business and increased pension contributions. Performance is
however expected to remain strong, enabling continued dividend growth whilst
taking account of imminent cash flow pressures facing the business. Your Board
proposes to pay a gross dividend of 41p (2002: 37p) on the Ordinary and 'A'
Ordinary Shares payable on 29 August 2003.
D.R. MALTWOOD - Chairman
M.J. LISTON - Managing Director
20 May 2003
Consolidated Profit and Loss Account
6 months ended 6 months ended 12 months ended
31 March 2003 31 March 2002 30 September 2002
Electricity Sales - kWh (000) 327,190 316,590 564,454
£ 000 £ 000 £ 000
Turnover:
Group and share of joint
venture 32,967 32,738 60,812
Less: Share of joint venture
turnover (272) (233) (461)
-----------------------------------------------
Group turnover 32,695 32,505 60,351
Cost of sales (18,620) (18,781) (37,510)
-----------------------------------------------
Gross profit 14,075 13,724 22,841
Net operating expenses (9,327) (10,101) (16,999)
Exceptional item -
restructuring costs - - (1,790)
Exceptional item - impairment
of investment - - (1,098)
-----------------------------------------------
Group operating profit 4,748 3,623 2,954
Share of operating loss in
joint venture (326) (354) (661)
Share of associate's operating
loss (260) (258) (503)
-----------------------------------------------
Profit on ordinary activities
before interest payable 4,162 3,011 1,790
Net interest and similar
charges (18) (175) (217)
-----------------------------------------------
Profit on ordinary activities
before taxation 4,144 2,836 1,573
Tax on profit on ordinary
activities (950) (755) (782)
-----------------------------------------------
Profit on ordinary activities
after taxation 3,194 2,081 791
Minority interest (36) (20) (41)
-----------------------------------------------
Profit on ordinary activities
after taxation and minority
interest 3,158 2,061 750
Dividends paid and proposed (502) (453) (1,020)
-----------------------------------------------
Retained profit/(loss) for the
Group and share in joint
venture 2,656 1,608 (270)
===============================================
Earnings per ordinary share
(basic and diluted) £2.06 £1.34 £0.49
===============================================
Earnings per ordinary share
(basic and diluted)
excluding exceptional items £2.06 £1.34 £2.14
===============================================
Consolidated Balance Sheet as at 31 March 2003
6 months ended 6 months ended 12 months ended
31 March 2003 31 March 2002 30 Sept 2002
£ 000 £ 000 £ 000 £ 000 £ 000 £ 000
Fixed assets
Intangible fixed
assets 162 202 182
Tangible fixed
assets 119,196 119,804 119,905
Investments:
Shares 5 1,103 5
Share of associate's
net assets 306 489 566
Joint venture share
of gross assets 554 601 557
Joint venture share
of gross
liabilities (406) (258) (73)
------- ------- -------
Net share of joint
venture assets 148 343 484
-------- -------- --------
119,817 121,941 121,142
Current assets 14,590 11,795 11,496
Current liabilities (9,327) (10,529) (11,078)
------- ------- -------
Net current assets 5,263 1,266 418
-------- -------- --------
Total assets less
current
liabilities 125,080 123,207 121,560
Creditors falling
due after more
than one year (916) (1,050) (961)
Pensions and similar (432) (496) (484)
obligations
Deferred taxation (12,846) (12,090) (11,884)
------- -------- --------
Less non-current (14,194) (13,636) (13,329)
liabilities
-------- -------- --------
110,886 109,571 108,231
======== ======== ========
Capital and
reserves
Called up share 1,767 1,767 1,767
capital
Reserves - equity 109,021 107,712 106,402
--------- --------- ---------
Shareholders' 110,788 109,479 108,169
funds
Equity - minority 98 92 62
interest --------- --------- ---------
110,886 109,571 108,231
========= ========= =========
Consolidated Cash Flow Statement
6 months ended 6 months ended 12 months ended
31 March 2003 31 March 2002 30 Sept 2002
£ 000 £ 000 £ 000
Reconciliation of operating profit to net
cash inflow from operating activities
Group operating profit 4,748 3,623 2,954
Depreciation charges 4,495 3,788 7,676
(Increase)/decrease in stocks & work in (69) 1,066 249
progress
(Increase)/decrease in debtors (3,025) (70) 2,204
(Decrease) /increase in creditors (727) (1,803) 1,707
Impairment of investment - - 1,098
---------------------------------------------
Net cash inflow from operating activities 5,422 6,604 15,888
Returns on investments and servicing of (18) (175) (217)
finance
Taxation - (157) (284)
Capital expenditure (4,549) (1,398) (5,481)
Dividends paid (563) (490) (952)
---------------------------------------------
Increase in cash 292 4,384 8,954
=============================================
Reconciliation of net cashflow
Change in net funds 292 4,384 8,954
Net debt - start of period (1,486) (10,440) (10,440)
---------------------------------------------
Net debt - end of period (1,194) (6,056) (1,486)
=============================================
Notes to the Financial Statements
for the period ended 31 March 2003
1. Basis of preparation
The interim statements have been prepared on the basis of the accounting
policies set in the Group 2002 notes to the Financial Statements.
2. Segmental details
Turnover Profit/(loss)
before interest and tax
£ 000 £ 000 £ 000 £ 000 £ 000 £ 000
6 months to 6 months to 12 months to 6 months to 6 months to 12 months to
Notes 31 Mar 2003 31 Mar 2002 30 Sept 2002 31 Mar 2003 31 Mar 2002 30 Sept 2002
Energy 23,642 22,743 40,954 4,167 2,802 4,238
Contracting 2,972 3,463 7,557 (349) (171) 78
Retail Appliance Sales 3,296 3,619 6,467 182 156 176
Property 979 903 1,845 531 473 891
Other 1,806 1,777 3,528 (369) (249) (705)
--------------------------------------------------------------------------------
32,695 32,505 60,351 4,162 3,011 4,678
=====================================
Exceptional item -
redundancy costs 3.a - - (1,790)
Exceptional item -
impairment of
investments 3.b - - (1,098)
-----------------------------------------
Profit on ordinary
activities before
interest payable 4,162 3,011 1,790
=========================================
The information currently available to report the net assets of each business
class as each 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
area.
3. Exceptional items
a. Redundancy costs
The exceptional item in the 12 months to 30 September 2002 of £1,790,000 relates
to the costs of manpower reductions of La Collette power station in Jersey. The
tax benefit arising from this exceptional item is £358,000 giving a net cost for
the year to 30 September 2002 of £1,432,000.
b. Impairment of investments
The exceptional charge of £1,098,000 in the 12 months to 30 September 2002
relates to the write-down of the Group investment in shares to zero in GoPro
Landsteinar Ehf. following an impairment
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