This announcement by the Jersey Electricity Company Limited replaces the announcement regarding the Interim Management Report released at 07.00 this morning. The record date stated was incorrect and has been amended to 20 June 2008.
All other details contained in the announcement below remain unchanged.
The Jersey Electricity Company
Interim Management Report
for the six months ended 31 March 2008
At a meeting of the Board of Directors held on 14 May 2008, the Board approved the Interim Management Report for the Group for the six months ended 31 March 2008 and declared an interim dividend of 91.25p gross (73p net of tax) compared to 61.25p gross (49p net) in 2007 on the Ordinary and 'A' Ordinary shares. The dividend will be paid on 30 June 2008 to those shareholders registered in the books of the Company on 20 June 2008.
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 2008 has not been audited or reviewed by our external auditors nor have the results for the equivalent period in 2007. The results for the year ended 30 September 2007 have been extracted from the statutory accounts for that period which had an unqualified audit opinion.
P.J. Routier
Company Secretary
Direct telephone number : 01534 505253
Direct fax number : 01534 505515
Email : proutier@jec.co.uk
14 May 2008
The Powerhouse,
PO Box 45,
Queens Road,
St Helier,
Jersey JE4 8NY
Jersey Electricity Company Limited
Unaudited Interim Management Report
for the six months to 31 March 2008
Financial Summary |
6 months 2008 |
6 months 2007 |
% increase |
Electricity Sales -kWh (000) |
359,772 |
335,986 |
7% |
Turnover |
£45.4m |
£40.0m |
13% |
Profit before tax |
£6.8m |
£4.9m |
40% |
Profit in Energy business |
£4.4m |
£3.0m |
44% |
Earnings per share |
£4.02 |
£2.84 |
41% |
Net dividend proposed per ordinary share |
73p |
49p |
49% |
Group profit before tax in the first half of 2008 was £6.8m being 40% higher than in the same period last year due to strong growth across all our businesses and a higher level of electricity unit sales in the last six months, following a very mild first half last year. This performance restores profitability to the levels prevailing prior to 2006 when we voluntarily pledged a two-year electricity price freeze and importantly, will support planned major investment, on which the continuing reliability of our electricity network depends. Earnings per share rose by 41% in line with the above profit increase.
Having hedged our position in the forward power and currency markets, we were able to honour our pledge last year that prices to customers would remain unchanged until 2009. European wholesale electricity prices have risen by around 30% since the start of this financial year and in addition the value of Sterling against the Euro, in which our power purchases are denominated, has deteriorated by 15% in the same period. Regrettably, we anticipate a need for tariff increases in 2009, which will mean that the majority of our customers will pay power prices similar to those in the UK, where rises of 11% have already taken place in the first quarter of 2008, but our tariff levels will still be lower on average than those in mainland Europe.
Electricity sales in the first half of 2008 were 7% higher than in 2007 following the mild winter experienced throughout Europe last year and this was the primary reason for Energy profits rising to £4.4m from £3.0m last year. Imported electricity met 94% of our requirements during the half year, which was slightly lower than usual as a result of periodic production from our own plant to prove its capability to fully meet the Island's electricity requirements in the event of a loss of power imports from the Continent.
Our Retailing business continued last year's trend of strong growth, with year-on-year turnover rising 14% and profits moving up from £0.4m to £0.5m. Profits from our Property portfolio rose from £0.8m to £0.9m which included the sale of a residential property used previously to house employees, for a capital gain of £0.4m. The Building Services business produced profits of £0.2m being at a similar level to last year. Our consultancy businesses Jersey Energy and Jendev produced profits on a par with the comparative period last year. Our data centre joint venture, Foreshore Limited, moved into profit for the first time with turnover up 30% against the same six months last year.
Cash, including short-term investments, fell £1.3m to £15.1m during the last six months, with operating cash produced from trading activity offset by £5.6m of electricity infrastructure investment and payment of the £1.2m final 2007 dividend.
Your Board proposes to pay an interim net dividend of 73p (2007: 49p) on the Ordinary and 'A' Ordinary Shares payable on 30 June 2008 in addition to the final dividend for 2007 of 75p (2006: 68p) paid on 31 March 2008. The increase in the level of proposed dividend followed a review by the Board on the level of dividend cover maintained by other listed and Jersey utilities balanced by the required levels of capital expenditure in the short to medium term. Following a re-basing of the dividend level at the interim and final stages in 2008 your Board will aim to deliver sustained real growth thereafter.
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).
G.J. GRIME - Chairman M.J.LISTON - Chief Executive 14 May 2008
INVESTOR TIMETABLE FOR 2008
20 June
|
Record date for interim ordinary dividend
|
30 June
|
Interim ordinary dividend for year ending 30 September 2008
|
1 July
|
Payment date for preference share dividends
|
End July
|
Interim Management Statement – nine months to 30 June 2008
|
18 December
|
Preliminary announcement of full year results
|
|
|
Condensed Group Income Statement (Unaudited)
|
|
|
Six months ended 31 March |
|
Year ended 30 September |
||
|
Note |
|
2008 £000 |
|
2007 £000 |
|
2007 £000 |
|
|
|
|
|
|
|
|
Revenue |
2 |
|
45,423 |
|
40,048 |
|
75,871 |
|
|
|
|
|
|
|
|
Cost of sales |
|
|
(30,832) |
|
(27,268) |
|
(52,117) |
|
|
|
|
|
|
|
|
Gross profit |
|
|
14,591 |
|
12,780 |
|
23,754 |
|
|
|
|
|
|
|
|
Revaluation of investment properties |
|
|
- |
|
- |
|
900 |
Profit on sale of property |
|
|
407 |
|
309 |
|
309 |
Operating expenses |
|
|
(8,750) |
|
(8,504) |
|
(16,951) |
|
|
|
|
|
|
|
|
Operating profit before joint venture |
|
|
6,248 |
|
4,585 |
|
8,012 |
Share of profit/(loss) of joint venture |
|
|
14 |
|
(116) |
|
(135) |
|
|
|
|
|
|
|
|
Operating profit |
2 |
|
6,262 |
|
4,469 |
|
7,877 |
|
|
|
|
|
|
|
|
Interest receivable |
|
|
554 |
|
413 |
|
868 |
Finance costs |
|
|
(4) |
|
(5) |
|
(11) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit from operations before taxation |
|
|
6,812 |
|
4,877 |
|
8,734 |
|
|
|
|
|
|
|
|
Taxation |
3 |
|
(639) |
|
(519) |
|
(1,074) |
|
|
|
|
|
|
|
|
Profit from operations after taxation |
|
|
6,173 |
|
4,358 |
|
7,660 |
|
|
|
|
|
|
|
|
Minority interest |
|
|
(18) |
|
(2) |
|
(90) |
|
|
|
|
|
|
|
|
Profit for the period attributable to the equity holders of the parent company |
|
|
6,155 |
|
4,356 |
|
7,570 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS PER SHARE |
|
|
|
|
|
|
|
- basic and diluted |
|
|
£4.02 |
|
£2.84 |
|
£4.94 |
|
|
|
|
|
|
|
|
DIVIDENDS PER SHARE |
|
|
|
|
|
|
|
- paid |
4 |
|
£0.75 |
|
£0.68 |
|
£1.17 |
- proposed |
4 |
|
£0.73 |
|
£0.49 |
|
£0.75 |
Condensed Group Statement of Recognised Income and Expense (Unaudited)
|
Six months ended
31 March
|
|
Year ended
30 September
|
||
|
2008
|
|
2007
|
|
2007
|
|
£000
|
|
£000
|
|
£000
|
Profit for the financial period
|
6,155
|
|
4,356
|
|
7,570
|
Actuarial gain on defined benefit scheme (net of tax)
|
2,283
|
|
-
|
|
5,431
|
Fair value gain on cash flow hedges (net of tax)
|
3,401
|
|
361
|
|
1,469
|
Revaluation of freehold land and buildings
|
-
|
|
-
|
|
448
|
|
|
|
|
|
|
Total recognised income and expense for the period attributable to the equity holders of the parent
|
11,839
|
|
4,717
|
|
14,918
|
|
|
|
|
|
|
Condensed Group Balance Sheet (Unaudited)
|
|
|
As at 31 March |
|
As at 30 September |
||
|
Note |
|
2008 £000 |
|
2007 £000 |
|
2007 £000 |
NON-CURRENT ASSETS |
|
|
|
|
|
|
|
Intangible assets |
|
|
60 |
|
117 |
|
82 |
Property, plant and equipment |
|
|
112,016 |
|
107,783 |
|
109,790 |
Investment property |
|
|
12,340 |
|
10,990 |
|
12,340 |
Other investments |
|
|
2,102 |
|
2,031 |
|
2,099 |
Retirement benefit surplus |
|
|
15,506 |
|
4,389 |
|
11,684 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-current assets |
|
|
142,024 |
|
125,310 |
|
135,995 |
|
|
|
|
|
|
|
|
CURRENT ASSETS |
|
|
|
|
|
|
|
Inventories |
|
|
4,695 |
|
4,228 |
|
4,631 |
Trade and other receivables |
|
|
13,972 |
|
12,837 |
|
11,258 |
Derivative financial instruments |
|
|
4,715 |
|
- |
|
464 |
Short-term investments - cash deposits |
|
|
4,930 |
|
- |
|
3,755 |
Cash and cash equivalents |
|
|
10,160 |
|
14,026 |
|
12,613 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
38,472 |
|
31,091 |
|
32,721 |
|
|
|
|
|
|
|
|
Total assets |
|
|
180,496 |
|
156,401 |
|
168,716 |
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
Trade and other payables |
|
|
10,093 |
|
8,803 |
|
11,348 |
Derivative financial instruments |
|
|
- |
|
737 |
|
- |
Current tax payable |
|
|
887 |
|
1,173 |
|
944 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
10,980 |
|
10,713 |
|
12,292 |
|
|
|
|
|
|
|
|
NON-CURRENT LIABILITIES |
|
|
|
|
|
|
|
Trade and other payables |
|
|
13,422 |
|
12,905 |
|
13,123 |
Tax liabilities |
|
|
1,093 |
|
1,305 |
|
487 |
Financial liabilities - preference shares |
|
|
235 |
|
235 |
|
235 |
Deferred tax liabilities |
|
|
15,221 |
|
11,833 |
|
13,670 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-current liabilities |
|
|
29,971 |
|
26,278 |
|
27,515 |
|
|
|
|
|
|
|
|
Total liabilities |
|
|
40,951 |
|
36,991 |
|
39,807 |
|
|
|
|
|
|
|
|
Net assets |
|
|
139,545 |
|
119,410 |
|
128,909 |
|
|
|
|
|
|
|
|
EQUITY |
|
|
|
|
|
|
|
Share capital |
|
|
1,532 |
|
1,532 |
|
1,532 |
Other reserves |
|
|
4,220 |
|
(737) |
|
819 |
Retained earnings |
|
|
133,772 |
|
118,588 |
|
126,483 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders' funds |
7 |
|
139,524 |
|
119,383 |
|
128,834 |
|
|
|
|
|
|
|
|
Minority interest |
|
|
21 |
|
27 |
|
75 |
|
|
|
|
|
|
|
|
Total equity |
|
|
139,545 |
|
119,410 |
|
128,909 |
Condensed Group Cash Flow Statement (Unaudited)
|
|
Six months ended 31 March |
|
Year ended 30 September |
||
|
Note |
2008 £000 |
|
2007 £000 |
|
2007 £000 |
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit before joint venture |
|
6,248 |
|
4,585 |
|
8,012 |
|
|
|
|
|
|
|
Depreciation and amortisation charges |
|
3,458 |
|
3,544 |
|
7,568 |
Revaluation of investment property |
|
- |
|
- |
|
(900) |
Pension operating charge less contributions paid |
|
(900) |
|
(391) |
|
(1,110) |
Profit on sale of fixed assets |
|
(407) |
|
(309) |
|
(312) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating cash flows before movement in working capital |
|
8,399 |
|
7,429 |
|
13,258 |
|
|
|
|
|
|
|
Increase in inventories |
|
(64) |
|
(23) |
|
(435) |
Increase in trade and other receivables |
|
(2,762) |
|
(3,813) |
|
(1,979) |
(Decrease)/increase in trade and other payables |
|
(1,045) |
|
(577) |
|
1,139 |
Interest received |
|
601 |
|
420 |
|
844 |
Preference dividends paid |
|
(5) |
|
(4) |
|
(9) |
Income taxes paid |
|
- |
|
- |
|
(1,159) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flows from operating activities |
|
5,124 |
|
3,423 |
|
11,659 |
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of property, plant and equipment |
5 |
(5,593) |
|
(3,506) |
|
(8,529) |
Investment in intangible assets |
|
(22) |
|
(7) |
|
(17) |
Proceeds from disposal of property |
|
410 |
|
318 |
|
318 |
Investment in joint venture |
|
- |
|
(263) |
|
(350) |
Short-term investments |
|
(1,175) |
|
3,765 |
|
10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flows from investing activities |
|
(6,380) |
|
307 |
|
(8,568) |
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity dividends paid |
4 |
(1,197) |
|
(1,050) |
|
(1,824) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flows used in financing activities |
|
(1,197) |
|
(1,050) |
|
(1,824) |
|
|
|
|
|
|
|
Net increase/(decrease) in cash and cash equivalents |
|
(2,453) |
|
2,680 |
|
1,267 |
Cash and cash equivalents at beginning of period |
|
12,613 |
|
11,346 |
|
11,346 |
|
|
|
|
|
|
|
Cash and cash equivalents at end of period |
|
10,160 |
|
14,026 |
|
12,613 |
|
|
|
|
|
|
|
Notes to the Condensed Interim Accounts
1. Accounting policies
Basis of preparation
The interim accounts for the six months ended 31 March 2008 have been prepared on the basis of the accounting policies set out in the 30 September 2007 annual report and accounts using accounting policies consistent with International Financial Reporting Standards (IFRS) and in accordance with IAS 34 'Interim Financial Reporting'.
2. Turnover and profit
The contributions of the various activities of the Group to turnover and profit are listed below:
|
31 March 2008
|
31 March 2007
|
30 September 2007
|
||||||
|
External
|
Internal
|
Total
|
External
|
Internal
|
Total
|
External
|
Internal
|
Total
|
Revenue
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
|
|
|
|
|
|
|
|
|
|
Energy
|
34,590
|
132
|
34,722
|
30,510
|
130
|
30,640
|
56,957
|
246
|
57,203
|
Building services
|
1,785
|
82
|
1,867
|
1,731
|
98
|
1,829
|
3,204
|
199
|
3,403
|
Retail
|
7,257
|
25
|
7,282
|
6,359
|
18
|
6,377
|
11,934
|
53
|
11,987
|
Property
|
826
|
340
|
1,166
|
745
|
340
|
1,085
|
1,597
|
683
|
2,280
|
Other
|
965
|
359
|
1,324
|
703
|
453
|
1,156
|
2,179
|
865
|
3,044
|
|
|
|
|
|
|
|
|
|
|
|
45,423
|
938
|
46,361
|
40,048
|
1,039
|
41,087
|
75,871
|
2,046
|
77,917
|
Inter Group elimination
|
|
|
(938)
|
|
|
(1,039)
|
|
|
(2,046)
|
|
|
|
45,423
|
|
|
40,048
|
|
|
75,871
|
|
|
|
|
|
|
|
|
|
|
Group operating profit
|
|
|
|
|
|
|
|
|
|
Energy
|
|
|
4,385
|
|
|
3,036
|
|
|
4,493
|
Building services
|
|
|
219
|
|
|
203
|
|
|
305
|
Retail
|
|
|
485
|
|
|
412
|
|
|
479
|
Property
|
|
|
485
|
|
|
441
|
|
|
954
|
Other
|
|
|
281
|
|
|
68
|
|
|
437
|
|
|
|
5,855
|
|
|
4,160
|
|
|
6,668
|
Revaluation of investment properties
|
|
|
-
|
|
|
-
|
|
|
900
|
Sale of property
|
|
|
407
|
|
|
309
|
|
|
309
|
|
|
|
6,262
|
|
|
4,469
|
|
|
7,877
|
Other gains and losses
|
|
|
|
|
|
|
|
|
|
Interest receivable
|
|
|
554
|
|
|
413
|
|
|
868
|
Finance costs
|
|
|
(4)
|
|
|
(5)
|
|
|
(11)
|
Profit from operations before taxation
|
|
|
6,812
|
|
|
4,877
|
|
|
8,734
|
Taxation
|
|
|
(639)
|
|
|
(519)
|
|
|
(1,074)
|
Profit from operations
after taxation
|
|
|
6,173
|
|
|
4,358
|
|
|
7,660
|
Minority interest
|
|
|
(18)
|
|
|
(2)
|
|
|
(90)
|
Profit for the period
|
|
|
6,155
|
|
|
4,356
|
|
|
7,570
|
Materially, all the Group's operations are conducted within the Channel Islands. All transfers between divisions are at an arm's length basis.
The only material movement between 2008 and 2007 half year segmental data is the increase in revenue in the Energy business. This 13% rise was a result of a 7% increase in unit sales of electricity combined with the year on year impact of a tariff rise on 1 January 2007.
Notes to the Condensed Interim Accounts (Unaudited)
3. Income tax
|
Six months ended 31 March |
|
Year ended 30 September |
||
|
2008 £000 |
|
2007 £000 |
|
2007 £000 |
|
|
|
|
|
|
Current income tax |
(511) |
|
(420) |
|
(587) |
Deferred income tax |
(128) |
|
(99) |
|
(487) |
Total income tax |
(639) |
|
(519) |
|
(1,074) |
On 30 January 2007 the draft 'zero-ten' legislation was approved by the States of Jersey. The legislation will come into effect from 1 January 2009 but transitional rules apply to any company currently taxed on a prior year basis, so that they become taxed on a current year basis. This results in Jersey tax paying companies being taxed in the 2008 year of assessment at 20% on the average of the profits which they generate in the financial year ended in 2007 and 2008. The effective tax rate for those two years is therefore around half that experienced up to 2006 due to the migration from a prior to current year basis but will revert to 20% for Island utilities from 2009 onwards.
4. Dividends
|
Six months ended 31 March |
|
Year ended 30 September |
||
|
2008 £000 |
|
2007 £000 |
|
2007 £000 |
|
|
|
|
|
|
Distributions to equity holders and by subsidiaries in the period |
1,197 |
|
1,050 |
|
1,824 |
The distribution to equity holders in the period consisted of £1,149,000 (75p net of tax per share) in respect of the final dividend for 2007. In addition £8,400 was paid by subsidiaries to minority interests.
The Directors have declared an interim dividend of 73p per share, net of tax (2007 - 49p) for the six months ended 31 March 2008 to shareholders on the register at the close of business on 15 August 2008. This dividend was approved by the Board on 14 May 2008 and has not been included as a liability at 31 March 2008.
5. Property, plant and equipment
During the period, the Group spent approximately £3,550,000 on a continuing project to reinforce the electricity infrastructure in the west of Jersey. In addition £1,498,000 was spent on distribution reinforcement and new customer developments.
Notes to the Condensed Interim Accounts
6. 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, and also to consider whether there have been any other events that would significantly affect the pension liabilities.
7. Reconciliation of movements in equity
|
Share |
Other |
Retained |
|
|
capital |
reserves |
earnings |
Total |
|
£000 |
£000 |
£000 |
£000 |
At 1 October 2007 |
1,532 |
819 |
126,483 |
128,834 |
Total recognised income and expense for the period |
- |
- |
6,155 |
6,155 |
Other recognised gains |
- |
3,401 |
2,283 |
5,684 |
Equity dividends |
- |
- |
(1,149) |
(1,149) |
As at 31 March 2008 |
1,532 |
4,220 |
133,772 |
139,524 |
|
|
|
|
|
At 1 October 2006 |
1,532 |
(1,098) |
115,274 |
115,708 |
Total recognised income and expense for the period |
- |
- |
7,570 |
7,570 |
Other recognised gains |
- |
1,469 |
5,431 |
6,900 |
Revaluation of freehold land and buildings |
- |
448 |
- |
448 |
Equity dividends |
- |
- |
(1,792) |
(1,792) |
As at 30 September 2007 |
1,532 |
819 |
126,483 |
128,834 |
|
|
|
|
|
At 1 October 2006 |
1,532 |
(1,098) |
115,274 |
115,708 |
Total recognised income and expense for the period |
- |
- |
4,356 |
4,356 |
Other recognised gains |
- |
361 |
- |
361 |
Equity dividends |
- |
- |
(1,042) |
(1,042) |
As at 31 March 2007 |
1,532 |
(737) |
118,588 |
119,383 |
|
|
|
|
|
The other reserves comprise of the foreign currency reserve of £3,772,000 and a revaluation reserve of £448,000. The increase from 30 September 2007 is due to the rise in the fair value of our forward currency hedges because of the recent weakening of Sterling against the Euro.
8. 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 which is being negotiated but it is anticipated that the rental will move onto commercial rates.
The Company made electricity sales to the value of £2.7m (2007: £2.5m) and other sales of £0.3m (2007: £0.3m) to the States of Jersey for the six months ended 31 March 2008. At the half-year end the States of Jersey had a debtors balance of £83,000 (2007: £238,000).
At the half-year end Foreshore Limited had a debtors balance of £859,000 (2007: £896,000).
During the six months to 31 March 2008 the Company made electricity sales of £190,000 (2007: £148,000) and other sales of £232,000 (2007: £276,000) to Foreshore Limited.
All the above transactions were conducted at arm's length.