Interim Results
Jersey Electricity Company Limited
17 May 2007
The Jersey Electricity Company
Preliminary Announcement of Interim Results
for the six months ended 31 March 2007
At a meeting of the Board of Directors held on 16 May 2007, the Board approved
the Interim Accounts for the Group for the six months ended 31 March 2007 and
declared an interim dividend of 61.25p gross (49p net of tax) compared to 55p
gross (44p net) in 2006 on the Ordinary and 'A' Ordinary shares. The dividend
will be paid on 31 August 2007 to those shareholders registered in the books of
the Company on 17 August 2007.
The Interim Accounts are attached 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.
The Interim Accounts for 2007 have not been audited nor have the results for the
equivalent period in 2006. The results for the year ended 30 September 2006 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
17 May 2007
The Powerhouse,
PO Box 45,
Queens Road,
St Helier,
Jersey JE4 8NY
Jersey Electricity Company Limited
Unaudited interim results
for the six months to 31 March 2007
Financial Summary 6 months 6 months % increase/
2007 2006 (decrease)
Electricity Sales -kWh (000) 335,986 355,949 (6)%
Turnover £40.0m £35.8m 12%
Profit before tax £4.9m £5.1m (5)%
Profit in Energy business £3.0m £3.9m (23)%
Earnings per share £2.84 £2.55 11%
Net dividend proposed per ordinary share 49p 44p 11%
Group profit before tax in the first half of 2007 was £4.9m being 5% lower than
in the same period last year, despite a 12% increase in turnover. This was
principally due to a lower level of electricity sales and our decision to
absorb, rather than pass on to customers, some of the increased cost of power
imported from Europe. Our earnings per share rose by 11% due to a reduction in
the effective tax rate for the 2007 and 2008 financial years. Note 3 to the
Interim Accounts explains the rationale for this tax change. Power prices to our
customers were increased by an average just above 19% from 1 January 2007.
Having hedged our position in the forward power markets, we were able to pledge
that prices would remain unchanged for at least two years.
Our aim remains to restore during the 2008 financial year, the profitability
upon which planned investment in the continuing reliability of our electricity
network depends.
Unit sales in the first half of 2007 were 6% lower than in 2006 due to milder
weather experienced throughout Europe, offset by continuing strong growth from
our dominant share of the new energy market presented by Jersey's ongoing
property development boom. Imported electricity met 82% of our requirements
during the half year, which was lower than normal because we took advantage of
lower oil prices in the global marketplace to generate locally during peak
periods when import costs are at their highest.
Our Retailing business continued last year's trend of strong growth, with
year-on-year turnover rising 40% and profits moving up from £0.3m to £0.4m.
Profits from our Property portfolio rose from £0.4m to £0.7m due mainly to the
sale of a residential property used previously to house employees, for a capital
gain of £0.3m. The Building Services business produced an increase in turnover
of 12% with profits up slightly at £0.2m. Losses at our data centre joint
venture, Foreshore Limited, reduced to £0.1m with turnover up 40% against last
year. Our consultancy businesses Jersey Energy and Jendev produced profits
slightly up at £0.1m.
Cash at bank, including short-term investments, fell £1.1m to £14.0m during the
last six months, with operating cash produced from trading activity offset by
£3.5m of capital investment expenditure and the £1.1m final 2006 dividend.
Your Board proposes to pay an interim net dividend of 49p (2006: 44p) on the
Ordinary and 'A' Ordinary Shares payable on 31 August 2007 in addition to the
final dividend for 2006 of 68p (2005: 62p) paid on 30 March 2007.
D.R. MALTWOOD - Chairman M.J.LISTON - Chief Executive 17 May 2007
INVESTOR TIMETABLE FOR 2007
17 May Announcement of interim results
30 June Payment date for preference share dividends
17 August Record date for interim ordinary dividend
31 August Interim ordinary dividend for year ending 30 September 2007
13 December Preliminary announcement of full year results
Group Income Statement (Unaudited)
Six months ended Year ended
31 March 30 September
2007 2006 2006
Note £000 £000 £000
Revenue 2 40,048 35,759 65,617
Cost of sales (27,268) (22,812) (42,873)
Gross profit 12,780 12,947 22,744
Revaluation of investment properties - - 1,219
Operating expenses (8,195) (8,095) (17,107)
Group operating profit before joint venture 4,585 4,852 6,856
Share of loss of joint venture (116) (169) (343)
Group operating profit 2 4,469 4,683 6,513
Interest receivable 413 452 818
Finance costs (5) (4) (9)
Profit from operations before taxation 4,877 5,131 7,322
Taxation 3 (519) (1,219) (1,351)
Profit from operations after taxation 4,358 3,912 5,971
Minority interest (2) (5) (29)
Profit for the period attributable to the equity
holders of the parent company 4,356 3,907 5,942
EARNINGS PER SHARE
- basic and diluted £2.84 £2.55 £3.88
DIVIDENDS PER SHARE
- paid final/interim 4 £0.68 £0.62 £1.06
- paid special 4 - £4.44 £4.44
- proposed 4 £0.49 £0.44 £0.68
Group Statement of Recognised Income and Expense (Unaudited)
Six months ended Year ended
30 September
31 March
2007 2006 2006
£000 £000 £000
Profit for the financial period 4,356 3,907 5,942
Actuarial gain on defined benefit scheme (net of tax) - - 2,910
Fair value gain/(loss) on cash flow hedges 361 546 (570)
Total recognised income and expense for the period attributable
to the equity holders of the parent
4,717 4,453 8,282
Group Balance Sheet (Unaudited)
As at 31 March As at 30
September
Note 2007 2006 2006
£000 £000 £000
NON-CURRENT ASSETS
Intangible assets 117 92 131
Property, plant and equipment 107,783 108,521 108,289
Investment property 10,990 9,753 10,990
Other investments 2,031 935 1,884
Total non-current assets 120,921 119,301 121,294
CURRENT ASSETS
Inventories 4,228 3,505 4,196
Trade and other receivables 17,226 11,747 13,046
Derivative financial instruments - 18 -
Short-term investments - cash deposits - 1,500 3,765
Cash and cash equivalents 14,026 11,641 11,346
Total current assets 35,480 28,411 32,353
Total assets 156,401 147,712 153,647
LIABILITIES
Trade and other payables 8,803 7,792 9,590
Derivative financial instruments 737 - 1,098
Current tax payable 1,173 1,195 1,190
Total current liabilities 10,713 8,987 11,878
NON-CURRENT LIABILITIES
Trade and other payables 12,905 13,680 13,245
Tax liabilities 1,305 1,219 813
Financial liabilities - preference shares 235 235 235
Retirement benefit obligations - 299 -
Deferred tax liabilities 11,833 10,705 11,734
Total non-current liabilities 26,278 26,138 26,027
Total liabilities 36,991 35,125 37,905
Net assets 119,410 112,587 115,742
EQUITY
Share capital 1,532 1,532 1,532
Other reserves (737) 18 (1,098)
Retained earnings 118,588 111,003 115,274
Shareholders' funds 5 119,383 112,553 115,708
Minority interest 27 34 34
Total equity 119,410 112,587 115,742
Group Cash Flow Statement (Unaudited)
Six months ended Year ended
31 March 30 September
Restated
Note 2007 2006 2006
£000 £000 £000
CASH FLOWS FROM OPERATING ACTIVITIES
Group operating profit before joint venture 4,585 4,852 6,856
Depreciation and amortisation charges 3,544 3,505 6,948
Revaluation of investment property - - (1,219)
Pension operating charge less contributions paid (391) (324) (877)
Profit on sale of fixed assets (309) - -
Operating cash flows before movement in working capital 7,429 8,033 11,708
(Increase)/decrease in inventories (32) 423 (269)
(Increase) in trade and other receivables (3,813) (3,767) (2,515)
(Decrease)/increase in trade and other payables (577) 1,017 3,387
Interest received 420 423 756
Preference dividends paid (4) (4) (9)
Income taxes paid - - (1,233)
Net cash flows from operating activities 3,423 6,125 11,825
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment (3,506) (2,290) (4,995)
Investment in intangible assets (7) - (76)
Proceeds from disposal of property 318 6,550 6,550
Investment in joint venture (263) (350) (613)
Short-term investments 3,765 (1,500) (3,765)
Net cash flows from investing activities 307 2,410 (2,899)
CASH FLOWS FROM FINANCING ACTIVITIES
Equity dividends paid 4 (1,050) (7,764) (8,450)
Net cash flows used in financing activities (1,050) (7,764) (8,450)
Net increase in cash and cash equivalents 2,680 771 476
Cash and cash equivalents at beginning of period 11,346 10,870 10,870
Cash and cash equivalents at end of period 14,026 11,641 11,346
Notes to the Interim Accounts
1. Accounting policies
Basis of preparation
The interim accounts for the six months ended 31 March 2007 have been prepared
on the basis of the accounting policies set out in the 30 September 2006 annual
report and accounts.
2. Turnover and profit
The contributions of the various activities of the Group to turnover and profit
are listed below:
31 March 2007 31 March 2006 30 September 2006
External Internal Total External Internal Total External Internal Total
Revenue £000 £000 £000 £000 £000 £000 £000 £000 £000
Energy 30,510 130 30,640 28,006 93 28,099 50,391 216 50,607
Building services 1,731 98 1,829 1,544 65 1,609 3,111 188 3,299
Retail 6,359 18 6,377 4,528 15 4,543 8,772 46 8,818
Property 745 340 1,085 789 154 943 1,556 286 1,842
Other 703 453 1,156 892 297 1,189 1,787 701 2,488
40,048 1,039 41,087 35,759 624 36,383 65,617 1,437 67,054
Inter-group (1,039) (624) (1,437)
elimination
40,048 35,759 65,617
Group operating profit
Energy 3,036 3,919 4,277
Building services 203 139 241
Retail 412 328 383
Property 750 350 442
Other 68 (53) (49)
4,469 4,683 5,294
Revaluation of
investment properties
- - 1,219
4,469 4,683 6,513
Materially, all the Group's operations are conducted within the Channel Islands.
All transfers between divisions are at arms-length basis.
3. Income tax
Six months ended Year ended
31 March 30 September
2007 2006 2006
£000 £000 £000
Current income tax (420) (1,022) (849)
Deferred income tax (99) (197) (502)
Total income tax (519) (1,219) (1,351)
On 30 January 2007 the draft 'zero-ten' legislation was approved by the States
of Jersey and has now gone to the Privy Council in the UK for approval. The vast
majority of 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. Due to Transitional rules
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.
Notes to the Interim Accounts (Unaudited)
4. Dividends
Six months ended Year ended
31 March 30 September
2007 2006 2006
£000 £000 £000
Distributions to equity holders and by subsidiaries in the period 1,050 7,764 8,450
The distribution to equity holders in the period consisted of £1,041,760 (68p
net of tax per share) in respect of the final dividend for 2006. In addition
£8,400 was paid by subsidiaries to minority interests.
The Directors have declared an interim dividend of 49p per share, net of tax
(2006 - 44p) for the six months ended 31 March 2007 to shareholders on the
register at the close of business on 17 August 2007. This dividend was approved
by the Board on 16 May 2007 and has not been included as a liability at 31 March
2007.
In March 2006 a special dividend of £4.44 per share, net of tax, was made to
distribute the proceeds from the sale of an investment property.
5. Reconciliation of movements in equity
Share Other Retained
capital reserves earnings Total
£000 £000 £000 £000
At 1 October 2006 1,532 (1,098) 115,274 115,708
Total recognised income and expense for the year - - 4,356 4,356
Other recognised gains/(losses) - 361 - 361
Equity dividends - - (1,042) (1,042)
As at 31 March 2007 1,532 (737) 118,588 119,383
At 1 October 2005 1,532 (528) 114,848 115,852
Total recognised income and expense for the year - - 5,942 5,942
Other recognised gains/(losses) - (570) 2,910 2,340
Equity dividends - - (8,426) (8,426)
As at 30 September 2006 1,532 (1,098) 115,274 115,708
At 1 October 2005 1,532 (528) 114,848 115,852
Total recognised income and expense for the year - - 3,907 3,907
Other recognised gains/(losses) - 546 - 546
Equity dividends - - (7,752) (7,752)
As at 31 March 2006 1,532 18 111,003 112,553
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