RNS Number : 4777U
Jersey Electricity Company Limited
15 May 2008
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 16 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 6 months % increase
2008 2007
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
16 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 Year ended
31 March 30
September
2008 2007 2007
Note £000 £000 £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 - - 900
properties
Profit on sale of property 407 309 309
Operating expenses (8,750) (8,504) (16,951)
Operating profit before joint 6,248 4,585 8,012
venture
Share of profit/(loss) of joint 14 (116) (135)
venture
Operating profit 2 6,262 4,469 7,877
Interest receivable 554 413 868
Finance costs (4) (5) (11)
Profit from operations before 6,812 4,877 8,734
taxation
Taxation 3 (639) (519) (1,074)
Profit from operations after 6,173 4,358 7,660
taxation
Minority interest (18) (2) (90)
Profit for the period
attributable to the 6,155 4,356 7,570
equity holders of the parent
company
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 ended31 March Year
ended30September
2008 2007 2007
£000 £000 £000
Profit for the financial 6,155 4,356 7,570
period
Actuarial gain on defined 2,283 - 5,431
benefit scheme (net of tax)
Fair value gain on cash flow 3,401 361 1,469
hedges (net of tax)
Revaluation of freehold land - - 448
and buildings
Totalrecognisedincome and 11,839 4,717 14,918
expense for the period
attributable to the equity
holders of the parent
Condensed Group Balance Sheet (Unaudited)
As at 31 March As at 30 September
Note 2008 2007 2007
£000 £000 £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 4,715 - 464
instruments
Short-term investments - cash 4,930 - 3,755
deposits
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 - 737 -
instruments
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 - 235 235 235
preference shares
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 Year ended
31 March 30
September
Note 2008 2007 2007
£000 £000 £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 (900) (391) (1,110)
contributions paid
Profit on sale of fixed assets (407) (309) (312)
Operating cash flows before movement 8,399 7,429 13,258
in working capital
Increase in inventories (64) (23) (435)
Increase in trade and other (2,762) (3,813) (1,979)
receivables
(Decrease)/increase in trade and (1,045) (577) 1,139
other payables
Interest received 601 420 844
Preference dividends paid (5) (4) (9)
Income taxes paid - - (1,159)
Net cash flows from operating 5,124 3,423 11,659
activities
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and 5 (5,593) (3,506) (8,529)
equipment
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 (6,380) 307 (8,568)
activities
CASH FLOWS FROM FINANCING ACTIVITIES
Equity dividends paid 4 (1,197) (1,050) (1,824)
Net cash flows used in financing (1,197) (1,050) (1,824)
activities
Net increase/(decrease) in cash and (2,453) 2,680 1,267
cash equivalents
Cash and cash equivalents at 12,613 11,346 11,346
beginning of period
Cash and cash equivalents at end of 10,160 14,026 12,613
period
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 - -
900
properties
Saleof 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 6,812 4,877
8,734
taxation
Taxation (639) (519)
(1,074)
Profit from operationsafter 6,173 4,358
7,660
taxation
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 Year ended 30 September
31 March
2008 2007 2007
£000 £000 £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 Year ended
31 March 30
September
2008 2007 2007
£000 £000 £000
Distributions to equity holders and by 1,197 1,050 1,824
subsidiaries in the period
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 - - 6,155 6,155
for the period
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 - - 7,570 7,570
for the period
Other recognised gains - 1,469 5,431 6,900
Revaluation of freehold land and - 448 - 448
buildings
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 - - 4,356 4,356
for the period
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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR SFMFMLSASESI
|