Final Results

Jersey Electricity Company Limited 16 December 2004 The Jersey Electricity Company Preliminary Announcement of Annual Results Year Ended 30 September 2004 At a meeting of the Board of Directors held on 15 December 2004, the final accounts for the Group for the year to 30 September 2004 were approved, details of which, are attached. The financial information set out in the announcement does not constitute the Company's statutory accounts for the years ended 30 September 2004 or 2003, but is derived from those accounts. Statutory accounts for 2003 have been delivered to the Jersey Registrar of Companies and those for 2004 will be delivered following the Company's Annual General Meeting. The auditors have reported on those accounts and their reports were unqualified. A final gross dividend of 70p (56p net of tax) on the Ordinary and 'A' Ordinary shares in respect of the period ended 30 September 2004 was recommended which, together with the interim gross dividend of 45p (36p net of tax), makes a total gross dividend for the year of £1.15 (92p net of tax)) on each £1 share. The dividend will be paid on 31 March 2005 to those shareholders registered in the books of the Company on 4 March 2005. A dividend on the 5% cumulative participating preference shares of 1.5% (2003 1.5%) payable on 1 July 2005 was also recommended. The Annual General Meeting of the Company will be held on 7 March 2005. P.J. Routier Company Secretary Direct telephone number : 01534 505253 Direct fax number : 01534 505553 Email : proutier@jec.co.uk 16 December 2004 The Powerhouse, PO Box 45, Queens Road, St Helier, Jersey JE4 8NY THE JERSEY ELECTRICITY COMPANY LIMITED Preliminary announcement of annual results Year ended 30 September 2004 The Chairman, Derek Maltwood, comments : 'I am pleased to report on another year of outstanding performance by the Company and its people. Electricity customers benefited most demonstrably this year from our recent diversification away from electricity produced locally from oil. Crude oil prices rose dramatically this year in response to political unrest in the Middle East, strong demand from developing countries and the impact on refinery capacity of a decade of inadequate investment. The local impact was a series of gas and heating oil price rises of more than 40%. By contrast, electricity users benefited again from our pledge not to increase tariffs until 2005, by which time they will have been unchanged for four consecutive years. As predicted, this commitment caused profits in our core business to remain static at £6.5m but Group pre-tax profit, before exceptional costs, increased by 15% to £7.0m as the performance of our other businesses improved.' Group turnover for the year to 30 September 2004 at £57.7m was 4% lower than the year ended 30 September 2003. The Energy business contributed £43.2m of the Group turnover which was £1.0m above last year due to a 2% increase in units sold compared to 2003. During 2004 tariffs were frozen at the same level as the previous year but will rise by 2.5% from 1 January 2005 due to the rising cost of imported power from Europe and from the strengthening of the euro against sterling. Turnover in the Property business rose marginally in the year to £2.0m but fell in Building Services by £3.0m due to the decision announced last year to withdraw from the larger projects sector and reduced by £0.4m in Retail appliance sales due to a general trend in this sector in Jersey during the last year. Turnover in Other Businesses rose by 8% to £3.4m with the growth in Foreshore revenues being the main factor. Profit on ordinary activities, before tax and exceptional costs, for the year to 30 September 2004 rose by 15% to £7.0m. Profit on ordinary activities, after exceptional costs, rose from £5.2m in 2003 to £5.5m in 2004. Profit in the Energy business stayed static at £6.5m with increased unit sales offset by higher electricity import and pension costs. The Property division continued to grow profits to £1.1m being 10% higher than last year due to higher occupancy rates. The Retail appliance sales business maintained profits at £0.1m being at a similar level to 2003 despite a year on year decrease of 7 % in like for like sales. The Building Services business produced profits of £0.2m having recovered from losses last year. Other businesses, including joint ventures and associates, produced a loss of £0.8m against £1.2m in 2003 due to lower losses in both our Newtel associate and Foreshore joint venture. An exceptional item of £1.5m was recognised in our half year figures writing down the £1.5m carrying value of our 41% equity investment and loans in Newtel, which was going through a refinancing exercise at that point. It has successfully secured external funding subsequently to develop the business further and eliminated the need for ongoing financial support from Jersey Electricity. In October 2003 a £2m agreement was signed with the dominant local telecoms operator Jersey Telecom, to lease fibre optic cables contained within our continental telecom network. Interest payable was £0.1m above 2003 due to a higher average level of net debt during the year due to the injection of £7m into the pension scheme late in the last financial year. The cash at bank at the year end was £2.9m, due to a cash inflow of £7.4m during the year. The taxation charge for the year was £1.8m consistent with 2003. Group earnings per share, excluding the impact of exceptional costs, rose 28% to £3.41 compared to £2.66 in 2003. Earnings per share including the impact of exceptional charges were £2.40 compared to £2.20 in the previous year. Dividends for the year rose by 26% from a gross level of 91.0p (72.8p net of tax) in 2003 to a proposed 115p (92p net of tax) for 2004 consistent with the rise in earnings per share in the year. Dividend cover, excluding exceptional costs, was sustained at 3.7 times. THE JERSEY ELECTRICITY COMPANY LIMITED Consolidated Profit and Loss Account for the year ended 30 September 2004 Notes 2004 2003 £ 000 £ 000 Turnover: Group and share of joint venture 2 57,684 59,809 Less: Share of joint venture turnover (771) (556) Group turnover 56,913 59,253 Cost of sales (32,039) (34,532) Gross profit 24,874 24,721 Net operating expenses (16,808) (17,266) Exceptional item - restructuring costs 3a - (886) Group operating profit 8,066 6,569 Share of operating loss in joint venture (517) (655) Share of associate's operating loss (417) (684) Exceptional item - impairment of investment 3b (1,545) - Profit on ordinary activities before interest and taxation 2 5,587 5,230 Net interest and similar charges (101) (21) Profit on ordinary activities before taxation 5,486 5,209 Tax on profit on ordinary activities (1,759) (1,771) Profit on ordinary activities after taxation 3,727 3,438 Minority Interest (42) (66) Profit on ordinary activities after taxation and 3,685 3,372 minority interest Dividends paid and proposed (1,418) (1,124) Retained profit for the group and share in joint 2,267 2,248 venture Earnings per ordinary share (basic and diluted) £2.40 £2.20 Earnings per ordinary share (basic and diluted) £3.41 £2.66 excluding exceptional items THE JERSEY ELECTRICITY COMPANY Consolidated Statement of Total Recognised Gains and Losses for the year ended 30 September 2004 2004 2003 £ 000 £ 000 Profit on ordinary activities after taxation and minority 3,685 3,372 interest Unrealised surplus on revaluation of plant 11 12 Unrealised (deficit)/surplus on revaluation of investment (18) 25 properties Deferred tax credit on items previously recognised in the - 1,960 Statement of Total Recognised Gains and Losses Total recognised gains since last annual report and accounts 3,678 5,369 Consolidated Note of Historical Cost Profits and Losses for the year ended 30 September 2004 2004 2003 £ 000 £ 000 Profit on ordinary activities before taxation (after minority interest) 5,444 5,143 Difference between the historical cost depreciation charge and the actual depreciation charge for the year calculated on the revalued amount 884 1,711 Historical cost profit on ordinary activities before taxation 6,328 6,854 (after minority interest) Historical cost profit for the year retained after taxation, minority interest and dividends 3,334 3,959 THE JERSEY ELECTRICITY COMPANY Balance Sheets 30 September 2004 Group Group Company Company 2004 2003 2004 2003 £ 000 £ 000 £ 000 £ 000 FIXED ASSETS (as (as restated) restated) Intangible fixed assets 100 141 - - Tangible fixed assets 126,183 128,443 126,181 128,442 Investments: subsidiary - - 477 477 other investments 5 5 5 3,944 joint venture - - 2,251 2,251 Share of associate's net assets - 873 - - Joint venture share of gross assets 542 561 Joint venture share of gross liabilities (120) (328) Net share of joint venture assets 422 233 - - 126,710 129,695 128,914 135,114 CURRENT ASSETS Stocks and work in progress 2,584 2,961 2,500 2,885 Debtors due within one year 9,501 9,404 9,285 9,198 Debtors due after more than one year 6,973 7,191 6,973 7,191 Cash at bank and in hand 2,890 77 2,865 17 21,948 19,633 21,623 19,291 CREDITORS Amounts falling due within one year 10,678 15,990 10,647 15,932 NET CURRENT ASSETS 11,270 3,643 10,976 3,359 Total assets less current liabilities 137,980 133,338 139,890 138,473 CREDITORS Amounts falling due after more than one 11,387 9,601 11,296 9,553 year PROVISIONS FOR LIABILITIES AND CHARGES Pensions and similar obligations 487 538 487 538 Deferred taxation 11,346 10,699 11,346 10,699 23,220 20,838 23,129 20,790 114,760 112,500 116,761 117,683 CAPITAL AND RESERVES Called up share capital: Equity 1,532 1,532 1,532 1,532 Non-Equity 235 235 235 235 Reserves - Equity 112,949 110,647 114,994 115,916 SHAREHOLDERS' FUNDS 114,716 112,414 116,761 117,683 Equity - Minority Interest 44 86 - - 114,760 112,500 116,761 117,683 THE JERSEY ELECTRICITY COMPANY LIMITED Consolidated Cash Flow Statement for the year ended 30 September 2004 2004 2003 £ 000 £ 000 RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING ACTIVITIES Group operating profit 8,066 6,569 Depreciation and amortisation charges 7,793 8,276 Decrease/(increase) in stocks & work in progress 377 (253) Increase in debtors (24) (8,036) Increase in creditors 1,077 892 NET CASH INFLOW FROM OPERATING ACTIVITIES 17,289 7,448 Returns on investments and servicing of finance (101) (21) Taxation (336) (231) Capital and investment expenditure (8,209) (9,047) Dividends paid (1,243) (1,173) INCREASE/(DECREASE) IN CASH 7,400 (3,024) RECONCILIATION OF NET CASHFLOW Increase/(decrease) in cash 7,400 (3,024) Net debt - start of year (4,510) (1,486) Net funds/(debt) - end of year 2,890 (4,510) Cash at bank and in hand 2,890 77 Overdraft - (4,587) Net funds/(debt) - end of year 2,890 (4,510) THE JERSEY ELECTRICITY COMPANY LIMITED Notes to the accounts Year ended 30 September 2004 1. Basis of Preparation The accounts have been prepared on the basis of the accounting policies set out in the Group 2003 Annual Report and Accounts with the only exception being the change in the policy for treatment of capital grants and capital contributions referred to in note 4 below. 2. Turnover and profit The contributions of the various activities of the Group to turnover (including joint venture) and profit are listed below: Turnover Profit/(loss) 2004 2003 2004 2003 Principal activities: £000 £000 £000 £000 Energy 43,232 42,244 6,549 6,536 Building Services 3,712 6,717 154 (414) Retail Appliance Sales 5,351 5,773 106 141 Property 2,010 1,964 1,107 1,008 Other 3,379 3,111 (784) (1,155) 57,684 59,809 7,132 6,116 Exceptional items: Restructuring costs - (886) Impairment of investment in associate (1,545) - Profit on ordinary activities before interest and 5,587 5,230 taxation The information currently available to report the net assets of each business class as a 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. The Contracting business has been renamed Building Services. Income from Public Lighting maintenance is now shown in this segment but was previously included in the 'Other' segment. 3. Exceptional Items a. Restructuring costs The 2003 exceptional item of £886,000 relates to the redundancy costs of manpower reductions within the Building Services business. The related tax benefit is £177,000 giving a net cost for the prior year of £709,000. b. Impairment of investment in associate The exceptional charge of £1,545,000 that was disclosed in the half year figures to 31 March 2004 was for the write-down of the investment in Newtel Holdings Limited following an impairment review. There is no related tax benefit associated with this charge. 4. Prior year adjustment The Group policy for treatment of capital grants and capital contributions was changed during the year and is now treated as deferred income and released to the profit and loss account over the estimated operational lives of the related assets. The previous policy was to deduct any such grants or contributions from the total cost of the assets involved. The Directors consider that the new policy provides a consistent treatment with that applied by UK listed electricity utilities. This information is provided by RNS The company news service from the London Stock Exchange

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