Half Yearly Report

RNS Number : 9075L
Jersey Electricity Company Ld
14 May 2010
 

                                               

 

                                                       

 

Jersey Electricity plc

 Interim Management Report

for the six months ended 31 March 2010

 

 

At a meeting of the Board of Directors held on 13 May 2010, the Board approved the Interim Management Report for the Group for the six months ended 31 March 2010 and declared an interim dividend of 81p (101.25p gross) compared to 77p (96.25p gross) in 2009 on the Ordinary and 'A' Ordinary shares. The dividend will be paid on 30 June 2010 to those shareholders registered in the books of the Company on 11 June 2010.

 

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 2010 has not been audited or reviewed by our external auditors nor have the results for the equivalent period in 2009. The results for the year ended 30 September 2009 have been extracted from the statutory accounts 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

 

13 May 2010

 

 

 

The Powerhouse,

PO Box 45,

Queens Road,

St Helier,

Jersey JE4 8NY

 

 

 

 

 

 

 

Jersey Electricity plc

Unaudited Interim Management Report

for the six months to 31 March 2010

 

Financial Summary

6 months

2010

6 months

2009

(restated)

% increase/(decrease)

 

 

Electricity Sales -kWh (000)

366,628

367,112

-

Turnover

£55.7m

£49.9m

 12 %

Profit before tax

£7.5m

£5.6m

34%

Profit in Energy business

£4.4m

£4.0m

10%

Earnings per share

£3.92

£2.93

 34%

Net dividend proposed per ordinary share

    81p

    77p

   5%

 

Group turnover was 12% higher than 2009 and profit before tax in the first half of 2010 was £7.5m being 34% higher than in the same period last year. Most of this increase in profits came from our non-Energy business units. Earnings per share rose by 34% in line with profits.  

 

Electricity revenues in the first half of 2010 were 8% higher than in 2009. Unit sales volumes were at the same level as last year but revenues increased by the net result of increased tariffs in the last financial year offset by a 5.1% decrease in prices to our customers from January 2010. Energy profits rose from £4.0m in 2009 to £4.4m mainly as a result of lower maintenance costs. Imported electricity met 89% of our requirements during the half year, which was slightly lower than in the previous year. 

 

Despite the tough trading conditions currently prevailing in markets our Retailing business saw year on year revenues rise 12% to £7.6m and profits increase by £0.1m to £0.4m. Profits from our Property portfolio rose by £0.6m to £1.2m due to an increase in rental flows and the settlement of a rent review with one of our tenants back-dated to June 2008. The Building Services business produced profits of £0.1m being at the same level as last year. Our remaining business units produced profits of £1.3m which included £1m received from our associate Newtel for fibre optic lease rentals and the part repayment of a loan written off in 2004 when the investment value was reduced to zero. These additional revenues are largely non-recurring and were associated with the distribution of funds raised by Newtel  from the sale of its data centre assets in Guernsey. Interest received at £0.2m was £0.2m lower than last year due mainly to lower interest rates.

 

Cash, including short-term investments, rose £1.4m to £18.2m during the last six months, with operating cash produced from trading activity offset by £2.4m of electricity infrastructure investment. In terms of capital expenditure, the Western Primary project to reinforce the network in the west of Jersey was completed during this period and the South Hill Primary project was initiated.

 

Your Board proposes to pay an interim net dividend of 81p (2009: 77p) on the Ordinary and "A" Ordinary Shares payable on 30 June 2010 in addition to the final dividend for 2009 of 118p (2008: 112p) paid on 31 March 2010. Your Board aims to deliver sustained real growth each year and the proposed interim dividend is a 5% year on year increase.  

 

At our Annual General Meeting, Chris Evans, a non-executive director who joined the Board in 1998, retired and the Board would like to thank him for all his help during the last 12 years.

 

 

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).

(d)  This half yearly financial report contains certain forward-looking statements with respect to the operations, performance and financial condition of the Company. By their nature, these statements involve uncertainty since future events and circumstances can cause results and developments to differ materially from those anticipated. The forward-looking statements reflect knowledge and information available at the date of preparation of this half yearly financial report and the Company undertakes no obligation to update these forward-looking statements. Nothing in this half yearly financial report should be construed as a profit forecast.

 

G.J. GRIME - Chairman    C.J.AMBLER - Chief Executive              13 May 2010

           

 

 

 

 

INVESTOR TIMETABLE FOR 2010

 

11 June

Record date for interim ordinary dividend

30 June

Interim ordinary dividend for year ending 30 September 2010

1 July

Payment date for preference share dividends

End July

Interim Management Statement - nine months to 30 June 2010

17 December

Preliminary announcement of full year results

 

 

 

 

Condensed Consolidated Income Statement (Unaudited)

 




Six months ended

31 March


Year ended

30 September

 

 

 

Note


2010

£000


2009

£000


2009

£000






(restated)



Revenue

2


55,706


49,897


93,594









Cost of sales



(39,713)


(35,214)


(66,903)









Gross profit



15,993


14,683


26,691









Revaluation of investment properties



-


-


(106)

Operating expenses



(8,661)


(9,456)


(17,818)









 

Operating profit before joint venture



 

7,332


 

5,227


 

8,767

Share of profit/(loss) of joint venture



30


(11)


(59)









Operating profit

2


7,362


5,216


8,708









Interest receivable



166


405


577

Finance costs



(7)


(5)


(11)

















Profit from operations before taxation



7,521


5,616


9,274









Taxation

3


(1,490)


(1,125)


(2,032)









Profit from operations after taxation



6,031


4,491


7,242









Minority interest



(31)


-


(38)









Profit for the period attributable to the

equity holders of the parent company



 

6,000


 

4,491


 

7,204









EARNINGS PER SHARE








   -     basic and diluted



£3.92


£2.93


£4.70









DIVIDENDS PER SHARE








   -     paid

4


£1.18


£1.12


£1.89

   -     proposed

4


£0.81


£0.80


£1.18









 

Condensed Consolidated Statement of Comprehensive Income (Unaudited)

 




Six months ended

31 March


Year ended

30 September




2010

£000


2009

£000


2009

£000

Profit for the period



6,000


4,491


7,204









Other comprehensive income








Actuarial gain/(loss) on defined benefit scheme (net of tax)



3,565


(8,178)


(9,163)

Fair value gain/(loss) on cash flow hedges (net of tax)



(994)


1,906


(830)









Total comprehensive income for the period



8,571


(1,781)


(2,789)









Attributable to:








Owners of the company



8,602


(1,781)


(2,751)

Minority Interest



(31)


-


(38)




8,571


(1,781)


(2,789)

 

Condensed Consolidated Statement of Changes in Equity (Unaudited)

 

 


Share

Other

Retained

Total


capital

reserves

reserves

 

£000

£000

£000

  At 1 October 2009

1,532

1,726

126,074

129,332

  Total recognised income and expense for the period

-

-

6,000

6,000

  Unrealised  losses on hedges

-

(994)

-

(994)

  Actuarial gain on defined benefit scheme

-

-

3,565

3,565

  Equity dividends paid by Jersey Electricity plc

-

-

(1,808)

(1,808)

  As at 31 March 2010

1,532

732

133,831

136,095











  At 1 October 2008

1,532

2,556

130,928

135,016

  Total recognised income and expense for the year

-

-

7,204

7,204

  Unrealised  losses on hedges

-

(830)

-

(830)

  Actuarial loss on defined benefit scheme

-

-

(9,163)

(9,163)

  Equity dividends paid by Jersey Electricity plc    

-

-

(2,895)

(2,895)

  As at 30 September 2009

1,532

1,726

126,074

129,332














(restated)

(restated)

  At 1 October 2008

1,532

2,556

130,928

135,016

  Total recognised income and expense for the period

-

-

4,491

4,491

  Unrealised  gains on hedges

-

1,906

-

1,906

  Actuarial loss on defined benefit scheme


-

(8,178)

(8,178)

  Equity dividends paid by Jersey Electricity plc   

-

-

(1,716)

(1,716)

  As at 31 March 2009

1,532

4,462

125,525

131,519






 

 

Condensed Consolidated Balance Sheet (Unaudited)

 




As at 31 March

 


As at 30 September




 

2010

£000


 

2009

£000


 

2009

£000

NON-CURRENT ASSETS





(restated)



Intangible assets



60


84


60

Property, plant and equipment



119,399


119,723


120,581

Investment property



12,635


12,635


12,529

Retirement benefit surplus



1,426


-


-

Other investments



1,803


1,907


1,804

















Total non-current assets



135,323


134,349


134,974









CURRENT ASSETS








Inventories



7,026


5,813


6,069

Trade and other receivables



18,560


17,127


14,871

Derivative financial instruments



357


5,019


1,599

Short-term investments - cash deposits



9,980


5,585


8,200

Cash and cash equivalents



8,263


6,398


8,636

















Total current assets



44,186


39,942


39,375









TOTAL ASSETS



179,509


174,291


174,349









CURRENT LIABILITIES








Trade and other payables



13,244


11,962


13,858

Current tax payable



3,188


2,150


1,698

















Total current liabilities



16,432


14,112


15,556

NET CURRENT ASSETS



27,754


25,830


23,819









NON-CURRENT LIABILITIES








Trade and other payables



15,264


14,216


14,676

Retirement benefit deficit



-


2,780


3,708

Financial liabilities - preference shares



235


235


235

Deferred tax liabilities



11,450


11,422


10,827

















Total non-current liabilities



26,949


28,653


29,446









TOTAL LIABILITIES



43,381


42,765

 


45,002









NET ASSETS



136,128


131,526


129,347









EQUITY








Share capital



1,532


1,532


1,532

Other reserves



446


5,019


1,726

Retained earnings



134,117


124,968


126,074

















Shareholders' funds



136,095


131,519


129,332









Minority interest



33


7


15









TOTAL EQUITY



136,128


131,526


129,347

 

 

 

 

Condensed Consolidated Cash Flow Statement (Unaudited)

 



Six months ended

31 March


Year ended

30 September


 

Note

 

2010

£000


 

2009

£000


 

2009

£000

CASH FLOWS FROM OPERATING ACTIVITIES




(restated)










Operating profit before joint venture


7,332


5,227


8,767








Depreciation and amortisation charges


3,873


3,705


7,828

Revaluation of investment property


-


-


106

Pension operating charge less contributions paid


(700)


(585)


(1,039)

(Profit)/loss on sale of fixed assets


(3)


-


24















Operating cash flows  before movement in working capital


10,502


8,347


15,686








(Increase)/decrease in inventories


(956)


289


33

(Increase)/decrease in trade and other receivables


(3,552)


(4,896)


(2,841)

Increase in trade and other payables


827


1,490


2,950

Interest received


31


314


690

Preference dividends paid


(4)


(4)


(9)

Income taxes paid


-


-


(933)















Net cash flows from operating activities


6,845


5,540


15,576








CASH FLOWS FROM INVESTING ACTIVITIES














Purchase of property, plant and equipment


(3,627)


(8,175)


(12,066)

Investment in intangible assets


(29)


(8)


(29)

Proceeds from disposal of  property


-


-


16

Repayment of long-term loan


50


100


150

Short-term investments


(1,780)


5,440


2,825















Net cash flows from investing activities


(5,386)


(2,643)


(9,104)








CASH FLOWS FROM FINANCING ACTIVITIES














Equity dividends paid

4

(1,832)


(1,716)


(2,907)















Net cash flows used in financing activities


(1,832)


(1,716)


(2,907)








Net increase in cash and cash equivalents


(373)


1,181


3,565

Cash and cash equivalents at beginning of period


8,636


5,217


5,071








Cash and cash equivalents at end of period


8,263


6,398


8,636








 


Notes to the Condensed Interim Accounts

 

1.         Accounting policies

 

Basis of preparation

The interim accounts for the six months ended 31 March 2010 have been prepared on the basis of the accounting policies set out in the 30 September 2009 annual report and accounts using accounting policies consistent with International Financial Reporting Standards (IFRS) and in accordance with IAS 34 'Interim Financial Reporting'.

 

The Group has considerable financial resources and, as a consequence, the directors believe that the Company is well placed to manage its business risks successfully despite the current uncertain economic outlook. The directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the annual financial statements.

 

2.         Turnover and profit

 

The contributions of the various activities of the Group to turnover and profit are listed below:

                                                                          Six months ended                                                             Year ended


31 March 2010

31 March 2009

(restated)

30 September 2009

 


External

Internal

Total

External

Internal

Total

External

Internal

Total

Revenue

£000

£000

£000

£000

£000

£000

£000

£000

£000











Energy

42,589

121

42,710

39,358

126

39,484

73,123

267

73,390

Building services

1,908

107

2,015

1,881

63

1,944

3,569

184

3,753

Retail

7,648

24

7,672

6,856

32

6,888

12,954

60

13,014

Property

1,519

348

1,867

898

344

1,242

1,840

691

2,531

Other

2,042

313

2,355

904

313

1,217

2,108

574

2,682












55,706

913

56,619

49,897

878

50,775

93,594

1,776

95,370

Inter Group elimination



(913)



(878)



(1,776)




55,706



49,897



93,594











Operating profit










Energy



4,400



3,992



6,679

Building services



129



139



176

Retail



383



279



292

Property



1,181



620



1,263

Other



1,269



186



404

Operating profit before property revaluation



7,362



5,216



8,814

Revaluation of investment  properties



 

-



 

-



 

(106)

Operating profit



7,362



5,216



8,708

 

Materially, all the Group's operations are conducted within the Channel Islands. All transfers between divisions are at an arm's-length basis.

 

No segmental detail for assets or liabilities has been provided as there has been no material movement from

the detail provided in the annual accounts to the 30 September 2009.

 

 

 

Notes to the Condensed Interim Accounts (Unaudited)

 

 

3.         Income tax

 

 

 

          Six months ended

            31 March


Year ended

30 September


2010

£000


2009

£000


2009

£000




(restated)



Current income tax

(1,490)


(806)


(1,237)

Deferred income tax

-


(320)


(795)

Total income tax

(1,490)


(1,126)


(2,032)

 

With effect from the 2009 year of assessment the standard rate of income tax for Jersey companies changed. For the period ended 31 March 2010 and subsequent periods, the company is taxable at the rate applicable to utility companies of 20%.

 

 

4.         Dividends

 


 Six months ended

    31 March


Year ended

30 September


2010

£000


2009

£000


2009

£000







Distributions to equity holders and by subsidiaries in the period

1,832


1,716


2,907

 

The distribution to equity holders in the period consisted of £ 1,807,760 (118p net of tax per share) in respect of the final dividend for 2009. In addition £24,000 was paid by subsidiaries to minority interests for the six months to 31 March 2010.

 

The Directors have declared an interim dividend of 81p per share, net of tax (2009 - 77p) for the six months ended 31 March 2010 to shareholders on the register at the close of business on 11 June 2010.  This dividend was approved by the Board on 13 May 2010 and has not been included as a liability at 31 March 2010.

 

 

 

5.         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 applicable under IAS 19 'Employee Benefits', and also consideration given as to whether there have been any other events that would significantly affect the pension liabilities. The triennial actuarial valuation of the defined benefits scheme as at 31 December 2009 is currently being finalised which will dictate the applicable future required cash contributions.

 

 

 

Notes to the Condensed Interim Accounts

 

 

6.         Related party transactions

 

a)   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 and the Company is in dispute with its landlord. The information usually required by IAS 37 Provisions, 'Contingent liabilities and contingent assets', is not disclosed on the grounds that it may prejudice the outcome of the dispute.      

 

b)   The Company made electricity sales to the value of £3.8m (2009: £3.6m) and other sales of £0.8m (2009: £0.3m) to the States of Jersey for the six months ended 31 March 2010. At the half-year end the States of Jersey had a debtors balance of £132,000 (2009: £243,000). The States of Jersey made sales to the value of £0.2m (2009:£0.1m) to Jersey Electricity for the six months ended 31 March 2010. In addition to the transactions included above with the States of Jersey, the Company regularly makes payments of income tax, social security, GST (Goods and Services Tax) and other statutory costs.  

 

c)   At the half-year end Foreshore Limited had a debtors balance of £119,000 (2009: £152,000). The long-term loan balance at 31 March 2010 was £550,000 (2009: £650,000) repayable to Jersey Electricity on a 'cash available' basis. During the six months to 31 March 2010 the Company made electricity sales of £284,000 (2009: £245,000) and other sales of £366,000 (2009: £382,000) to Foreshore Limited.

 

d)   The Company has a 34% shareholding in Newtel Holdings Limited ("Newtel"). During the six months to 31 March 2010 the Company made electricity sales of £16,000 (2009: £14,000) and received other income  of £1,033,000 (2009: £25,000) to Newtel. Newtel had sales of £2,000 (2009: £1,000) to the Company for the six months ended 31 March 2010.

 

 

7.      Prior year Adjustment - Energy Revenues

 

In the Annual Report for 2009 it was disclosed that a refinement had been made to the methodology employed to calculate the total number and values of unbilled units of electricity disclosed in our financial statements. For consistency, the Interim Report figures for 2009 have been restated to reflect this change. The impact is an increase in the Energy revenues (and profit) in the Income Statement of £0.3m and the net assets in the Balance Sheet by £2m. 

 

 

 

 

 

 

 

 


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