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Jersey Electricity (JEL)

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Thursday 18 May, 2006

Jersey Electricity

Interim Results

Jersey Electricity Company Limited
18 May 2006


                         The Jersey Electricity Company

                   Preliminary Announcement of Interim Results

                     for the six months ended 31 March 2006


At a meeting of the Board of Directors held on 17 May 2006, the Board approved
the Interim Accounts for the Group for the six months ended 31 March 2006 and
declared an interim dividend of 55p gross (44p net of tax) compared to 50p gross
(40p net) in 2005 on the Ordinary and 'A' Ordinary shares. The dividend will be
paid on 25 August 2006 to those shareholders registered in the books of the
Company on 11 August 2006.

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 2006 have not been audited nor have the results for the
equivalent period in 2005. The results for the year ended 30 September 2005 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


18 May 2006


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 2006


Financial Summary                         6 months        6 months
                                              2006            2005        % rise
Electricity Sales -kWh (000)               355,949         338,465            5%
Turnover                                    £35.8m          £30.6m           17%
Profit before tax                            £5.1m           £6.0m         (15)%
Profit in Energy business                    £3.9m           £5.2m         (25)%
Earnings per share                           £2.55           £3.05         (16)%
Net dividend proposed per ordinary share       44p             40p           10%


Jersey Electricity is required to adopt International Financial Reporting
Standards (IFRS) from 2006 and these interim results are the first to be
reported in accordance with them. The adoption of IFRS represents a change in
accounting policy only and does not change the Group's underlying cash flows or
business strategy. Group profit before tax in the first half of 2006 was 15%
lower than in the same period of the previous year, despite a 17% increase in
turnover. This was principally due to a 25% fall in profits in our core
electricity supply business, arising from our decision to absorb during 2006 and
2007 a substantial share of the 55% increase in costs of electricity in the
European wholesale power market, from which we import virtually all of our
needs. When announcing our decision last October to increase our tariffs by only
9.7% in 2006, we forecast a significant fall in profits for the year and our
expectations remain unchanged, despite exceptionally strong growth in
electricity sales in the first half of the year. Our earnings per share fell 16%
to £2.55 in line with the profits decrease.

Our aim remains to restore by the end of 2007, the profitability upon which
planned investment in the continuing reliability of our electricity network
depends.  However, our hopes to achieve this without increasing our tariffs by
more than 10% next year have been undermined by significant further increases in
the cost of European wholesale power for delivery in 2007.

Power importation remained at the same level as seen in recent years at 96% of
our requirements during the half-year. Our indigenous power generating plant
provided the balance of the electricity which we supplied and in addition to its
principal role as emergency standby capacity, it enabled us to make modest gains
from selling back power to our French supplier during their peak periods.

Our Electrical Retailing business had a very strong first six months with
year-on-year turnover rising 53% and profits moving up from £0.1m in 2005 to
£0.3m in 2006. This was aided by the opening of a new outlet in St. Helier in
November 2005. Profits from our Property portfolio fell from £0.6m to £0.4m due
to the sale of an investment property which had an annual rental income of
£0.6m. The Building Services business produced a £0.1m profit in the six month
period being at a similar level to last year. Losses at our data centre joint
venture, Foreshore Limited, remained at £0.2m.

Cash at bank, including short-term investments, rose £2.3m to £13.1m during the
last six months, with operating cash produced from trading activity offset by
£2.6m of capital investment expenditure and the £1.0m final 2005 dividend.

In addition, in October 2005, proceeds of £6.8m were received from the sale of a
property in St Helier which the Jersey Electricity Company Limited occupied
prior to relocation of its retail outlet some years ago. This was paid to
ordinary shareholders by way of a special dividend of £4.44 per share, net of
tax, in March 2006.

Your Board proposes to pay an interim net dividend of 44p (2005: 40p) on the
Ordinary and 'A' Ordinary Shares payable on 25 August 2006.


D.R. MALTWOOD - Chairman         M.J.LISTON - Chief Executive        18 May 2006




INVESTOR TIMETABLE FOR 2006


18 May               Announcement of interim results
30 June              Payment date for preference share dividends
11 August            Record date for interim ordinary dividend
25 August            Interim ordinary dividend for year ending 30 September 2006
15 December          Preliminary announcement of full year results



Group Income Statement (Unaudited)



                                                                           Six months ended         Year ended
                                                                                31 March          30 September
                                                                          2006           2005                2005
                                                      Note                £000           £000                £000

Revenue                                                2                35,759         30,589              56,096

Cost of sales                                                         (22,812)       (16,606)            (32,025)

Gross profit                                                            12,947         13,983              24,071

Revaluation of investment properties                                         -              -               2,370
Operating expenses                                                     (8,095)        (7,899)            (15,897)

GROUP OPERATING PROFIT BEFORE JOINT
VENTURE                                                                  4,852          6,084              10,544
Share of loss of joint venture                                           (169)          (173)               (355)

GROUP OPERATING PROFIT                                 2                 4,683          5,911              10,189

Interest receivable                                                        452            122                 354
Finance costs                                                              (4)            (4)                 (9)


PROFIT FROM OPERATIONS BEFORE TAXATION                                   5,131          6,029              10,534

Income tax                                             3               (1,219)        (1,351)             (1,911)

PROFIT FROM  OPERATIONS AFTER TAXATION                                   3,912          4,678               8,623

Minority interest                                                          (5)            (4)                (33)

PROFIT FOR THE PERIOD ATTRIBUTABLE TO THE
EQUITY HOLDERS OF THE PARENT COMPANY                                     3,907          4,674               8,590

                                                                             £              £                   £
EARNINGS PER SHARE
   -     basic and diluted                                                2.55           3.05                5.61

DIVIDENDS PER SHARE
   -     paid final/interim                            4                  0.62           0.56                0.96
   -     paid special                                  4                  4.44              -                   -
   -     proposed                                      4                  0.44           0.40                0.62




Group Balance Sheet (Unaudited)


                                                                          As at 31 March               As at  30
                                                                                                       September
                                                                      2006            2005                  2005
                                                    Note              £000            £000                  £000
Non-current assets
Intangible assets                                                       92             165                   130
Property, plant and equipment                                      108,521         110,516               109,791
Investment property                                                  9,753          13,986                 9,753
Other investments                                                      935             690                   754

Total non-current assets                                           119,301         125,357               120,428

Current assets
Inventories                                                          3,505           2,749                 3,927
Trade and other receivables                                         11,747          10,289                14,578
Derivative financial instruments                                        18               -                     -
Short-term investments - cash deposits                               1,500               -                     -

Cash and cash equivalents                                           11,641           7,342                12,240

Total current assets                                                28,411          20,380                30,745

TOTAL ASSETS                                                       147,712         145,737               151,173

Liabilities
Trade and other payables                                             7,792           7,071                 8,696
Derivative financial instruments                                         -               -                   528
Current tax payable                                                  1,195             792                 1,195


Total current liabilities                                            8,987           7,863                10,419

Non-current liabilities
Provisions                                                          13,680          12,248                12,241
Tax liabilities                                                      1,219           1,208                 1,154
Financial liabilities - preference shares                              235             235                   235
Retirement benefit obligations                                         299           3,331                   725
Deferred tax liabilities                                            10,705           9,625                10,506


Total non-current liabilities                                       26,138          26,647                24,861

TOTAL LIABILITIES                                                   35,125          34,510                35,280



NET ASSETS                                                         112,587         111,227               115,893

Equity
Share capital                                                        1,532           1,532                 1,532
Other reserves                                                          18               -                 (528)
Retained earnings                                                  111,003         109,659               114,848
Shareholders' funds                                                112,553         111,191               115,852

Equity minority interest                                                34              36                    41

TOTAL EQUITY                                         5             112,587         111,227               115,893




Group Cash Flow Statement (Unaudited)


                                                                         Six months ended            Year ended
                                                                             31 March              30 September
                                                           Note         2006           2005                2005
                                                                        £000           £000                £000

Cash flows from operating activities
 Operating profit                                                      4,852          6,084              10,544

Depreciation and amortisation charges                                  3,505          3,798               7,313
Revaluation of investment property                                         -              -             (2,370)
Pension operating charge less contributions paid                       (324)          (390)               (779)
 Loss on sale of  fixed assets                                             -              -                 258

 Operating cash flows  before movement in working capital              8,033          9,492              14,966

Decrease/(increase) in inventories                                       423          (171)             (1,343)
Decrease/(increase) in trade and other receivables                   (3,618)          (308)               2,195
Increase/(decrease) in trade and other payables                        1,973        (1,001)                 246
 Interest received                                                       423            122                 319
 Preference dividends paid                                               (4)            (4)                 (9)
 Income taxes paid                                                         -              -               (779)


Net cash flows from operating activities                               7,230          8,130              15,595

Cash flows from investing activities
Purchase of property, plant and equipment                            (2,277)        (2,357)             (5,395)
Investment in intangible assets                                            -           (13)                (13)
Proceeds from disposal of investment property                          6,802              -                   -
Investment in joint venture                                            (350)          (438)               (700)
Short-term investments                                               (1,500)              -                   -


Net cash flows from/(used in) investing activities                     2,675        (2,808)             (6,108)

Cash flows from financing activities
Equity dividends paid                                       4        (7,764)          (870)             (1,507)
Repayment of overdraft                                               (1,370)              -                   -


Net cash flows (used in)/from financing activities                   (9,134)          (870)             (1,507)

Net increase in cash and cash equivalents                                771          4,452               7,980
Cash and cash equivalents at beginning of period                      10,870          2,890               2,890

Cash and cash equivalents at end of period                            11,641          7,342              10,870



Cash and cash equivalents                                               Six months ended              Year ended
                                                                           31 March                 30 September
                                                                        2006            2005                2005
                                                                        £000            £000                £000

Cash in hand and balances with banks                                  11,641           7,342              12,240
Bank overdraft                                                             -               -             (1,370)

Cash and cash equivalents at end of period                            11,641           7,342              10,870



Group Statement of Recognised Income and Expense (Unaudited)


                                                                     Six months ended          Year ended
                                                                         31 March            30 September
                                                                 2006             2005               2005
                                                                 £000             £000               £000
Profit for the financial period                                 3,907            4,674              8,590
Actuarial gain on defined benefit scheme (net of tax)               -                -              1,660
Fair value gain/(loss) on cash flow hedges                        546                -              (528)

Total recognised income and expense for the period              4,453            4,674              9,722
attributable to the equity holders of the parent




Notes to the Interim Accounts


1.   Accounting policies


Basis of preparation

For all periods up to and including the year ended 30 September 2005, the Group
prepared its annual report and accounts in accordance with UK Generally Accepted
Accounting Practice (GAAP).  For the year ending 30 September 2006, the Group is
required to prepare its annual report and accounts in accordance with
International Financial Reporting Standards (IFRS). Accordingly, these interim
accounts have been prepared on the basis of the IFRS accounting policies that
management expects to apply in the 30 September 2006 annual report and accounts.

The Group's reconciliation of UK GAAP to IFRS for the year ended 30 September
2005 has been prepared to describe the changes which arose on transition from 1
October 2004. As such, it does not comprise a full set of financial statements
that have been prepared to present fairly the results and financial position of
the Group in accordance with IFRS.  The Group's IFRS accounting policies as they
are to be applied for the year ended 30 September 2006 have been adopted on the
basis of all IFRS issued by the International Accounting Standards Board
('IASB') and which have either been endorsed by the European Union ('EU') or
where there is a reasonable expectation of endorsement by the EU by the time the
Group prepares its first annual accounts in accordance with IFRS for the year
ending 30 September 2006.

Due to the continuing work of the IASB, further standards, amendments and
interpretations could be applicable for the Group's accounts for the year ending
30 September 2006 as practice is continuing to evolve. Consequently, the Group's
accounting policies may change prior to the publication of those accounts.

Since transition to IFRS was 1 October 2004, the Group has taken advantage of
the following exemptions to assist groups with the transition process contained
within IFRS 1 'First-time Adoption of International Financial Reporting
Standards':

  • Employee benefits: the cumulative actuarial losses relating to pensions
    and other post-retirement benefits at the date of transition to IFRS have
    been recognised in retained earnings, and prospectively, all actuarial gains
    and losses will be recognised immediately in full through the statement of
    recognised income and expense (SORIE);

  • Financial instruments: the Group has elected not to prepare comparative
    information in accordance with IAS 32 and IAS 39. These standards have been
    applied with effect from 1 October 2005. Details of the Group's IAS 32 and
    IAS 39 opening position are presented in note 6; and

  • Fixed assets : a deemed cost for the opening balance sheet carrying value
    of the fixed assets (with the exception of investment properties) by
    reference to their book value at the date of transition (1 October 2004) is
    established.

The principal accounting policies comprise the following:

Basis of consolidation

The Group's consolidated IFRS financial information for the six months ended 31
March 2006 incorporates the financial information of the company and its
subsidiaries to 31 March.

Subsidiaries are those entities over which the Group has the power to govern the
financial and operating policies, accompanying a shareholding that confers more
than half of the voting rights.

The results of subsidiaries acquired or disposed of during the year are included
in the income statement from the effective date of acquisition or up to the
effective date of disposal, as appropriate.

The consolidated IFRS financial information includes the Group's share of the
post-tax results and net assets under IFRS of associates and jointly controlled
entities using the equity method of accounting. Associates are all entities over
which the Group has significant influence, but not control, generally
accompanying a shareholding that confers between 20% and 50% of the voting
rights.  Jointly controlled entities are those entities over which the Group has
joint control with one or more other parties and over which there has to be
unanimous consent by all parties to the strategic, financial and operating
decisions.

Foreign currencies

The functional and presentation currency of the Company is pounds sterling.
Transactions in currencies other than pounds sterling are recorded at the rates
of exchange prevailing on the dates of the transactions. At each balance sheet
date, monetary assets and liabilities that are denominated in foreign currencies
are retranslated at the rates prevailing on the balance sheet date. Non-monetary
assets and liabilities carried at fair value that are denominated in foreign
currencies are translated at the rates prevailing at the date when the fair
value was determined. Gains and losses arising on retranslation are included in
net profit or loss for the period.

Use of estimates

The preparation of accounts in accordance with IFRS requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the accounts and the reported amounts of revenues and expenses during the
reporting period. Actual results can differ from those estimates.

Revenue

Revenue is recognised to the extent that it is probable that economic benefits
will flow to the Group and revenue can be reliably measured. Revenue is measured
at the fair value of consideration received or receivable and represents amounts
receivable for goods and services provided in the normal course of business.

The following specific criteria must also be met before revenue is recognised:

Energy supply

Revenue is recognised on the basis of energy supplied during the period. Revenue
for energy supply includes an assessment of energy supplied to customers between
the date of the last meter reading and the balance sheet date, estimated using
historical consumption patterns.

Long-term contract accounting

Profit on long-term contracts is taken as the work is carried out if the outcome
can be assessed with reasonable certainty.  The profit included is calculated on
a prudent basis to reflect the proportion of the work carried out at the period
end, by recording revenue and related costs as contract activity progresses.
Revenue is calculated as that proportion of total contract value which costs
incurred to date bear to total expected costs for that contract. Revenue derived
from variations on contracts is recognised only when they have been accepted by
the customer. Full provision is made for losses on all contracts in the year in
which they are first foreseen.

Interest

Interest income is accrued on a time basis, by reference to the principal
outstanding and at the effective interest rate applicable.

Indefeasible rights of use ('IRU') sales

With the connection of the Channel Island Electricity Grid Ltd (CIEG) telecom
network between Jersey, France and Guernsey, the Group has the ability to sell
dark fibre to other telecom network operators seeking to extend their own
networks through IRU  (Indefeasible Rights of Use) agreements. Income from IRU's
where an IRU agreement does not transfer substantially all the risks and
benefits ownership to the buyer or is deemed not to extend for substantially all
of the assets' expected useful lives, is recognised on a straight line basis
over the life of the agreement, even when the payments are not received on such
a basis. Where agreements extend for substantially all of the assets' expected
useful lives and transfer substantially all the risks and benefits of ownership
to the buyer the resulting profit/(loss) is recognised in the income statement
as a gain/(loss) on disposal of fixed assets.

Taxation

The tax expense represents the sum of tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable
profit differs from net profit as reported in the income statement because it
excludes items of income or expense that are taxable or deductible in other
years and it further excludes items that are never taxable or deductible.

Deferred tax is the tax expected to be payable or recoverable on the difference
between the carrying amounts of assets and liabilities in the balance sheet and
the corresponding tax bases used in the computation of taxable profits, and is
accounted for using the balance sheet liability method. Deferred tax liabilities
are recognised for all taxable temporary differences and deferred tax assets are
recognised to the extent that it is probable that taxable profit will be
available against which deductible temporary differences can be utilised.

Deferred tax is calculated at the tax rates that are expected to apply in the
period in which the liability is settled or the asset is realised, on a
non-discounted basis, and is charged in the income statement, except where it
relates to items charged or credited to equity via the statement of recognised
income and expense, in which case the deferred tax is also dealt with in the
statement of recognised income and expense.

Intangible assets

The costs of acquired computer software costs are capitalised on the basis of
the costs incurred to acquire and bring to use the specific software and are
amortised over their operational lives.  Costs directly associated with the
development of computer software programmes that will probably generate economic
benefits over a period in excess of one year are capitalised and amortised over
their estimated operational lives. Costs include employee costs relating to
software development and an appropriate proportion of directly attributable
overheads.

Property, plant and equipment

Tangible fixed assets are stated at cost (or 'deemed cost' as determined in
accordance with the transitional provisions contained within IFRS 1) and are
depreciated on the straight-line method to their residual values over their
estimated operational lives. Tangible fixed assets include capitalised employee,
interest and other costs that are directly attributable to construction of fixed
assets.

Depreciation is charged on the following principal bases:

Buildings                                    50 years
Interconnectors                              up to 25 years
Plant, mains cables and services             up to 33 years
Fixtures and fittings                        10 years
Computer equipment                           up to 4 years
Vehicles                                     5 years

The gain or loss arising on the disposal or retirement of an asset is determined
as the difference between the sales proceeds and the carrying amount of the
asset and is recognised in the income statement.

Capital grants and customer contributions in respect of additions to fixed
assets are treated as deferred income within non-current liabilities and
released to the income statement over the estimated operational lives of the
related assets.

Impairment of tangible and intangible assets

At each balance sheet date, the Group reviews its tangible and intangible assets
to determine whether there is any indication that those assets may have suffered
an impairment loss. If any such indication exists, the recoverable amount of the
asset is estimated in order to determine the extent of the impairment loss, if
any.  Where the asset does not generate cash flows that are independent from
other assets, the Group estimates the recoverable amount of the cash generating
unit to which the asset belongs.

Investment Property

Investment property, which is property held to earn rentals and/or for capital
appreciation, is stated at its fair value at the balance sheet date. Gains or
losses arising from changes in the fair value of investment property are
included in the income statement for the period in which they arise.

Other Investments

The results and assets and liabilities of associates and joint ventures are
incorporated using the equity method. Investments in associates and joint
ventures are carried in the balance sheet at cost as adjusted by changes in the
Group's share of net assets, less any impairment in the value of individual
investments.

Leased assets

Rentals payable under operating leases, where a significant portion of the risks
and rewards of ownership are retained by the lessors, are charged to the income
statement on a straight-line basis over the period of the leases.

The Group operates a sale and leaseback arrangement on the capital value of the
second interconnector to France. This asset has been leased from CIEG which
operates as a joint venture and the asset has been accounted for directly in
Group's books. Benefits arising from the sale and leaseback arrangement, being
up-front interest receipts, are initially capitalised and then amortised as
appropriate over the length of the lease.

Inventories

Inventories are stated at the lower of cost and net realisable value. Cost
comprises direct materials and, where applicable, direct labour costs and those
overheads that have been incurred in bringing the inventories to their present
location and condition. Cost is calculated using the average method with the
exception of fuel oil which is calculated using the first in first out method.
Net realisable value represents the estimated selling price less all estimated
costs of completion and costs to be incurred in marketing, selling and
distribution.

Financial Instruments

Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and in hand and short-term
deposits with a maturity of three months or less.

Short-term investments

Short term investments comprise cash deposits with a maturity greater than three
months.

Trade and other receivables

Trade receivables do not carry any interest and are stated at their nominal
value as reduced by appropriate allowances for estimated irrecoverable amounts.

Trade payables

Trade payables are not interest bearing and are stated at their nominal value.

Derivative financial instruments and hedge accounting

The Group uses foreign exchange contracts to hedge the risks of changes in
foreign currency exchange rates as its imported power from Europe is priced and
payable in euros. Such contracts are stated at fair value.

Changes in the fair value of derivative financial instruments which are
designated as effective hedges of future cash flows are recognised directly in
equity and the ineffective portion is recognised immediately in the income
statement. If the cash flow hedge of a firm commitment or forecasted transaction
results in the recognition of an asset or a liability, then, at the time the
asset or liability is recognised, the associated gains or losses on the
derivative that had previously been recognised in equity are included in the
initial measurement of the asset or liability. For hedges that do not result in
the recognition of an asset or a liability, amounts deferred in equity are
recognised in the income statement in the same period in which the hedged item
affects net profit or loss.

Changes in the fair value of derivative financial instruments that do not
qualify for hedge accounting are recognised in the income statement as they
arise.

Hedge accounting is discontinued when the hedging instrument expires or is sold,
terminated or exercised, or no longer qualifies for hedge accounting.  At that
time, any cumulative gain or loss on the hedging instrument recognised in equity
is kept in equity until the forecasted transaction occurs.  If a hedged
transaction is no longer expected to occur, the net cumulative gain or loss
recognised in equity is transferred to the income statement.

Dividends

Dividends are recorded in the Group's accounts in the period in which they are
approved by the Company's shareholders.  Interim dividends are recorded in the
period in which they are paid.

Provisions

Provisions are recognised when the Group has a present obligation (legal or
constructive) as a result of a past event, and where it is probable that an
outflow of resources embodying economic benefits will be required to settle the
obligation and a reliable estimate can be made of the amount of the obligation.

Retirement benefit obligations

The Group provides pensions through a defined benefit scheme. The cost of
providing benefits is determined using the projected unit credit method, with
actuarial valuations being carried out at a minimum every three years.
Actuarial gains and losses are recognised in full, directly in retained
earnings, in the period in which they occur and are shown in the statement of
recognised income and expense. The net figure derived from the current service
cost element of the pension charge, the expected return on pension scheme assets
and interest on pension scheme liabilities is deducted in arriving at operating
profit. The retirement benefits obligation recognised in the balance sheet
represents the net deficit in the Group's defined pension schemes together with
the net deficit in the Group's other post-retirement benefit arrangements,
principally healthcare benefits, which are accounted for on a similar basis to
the Group's defined benefit pension schemes.

2.   Segmental information

Revenue and profit information are analysed between the businesses as follows:

                                              Turnover                                   Operating
                                                                                          profit/
                                                                                          (loss)
                                     2006         2005         2005         2006             2005                  2005
                                 31 March     31 March           30     31 March         31 March          30 September
                                                          September
                                     £000         £000         £000         £000             £000                  £000
  Energy                           28,006       24,602       44,231        3,919            5,227                 6,711
  Building services                 1,544        1,174        2,258          139               57                   141
  Retail appliance sales            4,528        2,953        5,712          328               70                    70
  Property                            789        1,032        2,100          350              558                 3,200
  Other                               892          828        1,795         (53)              (1)                    67

                                   35,759       30,589       56,096        4,683            5,911                10,189



The segmental operating profit for Property for the year ended 30 September 2005
includes a £2,370,000 uplift in profit as a result of the revaluation of
investment property.



3.   Income tax

                                                                                Six months ended       Year ended
                                                                                     31 March        30 September
                                                                             2006           2005             2005
                                                                             £000           £000             £000
Current income tax                                                        (1,022)        (1,091)          (1,465)
Deferred income tax                                                         (197)          (260)            (446)

Total income tax                                                          (1,219)        (1,351)          (1,911)



4.   Dividends


                                                                              Six months ended        Year ended
                                                                                   31 March         30 September
                                                                                 2006      2005             2005
                                                                                 £000      £000             £000


Distributions to equity holders and by subsidiaries in the period               7,764       870            1,507



The distribution to equity holders in the period consisted of £950,000 (62p net
of tax per share) in respect of the final dividend for 2005 and £6,802,000
(£4.44 net of tax per share) being a special interim dividend linked to the
proceeds received in the period from the sale of an investment property. In
addition £12,000 was paid by subsidiaries to minority interests.

The Directors have declared an interim dividend of 44p per share, net of tax
(2005 - 40p) for the six months ended 31 March 2006 to shareholders on the
register at the close of business on 11 August 2006.  This dividend was approved
by the Board on 17 May 2006 and has not been included as a liability at 31 March
2006.



5.   Reconciliation of movements in equity


                                                                           Six months ended            Year ended
                                                                               31 March              30 September
                                                                             2006           2005             2005
                                                                             £000           £000             £000
Equity attributable to equity holders
At beginning of period                                                    115,893        107,348          107,348
Total recognised income and expense for the period                          4,453          4,674            9,722
Net movement in minority interests and other equity                           (7)             63              294
Dividends to equity holders                                               (7,752)          (858)          (1,471)

At end of period                                                          112,587        111,227          115,893



6.   Explanation of transition to IFRS


Overview of IFRS reconciliations

Detailed reconciliations of the Group's income statements for the six months
ended 31 March 2005 and for the year ended 30 September 2005 and balance sheets
at 1 October 2004 (the Group's date of transition to IFRS), 31 March 2005 and 30
September 2005 under IFRS to the results and financial position previously
reported under UK GAAP are set out below.

The adoption of IFRS represents a change in accounting policy only and does not
change the Group's underlying cash flows or business strategy.

The effect of moving from UK GAAP to IFRS had the following impact on the Group
for the year ended 30 September 2005  :

•    Profit before taxation increased by £3.1m for the year ended 30 September 
     2005 due mainly to:

     o    a lower pensions cost than under UK GAAP of £0.8m; and

     o    the impact of recognising the £2.4m uplift in the revaluation of
          investment properties in the income statement previously shown as a 
          movement in reserves under UK GAAP.

A degree of volatility, that previously did not exist, has been introduced into
the income statement as the annual revaluation of the investment property
portfolio now impacts profit before taxation.

•    Earnings per share increased by £1.95 as a result of increased profits.

•    Net assets in the balance sheet reduced by £5.3m as at 30 September 2005 
     mainly due to the remaining pensions prepayment established in 2003, when a
     lump sum payment of £7.0m was injected, being transferred to retained 
     earnings on transition to IFRS on 1 October 2004.


IFRS Summary of impact

IFRS adjustments

The adjustments that have been made to the amounts previously reported under UK
GAAP are explained below:


IAS 19 Employee Benefits - Defined Benefit Scheme Accounting

The Group prepared its 2005 UK GAAP results in accordance with SSAP 24
(Accounting for Pension Costs), with FRS 17 (Retirement Benefits) transitional
disclosures provided in the notes to the accounts.

Under SSAP 24, any pension surplus or deficit identified at the most recent
actuarial revaluation is recognised gradually through the profit and loss
account over the expected future working lifetime of employees. The net pension
cost under SSAP 24 therefore includes both the cost of providing an additional
year of pension benefits to employees and an element of the surplus/deficit
relating to previous years.

The difference between employer's contributions paid and the SSAP 24 net pension
cost is recognised as a prepayment/accrual, resulting in a balance sheet
position that does not necessarily reflect the actuarial position. Interest is
calculated on this balance sheet entry and is also included within the net
pension cost. In accordance with IAS 19, any legal and constructive obligation
for post employment benefit plans is immediately recognised as an asset or
liability on the balance sheet. Where actual experience differs from the
assumptions made at the start of a financial year, actuarial gains and losses
will be recognised through the statement of recognised income and expense.

The adoption of IAS 19 increases the 2005 profit before taxation by £0.8m
compared with UK GAAP. The derecognition of the UK GAAP SSAP 24 prepayment,
reduced net assets at transition on 1 October 2004 by £6.6m (£5.3m net of
deferred taxation). This prepayment reflected the unamortised lump sum payment
of £7.0m made in July 2003 which was previously recognised under UK GAAP. In
addition net assets were further reduced by the recognition of the IAS 19
pension scheme deficit of £3.7m (£3.0m net of deferred tax) at 1 October 2004
which moved downwards to a £0.6m (net of deferred taxation) deficit as at 30
September 2005.

IAS 40 Investment Property

Under UK GAAP any movement in the unrealised fair value of an investment
property is shown in the statement of total recognised gains and losses. In
effect, changes in the market value of investment properties, based on an annual
independent review by an external expert, was a movement through reserves rather
than an impact on profit before tax. IAS 40 requires all revaluations to be
reflected in the income statement.

The adoption of IAS 40 increases the 2005 profit before taxation by £2.4m
compared with UK GAAP.

IAS 10  Dividends

IAS 10 (Events After the Balance Sheet Date) and SSAP 17 (Accounting for Post
Balance Sheet Events) both distinguish 'adjusting events' from 'non-adjusting
events' with similar definitions and applications.  However, under IAS 10
dividends may not be recognised until they have been approved and declared to
shareholders and so are no longer at the discretion of the Directors. Therefore,
if this occurs after the balance sheet date, the dividends are not recognised as
a liability at the balance sheet date.  However, they are disclosed in the notes
to the accounts in accordance with IAS 1 (Presentation of Financial Statements).
Furthermore, dividends are no longer recognised within the income statement and
are instead reported in the movement of retained earnings.

Under UK GAAP an accrual would have been made in the financial statements for
the final dividend. The final dividend of £1.0m included in the UK GAAP
financial statements for 2005 is derecognised, thereby increasing the net assets
of the Group by this amount.

IAS 32 Preference Shares

The Group has preference share capital of £0.2m with no redemption date.
Preference share capital under UK GAAP was disclosed as equity in the balance
sheet and dividends payable shown as dividends in the profit and loss account.
Under IAS 32: Financial Instruments: Disclosure and Presentation, the Group's
preference shares are classified as financial liabilities in the balance sheet
and dividends are treated as financing payments in the income statement.

The impact on the balance sheet is to reduce net assets by £0.2m and the income
statement is less materially affected.

IAS 39 Accounting for Derivatives

The Group contracts with a European supplier for the importation of power,
priced and payable in euros. Forward foreign exchange contracts are placed for
future liabilities based on forecast purchases to hedge against volatility to
allow tariff planning to be performed more effectively. The Group put cash flow
hedges in place for future estimated monthly liabilities. The Group is taking
the exemption offered by IFRS 1 to apply IAS 39 with effect from 1 October 2005
rather than 1 October 2004 as is the case for all other IFRS. The comparative
information for the year ended 30 September 2005 and the period ended 31 March
2005 therefore reflects derivatives accounted for under the existing UK GAAP
accounting policy. However the transition adjustment required on 1 October 2005
of £0.5m to recognise the fair value of derivatives and apply hedge accounting
provisions is disclosed below.

For cash flow hedges, as described above, movements in the fair value of
derivatives are recognised in the balance sheet and deferred within reserves
until they can be recycled through the income statement to offset the future
income statement effect of changes in the hedged item.

In order to apply this treatment, it must be demonstrated that the derivative
has been, and will continue to be, an effective hedge of the hedged item within
the range deemed acceptable by IAS 39. Any hedge ineffectiveness is recognised
immediately within the income statement.

IAS 16 Revaluation of plant

The Group has historically revalued certain plant assets and their carrying
value is reviewed annually with reference to external indices regarding the
replacement of such plant. The Group has chosen to adopt under IFRS 1 the
one-off transitional option that the deemed cost for the opening balance sheet
carrying value of plant assets is established by reference to their value at the
date of transition (1 October 2004). The Group has opted to account for these
assets at depreciated cost and will no longer revalue annually by reference to
external indices. A review will be performed regularly to ensure the carrying
value is reasonable.

Under IFRS plant assets are stated at deemed cost less depreciation whereas
under UK GAAP plant was carried at valuation, by reference to industry indices,
less depreciation.

The impact on the 2005 balance sheet is to reduce net assets by £0.1m.

Other : IFRS reclassifications

All other material differences between IFRS and UK GAAP are included with the
other column.  The main adjustments are:

•    software costs move from tangible to intangible fixed assets in accordance 
     with IAS 38;

•    investment property is separately disclosed on the face of the balance 
     sheet;

•    tax balances are separately disclosed on the face of the balance sheet; and

•    the elimination of the revaluation reserve previously attributable to
     investment property.

Under UK GAAP, goodwill is required to be amortised over its estimated useful
economic life. On transition to IFRS under IFRS 3 (Business Combinations), the
balance of goodwill recognised under UK GAAP at that date is 'frozen' and no
future amortisation is charged.  However, the goodwill is subject to a mandatory
impairment test on at least an annual basis and otherwise if there is any
indication of impairment.  The JEC had a small balance of goodwill of £0.1m in
its balance sheet at 1 October 2004 and due to immateriality this was written
off in the year to 30 September 2005 and has not been reversed in the income
statement under IFRS.


              Analysis of IFRS adjustments to the Income Statement
                          Year ended 30 September 2005


                                                                          Investment   Preference
                                                               Pensions     Property    Dividends
                                                  UK GAAP*        IAS19       IAS 40       IAS 32          IFRS
                                                      £000         £000         £000         £000          £000
 Revenue                                            56,096            -            -            -        56,096
 Cost of sales                                    (32,078)           53            -            -      (32,025)
 Gross profit                                       24,018           53            -            -        24,071

 Revaluation of investment properties                    -            -        2,370            -         2,370
 Operating expenses                               (16,623)          726            -            -       (5,897)
 Group operating profit before joint venture         7,395          779        2,370            -        10,544

 Share of loss of joint venture                      (355)            -            -            -         (355)
 Group operating profit                              7,040          779        2,370            -        10,189

 Interest receivable                                   354            -            -            -           354
 Finance costs                                           -            -            -          (9)           (9)

 Profit from operations before taxation              7,394          779        2,370          (9)        10,534

 Taxation                                          (1,755)        (156)            -            -       (1,911)

 Profit from operations  after taxation              5,639          623        2,370          (9)         8,623

 Minority interest                                    (33)            -            -            -          (33)

 Profit for the year attributable to the equity      5,606          623        2,370          (9)         8,590
 holders of the parent company

 Earnings per ordinary share (basic and              £3.66                                                £5.61
 diluted)


 *This column represents the previously published results under UK GAAP in IFRS
format


                   Analysis of IFRS Balance Sheet adjustments
                              at 30 September 2005


                                                            Preference  Cashflow       Plant           Other:
                                       Pensions  Dividends      Shares    Hedges Revaluation    IFRS reclass-
                            UK GAAP*      IAS19     IAS 10      IAS 32    IAS 39      IAS 16       ifications      IFRS
                                £000       £000       £000        £000      £000        £000             £000      £000
Assets
Intangible assets                  -          -          -           -         -           -               130      130
Property, plant and          119,756          -          -           -         -        (82)           (9,883)  109,791
equipment
Investment property                -          -          -           -         -           -             9,753    9,753
Other investments -              754          -          -           -         -           -                 -      754
shares
Total non-current assets     120,510          -          -           -         -        (82)                 -  120,428
Inventories                   3,927           -          -           -         -           -                 -    3,927
Trade and other               21,089    (6,511)          -           -         -           -                 -   14,578
receivables
Cash and cash equivalents     12,240          -          -           -         -           -                 -   12,240
Total current assets          37,256    (6,511)          -           -         -           -                 -   30,745
Total assets                 157,766    (6,511)          -           -         -        (82)                 -  151,173

Liabilities
Trade and other payables      10,841          -      (950)           -         -           -           (1,195)    8,696
Derivative financial               -          -          -           -       528           -                 -      528
instruments
Current tax payable                -          -          -           -         -           -             1,195    1,195
Current liabilities           10,841          -      (950)           -       528           -                 -   10,419
Non-current liabilities
Long term provisions          13,395          -          -           -         -           -            (1,154)  12,241
Tax liabilities                    -          -          -           -         -           -             1,154    1,154
Financial liabilities              -          -          -         235         -           -                 -      235
Retirement benefit
obligations                      495        230          -           -         -           -                 -      725
Deferred taxation             11,792    (1,447)          -           -         -         161                 -   10,506
Non-current liabilities       25,682    (1,217)          -         235         -         161                 -   24,861
Total liabilities             36,523    (1,217)      (950)         235       528         161                 -   35,280
Net assets                   121,243    (5,294)        950       (235)     (528)       (243)                 -  115,893

Equity
Share capital - ordinary       1,532         -           -           -         -           -                 -    1,532
              - preference       235         -           -       (235)         -           -                 -        -
Revaluation reserve            5,278         -           -           -         -           -            (5,278)       -
Other reserves                     -         -           -           -     (528)           -                 -    (528)
Retained earnings            114,157    (5,294)        950           -         -       (243)             5,278  114,848
Shareholders' funds          121,202    (5,294)        950       (235)     (528)       (243)                 -  115,852
Equity minority interest
                                  41         -           -           -         -           -                 -       41
Total equity                 121,243    (5,294)        950       (235)     (528)       (243)                 -  115,893



*This column represents the previously published results under UK GAAP in IFRS
format


              Analysis of IFRS adjustments to the Income Statement
                         six months ended 31 March 2005


                                                                             Investment   Preference
                                                                  Pensions     Property    Dividends
                                                  UK GAAP*           IAS19       IAS 40       IAS 32        IFRS
                                                      £000            £000         £000         £000        £000
 Revenue                                            30,589               -            -            -      30,589

 Cost of sales                                    (16,632)              26            -            -    (16,606)
 Gross profit                                       13,957              26            -            -      13,983

 Revaluation of investment properties                    -               -            -            -           -
 Operating expenses                                (8,263)             364            -            -    (7, 899)
 Group operating profit before joint venture         5,694             390            -            -       6,084

 Share of loss of joint venture                      (173)               -            -            -       (173)
 Group operating profit                              5,521             390            -            -       5,911

 Interest receivable                                   122               -            -            -         122
 Finance costs                                           -               -            -          (4)         (4)

 Profit from operations before taxation              5,643             390            -          (4)       6,029

 Taxation                                          (1,273)            (78)            -            -     (1,351)

 Profit from operations  after taxation              4,370             312            -          (4)       4,678

 Minority interest                                     (4)               -            -            -         (4)

 Profit for the year attributable to the equity      4,366             312            -          (4)       4,674
 holders of the parent company

 Earnings per ordinary share (basic and diluted)     £2.85                                                 £3.05



*This column represents the previously published results under UK GAAP in IFRS
format




                   Analysis of IFRS Balance Sheet adjustments
                                at 31 March 2005


                                                                 Preference        Plant           Other:
                                          Pensions   Dividends       Shares   Revaluation   IFRS reclass-
                              UK GAAP*       IAS19      IAS 10       IAS 32       IAS 16       ifications      IFRS
                                  £000        £000        £000         £000         £000             £000      £000
Assets
Intangible assets                    -           -           -            -           -               165       165
Property, plant and
equipment                      124,667           -           -            -           -          (14,151)   110,516
Investment property                  -           -           -            -           -            13,986    13,986
Other investments -
shares                             690           -           -            -           -                 -       690
Total non-current assets       125,357           -           -            -           -                 -   125,357
Inventories                      2,749           -           -            -           -                 -     2,749
Trade and other
receivables                     16,813     (6,500)           -            -           -                 -    10,313
Cash and cash equivalents        7,318           -           -            -           -                 -     7,318
Total current assets            26,880     (6,500)           -            -           -                 -    20,380
Total assets                   152,237     (6,500)           -            -                             -   145,737

Liabilities
Trade and other payables         8,472           -       (613)            4           -              (792)    7,071
Current tax payable                 -            -           -            -           -               792       792

Current liabilities              8,472           -       (613)            4           -                 -     7,863
Non-current liabilities
Provisions                      13,456           -           -            -           -            (1,208)   12,248
                                
Tax liabilities                      -           -           -            -           -             1,208     1,208
                                    
Financial liabilities                -           -           -          235           -                 -       235
Retirement benefit                                                                                            
obligations                        462       2,869           -            -           -                 -     3,331
Deferred taxation               11,346     (1,966)           -            -         245                 -     9,625
                                
Non-current liabilities         25,264         903           -          235         245                 -    26,647
Total liabilities               33,736         903       (613)          239         245                 -    34,510
Net assets                     118,501     (7,403)         613        (239)       (245)                 -   111,227

Equity
Share capital - ordinary         1,532           -           -            -           -                 -     1,532
              - preference         235           -           -        (235)           -                 -         -
Revaluation reserve              9,503           -           -            -           -            (9,503)        -
Retained earnings              107,195     (7,403)     613              (4)       (245)             9,503   109,659
Shareholders' funds            118,465     (7,403)         613        (239)       (245)                 -   111,191
Equity minority interest            36           -           -            -           -                 -        36
                                    
Total equity                   118,501     (7,403)         613        (239)       (245)                 -   111,227
                               

*This column represents the previously published results under UK GAAP in IFRS
format


                   Analysis of IFRS Balance Sheet adjustments
                               at 1 October 2004


                                                                 Preference       Plant             Other:
                                             Pensions Dividends      Shares   Revaluation    IFRS reclass-
                                UK GAAP*        IAS19    IAS 10      IAS 32      IAS 16        ifications        IFRS
                                    £000         £000      £000        £000        £000              £000        £000
Assets
Intangible assets                    100            -        -            -           -               201         301
Property, plant and                                                                                           
equipment                        126,183            -        -            -           -          (13,924)     112,259
Investment property                    -            -        -            -           -            13,723      13,723
Other investments -
shares                               427            -        -            -           -                 -         427
Total non-current assets         126,710            -        -            -           -                 -     126,710
                                                       
Inventories                        2,584            -        -            -           -                 -       2,584
Trade and other                                               
receivables                       16,474       (6,625)       -            -           -                 -       9,849
Cash and cash equivalents          2,890            -        -            -           -                 -       2,890
Total current assets              21,948       (6,625)       -            -           -                 -      15,323
Total assets                     148,658      (6,625)        -            -           -                 -     142,033

Liabilities
Trade and other payables          10,678            -     (858)           -           -              (792)      9,028
Current tax payable                    -            -        -            -           -               792         792
Current liabilities               10,678            -     (858)           -           -                 -       9,820
Non-current liabilities
Provisions                        11,387            -        -            -           -            (1026)      10,361
Tax liabilities                        -            -        -            -           -             1,026       1,026
Financial liabilities                  -            -        -          235           -                 -         235
Retirement benefit
obligations                          487        3,234        -            -           -                 -       3,721
Deferred taxation                 11,346      (2,069)        -            -         245                 -       9,522
Non-current liabilities           23,220        1,165        -          235         245                 -      24,865
Total liabilities                 33,898        1,165     (858)         235         245                 -      34,685
Net assets                       114,760       (7,790)     858         (235)       (245)                -     107,348

Equity
Share capital - ordinary           1,532            -         -           -           -                 -       1,532
              - preference           235            -         -       (235)           -                 -           -
Revaluation reserve                9,503            -         -           -           -            (9,503)          -
Retained earnings                103,446      (7,790)       858           -       (245)             9,503     105,772
Shareholders' funds              114,716      (7,790)       858       (235)       (245)                 -     107,304
Equity minority interest              44            -         -           -           -                 -          44
Total equity                     114,760      (7,790)                 (235)       (245)                 -     107,348



*This column represents the previously published results under UK GAAP in IFRS
format





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