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Jersey Electricity (JEL)

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Friday 29 May, 2009

Jersey Electricity

Half Yearly Report

RNS Number : 9891S
Jersey Electricity Company Limited
29 May 2009
 

                    




The Jersey Electricity Company

 Interim Management Report

for the six months ended 31 March 2009


 

At a meeting of the Board of Directors held on 28 May 2009, the Board approved the Interim Management Report for the Group for the six months ended 31 March 2009 and declared an interim dividend of  96.25p gross (77p net of tax) compared to 91.25p gross (73p net) in 2008 on the Ordinary and 'A' Ordinary shares. The dividend will be paid on 30 June 2009 to those shareholders registered in the books of the Company on 12 June 2009.


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 2009 has not been audited or reviewed by our external auditors nor have the results for the equivalent period in 2008. The results for the year ended 30 September 2008 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

 

28 May 2009

 

 

 

The Powerhouse,

PO Box 45,

Queens Road,

St Helier,

Jersey JE4 8NY 








Jersey Electricity Company Limited

Unaudited Interim Management Report

for the six months to 31 March 2009


Financial Summary

6 months

2009

6 months

2008

% increase/(decrease)


Electricity Sales -kWh (000)

367,112

359,772

 2 %

Turnover

£49.6m

£45.4m

  9 %

Profit before tax

£5.3m

£6.8m

(22)%

Profit in Energy business 

£3.7m

£4.4m

(15)%

Earnings per share

£2.79

£4.02

(31)%

Net dividend proposed per ordinary share

   77p

   73p

    5%


Group turnover was 9% higher than 2008 but profit before tax in the first half of 2009 was £5.3m being 22lower than in the same period last year. Profits in our Energy business are down 15% having been impacted by a 40% increase in our electricity import costs from 1 January 2009 which was the regrettable catalyst for a 24% rise in customer tariffs from the same date.  Earnings per share fell by 31as a result of the above profit decrease and the return to a normalized tax rate of 20%.   


Electricity revenues in the first half of 2009 were 13% higher than in 2008 with a 2% rise in unit sales volume and the remainder from the rise in tariffs. Energy profits fell from £4.4m in 2008 to £3.7m as the increase in revenues did not cover the rise in import costs in the first half of this financial year. Imported electricity met 92% of our requirements during the half year, which was slightly lower than usual as a result of periodic production from our own plant.  


Our other businesses are not immune to the tough trading conditions currently prevailing in markets. The Retailing business saw year on year revenues fall 5% and profits fell by £0.2m to £0.3m. Core profits from our Property portfolio rose from £0.5m to £0.6but in 2008 there was also a sale of a property which produced a gain on sale of £0.4m. The Building Services business produced profits of £0.1m being down by £0.1m from last year. Our remaining business units produced profits on a par with the comparative period last year. Interest received at £0.4m was £0.2m lower than last year due to lower cash balances and lower interest rates.


Cash, including short-term investments, fell £4.3m to £12.0m during the last six months, with operating cash produced from trading activity offset by £8.2m 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. In addition £1m was paid as a deposit to RTE in France to secure the timing slot for the landside network build necessary as part of Normandie 3 project to deliver a third electricity interconnector between the Channel Islands and mainland Europe. 


Your Board proposes to pay an interim net dividend of 77p (200873p) on the Ordinary and 'A' Ordinary Shares payable on 30 June 2009 in addition to the final dividend for 2008 of 112p (200775p) paid on 31 March 2009. The increase in the level of dividends proposed during the last financial year followed a review by the Board on the level of dividend cover maintained by other listed and Jersey utilities balanced by the required levels of capital expenditure in the short to medium term. Following this re-basing of the dividend level in 2008 your Board will aim to deliver sustained real growth each year and the proposed interim dividend is a 5% year on year increase.  


The States of Jersey's Minister for Economic Development is likely to commission a review of the Company's tariffs, following the 24% increase in tariffs earlier this year. Article 22 of the Electricity (Jersey) Law 1937 permits the States to determine the tariffs set by the Company, having regard to a number of specified matters. The matters specified in the Law as being required to have been taken into account in setting tariffs reflect closely those adopted by the Board for determining tariffs and the Board are therefore confident that the review will serve to confirm the appropriateness of the current level of the Company's tariffs. Otherwise the anticipated principal risks over the second half of the financial year and beyond remain as stated in our 2008 Annual Report and Accounts.


At our Annual General MeetingJohn Le Maistre, a non-executive director who joined the Board in 1997 retired and was replaced during May by John Stares, an accountant and management consultant who is also a non-executive director of Jersey Telecom.   



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        28 May 2009

    




INVESTOR TIMETABLE FOR 2009


12 June
Record date for interim ordinary dividend
30 June
Interim ordinary dividend for year ending 30 September 2009
1 July
Payment date for preference share dividends
End July
Interim Management Statement – nine months to 30 June 2009
18 December
Preliminary announcement of full year results
 
 





Condensed Group Income Statement (Unaudited)





Six months ended

31 March


Year ended

30 September




Note


2009

£000


2008

£000


2008

£000









Revenue

2


49,625


45,423


81,910









Cost of sales



(35,214)


(30,832)


(55,968)









Gross profit



14,411


14,591


25,942









Revaluation of investment properties



-


-


294

Profit from sale of property



-


407


405

Operating expenses



(9,456)


(8,750)


(17,806)










Operating profit before joint venture




4,955



6,248



8,835

Share of (loss)/profit of joint venture



(11)


14


46









Operating profit

2


4,944


6,262


8,881









Interest receivable



405


554


1,086

Finance costs



(5)


(4)


(11)

















Profit from operations before taxation



5,344


6,812


9,956









Taxation

3


(1,071)


(639)


(84)









Profit from operations after taxation



4,273


6,173


9,872









Minority interest



-


(18)


(48)









Profit for the period attributable to the 

equity holders of the parent company




4,273



6,155



9,824

















EARNINGS PER SHARE








    -    basic and diluted



£2.79


£4.02


£6.41









DIVIDENDS PER SHARE








    -    paid 

4


£1.12


£0.75


£1.48

    -    proposed

4


£0.77


£0.73


£1.12


Condensed Group Statement of Recognised Income and Expense (Unaudited)


 
Six months ended
31 March
 
 
Year ended
30 September
 
 
2009
 
 
2008
 
  
2008
 
£000
 
£000
 
£000
Profit for the financial period
4,273
 
6,155
 
9,824
Actuarial (loss)/gain on defined benefit scheme (net of tax)
(8,178)
 
2,283
 
(4,874)
Fair value gain on cash flow hedges (net of tax)
1,906
 
3,401
 
1,737
 
 
 
 
 
 
Total recognised income and expense for the period attributable to the equity holders of the parent company
 
(1,999)
 
 
11,839
 
 
6,687
 
 
 
 
 
 

 


Condensed Group Balance Sheet (Unaudited)





As at 31 March



As at 30 September



Note



2009

£000



2008

£000



2008

£000

NON-CURRENT ASSETS








Intangible assets



84


60


86

Property, plant and equipment



119,723


112,016


115,990

Investment property



12,635


12,340


12,635

Other investments 



1,907


2,102


2,037

Retirement benefit surplus



-


15,506


6,702

















Total non-current assets



134,349


142,024


137,450









CURRENT ASSETS








Inventories



5,813


4,695


6,102

Trade and other receivables



14,653


13,972


9,942

Derivative financial instruments



5,019


4,715


2,763

Short-term investments - cash deposits



5,585


4,930


11,025

Cash and cash equivalents



6,398


10,160


5,217

















Total current assets



37,468


38,472


35,049









TOTAL ASSETS



171,817


180,496


172,499









CURRENT LIABILITIES








Trade and other payables



11,962


10,093


11,477

Derivative financial instruments



-


-


127

Current tax payable



1,656


887


905

















Total current liabilities



13,618


10,980


12,509

NET CURRENT ASSETS



23,850


27,492


22,540









NON-CURRENT LIABILITIES








Trade and other payables



14,216


13,422


13,959

Retirement benefit deficit



2,780


-


-

Tax liabilities



-


1,093


-

Financial liabilities - preference shares



235


 235


235

Deferred tax liabilities



11,422


15,221


12,535

















Total non-current liabilities



28,653


29,971


26,729









TOTAL LIABILITIES



42,271


40,951



39,238









NET ASSETS



129,546


139,545


133,261









EQUITY








Share capital



1,532


1,532


1,532

Other reserves



5,019


4,220


2,556

Retained earnings



122,988


133,772


129,166

















Shareholders' funds

7


129,539


139,524


133,254









Minority interest



7


21


7









TOTAL EQUITY



129,546


139,545


133,261






Condensed Group Cash Flow Statement (Unaudited)




Six months ended

31 March


Year ended

30 September



Note


2009

£000



2008

£000



2008

£000

CASH FLOWS FROM OPERATING ACTIVITIES














Operating profit before joint venture


4,955


6,248


8,835








Depreciation and amortisation charges


3,705


3,458


6,950

Revaluation of investment property


-


-


(294)

Pension operating charge less contributions paid


(585)


(900)


(1,110)

Profit on sale of fixed assets


-


(407)


(406)















Operating cash flows before movement in working capital


8,075


8,399


13,975








Decrease/(increase) in inventories 


289


(64)


(1,471)

(Increase)/decrease in trade and other receivables 


(4,624)


(2,762)


1,388

Increase/(decrease) in trade and other payables


1,490


(1,045)


954

Interest received


314


601


1,010

Preference dividends paid


(4)


(5)


(9)

Income taxes paid


-


-


(896)















Net cash flows from operating activities


5,540


5,124


14,951








CASH FLOWS FROM INVESTING ACTIVITIES














Purchase of property, plant and equipment

5

(8,175)


(5,593)


(13,270)

Investment in intangible assets


(8)


(22)


(49)

Proceeds from disposal of property


-


410


413

Repayment of long-term loan


100


-


109

Short-term investments


5,440


(1,175)


(7,270)















Net cash flows from investing activities


(2,643)


(6,380)


(20,067)








CASH FLOWS FROM FINANCING ACTIVITIES














Equity dividends paid

4

(1,716)


(1,197)


(2,426)















Net cash flows used in financing activities


(1,716)


(1,197)


(2,426)








Net increase/(decrease) in cash and cash equivalents


1,181


(2,453)


(7,542)

Cash and cash equivalents at beginning of period


5,217


12,613


12,613








Cash and cash equivalents at end of period


6,398


10,160


5,071

Overdraft


-


-


146








Cash and cash equivalents at end of period


6,398


10,160


5,217










Notes to the Condensed Interim Accounts


1.     Accounting policies


Basis of preparation

The interim accounts for the six months ended 31 March 2009 have been prepared on the basis of the accounting policies set out in the 30 September 2008 annual report and accounts using accounting policies consistent with International Financial Reporting Standards (IFRS) and in accordance with IAS 34 'Interim Financial Reporting'.


2.    Turnover and profit


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

 

 
31 March 2009
31 March 2008
30 September 2008
 
External
Internal
Total
External
Internal
Total
External
Internal
Total
Revenue
£000
£000
£000
£000
£000
£000
£000
£000
£000
 
 
 
 
 
 
 
 
 
 
Energy
39,086
126
39,212
34,590
132
34,722
61,751
271
62,022
Building services
1,881
63
1,944
1,785
82
1,867
3,402
172
3,574
Retail
6,856
32
6,888
7,257
25
7,282
13,135
51
13,186
Property
898
344
1,242
826
340
1,166
1,659
678
2,337
Other
904
313
1,217
965
359
1,324
1,963
723
2,686
 
 
 
 
 
 
 
 
 
 
 
49,625
878
50,503
45,423
938
46,361
81,910
1,895
83,805
Inter Group elimination
 
 
(878)
 
 
(938)
 
 
(1,895)
 
 
 
49,625
 
 
45,423
 
 
81,910
 
 
 
 
 
 
 
 
 
 
Operating profit
 
 
 
 
 
 
 
 
 
Energy
 
 
3,720
 
 
4,385
 
 
5,965
Building services
 
 
139
 
 
219
 
 
274
Retail
 
 
279
 
 
485
 
 
450
Property
 
 
620
 
 
485
 
 
953
Other
 
 
186
 
 
281
 
 
540
Operating profit before property revaluation/sale
 
 
4,944
 
 
5,855
 
 
8,182
Revaluation of investment  properties
 
 
 
-
 
 
 
-
 
 
 
294
Profit from sale of property
 
 
-
 
 
407
 
 
405
Operating profit
 
 
4,944
 
 
6,262
 
 
8,881
Other gains and losses
 
 
 
 
 
 
 
 
 
Interest receivable
 
 
405
 
 
554
 
 
1,086
Finance costs
 
 
(5)
 
 
(4)
 
 
(11)
Profit from operations before taxation
 
 
 
5,344
 
 
 
6,812
 
 
 
9,956
Taxation
 
 
(1,071)
 
 
(639)
 
 
(84)
Profit from operations
after taxation
 
 
 
4,273
 
 
 
6,173
 
 
 
9,872
Minority interest
 
 
-
 
 
(18)
 
 
(48)
Profit for the period
 
 
4,273
 
 
6,155
 
 
9,824



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

 

In terms of seasonality unit sales of electricity are consistently higher in the first half of the year.

The only material movements between 2009 and 2008 half year segmental data is the increase in revenue and decrease in profit in the Energy business. This 13% rise was a result of a 2% increase in unit sales of electricity combined with the year on year impact of a tariff rise on 1 January 2009. The decrease in profit was primarily due to an increase in the cost of imported power from 1 January 2009. 


Notes to the Condensed Interim Accounts (Unaudited)



3.    Income tax




  Six months ended

  31 March


Year ended 30 September


2009

£000


2008

£000


2008

£000







Current income tax

(751)


(511)


(437)

Deferred income tax

(320)


(128)


353

Total income tax

(1,071)


(639)


(84)



On 30 January 2007 the draft 'zero-ten' legislation was approved by the States of Jersey. The legislation came into effect from 1 January 2009 The effective tax rate for 2007 and 2008 was lower than in to 2006 due to the migration from a prior to current year basis but has reverted to 20% for Island utilities from 2009 onwards. This is why the tax charge has moved upwards.  



4.    Dividends



 Six months ended

  31 March


Year ended

30 September


2009

£000


2008

£000


2008

£000







Distributions to equity holders and by subsidiaries in the period

1,716


1,197


2426


The distribution to equity holders in the period consisted of £ 1,715,840 (112p net of tax per share) in respect of the final dividend for 2008No dividends were paid by subsidiaries to minority interests in the period.


The Directors have declared an interim dividend of 77p per share, net of tax (2008 - 73p) for the six months ended 31 March 2009 to shareholders on the register at the close of business on 12 June 2009. This dividend was approved by the Board on 28 May 2009 and has not been included as a liability at 31 March 2009.



5.    Property, plant and equipment


During the period, Jersey Electricity spent approximately £3m on the finalisation of the £14m project to reinforce the electricity infrastructure in the west of JerseyIn addition £1m was paid as a deposit to RTE in France to secure the timing slot for the landside network build necessary as part of Normandie 3 project to deliver a third electricity interconnector between the Channel Islands and mainland Europe. Capital expenditure on other distribution reinforcement and new customer developments amounted to £2m in the last six months. 




Notes to the Condensed Interim Accounts 


6.    Pensions


In consultation with the independent actuaries to the scheme, the valuation of the pension scheme assets and liabilities has been updated to reflect current market discount rates, current market values of investments and actual investment returns applicable under IAS 19 'Employee Benefits', and also to consider whether there have been any other events that would significantly affect the pension liabilities. The next triennial actuarial valuation of the defined benefits scheme is at 31 December 2009 when the relevant assumptions will be reviewed to establish the applicable future required cash contributions. 



7.    Reconciliation of movements in equity



Share

Other

Retained



capital

reserves

earnings

Total

  

£000

£000

£000

£000

  At 1 October 2008

1,532

2,556

129,166

133,254

  Total recognised income and expense for the period

-

-

4,273

4,273

  Unrealised gains on hedges 

-

1,906

-

1,906

  Actuarial loss on defined benefit scheme 

-

-

(8,178)

(8,178)

  Equity dividends  

-

-

(1,716)

(1,716)

  As at 31 March 2009

1,532

4,462

123,545

129,539






  At 1 October 2007

1,532

819

126,483

128,834

  Total recognised income and expense for the period

-

-

9,824

9,824

  Unrealised gains on hedges

-

1,737

-

1,737

  Actuarial loss on defined benefit scheme

-

-

(4,874)

(4,874)

  Equity dividends  

-

-

(2,267)

(2,267)

  As at 30 September 2008

1,532

2,556

129,166

133,254






  At 1 October 2007

1,532

819

126,483

128,834

  Total recognised income and expense for the period

-

-

6,155

6,155

  Unrealised gains on hedges 

-

3,401

-

3,401

  Actuarial loss on defined benefit scheme 


-

2,283

2,283

  Equity dividends  

-

-

(1,149)

(1,149)

  As at 31 March 2008

1,532

4,220

133,772

139,524







The other reserves comprise of the foreign currency reserve of £4,014,000 and a revaluation reserve of £448,000. The increase from 30 September 2008 is due to the rise in the fair value of our forward currency hedges because of the recent weakening of Sterling against the Euro.


8.    Related party transactions


  • The Company currently leases the La Collette Power Station site from its largest shareholder, the States of Jersey, for a peppercorn rent of £1,000 per annum. This lease was subject to a rent review as at June 2006 which is being negotiated but it is anticipated that the rental will move onto commercial rates.

  • The Company made electricity sales to the value of £3.6m (2008: £3.1m) and other sales of £0.3m (2008: £0.3m) to the States of Jersey for the six months ended 31 March 2009. At the half-year end the States of Jersey had a debtors balance of £243,000 (2008: £64,000).


At the half-year end Foreshore Limited had a debtors balance of £650,000 (2008: £859,000).


During the six months to 31 March 2009 the Company made electricity sales of £245,000 (2008: £190,000) and other sales of £382,000 (2008: £232,000) to Foreshore Limited.


All the above transactions were conducted at an arm's-length basis.    


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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