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Jersey Electricity (JEL)

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Friday 13 May, 2011

Jersey Electricity

Half Yearly Report

RNS Number : 5196G
Jersey Electricity PLC
13 May 2011
 

                                               

       

 

Jersey Electricity plc

 Interim Management Report

for the six months ended 31 March 2011

 

 

At a meeting of the Board of Directors held on 12 May 2011, the Board approved the Interim Management Report for the Group for the six months ended 31 March 2011 and declared an interim dividend of 4.25p compared to 4.05p for 2010 (re-stated following the 20 for 1 share split of the Ordinary and 'A' Ordinary shares approved at the 2011 AGM). The dividend will be paid on 30 June 2011 to those shareholders registered in the books of the Company on 10 June 2011.

 

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 2011 has not been audited or reviewed by our external auditors nor have the results for the equivalent period in 2010. The results for the year ended 30 September 2010 have been extracted from the statutory accounts which had an unqualified audit opinion.

  

M.P. Magee                                                               P.J. Routier

Finance Director                                                        Company Secretary

 

Direct telephone number : 01534 505321                     Direct telephone number: 01534 505253

Direct fax number : 01534 505466                               Direct fax number : 01534 505515

Email : mmagee@jec.co.uk                                           Email : proutier@jec.co.uk

 

13 May 2011

 

 

 

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 2011

 

Financial Summary

6 months

2011

6 months

2010

% increase/(decrease)

Electricity Sales -kWh (000)

373,832

366,628

 2%

Turnover

£55.7m

£55.7m

   0 %

Profit before tax

£6.9m

£7.5m

 (8)%

Profit in Energy business

£4.7m

£4.4m

 7%

Earnings per share

18.0p

19.6p*

 (8)%

Net dividend proposed per ordinary share

    4.25p

   4.05p *

 5%

* Earnings and dividends per share have been re-stated to reflect the 20 for 1 share split approved at the 2011 AGM

 

Group turnover at £55.7m was at the same level as in 2010 and profit before tax in the first half of 2011 was £6.9m being 8% lower than in the same period last year. Cost of sales was £0.6m lower with a reduction in the Energy business offset by an increase in our other business units due to higher turnover. Operating expenses were £1.1m higher than in 2010 with an increase in maintenance costs in our Energy business being the main reason. The fall in profits was a result of non-recurring revenues of £1.2m received in the prior year, and if excluded, the year-on-year rise in profits was around 9%. Earnings per share fell by 8% in line with profit movements.  

 

Electricity revenues in the first half of 2011 were 1% lower than in 2010 at £42.2m. Unit sales volumes were up 2% but this was offset by the year-on-year impact of the 5% decrease in customer tariffs from January 2010. Energy profits rose from £4.4m in 2010 to £4.7m mainly as a result of a lower cost of sales offset by higher overhead costs. Imported low-carbon electricity from France met 97% of our power requirements during the half year, which was higher than the 89% in the previous year. 

 

The principal risks and uncertainties identified in our last Annual Report have not materially altered in the interim period.  We announced to customers that following our tariff reduction of 5% from 1 January 2010 prices would remain frozen at current levels until at least the end of 2011. Our power purchase and foreign exchange requirements are materially hedged for the remainder of this financial year. In addition, around 70% of our forward imported power and foreign exchange requirements for 2012 have been hedged.

 

During late March 2011 a new ten year power importation framework for the period from 2013 to 2022 was struck by Jersey Electricity, along with our neighbours Guernsey Electricity, with our existing supplier EDF. This followed a tendering process involving another two of the largest electricity utilities in Europe and ensures a continuation of reliable, low-carbon imported electricity to the Channel Islands into the next decade.

   

Despite the tough trading conditions currently prevailing in markets our Retailing business saw year-on-year revenues rise 13% to £8.6m and profits increase by £0.1m to £0.5m. Profits from our Property portfolio fell by £0.3m to £0.9m due to the back-dated settlement of a rent review with one of our tenants which increased profits in the corresponding period last year. Our Building Services business produced profits of £0.2m being up £0.1m due to increased turnover. Our remaining business units produced profits of £0.5m being £0.8m less than in 2010. However the figures last year included £1m received from our former associate Newtel for fibre optic lease rentals and the part repayment of a loan previously written off. Interest received at £0.1m was at the same level as last year.

 

Cash, including short-term investments, fell £1.0m to £21.7m during the last six months, with operating cash produced from trading activity offset by £5.9m of electricity infrastructure investment. In terms of capital expenditure, the South Hill Switching Station project to reinforce the 90 kV network continued during this period and is due to be completed in August 2011.

 

The pension scheme surplus as at 31 March 2011 is £10.7m against a surplus of £1.8m at 30 September 2010. Since the last financial year end, assets have increased due to market performance and liabilities have fallen due to an increase in corporate bond yields resulting in increase in the retirement benefit surplus in our balance sheet.

 

Dividends paid increased substantially during this period, as in addition to the final dividend declared at the last AGM, a special dividend of £1m was paid on 31 March 2011 as indicated in our last Annual Report and Accounts.

 

Your Board proposes to pay an interim net dividend of 4.25p (2010: 4.05p re-stated following the 20 for 1 share split of the Ordinary and 'A' Ordinary shares approved at the 2011 AGM). Your Board aims to deliver sustained real growth each year and the proposed interim dividend is a 5% year on year increase.  

 

 

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); and

 

(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            12 May 2011

           

 

 

 

INVESTOR TIMETABLE FOR 2011

 

10 June

Record date for interim ordinary dividend

30 June

Interim ordinary dividend for year ending 30 September 2011

1 July

Payment date for preference share dividends

End July

Interim Management Statement - nine months to 30 June 2011

15 December

Preliminary announcement of full year results

 

 

 

 

 

 

 

Condensed Consolidated Income Statement (Unaudited)

 




Six months ended

31 March


Year ended

30 September

 

 

 

Note


2011

£000


2010

£000


2010

£000









Revenue

2


55,714


55,706


98,889









Cost of sales



(39,154)


(39,713)


(68,845)

Gross profit



16,560


15,993


30,044









Revaluation of investment properties



-


-


2,391

Operating expenses



(9,775)


(8,661)


(18,226)









Group operating profit before joint venture



6,785


7,332


14,209

Share of profit/(loss) of joint venture



(21)


30


26









Group operating profit

2


6,764


7,362


14,235









Interest receivable



155


166


338

Finance costs



(5)


(7)


(13)









Profit from operations before taxation



6,914


7,521


14,560









Taxation

3


(1,377)


(1,490)


(2,185)









Profit from operations after taxation



5,537


6,031


12,375

Minority interest



(21)


(31)


(60)









Profit for the period attributable to the

equity holders of the parent company



 

5,516


 

6,000


 

12,315









Attributable to:








Owners of the company



5,537


6,031


12,375

Minority interest



(21)


(31)


(60)









Profit for the period attributable to the equity holders of the parent company



 

5,516


 

6,000


 

12,315









EARNINGS PER SHARE








   -     basic and diluted



18.0p


19.6p


40.2p









DIVIDENDS PER SHARE








   -     paid

4


9.45p


5.90p


9.95p

   -     proposed

4


4.25p


4.05p


5.90p

 

 

 

 

 

 

Condensed Consolidated Statement of Comprehensive Income (Unaudited)

 




Six months ended

31 March


Year ended

30 September




2011

£000


2010

£000


2010

£000









Profit for the period/year



5,516


6,000


12,315









Other comprehensive income








Actuarial gain on defined benefit scheme



8,375


4,278


5,158

Fair value gain/(loss) on cash flow hedges



1,711


(1,193)


(1,212)

Tax related components to other comprehensive income



(2,017)


(514)


(860)

Total comprehensive income for the period/year



13,585


8,571


15,401









Attributable to:








Owners of the company



13,606


8,602


15,461

Minority Interest



(21)


(31)


(60)




13,585


8,571


15,401

 

Condensed Consolidated Statement of Changes in Equity (Unaudited)

 

 


Share

Retained

Other

Total


capital

earnings

reserves

reserves

 

£000

£000

£000

£000

  At 1 October 2010

1,532

139,396

756

141,684

  Total recognised income and expense for the period

-

5,516

-

5,516

  Unrealised  gains on hedges (net of tax)

-

-

1,368

1,368

  Actuarial gain on defined benefit scheme (net of tax)

-

6,701

-

6,701

  Equity dividends paid by Jersey Electricity plc

-

(2,895)

-

(2,895)

  As at 31 March 2011

1,532

148,718

2,124

152,374











  At 1 October 2009

1,532

126,074

1,726

129,332

  Total recognised income and expense for the period

-

6,000

-

6,000

  Unrealised losses on hedges (net of tax)

-

-

(994)

(994)

  Actuarial gain on defined benefit scheme (net of tax)


3,565

-

3,565

  Equity dividends paid by Jersey Electricity plc   

-

(1,808)

-

(1,808)

  As at 31 March 2010

1,532

133,831

732

136,095











  At 1 October 2009

1,532

126,074

1,726

129,332

  Total recognised income and expense for the period

-

12,315

-

12,315

  Unrealised losses on hedges (net of tax)

-

-

(970)

(970)

  Actuarial gain on defined benefit scheme (net of tax)


4,056

-

4,056

  Equity dividends paid by Jersey Electricity plc   

-

(3,049)

-

(3,049)

  As at 30 September 2010

1,532

139,396

756

141,684






 

 

 

 

Condensed Consolidated Balance Sheet (Unaudited)

 




As at 31 March

 


As at 30 September




 

2011

£000


 

2010

£000


 

2010

£000

NON-CURRENT ASSETS








Intangible assets



17


60


29

Property, plant and equipment



122,150


119,399


120,944

Investment property



14,928


12,635


14,928

Retirement benefit surplus



10,720


1,426


1,795

Other investments



1,627


1,803


1,677

















Total non-current assets



149,442


135,323


139,373









CURRENT ASSETS








Inventories



7,189


7,026


7,573

Trade and other receivables



19,730


18,560


15,958

Derivative financial instruments



2,096


357


387

Short-term investments - cash deposits



12,525


9,980


17,920

Cash and cash equivalents



9,150


8,263


4,756

















Total current assets



50,690


44,186


46,594









TOTAL ASSETS



200,132


179,509


185,967









CURRENT LIABILITIES








Trade and other payables



13,429


13,244


14,116

Current tax payable



3,373


3,083


2,066

















Total current liabilities



16,802


16,327


16,182

NET CURRENT ASSETS



33,888


27,859


30,412









NON-CURRENT LIABILITIES








Trade and other payables



16,662


15,264


15,907

Financial liabilities - preference shares



235


235


235

Deferred tax liabilities



14,019


11,555


11,932

















Total non-current liabilities



30,916


27,054


28,074









TOTAL LIABILITIES



47,718


43,381

 


44,256









NET ASSETS



152,414


136,128


141,711









EQUITY








Share capital



1,532


1,532


1,532

Other reserves



2,124


732


756

Retained earnings



148,718


133,831


139,396

















Equity attributable to the owners of the Company



152,374


136,095


141,684









Minority interest



40


33


27









TOTAL EQUITY



152,414


136,128


141,711

 

 

 

 

 

 

 

 

Condensed Consolidated Cash Flow Statement (Unaudited)

 



Six months ended

31 March


Year ended

30 September


 

Note

 

2011

£000


 

2010

£000


 

2010

£000

CASH FLOWS FROM OPERATING ACTIVITIES














Operating profit before joint venture


6,785


7,332


14,209








Depreciation and amortisation charges


3,968


3,873


7,997

Revaluation of investment property


-


-


(2,391)

Pension operating charge less contributions paid


(550)


(700)


(348)

Profit/(loss) on sale of fixed assets


-


(3)


-















Operating cash flows  before movement in working capital


10,203


10,502


19,467








Decrease/(increase) in inventories


384


(956)


(1,502)

(Increase)/decrease in trade and other receivables


(3,722)


(3,555)


(1,065)

Increase in trade and other payables


834


827


1,809

Interest received


106


31


312

Preference dividends paid


(5)


(4)


(9)

Income taxes paid


-


-


(1,572)















Net cash flows from operating activities


7,800


6,845


17,440








CASH FLOWS FROM INVESTING ACTIVITIES














Purchase of property, plant and equipment


(5,894)


(3,627)


(8,669)

Investment in intangible assets


(43)


(29)


-

Proceeds from disposal of  property


-


-


21

Repayment of long-term loan


50


50


150

Short-term investments


5,395


(1,780)


(9,720)















Net cash flows from investing activities


(492)


(5,386)


(18,218)








CASH FLOWS FROM FINANCING ACTIVITIES














Equity dividends paid

4

(2,914)


(1,832)


(3,102)















Net cash flows used in financing activities


(2,914)


(1,832)


(3,102)








Net increase in cash and cash equivalents


4,394


(373)


(3,880)

Cash and cash equivalents at beginning of period/year


4,756


8,636


8,636








Cash and cash equivalents at end of period/year


9,150


8,263


4,756








 

 

 

 

Notes to the Condensed Interim Accounts (Unaudited)

 

1.         Accounting policies

 

Basis of preparation

The interim accounts for the six months ended 31 March 2011 have been prepared on the basis of the accounting policies set out in the 30 September 2010 annual report and accounts using accounting policies consistent with International Financial Reporting Standards (IFRS) and in accordance with IAS 34 'Interim Financial Reporting'.

 

IFRIC 18 'Transfers of assets from customers' was adopted during the period. IFRIC 18 is effective for transfer of assets received on or after 1 July 2009. This standard clarifies the requirements for agreements in which an entity receives cash to construct an item of property, plant or equipment (or receives such assets from a customer) that the entity must then use either to connect the customer to a network or to provide the customer with ongoing access to a supply of goods or services (such as a supply of electricity, gas or water). The contributed assets will be recognised initially at fair value, and the related income will be recognised immediately, or if there is a future service obligation, over the relevant service period. Jersey Electricity plc has an ongoing obligation to maintain and replace such assets within our network and therefore its current accounting policy to treat customer contributions for new connections as deferred revenues, which are released to the income statement over the estimated operational lives of the related assets, has been retained. Therefore the adoption of IFRIC 18 has not had an impact on prior year figures or the period covered in these condensed interim accounts.

 

Jersey Electricity plc has considerable financial resources and, as a consequence, the directors believe that it is well placed to manage its business risks successfully despite the current uncertain economic outlook. The directors have a reasonable expectation that the Company 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 2011

31 March 2010

 

30 September 2010

 


External

Internal

Total

External

Internal

Total

External

Internal

Total

Revenue

£000

£000

£000

£000

£000

£000

£000

£000

£000











Energy

42,186

94

42,280

42,589

121

42,710

74,475

281

74,756

Building Services

2,552

189

2,741

1,908

107

2,015

4,283

237

4,520

Retail

8,603

30

8,633

7,648

24

7,672

14,410

50

14,460

Property

1,110

344

1,454

1,519

348

1,867

2,619

696

3,315

Other

1,263

335

1,598

2,042

313

2,355

3,102

655

3,757












55,714

992

56,706

55,706

913

56,619

98,889

1,919

100,808

Inter-segment elimination



(992)



(913)



(1,919)




55,714



55,706



98,889











Operating profit










Energy



4,717



4,400



7,742

Building Services



201



129



240

Retail



508



383



465

Property



854



1,181



1,858

Other



484



1,269



1,539

Operating profit before property revaluation



6,764



7,362



11,844

Revaluation of investment  properties



 

-



 

-



 

2,391

Operating profit



6,764



7,362



14,235

 

Notes to the Condensed Interim Accounts (Unaudited)

 

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

 

The assets and liabilities of the Group are not reported on as there has been no significant movement in the values in the six months to 31 March 2011.

 

 

3.         Income tax

 

 

 

          Six months ended

            31 March


Year ended

30 September


2011

£000


2010

£000


2010

£000







Current income tax

(1,307)


(1,385)


(1,940)

Deferred income tax

(70)


(105)


(245)

Total income tax

(1,377)


(1,490)


(2,185)

 

For the period ended 31 March 2011 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


2011

£000


2010

£000


2010

£000







Distributions to equity holders and by subsidiaries in the period

2,914


1,832


3,102

 

The distribution to equity holders in the period consisted of £1,899,680 (124p net of tax per share) in respect of the final dividend for 2010. A special dividend of £996,000 (65p net of tax per share) was also made to all ordinary shareholders to distribute the proceeds received from our associate Newtel from the sale of assets. This was prior to the 20 for 1 share split approved at the 2011 AGM and therefore the total 189p of dividend paid has been re-stated at 9.45p. Figures for previous periods have also been re-stated to reflect the impact of the share split. In addition £19,000 was paid by subsidiaries to minority interests for the six months to 31 March 2011.

 

The Directors have declared an interim dividend of 4.25p per share, net of tax (2010 - 4.05p) for the six months ended 31 March 2011 to shareholders on the register at the close of business on 10 June 2011. This dividend was approved by the Board on 12May 2011 and has not been included as a liability at 31 March 2011.

                       

 

 

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.

 

 

 

 

 

Notes to the Condensed Interim Accounts (Unaudited)

 

 

6.         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 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.  

 

 


 Value of    electricity  services supplied by Jersey Electricity

Value of goods  & other services supplied by Jersey Electricity 

Value of goods & services purchased by Jersey Electricity 

Amounts due to  Jersey Electricity 

Amounts due by  Jersey Electricity 

For the 6 months ended 31 March 

2011

2010

2011

2010

2011

2010

2011

2010

2011

2010

£000

£000

£000

£000

£000

£000

£000

£000

£000

£000












The States of Jersey

3,914

3,818

1,254

724

161

230

995

681

-

-

JT Group Limited

781

765

653

164

64

71

168

136

-

16

Jersey Post Int Limited

73

78

-

-

30

44

11

15

6

6

Jersey New Waterworks Ltd

342

407

3

1

26

43

51

-

-

-

Foreshore Limited

282

276

376

369

 5

 6

115

207

-

-

Newtel Limited

15

13

118

124

2

1

-

-

-

-

 

 

The States of Jersey is the Company's majority and controlling shareholder. Jersey New Waterworks is majority owned and controlled by the States of Jersey. JT Group Limited and Jersey Post International Limited are both wholly owned by the States of Jersey. All transactions are undertaken at an arm's length basis.

 

As at the 31 March 2011 Foreshore Limited had a long-term loan, to the value of £400,000 (2010: £550,000) due to Jersey Electricity plc.

 

During April 2011 the Company sold all shares held in its associate Newtel Limited.

 

 

 

 

 


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