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Jersey Electricity (JEL)

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Tuesday 08 May, 2012

Jersey Electricity

Half Yearly Report

RNS Number : 7956C
Jersey Electricity PLC
08 May 2012
 

                                               

       

 

Jersey Electricity plc

 Interim Management Report

for the six months ended 31 March 2012

 

 

The Board approved the Interim Management Report for the Group for the six months ended 31 March 2012 and declared an interim dividend of 4.50p compared to 4.25p for 2011. The dividend will be paid on 29 June 2012 to those shareholders registered in the books of the Company on 8 June 2012.

 

The Interim Management Report is attached and will be available to the public on the Company's website www.jec.co.uk/investor-relations/financial-reports.aspx

 

The Interim Management Report for 2012 has not been audited or reviewed by our external auditors nor have the results for the equivalent period in 2011. The results for the year ended 30 September 2011 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

 

4 May 2012

 

 

 

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 2012

 

Financial Summary

6 months

2012

6 months

2011

% increase/(decrease)

Electricity Sales -kWh (000)

357,724

373,832

 (4)%

Turnover

£54.2m

£55.7m

 (3)%

Profit before tax

£6.4m

£6.9m

  (7) %

Profit in Energy business

£4.5m

£4.7m

 (4)%

Earnings per share

16.66p

18.00p

  (7) %

Net dividend proposed per ordinary share

   4.50p

  4.25p

 6 %

 

Turnover at £54.2m was 3% lower than in 2012 and profit before tax in the first half of 2012 was £6.4m, being 7% below the same period last year. Cost of sales was £1.0m lower mainly due to a reduction in units sold in our Energy business. Operating expenses at £9.8m were at the same level as last year. Earnings per share fell by 7% in line with profit movements.  

 

Electricity revenues in the first half of 2012 were 4% lower than in 2011 at £40.5m. Unit sales volumes were down 4% due to temperatures being above the seasonal norm in the winter period with 5 out of the 6 months being milder than both last year and the long-term average. Energy profits fell from £4.7m in 2011 to £4.5m mainly as a result of lower unit sales offset by lower costs. We generated only 1% of our electricity on-island (compared to 3% last year) as imported low-carbon electricity from France met 93% of our power requirements during the half year. The remaining 6% came from the new Energy from Waste plant, owned by the States of Jersey, which is now fully operational.   

 

Customer tariffs rose by an average of 2.9% on 1 May 2012, being our first increase in over 3 years, and will remain frozen until at least the end of 2012. Our power purchase and foreign exchange requirements are materially hedged for the remainder of this financial year. In addition, around 90% and 70% of our needs for 2013 and 2014 respectively have also been hedged. Our goal is to deliver competitive and stable customer tariffs, whilst maintaining a reasonable return for our shareholders.  

  

Despite the tough trading conditions currently prevailing in markets our Retailing business saw year-on-year revenues rise 7% to £9.2m but profits fell by £0.2m to £0.3m. The increased revenues were primarily from an increase in turnover of £1m, to £2.4m, in our internet day2dayshop.com operation, with the remaining segments impacted by margin pressures. Profits from our Property portfolio remained at £0.8m. Our Building Services business produced profits of £0.2m being at the same level as 2011 despite lower turnover. Our remaining business units produced profits of £0.4m being £0.1m less than in 2011. Interest received at £0.2m was at the same level as last year.

  

 

Cash, including short-term investments, fell £7.1m to £17.4m during the last six months, with operating cash produced from trading activity offset by £11.6m of electricity infrastructure investment spend. The project to import, and refurbish two used diesel engines, commenced during the period with the plant having arrived in Jersey in March. It is scheduled to be completed by quarter 1 next year at a cost of around £10m of which around £6m has been spent to date. The engines replace two units within our existing generating fleet which have recently come to the end of their useful lives and will provide additional on-island flexibility and resilience.

 

The pension scheme deficit as at 31 March 2012 was £2.0m against a deficit of £4.4m at 30 September 2011. Since the last financial year end assets have increased due to market performance but this was largely offset by a rise in liabilities due to a fall in corporate bond yields which reduced the discount rate.  

 

Your Board proposes to pay an interim net dividend of 4.50p (2011: 4.25p). We continue to aim to deliver sustained real growth each year, excluding any special dividends, and the proposed interim dividend is a 6% year on year increase. Dividends paid during this period were lower than last year because a special dividend of £1m was paid on 31 March 2011, in addition to the normal dividend stream.

 

The principal risks and uncertainties identified in our last Annual Report have not materially altered in the interim period but it is worth highlighting three particular risk areas, due to updated circumstances.

 

-     On 29 April 2012 an electrical fault occurred on a section of the Channel Islands Electricity Grid between Guernsey and Jersey. The circuit remains out of service but has not affected power flows between France and Jersey. Further testing has located the approximate site of the problem area within the sub-sea cable. Discussions are taking place with the cable manufacturer to organise additional detailed testing to confirm the initial findings and establish the exact nature of the fault. Insurance arrangements exist for such eventualities and from initial discussions it is currently felt that this is an insured risk.

-     The Jersey Competition and Regulatory Authority initiated an electricity market review in Jersey in May 2012. We view our existing model, which seeks to provide a fair balance of reward to all our stakeholders, without large regulatory costs, as being a successful and sustainable framework particularly in the context of being based on an island serving fewer than 50,000 customer premises and our obligations around maintaining security of supply.

-     Our day2dayshop.com internet operation and Foreshore, our data centre joint venture, have both been impacted by the abolition by the UK Government, on 1 April 2012, of the Low Value Consignment Relief (LVCR) previously applicable to goods valued at less than £15 sold to the UK. The business units have both implemented plans to seek alternative markets to mitigate this change in tax treatment and its impact on their respective business models.           

 

Your Board is satisfied that Jersey Electricity plc has sufficient resources to continue in operation for the foreseeable future, a period of not less than 12 months from the date of this report. Accordingly, we continue to adopt the going concern basis in preparing the condensed financial statements.

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            4 May 2012

             

 

INVESTOR TIMETABLE FOR 2012

 

8 June

Record date for interim ordinary dividend

29 June

Interim ordinary dividend for year ending 30 September 2012

2 July

Payment date for preference share dividends

End July

Interim Management Statement - nine months to 30 June 2012

21 December

Preliminary announcement of full year results

 

 

 

Condensed Consolidated Income Statement (Unaudited)

 




Six months ended

31 March


Year ended

30 September

 

 

 

Note


2012

£000


2011

£000


2011

£000









Revenue

2


54,169


55,714


100,494









Cost of sales



(38,138)


(39,154)


(69,989)

Gross profit



16,031


16,560


30,505









Loss on revaluation of investment properties



-


-


(115)

Operating expenses



(9,768)


(9,775)


(19,553)









Group operating profit before joint venture



6,263


6,785


10,837

Share of loss of joint venture



(28)


(21)


(86)









Group operating profit

2


6,235


6,764


10,751









Interest receivable



175


155


327

Finance costs



(4)


(5)


(11)









Profit from operations before taxation



6,406


6,914


11,067









Taxation

3


(1,271)


(1,377)


(2,423)









Profit from operations after taxation



5,135


5,537


8,644

































Attributable to:








Owners of the company



5,103


5,516


8,593

Minority interest



32


21


51









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



 

5,135


 

5,537


 

8,644









EARNINGS PER SHARE








   -     basic and diluted



16.66p


18.00p


28.05p









DIVIDENDS PER SHARE








   -     paid

4


6.50p


9.45p


13.70  p

   -     proposed

4


4.50p


4.25p


6.50  p

  

 

 

Condensed Consolidated Statement of Comprehensive Income (Unaudited)

 




Six months ended

31 March


Year ended

30 September




2012

£000


2011

£000


2011

£000









Profit for the period/year



5,135


5,537


8,644









Other comprehensive income








Actuarial gain/(loss) on defined benefit scheme



2,165


8,375


(6,640)

Fair value (loss)/gain on cash flow hedges



(1,624)


1,711


100

Tax related components relating to other comprehensive income



(108)


(2,017)


1,308

Total comprehensive income for the period/year



5,568


13,606


3,412









Attributable to:








Owners of the company



5,536


13,585


3,361

Minority Interest



32


21


51




5,568


13,606


3,412

 

Condensed Consolidated Statement of Changes in Equity (Unaudited)

 

 


Share

Retained

Other

Total


capital

earnings

reserves

reserves

 

£000

£000

£000

£000

  At 1 October 2011

1,532

138,477

836

140,845

  Total recognised income and expense for the period

-

5,103

-

5,103

  Unrealised  losses on hedges (net of tax)

-

-

(1,299)

(1,299)

  Actuarial gain on defined benefit scheme (net of tax)

-

1,732

-

1,732

  Equity dividends paid by Jersey Electricity plc

-

(1,992)

-

(1,992)

  As at 31 March 2012

1,532

143,320

(463)

144,389











  At 1 October 2010

1,532

139,396

756

141,684

  Total recognised income and expense for the period

-

5,516

-

5,516

  Unrealised gain 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 2010

1,532

139,396

756

141,684

  Total recognised income and expense for the period

-

8,593

-

8,593

  Unrealised gain on hedges (net of tax)

-

-

80

80

  Actuarial loss on defined benefit scheme (net of tax)


(5,314)

-

(5,314)

  Equity dividends paid by Jersey Electricity plc   

-

(4,198)

-

(4,198)

  As at 30 September 2011

1,532

138,477

836

140,845






 

 

 

Condensed Consolidated Balance Sheet (Unaudited)

 



As at 31 March

 


As at 30 September




 

2012

£000


 

2011

£000


 

2011

£000

NON-CURRENT ASSETS







Intangible assets


36


17


60

Property, plant and equipment


134,597


122,150


128,330

Investment property


14,813


14,928


14,813

Retirement benefit surplus


-


10,720


-

Other investments


1,534


1,627


1,557















Total non-current assets


150,980


149,442


144,760








CURRENT ASSETS







Inventories


6,148


7,189


6,451

Trade and other receivables


19,411


19,730


15,361

Derivative financial instruments


-


2,096


486

Short-term investments - cash deposits


11,200


12,525


17,745

Cash and cash equivalents


6,227


9,150


6,787















Total current assets


42,986


50,690


46,830








TOTAL ASSETS


193,966


200,132


191,590








CURRENT LIABILITIES







Trade and other payables


14,182


13,429


15,878

Derivative financial instruments


1,137


-


-

Current tax payable


2,864


3,373


1,820















Total current liabilities


18,183


16,802


17,698

NET CURRENT ASSETS


24,803


33,888


29,132








NON-CURRENT LIABILITIES







Trade and other payables


17,611


16,662


17,152

Retirement benefit deficit


1,963


-


4,420

Financial liabilities - preference shares


235


235


235

Deferred tax liabilities


11,562


14,019


11,226















Total non-current liabilities


31,371


30,916


33,033








TOTAL LIABILITIES



49,554


47,718


50,731








NET ASSETS


144,412


152,414


140,859








EQUITY







Share capital


1,532


1,532


1,532

Other reserves


(463)


2,124


836

Retained earnings


143,320


148,718


138,477















Equity attributable to the owners of the Company


144,389


152,374


140,845








Minority interest


23


40


14








TOTAL EQUITY



144,412


152,414


140,859

 

 

 

 

Condensed Consolidated Cash Flow Statement (Unaudited)

 



Six months ended

31 March


Year ended

30 September


 

Note

 

2012

£000


 

2011

£000


 

2011

£000

CASH FLOWS FROM OPERATING ACTIVITIES














Operating profit before joint venture


6,263


6,785


10,837

Adjustment for disposal of shares in associate


-


-


(59)

Adjustment for repayment of long-term loan by associate


-


-


(136)

Depreciation and amortisation charges


4,034


3,968


8,212

Revaluation of investment property


-


-


115

Pension operating charge less contributions paid


(303)


(550)


(438)

(Loss)/profit on sale of fixed assets


(24)


-


6















Operating cash flows  before movement in working capital


9,970


10,203


18,537








Decrease in inventories


303


384


1,122

(Increase)/decrease in trade and other receivables


(3,956)


(3,722)


617

Increase in trade and other payables


87


834


2,326

Interest received


81


106


309

Preference dividends paid


(5)


(5)


(9)

Income taxes paid


-


-


(2,067)















Net cash flows from operating activities


6,480


7,800


20,835








CASH FLOWS FROM INVESTING ACTIVITIES














Purchase of property, plant and equipment


(11,579)


(5,894)


(14,940)

Investment in intangible assets


(4)


(43)


(31)

Net proceeds from disposal of  fixed assets


17


-


17

Repayment of long-term loan


-


50


186

Disposal of shares in associate


-


-


59

Short-term investments


6,545


5,395


175















Net cash flows from investing activities


(5,021)


(492)


(14,534)








CASH FLOWS FROM FINANCING ACTIVITIES














Equity dividends paid

4

(2,020)


(2,914)


(4,270)















Net cash flows used in financing activities


(2,020)


(2,914)


(4,270)








Net increase in cash and cash equivalents


(560)


4,394


2,031

Cash and cash equivalents at beginning of period/year


6,787


4,756


4,756








Cash and cash equivalents at end of period/year


6,227


9,150


6,787








 

  

 

 

Notes to the Condensed Interim Accounts (Unaudited)

 

1.         Accounting policies

 

Basis of preparation

The interim accounts for the six months ended 31 March 2012 have been prepared on the basis of the accounting policies set out in the 30 September 2011 annual report and accounts using accounting policies consistent with International Financial Reporting Standards (IFRS) and in accordance with IAS 34 'Interim Financial Reporting'.

 

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 2012

31 March 2011

 

30 September 2011

 


External

Internal

Total

External

Internal

Total

External

Internal

Total

Revenue

£000

£000

£000

£000

£000

£000

£000

£000

£000











Energy

40,525

129

40,654

42,186

94

42,280

74,486

326

74,812

Building Services

2,299

118

2,417

2,552

189

2,741

4,716

232

4,948

Retail

9,227

32

9,259

8,603

30

8,633

16,499

67

16,566

Property

1,058

344

1,402

1,110

344

1,454

2,216

688

2,904

Other

1,060

318

1,378

1,263

335

1,598

2,577

654

3,231












54,169

941

55,110

55,714

992

56,706

100,494

1,967

102,461

Inter-segment elimination



(941)



(992)



(1,967)




54,169



55,714



100,494











Operating profit










Energy



4,540



4,717



7,678

Building Services



193



201



220

Retail



327



508



476

Property



813



854



1,652

Other



362



484



840

Operating profit before property revaluation



6,235



6,764



10,866

Loss on revaluation of investment  properties



 

-



 

-



 

(115)

Operating profit



6,235



6,764



10,751

 

 

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 2012.

 

 

 

Notes to the Condensed Interim Accounts (Unaudited)

 

 

3.         Income tax

 

 

 

 

          Six months ended

            31 March


Year ended

30 September


2012

£000


2011

£000


2011

£000







Current income tax

1,044


1,307


1,820

Deferred income tax

227


70


603

Total income tax

1,271


1,377


2,423

 

For the period ended 31 March 2012 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


2012

£000


2011

£000


2010

£000







Distributions to equity holders and by subsidiaries in the period

2,020


2,914


3,202

 

The distribution to equity holders in the period consisted of £1,991,600 (6.50p net of tax per share) in respect of the final dividend for 2011. In addition £28,000 was paid by subsidiaries to minority interests for the six months to 31 March 2012.

 

The Directors have declared an interim dividend of 4.50p per share, net of tax (2011 - 4.25p) for the six months ended 31 March 2012 to shareholders on the register at the close of business on 8 June 2012. This dividend was approved by the Board on 16 May 2012 and has not been included as a liability at 31 March 2012.

                       

 

 

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 

Six months ended 31 March

2012

2011

2012

2011

2012

2011

2012

2011

2012

2011

£000

£000

£000

£000

£000

£000

£000

£000

£000

£000












The States of Jersey

3,911

3,914

1,157

1,254

1,632

161

734

995

1

-

JT Group Limited

770

781

107

653

97

64

247

168

-

-

Jersey Post Int Limited

50

73

-

-

22

30

-

11

-

6

Jersey New Waterworks Ltd

516

342

6

3

42

26

69

51

-

-

Foreshore Limited

269

282

378

376

 5

 5

163

115

-

-

 

 

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 2012 Foreshore Limited had a long-term loan, to the value of £400,000 (2011: £400,000) due to Jersey Electricity plc.

 

 

 

 

 


This information is provided by RNS
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