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Jersey Electricity (JEL)

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Monday 18 December, 2006

Jersey Electricity

Annual Report and Accounts

Jersey Electricity Company Limited
18 December 2006

                        The Jersey Electricity Company

                   Preliminary Announcement of Annual Results

                          Year Ended 30 September 2006

At a meeting of the Board of Directors held on 15 December 2006, the final
accounts for the Group for the year to 30 September 2006 were approved, details
of which, are attached.

The financial information set out in the announcement does not constitute the
Company's statutory accounts for the year ended 30 September 2006, but is
derived from those accounts. Statutory accounts for 2006 have been prepared
under IFRS and will be delivered to the Jersey Registrar of Companies in early
2007. The auditors have reported on those accounts and their report was

The financial information set out in this statement relating to the year ended
30 September 2005 does not constitute statutory accounts for that period.  Full
statutory accounts for that period, prepared in accordance with UK GAAP, which
received an unqualified audit opinion, have been delivered to the Jersey
Registrar of Companies.

A final gross dividend of 85p (68p net of tax) on the Ordinary and 'A' Ordinary
shares in respect of the period ended 30 September 2006 was recommended which,
together with the interim gross dividend of 55p (44p net of tax), makes a total
proposed gross dividend declared for the year of £1.40 (£1.12 net of tax) on
each £1 share. In addition a special gross dividend of £5.55 (£4.44 net of tax)
was paid in March 2006 associated with the sale of an investment property.

The final dividend will be paid on 30 March 2007 to those shareholders
registered in the books of the Company on 2 March 2007. A dividend on the 5%
cumulative participating preference shares of 1.5% (2005 1.5%) payable on 2 July
2007 was also recommended.

The Annual General Meeting of the Company will be held on 6 March 2007.

P.J. Routier

Company Secretary

Direct telephone number : 01534 505253
Direct fax number : 01534 505515
Email : [email protected]

15 December 2006

The Powerhouse,
PO Box 45,
Queens Road,
St Helier,
Jersey JE4 8NY


Preliminary Announcement of Annual Results

Year ended 30 September 2006

The Chairman, Derek Maltwood, comments :

'Last year we stated that your Board was convinced that the Company's
longer-term growth interests were best served by maintaining electricity's
reputation in Jersey for price competitiveness and stability. Accordingly we had
announced our decision to absorb, over the next two to three years, some of the
55% increase we had incurred in the cost of imported power. The resulting 9.7%
tariff rise from January 2006 was less than half the increase that our customers
would have suffered if we had immediately passed on our increase of costs in

Group profits, as anticipated, have fallen by 30% in the year as a result, due
primarily to the resultant fall in profits in our core, electricity supply
business. Customer tariffs will rise by 19.5% from January 2007 as a result of
further continued pressure on power costs being experienced across Europe and to
facilitate required investment in the electricity infrastructure that is vital
to Jersey. Our aim is to ensure that no further rises will be experienced by our
customers in 2007 or 2008 and we have hedged both our power purchasing
requirements and euro exposure for the next two years to aid this objective'.


Financial Summary                                       2006                 2005             % rise/(fall)

Turnover                                               £65.6m               £56.1m                  17%
Profit before tax                                      £7.3m                £10.5m                (30)%
Profit in Energy business                              £4.3m                £6.7m                 (36)%
Earnings per share                                     £3.88                £5.61                 (31)%
Dividend paid per ordinary share (net of tax)*         £1.06               £0.96                   10%

* excluding the special dividend of £4.44 (net of tax) paid in March 2006

Jersey Electricity is required to adopt International Financial Reporting
Standards (IFRS) for 2006 and these are the first full year results 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 turnover for the year to 30 September 2006 at £65.6m was 17% higher than
in the year ended 30 September 2005. The Energy business contributed £50.4m of
the Group turnover which was £6.2m above last year due to a 3.5% increase in
electricity units sold and a 9.7% rise in tariffs. Unit sales this year were
substantially aided by a higher than anticipated volume of sales over the winter

Group profit before tax in 2006 of £7.3m was 30% lower than last year, despite
the increase in turnover. This was principally due to a 36% fall in profits in
our core electricity supply business, arising from our decision to absorb during
2006 and 2007 a substantial share of the 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 this
has occurred.

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. Therefore we recently
announced an average tariff rise of 19.5% from 1 January 2007. We have however
hedged our power purchase costs, and euro exposure, with the aim being to have
no further customer tariff rises before January 2009.

Power importation remained at the same level as seen in recent years at 97% of
our requirements during the 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 Retailing business had a very strong year with turnover rising 54% due
largely to buoyant flat screen television sales and the successful introduction
of our new computer retailing operation with profits moving up from £0.1m in
2005 to £0.4m in 2006. During the year our Retail interests expanded with the
opening of a new outlet in St. Helier in November 2005, the launch of an
internet site ( and the launch in September 2006 of Imagination,
a hobby, crafts and toy store, within our Powerhouse site. Profits from our
Property portfolio fell from £3.2m to £1.7m due to the sale of an investment
property which had an annual rental income of £0.6m and the property revaluation
upside falling from £2.4m in 2005 to £1.2m in 2006. Under IFRS any increase or
decrease in the valuation of investment properties has to be recognised in the
Income Statement. The Building Services business produced a £0.2m profit, up
from £0.1m in 2005, on an increased turnover up £0.8m to £3.1m. Our share of
losses at our data centre joint venture, Foreshore Limited, remained at £0.3m.

Interest received in 2006 was £0.8m compared to £0.4m last year. Cash at bank,
including short-term investments, rose £4.2m to £15.1m during the year.
Operating cash flow decreased to £12.9m in 2006 from £15.6m in 2005 with a
reduction in profit being the primary reason. Capital expenditure and financial
investment spend decreased marginally from £6.1m in 2005 to £5.7m in 2006. In
October 2005, £6.8m was received from the sale of one of our investment
properties which Jersey Electricity occupied prior to relocation of its retail
outlet some years ago and proceeds were subsequently distributed to shareholders
as a special dividend.

The taxation charge for the year was £1.4m being lower than 2005 due to the drop
in profits. Group earnings per share fell 31% to £3.88 compared to £5.61 in

Dividends paid in the year rose by 10% from 96p net of tax in 2005 to 106p for
2006, excluding the special dividend of £4.44 per share paid in March 2006.
Dividend cover, excluding the special dividend, fell to 3.7 times from 5.8 times
in 2005.

Consolidated Income Statement
for the year ended 30 September 2006
                                                             2006                   2005
                                                             £000                   £000

Revenue                                                    65,617                 56,096

Cost of sales                                            (42,873)               (32,025)

Gross Profit                                               22,744                 24,071

Revaluation of investment properties                        1,219                  2,370

Operating expenses                                       (17,107)               (15,897)

Group operating profit before joint venture                 6,856                 10,544
Share of loss of joint venture                              (343)                  (355)

Group operating profit                                      6,513                 10,189
Interest receivable                                           818                    354
Finance costs                                                 (9)                    (9)

Profit from operations before taxation                      7,322                 10,534
Income tax                                                (1,351)                (1,911)

Profit from operations after taxation                       5,971                  8,623
Minority interest                                            (29)                   (33)

Profit for the period attributable to the
equity holders of the parent company                        5,942                  8,590

                                                              £                       £
Earnings per share
- basic and diluted                                          3.88                   5.61

Statements of Recognised Income and Expense
for the year ended 30 September 2006

                                                            Group                                   Company
                                                      2006            2005                   2006             2005
                                                      £000            £000                   £000             £000

Profit for the financial year                        5,942           8,590                  6,303            8,048
Actuarial gain on defined benefit                   
scheme (net of tax)                                  2,910           1,660                  2,910            1,660
Fair value loss on cash flow hedges                  (570)           (696)                  (696)            (696)

Total recognised income and expense for            
the year attributable to the equity
holders of the parent                                8,282           9,554                  8,643            9,012

      Balance Sheets at 30 September 2006
                                                                Group                             Company
                                                          2006             2005               2006         2005
                                                         £ 000            £ 000              £ 000        £ 000
      Intangible assets                                    131              130                131          130
      Property, plant and equipment                    108,289          109,798            108,287      109,798
      Investment property                               10,990            9,746             10,990        9,746
      Other investments                                  1,884            1,609              3,905        3,288
      Total non-current assets                         121,294          121,283            123,313      122,962
      Inventories                                        4,196            3,927              4,109        3,834
      Trade and other receivables                       13,046           13,723             12,885       13,606
      Short-term investments - cash                                                                          
      deposits                                           3,765                -              3,765            -

      Cash and cash equivalents                         11,346           12,240             11,266       12,168
      Total current assets                              32,353           29,890             32,025       29,608
      Total assets                                     153,647          151,173            155,338      152,570

      Trade and other payables                           9,590            8,696              9,549        8,694
      Derivative financial instruments                   1,098              528              1,098          528
      Current tax payable                                1,190            1,195              1,170        1,195
      Total current liabilities                         11,878           10,419             11,817       10,417

      Trade and other payables                          13,245           12,947             13,245       12,947
      Tax liabilities                                      813            1,173                735        1,110
      Financial liabilities - preference                 
      shares                                               235              235                235          235

      Deferred tax liabilities                          11,734           10,506             11,734       10,506
      Total non-current liabilities                     26,027           24,861             25,949       24,798
      Total liabilities                                 37,905           35,280             37,766       35,215
      Net assets                                       115,742          115,893            117,572      117,355

      Share capital                                      1,532            1,532              1,532        1,532
      Other reserves                                   (1,098)            (528)            (1,098)        (528)

      Retained earnings                                115,274          114,848            117,138      116,351
      Shareholders' Funds                              115,708          115,852            117,572      117,355
      Minority interest                                     34               41                -             -
      Total equity                                     115,742          115,893            117,572      117,355

Cash Flow Statement
for the year ended 30 September 2006
                                                                           Group                  Company
                                                                     2006         2005         2006        2005

                                                                    £ 000        £ 000        £ 000       £ 000
Cash flows from operating  activities

Operating profit                                                    6,856       10,544        6,819      10,648
Depreciation and amortisation charges                               6,948        7,313        6,947       7,213
Revaluation of investment property                                (1,219)      (2,370)      (1,219)     (2,370)
Pension operating charge less contribution paid                     (877)        (779)        (877)       (779)
Operating cash flows before movement in working capital                 -          258            -         258

Increase in inventories                                             (269)      (1,343)        (275)     (1,334)
(Increase)/decrease in trade and other receivables                (1,473)        2,195      (1,523)       2,086
Increase in trade and other payables                                3,445          246        3,462         208
Interest received                                                     761          319          761         319
Preference dividends paid                                             (9)          (9)          (9)         (9)
Taxation                                                          (1,233)        (779)      (1,191)       (753)

Net cash flows from operating activities                           12,930       15,595       12,895      15,487

Cash flows from investing activities
Purchase of property, plant and equipment                         (4,982)      (5,395)      (4,979)     (5,395)
Investment in intangible assets                                      (76)         (13)         (76)        (13)
Proceeds from disposal of investment property                       6,802            -        6,802           -
Investment in joint venture                                         (613)        (700)        (613)       (700)
Short-term investments                                            (3,765)            -      (3,765)           -

Net cash flows used in investing activities                       (2,634)      (6,108)      (2,631)     (6,108)

Cash flows from financing  activities
Equity dividends paid                                             (8,450)      (1,507)      (8,426)     (1,471)
Repayment of overdraft                                            (1,370)            -      (1,370)           -

Net cash flows used in financing activities                       (9,820)      (1,507)      (9,796)     (1,471)

Net increase in cash and cash equivalents                             476        7,980          468       7,908
Cash and cash equivalents at beginning of period                   10,870        2,890       10,798       2,890

Cash and cash equivalents at end of period                         11,346       10,870       11,266      10,798

Cash and cash equivalents

Cash in hand and balances at bank                                  11,346       12,240       11,266      12,168
                                                                        -      (1,370)            -     (1,370)

Cash and cash equivalents at end of period                         11,346       10,870       11,266      10,798

Notes to the accounts

Year ended 30 September 2006

   1.   Basis of Preparation

The consolidated financial statements of The Jersey Electricity Company Limited,
for the year ended 30 September 2006 have been prepared for the first time in
accordance with International Financial reporting Standards (IFRS) as adopted
for use in the European Union (EU), including International Accounting Standards
(IAS) and Interpretations issued by the International Financial Reporting
Interpretations Committee (IFRIC).  Results for the comparative period have been
restated under IFRS as adopted for use in the EU.

The principal accounting policies of the Group and details of the transition
from UK GAAP to IFRS were indicated in a shareholder communication issued in
February 2006 and were detailed in the 2006 Interim Report issued in May 2006 (a
copy of which can be found on the Group's website

While the financial information included in this preliminary announcement has
been computed in accordance with IFRS, this announcement does not itself contain
sufficient information to comply with IFRS.  The Group expects to publish full
financial statements that comply with IFRS in early 2007.

2    Segmental information
Revenue and profit information are analysed between
the businesses as follows:
                                                          2006      2006    2006          2005      2005     2005
                                                      External  Internal   Total      External  Internal    Total
                                                          £000      £000    £000          £000      £000     £000

Energy                                                  50,391       216  50,607        44,231       247   44,478       
Building Services                                        3,111       188   3,299         2,258       334    2,592       
Retail                                                   8,772        46   8,818         5,712        34    5,746       
Property                                                 1,556       286   1,842         2,100       297    2,397       
Other                                                    1,787       701   2,488         1,795       704    2,499       
                                                        65,617     1,437  67,054        56,096     1,616   57,712
Inter-Group elimination                                                  (1,437)                          (1,616)

                                                                          65,617                           56,096

Operating profit                                                           4,277                            6,711
Energy                                                                       241                              141       

Building Services                                                            383                               70       

Retail                                                                       442                              830       


Other                                                                       (49)                               67


Revaluation of investment properties                                       1,219                            2,370       

                                                                           6,513                           10,189

3.    Dividends paid

                                                                                                2006        2005
Ordinary and 'A' Ordinary  Shares                                                               £000        £000

Final dividend of 62p net of tax per share (2005 - 56p per share)                                950         858

Interim dividend of 44p net of tax per share paid (2005- 40p per share)                          674         613

Special dividend of £4.44 net of tax per share paid (2005 - nil per share)                     6,802           -

                                                                                               8,426       1,471

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

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