(JEL.L) Jersey Electricity Company Ltd Buy/Sell

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(RNS) 2009-05-29 07:02 Jersey Electricity - Half Yearly Report
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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 6 months % increase/(decrease)` 2009 2008 `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 77p 73p 5%` share Group turnover was 9% higher than 2008 but profit before tax in the first half of 2009 was £5.3m being 22% lower 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 31% as 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 £0.6m but 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 (2008: 73p) on the Ordinary and "A" Ordinary Shares payable on 30 June 2009 in addition to the final dividend for 2008 of 112p (2007: 75p) 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 Meeting, John 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 Year ended` `31 March 30 September` 2009 2008 2008 `Note £000 £000 £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 - - 294` properties `Profit from sale of property - 407 405` `Operating expenses (9,456) (8,750) (17,806)` `Operating profit before joint 4,955 6,248 8,835` venture `Share of (loss)/profit of joint (11) 14 46` venture `Operating profit 2 4,944 6,262 8,881` `Interest receivable 405 554 1,086` `Finance costs (5) (4) (11)` `Profit from operations before 5,344 6,812 9,956` taxation `Taxation 3 (1,071) (639) (84)` `Profit from operations after 4,273 6,173 9,872` taxation `Minority interest - (18) (48)` Profit for the period `attributable to the 4,273 6,155 9,824` equity holders of the parent company 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 ended31 March Year` `ended30September` 2009 2008 2008 `£000 £000 £000` `Profit for the financial 4,273 6,155 9,824` period `Actuarial (loss)/gain on (8,178) 2,283 (4,874)` defined benefit scheme (net of tax) `Fair value gain on cash flow 1,906 3,401 1,737` hedges (net of tax) `Totalrecognisedincome and (1,999) 11,839 6,687` expense for the period attributable to the equity holders of the parent company Condensed Group Balance Sheet (Unaudited) `As at 31 March As at 30 September` `Note 2009 2008 2008` `£000 £000 £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 5,019 4,715 2,763` instruments `Short-term investments - cash 5,585 4,930 11,025` deposits `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 - - 127` instruments `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 - 235 235 235` preference shares `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 Year ended` `31 March 30 September` `Note 2009 2008 2008` `£000 £000 £000` CASH FLOWS FROM OPERATING ACTIVITIES `Operating profit before joint 4,955 6,248 8,835` venture `Depreciation and amortisation 3,705 3,458 6,950` charges `Revaluation of investment property - - (294)` `Pension operating charge less (585) (900) (1,110)` contributions paid `Profit on sale of fixed assets - (407) (406)` `Operating cash flows before 8,075 8,399 13,975` movement in working capital `Decrease/(increase) in inventories 289 (64) (1,471)` `(Increase)/decrease in trade and (4,624) (2,762) 1,388` other receivables `Increase/(decrease) in trade and 1,490 (1,045) 954` other payables `Interest received 314 601 1,010` `Preference dividends paid (4) (5) (9)` `Income taxes paid - - (896)` `Net cash flows from operating 5,540 5,124 14,951` activities CASH FLOWS FROM INVESTING ACTIVITIES `Purchase of property, plant and 5 (8,175) (5,593) (13,270)` equipment `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 (2,643) (6,380) (20,067)` activities CASH FLOWS FROM FINANCING ACTIVITIES `Equity dividends paid 4 (1,716) (1,197) (2,426)` `Net cash flows used in financing (1,716) (1,197) (2,426)` activities `Net increase/(decrease) in cash and 1,181 (2,453) (7,542)` cash equivalents `Cash and cash equivalents at 5,217 12,613 12,613` beginning of period `Cash and cash equivalents at end of 6,398 10,160 5,071` period `Overdraft - - 146` `Cash and cash equivalents at end of 6,398 10,160 5,217` period 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 4,944 5,855 8,182` property revaluation/sale `Revaluation of investment - - 294` properties `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 5,344 6,812 9,956` taxation `Taxation (1,071) (639) (84)` `Profit from operationsafter 4,273 6,173 9,872` taxation `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 Year ended 30 September` `31 March` 2009 2008 2008 `£000 £000 £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 Year ended` `31 March 30 September` 2009 2008 2008 `£000 £000 £000` `Distributions to equity holders and by 1,716 1,197 2426` subsidiaries in the period 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 2008. No 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 Jersey. 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. 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 - - 4,273 4,273` for the period `Unrealised gains on hedges - 1,906 - 1,906` `Actuarial loss on defined benefit - - (8,178) (8,178)` scheme `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 - - 9,824 9,824` for the period `Unrealised gains on hedges - 1,737 - 1,737` `Actuarial loss on defined benefit - - (4,874) (4,874)` scheme `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 - - 6,155 6,155` for the period `Unrealised gains on hedges - 3,401 - 3,401` `Actuarial loss on defined benefit - 2,283 2,283` scheme `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 &POUND;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 &POUND;3.6M (2008: &POUND;3.1M) AND OTHER SALES OF &POUND;0.3M (2008: &POUND;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 &POUND;243,000 (2008: &POUND;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 IR BRGDUUXDGGCI
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