Jersey Electricity Regulatory News (JEL)

13 Dec 2007 07:00

Jersey Electricity Company Limited13 December 2007 The Jersey Electricity Company Preliminary Announcement of Annual Results Year Ended 30 September 2007 At a meeting of the Board of Directors held on 12 December 2007, the finalaccounts for the Group for the year to 30 September 2007 were approved, detailsof which, are attached. The financial information set out in the announcement does not constitute theCompany's statutory accounts for the year ended 30 September 2007 or 2006, butis derived from those accounts. Statutory accounts for 2006 have been deliveredto the Jersey Registrar of Companies and those for 2007 will be delivered inearly 2008. The auditors have reported on those accounts and their reports wereunqualified. A final gross dividend of 93.75p (75p net of tax) on the Ordinary and 'A'Ordinary shares in respect of the period ended 30 September 2007 was recommendedwhich, together with the interim gross dividend of 61.25p (49p net of tax),makes a total proposed gross dividend declared for the year of £1.55 (£1.24 netof tax) on each £1 share. The final dividend will be paid on 31 March 2008 to those shareholdersregistered in the books of the Company on 29 February 2008. A dividend on the 5%cumulative participating preference shares of 1.5% (2006 1.5%) payable on 1 July2008 was also recommended. The Annual General Meeting of the Company will be held on 5 March 2008. M.P. Magee P.J. RoutierFinance Director Company Secretary Direct telephone number : 01534 505321 Direct telephone number : 01534 505253Direct fax number : 01534 505466 Direct fax number : 01534 505515Email : mmagee@jec.co.uk Email : proutier@jec.co.uk 13 December 2007 The Powerhouse,PO Box 45,Queens Road,St Helier,Jersey JE4 8NY THE JERSEY ELECTRICITY COMPANY LIMITEDPreliminary Announcement of Annual ResultsYear ended 30 September 2007 The Chairman, Derek Maltwood, comments : "Group profits rose by 19% in the year due mainly to a fine performance by ournon-core business units aided by upside from a revaluation of our propertyinterests. These businesses account for around one third of Group profits.Profits in our Energy business rose by 5% but were still a third lower thanthose achieved in 2005 due to our decision to constrain the pass through to ourcustomers of substantial increases in the cost of the energy we import fromFrance. Customer tariffs, rose by 19% from January 2007, as a result ofdeferring the pass through of cost rises experienced across Europe since 2006and to facilitate required investment in the electricity infrastructure that isvital to Jersey. Projects initiated in 2007 include the £13m reinforcement ofthe network in the west of Jersey. Our aim is to ensure that no further directtariff rises will be experienced by our customers in 2008 as we have hedged bothour power purchasing requirements and euro exposure to deliver this objective.However markets are still volatile and the forecasting of future wholesale powerprices in Europe remains a significant challenge to Jersey Electricity." Financial Summary 2007 2006 % rise/(fall) Turnover £75.9m £65.6m 16%Profit before tax £8.7m £7.3m 19%Profit in Energy business £4.5m £4.3m 5%Earnings per share £4.94 £3.88 27%Dividend paid per ordinary share (net of tax)* £1.17 £1.06 10% *excluding the special dividend of £4.44 (net of tax) paid in March 2006 Group turnover for the year to 30 September 2007 at £75.9m was 16% higher thanin the year ended 30 September 2006. The Energy business contributed £57.0m ofthe Group turnover which was £6.6m above last year due to a 19% rise in tariffsfrom January 2007 offset by a 3% reduction in units sold because of the mildwinter in 2006/07. Group profit before tax in 2007 of £8.7m was 19% higher than the corresponding£7.3m last year. This compares to a level of £10.5m in 2005 before the decisionwas made to absorb an element of the substantial rise in the price of importedpower which impacted the level of Energy profits in both 2006 and 2007. Profits in our Energy business moved up from £4.3m last year to £4.5m in 2007,but were 33% lower than in 2005. As stated last year profitability is expectedto rise in 2008 to previous levels experienced prior to our decision to absorban element of the substantial rise in our electricity importation costs. Powerimportation fell from an average level of 95% over the previous 5 years to 89%in the last financial year as a short term fall in oil prices in the early partof 2007 made it financially advantageous to generate power rather than importelectricity. This helped off set the downside from lower sales during the mildwinter of 2006/07. Profits in our Property division, excluding upside from property revaluations/disposals, rose substantially from £0.4m to £1.0m due mainly to higher rentalflows. Gains recognised in the income statement from the revaluation/sale ofproperties were on a par with last year at £1.2m. Our Retailing business had a strong year with turnover rising 20% on a like forlike basis and 36% including new ventures. Profits rose from £0.4m to £0.5m withhigher flat screen television and computer sales offset by early trading lossesfrom Imagination, our hobby, crafts and toy store, within our Powerhouse siteand our e-retailing internet start-up operation (day2dayshop.com). The Building Services business produced a £0.3m profit, up from £0.2m in 2006despite a very competitive marketplace. Our other business units - Jersey Energy, Jendev and Jersey Deep Freeze all hadsuccessful years with growth in both revenues and profit. Our share of losses atour data centre joint venture, Foreshore Limited, fell substantially from £0.3mto £0.1m and the business is now profitable on an increased annual turnoverwhich rose nearly 60% from £2.2m to £3.5m in the last financial year. Interest received in 2007 was £0.9m being at the same level as last year with alower average level of cash being negated by higher interest rates achieved. The taxation charge for the year, at £1.1m, was lower than the 2006 charge of£1.4m despite the rise in profits. As indicated in our Interim Report this is aresult of transitional rules introduced in Jersey as a prelude to changes in thecorporate tax regime. The effective tax rate for 2007 and 2008 is lower than2006 due to the migration from a prior year to current year basis of taxassessment but will revert to 20% again, being the ongoing rate applicable toJersey utilities, from 2009 onwards. Our earnings per share rose by 27% to £4.94 compared to £3.88 in 2006 as aresult of increased profits and tax changes as described above. Cash at bank, including short-term investments, rose £1.3m to £16.4m during theyear although it had been anticipated that this would fall due to an increasedlevel of capital expenditure which has moved into 2007/08 due to planningdelays. Operating cash flow was marginally lower than 2006 at £11.7m in 2007with higher profit offset by the requirement for additional working capital.Investment expenditure increased from £5.7m in 2006 to £8.9m in 2007 with theinitiation of spend on the two year £13m capital project to reinforce theelectricity network in the west of Jersey being the primary driver. Dividends paid in the year rose by 10% from £1.06 net of tax in 2006 to £1.17for 2007, excluding the special dividend of £4.44 per share paid in March 2006.Dividend cover, excluding the special dividend, rose from 3.7 times last year to4.2 times in 2007. Consolidated Income Statementfor the year ended 30 September 2007 2007 2006 £000 £000 Revenue 75,871 65,617 Cost of sales (52,117) (42,873) Gross profit 23,754 22,744 Revaluation of investment properties 900 1,219Sale of property 309 -Operating expenses (16,951) (17,107) Group operating profit before joint venture 8,012 6,856Share of loss of joint venture (135) (343) Group operating profit 7,877 6,513Interest receivable 868 818Finance costs (11) (9) Profit from operations before taxation 8,734 7,322Taxation (1,074) (1,351) Profit from operations after taxation 7,660 5,971Minority interest (90) (29) Profit for the year attributable to the equityholders of the parent company 7,570 5,942 £ £Earnings per share- basic and diluted 4.94 3.88 Statements of Recognised Income and Expensefor the year ended 30 September 2007 Group Company 2007 2006 2007 2006 £000 £000 £000 £000 Profit for the year 7,570 5,942 7,601 6,303Actuarial gain on defined benefit scheme 5,431 2,910 5,431 2,910(net of tax)Fair value gain/(loss) on cash flow hedges 1,469 (570) 1,469 (570)(net of tax)Revaluation of freehold land and buildings 448 - 448 - Total recognised income and expense for the 14,918 8,282 14,949 8,643year attributable to the equity holders ofthe parent Balance Sheets at Group Company30 September 2007 2007 2006 2007 2006 £ 000 £ 000 £ 000 £ 000NON-CURRENT ASSETSIntangible assets 82 131 82 131Property, plant and equipment 109,790 108,289 109,788 108,287Investment property 12,340 10,990 12,340 10,990Other investments 2,099 1,884 4,255 3,905Retirement benefit surplus 11,684 3,789 11,684 3,789Total non-current assets 135,995 125,083 138,149 127,102 CURRENT ASSETS Inventories 4,631 4,196 4,556 4,109 Trade and other receivables 11,258 9,257 11,075 9,096 Derivative financial instruments 464 - 464 -Short-term investments - cash deposits 3,755 3,765 3,755 3,765Cash and cash equivalents 12,613 11,346 12,400 11,266 Total current assets 32,721 28,564 32,250 28,236 Total assets 168,716 153,647 170,399 155,338 LIABILITIESTrade and other payables 11,348 9,590 11,301 9,549Derivative financial instruments - 1,098 - 1,098Current tax payable 944 1,190 887 1,170 Total current liabilities 12,292 11,878 12,188 11,817 NON-CURRENT LIABILITIESTrade and other payables 13,123 13,245 13,123 13,245Tax liabilities 487 813 454 735Financial liabilities - preference shares 235 235 235 235Deferred tax liabilities 13,670 11,734 13,670 11,734 Total non-current liabilities 27,515 26,027 27,482 25,949 Total liabilities 39,807 37,905 39,670 37,766 Net assets 128,909 115,742 130,729 117,572EQUITYShare capital 1,532 1,532 1,532 1,532Other reserves 819 (1,098) 819 (1,098)Retained earnings 126,483 115,274 128,378 117,138Shareholders' funds 128,834 115,708 130,729 117,572Minority interest 75 34 - - Total equity 128,909 115,742 130,729 117,572 Cash Flow Statementfor the year ended 30 September 2007 Group Company 2007 2006 2007 2006 £ 000 £ 000 £ 000 £ 000Cash flows from operating activities Operating profit 8,012 6,856 7,810 6,819Depreciation and amortisation charges 7,568 6,948 7,568 6,947Revaluation of investment property (900) (1,219) (900) (1,219)Pension operating charge less contribution paid (1,110) (877) (1,110) (877)Profit on sale of fixed assets (312) - (312) -Operating cash flows before movement in working capital 13,258 11,708 13,056 11,670 Increase in inventories (435) (269) (447) (275)Increase in trade and other receivables (1,979) (2,515) (1,957) (2,470)Increase in trade and other payables 1,139 3,387 1,150 3,310Interest received 844 756 837 756Preference dividends paid (9) (9) (9) (9)Income taxes paid (1,159) (1,233) (1,136) (1,191) Net cash flows from operating activities 11,659 11,825 11,494 11,791 Cash flows from investing activitiesPurchase of property, plant and equipment (8,529) (4,995) (8,529) (4,992)Investment in intangible assets (17) (76) (17) (76)Proceeds from disposal of property 318 6,550 318 6,550Investment in joint venture (350) (613) (350) (613)Short-term investments 10 (3,765) 10 (3,765) Net cash flows used in investing activities (8,568) (2,899) (8,568) (2,896) Cash flows from financing activitiesEquity dividends paid (1,824) (8,450) (1,792) (8,426) Net cash flows used in financing activities (1,824) (8,450) (1,792) (8,426) Net increase in cash and cash equivalents 1,267 476 1,134 468Cash and cash equivalents at beginning of period 11,346 10,870 11,266 10,798 Cash and cash equivalents at end of period 12,613 11,346 12,400 11,266 Notes to the accounts Year ended 30 September 2007 1. Basis of Preparation The consolidated financial statements of The Jersey Electricity Company Limited,for the year ended 30 September 2007 have been prepared in accordance withInternational Financial reporting Standards (IFRS) as adopted for use in theEuropean Union (EU), including International Accounting Standards (IAS) andInterpretations issued by the International Financial Reporting InterpretationsCommittee (IFRIC). While the financial information included in this preliminary announcement hasbeen prepared in accordance with the recognition and measurement criteria, thisannouncement does not itself contain sufficient information to comply with IFRS.The Group expects to publish full financial statements that comply with IFRSin early 2008. 2 Segmental information Revenue and profit information are analysed betweenthe businesses as follows: 2007 2007 2007 2006 2006 2006 External Internal Total External Internal Total £000 £000 £000 £000 £000 £000Revenue 56,957 246 57,203 50,391 216 50,607Energy 3,204 199 3,403 3,111 188 3,299Building Services 11,934 53 11,987 8,772 46 8,818Retail 1,597 683 2,280 1,556 286 1,842Property 2,179 865 3,044 1,787 701 2,488Other 75,871 2,046 77,917 65,617 1,437 67,054 Inter-Group elimination (2,046) (1,437) 75,871 65,617 Operating profit Energy 4,493 4,277 Building Services 305 241 Retail 479 383 Property 954 442 Other 437 (49) 6,668 5,294 Revaluation of investment properties 900 1,219Sale of property 309 - 7,877 6,513 3. Dividends paid and proposed 2007 2006Ordinary and 'A' Ordinary Shares £000 £000Final dividend proposed of 75p net of tax per share (2006 - 68 per share) 1,149 1,042Interim dividend paid of 49p net of tax per share paid (2006- 44p per share) 750 674Special dividend of nil per share paid (2006 - £4.44 per share) - 6,802 1,899 8,518 This information is provided by RNS The company news service from the London Stock Exchange