Jersey Electricity Regulatory News (JEL)

18 Dec 2006 07:01

Jersey Electricity Company Limited18 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 finalaccounts for the Group for the year to 30 September 2006 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 2006, but isderived from those accounts. Statutory accounts for 2006 have been preparedunder IFRS and will be delivered to the Jersey Registrar of Companies in early2007. The auditors have reported on those accounts and their report wasunqualified. The financial information set out in this statement relating to the year ended30 September 2005 does not constitute statutory accounts for that period. Fullstatutory accounts for that period, prepared in accordance with UK GAAP, whichreceived an unqualified audit opinion, have been delivered to the JerseyRegistrar of Companies. A final gross dividend of 85p (68p net of tax) on the Ordinary and 'A' Ordinaryshares 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 totalproposed gross dividend declared for the year of £1.40 (£1.12 net of tax) oneach £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 shareholdersregistered 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 July2007 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 505253Direct fax number : 01534 505515Email : proutier@jec.co.uk 15 December 2006 The Powerhouse,PO Box 45,Queens Road,St Helier,Jersey JE4 8NY THE JERSEY ELECTRICITY COMPANY LIMITED 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'slonger-term growth interests were best served by maintaining electricity'sreputation in Jersey for price competitiveness and stability. Accordingly we hadannounced our decision to absorb, over the next two to three years, some of the55% 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 customerswould have suffered if we had immediately passed on our increase of costs infull. Group profits, as anticipated, have fallen by 30% in the year as a result, dueprimarily to the resultant fall in profits in our core, electricity supplybusiness. Customer tariffs will rise by 19.5% from January 2007 as a result offurther continued pressure on power costs being experienced across Europe and tofacilitate required investment in the electricity infrastructure that is vitalto Jersey. Our aim is to ensure that no further rises will be experienced by ourcustomers in 2007 or 2008 and we have hedged both our power purchasingrequirements 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 ReportingStandards (IFRS) for 2006 and these are the first full year results to bereported in accordance with them. The adoption of IFRS represents a change inaccounting policy only and does not change the Group's underlying cash flows orbusiness strategy. Group turnover for the year to 30 September 2006 at £65.6m was 17% higher thanin the year ended 30 September 2005. The Energy business contributed £50.4m ofthe Group turnover which was £6.2m above last year due to a 3.5% increase inelectricity units sold and a 9.7% rise in tariffs. Unit sales this year weresubstantially aided by a higher than anticipated volume of sales over the winterperiod. Group profit before tax in 2006 of £7.3m was 30% lower than last year, despitethe increase in turnover. This was principally due to a 36% fall in profits inour core electricity supply business, arising from our decision to absorb during2006 and 2007 a substantial share of the increase in costs of electricity in theEuropean wholesale power market, from which we import virtually all of ourneeds. When announcing our decision last October to increase our tariffs by only9.7% in 2006, we forecast a significant fall in profits for the year and thishas occurred. Our aim remains to restore by the end of 2007, the profitability upon whichplanned investment in the continuing reliability of our electricity networkdepends. However, our hopes to achieve this without increasing our tariffs bymore than 10% next year have been undermined by significant further increases inthe cost of European wholesale power for delivery in 2007. Therefore we recentlyannounced an average tariff rise of 19.5% from 1 January 2007. We have howeverhedged our power purchase costs, and euro exposure, with the aim being to haveno further customer tariff rises before January 2009. Power importation remained at the same level as seen in recent years at 97% ofour requirements during the year. Our indigenous power generating plant providedthe balance of the electricity which we supplied and in addition to itsprincipal role as emergency standby capacity it enabled us to make modest gainsfrom selling back power to our French supplier during their peak periods. Our Retailing business had a very strong year with turnover rising 54% duelargely to buoyant flat screen television sales and the successful introductionof our new computer retailing operation with profits moving up from £0.1m in2005 to £0.4m in 2006. During the year our Retail interests expanded with theopening of a new outlet in St. Helier in November 2005, the launch of aninternet site (day2dayshop.com) and the launch in September 2006 of Imagination,a hobby, crafts and toy store, within our Powerhouse site. Profits from ourProperty portfolio fell from £3.2m to £1.7m due to the sale of an investmentproperty which had an annual rental income of £0.6m and the property revaluationupside falling from £2.4m in 2005 to £1.2m in 2006. Under IFRS any increase ordecrease in the valuation of investment properties has to be recognised in theIncome Statement. The Building Services business produced a £0.2m profit, upfrom £0.1m in 2005, on an increased turnover up £0.8m to £3.1m. Our share oflosses 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 areduction in profit being the primary reason. Capital expenditure and financialinvestment spend decreased marginally from £6.1m in 2005 to £5.7m in 2006. InOctober 2005, £6.8m was received from the sale of one of our investmentproperties which Jersey Electricity occupied prior to relocation of its retailoutlet some years ago and proceeds were subsequently distributed to shareholdersas a special dividend. The taxation charge for the year was £1.4m being lower than 2005 due to the dropin profits. Group earnings per share fell 31% to £3.88 compared to £5.61 in2005. Dividends paid in the year rose by 10% from 96p net of tax in 2005 to 106p for2006, 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 timesin 2005. Consolidated Income Statementfor 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 10,544Share of loss of joint venture (343) (355) Group operating profit 6,513 10,189Interest receivable 818 354Finance costs (9) (9) Profit from operations before taxation 7,322 10,534Income tax (1,351) (1,911) Profit from operations after taxation 5,971 8,623Minority interest (29) (33) Profit for the period attributable to theequity holders of the parent company 5,942 8,590 £ £Earnings per share- basic and diluted 3.88 5.61 Statements of Recognised Income and Expensefor 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 8,048Actuarial gain on defined benefit scheme (net of tax) 2,910 1,660 2,910 1,660Fair value loss on cash flow hedges (570) (696) (696) (696) Total recognised income and expense for the year attributable to the equityholders 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 NON-CURRENT ASSETS 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 CURRENT ASSETS 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 LIABILITIES 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 NON-CURRENT LIABILITIES 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 EQUITY 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 Statementfor the year ended 30 September 2006 Group Company 2006 2005 2006 2005 £ 000 £ 000 £ 000 £ 000Cash flows from operating activities Operating profit 6,856 10,544 6,819 10,648Depreciation and amortisation charges 6,948 7,313 6,947 7,213Revaluation 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) 2,086Increase in trade and other payables 3,445 246 3,462 208Interest received 761 319 761 319Preference 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 activitiesPurchase 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 activitiesEquity 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 7,908Cash 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 inaccordance with International Financial reporting Standards (IFRS) as adoptedfor use in the European Union (EU), including International Accounting Standards(IAS) and Interpretations issued by the International Financial ReportingInterpretations Committee (IFRIC). Results for the comparative period have beenrestated under IFRS as adopted for use in the EU. The principal accounting policies of the Group and details of the transitionfrom UK GAAP to IFRS were indicated in a shareholder communication issued inFebruary 2006 and were detailed in the 2006 Interim Report issued in May 2006 (acopy of which can be found on the Group's website www.jec.co.uk). While the financial information included in this preliminary announcement hasbeen computed in accordance with IFRS, this announcement does not itself containsufficient information to comply with IFRS. The Group expects to publish fullfinancial statements that comply with IFRS in early 2007. 2 Segmental informationRevenue and profit information are analysed betweenthe businesses as follows: 2006 2006 2006 2005 2005 2005 External Internal Total External Internal Total £000 £000 £000 £000 £000 £000Revenue 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 Property Other (49) 67 5,294 7,819 Revaluation of investment properties 1,219 2,370 6,513 10,189 3. Dividends paid 2006 2005Ordinary 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