Jersey Electricity Regulatory News (JEL)

15 Dec 2005 07:00

Jersey Electricity Company Limited15 December 2005 The Jersey Electricity Company Preliminary Announcement of Annual Results Year Ended 30 September 2005 At a meeting of the Board of Directors held on 14 December 2005, the finalaccounts for the Group for the year to 30 September 2005 were approved, detailsof which, are attached. The financial information set out in the announcement does not constitute theCompany's statutory accounts for the years ended 30 September 2005 or 2004, butis derived from those accounts. Statutory accounts for 2004 have been deliveredto the Jersey Registrar of Companies and those for 2005 will be delivered inearly 2006. The auditors have reported on those accounts and their reports wereunqualified. A final gross dividend of 77.5p (62p net of tax) on the Ordinary and 'A'Ordinary shares in respect of the period ended 30 September 2005 was recommendedwhich, together with the interim gross dividend of 50p (40p net of tax), makes atotal gross dividend for the year of £1.275 (£1.02p net of tax) on each £1share. The dividend will be paid on 31 March 2006 to those shareholders registered inthe books of the Company on 10 March 2006. A dividend on the 5% cumulativeparticipating preference shares of 1.5% (2004 1.5%) payable on 3 July 2006 wasalso recommended. The Annual General Meeting of the Company will be held on 14 March 2006. P.J. RoutierCompany Secretary Direct telephone number : 01534 505253Direct fax number : 01534 505515Email : proutier@jec.co.uk 15 December 2005 The Powerhouse,PO Box 45,Queens Road,St Helier,Jersey JE4 8NY THE JERSEY ELECTRICITY COMPANY LIMITEDPreliminary Announcement of Annual ResultsYear ended 30 September 2005 The Chairman, Derek Maltwood, comments : "I am pleased to report on another year of outstanding performance by theCompany and its people. Group profits have risen by 5% in the year, despite aslight fall in profits in our core, electricity supply business. Our customersremained sheltered from escalating global energy costs, by the fixed priceagreement under which we have imported power from Europe throughout the pastthree years. The expiry of this contract in December, 2005 exposes ourelectricity supply business to high and volatile power prices in the Europeanwholesale market. Your Board is convinced that the Company's longer term growthinterests are best served by maintaining electricity's reputation in Jersey, forprice competitiveness and stability. It believes too, that tariff restraint isespecially appropriate in the context of the new Competition Law and aCompetition Regulatory Authority seeking to establish competitive behaviour in aconstrained market. As a result, your Board has decided to pass on to customersthe 55% increase in the cost of imported power, over the next two to threeyears, rather than immediately, and this will reduce profits in our corebusiness over that period." ________________________________________________________________________________ Group turnover for the year to 30 September 2005 at £57.2m was at a very similarlevel as in the year ended 30 September 2004. The Energy business contributed£44.2m of the Group turnover which was £1.0m above last year due to a 1.3%increase in units sold and a rise in tariffs. Our electricity tariff increase of 2.5% in 2005 was the first since January 2001and contrasted with dramatically increased heating oil and gas prices inJersey's energy market. Again this year we won more than 80% of the significantgrowth in this market arising from the Island's buoyant property developmentsector. Our three year fixed price power contract with Electricite de Franceexpired on 1 December 2005, since when our realignment with the Europeanwholesale power market has increased our costs for imported power by 55%.Tariff rises for customers will, however, be phased in over a two to three yearperiod rather than the full increase being applied immediately. In January 2006tariffs will rise by an average of 9.7% and we have announced that a similarincrease can be expected in 2007. We have mitigated our power purchasing risksfor 2006 and have negotiated the facility to cap or fix our procurement costs ona rolling basis for the following year, as opportunities arise. Turnover in our Retail business rose by 7% to £5.7m, despite a difficultbusiness climate, due to a strong performance in the second half of thefinancial year. Diversification away from the retailing of core white and brownproducts, where demand has fallen, into mobile phones and computers has aidedperformance. Turnover in the Property business rose 4% to £2.1m but fell inBuilding Services from £3.7m to £2.3m due to delays in the refurbishment ofsupermarkets, in particular. Turnover in our Other businesses segment fell by£0.5m to £2.9m with the primary reason being the sale in October 2004 of oursmall loss making JET telecommunications business. Profit on ordinary activities, before tax and exceptional costs, for the year to30 September 2005 rose by 5% to £7.4m. Profit on ordinary activities, afterexceptional costs, rose 35% from £5.5m in 2004. Profit in the Energy businessfell by £0.6m to £5.9m with increased unit sales and tariffs offset by higherelectricity import costs largely due to the strengthening of the euro againststerling. In our Property division there was a 4% increase in core rental incomedue to higher occupancy rates but profits were down £0.3m to £0.8m due to abook loss of £0.3m on the sale of our Commercial House property in St Helier,Jersey on 30 September 2005 for £6.8m (against an original cost, beforerevaluations, of £0.7m). The Retail Appliance Sales business decreased profitsmarginally to £0.1m. The Building Services business produced profits £0.1m lowerthan 2004, at £0.1m, due to a lower level of sales. Other businesses, includingjoint ventures and associates, produced a profit of £0.1m against losses of£0.8m in 2004. The improvement results from a number of factors: losses at ourNewtel associate in 2004 no longer impact Group profits, reduced losses in ourForeshore joint venture, the exit from our JET telecommunications business andimproved performance in Jendev and Jersey Energy. Interest received in 2005 was £0.4m compared to interest paid of £0.1m last yearas bank deposits increased in the year. The cash at bank at the year end was£10.9m. The net cash inflow of £8.0m during the year was £0.6m higher than in2004 mainly due to a lower level of capital expenditure and investment spend.Cash on the sale of the Commercial House property was not received until earlyOctober 2005. The taxation charge for the year was £1.8m consistent with 2004. Group earnings per share, excluding the impact of exceptional costs, rose 7% to£3.66 compared to £3.41 in 2004. Earnings per share including the impact ofexceptional charges were £3.66 compared to £2.40 in the previous year. Dividends for the year rose by 11% from a gross level of 115.0p (92.0p net oftax) in 2004 to a proposed 127.5p (102.0p net of tax) for 2005 consistent withthe rise in earnings per share in the year. Dividend cover, excludingexceptional costs, fell marginally to 3.6 times. From 1 October 2005 the Group will comply with the International FinancialReporting Standards (IFRS). The first financial information to be reported bythe Group in accordance with IFRS will be for the six months ending 31 March2006. An IFRS Transition Statement will be issued with the 2005 Annual Reportand Accounts which will detail the likely impact on the main financialperformance indicators by re-stating the 2005 year end figures under IFRS. THE JERSEY ELECTRICITY COMPANY LIMITED Consolidated Profit and Loss Account for the year ended 30 September 2005 Notes 2005 2004 £ 000 £ 000Turnover:Group and share of joint venture 2 57,214 57,684Less: Share of joint venture turnover (1,118) (771) Group turnover 56,096 56,913 Cost of sales (32,078) (32,039) Gross profit 24,018 24,874 Net operating expenses (16,623) (16,808) Group operating profit 7,395 8,066 Share of operating loss in joint venture (355) (517) Share of associate's operating loss - (417) Exceptional item - impairment of investment 3 - (1,545) Profit on ordinary activities before interest andtaxation 2 7,040 5,587 Net interest 354 (101) Profit on ordinary activities before taxation 7,394 5,486 Tax on profit on ordinary activities (1,755) (1,759) Profit on ordinary activities after taxation 5,639 3,727 Minority Interest (33) (42)Profit on ordinary activities after taxation and minority interest 5,606 3,685 Dividends paid and proposed (1,572) (1,418) Retained profit for the group and share of joint venture loss 4,034 2,267 Earnings per ordinary share (basic and diluted) £3.66 £2.40 Earnings per ordinary share (basic and diluted) excluding exceptional items £3.66 £3.41 THE JERSEY ELECTRICITY COMPANY Consolidated Statement of Total Recognised Gains and Losses for the year ended 30 September 2005 2005 2004 £ 000 £ 000 Profit on ordinary activities after taxation and minority interest 5,606 3,685 Unrealised surplus on revaluation of plant 82 11 Unrealised surplus/(deficit) on revaluation of investment properties 2,370 (18) Total recognised gains since last annual report and accounts 8,058 3,678 Consolidated Note of Historical Cost Profits and Losses for the year ended 30 September 2005 2005 2004 £ 000 £ 000 Profit on ordinary activities before taxation (after minority interest) 7,361 5,444 Difference between the historical cost depreciation chargeand the actual depreciation charge for the year calculatedon the revalued amount 435 884 Realised profit on sale of investment property 6,243 - Historical cost profit on ordinary activities before taxation 14,039 6,328(after minority interest) Historical cost profit for the year retained after taxation,minority interest and dividends 10,712 3,151 THE JERSEY ELECTRICITY COMPANY Balance Sheets 30 September 2005 Group Group Company Company 2005 2004 2005 2004 £ 000 £ 000 £ 000 £ 000Fixed AssetsIntangible fixed assets - 100 - -Tangible fixed assets 119,756 126,183 119,756 126,181Investments: subsidiary - - 477 477 other investments 5 5 5 5 joint venture - - 1,951 2,251Share of associate's net assets - - - -Share of joint venture gross assets 526 542Share of joint venture gross liabilities (3,428) (3,071)Loans to joint venture 3,651 2,951Net joint venture assets 749 422 - - 120,510 126,710 122,189 128,914Current AssetsStocks and work in progress 3,927 2,584 3,834 2,500Debtors due within one year 14,020 9,501 13,903 9,285Debtors due after more than one year 7,069 6,973 7,069 6,973Cash at bank and in hand 12,240 2,890 12,168 2,865 37,256 21,948 36,974 21,623CreditorsAmounts falling due within one year 10,841 10,678 10,839 10,647 Net Current Assets 26,415 11,270 26,135 10,976 Total assets less current liabilities 146,925 137,980 148,324 139,890 CreditorsAmounts falling due after more than one year 13,395 11,387 13,332 11,296 Provisions for Liabilities and ChargesPensions and similar obligations 495 487 495 487Deferred taxation 11,792 11,346 11,792 11,346 25,682 23,220 25,619 23,129 121,243 114,760 122,705 116,761 Capital and Reserves Called-up share capital - Equity 1,532 1,532 1,532 1,532 - Non-equity 235 235 235 235Reserves - Equity 119,435 112,949 120,938 114,994 Shareholders' Funds 121,202 114,716 122,705 116,761 Equity minority interest 41 44 - - 121,243 114,760 122,705 116,761 THE JERSEY ELECTRICITY COMPANY LIMITED Consolidated Cash Flow Statement for the year ended 30 September 2005 2005 2004 £ 000 £ 000RECONCILIATION OF OPERATING PROFIT TONET CASH INFLOW FROM OPERATING ACTIVITIES Group operating profit 7,395 8,066Depreciation and amortisation charges 7,313 7,793Loss on sale of fixed assets 258 -(Increase)/decrease in stocks & work in progress (1,343) 377Decrease/(increase) in debtors 2,195 (24)Increase in creditors 246 1,077 NET CASH INFLOW FROM OPERATING ACTIVITIES 16,064 17,289 Returns on investments and servicing of finance 319 (101)Taxation (779) (336)Capital and investment expenditure (6,108) (8,209)Dividends paid (1,516) (1,243) INCREASE IN CASH 7,980 7,400 RECONCILIATION OF NET CASHFLOW Increase in cash 7,980 7,400Net funds/(debt) as at beginning of year 2,890 (4,510) Net funds as at end of year 10,870 2,890 Net funds comprise of:Cash at bank and in hand 12,240 2,890Overdraft (1,370) - Net funds as at end of year 10,870 2,890 THE JERSEY ELECTRICITY COMPANY LIMITED Notes to the accounts Year ended 30 September 2005 1. Basis of Preparation The accounts have been prepared on the basis of the accounting policies set outin the Group 2004 Annual Report and Accounts. 2. Turnover and profit The contributions of the various activities of the Group to turnover (includingjoint venture) and profit are listed below: Turnover Profit/(loss) 2005 2004 2005 2004Principal activities: £000 £000 £000 £000Energy 44,231 43,232 5,932 6,549Building Services 2,258 3,712 141 154Retail Appliance Sales 5,712 5,351 70 106Property 2,100 2,010 830 1,107Other 2,913 3,379 67 (784) 57,214 57,684 7,040 7,132Exceptional item:Impairment of investment in associate - (1,545)Profit on ordinary activities before interest and 7,040 5,587taxation The information currently available to report the net assets of each businessclass as a reportable segment is limited, as each business operates as adivision of the Group and therefore in certain instances there is no reasonablebasis to allocate the Group net assets to each business class. On a geographicalbasis, the Group's material operations are conducted within the Channel Islands. 3. Exceptional Item - impairment of investment in associate The exceptional charge of £1,545,000 that was disclosed in 2004 was for thewrite-down in the previous year of the investment in Newtel Holdings Limitedfollowing an impairment review. There was no related tax benefit associated withthis charge. This information is provided by RNS The company news service from the London Stock Exchange