Jersey Electricity Regulatory News (JEL)

Jersey Electricity plc

 Preliminary Announcement of Annual Results

Year Ended 30 September 2011

At a meeting of the Board of Directors held on 14 December 2011, the final accounts for the Group for the year to 30 September 2011 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 2011 or 2010, but is derived from those accounts. Statutory accounts for 2010 have been delivered to the Jersey Registrar of Companies and those for 2011 will be delivered in early 2012. The auditors have reported on those accounts and their reports were unqualified.

A final dividend of 6.50p on the Ordinary and 'A' Ordinary shares in respect of the year ended 30 September 2011 was recommended compared to 6.20p for 2010 (re-stated following the 20 for 1 share split of the Ordinary and 'A' Ordinary shares approved at the 2011 AGM). Together with the interim dividend of 4.25p the proposed total dividend declared for the year was 10.75p on each share.

The final dividend will be paid on 30 March 2012 to those shareholders registered in the books of the Company on 24 February 2012. A dividend on the 5% cumulative participating preference shares of 1.5% (2010:1.5%) payable on 2 July 2012 was also recommended.

The Annual General Meeting of the Company will be held on 6 March 2012.

M.P. Magee P.J. Routier

Finance Director Company Secretary

Direct telephone number : 01534 505321 Direct telephone number : 01534 505253

Direct fax number : 01534 505466 Direct fax number : 01534 505515

Email : mmagee@jec.co.uk Email : proutier@jec.co.uk

15 December 2011

The Powerhouse,

PO Box 45,

Queens Road,

St Helier,

Jersey JE4 8NY

JERSEY ELECTRICITY plc

Preliminary Announcement of Annual Results

Year ended 30 September 2011

The Chairman, Geoffrey Grime, comments :

"Jersey Electricity produced a solid performance in 2011 with our turnover breaking through the £100m barrier for the first time. Profits fell to £11.1m but this was due to our 2010 figures including a material upside from the revaluation of our investment property portfolio and a windfall receipt from asset sales by our ex-associate Newtel. The return on fixed assets in the Energy business remained at a level needed to support our investment programme going forward. We successfully commissioned the £9m South Hill Switching Station in a year when our overall capital expenditure rose by over 70% to £15m. Volatility in our imported power prices still remains but following our 5% reduction in customer tariffs in 2010 and a freeze in prices during 2011 we intend to retain prices at existing levels until at least April 2012. This is in the context of UK electricity prices having risen by an average of 17% in the last year and we are pleased to report that our tariffs have remained competitive with, and in many cases cheaper than, other jurisdictions for most customers. Finally we agreed a new €1bn, 10 year agreement with EDF during this year and are already hedging power for 2013 and beyond using this new framework".

*Earnings and dividends per share have been re-stated to reflect the 20 for 1 share split approved at the 2011 AGM

Group turnover for the year to 30 September 2011 at £100.5m was 2% higher than in the year ended 30 September 2010. Unit sales volumes in our Energy business were 1% higher than last year but revenues in our Energy business remained at the same level as 2010, at £74.5m, as a result of the 5% decrease in prices to our customers from January 2010.

Profit before tax for the year to 30 September 2011 fell to £11.1m from £14.6m but the underlying position remained relatively constant as the movement from the 2010 figures included £2.5m attributable to the revaluation of our investment property portfolio and £0.8m from the distribution of proceeds by our ex-associate Newtel from the sale of assets. 

Profits in our Energy business, at £7.7m, remained on a par with last year. Tariffs to our customers were reduced by 5% in January 2010 and remained frozen throughout this full financial year. We have publicly indicated that tariffs will remain at current levels until at least April 2012 and have hedged around 90% and 60% of both power and foreign exchange for 2012 and 2013 respectively. We again imported most of our power requirements from France (96% against 93% in the previous year).

Profits in our Property division, excluding movement from property revaluations, fell to £1.7m from £1.9m last year primarily as a result of a back-dated rent review settlement that crystallised in the last financial year. Our investment property portfolio was revalued downwards marginally by £0.1m to £14.9m this year due mainly to movements in stamp duty in Jersey being reflected in the external assessment.

Despite the tough trading conditions currently prevailing in markets theRetailing business saw profits remain at £0.5m with turnover up 14% to £16.5m. The Building Services business produced a £0.2m profit, being on a par with last year, even though pressure on margins continued to exist in a very competitive marketplace. In addition our other business units - Jersey Energy, Jendev and Jersey Deep Freeze all had a profitable year. We also received £0.2m in proceeds from the sale of our remaining shares/loans in our ex-associate Newtel. Foreshore, our data centre joint venture, had a turnover of £4.9m being £0.1m less than in 2010 with profitability moving from a small profit last year to a £0.1m loss in 2011.

Interest received on deposits in 2011 was £0.3m being at the same level as in the previous year. The taxation charge at £2.4m was higher than in 2010 because although profits last year were above those in 2011 much of the year-on-year difference was due to non-taxable items such as upside from revaluation of investment properties.  

Group earnings per share fell to 28.05p compared to 40.20p in 2010 (re-stated to reflect the 20 for 1 share split approved at the 2011 AGM) due mainly to the lower profits as a sizeable element of the profit in the previous year was due to non-recurring 'windfall' revenues and a material upside from the revaluation of investment property.

Dividends paid in the year, net of tax, rose by 5% from 9.95p in 2010, to 10.45p. In addition, a special dividend of 3.25p per share, which was proposed last year, was paid in the year. Dividends declared last year have been re-stated due to the aforementioned share split. The proposed final dividend for this year is 6.50p, being a 5% rise on the previous year. Dividend cover fell from 4.0 times in 2010 to 2.1 times due primarily to the lower level of profit.

Net cash inflow from operating activities at £20.8m was £3.6m higher than 2010. Capital expenditure, at £15.0m rose from £8.7m last year with the completion of the £9.3m South Hill switching station capital project, including associated cabling works, to reinforce the electricity network in Jersey being the primary driver. Cash at bank, including short-term investments, at the year end was £24.5m being £1.9m higher than last year.

Our defined benefits pension scheme, which showed a £1.4m surplus, net of deferred tax, at the 2010 year end showed a £3.5m deficit as at 30 September 2011. This movement was due mainly to a decrease in scheme assets associated with volatility in financial markets.

Notes to the accounts

Year ended 30 September 2011

1. Basis of Preparation

The consolidated financial statements of Jersey Electricity plc, for the year ended 30 September 2011 have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU), including International Accounting Standards (IAS) and Interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC).

While the financial information included in this preliminary announcement has been prepared in accordance with the appropriate recognition and measurement criteria, this announcement does not itself contain sufficient information to comply with IFRS. The Company expects to publish full financial statements that comply with IFRS in early 2012.

The Company has considerable financial resources and as a consequence, the directors believe that the Company is well placed to manage its business risks successfully despite the current uncertain economic outlook. The directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the annual financial statements.