Jersey Electricity Regulatory News (JEL)

18 Dec 2009 07:00

The Jersey Electricity Company

 Preliminary Announcement of Annual Results

Year Ended 30 September 2009

At a meeting of the Board of Directors held on 17 December 2009, the final accounts for the Group for the year to 30 September 2009 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 2009 or 2008, but is derived from those accounts. Statutory accounts for 2008 have been delivered to the Jersey Registrar of Companies and those for 2009 will be delivered in early 2010. The auditors have reported on those accounts and their reports were unqualified.

A final gross dividend of £1.475 (£1.18 net of tax) on the Ordinary and 'A' Ordinary shares in respect of the year ended 30 September 2009 was recommended which, together with the interim gross dividend of £0.9625 (£0.77 net of tax), makes a total proposed gross dividend declared for the year of £2.4375 (£1.95 net of tax) on each £1 share. 

The final dividend will be paid on 31 March 2010 to those shareholders registered in the books of the Company on 26 February 2010. A dividend on the 5% cumulative participating preference shares of 1.5% (2008 1.5%) payable on 2 July 2010 was also recommended.

The Annual General Meeting of the Company will be held on 4 March 2010.

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

18 December 2009

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 2009

The Chairman, Geoffrey Grime, comments :

"Jersey Electricity produced a sound performance in 2009. Group profit for the year was £9.3m and although 10% down on last year, this reduction was largely due to non-controllable factors such as property gains and revaluations last year, not repeated this year. Return on fixed assets in the energy business was 6.6%, consistent with the level needed to support our investment programme going forward and consistent with allowed regulatory returns elsewhere. We are delighted to be able to announce a tariff reduction of 5.1% effective 1 January 2010. Although power prices eased significantly during the credit crunch, a further weakening of sterling has prevented us from offering a greater price reduction to customers. We are pleased to report that throughout this period our tariffs have remained competitive with, and in many cases cheaper than, other jurisdictions for most customers."

Financial Summary	2009	2008 (restated)	% rise/(fall)
Turnover	£93.6m	£82.2m	14%
Profit before tax	£9.3m	£10.3m	(10)%
Profit in Energy business	£6.7m	£6.3m	6%
Earnings per share	£4.70	£6.58	(29)%
Dividend paid per ordinary share	£1.89	£1.48	28%
Dividend cover	2.5 times	4.4 times	(43)%

Group turnover for the year to 30 September 2009 at £93.6m was 14% higher than in the year ended 30 September 2008. The Energy business contributed £73.1m of this turnover being £11.0m above last year due mainly to the impact of our 24% tariff rise in January 2009 but also from a 1% rise in unit sales of electricity. 

Profit before tax for the year to 30 September 2009 fell by 10% to £9.3m with lower interest received due to falling interest rates and profit upside from property gains/revaluation not repeated in 2009. Profits in our Energy business moved up from £6.3m last year to £6.7m in 2009. A substantial increase in our import costs due to rising prices in the European wholesale electricity marketplace was covered by a tariff rise of 24% from January 2009. Unanticipated lower oil prices during 2009 added to profitability as we imported less electricity (92% against 96% in the previous year) and replaced such requirements with local generation. Unit sales of electricity were marginally ahead of levels during 2008. Profits in our Property division, excluding upside from property revaluation/disposals, rose to £1.3m due to higher rental yields. Our investment property portfolio was revalued downwards by £0.1m in 2009 against corresponding gains recognised in the income statement from the revaluation/sale of properties of £0.7m in 2008. 

Our Retailing business saw profits decrease from £0.5m to £0.3m. A fall of £0.3m in profits in the traditional retailing areas of white/brown goods driven largely by a weak marketplace was offset by a stronger performance by our newer toy/hobbies and e-retailing internet businesses. The Building Services business produced a £0.2m profit being down £0.1m on 2008 due to pressure on margins in a very competitive marketplace. Our other business units - Jersey Energy, Jendev and Jersey Deep Freeze all had a profitable year. Foreshore, our data centre joint venture, saw an increased annual turnover which rose 15% from £4.1m to £4.7m but profitability was lower due to investment in the expansion of existing facilities.

Interest received on deposits in 2009 was £0.5m against £1.1m due primarily to lower interest rates associated with the UK base rate falling substantially during this period. The taxation charge for the year, at £2.0m, was substantially higher than in 2008. As indicated last year as a result of transitional rules introduced in Jersey as a prelude to changes in the corporate tax regime the effective tax rate for 2007 and 2008 was lower but reverted to 20% again from 2009 onwards. 

Group earnings per share fell 29% to £4.70 compared to £6.58 in 2008 due to lower profits and a higher tax charge.

Dividends paid, net of tax, rose by 28% from £1.48 in 2008 to £1.89 in 2009. The proposed final dividend for this year is £1.18, being a 5% rise on the previous year. Dividend cover fell from 4.4 times in 2008 to 2.5 times this year due primarily to a lower level of profits and a higher level of dividend associated with the alteration in dividend policy announced last year.

Net cash inflow from operating activities at £15.6m was £0.7m higher than 2008. Capital expenditure, at £12.1m remained at a similar level to last year with the spend to finish the £14m Western Primary capital project to reinforce the electricity network in the west of Jersey and initial spending on the third interconnector to France being the primary drivers. Cash at bank, including short-term investments, at the year end was £16.8m being £0.7m higher than last year. 

Revenue in our Energy Division is recognised on the basis of energy supplied during the period and includes an assessment of electricity used by customers between the date of the last meter reading and the balance sheet date. The methodology employed to calculate the total number and value of the unbilled units at each period end has been regularly refined as there is a degree of estimation in the process. During the most recent review in early 2009 an error in the methodology became apparent and the necessary adjustment is reflected in the figures for this financial year. The 2008 comparatives were restated resulting in an increase in revenues and profit before tax of £0.3m. The opening reserves in the comparatives were adjusted by £1.5m, net of tax, to reflect the same prior year error in the periods 2002 to 2007 inclusive.

Our defined benefits pension scheme, which showed a £5.4m surplus, net of deferred tax, at the 2008 year end showed a deficit of £3.0m, on the same basis, as at 30 September 2009. Although the asset value of the scheme rose during the year the level of liabilities increased by a larger quantum due primarily to reduced discount rates driven by volatility in financial markets.

Consolidated Income Statement
for the year ended 30 September 2009
					2009				2008
					£000				£000
									(restated)
Revenue					93,594				82,222
Cost of sales					(66,903)				(55,968)
Gross profit					26,691				26,254
Revaluation of investment properties					(106)				294
Profit from sale of property					-				405
Operating expenses					(17,818)				(17,806)
Group operating profit before joint venture					8,767				9,147
Share of (loss)/profit of joint venture					(59)				46
Group operating profit					8,708				9,193
Interest receivable					577				1,086
Finance costs					(11)				(11)
Profit from operations before taxation					9,274				10,268
Taxation					(2,032)				(146)
Profit from operations after taxation					7,242				10,122
Minority interest					(38)				(48)
Profit for the year attributable to the equity holders of the parent company
					7,204				10,074
					£				£
Earnings per share
- basic and diluted					4.70				6.58
Statements of Recognised Income and Expense
for the year ended 30 September 2009
				Group								Company
				2009				2008				2009		2008
				£000				£000				£000		£000
								(restated)						(restated)
Profit for the year				7,204				10,074				7,225		10,072
Actuarial loss on defined benefit scheme  (net of tax)				(9,163)				(4,874)				(9,163)		(4,874)
Fair value (loss)/gain on cash flow hedges (net of tax)				(830)				1,737				(830)		1,737
Total recognised income and expense for the year attributable to the equity holders of the parent				(2,789)				6,937				(2,768)		6,935

Note 1 provides details of the restatement of the prior year comparative figures.

	Balance Sheets at 30 September 2009			Group				Company
				2009		2008		2009	2008
				£ 000		£ 000		£ 000	£ 000
	NON-CURRENT ASSETS					(restated)			(restated)
	Intangible assets			60		86		60	86
	Property, plant and equipment			120,581		115,990		120,581	115,988
	Investment property			12,529		12,635		12,529	12,635
	Other investments			1,804		2,037		3,395	3,395
	Long-term loans			-		-		600	750
	Retirement benefit surplus			-		6,702		-	6,702
	Total non-current assets			134,974		137,450		137,165	139,556
	CURRENT ASSETS
	Inventories			6,069		6,102		6,001	6,041
	Trade and other receivables			14,871		12,145		14,665	11,927
	Derivative financial instruments			1,599		2,763		1,599	2,763
	Short-term investments - cash deposits			8,200		11,025		8,200	11,025
	Cash and cash equivalents			8,636		5,217		8,569	5,180
	Total current assets			39,375		37,252		39,034	36,936
	Total assets			174,349		174,702		176,199	176,492
	LIABILITIES
	Trade and other payables			13,858		11,477		13,808	11,436
	Derivative financial instruments			-		127		-	127
	Current tax payable			1,698		1,346		1,698	1,346
	Total current liabilities			15,556		12,950		15,507	12,909
	NET CURRENT ASSETS			23,819		24,302		23,527	24,027
	NON-CURRENT LIABILITIES
	Trade and other payables			14,676		13,959		14,676	13,904
	Retirement benefit deficit			3,708		-		3,708	-
	Financial liabilities - preference shares			235		235		235	235
	Deferred tax liabilities			10,827		12,535		10,827	12,535
	Total non-current liabilities			29,446		26,729		29,446	26,674
	Total liabilities			45,002		39,679		44,953	39,583
	Net assets			129,347		135,023		131,246	136,909
	EQUITY
	Share capital			1,532		1,532		1,532	1,532
	Other reserves			1,687		2,556		1,687	2,556
	Retained earnings			126,113		130,928		128,027	132,821
	Shareholders' funds			129,332		135,016		131,246	136,909
	Minority interest			15		7		-	-
	Total equity			129,347		135,023		131,246	136,909

Note 1 provides details of the restatement of the prior year comparative figures.

Cash Flow Statement
for the year ended 30 September 2009
		Group		Company
		2009	2008	2009	2008
		£ 000	£ 000	£ 000	£ 000
Cash flows from operating activities			(restated)		(restated)
Operating profit		8,767	9,147	8,692	9,146
Depreciation and amortisation charges		7,828	6,950	7,826	6,949
Revaluation of investment property		106	(294)	16	(294)
Pension operating charge less contribution paid		(1,039)	(1,110)	(1,039)	(1,110)
Loss/(profit) on sale of fixed assets		24	(406)	24	(406)
Operating cash flows before movement in working capital		15,686	14,287	15,609	14,285
Decrease/(increase) in inventories		33	(1,471)	40	(1,485)
(Increase)/decrease in trade and other receivables		(2,841)	1,076	(2,849)	1,112
Increase in trade and other payables		2,950	954	2,951	933
Interest received		690	1,010	688	1,008
Preference dividends paid		(9)	(9)	(9)	(9)
Income taxes paid		(933)	(896)	(896)	(876)
Net cash flows from operating activities		15,576	14,951	15,534	14,968
Cash flows from investing activities
Purchase of property, plant and equipment		(12,066)	(13,270)	(12,066)	(13,270)
Investment in intangible assets		(29)	(49)	(29)	(49)
Net proceeds from disposal of property		16	413	16	413
Repayment of long-term loan		150	109	150	109
Short-term investments		2,825	(7,270)	2,825	(7,270)
Net cash flows used in investing activities		(9,104)	(20,067)	(9,104)	(20,067)
Cash flows from financing activities
Equity dividends paid		(2,907)	(2,426)	(2,895)	(2,267)
Net cash flows used in financing activities		(2,907)	(2,426)	(2,895)	(2,267)
Net increase in cash and cash equivalents		3,565	(7,542)	3,535	(7,366)
Cash and cash equivalents at beginning of year		5,071	12,613	5,034	12,400
Net cash and cash equivalents at end of year		8,636	5,071	8,569	5,034
Overdraft		-	146	-	146
Cash and cash equivalents at end of year		8,636	5,217	8,569	5,180

Note 1 provides details of the restatement of the prior year comparative figures.

Notes to the accounts

Year ended 30 September 2009

 

1. Basis of Preparation

The consolidated financial statements of The Jersey Electricity Company Limited, for the year ended 30 September 2009 have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted for use in 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 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 2010. 

There has been a restatement of the prior year comparative revenue, reserves and creditors as a result of a prior period error. This is discussed in more detail in the narrative covering this statement.

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.

2 Segmental information
Revenue and profit information are analysed between the businesses as follows:
	2009	2009	2009		2008	2008	2008
	External	Internal	Total		External	Internal	Total
	£000	£000	£000		£000	£000	£000
Revenue			)9				(restated))9
Energy	73,123	267	73,390		62,063	271	62,334
Building Services	3,569	184	3,753		3,402	172	3,574
Retail	12,954	60	13,014		13,135	51	13,186
Property	1,840	691	2,531		1,659	678	2,337
Other	2,108	57	2,682		1,963	723	2,686
	93,594	1,776	95,370		82,222	1,895	84,117
Inter-Group elimination			(1,776)				(1,895)
Revenue			93,594				82,222
Operating profit
Energy			6,679				6,277
Building Services			176				274
Retail			292				450
Property			1,263				953
Other			404				540
Operating profit before property revaluation/sale			8,814				8,494
Revaluation of investment properties			(106)				294
Profit from sale of property			-				405
Group operating profit			8,708				9,193

3. Dividends paid and proposed

	2009	2008
Ordinary and 'A' Ordinary Shares	£000	£000
Final dividend proposed of 118p net of tax per share (2008 - 112p per share)	1,808	1,716
Interim dividend paid of 77p net of tax per share paid (2008- 73p per share)	1,179	1,118
	2,987	2,834

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