Jersey Electricity Regulatory News (JEL)

JERSEY ELECTRICITY plc

Preliminary Announcement of Annual Results

Year Ended 30 September 2013

At a meeting of the Board of Directors held on 17 December 2013, the final accounts for the Group for the year to 30 September 2013 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 2013 or 2012, but is derived from those accounts. Statutory accounts for 2012 have been delivered to the Jersey Registrar of Companies and those for 2013 will be delivered in early 2014. The auditor has reported on those accounts and their reports were unmodified.

A final dividend of 6.80p on the Ordinary and 'A' Ordinary shares in respect of the year ended 30 September 2013 was recommended (2012:6.50p). Together with the interim dividend of 4.75p the proposed total dividend declared for the year was 11.25p on each share.

The final dividend will be paid on 28 March 2014 to those shareholders registered in the books of the Company on 21 February 2014. A dividend on the 5% cumulative participating preference shares of 1.5% (2012:1.5%) payable on 1 July 2014 was also recommended.

The Annual General Meeting of the Company will be held on 6 March 2014.

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

17 December 2013

The Powerhouse

PO Box 45

Queens Road

St Helier

Jersey JE4 8NY

JERSEY ELECTRICITY plc

Preliminary Announcement of Annual Results

Year ended 30 September 2013

The Chairman, Geoffrey Grime, comments :

"If 2011/ 2012 was spent responding to extraordinary challenges, 2012/ 2013 was spent delivering a foundation for recovery. The loss in June 2012 of the older of our two interconnectors to France before our long planned third submarine cable, Normandie 3 could be installed, led to a severe restriction in importation capacity into Jersey. This meant re-mobilising La Collette Power Station from an emergency standby facility to a 24/7 generation hub. Reallocating staff and accelerating plant capacity upgrades required extra investment and tremendous focus by all concerned. As if this was not enough, the past winter saw the worst snow storms in a generation resulting in significant damage to our overhead network. Regrettably, events left us little choice but to increase tariffs by an average 9% in January 2013. However, our tariffs remain very competitive with peer jurisdictions and well within our target of +/-10% of the European average. We responded positively to restore a good operational performance in our Energy business and our supply reliability in the last financial year returned to a strong level at an average of 13 minutes of lost supply for each customer, around five times better than the most recent figures in the UK."

Group turnover for the year to 30 September 2013 at £102.3m was 5% higher than in the year ended 30 September 2012. Unit sales volumes of electricity were 4% higher than last year and combined with a tariff increase resulted in revenues in our Energy business rising 13% to £82.0m. On a like for like basis, turnover in our Retail business decreased by 2% from £12.4m to £12.2m. The total reduction was 21% due to the closure of our internet retailer, day2dayshop.com, in the second half of the last financial year. Revenues in the Property business, including internal revenues, rose marginally to £2.9m. Sales in Building Services, including internal revenues, fell 10% from levels experienced in 2012 to £4.1m. Turnover in our Other Businesses, including internal revenues, fell 4% from £3.3m to £3.2m on slightly lower trading activity.

Profit before tax for the year to 30 September 2013 rose 14% to £6.5m from £5.7m. Our investment in Foreshore Ltd was impaired by £0.6m in 2013 against £1.1m in 2012 and therefore, excluding this item, the profit before tax in this year was 5% above the level in the previous year.

As anticipated, despite the 13% rise in revenues, profits in our Energy business only rose £0.2m from £4.2m to £4.4m due to the change in the winter operating regime, with less importation and more oil usage, following the failure of our oldest subsea interconnector cable in June 2012. As reported previously, until we install a new interconnector to France, which is scheduled for 2015, we are capacity constrained on importation and reliant on a heavier mix of more expensive on-island oil-fired generation, particularly in winter, when volumes are higher. During this financial year we generated 21% of our electricity on-Island (compared to only 2% last year) and imported 75% of our requirements from France (down from 92% in 2012). The remaining 4% of our electricity came from the Energy from Waste plant, owned by the States of Jersey, against 6% in the same period in 2012. Unit sales volumes were up 4% due to a combination of the temperatures being below the seasonal norm this winter and the corresponding period last year being particularly mild as each of the six winter months in this financial year experienced lower temperatures than its corresponding month in 2011/ 2012 and were at, or below, the long-term average level.

The remainder of the increase in Energy turnover was due to an average tariff increase of 9% in January 2013 largely to cover the increase in the cost base associated with a higher level of on-island generation. In spite of these price rises, our tariffs continue to remain competitive with other jurisdictions.

Profits in our Property division, excluding the impact of investment property revaluation, were at the same level as 2012 at £1.6m. Our like for like investment property portfolio was revalued upwards by £0.2m to £15.0m this year. Additional freehold land and buildings were reclassified as investment properties in the year resulting in a further £4.8m increase in the revaluation reserve in the balance sheet as a result of a re-interpretation of our existing accounting policy.Our Retailing business had a challenging year with turnover falling from £12.4m to £12.2m on a like for like basis. Profitability improved from £0.1m to £0.2m but the 2012 figures had been impacted by the closure of our internet retailer, day2dayshop.com, due to the ending of the Low Value Consignment Relief tax concession by the UK Government in April 2012. The Building Services business produced a £0.1m profit, being £0.2m behind last year due to competitive pressures on both turnover and margins. Our other business units - Jersey Energy, Jendev and Jersey Deep Freeze all had a profitable year. An impairment review of our investment in Foreshore, our datacentre joint venture, resulted in the writing off of £0.6m in addition to the £1.1m reduction last year.

Interest received on deposits in 2013 was negligible compared to recent years due to our investment programme that has seen the previous cash balance move into a net debt position. Interest payable, associated with the Normandie 3 interconnector project, is being capitalised until the commissioning date. The taxation charge at £1.5m was lower than in 2012 due to a lower effective tax charge as the mix of taxable profits differed. Group earnings per share increased 31% to 16.39p compared to 12.55p in 2012 due to a combination of higher profits and a lower effective tax rate.

Dividends paid in the year, net of tax, rose by 2%, from 11.00p in 2012 to 11.25p in 2013. The proposed final dividend for this year is 6.80p, being a 5% rise on the previous year. Dividend cover rose from 1.1 times in 2012 to 1.5 times due to a higher level of profits. The aim going forward is to maintain our declared ambition for sustained real growth in dividends over the medium-term.

Net cash inflow from operating activities at £10.9m was £1.0m lower than 2012. Working capital movements were broadly similar but the movement in the foreign exchange hedge adjustment, associated with a weaker Euro against Sterling at this year-end, and higher oil stock against the last year-end were the main reasons. Cash capital expenditure, at £26.9m  rose from £18.8m last year with Normandie 3 project spend at £16.2m being the most material project spend. Net debt, at the year-end was £5.2m being a £19.5m swing from last year when cash held was £14.3m.

Our defined benefits pension scheme, which had a £4.9m deficit, net of deferred tax, at the 2012 year end showed a £0.8m deficit as at 30 September 2013. This movement was due mainly to a higher than expected increase in asset values associated with strong performance in financial markets.

Notes to the accounts

Year ended 30 September 2013

1. Basis of Preparation

The consolidated financial statements of Jersey Electricity plc, for the year ended 30 September 2013 have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU), including International Accounting Standards 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 Group expects to publish full financial statements that comply with IFRS in early 2014.

The Group has considerable financial resources and as a consequence, the directors believe that the Group is well placed to manage its business risks successfully despite the current uncertain economic outlook. The directors have a reasonable expectation that the Group 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.