Prelim Announcement 2010

At a meeting of the Board of Directors held on 16 December 2010, the final accounts for the Group for the year to 30 September 2010 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 2010 or 2009, but is derived from those accounts. Statutory accounts for 2009 have been delivered to the Jersey Registrar of Companies and those for 2010 will be delivered in early 2011. The auditors have reported on those accounts and their reports were unqualified. 

A final dividend of £1.24 on the Ordinary and 'A' Ordinary shares in respect of the year ended 30 September 2010 was recommended, which together with the interim dividend of £0.81, makes a total proposed dividend declared for the year of £2.05 on each £1 share. In addition a special dividend of £0.65 was declared to distribute a £1m windfall receipt received from an Associate Company.

The final dividend and special dividend will be paid on 31 March 2011 to those shareholders registered in the books of the Company on 25 February 2011. A dividend on the 5% cumulative participating preference shares of 1.5% (2009:1.5%) payable on 1 July 2011 was also recommended.

The Annual General Meeting of the Company will be held on 3 March 2011.

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 2010     

The Powerhouse,

PO Box 45,

Queens Road,

St Helier,

Jersey JE4 8NY

JERSEY ELECTRICITY plc                       

Preliminary Announcement of Annual Results

Year ended 30 September 2010                                                                               

The Chairman, Geoffrey Grime, comments :

"Despite a 5% decrease in electricity tariffs to our customers from January 2010 Jersey Electricity produced a sound financial performance in 2010 largely buoyed by our non-Energy business units which were positively impacted by the revaluation of our investment properties portfolio and a "windfall" receipt from asset sales by our associate. Return on fixed assets in the Energy business was at a level needed to support our infrastructure investment going forward and is consistent with returns made by regulated utilities. Volatility in our imported power prices still remains but we are pleased to announce that following our 5% reduction in 2010 we intend to freeze electricity prices until 2012. We are pleased to report that throughout this period the tariffs for most of our customers have remained competitive with, and in many cases cheaper than, other jurisdictions."

Group turnover for the year to 30 September 2010 at £98.9m was 6% higher than in the year ended 30 September 2009. Unit sales volumes in our Energy business were marginally higher than last year, and combined with the timing of tariff changes, increased revenues by 2% to £74.5m.

Profit before tax for the year to 30 September 2010 rose to £14.6m but £2.4m was attributable to the revaluation of our investment property portfolio and £1m from the distribution of proceeds by our associate Newtel from the sale of assets. 

Profits in our Energy business moved up from £6.7m last year to £7.7m in 2010. Tariffs to our customers were reduced by 5% in January 2010, being made possible by our hedged position on both power and foreign exchange, and will remain frozen until at least 2012 unless severe unexpected operational problems are experienced. We again imported most of our power requirements (93% against 92% in the previous year) but generated on-Island, at a higher level than the long-term average, when oil prices made this advantageous. We also entered into an optimization agreement with EDF which allowed us to use our generation facilities in Jersey when market opportunities arose.

Profits in our Property division, excluding upside from property revaluations, rose £0.6m to £1.9m  due to an increase in rental flows and the settlement of a rent review with one of our tenants back-dated to June 2008. Our investment property portfolio was revalued upwards by £2.4m in 2010 largely due to the aforementioned rent review with our largest tenant.

Despite the current trading conditions our Retailing business saw profits rise from £0.3m to £0.5m with turnover up 11% to £14.4m. The Building Services business produced a £0.2m profit, being on a par with last year, even though pressure on margins prevailed 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 £1m from our associate Newtel for fibre optic lease rentals and the part repayment of a loan written off in 2004 when the investment value was reduced to zero. These additional revenues are largely non-recurring and were associated with the distribution of funds raised by Newtel from the sale of its data centre assets in Guernsey. Foreshore, our data centre joint venture, saw an increased annual turnover which rose by over 20% from £4.1m to £5.0m and profitability was improved by £0.1m. 

Interest received on deposits in 2010 was £0.3m against £0.6m last year due primarily to lower interest rates associated with the UK base rate remaining at 0.5% during the full financial year period. The taxation charge for the year rose £0.2m to £2.2m due to higher taxable profits. 

Group earnings per share rose 71% to £8.04 compared to £4.70 in 2009 as profit was higher but also a sizeable element of the increase was due to non-recurring revenues and a revaluation of the investment property portfolio (which is not taxable as it is a non-realised capital adjustment).

Dividends paid, net of tax, rose by 5% from £1.89 in 2009 to £1.99 in 2010. The proposed final dividend for this year is £1.24, being a 5% rise on the previous year. In addition a special dividend of 65p, net of tax, is also proposed to distribute the windfall receipt of £1m from Newtel. Dividend cover rose from 2.5 times in 2009 to 4 times this year due primarily to a higher level of profits but this does not reflect the impact of the proposed special dividend as that will be distributed in the next financial year. If the dividend cover figure excluded the unrealised property revaluation profit and the Newtel receipt then the underlying cover figure for 2010 would have remained at the same level as in 2009 of 2.5 times.  

Net cash inflow from operating activities at £17.4m was £1.8m higher than 2009. Capital expenditure, at £8.7m fell from £12.1m last year largely as a result of the completion in 2009 of the £14m Western Primary capital project, to reinforce the electricity network in the west of Jersey.The South Hill Primary capital project started during this financial year and is anticipated to be completed in 2011 at a total cost of around £10m.Cash, including short-term investments, at the year end was £22.7m being £5.8m higher than last year.

Our defined benefits pension scheme, which showed a £3.0m deficit, net of deferred tax, at the 2009 year end showed a £1.4m surplus as at 30 September 2010.

Notes to the accounts

Year ended 30 September 2010

1.   Basis of Preparation

The consolidated financial statements of Jersey Electricity plc, for the year ended 30 September 2010 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 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 2011. 

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.