Preliminary Annual Results

RNS Number : 0890U

Jersey Electricity PLC

21 December 2012

 

      Jersey Electricity plc                              Preliminary Announcement of Annual Results Year Ended 30 September 2012

At a meeting of the Board of Directors held on 20 December 2012, the final accounts for the Group for the year to 30 September 2012 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 2012 or 2011, but is derived from those accounts. Statutory accounts for 2011 have been delivered to the Jersey Registrar of Companies and those for 2012 will be delivered in early 2013. The auditor has reported on those accounts and their reports were unmodified. 

A final dividend of 6.50p on the Ordinary and 'A' Ordinary shares in respect of the year ended 30 September 2012 was recommended to be maintained at the same level as in 2011. Together with the interim dividend of 4.50p the proposed total dividend declared for the year was 11.00p on each share.

The final dividend will be paid on 4 April 2013 to those shareholders registered in the books of the Company on 22 February 2013. A dividend on the 5% cumulative participating preference shares of 1.5% (2011:1.5%) payable on 1 July 2013 was also recommended.

The Annual General Meeting of the Company will be held on 4 March 2013.

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

20 December 2012     

The Powerhouse

PO Box 45

Queens Road

St Helier

Jersey JE4 8NY

JERSEY ELECTRICITY plc                       

Preliminary Announcement of Annual Results

Year ended 30 September 2012                                                                                                       

The Chairman, Geoffrey Grime, comments :

"At the beginning of the year, we would never have predicted the extraordinary events facing the business during 2011/12. On 29 April we experienced our first ever submarine cable fault on the Channel Islands Electricity Grid (CIEG), resulting in the temporary loss of the Jersey-Guernsey link. Less than two months later, on 17 June, both interconnectors to France failed within an hour of each other, resulting in only the second Island-wide power failure in six years.  Then on 25 September, Jersey Electricity faced its most difficult restoration ever following the failure of the sole remaining submarine cable connecting Jersey to France and a third instance of loss of power to the Island. The pressure on staff during this period has been huge and their response exceptional but as you would expect our financial performance has naturally been impacted by the consequences of such events."

Group turnover for the year to 30 September 2012 at £97.2m was 3% lower than in the year ended 30 September 2011. Unit sales volumes were 2% lower than last year and consequently revenues in our Energy business fell to £72.7m. Turnover in our Retail business decreased by 6%, from £16.5m to £15.5m, with around half this shortfall being in our e-retailing internet business, daytodayshop.com which we closed in August 2012.  Turnover in the Property business, including internal revenues, fell by £0.1m to £2.8m due to loss of a commercial tenant. Turnover in Building Services fell 11% from levels experienced in 2011 to £4.2m. Turnover in our Other Businesses rose from £2.6m to £2.7m with increased revenues in both Jendev and Jersey Energy.    

Profit before tax for the year to 30 September 2012 fell to £5.7m from £11.1m. Our Energy business accounted for most of this reduction with mild weather, and issues directly and indirectly associated with interconnector failures during the year, being the primary drivers. In addition, the non-cash, £1.1m impairment of our investment in Foreshore Ltd was the other material reason for reduced year-on-year group profit.

Profits in our Energy business fell £3.5m from £7.7m to £4.2m. Unit sales of electricity were 2% behind those in 2011, due to a particularly mild winter period, and contributed to a £1.9m reduction in gross margin. In addition, the uninsured element of £0.9m from the £9m repair of the Guernsey-Jersey subsea cable and the decommissioning of our irreparable 28 year old cable to France, at £0.7m, including accelerated depreciation, were unexpected costs.

Tariffs to our customers were increased by 2.9% in May 2012 and the average customer will unfortunately see a rise of around 9% from 1 January 2013 as we will be generating more heavily during the coming year due to the aforementioned issues associated with the loss of the interconnector to France. The forthcoming tariff rise is primarily a result of the differential price between generating using oil against importing from France. These additional costs are forecast to remain until the planned replacement interconnector to France is delivered in 2015.

We have materially hedged our imported power and foreign exchange requirements for 2013 and 2014 and 75% of our expected oil requirements for the 2012/13 financial year. We again imported most of our power requirements from France (92% against 96% in the previous year) but this will fall in the next financial year to an expected level of around 80%.

Profits in our Property division, excluding the impact of investment property revaluation, were at a similar level to 2011 at £1.6m. Our investment property portfolio was revalued downwards 2% by £0.3m to £14.9m this year due mainly to a change in yield assumptions.

Our Retailing business had a challenging year with turnover falling from £16.5m to £15.5m. Profitability was impacted by reduced margins and the closure of our internet retailer, daytodayshop.com, due to the ending of the Low Value Consignment Relief (LVCR) tax concession by the UK Government.

The Building Services business produced a £0.3m profit, being £0.1m ahead of last year despite 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, had a turnover of £4.9m being at the same level as 2011 with profitability remaining around the breakeven level. However an impairment review of our investment resulted in the writing off of £1.1m. Future forecast returns have been impacted by changing circumstances, including the impending loss of its largest customer, who was also impacted by the abolition of the LVCR tax concession that previously existed between Jersey and the UK.   

Interest received on deposits in 2012 at £0.3m was at the same level as in the previous year with a lower cash level offset by marginally better achieved returns. The taxation charge at £1.8m was lower than in 2011 because of reduced profits. Group earnings per share fell 55% to 12.55p compared to 28.05p in 2011 primarily due to lower profits.

Dividends paid in the year, net of tax, fell by 19.7%, from 13.70p in 2011 to 11.00p in 2012. However the underlying increase was 5.3% as a special dividend of 3.25p per share was paid last year. The proposed final dividend for 2012 is maintained at 6.50p, resulting in a total proposed dividend for the year of 11.00p, being an underlying rise of 2.3% on the previous year. Dividend cover fell from 2.1 times in 2011 to 1.1 times due primarily to the lower level of profit. The aim going forward is to maintain our previously published declared ambition for sustained real growth in dividends over the medium-term.   

Net cash inflow from operating activities at £11.9m was £8.9m lower than 2011 with lower profits and a large insurance debtor for the Guernsey to Jersey cable repair being the main reasons. Capital expenditure, at £18.8m rose from £15.0m last year with the £8.5m spend on diesel engines, which are due to be commissioned before the end of 2012 being the most material project spend. Cash and cash equivalents, including short-term investments, at the year-end were £14.3m being £10.3m lower than last year.

Our defined benefits pension scheme, which had a £3.5m deficit, net of deferred tax, at the 2011 year end showed a £4.9m deficit as at 30 September 2012. This movement was due mainly to the increase in liabilities, associated with lower discount rates in financial markets.

Notes to the accounts

Year ended 30 September 2012

1.   Basis of Preparation

The consolidated financial statements of Jersey Electricity plc, for the year ended 30 September 2012 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 pr

epared 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 2012.

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.

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