CO 2 and responsibility

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investment

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responsibility

performance

Interim Report 2007

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Directors, Officers and Professional Advisers 1

Directors’ Statement 2

Investor Timetable for 2007 3

Group Income Statement (Unaudited) 4

Group Statement of Recognised Income and Expense (Unaudited) 4

Group Balance Sheet (Unaudited) 5

Group Cash Flow Statement (Unaudited) 6

Notes to the Interim Accounts 7

Directors, Officers and Professional Advisers

Non-Executive Derek Ryder Maltwood (Chairman)

Directors Jean Amy Le Maistre

Arthur Jeremy Arnold, F.C.A.

Christopher Charles Evans Geoffrey John Grime, F.C.A.

Clive Aubrey Charles Chaplin, B.A.

Executive Michael Joseph Liston (Chief Executive),F.R.Eng., B.Sc., C.Eng., F.I.E.E., C.I.Mgt.

Directors Martin Paul Magee (Finance), C.A.

David Brian Padfield (Operations),B.Sc., C.Eng., F.I.E.E., M.C.M.I.

Richard Alan Plaster (Commercial & Human Resources),F.C.I.P.D.

Secretary Peter John Routier, B.Sc., F.C.I.S.

Registered Office Queens Road, St. Helier, Jersey

Auditors Deloitte & Touche LLP, 66-68 Esplanade, St. Helier, Jersey

Bankers Royal Bank of Scotland International Limited, 16 Library Place, St. Helier, Jersey

Brokers Collins Stewart (CI) Limited, 38-39 Esplanade, St. Helier, Jersey

Registrar Computershare Investor Services (CI) Limited, 31 Pier Road, St. Helier, Jersey

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Financial Summary 6 months 6 months % increase/ 2007 2006 (decrease) Electricity Sales – kWh (000) 335,986 355,949 (6)%

Turnover £40.0m £35.8m 12%

Profit before tax £4.9m £5.1m (5)% Profit in Energy business £3.0m £3.9m (23)% Earnings per share £2.84 £2.55 11% Net dividend proposed per ordinary share 49p 44p 11%

Group profit before tax in the first half of 2007 was £4.9m being 5% lower than in the same period last year, despite a 12% increase in turnover. This was principally due to a lower level of electricity sales and our decision to absorb, rather than pass on to customers, some of the increased cost of power imported from Europe. Our earnings per share rose by 11% due to a reduction in the effective tax rate for the 2007 and 2008 financial years. Note 3 to the Interim Accounts explains the rationale for this tax change. Power prices to our customers were increased by an average just above 19% from 1 January 2007. Having hedged our position in the forward power markets, we were able to pledge that prices would remain unchanged for at least two years.

Our aim remains to restore during the 2008 financial year, the profitability upon which planned investment in the continuing reliability of our electricity network depends.

Unit sales in the first half of 2007 were 6% lower than in 2006 due to milder weather experienced throughout Europe, offset by continuing strong growth from our dominant share of the new energy market presented by Jersey’s ongoing property development boom. Imported electricity met 82% of our requirements during the half year, which was lower than normal because we took advantage of lower oil prices in the global marketplace to generate locally during peak periods when import costs are at their highest.

Our Retailing business continued last year’s trend of strong growth, with year-on-year turnover rising 40% and profits moving up from £0.3m to £0.4m. Profits from our Property portfolio rose from £0.4m to £0.7m due mainly to the sale of a residential property used previously to house employees, for a capital gain of £0.3m. The Building Services business produced an increase in turnover of 12% with profits up slightly at £0.2m. Losses at our data centre joint venture, Foreshore Limited, reduced to £0.1m with turnover up 40% against last year. Our consultancy businesses Jersey Energy and Jendev produced profits slightly up at £0.1m.

Cash at bank, including short-term investments, fell £1.1m to £14.0m during the last six months, with operating cash produced from trading activity offset by £3.5m of capital investment expenditure and the £1.1m final 2006 dividend.

Your Board proposes to pay an interim net dividend of 49p (2006: 44p) on the Ordinary and “A” Ordinary Shares payable on 31 August 2007 in addition to the final dividend for 2006 of 68p (2005: 62p) paid on 30 March 2007.

D.R. MALTWOOD Chairman M.J. LISTON Chief Executive 17 May 2007

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performance investment and responsibility

Interim Report 2007

17 May Announcement of interim results

30 June Payment date for preference share dividends 17 August Record date for interim ordinary dividend

31 August Interim ordinary dividend for year ending 30 September 2007 13 December Preliminary announcement of full year results

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Six months ended Six months ended Year ended 31 March 2007 31 March 2006 30 September 2006

Note £000 £000 £000

Revenue 2 40,048 35,759 65,617

Cost of sales (27,268) (22,812) (42,873)

Gross profit 12,780 12,947 22,744

Revaluation of investment properties - - 1,219

Operating expenses (8,195) (8,095) (17,107)

Group operating profit before joint venture 4,585 4,852 6,856

Share of loss of joint venture (116) (169) (343)

Group operating profit 2 4,469 4,683 6,513

Interest receivable 413 452 818

Finance costs (5) (4) (9)

Profit from operations before taxation 4,877 5,131 7,322

Taxation 3 (519) (1,219) (1,351)

Profit from operations after taxation 4,358 3,912 5,971

Minority interest (2) (5) (29)

Profit for the period attributable to the equity holders

of the parent company 4,356 3,907 5,942

EARNINGS PER SHARE

- basic and diluted £2.84 £2.55 £3.88

DIVIDENDS PER SHARE

- paid final/interim 4 £0.68 £0.62 £1.06

- paid special 4 - £4.44 £4.44

- proposed 4 £0.49 £0.44 £0.68

£000 £000 £000

Profit for the financial period 4,356 3,907 5,942

Actuarial gain on defined benefit scheme (net of tax) - - 2,910 Fair value gain/(loss) on cash flow hedges 361 546 (570) Total recognised income and expense for the period

attributable to the equity holders of the parent 4,717 4,453 8,282

Group Income Statement (Unaudited)

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performance investment and responsibility

Interim Report 2007

31 March 2007 31 March 2006 30 September 2006

Note £000 £000 £000

NON-CURRENT ASSETS

Intangible assets 117 92 131

Property, plant and equipment 107,783 108,521 108,289

Investment property 10,990 9,753 10,990

Other investments 2,031 935 1,884

Total non-current assets 120,921 119,301 121,294

CURRENT ASSETS

Inventories 4,228 3,505 4,196

Trade and other receivables 17,226 11,747 13,046

Derivative financial instruments - 18

-Short-term investments - cash deposits - 1,500 3,765

Cash and cash equivalents 14,026 11,641 11,346

Total current assets 35,480 28,411 32,353

Total assets 156,401 147,712 153,647

LIABILITIES

Trade and other payables 8,803 7,792 9,590

Derivative financial instruments 737 - 1,098

Current tax payable 1,173 1,195 1,190

Total current liabilities 10,713 8,987 11,878

NON-CURRENT LIABILITIES

Trade and other payables 12,905 13,680 13,245

Tax liabilities 1,305 1,219 813

Financial liabilities - preference shares 235 235 235

Retirement benefit obligations - 299

-Deferred tax liabilities 11,833 10,705 11,734

Total non-current liabilities 26,278 26,138 26,027

Total liabilities 36,991 35,125 37,905 Net assets 119,410 112,587 115,742 EQUITY Share capital 1,532 1,532 1,532 Other reserves (737) 18 (1,098) Retained earnings 118,588 111,003 115,274 Shareholders’ funds 5 119,383 112,553 115,708 Minority interest 27 34 34 Total equity 119,410 112,587 115,742

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Group Cash Flow Statement (Unaudited)

Note Restated

£000 £000 £000

CASH FLOWS FROM OPERATING ACTIVITIES

Group operating profit before joint venture 4,585 4,852 6,856 Depreciation and amortisation charges 3,544 3,505 6,948

Revaluation of investment property - - (1,219)

Pension operating charge less contributions paid (391) (324) (877)

Profit on sale of fixed assets (309) -

-Operating cash flows before movement in working capital 7,429 8,033 11,708

(Increase)/decrease in inventories (32) 423 (269)

(Increase) in trade and other receivables (3,813) (3,767) (2,515) (Decrease)/increase in trade and other payables (577) 1,017 3,387

Interest received 420 423 756

Preference dividends paid (4) (4) (9)

Income taxes paid - - (1,233)

Net cash flows from operating activities 3,423 6,125 11,825 CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property, plant and equipment (3,506) (2,290) (4,995)

Investment in intangible assets (7) - (76)

Net proceeds from disposal of investment property 318 6,550 6,550

Investment in joint venture (263) (350) (613)

Short-term investments 3,765 (1,500) (3,765)

Net cash flows used in investing activities 307 2,410 (2,899) CASH FLOWS FROM FINANCING ACTIVITIES

Equity dividends paid 4 (1,050) (7,764) (8,450)

Net cash flows used in financing activities (1,050) 7,764 (8,450) Net increase in cash and cash equivalents 2,680 771 476 Cash and cash equivalents at beginning of period 11,346 10,870 10,870 Cash and cash equivalents at end of period 14,026 11,641 11,346

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performance investment and responsibility

Interim Report 2007

Notes to the Interim Accounts

for the period ended 31 March 2007

2. Turnover and profit

The contributions of the various activities of the Group to turnover and profit are listed below:

31 March 2007 31 March 2006 30 September 2006

External Internal Total External Internal Total External Internal Total

Revenue £000 £000 £000 £000 £000 £000 £000 £000 £000 Energy 30,510 130 30,640 28,006 93 28,099 50,391 216 50,607 Building Services 1,731 98 1,829 1,544 65 1,609 3,111 188 3,299 Retail 6,359 18 6,377 4,528 15 4,543 8,772 46 8,818 Property 745 340 1,085 789 154 943 1,556 286 1,842 Other 703 453 1,156 892 297 1,189 1,787 701 2,488 40,048 1,039 41,087 35,759 624 36,383 65,617 1,437 67,054 Inter-group elimination (1,039) (624) (1,437) 40,048 35,759 65,617

Group operating profit

Energy 3,036 3,919 4,277 Building Services 203 139 241 Retail 412 328 383 Property 750 350 442 Other 68 (53) (49) 4,469 4,683 5,294

Revaluation of investment properties - - 1,219

4,469 4,683 6,513

Materially, all the Group’s operations are conducted within the Channel Islands. All transfers between divisions are at arms-length basis.

1. Accounting policies

Basis of preparation

The interim accounts for the six months ended 31 March 2007 have been prepared on the basis of the accounting policies set out in the 30 September 2006 annual report and accounts.

3. Income tax

£000 £000 £000

Current income tax (420) (1,022) (849)

Deferred income tax (99) (197) (502)

Total income tax (519) (1,219) (1,351)

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Notes to the Interim Accounts

continued

for the period ended 31 March 2007

4. Dividends

£000 £000 £000

Distributions to equity holders and by subsidiaries in the period 1,050 7,764 8,450 The distribution to equity holders in the period consisted of £1,041,760 (68p net of tax per share) in respect of the final dividend for 2006. In addition £8,400 was paid by subsidiaries to minority interests.

The Directors have declared an interim dividend of 49p per share, net of tax (2006 – 44p) for the six months ended 31 March 2007 to shareholders on the register at the close of business on 17 August 2007. This dividend was approved by the Board on 16 May 2007 and has not been included as a liability at 31 March 2007.

In March 2006 a special dividend of £4.44 per share, net of tax, was made to distribute the proceeds from the sale of an investment property.

5. Reconciliation of movements in equity

£000 £000 £000 £000

At 1 October 2006 1,532 (1,098) 115,274 115,708

Total recognised income and expense for the year - - 4,356 4,356

Other recognised gains/(losses) - 361 - 361

Equity dividends - - (1,042) (1,042)

As at 31 March 2007 1,532 (737) 118,588 119,383

At 1 October 2005 1,532 (528) 114,848 115,852

Other recognised gains/(losses) - (570) 2,910 2,340

As at 30 September 2006 1,532 (1,098) 115,274 115,708

At 1 October 2005 1,532 (528) 114,848 115,852

Other recognised gains/(losses) - 546 - 546

As at 31 March 2006 1,532 18 111,003 112,553

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