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| Share Name | Share Symbol | Market | Type |
|---|---|---|---|
| Italian Exhibition Group Spa | BIT:IEG | Italy | Ordinary Share |
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RNS Number:8645J
International Energy Group Ld
10 April 2003
Enquiries:
Paul Fairclough, Chief Executive Mobile: 07781 100356
Mike Richards, Finance Director
International Energy Group Limited Tel: 01481 715634
Peter Otero, Financial Dynamics Tel: 020 7269 7103
Date: Embargoed until 7.00am, Thursday 10 April 2003
INTERNATIONAL ENERGY GROUP LIMITED
Preliminary Results for the year ended 31st December 2002
HIGHLIGHTS
2002 2001
# million # million
Turnover - continuing operations 47.9 47.6
Operating profit - continuing operations 9.5 8.3
Profit before tax 10.7 12.2
Earnings per share 10.50p 12.58p
Dividend - total gross 6.75p 6.35p
Special dividend - 26.04p
Shareholders' funds 76.5 69.6
* Record results despite record warm weather
* Operating profits from continuing operations increased by 14%
* Profit before tax up 19% after adjusting for discontinued property
operations
* EPS up 25% after adjusting for discontinued property operations
* Isle of Man natural gas conversion programme progressing to target
* Customers increased in UK by 22,000
* Expansion in Portugal continues: 29% increase in profit
* Negligible net debt at #0.2 million
* Increases in LPG costs
* Property valuation surplus of #2.6 million
* Shareholders' funds increase to #76.5 million
CHAIRMAN'S STATEMENT
2002 was the first year for the Group being solely focussed on its core energy
businesses, and I am delighted to announce that operating profit for the
continuing operations for the year to December 2002 increased by 14% to #9.5
million (2001: #8.3 million), in spite of one of the warmest years on record.
Results Overview
Group turnover on continuing operations was slightly higher than last year at
#47.9 million (2001: #47.6 million). Higher sales in the United Kingdom and in
Portugal, arising from increased customers, balanced the falls in the Channel
Islands and Isle of Man, which were due principally to the warm weather and the
effect of removing price surcharges.
The 24% increase in the United Kingdom turnover to #6.4 million (2001: #5.2
million) reflects the ongoing increase in customer connections in the
transportation business.
The operating profits in each of the geographical sectors improved, and pretax
profits increased by 19% to #10.1 million (2001: #8.5 million) after adjusting
for the contributions of #0.6 million (2001: #3.7 million) from the discontinued
property operations and disposals.
The increases in profitability highlight the strength of the Group during
adverse weather and trading conditions and with extremely volatile liquefied
petroleum gas costs.
Earnings per share increased by 25% to 9.71 pence (2001: 7.78 pence) having
adjusted for the substantial effect on earnings of the sale of discontinued
operations in 2001 and sales of property in each year.
The Board is recommending that the gross final dividend should be 4.0 pence per
share (2001: 3.75 pence per share) making a total for the year of 6.75 pence per
share (2001: 6.35 pence per share), and the final dividend will be paid on 3rd
June 2003 to all shareholders on the register at the close of business on 2nd
May 2003. The results for 2001 have been restated to conform with Financial
Reporting Standard 19 'Deferred Tax', which has been adopted for the first time
this year. This resulted in a decrease in shareholders' funds of #3.7 million
to #69.6 million at the end of 2001.
An external interim valuation of the Group's properties as at 31st December
2002 showed a surplus of over #2.6 million which has been added to the
revaluation reserve. This surplus, together with retained profits of #3.7
million for the year, results in a 10% increase in shareholders' funds to #76.5
million.
Outlook
Instability in the Middle East continues to affect crude oil prices, and
therefore associated liquefied petroleum gas costs. The Group continues to focus
on managing the effect of volatility of this principal cost.
As previously announced the Group has been in negotiations for a possible
acquisition in Italy, but these discussions appear unlikely to reach a
satisfactory conclusion. The costs incurred in pursuing the acquisition have,
therefore, been charged against profit in the accounts for the year.
Development of the gas transportation business in the United Kingdom has
continued strongly. We are participating in the Ofgem consultation processes,
which are likely to extend payback periods on future projects beyond those
originally envisaged. The reviews may result in lower levels of future
investment by the Group, and a somewhat lower rate of growth in this business in
the medium term.
The programme for the introduction of natural gas into the Isle of Man is
progressing, and it is expected that the capital intensive appliance conversion
programme involving some 13,500 customers and 23,000 appliances will be
substantially completed during 2003 enabling consumers in the Douglas area to
receive natural gas. Conversion will extend the availability of gas in the area
providing Manx Gas with the opportunity to increase its market share in the
energy sector.
Expansion in Portugal is continuing through organic growth and a further
acquisition is being investigated.
The Group finished the year with minimal net debt of #0.2 million and strong
order books in the United Kingdom and Portugal.
Particularly bearing in mind the special distribution of #19.1 million to
shareholders in 2001, the results for the year have, I believe, once again
demonstrated the resilience of the Group and its ability to maintain both
profits and growth in what has been for many companies a very difficult year. I
remain confident of our ability to continue to do so in the future.
Tom Scott
Chairman
9th April 2003
BUSINESS REVIEW
The Group's principal activity is the distribution and transportation of gas to
domestic and commercial customers in its various geographical areas of
operation.
Liquefied Petroleum Gas is the Group's principal raw material, which is derived
from crude oil and the costs of LPG therefore largely reflect the movement in
oil prices. There was a substantial rise in these costs during the second half
of 2002 and they have risen further, reaching the highest prices recorded for 12
years early in 2003. This has necessitated increasing prices to customers, but
it is hoped that costs will reduce during the remainder of 2003.
Offshore Islands
In the Channel Islands and the Isle of Man, the Group operates mains networks
supplying manufactured gas from its own gas plants, using a mixture of LPG and
air, to both domestic and commercial customers. The Group also supplies
customers outside the mains network areas with LPG, either in cylinders or to
mini-bulk tanks, enabling gas to reach all parts of the islands.
The Group also owns the bulk LPG storage in the islands, which is sized to
ensure security of supply to customers.
The ownership of mains, production plants and bulk storage reflects the Group
investment model of undertaking high levels of capital expenditure to achieve
long term, stable income streams.
In addition to the supply of gas in the islands, the Group provides 24 hour
emergency cover, every day of the year, and supports fully integrated customer
services sections, including appliance supply, conversion and maintenance.
Turnover in the offshore islands in 2002 fell by some 4% to #33.4 million (2001:
#34.9 million) reflecting both the removal of the gas price surcharges earlier
in the year and the impact of record warm weather. However, increased customer
numbers helped profits in the islands to increase by 5% to #6.8 million (2001:
#6.5 million).
There have been successful central heating boiler campaigns, increases in
industrial and commercial installations and additional outlets for the sale of
LPG to autogas customers, all of which have been designed to increase gas sales.
The programme to introduce natural gas to customers in the Douglas area of the
Isle of Man has been intensified during the year, with approximately 13,500
customers having 23,000 appliances being planned for conversion starting in
summer 2003. Each of the different appliance models have had a conversion
procedure approved to enable the burning of natural gas. Following the detailed
evaluation the project is now expected to cost some #10 million, and to be
completed by the year end. The conversion will enable gas to be made available
to more potential customers in the Douglas area, both domestic and commercial,
and the Group is confident it will increase its penetration and market share.
Portugal
In Portugal, the Group's principal business is the supply of LPG to domestic
customers in apartment blocks and villa complexes through local piped networks
fed from central bulk storage tanks. Organic growth is achieved through
contracting with property developers to install gas in their new developments,
with complexes ranging in size from a small number of villas to several thousand
apartments. Some 3,600 new premises were connected during 2002, although some
loss of customers was experienced as a result of high LPG costs and local
economic conditions.
The Portuguese business has a strong technical base and has developed its
business to include a technical service to third parties in both design and
maintenance.
This service, together with a net gain in customer numbers contributed to a 6%
increase in turnover from #7.5 million in 2001 to #8.0 million in 2002 and a 29%
increase in profits to #2.8 million (2001: #2.2 million). In addition to the
strong organic growth in Portugal further acquisitions are being actively
pursued.
United Kingdom
The United Kingdom transportation business involves the installation, ownership
and operation of natural gas mains from the existing national network to new
domestic property developments.
In spite of the impact of the delays in developers receiving planning consents
following the introduction of Policy Planning Guidance Note 3 issued by the
United Kingdom Department of the Environment in March 2000, this business once
again expanded significantly with 22,000 new domestic connections being
completed and a similar number of additional contracts for houses secured. The
total number of contracted customers is now 150,000, of which 86,000 were
connected by the year end. Further contracts in the industrial and commercial
market have also been secured.
The continued expansion has resulted in a 24% increase in turnover to #6.4
million (2001: #5.2 million) and an increase in profits of 15% to #2.4 million
(2001: #2.1 million). The business has now become one of the major domestic gas
transportation companies in the United Kingdom. Development of the gas
transportation business in the United Kingdom has continued strongly. We are
participating in the Ofgem consultation processes, which are likely to extend
payback periods on future projects beyond those originally envisaged. The
reviews may result in lower levels of future investment by the Group, and a
somewhat lower rate of growth in this business in the medium term.
Group
Early in 2003 two new 5 year contracts were signed securing LPG deliveries for
the offshore islands, the first being with Exxon Mobil for the supply of LPG
product and the second with Sigas Kosan for LPG shipping.
There have been major changes to health, safety and environmental requirements
for the Group in recent years. In order to formalise the work already being
carried out, a Manager has been appointed, reporting directly to the Board, and
responsible for Group Health, Safety and Environmental matters.
An evaluation of operating properties was carried out early in the year, and as
a result a new office is under construction for the United Kingdom operations.
This building is expected to be completed by early summer. Plans for a new
centralised property for Guernsey Gas operations have been submitted to the
planning authority and permission has been given to develop staff houses near to
the Jersey Gas offices.
A profit of #0.6 million was generated on the deferred consideration agreement
on the sale of a landmark building site in Guernsey. An external interim
property revaluation at the end of 2002 resulted in a surplus of over #2.6
million compared to the last full valuation in 1999. This sum has been added to
the revaluation reserve.
The Group had an average of 481 employees during the year, and some 48% have
been employed by the Group for over 5 years.
Cash Flow
The Group, and in particular its core energy business, continues to be a strong
cash generator, with the increased energy profits reflecting in the cash flow
and replacing the rental income streams lost through the disposal of the Group's
property portfolio in 2001. As a result operating cash flows have been
maintained at #15.9 million (2001: #15.8 million) despite the property disposal.
The receipt of deferred proceeds on the disposal in 2000 of the Guernsey
landmark building site, together with a profit element, contributed #3.1 million
to cash inflows, with some #0.6 million of accumulated interest also being
received. A total of #17.0 million was spent on fixed assets during the year.
Of this total #1.4 million was spent on the office building under construction
and #9.6 million on mains networks in the United Kingdom. In Portugal #0.6
million was spent on new networks, and in the offshore islands just over #1.0
million was spent on mains extensions. In addition #0.8 million was spent on
the initial phases of natural gas conversion in the Isle of Man. The balance of
#3.6 million was incurred on profit maintaining expenditure throughout the
Group, principally mains, meter and plant replacement.
Having covered tax and dividend commitments of some #6.3 million there was a
reduction in net cash resources of #2.9 million, with cash on deposit reduced by
#1.4 million to #3.3 million. The Portuguese debt in euros of #4.9 million has
been retained as a natural hedge against currency movements.
Capital Resources
The Group finances its operations through a mixture of retained profits and bank
borrowings. Shareholders' funds increased by #6.9 million to #76.5 million
principally through retained profits of #3.7 million and #2.6 million surplus on
the interim revaluation of properties. In addition #0.3 million was received on
the exercise of share options and a further #0.3 million arose on foreign
currency translation. Net cash and liquid resources reduced by #4.3 million
during the year, with net debt at the year end of #0.2 million.
The principal risks arising from the Group's financial instruments relate to
liquidity, interest rates and foreign currency. The Board regularly reviews and
agrees policies for managing these risks, which are summarised below.
The Board has historically ensured that liquidity is available to meet
foreseeable needs through the use of revolving bank loans and overdraft
facilities and maintaining notice periods of between one and two years.
Following the disposal of the property portfolio, no loan facilities were
retained other than the Portuguese euro loan.
The Group is currently negotiating a series of loans, to be drawn down and
subsequently repaid over fixed periods, to meet the forecast requirements of
both investment in fixed assets and potential acquisitions. Agreement in
principle has been reached for loan facilities totalling #42.0 million, subject
to individual projects proceeding.
Overdraft facilities of #6.4 million are in place pending completion of the loan
agreements. The Group's exposure to significant interest rate fluctuations is
managed by the use of short term caps, with the policy being to cover all
anticipated loan requirements for between one and two years forward. On
completion of the new loan agreements caps will be put in place to cover the
exposure for the life of each individual loan.
LPG buying prices are denominated in dollars. To minimise exposure to
fluctuations in the US dollar/sterling exchange rates, the Group enters into US
dollar exchange rate options. The options in place at the year end covered
budgeted purchasing requirements to the end of June 2003.
General
The Group is committed to high standards of corporate governance extending
beyond those which it is legally required to meet. In particular both health
and safety and financial reporting policies are aligned with best practice,
ahead of the legal requirements of the jurisdictions in which the Group
operates.
This year has seen the introduction of compliance with Financial Reporting
Standard 19 'Deferred Tax', which has resulted in a restatement of the 2001
figures, which as set out in note 24, resulted in a reduction of #3.7 million in
opening shareholders' funds.
The transitional requirements of FRS 17 'Retirement Benefits' are also included
in note 27. The Group has also introduced the Directors' Remuneration Report
required by legislation for United Kingdom companies and extended the Directors'
Report to include statements on Health, Safety and the Environment and Corporate
and Social Responsibility.
The implications of compliance with International Financial Reporting Standards
are being monitored with the Group's advisors with the aim of achieving
compliance in 2005.
Whilst the Group remains committed to best practice, the burden on a Group of
our size of ever increasing compliance requirements in all areas of the
business, both in terms of cost and management time, should not be
underestimated.
The Group maintains an ongoing process of managing significant risks, and as
part of that process, in addition to statutory insurances, has policies in place
which seek to protect the Group against catastrophic events or unacceptable
levels of losses during the year.
Following the extension of the necessary systems to the Channel Islands and the
resolution passed at the last Annual General Meeting in May 2002, the Company's
shares have been capable of being traded through the CREST system since July
2002.
INTERNATIONAL ENERGY GROUP LIMITED
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the year ended 31st December 2002
2002 2001
Restated
#'000 #'000
Turnover
Continuing operations 47,870 47,628
Discontinued operations - 1,507
47,870 49,135
Cost of sales (30,324) (31,563)
Gross profit 17,546 17,572
Operating expenses (net) (8,046) (8,052)
Operating profit
Continuing operations 9,500 8,323
Discontinued operations - 1,197
9,500 9,520
Profit/(loss) on sale of properties 599 (409)
Profit on sale of continuing operations 326 149
(Loss)/profit on sales of discontinued operations (20) 2,938
Profit on ordinary activities before interest 10,405 12,198
Interest (net) 289 11
Profit on ordinary activities before taxation 10,694 12,209
Taxation (2,396) (2,565)
Profit on ordinary activities after taxation 8,298 9,644
Minority interests (585) (512)
Profit for financial year 7,713 9,132
Dividends (net) (3,984) (3,719)
Special dividend - (19,060)
Retained profit / (loss) for the financial year 3,729 (13,647)
Basic earnings per share 10.50p 12.58p
Diluted earnings per share 10.46p 12.48p
Dividend per share (gross) 6.75p 6.35p
Dividend per share (net) 5.40p 5.08p
Special dividend per share - 26.04p
The 2001 numbers have been restated due to the adoption of Financial Reporting
Standard 19 'Deferred Tax' and also to conform the allocation of costs between
cost of sales and operating expenses within the Group companies.
INTERNATIONAL ENERGY GROUP LIMITED
CONSOLIDATED BALANCE SHEET
as at 31st December 2002
2002 2001
Restated
#'000 #'000
Fixed assets
Intangible assets 443 469
Tangible assets 89,673 75,153
Intangible
assets
Investments 1 1
90,117 75,623
Current assets
Stock and work in progress 2,639 2,218
Debtors 11,081 14,566
Cash at bank and in hand 8,540 11,137
22,260 27,921
Current liabilities
Amounts falling due within one year
Creditors 13,675 13,260
Taxation 1,184 1,838
Bank overdrafts 3,861 2,368
Dividend 2,355 2,196
21,075 19,662
Net current assets 1,185 8,259
Total assets less current liabilities 91,302 83,882
Amounts falling due after more than one year
Creditors 6,042 6,041
Provision for liabilities and charges 5,383 5,500
11,425 11,541
Net assets 79,877 72,341
Capital and reserves
Called up share capital 7,358 7,320
Share premium account 14,203 13,937
Revaluation reserve 6,949 4,337
Profit & loss account 48,020 43,985
Reserves 69,172 62,259
Equity shareholders' funds 76,530 69,579
Minority interest 3,347 2,762
79,877 72,341
INTERNATIONAL ENERGY GROUP LIMITED
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31st December 2002
2002 2001
#'000 #'000
Net cash inflow from operating activities 15,862 15,830
Returns on investments and servicing of finance
Interest received 949 286
Interest paid (294) (591)
Dividends paid to minority interest in subsidiary undertaking (138) (346)
Net cash inflow/(outflow) from returns on investments and 517 (651)
servicing of finance
Taxation
Channel Islands and Isle of Man tax paid (828) (1,441)
Overseas tax paid (1,670) (213)
Tax paid (2,498) (1,654)
Capital expenditure and financial investment
Purchase of tangible fixed assets (17,049) (20,490)
Sale of tangible fixed assets 2,782 208
Net cash outflow for capital expenditure and financial investment (14,267) (20,282)
Acquisitions and disposals
Sale of subsidiary companies (666) 29,923
Disposal of cash on sale of subsidiary companies - (18)
Sale of trade of subsidiary companies 326 1,377
Net cash (outflow)/ inflow from acquisitions and disposals (340) 31,282
Equity dividends paid (3,825) (3,636)
Net cash (outflow)/ inflow before use of liquid resources and (4,551) 20,889
financing
Management of liquid resources
Cash withdrawn from/ (placed on deposit) 1,378 (4,678)
Financing
Repayment of loans - (22,000)
New loans - 9,250
Issue of shares 304 676
Net cash inflow/ (outflow) from financing 304 (12,074)
(Decrease)/ increase in cash (2,869) 4,137
INTERNATIONAL ENERGY GROUP LIMITED
NOTES TO THE ACCOUNTS
1. BASIS OF PREPARATION
The accounts have been prepared using the historical cost convention
modified for revaluations of property and comply with applicable accounting
standards. Financial Reporting Standard 19 'Deferred Tax' has been adopted for
the first time in these accounts. The results have been extracted from the
audited financial statements for the year, in respect of which the auditors
issued an unqualified report.
2. EARNINGS PER SHARE
2002 2001
Restated
#'000 #'000
Basic
Profit for financial period attributable to shareholders 7,713 9,132
Weighted average number of shares in issue 73,455,728 72,589,837
Earnings per share 10.50p 12.58p
Fully diluted
Weighted average number of shares in issue 73,455,728 72,589,837
Dilutive potential ordinary shares under option 306,243 603,119
73,761,971 73,192,956
Fully diluted earnings per share 10.46p 12.48p
3. COST OF SALES AND OPERATING EXPENSES
2002 2001
Restated
#'000 #'000
Cost of sales
Continuing operations 30,324 31,359
Discontinued operations - 204
30,324 31,563
Net operating expenses
Continuing operations
- share option price reduction - 403
- other 8,343 8,414
Discontinued operations - 106
Operating expenses 8,343 8,923
Other operating income - continuing operations (297) (871)
8,046 8,052
4. SEGMENTAL ANALYSIS
2002 2001
Profit before Profit before
Turnover tax Turnover tax
#'000 #'000 #'000 #'000
Geographical origin
Continuing operations
Channel Islands and Isle of Man 33,391 6,849 34,900 6,544
United Kingdom 6,443 2,408 5,181 2,088
Rest of Europe 8,036 2,784 7,547 2,164
47,870 12,041 47,628 10,796
Surplus on disposals in United Kingdom 326 149
12,367 10,945
Discontinued operations - property
Channel Islands and Isle of Man - - 1,507 1,197
Surplus on disposals in Channel Islands 579 2,529
and Isle of Man
579 3,726
Total 47,870 12,946 49,135 14,671
Common costs (2,541) (2,473)
Profit before common interest 10,405 12,198
Common interest net 289 11
10,694 12,209
5A. RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING
ACTIVITIES
2002 2001
#'000 #'000
Operating profit 9,500 9,520
Depreciation and amortisation charges 4,754 4,222
Permanent diminution in property values -
Loss/ (profit) on sale of tangible fixed assets 67 (9)
(Increase)/ decrease in stocks (400) 734
Decrease in debtors 568 1,628
Increase/ (decrease) in creditors 1,373 (668)
Share option price reduction - 403
Net cash inflow from operating activities 15,862 15,830
5B. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
2002 2001
#'000 #'000
(Decrease)/ increase in cash (2,869) 4,137
Cash inflow from increase in loans - (9,250)
Cash (outflow)/ inflow from increase/ decrease in liquid (1,378) 4,678
resources
Repayment of loans - 22,000
Changes in net debt resulting from cash flows (4,247) 21,565
Exchange differences (62) 26
Movement in net debt (4,309) 21,591
Net funds/ (debt) at 1st January 4,115 (17,476)
Net (debt)/ funds at 31st December (194) 4,115
5C. ANALYSIS OF CHANGES IN NET FUNDS/(DEBT)
At At
1st January Cash Exchange 31st December
2002 flow differences 2002
#'000 #'000 #'000 #'000
Cash at bank and in hand 6,459 (1,376) 157 5,240
Bank overdrafts (2,368) (1,493) - (3,861)
Net cash 4,091 (2,869) 157 1,379
Loans (4,654) - (219) (4,873)
Bank deposit 4,678 (1,378) - 3,300
4,115 (4,247) (62) (194)
6. RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS
2002 2001
Restated
#'000 #'000
Profit for the financial year 7,713 9,132
Dividends (3,984) (22,779)
3,729 (13,647)
Other net recognised gains relating to the year 2,918 10
Share option price reduction - 403
Issue of share capital 304 676
Net additions to shareholders' funds 6,951 (12,558)
Opening shareholders' funds - as restated 69,579 82,137
Closing shareholders' funds 76,530 69,579
ENQUIRIES AND INFORMATION
This statement has been sent to shareholders, and enquiries should be directed to:
The Company Secretary
International Energy Group Limited
P.O.Box 310
St Peter Port
Guernsey
Channel Islands GY1 3TB
Telephone: +44 (0) 1481 715634
Fax: +44 (0) 1481 723834
Email: group@i-e-g.com
The Annual General Meeting will take place at 11:00am on 22nd May 2003 at the St Pierre Park Hotel,
Guernsey.
The final dividend will be paid on 3rd June 2003 to members on the register at close of business on
2nd May 2003.
Full accounts will be distributed on 17th April 2003.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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