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Jersey Electricity PLC  -  JEL   

Preliminary Announcement of Annual Results

Released 09:52 14-Dec-2016

RNS Number : 8288R
Jersey Electricity PLC
14 December 2016
 

             

JERSEY ELECTRICITY plc                                                                                                                 Preliminary Announcement of Annual Results

Year Ended 30 September 2016

 

 

 

At a meeting of the Board of Directors held on 13 December 2016, the final accounts for the Group for the year to 30 September 2016 were approved, details of which are attached.

The financial information set out in the announcement does not constitute the Group's statutory accounts for the year ended 30 September 2016 or 2015, but is derived from those accounts. Statutory accounts for 2015 have been delivered to the Jersey Registrar of Companies and those for 2016 will be delivered in early 2017. The auditor has reported on those accounts and their reports were unmodified. 

A final dividend of 8.00p on the Ordinary and 'A' Ordinary shares in respect of the year ended 30 September 2016 was recommended (2015: 7.60p). Together with the interim dividend of 5.50p the proposed total dividend declared for the year was 13.50p on each share (2015: 12.85p).

           

The final dividend will be paid on 30 March 2017 to those shareholders registered in the books of the Company on 24 February 2017. A dividend on the 5% cumulative participating preference shares of 1.5% (2015: 1.5%) payable on 3 July 2017 was also recommended.

 

The Annual General Meeting of the Company will be held on 2 March 2017.

 

 

 

 

 

M.P. Magee                                                                           P.J. Routier

Finance Director                                                                   Company Secretary

 

Direct telephone number : 01534 505321                                      Direct telephone number :01534 505253

Email : mmagee@jec.co.uk                                                        Email : proutier@jec.co.uk

 

 

 

 

13 December 2016    

 

 

 

The Powerhouse

PO Box 45

Queens Road

St Helier

Jersey JE4 8NY

 

 

 

 

 

 

 

 

 

 

JERSEY ELECTRICITY plc            

Preliminary Announcement of Annual Results

Year ended 30 September 2016                                                                                                    

 

The Chairman, Geoffrey Grime, comments:

 

"I am pleased to report that Jersey Electricity has delivered another excellent year's performance in 2015/16. The Company has continued to make great progress in implementing its infrastructure strategy, at the centre of which was the successful delivery of another 100MW interconnector, Normandie 1 (N1), installed between Jersey and France, and delivered ahead of schedule and materially below budget. A shared investment with our partners Guernsey Electricity, N1 is the replacement for EDF1, Jersey Electricity's first interconnector, which came to the end of its life in 2012. This new cable link gives Jersey and Guernsey the benefit of three submarine cables between Jersey and France, across two diverse routes. The primary project was completed in just four years at a cost of around £30m representing another notable achievement.

   

The Company's success this year is not limited to delivering capital projects. In addition we also produced our best ever Group financial performance supported by strong improvements in its non-Energy businesses. In the Energy business, Jersey Electricity has built on the good progress made last year, maintaining profitability at a level needed to support ongoing investment and commensurate with a rate of return that we see in regulated entities elsewhere.  Importantly, despite the recent period of sustained investment, we have been able to maintain prices at current levels for nearly three years and remain competitively priced relative to other islands and even larger EU countries. Furthermore, we have announced that electricity prices will not increase until 1 January 2018 at the earliest. Our supply reliability, health and safety and environmental performance, including the carbon intensity of supplied electricity, remain strong relative to peers which is a significant achievement given the particular challenges of operating in an island context.

 

As sole supplier of over 40% of the Island's energy requirements we have a huge responsibility to our customers and it is gratifying that we maintained our overall customer service rating at a level assessed as being "excellent" when compared with similar service providers in the market.

 

Finally there have been reports in recent weeks of potential supply security issues in France because of unexpected inspection shutdowns in a number of nuclear generation plants. We have received a high degree of comfort from EDF that the supplies to the Channel Islands will not be impacted by what is viewed as a short-term issue."

 

 

 

Financial Summary

 

2016

 

2015

 

Electricity Sales in kilowatt hours

    625m

    627m

£103.4m

£100.5m

£  13.1m

£  12.4m

   33.31p

   32.94p

   13.10p

   12.45p

    8.00p

    7.60p

£ 29.0m

£ 17.5m

 

Group revenue for the year to 30 September 2016 at £103.4m was 3% higher than in the previous financial year. Unit sales volumes of electricity were marginally behind last year with Energy revenues at £81.2m against £80.7m in 2015, slightly higher due to some non-recurring installation work in the year. Turnover in Powerhouse.je, our retail business, increased by 8% from £11.1m to £11.9m. Revenue in the Property business rose by £0.1m to £2.1m due to a higher level of rental income. Revenue from JEBS, our contracting and building services business, rose £1.0m from levels experienced in 2015 to £5.1m. Turnover in our Other Businesses rose £0.5m to £3.0m.

 

Overall cost of sales rose by £0.6m to £65.2m due mainly to additional costs in the non-Energy business units associated with the aforementioned rise in revenue, partially offset by a fall in the Energy business. Operating expenses, at £23.5m, rose by £1.6m from their 2015 level with an increase in IAS19 pension costs of £0.4m and a £0.7m ex-gratia award for current pensioners being the main items.

 

Profit before tax, pre-exceptional items, for the year to 30 September 2016, at £13.1m, increased by 6% from £12.4m in 2015. The rise was primarily generated from improved performance in our non-Energy business units. Profit before tax post-exceptional items, rose from £13.2m last year to

£14.8m in 2016.  The exceptional credit of £1.7m in 2016 was in respect of the release of a rent accrual that had been accumulated over many years for our La Collette Power Station site.

 

As highlighted previously in our Related Party Transactions note to the accounts the lease had been subject to a rent review dispute which was settled by an arbiter (and confirmed by subsequent legal judgement) in our favour and retained at a peppercorn rent, rather than at a higher level suggested by our landlord.

 

Our Energy business unit sales saw volumes falling marginally from 627m to 625m kilowatt hours after another relatively mild winter period with both the last two winters seeing temperatures above the long-term average. Profits in our Energy business rose from £11.5m to £11.6m. A lower cost of sales resulted in a higher margin but this was offset by higher pension costs. The main factor that contributed to the increase in such costs was a £0.7m charge of a non-recurring nature associated with the granting of an ex-gratia rise in pensions in service. In the financial year we imported 92% of our requirements from France (2015: 94%) and generated 3% of our electricity on-island at La Collette Power Station (2015: 1%). Additional generation for training was the main reason for the lower levels of importation in 2016 compared to the previous year. The remaining 5% of our electricity came from the local Energy from Waste plant being at the same level as in 2015. Continuing with the trend since 2014 there were no tariff changes during 2016 and our prices continue to remain competitive with other jurisdictions. Our last tariff movement was an average 1.5% increase in April 2014.

 

Profits in our Property division, excluding the impact of investment property revaluation, at £1.7m, rose by £0.1m from last year with a higher rental level and lower maintenance cost being the main drivers. Our investment property portfolio was revalued downwards this year by £0.3m to £20.1m by the external consultants who review the position annually. The main reason for this 2% devaluation is that a break clause, exercisable in 2023, for one of the leases, impacts such calculations between now and that date. Our retail business, Powerhouse.je, had a strong year post the restructuring and re-branding of the business with a loss of £0.1m in 2014 moving to a profit of £0.3m in 2015 and to £0.5m in 2016. JEBS, our contracting and business services unit produced a profit of £0.1m compared with a near breakeven position in 2015 in a challenging industry with high competition for staff. Our other business units - Jersey Energy, Jendev and Jersey Deep Freeze all had profitable years ahead of internal targets.

 

The interest charge in 2016 was £1.1m against £1.5m in 2015 with a capitalisation of interest associated with the new N1 subsea cable being the primary reason for the reduction. The taxation charge at £3.2m was £0.8m higher than 2015 due to a higher level of profitability.

 

Group earnings per share, pre-exceptional items, rose 1% to 33.31p compared to 32.94p in 2015 due mainly to an increase in profits. Earnings per share, before adjusting for exceptional items, increased from 35.00p in 2015 to 37.69p in 2016.

 

Dividends paid in the year, net of tax, rose by 5%, from 12.45p in 2015 to 13.10p in 2016. The proposed final dividend for this year is 8.00p, a 5% rise on the previous year. Dividend cover, pre-exceptional items, at 2.5 times fell marginally from 2.6 times in 2015. If exceptional items are included, dividend cover rose from 2.8 times last year to 2.9 times in this financial year. 

 

 

 

 

Net cash inflow from operating activities at £25.2m was £1.9m higher than in 2015 with an increase in profit, prior to IAS 19 pension accounting, being the primary driver. Capital expenditure, at £32.4m rose from £16.8m last year as the N1 project spend dominated this year and resulted in net debt at the year-end of £29.0m being £11.5m higher than last year.

 

Our defined benefits pension scheme, which had an IAS 19 deficit of £5.8m, net of deferred tax, at the 2015 year end increased to a £9.2m deficit as at 30 September 2016. Scheme assets rose 20% since the last year end, but liabilities increased 22% due to a reduction in the discount rate applied, reflecting sentiments in financial markets after the UK decision in June 2016 to prepare to leave the EU. The formal triennial valuation was performed by our external actuary as at 31 December 2015 and this exercise showed a surplus of £6.9m at that point in time.

 

 

 

 

 

 

 

Consolidated Income Statement


2016


2015

For the year ended 30 September 2016


£000's


£000's






Revenue


103,361


100,479

Cost of sales


(65,249)


(64,604)






Gross Profit


38,112


35,875






Revaluation of investment properties


(350)


(45)

Operating expenses


(23,498)


(21,931)






Group operating profit before exceptional items


14,264


13,899

Exceptional item     - La Collette rent accrual reversal


1,676


-

                               - RTE outage compensation


-


479

                               - impact of reversal of EDF1 related provision


-


310

Group operating profit


15,940


14,688

Finance income


22


36

Finance costs


(1,154)


(1,555)






Profit from operations before taxation


14,808


13,169






Taxation


(3,166)


(2,397)






Profit from operations after taxation


11,642


10,772






Attributable to:





Owners of the Company


11,547


10,725

Non-controlling interests


95


47



                   11,642


                   10,772






Earnings per share





- basic and diluted


37.69p


35.00p








2016


2015

Consolidated Statement of Comprehensive Income


£ 000


£ 000






Profit for the year


11,642


10,772






Items that will not be reclassified subsequently to profit or loss:





Actuarial loss on defined benefit scheme


(2,829)


(5,706)

Income tax relating to items not reclassified


566


1,141



(2,263)


(4,565)






Items that may be reclassified subsequently to profit or loss:





Fair value gain/(loss) on cash flow hedges


13,865


(874)

Income tax relating to items that may be reclassified


(2,773)


175



11,092


(699)






Total comprehensive income for the year


20,471


5,508






Attributable to:





Owners of the Company


20,376


5,461

Non-controlling interests


95


47



20,471


5,508

 

 

 

 

 

Balance Sheet


2016


2015

For the year ended 30 September 2016


£ 000


£ 000

NON-CURRENT ASSETS





Intangible assets


162


227

Property, plant and equipment


209,168


187,845

Investment properties


20,110


20,460

Secured loan accounts


683


731

Derivative financial instruments


5,957


414

Other investments


5


5

Total non-current assets


236,085


209,682

CURRENT ASSETS





Inventories


              5,962


6,239

Trade and other receivables


            16,583


14,777

Derivative financial instruments


              2,788


780

Cash and cash equivalents


              1,925


12,503

Total current assets


            27,258


34,299

Total assets


          263,343


243,981

LIABILITIES





Trade and other payables


            16,084


17,597

Bank overdraft


                 943


-

Current tax liability


420


404

Derivative financial instruments


                   -  


3,892

Total current liabilities


            17,447


21,893

NET CURRENT ASSETS


              9,811


12,406

NON-CURRENT LIABILITIES










Trade and other payables


            19,600


18,884

Retirement benefit deficit


            11,471


7,291

Derivative financial instruments


                   -  


2,422

Financial liabilities - preference shares


                 235


235

Long-term borrowings


            30,000


30,000

Deferred tax liabilities


            20,482


15,529

Total non-current liabilities


            81,788


74,361

Total liabilities


            99,235


96,254

Net assets


          164,108


147,727

EQUITY





Share capital


1,532


1,532

Revaluation reserve


5,270


5,270

ESOP reserve


(155)


(97)

Other reserves


6,878


(4,214)

Retained earnings


150,523


145,223

Equity attributable to owners of the Company


164,048


147,714

Non-controlling interests


60


13

Total equity


164,108


147,727

 

 

 

 

 

 

 

Consolidated Statement of changes in Equity

Share

 Revaluation

 ESOP

Other

Retained

Total

for the year ended 30 September 2016

capital

 reserve

 reserve

reserves

earnings



£ 000

£ 000

£ 000

£ 000

£ 000

£ 000

At 1 October 2015

1,532

5,270

(97)

(4,214)

145,223

147,714

Total recognised income and expense for the year

                  -  

                   -  

             -  


11,547

11,547

Funding of employee share option scheme

                  -  

                   -  

(114)

             -  

            -  

(114)

Amortisation of employee share option scheme

                  -  

                   -  

56

             -  

            -  

56

Unrealised gain on hedges (net of tax)

                  -  

                   -  

             -  

11,092

-

11,092

Actuarial loss on defined benefit scheme (net of tax)

                  -  

                   -  

             -  

          -

(2,263)

(2,263)

Adjustment arising from change in non-controlling interest





31

31

Equity dividends

                  -  

                   -  

             -  

             -  

(4,015)

(4,015)

At 30 September 2016

1,532

5,270

(155)

6,878

150,523

164,048









Share

 Revaluation

 ESOP

Other

Retained

Total


capital

 reserve

 reserve

reserves

earnings



£ 000

£ 000

£ 000

£ 000

£ 000

£ 000

At 1 October 2014

1,532

5,270

(36)

(3,515)

142,878

146,129

Total recognised income and expense for the year

                  -  

                   -  

             -  


10,725

10,725

Funding of employee share option scheme

                  -  

                   -  

(112)

             -  

            -  

(112)

Amortisation of employee share option scheme

                  -  

                   -  

51

             -  

            -  

51

Unrealised loss on hedges (net of tax)

                  -  

                   -  

             -  

(699)


(699)

Actuarial loss on defined benefit scheme (net of tax)

                  -  

                   -  

             -  

          -

(4,565)

(4,565)

Equity dividends

                  -  

                   -  

             -  

             -  

(3,815)

(3,815)

At 30 September 2015

1,532

5,270

(97)

(4,214)

145,223

147,714

 

 

 

 

 

 

Statements of Cash Flow


2016

2015

for the year ended 30 September 2016


£ 000

£ 000





CASH FLOWS FROM OPERATING ACTIVITIES








Operating profit before exceptional items


14,264

13,899

Depreciation and amortisation charges


10,295

9,926

Loss on revaluation of investment property


350

45

Pension operating charge less contributions paid


1,351

213

(Loss)/profit on sale of fixed assets


(6)

7









Operating cash flows before movement in working capital


26,254

24,090





Decrease in inventories


277

1,095

(Increase)/decrease in trade and other receivables


(1,758)

1,884

Increase/(decrease) in trade and other payables


2,359

(2,640)

Interest paid


(1,148)

(1,548)

Capitalised interest paid


(374)

(4)

Preference dividends paid


(9)

(9)

Cash amounts relating to exceptional item


         -

479

Income taxes paid


(396)

-





Net cash flows from operating activities


25,205

23,347





CASH FLOWS FROM INVESTING ACTIVITIES




Purchase of property,plant and equipment


(32,391)

(16,629)

Investment in intangible assets


(4)

(207)

Proceeds from part disposal of subsidiary


10

-

Net proceeds from disposal of fixed assets


9

3





Net cash flows used in investing activities


(32,376)

(16,833)





CASH FLOWS FROM FINANCING ACTIVITIES




Equity dividends paid


(4,067)

(3,859)

Deposit interest received


22

36

Payment for foreign exchange option


(250)

-

Repayment of borrowings


5,500

-

Proceeds of borrowings


(5,500)

            -





Net cash flows used in financing activities


(4,295)

(3,823)





Net (decrease)/increase in cash and cash equivalents


(11,466)

2,691





Cash and cash equivalents at beginning of year


12,503

9,776

Effect of foreign exchange rates


(55)

36

Overdraft


943

-





Cash and cash equivalents at end of year


1,925

12,503

 

 

 

 

 

 

 

 

Notes to the accounts

 

Year ended 30 September 2016

 

1.   Basis of Preparation

The consolidated financial statements of Jersey Electricity plc, for the year ended 30 September 2016, 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 2017.

The Group has considerable financial resources together with a large number of customers both corporate and individual. As a consequence, the directors believe that the Group is well placed to manage its business risks successfully. The directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going-concern basis in preparing the financial statements.

 

 

 

Segmental information

 






Revenue and profit information are analysed between the businesses as follows:









2016

2016

2016


2015

2015

2015


External

Internal

Total


External

Internal

Total


£000

£000

£000


£000

£000

£000

Revenue








Energy

81,215

144

81,359


  80,698

      129

 80,827

Building Services

5,120

786

5,906


    4,148

      808

    4,956

Retail

11,933

45

11,978


  11,087

        40

  11,127

Property

2,143

599

2,742


    2,084

      599

    2,683

Other

2,950

876

3,826


    2,462

      777

    3,239


103,361

2,450

105,811


100,479

   2,353

102,832

Intergroup elimination



(2,450)




(2,353)

Revenue



103,361




100,479









Operating profit








Energy



11,650




  11,514

Building Services



134




(58)

Retail



452




334

Property



1,683




1,562

Other



695




592




14,614




13,944

Revaluation of investment properties



(350)




(45)









Exceptional item - La Collette rent accrual reversal                          



1,676




-

                           - RTE outage compensation                          



-




479

                           - impact of reversal of EDF1 provision



-




310









Group operating profit



15,940




14,688

 


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Preliminary Announcement of Annual Results - RNS