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Jersey Electricity PLC  -  JEL   

Preliminary Announcement of Annual Results

Released 07:00 14-Dec-2017

RNS Number : 2766Z
Jersey Electricity PLC
14 December 2017
 

             

JERSEY ELECTRICITY plc                                                                                                                 Preliminary Announcement of Annual Results

Year Ended 30 September 2017

 

 

 

At a meeting of the Board of Directors held on 13 December 2017, the final accounts for the Group for the year to 30 September 2017 were approved, details of which follow.

The financial information set out in the announcement does not constitute the Group's statutory accounts for the year ended 30 September 2017 or 2016, but is derived from those accounts. Statutory accounts for 2016 have been delivered to the Jersey Registrar of Companies and those for 2017 will be delivered in early 2018. The auditor has reported on the accounts for both years and their reports were unmodified. 

A final dividend of 8.4p on the Ordinary and 'A' Ordinary shares in respect of the year ended 30 September 2017 was recommended (2016: 8.0p). Together with the interim dividend of 5.8p (2016: 5.5p) the proposed total dividend declared for the year was 14.2p on each share (2016: 13.5p).

           

The final dividend will be paid on 29 March 2018 to those shareholders registered in the books of the Company on 23 February 2018. A dividend on the 5% cumulative participating preference shares of 1.5% (2016: 1.5%) payable on 2 July 2018 was also recommended.

 

The Annual General Meeting of the Company will be held on 1 March 2018.

 

 

 

 

 

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 2017    

 

 

 

The Powerhouse

PO Box 45

Queens Road

St Helier

Jersey JE4 8NY

 

 

 

 

 

 

 

 

 

 

JERSEY ELECTRICITY plc            

Preliminary Announcement of Annual Results

Year ended 30 September 2017                                                                                                    

 

The Chairman, Geoffrey Grime, comments:

 

"I am delighted to report another excellent performance from Jersey Electricity for 2016/17. Group revenue for the year to 30 September 2017 was £102m and profit before tax and exceptional items at £13.5m, was 2.5% higher than the £13.1m achieved in 2016. This was supported by strong underlying performance in the Energy business as well as across our non-Energy businesses, especially our retail business, Powerhouse.je, which has had another particularly strong year.  Overall, this has led to the Group's best ever financial performance, an outcome that is good for all stakeholders, for our ongoing investment programme and for a sustainable electricity service.  I am therefore pleased to report a proposed final dividend for this year of 8.40p, a 5% rise on the previous year, payable on 29 March 2018.

 

Our first almost full year operating with three undersea supply cables to France has not only resulted in improved financial performance, but has also driven exceptional supply reliability, attractive pricing for customers and a virtually fully decarbonised electricity system. Our tariffs remain very competitive compared with other jurisdictions, including other islands and even the EU and UK which benefit from significant economies of scale.  In addition, with the last tariff rise of 1.5% on 1 April 2014, Jersey Electricity is approaching four years without an increase - a notable achievement given the very significant rises over that period elsewhere.

 

As the sole supplier of over a third of Jersey's energy requirements, the Company has a huge responsibility to our customers and it is one all colleagues take very seriously. I am therefore pleased that our customer satisfaction ratings have improved further across the four key service areas leading to an increase in an overall rating which is independently assessed as 'excellent' when compared with other service providers."

Financial Highlights

2017

2016




Revenue

£102.3m

£103.4m

Profit before tax pre-exceptional items

£13.5m

£13.1m

Earnings per share pre-exceptional items

34.6p

33.3p

Dividend paid per share

      13.8p

   13.1p

Final proposed dividend per share       

8.4p

8.0p

Net debt             

£21.9m

£29.0m

                       

Group revenue for the year to 30 September 2017 at £102.3m was 1% lower than in the previous financial year. Unit sales volumes of electricity were marginally behind last year with Energy revenues at £80.5m against £81.2m in 2016. Turnover in Powerhouse.je, our retail business, increased by 9% from £11.9m to £13.0m. Revenue in the Property business rose by £0.1m to £2.2m due to higher rental income. Revenue from JEBS, our contracting and building services business, fell £1.1m from levels experienced in 2016 to £4.0m. Turnover in our other businesses fell £0.3m to £2.6m.

 

Overall cost of sales decreased by £2.1m to £63.2m mainly due to a reduction in import costs in our Energy business. Operating expenses, at £24.4m, rose by £0.9m from their 2016 level with an increase in depreciation charges, post our continued investment in infrastructure, and IAS19 pension costs being the main drivers.

 

 

 

 

Profit before tax, pre-exceptional items, for the year to 30 September 2017, at £13.5m, increased by 2.5% from £13.1m in 2016. Profit before tax post-exceptional items, fell from £14.8m last year to £13.5m in 2017 as we had an exceptional credit of £1.7m in 2016 associated with the release of a rent accrual that had been accumulated over many years for our La Collette Power Station site post the settlement of a long-running rent review which was settled by an arbiter in our favour.

 

Our Energy business unit sales saw volumes falling 0.6% from 625m to 621m kilowatt hours. Profits in our Energy business moved up marginally against last year to £11.7m. A lower cost of sales resulted in a higher margin but this was offset by increased depreciation and pension costs.  

 

In the financial year we imported 93% of our requirements from France (2016: 92%) and generated 1% of our electricity on-island at La Collette Power Station (2016: 3%). Additional staff training on plant was the main reason for the higher level of generation in 2016 compared to this year. The remaining 6% of our electricity came from the local Energy from Waste plant being marginally above that seen in 2016. Customer tariffs have remained at the same level over the last three years and there were no changes during 2017 and our prices continue to remain competitive with other jurisdictions (EU and other islands). The UK saw material increases in retail electricity prices for their customers during 2017 with an average rise of 14% across the 'Big 6' but 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 £1.6m, were at the same level as last year with a higher rental level offset by increased maintenance costs. Our investment property portfolio was marginally revalued upwards this year to £20.2m by the external consultants who review the position annually. Our retailing business, Powerhouse.je, saw continued strong growth with profits moving £0.3m upwards to £0.7m in 2017. JEBS, our contracting and business services unit produced a profit of £0.1m on a par with that achieved in 2016 in a challenging industry with high competition for staff. Our other business units - Jersey Energy, Jendev and Jersey Deep Freeze were £0.2m behind last year as Jersey Deep Freeze had an exceptional year in 2016 which was not repeated in 2017.

 

Interest paid in 2017 was £1.3m against £1.1m in 2016 with a lower level of average debt, and a higher level of capitalisation of interest in 2016 associated with the new N1 subsea cable, being the primary reasons for the rise. The taxation charge at £2.8m was £0.3m lower than 2016 due mainly to the exceptional credit last year being a taxable item.

 

Group earnings per share, pre-exceptional items, rose to 34.6p compared to 33.3p in 2016 due mainly to the increase in profits. Earnings per share, before adjusting for exceptional items, stood at 37.7p in 2016 whilst there were no exceptional items to adjust for in 2017. 

 

Dividends paid in the year, net of tax, rose by 5%, from 13.1p in 2016 to 13.8p in 2017. The proposed final dividend for this year is 8.4p, a 5% rise on the previous year. Dividend cover, pre-exceptional items, at 2.5 times was at a similar level to 2016. If exceptional items are included, dividend cover fell from 2.9 times last year to 2.5 times in this financial year. 

 

Net cash inflow from operating activities at £26.5m was £1.3m higher than in 2016 with an increase in profit, prior to IAS 19 pension accounting, being the primary driver. Capital expenditure, at £15.1m fell from £32.4m last year as most of the cash on the N1 project was spent in 2016 in advance of the cable being commissioned during this financial year. Net debt, at the year-end was £21.9m being £7.1m lower than last year.        

 

Our defined benefits pension scheme, which had an IAS 19 deficit of £9.2m, net of deferred tax, at the 2016 year end decreased to a £3.4m deficit as at 30 September 2017. Scheme liabilities fell 4% due to an increase in the discount rate applied, reflecting sentiments in financial markets, and assets rose 1%, since the last year end.

 

 

 

                                                                                                                                                             

Consolidated Income Statement


2017


2016

For the year ended 30 September 2017


£000


£000






Revenue


102,320


103,361

Cost of sales


(63,186)


(65,249)

Gross Profit


39,134


38,112






Revaluation of investment properties


40


(350)

Operating expenses


(24,379)


(23,498)






Group operating profit before exceptional items


14,795


14,264

Exceptional item - La Collette rent accrual reversal


-


1,676

Group operating profit


14,795


15,940

Finance income


3


22

Finance costs


(1,340)


(1,154)






Profit from operations before taxation


13,458


14,808






Taxation


(2,834)


(3,166)






Profit from operations after taxation


10,624


11,642






Attributable to:





Owners of the Company


10,599


11,547

Non-controlling interests


25


95



                   10,624


                   11,642






Earnings per share





- basic and diluted


34.59p


37.69p

 

 Consolidated Statement of Comprehensive Income


2017


2016



£ 000


£ 000






Profit for the year


10,624


11,642






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





Actuarial gain / (loss) on defined benefit scheme


8,859


(2,829)

Income tax relating to items not reclassified


(1,772)


566



7,087


(2,263)






Items that may be reclassified subsequently to profit or loss:





Fair value (loss) / gain on cash flow hedges


(1,673)


13,865

Income tax relating to items that may be reclassified


335


(2,773)



(1,388)


11,092






Total comprehensive income for the year


16,393


20,471






Attributable to:





Owners of the Company


16,348


20,376

Non-controlling interests


25


95



16,373


20,471

 

 

 

 

 

 

 

Consolidated Balance Sheet


2017


2016

For the year ended 30 September 2017


£ 000


£ 000

NON-CURRENT ASSETS





Intangible assets


1,110


162

Property, plant and equipment


211,921


209,168

Investment properties


20,150


20,110

Secured loans


592


683

Derivative financial instruments


2,790


5,957

Other investments


5


5

Total non-current assets


236,568


236,085

CURRENT ASSETS





Inventories


6,825


5,962

Trade and other receivables


15,782


16,583

Derivative financial instruments


4,454


2,788

Cash and cash equivalents


8,076


1,925

Total current assets


35,137


27,258

Total assets


271,705


263,343

LIABILITIES





Trade and other payables


15,885


16,084

Bank overdraft


-


943

Current tax liability


1,034


420

Total current liabilities


16,919


17,447

NET CURRENT ASSETS


18,218


9,811

NON-CURRENT LIABILITIES





Trade and other payables


20,177


19,600

Retirement benefit deficit


4,219


11,471

Derivative financial instruments


172


-

Financial liabilities - preference shares


                 235


235

Long-term borrowings


            30,000


30,000

Deferred tax liabilities


23,719


20,482

Total non-current liabilities


78,522


81,788

Total liabilities


95,441


99,235

Net assets


176,264


164,108

EQUITY





Share capital


1,532


1,532

Revaluation reserve


5,270


5,270

ESOP reserve


(84)


(155)

Other reserves


5,658


6,878

Retained earnings


163,862


150,523

Equity attributable to owners of the Company


176,238


164,048

Non-controlling interests


26


60

Total equity


176,264


164,108

 

 

 

 

Consolidated Statement of Changes in Equity for the year ended 30 September 2017

Share

capital

 Revaluation

 reserve

 ESOP

reserve

Other

reserves

Retained

earnings

Total


£ 000

£ 000

£ 000

£ 000

£ 000

£ 000

At 1 October 2016

1,532

5,270

(155)

6,878

150,523

164,048

Total recognised income and expense for the year

                  -  

                   -  

             -  

10,599

10,599

Funding of employee share option scheme

                  -  

                   -  

(2)

             -  

            -  

(2)

Amortisation of employee share option scheme

                  -  

                   -  

73

             -  

            -  

73

Unrealised gain on hedges (net of tax)

                  -  

                   -  

             -  

(1,388)

-

(1,388)

Actuarial loss on defined benefit scheme (net of tax)

                  -  

                   -  

             -  

          -

7,087

7,087

Adjustment to reserves

-

-

-

118

(118)

-

Equity dividends

                  -  

                   -  

             -  

             -  

(4,229)

(4,229)

At 30 September 2017

1,532

5,270

(84)

5,658

163,862

176,238








 

 

Share

capital

 Revaluation

 reserve

 ESOP

reserve

Other

reserves

Retained

earnings

Total


£ 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 loss 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

 

 

 

 

Consolidated Statement of Cash Flows


2017

2016

for the year ended 30 September 2017


£ 000

£ 000





CASH FLOWS FROM OPERATING ACTIVITIES








Operating profit before exceptional items


14,795

14,264

Depreciation and amortisation charges


10,695

10,295

Share based reward charges


73

56

(Gain) / loss on revaluation of investment property


(40)

350

Pension operating charge less contributions paid


1,607

1,351

Profit on sale of fixed assets


(4)

(6)

Operating cash flows before movement in working capital


27,126

26,310

Working capital adjustments:




      (Increase) / decrease in inventories


(863)

277

      Decrease / (increase) in trade and other receivables


892

(1,758)

      Increase in trade and other payables


1,230

2,303

Net movement in working capital


1,259

822

Interest paid


(1,322)

(1,148)

Capitalised interest paid


(172)

(374)

Preference dividends paid


(9)

(9)

Income taxes paid


(421)

(396)

Net cash flows from operating activities


26,461

25,205





CASH FLOWS FROM INVESTING ACTIVITIES




Purchase of property, plant and equipment


(14,252)

(32,391)

Investment in intangible assets


(836)

(4)

Proceeds from part disposal of subsidiary


-

10

Net proceeds from disposal of fixed assets


4

9

Net cash flows used in investing activities


(15,084)

(32,376)





CASH FLOWS FROM FINANCING ACTIVITIES




Equity dividends paid


(4,229)

(4,019)

Dividends paid to non-controlling interest


(59)

(48)

Deposit interest received


3

22

Payment for foreign exchange option


-

(250)

Proceeds of borrowings


18,000

5,500

Repayment of borrowings


(18,943)

(5,500)

Net cash flows used in financing activities


(5,228)

(4,295)





Net increase / (decrease) in cash and cash equivalents


6,149

(11,466)





Cash and cash equivalents at beginning of year


1,925

12,503

Effect of foreign exchange rates


2

(55)

Overdraft


-

943





Cash and cash equivalents at end of year


8,076

1,925

 

 

 

 

 

Notes to the accounts

 

Year ended 30 September 2017

 

1.   Basis of Preparation

The consolidated financial statements of Jersey Electricity plc, for the year ended 30 September 2017, 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 2018.

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 business segments as follows:


2017

2017

2017


2016

2016

2016


External

Internal

Total


External

Internal

Total


£000

£000

£000


£000

£000

£000

Revenue








Energy

80,480

143

80,623


81,215

144

81,359

Building Services

3,982

915

4,897


5,120

786

5,906

Retail

13,045

37

13,082


11,933

45

11,978

Property

2,187

599

2,786


2,143

599

2,742

Other

2,626

1,324

3,950


2,950

876

3,826


102,320

3,018

105,338


103,361

2,450

105,811

Intergroup elimination



(3,018)




(2,450)

Revenue



102,320




103,361









Operating profit








Energy



11,723




11,650

Building Services



131




134

Retail



731




452

Property



1,645




1,683

Other



525




695




14,755




14,614

Revaluation of investment properties



40




(350)









Exceptional item - La Collette rent accrual reversal                          



-




1,676









Operating profit



14,795




15,940

 


This information is provided by RNS
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Preliminary Announcement of Annual Results - RNS