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Jersey Electricity PLC   -  JEL   

Preliminary Announcement

Released 07:00 14-Dec-2018

RNS Number : 4375K
Jersey Electricity PLC
14 December 2018
 

             

JERSEY ELECTRICITY plc                                                                                                                 Preliminary Announcement of Annual Results

Year Ended 30 September 2018

 

 

 

At a meeting of the Board of Directors held on 13 December 2018, the final accounts for the Group for the year to 30 September 2018 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 2018 or 2017, but is derived from those accounts. Statutory accounts for 2017, have been delivered to the Jersey Registrar of Companies, and those for 2018 will be delivered in early 2019. The auditor has reported on the accounts for both years and their reports were unmodified. 

A final dividend of 8.8p on the Ordinary and 'A' Ordinary shares in respect of the year ended 30 September 2018 was recommended (2017: 8.4p). Together with the interim dividend of 6.1p (2017: 5.8p) the proposed total dividend declared for the year was 14.9p on each share (2017: 14.2p).

           

The final dividend will be paid on 28 March 2019 to those shareholders registered in the books of the Company on 22 February 2019. A dividend on the 5% cumulative participating preference shares of 1.5% (2017: 1.5%) payable on 1 July 2019 was also recommended.

 

The Annual General Meeting of the Company will be held on 28 February 2019. On that date Geoffrey Grime will retire as Chairman and Director of the Company, and Phil Austin, currently a Board member, will assume the role of Chairman.

 

 

 

 

 

M.P. Magee                                                                           P.J. Routier

Finance Director                                                                   Company Secretary

 

Direct telephone number : 01534 505201                                      Direct telephone number :01534 505253

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

 

 

 

 

13 December 2018    

 

 

 

The Powerhouse

PO Box 45

Queens Road

St Helier

Jersey JE4 8NY

 

 

 

 

 

 

 

 

 

 

JERSEY ELECTRICITY plc            

Preliminary Announcement of Annual Results

Year ended 30 September 2018                                                                                                    

 

The Chairman, Geoffrey Grime, comments:

 

"The Group recorded its best ever financial performance for the third year in succession. Group revenue for the year 2017/18 was £105.9m, 4% higher than 2017 and profit before tax increased to £15.3m up from the £13.5m achieved last year. This was supported by strong underlying performance in the Energy business, which saw a new record peak demand of 178MW set and a 2% increase in unit sales volumes from 621m to 634m units. Our Powerhouse retail business also witnessed continued strong growth in a challenging sector, with profits up 11% to £0.8m on an increased turnover of £13.6m, up 5% on last year.

 

We have made excellent progress on all our major investment projects during the year. St Helier West Primary Substation is about to be commissioned. Our smart metering programme, SmartSwitch, is entering its final phase, with 87% of our customers now converted and benefits already being realised.  We successfully launched an innovative "smart home" demonstration store, Smarter Living, embedded in the Powerhouse retail store which is receiving great interest from customers. In France, we completed an important £1m upgrade on our Normandie 2 circuit to increase both import capacity and security of supply.

 

As the Island's leading energy supplier, we bear an enormous responsibility to our customers and we continue our programme of activities to seek feedback from them. We are aware that there is more to do to promote energy efficiency, local renewables and electric transportation, but it is reassuring we continue to receive positive feedback from stakeholders. Once again, I am pleased to report that our ratings in both our supply service and overall customer service showed improvements on last year.

 

Maintaining profitability is essential to continued investment in infrastructure and to providing a sustainable electricity service for everyone including all of our stakeholders. I am also pleased to report a proposed final dividend for this year of 8.8p, a 5% rise on the previous year, payable on 28 March 2019.

 

I will be formally stepping down as Chairman at the AGM on 28 February 2019 but I am delighted to be handing over to Phil Austin a Company that is well positioned for the future and I wish Phil and the whole Board the very best in continuing to steer Jersey Electricity through the many exciting opportunities ahead."

 

Financial Highlights

2018

2017

 

 

 

Revenue

£105.9m

£102.1m

Profit before tax 

£15.3m

£13.5m

Earnings per share 

39.5p

34.6p

Dividend paid per share

      14.5p

   13.8p

Final proposed dividend per share       

8.8p

8.4p

Net debt             

£14.3m

£21.9m

                       

  

Group revenue for the year to 30 September 2018 at £105.9m was 4% higher than in the previous financial year. Energy revenues at £82.3m were 2% higher than the £80.4m achieved in 2017 with a 2% increase in the unit sales volumes of electricity, largely driven by weather, being the main factor. Turnover in the Powerhouse retail business increased by 5% from £12.9m to £13.6m. Revenue in the Property business rose £0.1m to £2.3m due to higher rental income. Revenue from JEBS, our contracting and building services business, rose £0.8m from levels experienced in 2017 to £4.8m. Turnover in our other businesses rose £0.2m to £2.9m.

 

Cost of sales at £65.1m was £2.1m higher than last year with an increase in import costs in our Energy business and higher sales activity in the Powerhouse retail business being the main reasons.

 

Operating expenses, at £24.4m were at the same level as in 2017.

 

Profit before tax for the year to 30 September 2018, at £15.3m, increased by 14% from £13.5m in 2017. Our Energy business unit sales saw volumes increasing from 621m to 634m kilowatt hours with strong winter period sales and the benefits of switching customers from other heating fuels more than offsetting the continued impact of energy efficiency measures employed by our customers.

 

Profits in our Energy business moved up to £13.4m from £11.7m last year. The higher level of sales resulted in an improved gross margin and this was supplemented by ongoing initiatives to reduce both manpower and maintenance costs. Customer tariffs rose by 2% in June 2018 yet remained competitive with other jurisdictions but this accounted for only £0.4m of the increase in profits with the remainder driven by cost efficiencies and increased unit sales of electricity. The UK saw material increases in retail electricity prices for their customers during both 2017 and 2018 with an average rise of 24% across the 'Big 6' suppliers.

 

In the financial year we imported 95% of our requirements from France (2017: 93%) and generated only 0.2% of our electricity on-island at La Collette Power Station (2017: 1%). The remaining 5% (2017: 6%) of our electricity came from the local Energy from Waste plant being marginally below that seen in 2017.

 

Profits in our Property division, excluding the impact of investment property revaluation, at £1.8m, were £0.2m above the level last year due to a higher rental level and reduced costs. Our investment property portfolio was revalued upwards this year by £0.3m to £20.5m by the external consultants who review the position annually due primarily to the growth in the value of the residential properties that we rent to tenants.

 

Our Powerhouse retailing business saw continued strong growth in sales with profits moving up 11% to £0.8m in 2018.

 

JEBS, our contracting and business services unit had a challenging year and incurred a loss of £0.2m against a profit of £0.1m in 2017 as the business was impacted by both a decline in margins and some exceptional costs. Plans are being implemented to improve performance in this business unit.

 

Our other business units (Jersey Energy, Jendev, Jersey Deep Freeze and fibre optic lease rentals) produced profits of £0.6m being 12% higher than last year.

 

Net Interest in 2018 was £1.3m being £0.1m higher than last year because in 2017 there was still an element of capitalisation of interest associated with the new N1 subsea cable. The taxation charge at £3.2m was £0.3m higher than 2017 due to the increase in profit.

 

Group earnings per share rose to 39.5p compared to 34.6p in 2017 due mainly to increased profitability.

 

 

Dividends paid in the year, net of tax, rose by 5%, from 13.8p in 2017 to 14.5p in 2018. The proposed final dividend for this year is 8.8p, a 5% rise on the previous year. Dividend cover was 2.7 times compared to 2.5 times in 2017.

 

Net cash inflow from operating activities at £27.0m was £0.5m higher than in 2017 with higher operating profit being the primary driver. Capital expenditure, at £14.9m was marginally lower than £15.1m last year with spend on the St Helier West primary sub-station being the most material project in 2018. In the 2017 financial year the most material primary spend was on the N1 subsea cable project prior to commissioning in December 2016. The resultant position was that net debt at the year-end was £14.3m, being £30.0m of borrowings less £15.7m of cash and cash equivalents, which was £7.6m lower than last year.

 

Our defined benefits pension scheme, showed a surplus at 30 September 2018, under IAS 19 "Employee Benefits", of £3.8m, net of deferred tax, compared with a deficit of £3.4m at 30 September 2017. Scheme liabilities decreased 2% to £131.4m since the last year end with the discount rate assumption, which heavily influences the calculation of liabilities, rising from 2.7% in 2017 to 2.9% in 2018 to reflect sentiments in prevailing financial markets. In addition, scheme assets rose 5% to £136.2m in the same period.

 

 

Consolidated Income Statement

 

2018

 

2017

For the year ended 30 September 2018

 

£000

 

£000

 

 

 

 

 

Revenue

 

105,874

 

102,085

Cost of sales

 

(65,110)

 

(63,023)

Gross Profit

 

40,764

 

39,062

 

 

 

 

 

Revaluation of investment properties

 

310

 

40

Operating expenses

 

(24,380)

 

(24,379)

 

 

 

 

 

Group operating profit

 

16,694

 

14,723

Finance income

 

28

 

3

Finance costs

 

(1,377)

 

(1,268)

 

 

 

 

 

Profit from operations before taxation

 

15,345

 

13,458

 

 

 

 

 

Taxation

 

(3,152)

 

(2,834)

 

 

 

 

 

Profit from operations after taxation

 

12,193

 

10,624

 

 

 

 

 

Attributable to:

 

 

 

 

Owners of the Company

 

12,115

 

10,599

Non-controlling interests

 

78

 

25

 

 

                   12,193

 

                   10,624

 

 

 

 

 

Earnings per share

 

 

 

 

- basic and diluted

 

39.54p

 

34.59p

 

 

 Consolidated Statement of Comprehensive Income

 

2018

 

2017

 

 

£ 000

 

£ 000

 

 

 

 

 

Profit for the year

 

12,193

 

10,624

 

 

 

 

 

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

 

 

 

 

Actuarial gain on defined benefit scheme

 

10,166

 

8,859

Income tax relating to items not reclassified

 

(2,033)

 

(1,772)

 

 

8,133

 

7,087

 

 

 

 

 

Items that may be reclassified subsequently to profit or loss:

 

 

 

 

Fair value loss on cash flow hedges

 

(4,261)

 

(1,673)

Income tax relating to items that may be reclassified

 

852

 

335

 

 

(3,409)

 

(1,338)

 

 

 

 

 

Total comprehensive income for the year

 

16,917

 

16,373

 

 

 

 

 

Attributable to:

 

 

 

 

Owners of the Company

 

16,839

 

16,348

Non-controlling interests

 

78

 

25

 

 

16,917

 

16,373

 

 

A presentational change to the 2017 figures has arisen as a result of elements previously embedded within cost of sales and finance costs being reclassified and shown in revenue. There has been no impact on profit.

 

 

  

Consolidated Balance Sheet

30 September 2018

 

 

 

 

 

2018

 

2017

 

 

 

 

 

£ 000

 

£ 000

 

 

 

 

 

 

 

 

NON-CURRENT ASSETS

 

 

 

 

 

 

 

Intangible assets

 

 

 

 

938

 

          1,110

Property, plant and equipment

 

 

 

 

     215,153

 

       211,921

Investment properties

 

 

 

 

       20,460

 

         20,150

Trade and other receivables

 

 

 

 

           501

 

             592

Retirement benefit surplus

 

 

 

 

4,751

 

-

Derivative financial instruments

 

 

 

 

           682

 

          2,790

Other investments

 

 

 

 

5

 

                 5

Total non-current assets

 

 

 

     242,490

 

       236,568

CURRENT ASSETS

 

 

 

 

 

 

 

Inventories

 

 

 

 

7,092

 

          6,825

Trade and other receivables

 

 

 

 

       15,202

 

         15,782

Derivative financial instruments

 

 

 

 

         2,338

 

          4,454

Cash and cash equivalents

 

 

 

 

       15,735

 

          8,076

Total current assets

 

 

 

       40,367

 

         35,137

Total assets

 

 

 

 

     282,857

 

       271,705

LIABILITIES

 

 

 

 

 

 

 

Trade and other payables

 

 

 

 

15,284

 

         15,885

Current tax liabilities

 

 

 

 

2,299

 

          1,034

Derivative financial instruments

 

 

 

 

           120

 

               -  

Total current liabilities

 

 

 

       17,703

 

         16,919

NET CURRENT ASSETS

 

 

 

 

22,664

 

         18,218

NON-CURRENT LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

 

Trade and other payables

 

 

 

 

       20,348

 

         20,177

Retirement benefit deficit

 

 

 

         -

 

          4,219

Derivative financial instruments

 

 

 

 

             89

 

             172

Financial liabilities - preference shares

 

 

 

 

           235

 

235

Borrowings

 

 

 

 

       30,000

 

         30,000

Deferred tax liabilities

 

 

 

 

       25,753

 

         23,719

Total non-current liabilities

 

 

76,425

 

         78,522

Total liabilities

 

 

 

94,128

 

         95,441

Net assets

 

 

 

 

     188,729

 

       176,264

EQUITY

 

 

 

 

 

 

 

Share capital

 

 

 

 

1,532

 

          1,532

Revaluation reserve

 

 

 

 

5,270

 

          5,270

ESOP reserve

 

 

 

 

(41)

 

(84)

Other reserves

 

 

 

 

2,249

 

5,658

Retained earnings

 

 

 

 

179,666

 

       163,862

 

 

 

 

 

 

 

 

Equity attributable to owners of the company

 

 

 

 

     188,676

 

       176,238

Non-controlling interests

 

 

 

 

53

 

               26

Total equity

 

 

 

 

     188,729

 

       176,264

 

 

  

Consolidated Statement of Changes in Equity for the year ended 30 September 2018

Share

capital

 Revaluation

 reserve

 ESOP

reserve

Other

reserves

Retained

earnings

Total

 

£ 000

£ 000

£ 000

£ 000

£ 000

£ 000

At 1 October 2017

1,532

5,270

(84)

5,658

163,862

176,238

Total recognised income and expense for the year

                  -  

                   -  

             -  

12,115

12,115

Funding of employee share option scheme

                  -  

                   -  

(9)

             -  

            -  

(9)

Amortisation of employee share option scheme

                  -  

                   -  

52

             -  

            -  

52

Unrealised loss on hedges (net of tax)

                  -  

                   -  

             -  

(3,409)

-

(3,409)

Actuarial gain on defined benefit scheme (net of tax)

                  -  

                   -  

             -  

          -

8,133

8,133

Equity dividends

                  -  

                   -  

             -  

             -  

(4,444)

(4,444)

At 30 September 2018

1,532

5,270

(41)

2,249

179,666

188,676

 

 

 

 

 

 

 

 

 

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 loss on hedges (net of tax)

                  -  

                   -  

             -  

(1,338)

-

(1,338)

Actuarial gain to 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

 

 

  

Consolidated Statement of Cash Flows

 

2018

2017

for the year ended 30 September 2018

 

£ 000

£ 000

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

 

Operating profit

 

16,694

14,723

Depreciation and amortisation charges

 

11,242

10,695

Share based reward charges

 

52

73

Gain on revaluation of investment property

 

(310)

(40)

Pension operating charge less contributions paid

 

1,196

1,607

Profit on sale of fixed assets

 

(1)

(4)

Operating cash flows before movement in working capital

 

28,873

27,054

Working capital adjustments:

 

 

 

      Increase in inventories

 

(267)

(863)

      Decrease in trade and other receivables

 

671

892

      Increase in trade and other payables

 

125

1,230

Net movement in working capital

 

529

1,259

Interest paid

 

(1,368)

(1,250)

Capitalised interest paid

 

-

(172)

Preference dividends paid

 

(9)

(9)

Income taxes paid

 

(1,045)

(421)

Net cash flows from operating activities

 

26,980

26,461

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

Purchase of property, plant and equipment

 

(14,705)

(14,252)

Investment in intangible assets

 

(168)

(836)

Net proceeds from disposal of fixed assets

 

1

4

Net cash flows used in investing activities

 

(14,872)

(15,084)

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

Equity dividends paid

 

(4,444)

(4,229)

Dividends paid to non-controlling interest

 

(51)

(59)

Deposit interest received

 

28

3

Proceeds of borrowings

 

-

18,000

Repayment of borrowings

 

-

(18,943)

Net cash flows used in financing activities

 

(4,467)

(5,228)

 

 

 

 

Net increase in cash and cash equivalents

 

7,641

6,149

 

 

 

 

Cash and cash equivalents at beginning of year

 

8,076

1,925

Effect of foreign exchange rates

 

18

2

 

 

 

 

Cash and cash equivalents at end of year

 

15,735

8,076

 

 

 

A presentational change to the 2017 figures has arisen as a result of elements previously embedded within cost of sales and finance costs being reclassified and shown in revenue. There has been no impact on profit.

 

 

Notes to the accounts

 

Year ended 30 September 2018

 

1.   Basis of Preparation

The consolidated financial statements of Jersey Electricity plc, for the year ended 30 September 2018, 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 2019.

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:

 

2018

2018

2018

 

2017

2017

2017

 

External

Internal

Total

 

External

Internal

Total

 

£000

£000

£000

 

£000

£000

£000

Revenue

 

 

 

 

 

 

 

Energy

82,332

133

82,465

 

80,408

143

80,551

Building Services

4,823

876

5,699

 

3,976

915

4,891

Retail

13,571

56

13,627

 

12,888

37

12,925

Property

2,277

604

2,881

 

2,187

599

2,786

Other

2,871

909

3,780

 

2,626

1,324

3,950

 

105,874

2,578

108,452

 

102,085

3,018

105,103

Intergroup elimination

 

 

(2,578)

 

 

 

(3,018)

Revenue

 

 

105,874

 

 

 

102,085

 

 

 

 

 

 

 

 

Operating profit / (loss)

 

 

 

 

 

 

 

Energy

 

 

13,418

 

 

 

11,651

Building Services

 

 

(245)

 

 

 

131

Retail

 

 

812

 

 

 

731

Property

 

 

1,813

 

 

 

1,645

Other

 

 

586

 

 

 

525

 

 

 

16,384

 

 

 

14,683

Revaluation of investment properties

 

 

310

 

 

 

40

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating profit

 

 

16,694

 

 

 

14,723

 

A presentational change to the 2017 figures has arisen as a result of elements previously embedded within cost of sales (£163,000) and finance costs (£72,000) being reclassified and shown in revenue. There has been no impact on profit.

 

 


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
 
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