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Jersey Electricity PLC   -  JEL   

Preliminary Announcement of Annual Results

Released 07:00 20-Dec-2019

RNS Number : 5392X
Jersey Electricity PLC
20 December 2019
 

             

JERSEY ELECTRICITY plc                                                                                                                 Preliminary Announcement of Annual Results

Year Ended 30 September 2019

 

 

 

At a meeting of the Board of Directors held on 19 December 2019, the final accounts for the Group for the year to 30 September 2019 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 2019 or 2018, but is derived from those accounts. Statutory accounts for 2018 have been delivered to the Jersey Registrar of Companies, and those for 2019 will be delivered in early 2020. The auditor has reported on the accounts for both years and their reports were unmodified. 

 

A final dividend of 9.25p on the Ordinary and 'A' Ordinary shares in respect of the year ended 30 September 2019 was recommended (2018: 8.80p). Together with the interim dividend of 6.45p (2018: 6.10p) the proposed total dividend declared for the year was 15.70p on each share (2018: 14.90p).

           

The final dividend will be paid on 26 March 2020 to those shareholders registered in the books of the Company on 21 February 2020. A dividend on the 5% cumulative participating preference shares of 1.5% (2018: 1.5%) payable on 1 July 2020 was also recommended.

 

The Annual General Meeting of the Company will be held on 5 March 2020 at 12.30 pm at the Powerhouse, Queens Road, St Helier, Jersey.

 

 

 

 

 

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

 

 

 

 

 

19 December 2019    

 

 

 

The Powerhouse

PO Box 45

Queens Road

St Helier

Jersey JE4 8NY

 

 

 

 

 

 

 

 

 

 

JERSEY ELECTRICITY plc            

Preliminary Announcement of Annual Results

Year ended 30 September 2019                                                                                                    

 

The Chairman, Phil Austin, comments:

"It was a privilege to be appointed Chairman of Jersey Electricity at the AGM in February. I would like to offer my sincere thanks to my predecessor Geoffrey Grime for his hard work and commitment during 10 years as Chairman throughout which he helped steer the Company through a significant and sustained programme of investment. That investment is today bearing fruit for customers in terms of supply reliability, competitive pricing and carbon reduction, and for shareholders in terms of sustained growth in dividends.

Jersey now benefits from an energy platform that is substantially 'future proofed' for years to come, and the business is strategically well positioned to meet the challenges and opportunities ahead.

Group revenue for 2018/19 was £110.3m, 3% higher than last year, however, profits were impacted by the mild winter which saw electricity unit sales fall 1% to 627 million from 634 million. Profit before tax fell 3% to £14.8m, down from the £15.3m achieved last year. The Board has recommended a final dividend for this year of 9.25p, a 5% rise on the previous year, payable on 26 March 2020.

Looking ahead, new technology and digitalisation are major global factors impacting virtually all companies, including utilities, and these have the potential to positively transform the customer experience. We therefore expect new services, technologies and digital to play an increasing role in our business.

Climate change presents us with both challenges and opportunities. While warmer temperatures may have some adverse impact on unit sales of electricity, Jersey Government's declaration of a climate emergency and ambition to push for net zero carbon by 2030 presents us with many opportunities for growing our share of the energy market.  Given that electricity is now almost completely decarbonised, the main way the Island will reduce carbon emissions further is by displacing fossil fuels with electricity and energy efficiency. To adapt to this changing landscape we have reset our Vision to 'enable life's essentials and inspire a zero-carbon future' which recognises the importance of working with the community, customers and partners. We have made some key strategic management appointments this year and have also welcomed to the Board a new non-Executive Director in Peter Simon. We held a Board Away Day in March at which we established seven strategic themes to achieve that Vision.

Our core objective, however, remains to serve our customers with secure, affordable and sustainable electricity now and long into the future. Our below inflation 3.5% tariff rise in April 2019 was only our second rise in five years and our tariffs remain very competitive compared with other jurisdictions, including the EU and UK. The electricity we supply is not only virtually completely decarbonised but one third of our imports is already from certificated renewable sources. Furthermore, this year we have invested in local renewables and brought solar PV on to the grid.

As well as performing better than many UK power companies at an operational level, this year we took part in the UK Customer Satisfaction Index (UKCSI), which for the first time has enabled us to benchmark ourselves against UK mainland utilities against various customer service and satisfaction attributes. With an overall rating of 78%, I am very pleased to report that we delivered a solid debut result and materially outperformed UK utilities, which averaged 72%.

These strong performance levels would not be possible without a highly skilled and dedicated team. My thanks go to our Executive and non-Executive Directors and, just as importantly, all colleagues throughout the business for their commitment, hard work and loyalty."

 

 

Financial Highlights

2019

2018

 

 

 

Revenue

£110.3m

£106.6m

Profit before tax 

£14.8m

£15.3m

Earnings per share 

38.42p

39.54p

Dividend paid per share

      15.25p

   14.50p

Final proposed dividend per share       

9.25p

8.80p

Net debt             

£5.1m

£14.3m

                       

 

Group revenue for the year to 30 September 2019 at £110.3m was 3% higher than in the previous financial year. Energy revenues at £86.6m were 5% higher than the £82.3m achieved in 2018. The sale of heavy fuel oil to Guernsey Electricity (amounting to £2.7m) and a 3.5% rise in tariffs from 1 April 2019 were offset by a 1% decrease in the unit sales volumes of electricity due to milder weather. Revenue in the Powerhouse retail business increased by 6% from £14.3m to £15.2m. Revenue in the Property business at £2.3m was at the same level as last year. Revenue from JEBS, our contracting and building services business, fell £1.6m from levels experienced in 2018 to £3.3m as the previous year was influenced by one exceptionally large contract. Revenue in our other businesses remained at £2.9m.

 

Cost of sales at £69.3m was £3.4m higher than last year with an increase in the imported cost of electricity, the cost associated with the sale of heavy fuel oil to Guernsey Electricity and higher sales activity in the Powerhouse retail business being the main reasons.

 

Other income was recognised during the year arising from the receipt of a £0.8m rebate for a subsea cable repair in 2014.

 

Operating expenses at £26.4m were £2.0m higher than 2018 primarily due to a £1.1m increase in the IAS 19 pensions cost as explained in more detail later in this report and an increase of £0.6m in depreciation charges.

 

Profit before tax for the year to 30 September 2019, at £14.8m, decreased by 3% from £15.3m in 2018 largely due to lower profits in our Energy business. A £0.7m upward revaluation of our investment property portfolio (against £0.3m in 2018) was another material year-on-year movement. 

 

Profits in our Energy business fell from £13.4m in 2018 to £12.3m this year. Unit sales volumes decreased from 634m to 627m kilowatt hours with a milder winter period being the main reason. Adverse foreign exchange, and rising wholesale prices, impacted the cost of imported electricity.  Customer tariffs rose by 3.5% in April 2019 yet remained competitive with other jurisdictions. During the year we sold our remaining stock of heavy fuel oil to Guernsey Electricity which produced a profit of around £1.0m. The oil was no longer required post the decommissioning of our legacy on-Island steam plant. We also impaired assets associated with this change of operating regime at a cost similar to the quantum of such profit. In the 2014 financial year, a repair was performed to the subsea cable between Jersey and Guernsey and Jersey Electricity made a contribution of £1.8m towards the total cost. In March 2019 a cash payment of £0.8m was received which in effect was a rebate towards the repair costs. A non-cash pension cost of £1.1m was incurred in the year associated with the granting of an ex-gratia rise in pensions in service.

 

In the financial year we imported 94% of our requirements from France (2018: 95%) and generated only 0.3% of our electricity on-island at La Collette Power Station (2018: 0.2%). The remaining 6% (2018: 5%) of our electricity was purchased from the local Energy from Waste plant.  

 

 

The £1.7m profits in our Property division, excluding the impact of investment property revaluation, was £0.1m lower than last year due to higher maintenance and depreciation costs. Our investment property portfolio was revalued upwards this year by £0.7m to £21.2m based on advice from our  external consultants who review the position annually, due primarily to the growth in the value of the residential properties that we rent to tenants as yields have increased in Jersey in the last year.

 

Our Powerhouse retail business saw continued strong growth in sales with profits also improving by  10% to £0.9m in 2019.

 

JEBS, our contracting and business services unit had a challenging year with a £0.1m loss, against a loss of £0.2m in 2018, and a plan is underway to re-focus, and 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 at a similar level to last year.

 

Net interest paid in 2019 was £0.1m lower than last year at £1.3m due to interest received on higher cash balances. The taxation charge at £3.0m was £0.2m lower than 2018 due to the decrease in taxable profit.  

 

Group basic and diluted earnings per share fell to 38.42p compared to 39.54p in 2018 due mainly to reduced profitability.  

 

Dividends paid in the year, net of tax, rose by 5%, from 14.50p in 2018 to 15.25p in 2019. The proposed final dividend for this year is 9.25p, a 5% rise on the previous year. Dividend cover, at 2.5 times, was lower than the comparable 2.7 times in 2018.

 

Net cash inflow from operating activities at £27.7m was £0.7m higher than in 2018 with the impact on working capital from the sale of heavy fuel oil stock being a primary driver. Capital expenditure, at £13.9m was £1.0m lower than £14.9m last year with spend on the St Helier West primary sub-station being the most material project in 2019. The resultant position was that net debt at the year-end was £5.1m, being £30.0m of borrowings less £24.9m of cash and cash equivalents, which was £9.2m lower than last year.

 

Our defined benefits pension scheme showed an increased surplus at 30 September 2019, under IAS 19 "Employee Benefits", of £8.3m, net of deferred tax, compared with a surplus of £3.8m at 30 September 2018. Assets rose 14% from £136.2m to £154.7m during the year. However, liabilities also increased 10% from £131.4m to £144.2m since the last year-end. This was largely due to the discount rate assumption, which heavily influences the calculation of liabilities, falling from 2.9% in 2018 to 1.9% in 2019, reflecting sentiments in prevailing financial markets.

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Income Statement

 

2019

 

2018

For the year ended 30 September 2019

 

£000

 

£000

Operating expenses

 

(26,369)

 

(24,380)

 

 

 

 

 

Taxation

 

(2,969)

 

(3,152)

Profit from operations after taxation

 

11,851

 

12,193

 

 

 

 

 

 

 

 

11,851

 

                   12,193

 

 

 

 

 

 

 

 

A presentational change to the 2018 figures has arisen as a result of elements previously embedded within cost of sales (£767k rebates credit) being reclassified and shown in revenue. Gross profit remains unchanged.

 

 

 

 

Consolidated Balance Sheet

30 September 2019

 

 

 

 

 

2019

 

2018

 

 

 

 

 

£000

 

£000

 

 

 

 

 

 

 

 

NON-CURRENT ASSETS

 

 

 

 

 

 

 

Intangible assets

 

 

 

 

683

 

938

Property, plant and equipment

 

 

 

 

217,046

 

     215,153

Investment properties

 

 

 

 

21,240

 

       20,460

Trade and other receivables

 

 

 

 

383

 

           501

Retirement benefit surplus

 

 

 

 

10,417

 

4,751

Derivative financial instruments

 

 

 

 

208

 

           682

Other investments

 

 

 

 

5

 

5

Total non-current assets

 

 

 

249,982

 

       242,490

CURRENT ASSETS

 

 

 

 

 

 

 

Inventories

 

 

 

 

6,018

 

7,092

Trade and other receivables

 

 

 

 

17,995

 

       15,202

Derivative financial instruments

 

 

 

 

197

 

         2,338

Cash and cash equivalents

 

 

 

 

24,915

 

       15,735

Total current assets

 

 

 

49,125

 

         40,367

Total assets

 

 

 

 

299,107

 

     282,857

LIABILITIES

 

 

 

 

 

 

 

Trade and other payables

 

 

 

 

17,320

 

15,284

Current tax liabilities

 

 

 

 

2,714

 

2,299

Derivative financial instruments

 

 

 

 

298

 

           120

Total current liabilities

 

 

 

20,332

 

         17,703

NET CURRENT ASSETS

 

 

 

 

28,793

 

22,664

NON-CURRENT LIABILITIES

 

 

 

 

 

Trade and other payables

 

 

 

 

21,757

 

       20,348

Derivative financial instruments

 

 

 

 

303

 

             89

Financial liabilities - preference shares

 

 

 

 

235

 

           235

Borrowings

 

 

 

 

30,000

 

       30,000

Deferred tax liabilities

 

 

 

 

26,936

 

       25,753

Total non-current liabilities

 

 

79,231

 

         76,425

Total liabilities

 

 

 

99,563

 

         94,128

Net assets

 

 

 

 

199,544

 

     188,729

EQUITY

 

 

 

 

 

 

 

Share capital

 

 

 

 

1,532

 

1,532

Revaluation reserve

 

 

 

 

5,270

 

5,270

ESOP reserve

 

 

 

 

(45)

 

(41)

Other reserves

 

 

 

 

(157)

 

2,249

Retained earnings

 

 

 

 

192,882

 

179,666

 

 

 

 

 

 

 

 

Equity attributable to owners of the company

 

 

 

 

199,482

 

     188,676

Non-controlling interests

 

 

 

 

62

 

53

Total equity

 

 

 

 

199,544

 

     188,729

 

 

 

 

 

 

 

Consolidated Statement of Changes in Equity for the year ended 30 September 2019

Share

capital

 Revaluation

 reserve

 ESOP

reserve

Other

reserves

Retained

earnings

Total

Total recognised income and expense for the year

                  -  

                   -  

             -  

11,773

11,773

At 30 September 2019

1,532

5,270

(45)

(157)

192,882

199,482

 

 

 

 

 

 

 

 

 

Share

capital

 Revaluation

 reserve

 ESOP

reserve

Other

reserves

Retained

earnings

Total

Equity dividends

                  -  

                   -  

             -  

             -  

(4,444)

(4,444)

At 30 September 2018

1,532

5,270

(41)

2,249

179,666

188,676

 

  

 

 

Consolidated Statement of Cash Flows

 

2019

2018

for the year ended 30 September 2019

 

£000

£000

 

 

 

 

 

 

 

Notes to the accounts

 

Year ended 30 September 2019

 

1.   Basis of Preparation

The consolidated financial statements of Jersey Electricity plc, for the year ended 30 September 2019, 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).  This is consistent with the accounting policies in the 30 September 2018 annual report and accounts, except for IFRS9 and IFRS15, the impacts of which are disclosed in the 31 March 2019 interim report.

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 2020.

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:

 

2019

2019

2019

 

2018

2018

2018

 

External

Internal

Total

 

External

Internal

Total

 

£000

£000

£000

 

£000

£000

£000

Revenue

 

 

 

 

 

 

 

Energy - arising in the course of ordinary business

83,907

126

84,033

 

82,332

133

82,465

            - arising from the sale of heavy fuel oil

2,723

-

2,723

 

-

-

-

Building Services

3,286

809

4,095

 

4,841

876

5,717

Retail

15,199

59

15,258

 

14,320

56

14,376

Property

2,262

612

2,874

 

2,277

604

2,881

Other

2,917

898

3,815

 

2,871

909

3,780

 

110,294

2,504

112,798

 

106,641

2,578

109,219

Intergroup elimination

 

 

(2,504)

 

 

 

(2,578)

Revenue

 

 

110,294

 

 

 

106,641

 

 

 

 

 

 

 

 

Operating profit / (loss)

 

 

 

 

 

 

 

Energy

 

 

12,281

 

 

 

13,418

Building Services

 

 

(79)

 

 

 

(245)

Retail

 

 

895

 

 

 

812

Property

 

 

1,679

 

 

 

1,813

Other

 

 

617

 

 

 

586

 

 

 

15,393

 

 

 

16,384

Revaluation of investment properties

 

 

689

 

 

 

310

 

 

 

 

 

 

 

 

Operating profit

 

 

16,082

 

 

 

16,694

 

A presentational change to the 2018 figures has arisen as a result of elements previously embedded within cost of sales (£767k rebates credit of which £18k is related to Building Services and £749k to Retail) being reclassified and shown in revenue. Gross profit remains unchanged.

 

The revaluation of investment properties is shown separately from Property operating profit as this income is reflected solely by a movement in reserves.


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Preliminary Announcement of Annual Results - RNS