Final Results Summary

Jersey Electricity PLC

20 December 2023

 

 

 

JERSEY ELECTRICITY Plc                                                                                           

Financial Results Summary

Year Ended 30 September 2023

At a meeting of the Board of Directors held on 20 December 2023, the final accounts for the year ended 30 September 2023 were approved and have been published on our website (www.jec.co.uk).

The financial information set out in this summary does not constitute the statutory accounts for the year ended 30 September 2023, or 2022, but is derived from those accounts. Statutory accounts for 2022 have been delivered to the Jersey Registrar of Companies, and those for 2023 will be delivered in early 2024. The auditor reported on the accounts for both years and their reports were unmodified.

A final dividend of 11.40p on the Ordinary and 'A' Ordinary shares in respect of the year ended 30 September 2023 was recommended (2022: 10.80p). Together with the interim dividend of 8.00p (2022: 7.60p) the proposed total dividend declared for the year was 19.40p on each share (2022: 18.40p).

The final dividend will be paid on 15 March 2024 to those shareholders registered on 23 February 2024. A dividend on the 5% cumulative participating preference shares of 1.5% (2022: 1.5%) payable on 1 July 2024 was also recommended.

The Annual General Meeting will be held on 5 March 2024 at 2.00 pm at the Powerhouse, Queen's Road, St. Helier, Jersey.

L.G. Fulton                                                                                         

Chief Financial Officer                                                                                 

Direct Line:           01534 505270

Mobile Number: 07797 778688                                                                      

Email: [e-mail]                                                                                    

20 December 2023          

The Powerhouse

PO Box 45

Queens Road

St. Helier

Jersey JE4 8NY

JERSEY ELECTRICITY plc                

Financial Results Summary

Year ended 30 September 2023                                                                                                                                               

The Chair, Phil Austin, comments:

Performance

The Group has achieved another solid year of operational and financial performance and is strategically well-positioned for the future. Wholesale prices have eased in the last year, but they remain high in relative terms, in what continues to be a challenging economic environment.

Our Energy Business delivered a Return on Assets of 7.2% in the year, restoring the under recovery of costs from prior years and bringing the 5-year rolling average to 6.2% within the target range of 6%-7%.

We implemented a 5% rise in tariffs in January 2023 to help keep pace with wholesale prices but, due to our strong hedged position, and coupled with contractual provisions, we have been able to significantly shelter Islanders from the recent turmoil in energy markets. However, whilst wholesale prices have recently come down, they remain well above our long-term hedged position and therefore we expect further upward pressure on retail prices over the next few years.

To give customers some certainty over the coming winter, we announced a further 12% tariff rise in June, to take effect from January 2024. As we look forward to 2025 - 2027, approximately one third of our energy is already hedged at fixed prices and our focus now is on transitioning our customers through this difficult period, whilst keeping bills as stable and at as low a cost as possible.  

Our other businesses within the Group continued to perform in line with expectations, providing consistent year-on-year return.

The Board has recommended a final dividend for the year of 11.40p, a 6% rise on the previous year, payable on 15 March 2024.

Climate Change

In April 2022, the UK became the first G20 country to introduce legislation, making it mandatory for large businesses to disclose climate-related financial information in line with the Taskforce on Climate-related Financial Disclosures (TCFD) recommendations. At Jersey Electricity, we have made significant progress towards establishing our net-zero strategy, together with key priorities, metrics and targets. Details of our progress are set out on pages 22-33 of the 2023 Annual Report and Accounts.

Energy Security
This year we completed a review of our Supply Security Standard. The review was driven by the recent energy crisis, the demands of the Government of Jersey's (GoJ) Carbon Neutral Roadmap
(CNR) and the French fishing dispute of 2021. Following this review, and subject to securing long-term tenure on our site at La Collette, the Board has approved a four-year £22.6m project to enhance our on-Island emergency generation capacity at La Collette Power Station.

While we continue to deploy solar PV across the Island, with a view to increasing energy sovereignty and long-term supply diversity, as well as supporting the local economy, we have at the same time continued more detailed investigations into the viability of offshore wind generation and how it might integrate into Jersey's future energy system. We are actively engaging with GoJ to determine the future approach and role Jersey Electricity Plc (JE)should play in the development of such a project.

In Conclusion

I am very proud of the response efforts from the JE team and our customers following storm Ciarán. I wish to thank all our teams and fellow Board members for their hard work and dedication this past year, as well as our shareholders for their continued support. We have achieved much together during what has been a very successful year, while keeping Jersey Electricity on course to take advantage of the opportunities the future holds and meet the challenges it will demand of us.

Financial Performance

Financial Highlights	2023	2022
Revenue	£125.1m	£117.4m
Profit before tax	£14.9m	£10.6m
Earnings per share	36.81p	27.17p
Dividend paid per share	18.80p	17.80p
Final proposed dividend per share	11.40p	10.80p
Net cash	£17.4m	£17.4m
In Year Return on Assets	7.2%	4.2%
Return on Assets - 5 year rolling average	6.2%	6.2%

2022/23 has seen a return to a less volatile operating environment following the pandemic. Our hedging strategy for the procurement of power has protected us against a volatile wholesale energy market which has seen prices reach over 10 times historical levels in the same period. Escalating inflation has put pressure on the cost base as the business continues to maintain performance and build towards a decarbonised future. Our balance sheet continues to be healthy underpinned by high quality assets.

Group revenue for the year to 30 September 2023 increased year on year by £7.7m (6.5%) due to tariff price increases in the Energy Business. Revenue across the wider group remained in line with the previous financial year.

Group Profit before tax for the year to 30 September 2023 was £14.9m compared to £10.6m in 2022. The profit increase is attributed to £1.8m from the energy business and £1.6m income from interest earnings. In the year the energy business received a rebate of £3.6m relating to prior year wholesale energy costs and following a full review, our property portfolio was devalued by £1.2m.
Underlying profit before tax (excluding the impacts of the rebate and property valuation) was £12.5m in 2023 against £9.6m in 2022.

Energy Business: Operating Profit, excluding the rebate of past energy costs, at £9.3m, was £1.8m above the £7.5m achieved in 2022. This is due a £7.4m increase in revenues, following a tariff price increase on 1 January 2023 which has been offset by a £5.6m increase in wholesale energy costs and operating costs. Operating costs have increased due to increased inflation and increased investment in our systems and people, as we head into a period of increased capital investment and enhancing our capability as we continue to achieve our net-zero ambition and supporting the GoJ in meeting its Carbon Neutral Roadmap objectives and a net-zero Jersey.

Our 2023 in year Return on Assets (see other information, Alternative Performance Measures, p127 of the 2023 Annual report and Accounts) is 7.2% compared to 4.2% in 2022. This increase is effectively a 'truing up' of prior years under recovery and includes the rebate on prior year energy costs. We target Return on Assets to be within a 6% to 7% range over a 5-year rolling average basis. Our 2023 5-year rolling average Return on Assets is 6.2%.

Property: The £1.1m profit in our property division, is £0.3m lower than in 2022 due to one of the commercial spaces being vacated in March 2023. A new tenant is expected for the space during early 2024.

Powerhouse.je: Our Powerhouse retail business saw profits fall 22% from £1.2m to £0.9m, despite a marginal fall in revenues of 1%, due to increased overheads in staff and storage costs.

JEBS: Profits fell by £0.1m across our building services business due to an under recovery in revenue from a lower-than-expected number of fuel switches. The reduction was due to a slowing in the pace of switching for a short time as the government incentive scheme was being launched.

Other business units (Jersey Energy, Jendev, Jersey Deep Freeze and fibre optic lease rentals) produced combined profits of £0.6m, being £0.1m higher than last year.

Net interest income was £0.3m in 2023 compared to a net interest cost of £1.3m in 2022 due to a higher level of interest earned on deposits from rising interest rates. Taxation at £3.4m was higher than the previous year, due to increased taxable profits.

Group basic and diluted earnings per share, at 36.81p, compared to 27.17p in 2022, rose due to increased profitability. Dividends paid in the year, net of tax, rose by 6%, from 17.80p in 2022 to 18.80p in 2023. The proposed final dividend for this year is 11.40p, a 6% rise on the previous year. Dividend cover, at 2 times has increased from 1.5 times in 2022.

Net cash flows from operating activities at £17.6m was £3.6m lower than in 2022. Investing activities, at £11.4m, was 3% higher than the prior financial year. Dividends paid were £5.8m compared to £5.5m in 2022. The resultant position was that net cash at the year-end was £17.4m, being £30.0m of borrowings offset by £47.4m of cash and cash equivalents, which was the same as last year.

Consolidated Income Statement for the year ended 30 September 2023

		2023		2022
		£000		£000
Revenue		125,078		117,421
Cost of sales		(80,924)		(77,242)
Rebate of past energy costs - non recurring item		3,593		-
Gross Profit		47,747		40,179
Movement in valuation of investment properties		(1,215)		1,020
Operating expenses		(32,010)		(29,293)
Group operating profit		14,522		11,906
Finance income		1,871		218
Finance costs		(1,528)		(1,523)
Profit from operations before taxation		14,865		10,601
Taxation		(3,432)		(2,135)
Profit from operations after taxation		11,433		8,466
Attributable to:
Owners of the Company		11,280		8,326
Non-controlling interests		153		140
		11,433		8,466
Earnings per share
- basic and diluted		36.81p		27.17p

Consolidated Statement of Comprehensive Income

		2023		2022
		£000		£000
Profit for the year		11,433		8,466
Items that will not be reclassified subsequently to profit or loss:
Actuarial (loss)/gain on defined benefit scheme		(815)		8,976
Income tax relating to items not reclassified		163		(1,795)
		(652)		7,181
Items that may be reclassified subsequently to profit or loss:
Fair value (loss)/gain on cash flow hedges		(3,361)		4,815
Income tax relating to items that may be reclassified		672		(963)
		(2,689)		3,852
Total comprehensive income for the year		8,092		19,499
Attributable to:
Owners of the Company		7,939		19,359
Non-controlling interests		153		140
		8,092		19,499

Consolidated Balance Sheet as at 30 September 2023

		2023	2022
		£ 000	£ 000
NON-CURRENT ASSETS
Intangible assets		681	967
Property, plant and equipment		216,136	216,235
Right of use assets		3,194	3,280
Investment properties		27,615	28,830
Trade and other receivables		300	300
Retirement benefit asset		25,545	26,434
Derivative financial instruments		129	2,640
Other investments		5	5
Total non-current assets		273,606	278,691
CURRENT ASSETS
Inventories		9,187	7,173
Trade and other receivables		25,959	19,934
Derivative financial instruments		64	483
Cash and cash equivalents		47,429	47,397
Total current assets		82,639	74,987
Total assets		356,245	353,678
LIABILITIES
Trade and other payables		19,459	21,043
Current tax liabilities		3,301	2,088
Lease liabilities		81	69
Derivative financial instruments		536	330
Total current liabilities		23,377	23,530
NET CURRENT ASSETS		59,262	51,457
NON-CURRENT LIABILITIES
Trade and other payables		26,249	25,162
Lease liabilities		3,193	3,251
Derivative financial instruments		225	-
Financial liabilities - preference shares		235	235
Borrowings		30,000	30,000
Deferred tax liabilities		31,422	32,126
Total non-current liabilities		91,324	90,774
Total liabilities		114,701	114,304
Net assets		241,544	239,374
EQUITY
Share capital		1,532	1,532
Revaluation reserve		5,270	5,270
ESOP reserve		(35)	(38)
Other reserves		(455)	2,234
Retained earnings		235,100	230,232
Equity attributable to owners of the company		241,412	239,230
Non-controlling interests		132	144
Total equity		241,544	239,374

Consolidated Statement of Changes in Equity for the year ended 30 September 2023

	Share	Revaluation	ESOP	Other	Retained	Total
	capital	reserve	reserve	reserves*	earnings
	£ 000	£ 000	£ 000	£ 000	£ 000	£ 000
At 1 October 2022	1,532	5,270	(38)	2,234	230,232	239,230
Total recognised income and expense for the year	-	-	-	-	11,280	11,280
Amortisation of employee share option scheme	-	-	3	-	-	3
Movement on hedges (net of tax)	-	-	-	(2,689)	-	(2,689)
Actuarial gain on defined benefit scheme (net of tax)	-	-	-	-	(652)	(652)
Equity dividends	-	-	-	-	(5,760)	(5,760)
At 30 September 2023	1,532	5,270	(35)	(455)	235,100	241,412
At 1 October 2021	1,532	5,270	(79)	(1,618)	220,178	225,283
Total recognised income and expense for the year	-	-	-	-	8,326	8,326
Amortisation of employee share option scheme	-	-	41	-	-	41
Movement on hedges (net of tax)	-	-	-	3,852	-	3,852
Actuarial gain on defined benefit scheme (net of tax)	-	-	-	-	7,181	7,181
Equity dividends	-	-	-	-	(5,453)	(5,453)
At 30 September 2022	1,532	5,270	(38)	2,234	230,232	239,230

*'Other reserves' represents the foreign currency hedging reserve.

Consolidated Statement of Cash Flows for the year ended 30 September 2023

		2023	2022
		£000	£000
CASH FLOWS FROM OPERATING ACTIVITIES
Operating profit		14,522	11,906
Depreciation and amortisation charges		11,581	11,094
Share based reward charges		3	41
Loss/(gain) on revaluation of investment property		1,215	(1,020)
Pension operating charge less contributions paid		73	1,303
Deemed interest income from hire purchase arrangements		183	50
Profit on sale of property, plant and equipment		(3)	(7)
Operating cash flows before movement in working capital		27,574	23,367
Working capital adjustments:
Increase in inventories		(2,014)	(257)
Increase in trade and other receivables		(3,835)	(1,926)
(Decrease)/increase in trade and other payables		(617)	4,444
Net movement in working capital		(6,466)	2,261
Interest paid		(1,368)	(1,380)
Preference dividends paid		(9)	(9)
Income taxes paid		(2,089)	(3,020)
Net cash flows from operating activities		17,642	21,219
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment		(13,046)	(11,001)
Investment in intangible assets		(92)	(319)
Deposit interest received		1,688	168
Net proceeds from disposal of fixed assets		3	7
Net cash flows used in investing activities		(11,447)	(11,145)
CASH FLOWS FROM FINANCING ACTIVITIES
Equity dividends paid		(5,760)	(5,453)
Dividends paid to non-controlling interest		(165)	(154)
Repayment of lease liabilities		(242)	(206)
Net cash flows used in financing activities		(6,167)	(5,813)
Net increase in cash and cash equivalents		28	4,261
Cash and cash equivalents at beginning of year		47,397	43,136
Effect of foreign exchange rates		4	-
Cash and cash equivalents at end of year		47,429	47,397

Notes to the accounts

Year ended 30 September 2023

1.   Basis of Preparation

The consolidated financial statements of Jersey Electricity plc, for the year ended 30 September 2023, 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 2022 annual report and accounts and the 31 March 2023 interim report.

While the financial information included in this summary 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. Full financial statements that comply with IFRS have additionally been published on our website; www.jec.co.uk.

Segmental information

Revenue and profit information are analysed between the business segments as follows:

	2023	2023	2023		2022	2022	2022
	External	Internal	Total		External	Internal	Total
	£000	£000	£000		£000	£000	£000
Revenue
Energy - arising during the course of ordinary business	97,053	89	97,142		89,683	100	89,783
Building Services	3,349	831	4,180		3,365	780	4,145
Retail	18,514	56	18,570		18,695	41	18,736
Property	2,350	641	2,991		2,345	639	2,984
Other*	3,812	466	4,278		3,333	625	3,958
	125,078	2,083	127,161		117,421	2,185	119,606
Intergroup elimination			(2,083)				(2,185)
Revenue			125,078				117,421
Operating profit
Energy profit before rebate of past energy costs**			9,329				7,502
Rebate of past energy costs			3,593				-
Energy profit including rebate			12,922				7,502
Building Services			162				266
Retail			917				1,174
Property			1,149				1,436
Other*			587				508
			15,737				10,886
Revaluation of investment properties			(1,215)				1,020
Operating profit			14,522				11,906

*Other segment includes the divisions of Jersey Energy, Jendev as well as Jersey Deep Freeze Limited, the Group's sole subsidiary.

Materially, all the Group's operations are conducted within the Channel Islands. All transfers between divisions are on an arms-length basis. The revaluation of investment properties is shown separately from Property operating profit.

Revenues disclosed by the business segments above are recognised both on a point in time and over time basis. The treatment of revenue recognition in accordance with IFRS 15 is detailed for each of these business segments in note 1 in the full version of these financial statements.

**During the year ended 30 September 2023, the Company received a credit which has been disclosed as 'Rebate of past energy costs - non-recurring item' within gross profit in these financial statements. This was a rebate from the French network operator (RTE) in respect of payments made in 2022 which they were instructed to return to us as part of a regulatory decision due to volatility in the energy marketplace during 2022. Due to the unknown timing, amount and eligibility regarding this reimbursement, it was not possible to disclose this rebate in relation to the prior year ending 30 September 2022.

 

END