Final Results

RNS Number : 0610J

Jersey Electricity PLC

17 December 2020

 

   

JERSEY ELECTRICITY plc          Preliminary Announcement of Annual Results

Year Ended 30 September 2020

At a meeting of the Board of Directors held on 17 December 2020, the final accounts for the year ended 30 September 2020 were approved, details of which follow.

The financial information set out in the announcement does not constitute the statutory accounts for the year ended 30 September 2020 or 2019, but is derived from those accounts. Statutory accounts for 2019 have been delivered to the Jersey Registrar of Companies, and those for 2020 will be delivered in early 2021. The auditor reported on the accounts for both years and their reports were unmodified. 

A final dividend of 9.70p on the Ordinary and 'A' Ordinary shares in respect of the year ended 30 September 2020 was recommended (2019: 9.25p) . Together with the interim dividend of 6.80p (2019: 6.45p) the proposed total dividend declared for the year was 16.50p on each share (2019: 15.70p).

The final dividend will be paid on 25 March 2021 to those shareholders registered on 19 February 2021. A dividend on the 5% cumulative participating preference shares of 1.5% (2019: 1.5%) payable on 1 July 2021 was also recommended.

The Annual General Meeting will be held on 4 March 2021 at 12.30 pm at the Powerhouse, Queens Road, St Helier, Jersey.

M.P. Magee    L. Floris

Finance Director  Company Secretary

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

Email: [e-mail]   Email: [e-mail]

17 December 2020 

The Powerhouse

PO Box 45

Queens Road

St Helier

Jersey JE4 8NY

JERSEY ELECTRICITY plc 

Preliminary Announcement of Annual Results

Year ended 30 September 2020     

The Chairman, Phil Austin, comments:

"When we entered the year, we could not have imagined that the world would be so impacted by a virus.  As I write, countries across the globe are battling COVID-19 and both lives and economies are being hugely disrupted, with tragic consequences. Even now, the world is far from through it.

Strong response to COVID-19

Though unprecedented, a critical service provider like Jersey Electricity should be prepared for such events.  I am pleased to report that we were well prepared. 

The Company has a well-tested contingency plan and had been closely monitoring the COVID-19 situation since the beginning of January, formally invoking its Business Continuity Plan in April.  Throughout the crisis, we have taken steps to keep our people and the community safe, as well as maintaining continuity of electricity supplies and other essential services, on which the Island so depends. 

The response of the whole workforce has been exceptional and I'd particularly like to thank those who went out every day in the field, or into their place of work, to ensure that we continued to keep our organisation functioning and able to power homes, businesses and Government throughout this difficult period.  Through our ongoing investment in technology, our people were able to successfully migrate to home working, such that overall productivity and performance levels have been remarkably unaffected. 

As well as focusing on core services, we took immediate action to lessen any financial hardship of customers by deferring our 2.5% tariff rise by six months, at a cost of around £1m.  We also adopted a more flexible approach to electricity customers and investment property tenants. Measures included a more sympathetic debt collection process and suspension of service terminations, and we worked closely with Government and charities to establish new processes to support vulnerable customers. 

Given Jersey Electricity's scale and role, we offered the full strength of the Company in support of the community by providing, without charge and on a fast-track basis, new infrastructure, plumbing and electrical services for Jersey's Nightingale Hospital, including professional services support.  In addition, Jersey Electricity has fulfilled all its own contractual obligations and has not taken advantage of any forms of Government furlough or other financial support schemes.

Leaders in clean energy

Last year we communicated our new Vision "to enable life's essentials and inspire a zero-carbon future".  Whilst we continue to flesh out how we can best support the Island to deliver carbon neutrality, the COVID-19 pandemic has only re-emphasised the importance of this Vision to the Company and to the Island as a whole. There now seems to be a clear and widespread recognition of the climate issue and, crucially, a real appetite to take action.  We have made considerable progress during the year in transforming this Vision into tangible work streams, including, for example, conducting a larger scale assessment of what investment is required to facilitate carbon neutrality by 2030.  It is now well understood that our grid is substantially decarbonised and the only way Jersey can materially reduce its carbon emissions is by switching from high-carbon fossil fuels to low carbon imported or locally generated electricity.

Resilient performance

Despite the challenges of COVID-19, the Company's financial performance has been remarkably resilient.  Revenue for 2019/20 was £111.7m, 1% higher than last financial year. Electricity unit sales initially fell 13% in the immediacy of lockdown, but largely recovered, and for the full year were 619m units, only 1% lower than those in the 2018/19 financial year. 

Profit before tax was unchanged from the prior year at a level of £14.8m, with the cost impact of the deferred tariff being completely offset by outperformance in other areas, most notably our Powerhouse retail business, which saw profits increase by almost one third from £0.9m to £1.2m. 

The Board has therefore recommended a final dividend for the year of 9.70p, a 5% increase on the previous year, and payable on 25 March 2021.

Our core objective remains to deliver an affordable, secure and sustainable supply of electricity now and long into the future - and our performance this year, across all our key metrics, reflects real success." 

Financial Highlights	2020	2019
Revenue	£111.7m	£110.7m
Profit before tax	£14.8m	£14.8m
Earnings per share	37.94p	38.42p
Dividend paid per share	16.05p	15.25p
Final proposed dividend per share	9.70p	9.25p
Net cash/(debt)	£5.5m	£(5.1)m

Group revenue   for the year to 30 September 2020 at £111.7m was 1% higher than in the previous financial year. Energy revenues at £85.1m were 2% lower than the £87.0m achieved in 2019. Lower unit sales of electricity, linked to the COVID-19 crisis, combined with the sale of heavy fuel oil to Guernsey Electricity last year were the main reasons for the reduction. Revenue in the Powerhouse retail business increased 17% from £15.2m in 2019 to £17.8m. The business had a strong first half, but was impacted when the shop was forced to close due to COVID-19, but then recovered well helped by the strong on-line offering. Revenue in the Property business, at £2.3m, was at the same level as last year despite initial concerns that rental flows could be impacted by COVID-19 . Revenue from JEBS, our building services business, increased from £3.3m in 2019 to £3.8m. Revenue in our other businesses, at £2.7m, was marginally lower than in 2019.

Cost of sales   at £69.7m was £0.4m higher than last year with the increased revenue level in the Powerhouse Retail business being offset by a lower volume of imported units of electricity in 2020 and the costs associated with the sale of heavy fuel oil to Guernsey Electricity last year.

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

Operating expenses   at £26.4m were £0.4m lower than last year primarily due to the pension cost in 2019 being £0.6m higher than in 2020.

Profit before tax for the year to 30 September 2020, at £14.8m, was maintained at the same level as 2019 despite the challenges of COVID-19.

Profits in our Energy business, at £12.3m, were at the same level as in 2019. Unit sales volumes decreased from 627m to 619m kilowatt hours with the impact of COVID-19 in the second half of the financial year being the main reason. However, revenue from electricity sales was £0.8m higher due to the sales mix, with an increase in usage in domestic premises more than offsetting the fall in the commercial sector. In 2019 Energy had a £1m profit from the sale of heavy fuel oil being a 'one-off' transaction. During this year overhead costs were £0.9m lower than in 2019 largely due to lower depreciation charges. In the financial year we imported 95% of our requirements from France (2019: 94%) and generated 0.2% of our electricity on island from our solar and diesel plant (2019: 0.3%). The remaining 5% (2019: 6%) of our electricity was purchased from the local Energy from Waste plant. A planned 2.5% tariff rise from 1 April 2020 was postponed to 1 October 2020 to provide some further assistance to our customers in light of the COVID-19 pandemic.

The £1.3m profit in our Property division, excluding the impact of investment property revaluation, was £0.4m lower than last year due mainly to accelerated depreciation on air conditioning plant that was replaced during this year. Our investment property portfolio moved up in value by £0.5m to £21.8m based on advice from our external   consultants who review the position annually, due primarily to the growth in the value of residential properties despite COVID-19 challenges.

Our Powerhouse retail business saw profits rise by 31% from £0.9m to £1.2m in a turbulent year where flexibility in the business model, due to our strong on-line presence, aided this business during the COVID-19 crisis. The business was also helped by our customers appearing to have more spending power, due to less travel taking place, with some sales lines seeing material growth - such as electric bikes.

JEBS, our building services unit, positively moved to a profit of £0.2m against a £0.1m loss in 2019 as a result of an increase in revenue, and a move to higher margin work.

Our other business units (Jersey Energy, Jendev, Jersey Deep Freeze and fibre optic lease rentals) produced increased profits of £0.8m being £0.2m above last year.

The net interest cost in 2020 was £1.4m being £0.1m higher than in 2019 due to the implementation of IFRS 16 ('Leases'). The taxation charge   at £3.1m was marginally higher than the level in 2019.

Group basic and diluted earnings per share at 37.94p compared to 38.42p in 2019 due to profitability being similar in both years.

Dividends   paid in the year, net of tax, rose by 5%, from 15.25p in 2019 to 16.05p in 2020. The proposed final dividend for this year is 9.70p, a 5% rise on the previous year. Dividend cover, at 2.4 times, was marginally lower than comparable 2.5 times in 2019.

Net cash inflow from operating activities at £26.9m was £0.8m lower than in 2019. Capital expenditure , at £11.2m was £2.7m lower than £13.9m last year as there was material spend in 2019 in completing the St Helier West primary sub-station. Dividends paid were £5.0m compared to £4.7m in 2019. The resultant position was that net cash at the year-end was £5.5m, being £30.0m of borrowings offset by £35.5m of cash and cash equivalents, which was £10.6m more positive than last year.

Our defined benefits pension scheme showed a s urplus at 30 September 2020, under IAS 19 "Employee Benefits", of £5.9m, net of deferred tax, compared with a surplus of £8.3m at 30 September 2019. Assets rose 1% from £154.7m to £156.6m during the year. However, liabilities also increased 4% from £144.2m to £149.3m since the last year-end. This was largely due to the discount rate assumption, which heavily influences the calculation of liabilities, falling from 1.9% in 2019 to 1.6% in 2020, reflecting sentiments in prevailing financial markets.

Impact of new accounting standard - IFRS 16 was adopted from 1 October 2019, applying the "modified retrospective" approach whereby comparative figures are not restated. In adopting this approach, the results for the year to 30 September 2020 are not directly comparable with those reported in the prior year under the previous applicable accounting standard IAS 17 "Leases".

This adoption has resulted in an increase in Group operating profit of £86k, (a £189k reduction in rent expense has been partially offset by an increase of £103k in depreciation). Finance costs have increased by £131k, resulting in a decrease in profit from operations before taxation of £45k. At 30 September 2020 the net value of right of use assets under IFRS 16 totalled £2.9m, with a corresponding lease liability of £2.9m.

Whilst there is no impact on total cash and cash equivalents, there has been a reclassification of lease payments resulting in a deterioration of net cash flows arising from financing activities, whilst there is a corresponding increase in net cash flows from operating activities.

Consolidated Income Statement		2020		2019
For the year ended 30 September 2020		£000		£000
Revenue		111,747		110,709
Cost of sales		(69,695)		(69,282)
Gross Profit		42,052		41,427
Other income		-		750
Revaluation of investment properties		515		689
Operating expenses		(26,360)		(26,784)
Group operating profit		16,207		16,082
Finance income		139		103
Finance costs		(1,516)		(1,365)
Profit from operations before taxation		14,830		14,820
Taxation		(3,090)		(2,969)
Profit from operations after taxation		11,740		11,851
Attributable to:
Owners of the Company		11,624		11,773
Non-controlling interests		116		78
		11,740		11,851
Earnings per share
- basic and diluted		37.94p		38.42p

In 2020 the Directors have made a classification change in relation to the amortisation of deferred infrastructure charges. In order to present the results in a consistent format, the Directors have reclassified the prior year reported results, increasing both Operating expenses and Revenue by £415k, with no impact to Group operating profit.  

Consolidated Statement of Comprehensive Income		2020		2019
		£000		£000
Profit for the year		11,740		11,851
Items that will not be reclassified subsequently to profit or loss:
Actuarial (loss)/gain on defined benefit scheme		(1,663)		7,643
Income tax relating to items not reclassified		333		(1,529)
		(1,330)		6,114
Items that may be reclassified subsequently to profit or loss:
Fair value gain/(loss) on cash flow hedges		1,290		(3,007)
Income tax relating to items that may be reclassified		(258)		601
		1,032		(2,406)
Total comprehensive income for the year		11,442		15,559
Attributable to:
Owners of the Company		11,326		15,481
Non-controlling interests		116		78
		11,442		15,559

Consolidated Balance Sheet
30 September 2020
					2020		2019
					£000		£000
NON-CURRENT ASSETS
Intangible assets					479		683
Property, plant and equipment					217,936		217,046
Right of use assets					2,899		-
Investment properties					21,755		21,240
Trade and other receivables					300		383
Retirement benefit surplus					7,315		10,417
Derivative financial instruments					277		208
Other investments					5		5
Total non-current assets					250,966		249,982
CURRENT ASSETS
Inventories					6,028		6,018
Trade and other receivables					16,645		17,995
Derivative financial instruments					960		197
Cash and cash equivalents					35,520		24,915
Total current assets					59,153		49,125
Total assets					310,119		299,107
LIABILITIES
Trade and other payables					18,193		17,320
Current tax liabilities					2,742		2,714
Lease liabilities					65		-
Derivative financial instruments					143		298
Total current liabilities					21,143		20,332
NET CURRENT ASSETS					38,010		28,793
NON-CURRENT LIABILITIES
Trade and other payables					22,714		21,757
Lease liabilities					2,879		-
Derivative financial instruments					-		303
Financial liabilities - preference shares					235		235
Borrowings					30,000		30,000
Deferred tax liabilities					27,209		26,936
Total non-current liabilities					83,037		79,231
Total liabilities					104,180		99,563
Net assets					205,939		199,544
EQUITY
Share capital					1,532		1,532
Revaluation reserve					5,270		5,270
ESOP reserve					(120)		(45)
Other reserves					875		(157)
Retained earnings					198,259		192,882
Equity attributable to owners of the company					205,816		199,482
Non-controlling interests					123		62
Total equity					205,939		199,544

Consolidated Statement of Changes in Equity for the year ended 30 September 2020	Share capital	Revaluation  reserve	ESOP reserve	Other reserves	Retained earnings	Total
	£000	£000	£000	£000	£000	£000
At 1 October 2019	1,532	5,270	(45)	(157)	192,882	199,482
Total recognised income and expense for the year	-	-	-	-	11,624	11,624
Funding of employee share option scheme	-	-	(78)	-	-	(78)
Amortisation of employee share option scheme	-	-	3	-	-	3
Unrealised gain on hedges (net of tax)	-	-	-	1,032	-	1,032
Actuarial loss on defined benefit scheme (net of tax)	-	-	-	-	(1,330)	(1,330)
Equity dividends	-	-	-	-	(4,917)	(4,917)
At 30 September 2020	1,532	5,270	(120)	875	198,259	205,816
	Share capital	Revaluation  reserve	ESOP reserve	Other reserves	Retained earnings	Total
	£000	£000	£000	£000	£000	£000
At 1 October 2018	1,532	5,270	(41)	2,249	179,666	188,676
Total recognised income and expense for the year	-	-	-	-	11,773	11,773
Funding of employee share option scheme	-	-	(20)	-	-	(20)
Amortisation of employee share option scheme	-	-	16	-	-	16
Unrealised loss on hedges (net of tax)	-	-	-	(2,406)	-	(2,406)
Actuarial gain to defined benefit scheme (net of tax)	-	-	-	-	6,114	6,114
Equity dividends	-	-	-	-	(4,671)	(4,671)
At 30 September 2019	1,532	5,270	(45)	(157)	192,882	199,482

Consolidated Statement of Cash Flows		2020	2019
for the year ended 30 September 2020		£000	£000
CASH FLOWS FROM OPERATING ACTIVITIES
Operating profit		16,207	16,082
Depreciation and amortisation charges		11,424	11,604
Share based reward charges		3	16
Gainon revaluation of investment property		(515)	(689)
Pension operating charge less contributions paid		1,439	1,977
Profit on sale of fixed assets		(24)	(2)
Operating cash flows before movement in working capital		28,534	28,988
Working capital adjustments:
Decrease/(increase) in inventories		(10)	1,074
(Increase)/decrease in trade and other receivables		1,433	(2,675)
Increase in trade and other payables		1,071	4,023
Net movement in working capital		2,494	2,422
Interest paid		(1,376)	(1,356)
Preference dividends paid		(9)	(9)
Income taxes paid		(2,714)	(2,300)
Net cash flows from operating activities		26,929	27,745
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment		(10,922)	(13,850)
Investment in intangible assets		(337)	(90)
Deposit interest received		139	103
Net proceeds from disposal of fixed assets		24	2
Net cash flows used in investing activities		(11,096)	(13,835)
CASH FLOWS FROM FINANCING ACTIVITIES
Equity dividends paid		(4,917)	(4,671)
Dividends paid to non-controlling interest		(55)	(69)
Purchase of shares by Employee Benefit Trust		(78)	-
Repayment of lease liabilities		(189)	-
Net cash flows used in financing activities		(5,239)	(4,740)
Net increase in cash and cash equivalents		10,594	9,170
Cash and cash equivalents at beginning of year		24,915	15,735
Effect of foreign exchange rates		11	10
Cash and cash equivalents at end of year		35,520	24,915

In 2020 the Directors have made a presentational change in relation to deposit interest received, presenting this within investing activities, in compliance with IAS 7 "Statement of Cash Flows". In the prior year deposit interest received was presented within financing activities. In order to present the consolidated cash flow statement in a consistent format, the Directors have reclassified prior year's deposit interest received of £103k. This adjustment has had no impact on the 2019 reported Net increase in cash and cash equivalents.

Notes to the accounts

Year ended 30 September 2020

1.  Basis of Preparation

The consolidated financial statements of Jersey Electricity plc, for the year ended 30 September 2020, 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 2019 annual report and accounts, except for IFRS16, the impacts of which are disclosed in the 31 March 2020 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 2021.

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, including the impact of COVID-19. 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:
	2020	2020	2020		2019	2019	2019
	External	Internal	Total		External	Internal	Total
	£000	£000	£000		£000	£000	£000
Revenue
Energy - arising in the course of ordinary business	85,140	122	85,262		84,322	126	84,448
- arising from the sale of heavy fuel oil	-	-	-		2,723	-	2,723
Building Services	3,767	1,027	4,794		3,286	809	4,095
Retail	17,825	60	17,885		15,199	59	15,258
Property	2,266	645	2,911		2,262	612	2,874
Other	2,749	891	3,640		2,917	898	3,815
	111,747	2,745	114,492		110,709	2,504	113,213
Intergroup elimination			(2,745)				(2,504)
Revenue			111,747				110,709
Operating profit
Energy			12,257				12,281
Building Services			216				(79)
Retail			1,176				895
Property			1,270				1,679
Other			773				617
			15,692				15,393
Revaluation of investment properties			515				689
Operating profit			16,207				16,082

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

In 2020 the Directors have made a classification change in relation to the amortisation of deferred infrastructure charges. In order to present the results in a consistent format, the Directors have reclassified the prior year reported results, increasing both Operating expenses and Revenue by £415k, with no impact to Group operating profit.  

 

END

 

 

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