Preliminary Announcement of Annual Results

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 : [e-mail]                                                        Email : [e-mail]

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

 

END

 

 

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