Jersey Electricity - Preliminary Announcement of Annual Results

Jersey Electricity

14/12/2017 07:00

RNS Number : 2766Z

Jersey Electricity PLC

14 December 2017

JERSEYELECTRICITYplc     PreliminaryAnnouncement of Annual Results

Year Ended30September2017

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

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) / losson 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

This information is provided by RNS

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