REG - Jersey Electricity - Final Results Summary

Jersey ElectricityAnnouncement

20/12/2023 18:00

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RNS Number : 5291X  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:
lfulton@jec.co.uk

 

 

 

 

 

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.

 

 

 

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