REG - Jersey Electricity - Half-year Report
20/05/2024 17:15
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RNS Number : 1686P Jersey Electricity PLC 20 May 2024
Jersey Electricity PLC
Interim Report
for the six months ended 31 March 2024
The Board approved at a meeting on 20 May 2024 the Interim Management Report
for the six months ended 31 March 2024 and declared an interim dividend of
8.40p compared to 8.00p for 2022/23. The dividend will be paid on 24 June 2024
to those shareholders registered in the records of the Company at the close of
business on 7 June 2024.
The Interim Management Report is attached and will be available to the public
on the Company's website www.jec.co.uk/investors
(http://www.jec.co.uk/investors) .
The Interim Management Report for 2024 has not been audited, or reviewed, by
our external auditors, nor have the results for the equivalent period in 2023.
The results for the year ended 30 September 2023 were extracted from the
statutory accounts. The auditor has reported on those accounts and their
report was unmodified.
L.G.
Fulton
A. Welsby
Chief Financial
Officer
Company Secretary
Direct telephone number: 01534 505270
Direct telephone number: 01534 505250
Mobile: 07797
778688
Email:
lfulton@jec.co.uk
Email: awelsby@jec.co.uk
20 May 2024
The Powerhouse,
PO Box 45,
Queen's Road,
St Helier,
Jersey JE4 8NY
Directors' Statement
Jersey Electricity Plc (JE) has delivered a strong set of both operational and
financial results for the period 1(st) October 2023 to 31(st) March 2024.
Operational Performance
At the start of the financial year Jersey faced one of the worst storms in at
least 40 years. The storm caused a lot of damage and disruption on the Island
and the Energy Business had faced significant challenges with its overhead
network and certain substations, but overall resilience remained strong with a
less than 1% fault rate. We thank all our staff, and the broader Community for
their strong response to the Storm.
Excluding the storm, our Customer Minutes Lost remain below 7 and the enabling
works has begun on our new ground mounted solar array in St Clements. We have
also commenced the replacement of transformers at Five Oaks and have initiated
our £23m resilience programme at La Collette.
Wholesale Energy Markets
In our 2023 Annual Report, we noted that global energy markets had eased
somewhat compared to the turmoil of 2021/22. The market has continued to
improve with more easing in the first three months of calendar year 2024,
however, it remains above historic levels and the macro-economic environment
is tough. The geopolitical landscape is fragile, with ongoing conflict in
Ukraine and rising tension in the Middle East. Through this period of
uncertainty and turmoil we have continued to demonstrate financial resilience
and have shielded our customers from the higher retail prices seen elsewhere
without needing any Government help/subsidy.
Hedging of electricity and foreign exchange, and customer tariffs
Our focus remains on delivering secure, low-carbon electricity supplies and
maintaining relatively stable and competitive customer tariffs, now and into
the future. Our electricity purchases are fully fixed for the remainder of
2024 and materially hedged for 2025. In addition, we have around one third of
our expected 2026 and 2027 requirements hedged. As these are contractually
denominated in Euros, we also enter forward foreign currency contracts, on a
three-year rolling basis, reducing the volatility of our cost base and aiding
tariff planning. In January 2024 we implemented a 12% rise in customer tariffs
and do not anticipate further rises during the remainder of 2024.
Even with the rises implemented to date, the tariffs paid by our customers
continue to benchmark well against other jurisdictions. Residential customers
on the general domestic tariff in Jersey pay around 40% less than the
equivalent customers in the UK on average for their electricity.
Financial Performance
1(st) October 2023 - 31 March 2024 2024 2023
Electricity Sales in kWh 355.9m 355.7m
Revenue £75.6m £69.4m
Profit before tax £10.3m £10.3m
Earnings per share 26.15p 26.23p
Final dividend paid per ordinary share 11.40p 10.80p
Proposed interim dividend per ordinary share 8.40p 8.00p
Group revenue, at £75.6m, was 9% higher for the first half of 2023/24
compared with £69.4m for the same period last year mainly due to a rise in
revenue from our Energy business. Profit before tax was in line with prior
year at £10.3m. Cost of sales and operating costs increased by 5% year on
year recognising the ongoing inflationary pressures.
Net cash on the balance sheet, which comprises borrowings less cash and cash
equivalents, on 31 March 2024, was £16.7m compared with £16.8m at this time
last year (and £17.4m at our last year end on 30 September 2023).
Energy Performance
Unit sales of electricity were static at 355.9 kWh compared to 355.7 kWh for
the same period last year. We imported 96% of our on-island requirement from
France and 4% from the Energy from Waste plant, owned by the Government of
Jersey. Just over 1 million units of power (0.4%) was generated in Jersey
using our traditional oil-fired plant, which is run during testing regimes,
and from our local solar generation. These importation and generation levels
are materially consistent with the same period last year.
Revenue in our Energy Business at £60.9m was £6.1m higher than in 2022/23
with the year-on-year increase being largely attributable to a 12% tariff rise
in January 2024. Operating profit at £8.5m is consistent with the same period
last year. We anticipate our year end position to be in line with our targeted
range of 6% - 7% Return on Assets (ROA), on a five-year rolling basis.
Non-Energy performance
Throughout a challenging economic period, our Non-Energy Businesses have
produced a half year position that remains consistent with the prior financial
year. Our Powerhouse retail store has had a slight reduction in profit year on
year due to inflationary cost pressures relating to storage. Our property
portfolio has, as forecast, now leased the commercial space at the Powerhouse
site resulting in all major commercial spaces being fully occupied. JEBS, our
building services unit, has also performed well over the first 6 months of the
year, with profits increased by £0.1m over the same period last year.
Liquidity and cashflow
Net cash on the balance sheet, which comprises borrowings less cash and cash
equivalents, on 31 March 2024, was £16.7m compared with £16.8m at this time
last year (and £17.4m at our last year end on 30 September 2023). Net cash
consists of cash and cash equivalents of £46.7m offset by £30.0m of
long-term debt. The cash and cash equivalents balances have, for the last five
years, remained relatively stable. However, over the next few years, we expect
to see this balance reduce as our capital programme increases in line with our
long-term investment requirements. Our programme of work is focussed on
ensuring investment is optimised to deliver community, customer, and
shareholder value.
Pension scheme
The defined benefit pension scheme surplus (without deduction of deferred tax)
on our balance sheet on 31 March 2024 stood at £28.9m, compared with a
surplus of £25.5m on 30 September 2023.
Net of deferred tax, the pension surplus, increased by £2.7m, mainly driven
by the increase in assets by 7.7% over the period versus the increase in
liabilities of the scheme by 6.1%. Assets in the Scheme rose by around
£8.6m to £119.7m. Unlike most UK schemes, the Jersey Electricity pension
scheme is not funded to pay mandatory annual rises on retirement. The P&L
charge is £0.1m for the half-year to 31 March 2024, which we have determined
by pro-rating the estimated P&L charge for the full year ending
30 September 2024. There were no special events during the period that led to
past service costs or settlement costs in the P&L charge. No new
ex-gratia pension increases were awarded during the period.
Dividends
Your Board proposes to pay an interim net dividend for 2024 of 8.4p (2023:
8.0p). As stated in previous years, we aim to deliver sustained real growth
each year over the medium-term. The final dividend for 2023 of 11.40p, paid in
late March in respect of the last financial year, was an increase of 5% on the
previous year.
Risk and Outlook
The principal risks and uncertainties identified in our last Annual Report,
issued in December 2023 have not materially altered in the interim period. As
highlighted earlier in this report, there is continued uncertainty in the
energy markets, although we have seen an overall easing during the first
quarter of 2024.
The JE Board is satisfied business has sufficient resources to continue in
operation for the foreseeable future, a period of not less than 12 months from
the date of approval of this report and accordingly, we continue to adopt the
going concern basis in preparing the condensed financial statements.
Responsibility Statement
We confirm to the best of our knowledge:
(a) the condensed set of financial statements has been prepared in
accordance with IAS 34 'Interim Financial Reporting'.
(b) the Interim Directors Statement includes a fair review of the
information required by the Disclosure and Transparency Rule DTR 4.2.7R
(indication of important events during the first six months and description of
principal risks and uncertainties for the remaining six months of the year);
and
(c) the Interim Directors Statement includes a fair review of the
information required by the Disclosure and Transparency Rule DTR 4.2.8R
(disclosure of related party transactions and changes therein); and
(d) this half yearly interim report looks at certain forward-looking
statements with respect to the operations, performance, and financial
condition of the Group. By their nature, these statements involve uncertainty
since future events and circumstances can cause results and developments to
differ materially from those anticipated. The forward-looking statements
reflect knowledge and information available at the date of preparation of this
half yearly financial report and the Company undertakes no obligation to
update these forward-looking statements. Nothing in this half yearly financial
report should be construed as a profit forecast.
Investor timetable for 2024
7 June Record date for interim ordinary dividend
24 June Interim ordinary dividend for year ending 30 September 2024
1 July Payment date for preference share dividends
18 December Announcement of full year results
C.J. AMBLER - Chief Executive L.G. Fulton -
Chief Financial
Officer
Director
Director
20 May 2024
Condensed Consolidated Income Statement (Unaudited)
Six months ended Year ended
31-Mar 30-Sep
2024 2023 2023
Note £ 000 £ 000 £ 000
Revenue 2 75,593 69,378 125,078
Cost of sales (48,606) (46,459) (80,924)
Rebate of past energy costs - non-recurring item - 3,593 3,593
Gross profit 26,987 26,512 47,747
Movement on revaluation of investment properties - - (1,215)
Operating expenses (17,050) (16,146) (32,010)
Group operating profit 2 9,937 10,366 14,522
Finance income 1,127 706 1,871
Finance costs (765) (767) (1,528)
Profit from operations before taxation 10,299 10,305 14,865
Taxation 3 (2,208) (2,208) (3,432)
Profit from operations after taxation 8,091 8,097 11,433
Attributable to:
Owners of the Company 8,011 8,037 11,280
Non-controlling interests 80 60 153
8,091 8,097 11,433
Earnings per share
- basic and diluted 26.15p 26.23p 36.81p
Condensed Consolidated Statement of Comprehensive Income (Unaudited)
Six months ended Year ended
31-Mar 30-Sep
2024 2023 2023
£ 000 £ 000 £ 000
Profit for the period/year 8,091 8,097 11,433
Items that will not be reclassified subsequently to profit or loss:
Actuarial gain/(loss) on defined benefit scheme 2,627 4,307 (815)
Income tax relating to items not reclassified (525) (861) 163
2,102 3,446 (652)
Items that may be reclassified subsequently to profit or loss:
Fair value loss on cash flow hedges (1,525) (2,013) (3,361)
Income tax relating to items that may be reclassified 305 403 672
(1,220) (1,610) (2,689)
Total comprehensive income for the period/year 8,973 9,933 8,092
Attributable to:
Owners of the Company 8,893 9,873 7,939
Non-controlling interests 80 60 153
8,973 9,933 8,092
Condensed Consolidated Balance Sheet (Unaudited)
As at 31 March As at 30 September
2024 2023 2023
Note £ 000 £ 000 £ 000
NON-CURRENT ASSETS
Intangible assets 496 654 681
Property, plant and equipment 216,277 215,329 216,136
Right of use assets 3,128 3,259 3,194
Investment properties 27,615 28,830 27,615
Trade and other receivables 300 300 300
Retirement benefit asset 28,864 30,130 25,546
Derivative financial instruments 6 - 916 129
Other investments 5 5 5
Total non-current assets 276,685 279,423 273,606
CURRENT ASSETS
Inventories 9,414 9,454 9,187
Trade and other receivables 32,457 28,035 25,959
Derivative financial instruments 6 - 148 64
Cash and cash equivalents 46,743 46,795 47,429
Total current assets 88,614 84,432 82,639
TOTAL ASSETS 365,299 363,855 356,245
CURRENT LIABILITIES
Trade and other payables 20,829 22,799 19,459
Lease liabilities 81 81 81
Derivative financial instruments 6 440 110 536
Current tax liabilities 3,473 3,328 3,301
Total current liabilities 24,823 26,318 23,377
NET CURRENT ASSETS 63,791 58,114 59,262
NON-CURRENT LIABILITIES
Trade and other payables 26,399 25,390 26,249
Lease liabilities 3,152 3,212 3,193
Derivative financial instruments 6 1,654 174 225
Financial liabilities - preference shares 235 235 235
Borrowings 30,000 30,000 30,000
Deferred tax liabilities 32,108 32,508 31,422
Total non-current liabilities 93,548 91,519 91,324
TOTAL LIABILITIES 118,371 117,837 114,701
NET ASSETS 246,928 246,018 241,544
EQUITY
Share capital 1,532 1,532 1,532
Revaluation reserve 5,270 5,270 5,270
ESOP reserve (35) (18) (35)
Other reserves (1,675) 624 (455)
Retained earnings 241,721 238,418 235,100
Equity attributable to the owners of the Company 246,813 245,826 241,412
Non-controlling interest 115 192 132
TOTAL EQUITY 246,928 246,018 241,544
Condensed Consolidated Statement of Changes in Equity (Unaudited)
Share Revaluation ESOP Other Retained Total
Capital Reserve Reserve Reserves* Earnings
£000's £000's £000's £000's £000's £000's
At 1 October 2023 1,532 5,270 (35) (455) 235,100 241,412
Total recognised income and expense for the period - - - - 8,011 8,011
Amortisation of employee share scheme - - - - - -
Unrealised loss on hedges (net of tax) - - - (1,220) - (1,220)
Actuarial gain on defined benefit scheme (net of tax) - - - - 2,102 2,102
Equity dividends paid - - - - (3,492) (3,492)
As at 31 March 2024 1,532 5,270 (35) (1,675) 241,721 246,813
At 1 October 2022 1,532 5,270 (38) 2,234 230,232 239,230
Total recognised income and expense for the period - - - - 8,037
8,037
Amortisation of employee share scheme - - 20 - -
20
Unrealised loss on hedges (net of tax) - - - (1,610) -
(1,610)
Actuarial gain on defined benefit scheme (net of tax) - - - - 3,446
3,446
Equity dividends paid - - - - (3,309) (3,309)
As at 31 March 2023 1,532 5,270 (18) 624 238,406 245,814
At 1 October 2022 1,532 5,270 (38) 2,234 230,232 239,230
Total recognised income and expense for the period - - - - 11,280
11,280
Amortisation of employee share scheme - - 3 - -
3
Unrealised loss on hedges (net of tax) - - - (2,689) -
(2,689)
Actuarial loss on defined benefit scheme (net of tax) - - - - (652)
(652)
Equity dividends paid - - - - (5,760) (5,760)
As at 30 September 2023 1,532 5,270 (35) (455) 235,100 241,412
*'Other reserves represents the foreign currency hedging reserve.
Condensed Consolidated Cash Flow Statement (Unaudited)
Six months ended 30 March Year ended 30 September
2024 2023 2023
£ 000's £ 000's £ 000's
Cash flows from operating activities
Operating profit 9,937 10,366 14,522
Adjustments to add back / (deduct) non-cash items and items disclosed
elsewhere on the Cash Flow Statement:
Depreciation and amortisation charges 6,349 5,741 11,581
Share based reward charges - 20 3
Loss on revaluation of investment property - - 1,215
Pension operating charge less contributions paid 692 612 73
Deemed interest from hire purchase agreements - - 183
Profit on sale of property, plant, and equipment (34) (1) (3)
Operating cash flows before movement in working capital 16,944 16,738 27,574
Working capital adjustments:
Increase in inventories (227) (2,281) (2,014)
Increase in receivables (9,473) (8,101) (3,835)
Increase / (decrease) in payables 2,574 2,136 (617)
Net movement in working capital (7,126) (8,246) (6,466)
Interest paid on borrowings (761) (763) (1,368)
Preference dividends paid (4) (4) (9)
Income taxes paid (1,568) (1,045) (2,089)
Net cash flows from operating activities 7,485 6,680 17,642
Cash flows from investing activities
Purchase of property, plant and equipment (5,626) (4,541) (13,046)
Investment in intangible assets - (68) (92)
Deposit interest received 1,127 706 1,688
Net proceeds from disposal of fixed assets 34 1 3
Net cash flows used in investing activities (4,465) (3,902) (11,447)
Cash flows from financing activities
Equity dividends paid (3,492) (3,309) (5,760)
Dividends paid to non-controlling interest (97) - (165)
Repayment of lease liabilities (114) (72) (242)
Net cash flows used in financing activities (3,703) (3,381) (6,167)
Net (decrease) / increase in cash and cash equivalents (683) (603) 28
Cash and cash equivalents at the beginning of the period 47,429 47,397 47,397
Effect of foreign exchange rate changes (3) 1 4
Cash and cash equivalents at the end of the period 46,743 46,795 47,429
Of the £46.7m cash and cash equivalents at 31 March 2024, £35.0m with an
average of 74 days remaining. On 30(th) September 2023 this was £34.0m with
an average of 70 days remaining, whilst on 31(st) March 2023 the figure was
£37.0m with an average of 74 days remaining.
Notes to the Condensed Interim Accounts (Unaudited)
1 Accounting policies
Basis of preparation
The interim accounts for the six months ended 31 March 2024 have been
prepared based on the accounting policies set out in the 30 September 2023
annual report and accounts using accounting policies consistent with
International Financial Reporting Standards (IFRS) as adopted by the EU and in
accordance with IAS 34 'Interim Financial Reporting'. There have been no
changes to accounting standards during the current financial period that has
impacted the disclosures in these financial statements and the full year
financial statements that will be prepared for 30 September 2023.
Jersey Electricity Plc has considerable financial resources and, consequently,
the directors believe that the Group is well placed to manage its business
risks successfully despite the current uncertain economic outlook. The
directors have a reasonable expectation that the Group has adequate resources
to continue in operational existence for the foreseeable future. Thus, they
continue to adopt the going concern basis of accounting in preparing the
annual financial statements.
2 Revenue and profit
The contributions of the various activities of the Group to turnover and
profit are listed below:
Six months ended Six months ended Year ended
31 March 2024 31 March 2023 30 September 2023
External Internal Total External Internal Total External Internal Total
Revenue £000 £000 £000 £000 £000 £000 £000 £000 £000
Energy 60,937 55 60,992 54,833 46 54,879 97,053 89 97,142
Retail 9,573 34 9,607 9,955 35 9,990 3,349 831 4,180
Building Services 2,136 294 2,430 1,684 343 2,027 18,514 56 18,570
Property 1,151 320 1,471 1,226 320 1,546 2,350 641 2,991
Other* 1,796 65 1,861 1,680 264 1,944 3,812 466 4,278
75,593 768 76,361 69,378 1,008 70,386 125,078 2,083 127,161
Inter-segment elimination (768) (1,008) (2,083)
75,593 69,378 125,078
Operating Profit
Energy profit before rebate of past energy costs 8,519 5,061 9,329
Rebate of past energy costs - 3,593 3,593
Energy profit including rebate 8,519 8,654 12,922
Retail 514 672 162
Building Services 128 27 917
Property 458 788 1,149
Other * 318 225 587
Operating profit before property revaluation/sale 9,937 10,366 15,737
Loss on revaluation of investment properties - - (1,215)
Operating profit 9,937 10,366 14,522
*Other segment includes Jersey Energy, Jendev as well as Jersey Deep Freeze
Limited, the Company's sole subsidiary.
Materially, all the Group's operations are conducted within the Channel
Islands. All transfers between divisions are on an arm's length basis. Gains
or losses resulting from 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 in the 30 September 2023 annual report.
3 Taxation
Six months Six months Year
ended ended ended
31 March 31 March 30 September
2024 2023 2023
£000 £000 £000
Current income tax 1,741 2,132 3,301
Deferred income tax 467 76 131
Total income tax 2,208 2,208 3,432
The Company is taxable at the rate applicable to utility companies in Jersey
of 20%. (2023: 20%).
4 Dividends paid and proposed
Six months Six months Year
ended ended ended
31 March 31 March 30 September
2024 2023 2023
Dividends per share
Paid 11.40p 10.80p 18.80p
Proposed 8.40p 8.00p 11.40p
Six months Six months Year
ended ended ended
31 March 31 March 30 September
2024 2023 2023
£000 £000 £000
Distribution to equity holders 3,492 3,309 5,760
The distribution to equity holders in respect of the final dividend for 2023
of £3,492,059 (11.40p net of tax per share) was paid on 15 March 2024. The
Directors have declared an interim dividend of 8.40p per share, net of tax
(2023: 8.00p) for the six months ended 31 March 2024 to shareholders on the
register at the close of business on 7 June 2024. This dividend was approved
by the Board on 20 May 2024 and has not been included as a liability on 31
March 2024.
5 Pensions
In consultation with the independent actuaries to the scheme, the valuation
of the pension scheme assets and liabilities has been updated to reflect
current market discount rates, discount rates, inflation, salary increases,
pension increases, post-retirement mortality, current market values of
investments and actual investment returns applicable under IAS 19 'Employee
Benefits', and also consideration has been given as to whether there have been
any other events that would significantly affect the pension liabilities.
6 Financial Instruments
The Group held the following derivative contracts, classified as level 2
financial instruments on 31 March 2023.
Six months Six months Year
ended ended ended
31 March 31 March 30 September
2024 2023 2023
Fair value of currency hedges £000 £000 £000
Derivative assets
Less than one year - 148 64
Greater than one year - 916 129
Derivative liabilities
Less than one year (440) (110) (536)
Greater than one year (1,654) (174) (225)
Total net liabilities (2,094) (780) (568)
All financial instruments for which fair value is recognised or disclosed are
categorised within the fair value hierarchy. This hierarchy is based on the
underlying assumptions used to determine the fair value measurement as a whole
and is categorised as follows:
Level 1 - financial instruments are those with values that are immediately
comparable to quoted (unadjusted) market prices in active markets for
identical assets or liabilities.
Level 2 - financial instruments are those with values that are determined
using valuation techniques for which the basic assumptions used to calculate
fair value are directly or indirectly observable (such as readily available
market prices).
Level 3 - financial instruments are shown at values that are determined by
assumptions that are not based on observable market data (unobservable
inputs).
The derivative contracts for foreign currency shown above are classified as
level 2 financial instruments and are valued using a discounted cash flow
valuation technique. Future cash flows are estimated based on forward exchange
rates (from observable forward exchange rates at the end of the reporting
period) and contract forward rates, discounted at a rate that reflects the
credit risk of various counterparties.
7 Related Party Transactions
The Government of Jersey (the "Government") treats the Company as a
strategic investment. Whilst it holds the majority voting rights in the
Company, the Government does not view the Company as being under its control
and as such, it is not consolidated within the Government accounts. The
Government is understood by the Directors to have significant influence but
not control of the Company.
The Company has elected to take advantage of the disclosure exemptions
available in IAS 24, paragraphs 25 and 26. All transactions are undertaken
on an arms-length basis in the ordinary course of business.
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