REG - Jersey Electricity - Notice of Results <Origin Href="QuoteRef">JLEC.L</Origin>

Jersey ElectricityAnnouncement

14/12/2016 07:30

RNS Number : 7577R
Jersey Electricity PLC
14 December 2016
  
JERSEY ELECTRICITY plc     PreliminaryAnnouncement of Annual Results
Year Ended30September2016
At a meeting of the Board of Directors held on 13 December 2016, the final accounts for the Group for the year to 30 September 2016 were approved, details of which are attached. 
The financial information set out in the announcement does not constitute the Group's statutory accounts for the year ended 30 September 2016 or 2015, but is derived from those accounts. Statutory accounts for 2015 have been delivered to the Jersey Registrar of Companies and those for 2016 will be delivered in early 2017. The auditor has reported on those accounts and their reports were unmodified. 
A final dividend of 8.00p on the Ordinary and 'A' Ordinary shares in respect of the year ended 30 September 2016 was recommended (2015: 7.60p). Together with the interim dividend of 5.50p the proposed total dividend declared for the year was 13.50p on each share (2015: 12.85p). 
 
The final dividend will be paid on 30 March 2017 to those shareholders registered in the books of the Company on 20 February 2017. A dividend on the 5% cumulative participating preference shares of 1.5% (2015: 1.5%) payable on 3 July 2017 was also recommended.
The Annual General Meeting of the Company will be held on 2 March 2017.
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 2016 
The Powerhouse
PO Box 45
Queens Road
St Helier
Jersey JE4 8NY 
JERSEY ELECTRICITY plc 
Preliminary Announcement of Annual Results
Year ended 30 September 2016   
The Chairman, Geoffrey Grime,comments:
"I am pleased to report that Jersey Electricity has delivered another excellent year's performance in 2015/16. The Company has continued to make great progress in implementing its infrastructure strategy, at the centre of which was the successful delivery of another 100MW interconnector, Normandie 1 (N1), installed between Jersey and France, and delivered ahead of schedule and materially below budget. A shared investment with our partners Guernsey Electricity, N1 is the replacement for EDF1, Jersey Electricity's first interconnector, which came to the end of its life in 2012. This new cable link gives Jersey and Guernsey the benefit of three submarine cables between Jersey and France, across two diverse routes. The primary project was completed in just four years at a cost of around 30m representing another notable achievement.
 
The Company's success this year is not limited to delivering capital projects. In addition we also produced our best ever Group financial performance supported by strong improvements in its non-Energy businesses. In the Energy business, Jersey Electricity has built on the good progress made last year, maintaining profitability at a level needed to support ongoing investment and commensurate with a rate of return that we see in regulated entities elsewhere. Importantly, despite the recent period of sustained investment, we have been able to maintain prices at current levels for nearly three years and remain competitively priced relative to other islands and even larger EU countries. Furthermore, we have announced that electricity prices will not increase until 1 January 2018 at the earliest. Our supply reliability, health and safety and environmental performance, including the carbon intensity of supplied electricity, remain strong relative to peers which is a significant achievement given the particular challenges of operating in an island context. 
As sole supplier of over 40% of the Island's energy requirements we have a huge responsibility to our customers and it is gratifying that we maintained our overall customer service rating at a level assessed as being "excellent" when compared with similar service providers in the market.
Finally there have been reports in recent weeks of potential supply security issues in France because of unexpected inspection shutdowns in a number of nuclear generation plants. We have received a high degree of comfort from EDF that the supplies to the Channel Islands will not be impacted by what is viewed as a short-term issue."
Financial Summary
2016
2015
Electricity Sales in kilowatt hours
 625m
 627m
Revenue
103.4m
100.5m
Profit before tax pre-exceptional items 
 13.1m
 12.4m
Earnings per share pre-exceptional items
 33.31p
 32.94p
Dividends paid per ordinary share 
 13.10p
 12.45p
Final proposed dividend per share
 8.00p
 7.60p
Net debt
 29.0m
 17.5m
Group revenue for the year to 30 September 2016 at 103.4m was 3% higher than in the previous financial year. Unit sales volumes of electricity were marginally behind last year with Energy revenues at 81.2m against 80.7m in 2015, slightly higher due to some non-recurring installation work in the year. Turnover in Powerhouse.je, our retail business, increased by 8% from 11.1m to 11.9m. Revenue in the Property business rose by 0.1m to 2.1m due to a higher level of rental income. Revenue from JEBS, our contracting and building services business, rose 1.0m from levels experienced in 2015 to 5.1m. Turnover in our Other Businesses rose 0.5m to 3.0m. 
Overall cost of sales rose by 0.6m to 65.2m due mainly to additional costs in the non-Energy business units associated with the aforementioned rise in revenue, partially offset by a fall in the Energy business. Operating expenses, at 23.5m, rose by 1.6m from their 2015 level with an increase in IAS19 pension costs of 0.4m and a 0.7m ex-gratia award for current pensioners being the main items. 
Profit before tax, pre-exceptional items, for the year to 30 September 2016, at 13.1m, increased by 6% from 12.4m in 2015. The rise was primarily generated from improved performance in our non-Energy business units. Profit before tax post-exceptional items, rose from 13.2m last year to 
14.8m in 2016. The exceptional credit of 1.7m in 2016 was in respect of the release of a rent accrual that had been accumulated over many years for our La Collette Power Station site. 
As highlighted previously in our Related Party Transactions note to the accounts the lease had been subject to a rent review dispute which was settled by an arbiter (and confirmed by subsequent legal judgement) in our favour and retained at a peppercorn rent, rather than at a higher level suggested by our landlord.
Our Energy business unit sales saw volumes falling marginally from 627m to 625m kilowatt hours after another relatively mild winter period with both the last two winters seeing temperatures above the long-term average. Profits in our Energy business rose from 11.5m to 11.6m. A lower cost of sales resulted in a higher margin but this was offset by higher pension costs. The main factor that contributed to the increase in such costs was a 0.7m charge of a non-recurring nature associated with the granting of an ex-gratia rise in pensions in service. In the financial year we imported 92% of our requirements from France (2015: 94%) and generated 3% of our electricity on-island at La Collette Power Station (2015: 1%). Additional generation for training was the main reason for the lower levels of importation in 2016 compared to the previous year. The remaining 5% of our electricity came from the local Energy from Waste plant being at the same level as in 2015. Continuing with the trend since 2014 there were no tariff changes during 2016 and our prices continue to remain competitive with other jurisdictions. 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 1.7m, rose by 0.1m from last year with a higher rental level and lower maintenance cost being the main drivers. Our investment property portfolio was revalued downwards this year by 0.3m to 20.1m by the external consultants who review the position annually. The main reason for this 2% devaluation is that a break clause, exercisable in 2023, for one of the leases, impacts such calculations between now and that date.Our retail business, Powerhouse.je, had a strong year post the restructuring and re-branding of the business with a loss of 0.1m in 2014 moving to a profit of 0.3m in 2015 and to 0.5m in 2016. JEBS, our contracting and business services unit produced a profit of 0.1m compared with a near breakeven position in 2015 in a challenging industry with high competition for staff. Our other business units - Jersey Energy, Jendev and Jersey Deep Freeze all had profitable years ahead of internal targets.
The interest charge in 2016 was 1.1m against 1.5m in 2015 with a capitalisation of interest associated with the new N1 subsea cable being the primary reason for the reduction. The taxation charge at 3.2m was 0.8m higher than 2015 due to a higher level of profitability. 
Group earnings per share, pre-exceptional items, rose 1% to 33.31p compared to 32.94p in 2015 due mainly to an increase in profits. Earnings per share, before adjusting for exceptional items, increased from 35.00p in 2015 to 37.69p in 2016.
Dividends paid in the year, net of tax, rose by 5%, from 12.45p in 2015 to 13.10p in 2016. The proposed final dividend for this year is 8.00p, a 5% rise on the previous year. Dividend cover, pre-exceptional items, at 2.5 times fell marginally from 2.6 times in 2015. If exceptional items are included, dividend cover rose from 2.8 times last year to 2.9 times in this financial year. 
Net cash inflow from operating activities at 25.2m was 1.9m higher than in 2015 with an increase in profit, prior to IAS 19 pension accounting, being the primary driver. Capital expenditure, at 32.4m rose from 16.8m last year as the N1 project spend dominated this year and resulted in net debt at the year-end of 29.0m being 11.5m higher than last year.
Our defined benefits pension scheme, which had an IAS 19 deficit of 5.8m, net of deferred tax, at the 2015 year end increased to a 9.2m deficit as at 30 September 2016. Scheme assets rose 20% since the last year end, but liabilities increased 22% due to a reduction in the discount rate applied, reflecting sentiments in financial markets after the UK decision in June 2016 to prepare to leave the EU. The formal triennial valuation was performed by our external actuary as at 31 December 2015 and this exercise showed a surplus of 6.9m at that point in time. 
Consolidated Income Statement

2016

2015
For the year ended 30 September 2016

000's

000's





Revenue

103,361

100,479
Cost of sales

(65,249)

(64,604)





Gross Profit

38,112

35,875





Revaluation of investment properties

(350)

(45)
Operating expenses

(23,498)

(21,931)





Group operating profit before exceptional items

14,264

13,899
Exceptional item - La Collette rent accrual reversal

1,676

-
 - RTE outage compensation

- 

479 
 - impact of reversal of EDF1 related provision

- 

310 
Group operating profit

15,940

14,688
Finance income

22 

36 
Finance costs

(1,154)

(1,555)





Profit from operations before taxation

14,808

13,169





Taxation

(3,166)

(2,397)





Profit from operations after taxation

11,642

10,772





Attributable to:




Owners of the Company

11,547 

10,725 
Non-controlling interests

95 

47 


 11,642 

 10,772 





Earnings per share




- basic and diluted

37.69p 

35.00p 







2016

2015
Consolidated Statement of Comprehensive Income 

 000

 000





Profit for the year

11,642

10,772





Items that will not be reclassified subsequently to profit or loss:




Actuarial loss on defined benefit scheme 

(2,829)

(5,706)
Income tax relating to items not reclassified

566 

1,141 


(2,263)

(4,565)





Items that may be reclassified subsequently to profit or loss:




Fair value gain/(loss) on cash flow hedges 

13,865

(874)
Income tax relating to items that may be reclassified

(2,773) 

175 


11,092

(699)





Total comprehensive income for the year

20,471

5,508





Attributable to:




Owners of the Company

20,376 

5,461 
Non-controlling interests

95 

47 


20,471

5,508
Balance Sheet

2016

2015
For the year ended 30 September 2016

 000

 000
NON-CURRENT ASSETS




Intangible assets

162

227 
Property, plant and equipment

209,168

187,845 
Investment properties

20,110

20,460 
Secured loan accounts

683

731 
Derivative financial instruments

5,957

414
Other investments

5 

5 
Total non-current assets

236,085 

209,682
CURRENT ASSETS




Inventories

 5,962 

6,239 
Trade and other receivables

 16,583 

14,777 
Derivative financial instruments

 2,788 

780 
Cash and cash equivalents

 1,925 

12,503 
Total current assets

 27,258 

34,299 
Total assets

 263,343 

243,981 
LIABILITIES




Trade and other payables

 16,084 

17,597 
Bank overdraft

 943 

-
Current tax liability

420 

404
Derivative financial instruments

 - 

3,892 
Total current liabilities

 17,447 

21,893 
NET CURRENT ASSETS

 9,811 

12,406 
NON-CURRENT LIABILITIES









Trade and other payables

 19,600 

18,884 
Retirement benefit deficit

 11,471 

7,291
Derivative financial instruments

 - 

2,422
Financial liabilities - preference shares

 235 

235
Long-term borrowings

 30,000 

30,000
Deferred tax liabilities

 20,482 

15,529
Total non-current liabilities

 81,788 

74,361
Total liabilities

 99,235 

96,254
Net assets

 164,108 

147,727
EQUITY




Share capital

1,532 

1,532 
Revaluation reserve

5,270

5,270
ESOP reserve

(155)

(97)
Other reserves

6,878

(4,214)
Retained earnings

150,523 

145,223 
Equity attributable to owners of the Company

164,048 

147,714 
Non-controlling interests

60 

13 
Total equity

164,108 

147,727 
Consolidated Statement of changes in Equity
Share
Revaluation 
ESOP 
Other
Retained
Total
for the year ended 30 September 2016
capital
reserve 
reserve 
reserves
earnings


 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 gain 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








Share
Revaluation 
ESOP 
Other
Retained
Total

capital
reserve 
reserve 
reserves
earnings


 000
 000
 000
 000
 000
 000
At 1 October 2014
1,532
5,270
(36)
(3,515)
142,878
146,129
Total recognised income and expense for the year
 - 
 - 
 - 

10,725
10,725
Funding of employee share option scheme
 - 
 - 
(112)
 - 
 - 
(112)
Amortisation of employee share option scheme
 - 
 - 
51 
 - 
 - 
51 
Unrealised loss on hedges (net of tax)
 - 
 - 
 - 
(699)

(699)
Actuarial loss on defined benefit scheme (net of tax)
 - 
 - 
 - 
 - 
(4,565)
(4,565)
Equity dividends
 - 
 - 
 - 
 - 
(3,815)
(3,815)
At 30 September 2015
1,532
5,270
(97)
(4,214)
145,223
147,714
Statements of Cash Flow 

2016
2015
for the year ended 30 September 2016

 000
 000




CASH FLOWS FROM OPERATING ACTIVITIES







Operating profit before exceptional items

14,264 
13,899 
Depreciation and amortisation charges

10,295
9,926 
Losson revaluation of investment property

350
45
Pension operating charge less contributions paid

1,351 
213
(Loss)/profit on sale of fixed assets

(6) 
7








Operating cash flows before movement in working capital

26,254 
24,090 




Decrease in inventories

277 
1,095 
(Increase)/decrease in trade and other receivables

(1,758) 
1,884
Increase/(decrease) in trade and other payables

2,359
(2,640) 
Interest paid

(1,148)
(1,548)
Capitalised interest paid

(374)
(4)
Preference dividends paid

(9)
(9)
Cash amounts relating to exceptional item

 -
479
Income taxes paid

(396)
-




Net cash flows from operating activities

25,205 
23,347




CASH FLOWS FROM INVESTING ACTIVITIES



Purchase of property,plant and equipment

(32,391)
(16,629)
Investment in intangible assets

(4)
(207)
Proceeds from part disposal of subsidiary

10
-
Net proceeds from disposal of fixed assets

9
3 




Net cash flows used in investing activities

(32,376)
(16,833)




CASH FLOWS FROM FINANCING ACTIVITIES



Equity dividends paid

(4,067)
(3,859)
Deposit interest received

22 
36 
Payment for foreign exchange option

(250)
-
Repayment of borrowings

5,500
-
Proceeds of borrowings

(5,500)
 - 




Net cash flows used in financing activities

(4,295)
(3,823) 




Net (decrease)/increase in cash and cash equivalents

(11,466) 
2,691 




Cash and cash equivalents at beginning of year

12,503 
9,776 
Effect of foreign exchange rates

(55)
36
Overdraft

943
-




Cash and cash equivalents at end of year

1,925 
12,503 
Notes to the accounts
Year ended 30 September 2016
1. Basis of Preparation
The consolidated financial statements of Jersey Electricity plc, for the year ended 30 September 2016, 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 2017. 
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 businesses as follows:








2016
2016
2016

2015
2015
2015

External
Internal
Total

External
Internal
Total

000
000
000

000
000
000
Revenue







Energy
81,215 
144 
81,359 

 80,698 
 129 
80,827 
Building Services
5,120 
786 
5,906 

 4,148 
 808 
 4,956
Retail 
11,933 
45 
11,978 

 11,087 
 40 
 11,127 
Property
2,143 
599 
2,742 

 2,084 
 599 
 2,683 
Other 
2,950 
876 
3,826 

 2,462 
 777 
 3,239 

103,361 
2,450 
105,811 

100,479 
 2,353 
102,832
Intergroup elimination


(2,450)



(2,353)
Revenue


103,361 



100,479 








Operating profit







Energy


11,650 



 11,514 
Building Services


134 



(58)
Retail 


452 



334
Property


1,683 



1,562
Other


695 



592



14,614 



13,944 
Revaluation of investment properties


(350)



(45) 








Exceptional item - La Collette rent accrual reversal 


1,676 



-
 - RTE outage compensation 


- 



479
 - impact of reversal of EDF1 provision


- 



310








Group operating profit


15,940 



14,688

This information is provided by RNS
The company news service from the London Stock Exchange
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