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

Jersey ElectricityAnnouncement

18/12/2015 07:10

RNS Number : 4669J
Jersey Electricity PLC
18 December 2015
  
JERSEYELECTRICITYplc     PreliminaryAnnouncement of Annual Results
Year Ended30September2015
At a meeting of the Board of Directors held on 17 December 2015, the final accounts for the Group for the year to 30 September 2015 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 2015 or 2014, but is derived from those accounts. Statutory accounts for 2014 have been delivered to the Jersey Registrar of Companies and those for 2015 will be delivered in early 2016. The auditor has reported on those accounts and their reports were unmodified. 
A final dividend of 7.60p on the Ordinary and 'A' Ordinary shares in respect of the year ended 30 September 2015 was recommended (2014: 7.20p). Together with the interim dividend of 5.25p the proposed total dividend declared for the year was 12.85p on each share (2014: 12.20p) 
 
The final dividend will be paid on 29 March 2016 to those shareholders registered in the books of the Company on 19 February 2016. A dividend on the 5% cumulative participating preference shares of 1.5% (2014: 1.5%) payable on 1 July 2016 was also recommended.
The Annual General Meeting of the Company will be held on 3 March 2016.
M.P. Magee P.J. Routier
Finance Director Company Secretary
Direct telephone number : 01534 505321 Direct telephone number : 01534 505253
Direct fax number : 01534 505466 Direct fax number : 01534 505515
Email : mmagee@jec.co.uk Email : proutier@jec.co.uk
17 December 2015 
The Powerhouse
PO Box 45
Queens Road
St Helier
Jersey JE4 8NY 
JERSEY ELECTRICITY plc 
Preliminary Announcement of Annual Results
Year ended 30 September 2015   
The Chairman, Geoffrey Grime,comments :
"2014/15 has been an exceptionally good year for Jersey Electricity. The completion of our Normandie 3 (N3) submarine cable to France at the end of the last financial year and the resultant first full year with our importation capacity restored to pre-2012 levels has transformed our business in several ways. Profitability, supply reliability and carbon intensity have all showed marked improvement when compared with the last three years and this has been achieved whilst maintaining prices which continue to be competitive with international benchmarks." 
Financial Summary
2015
2014
Electricity Sales in kWh 
626.8m
620.6m
Revenue
100.5m
98.4m
Profit before tax pre-exceptional items 
 12.4m
10.0m
Earnings per share pre-exceptional items
 32.94p
 24.26p
Dividends paid per ordinary share 
 12.45p
 11.80p
Final proposed dividend per share
 7.60p
 7.20p
Net debt
17.5m
20.2m
Group revenue for the year to 30 September 2015 at 100.5m was 2% higher than in the previous financial year. Unit sales volumes of electricity were 1.0% higher than last year with Energy revenues rising 1.6% to 80.7m. Turnover in Powerhouse.je, our retail business, decreased by 3% from 11.4m to 11.1m as the floor space utilised by the business was reduced following the leasing of floor space to a new external tenant from May 2014. Revenue in the Property business rose from 2.0m to 2.1m linked to changes in tenancy arrangements during the last two financial years. Revenue from JEBS, our building services business, including internal sales, rose 18% from levels experienced in 2014 to 5.0m. Turnover in our Other Businesses, including internal sales, remained at 3.2m. 
Cost of sales fell by 3.9m to 64.6m associated mainly with a higher level of importation displacing oil purchases in our Energy business. Operating expenses, at 22.0m, rose by 1.9m from their 2014 level with a 1.7m rise in depreciation, associated with our recent material infrastructure spend, being the main item. 
 
Profit before tax, pre-exceptional items, for the year to 30 September 2015, rose 24% to 12.4m, from 10.0m in 2014, reflecting a strong performance in our Energy business, and a recovery in our retail business, Powerhouse.je. Profit before tax post-exceptional items, rose from 6.5m last year to 13.2m in 2015 reflecting material one-off items. Exceptional items have had a material impact on profits in the last 2 years and a narrative detailing the background to such items is contained within this document below. 
Unit sales in our Energy business increased by 1%, rising from 621m to 627m kWh. The first quarter of the financial year was milder than the corresponding period in the previous year but there was a reversal in the second quarter. However both the overall winter periods in the last two years have seen temperatures above the long-term average and therefore milder than anticipated. Profits in our Energy business rose from 8.0m to 11.5m. Two main factors contributed to this increase in profit; firstly lower levels of more costly generation and secondly, the rising asset base (on which we apply a return) reflecting the heavier investment in infrastructure over recent years. As reported previously, until the new interconnector to France was commissioned in September 2014, we had been capacity constrained on importation and reliant on a heavier mix of more expensive on-island oil-fired generation, particularly in winter, when volumes are higher. In the financial year we imported 94% of our requirements from France (up from 80% in 2014) and only generated 1% of our electricity on-island (compared to 15% last year). The remaining 5% of our electricity came from the local Energy from Waste plant being at the same level as in 2014. There were no customer tariff movements during 2015 and our tariffs continue to remain competitive with other jurisdictions. 
Profits in our Property division, excluding the impact of investment property revaluation, rose by 0.1m from 1.4m last year with changes in occupancy levels being the main driver. Our investment property portfolio was marginally revalued downwards this year whereas it moved up by 0.1m in 2014. Our retailing business, Powerhouse.je, showed good signs of recovery post a rationalisation of floor space, a restructuring and re-branding of the business during the 2014 financial year. This was reflected in the movement from a loss of 0.1m last year to a profit of 0.3m in 2015. JEBs, our contracting and business services unit produced a marginal loss due to continued competitive pressures on margin. Our other business units - Jersey Energy, Jendev and Jersey Deep Freeze all had a profitable year. 
Interest paid in 2015 was 1.5m whereas in 2014 it was negligible as most of this cost was capitalised up to the date of commissioning of our new N3 subsea cable. The taxation charge at 2.4m was materially higher than the 2014 figure of 1.5m due to higher profits including the taxation of exceptional items. 
Group earnings per share, pre-exceptional items, increased 36% to 32.94p compared to 24.26p in 2014 due mainly to an increase in profitability. Earnings per share, after exceptional items, rose from 16.10p in 2014 to 35.00p in 2015. 
Dividends paid in the year, net of tax, rose by 6%, from 11.80p in 2014 to 12.45p in 2015. The proposed final dividend for this year is 7.60p, a 6% rise on the previous year. Dividend cover, pre-exceptional items, rose from 2.1 times in 2014 to 2.6 times due to a higher level of profits. If exceptional items are included dividend cover rose from 1.4 times last year to 2.8 times in this financial year. 
Net cash inflow from operating activities at 23.4m was 3.3m higher than in 2014 with increased profitability being the primary driver. Capital expenditure, at 16.8m fell from 33.0m last year as the Normandie 3 project spend dominated last year albeit there was the settlement of 5.5m of residual project cost in quarter 1 of this financial year. Net debt at the year-end of 17.5m was 2.7m lower than last year.
Our defined benefits pension scheme, which had a 1.1m deficit, net of deferred tax, at the 2014 year end increased to a 5.8m deficit as at 30 September 2015. Scheme assets rose 2% since the last year end but liabilities increased 7% due to a reduction in the discount rate applied reflecting sentiments in financial markets.
Exceptional Items
A number of items of an exceptional nature were incurred in the last two financial years. 
During this financial year we had two exceptional credits amounting to 0.8m which have been adjusted in arriving at our underlying profit figure. The first exceptional item resulted from a network issue in France during March 2015 for which the CIEG received a compensation payment from RTE (the grid operator) and the net upside for the Jersey Electricity proportion was 0.5m. Secondly we had created a provision in 2012 in relation to work associated with the failure of the EDF1 subsea cable. Now that the N1 project is progressing, the provision is no longer required, as such work is part of the wider project, and 0.3m in relation to this issue was released back to profit and is viewed as exceptional. All these items have been assumed to be taxable.
In the 2014 Annual Report we reported exceptional costs of 0.6m and 1.2m in restructuring our retail business, Powerhouse.je, and exiting our investment in Foreshore Limited respectively. In addition, a 1.8m provision was established in September 2014 for a repair to the subsea cable between Jersey and Guernsey. As reported in our Interim Report this preventative repair was successfully performed during January 2015 with the cost fully covered by the provision. 
 
Consolidated Income Statement

2015

2014
For the year ended 30 September 2015

000's

000's





Revenue

100,479

98,443
Cost of sales

(64,604)

(68,468)





Gross Profit

35,875

29,975





Revaluation of investment properties

(45)

145 
Operating expenses

(21,931)

(20,079)





Group operating profit before exceptional items

13,899

10,041
Exceptional item - RTE outage compensation

479 

- 
 - impact of reversal of EDF1 related provision

310 

-
 - impairment of investment

-

(1,178)
 - subsea cable repair

-

(1,800)
 - restructuring costs

-

(570)
Group operating profit

14,688

6,493
Finance income

36 

14 
Finance costs

(1,555)

(51)





Profit from operations before taxation

13,169

6,456





Taxation

(2,397)

(1,478)





Profit from operations after taxation

10,772

4,978





Attributable to:




Owners of the company

10,725 

4,932 
Non-controlling interest

47 

46 


 10,772 

 4,978 





Earnings per share




- basic and diluted

35.00p 

16.10p 







2015

2014
Consolidated Statement of Comprehensive Income 

 000

 000





Profit for the year

10,772

4,978 





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




Actuarial loss on defined benefit scheme 

(5,706)

(392)
Income tax relating to items not reclassified

1,141 

78 


(4,565)

(314)





Items that may be reclassified subsequently to profit or loss:




Fair value loss on cash flow hedges 

(874)

(4,567)
Income tax relating to items that may be reclassified

175 

913 


(699)

(3,654)





Total comprehensive income for the year

5,508

1,010 





Attributable to:




Owners of the Company

5,461 

964 
Non-controlling interests

47 

46 


5,508

1,010 


Balance Sheet

2015

2014
For the year ended 30 September 2015

 000

 000
NON-CURRENT ASSETS




Intangible assets

227 

20 
Property,plant and equipment

187,845 

184,846 
Investment properties

20,460 

20,505 
Secured loan accounts

731 

838 
Other investments

5 

5 
Total non-current assets

209,268 

206,214 
CURRENT ASSETS




Inventories

6,239 

7,334
Trade and other receivables

14,777 

16,474
Derivative financial instruments

1,194 

-
Cash and cash equivalents

12,503 

9,776
Total current assets

34,713 

33,584
Total assets

243,981 

239,798 
LIABILITIES




Trade and other payables

17,597 

24,675 
Current tax liability

404

-
Derivative financial instruments

6,314 

4,246
Total current liabilities

24,315 

28,921
NET CURRENT ASSETS

10,398 

4,663
NON-CURRENT LIABILITIES









Trade and other payables

18,884 

18,279
Retirement benefit deficit

7,291

1,372
Financial liabilities - preference shares

235

235
Long-term borrowings

30,000

30,000
Deferred tax liabilities

15,529

14,852
Total non-current liabilities

71,939

64,738
Total liabilities

96,254

93,659
Net assets

147,727

146,139
EQUITY




Share capital

1,532 

1,532 
Revaluation reserve

5,270

5,270
ESOP reserve

(97)

(36)
Other reserves

(4,214)

(3,515)
Retained earnings

145,223 

142,878 
Equity attributable to owners of the company

147,714 

146,129 
Non-controlling interests

13 

10 
Total equity

147,727 

146,139 
 
Consolidated Statement of changes in Equity
Share
Revaluation 
ESOP 
Other
Retained
Total
for the year ended 30 September 2015
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















Share
Revaluation 
ESOP 
Other
Retained
Total

capital
reserve 
reserve 
reserves
earnings


 000 
 000 
 000 
 000 
 000 
 000 
At 1 October 2013
1,532
 5,270
(58)
139
141,925
148,808
Total recognised income and expense for the year
 -
 - 
 -
 -
4,932
 4,932 
Amortisation of employee share option scheme
 - 
 - 
 22 
 -
(22)
 - 
Unrealised loss on hedges (net of tax)
 - 
 - 
 -
(3,654)
 -
(3,654)
Actuarial gain on defined benefit scheme (net of tax)
 - 
 - 
 -
 -
(314)
(314)
Equity dividends
 - 
 - 
 -
 -
(3,643)
(3,643)
At 30 September 2014
1,532
5,270
(36)
(3,515)
142,878
146,129
Statements of Cash Flow 

2015
2014
for the year ended 30 September 2015

 000
 000




CASH FLOWS FROM OPERATING ACTIVITIES







Operating profit

13,899 
10,041 
Depreciation and amortisation charges

9,926 
8,259 
Loss/(gain) on revaluation of investment property

45 
(145)
Pension operating charge less contributions paid

213 
(38)
Adjustment for foreign exchange hedges

-
63 
Profit on sale of fixed assets

7 
(11)








Operating cash flows before movement in working capital

24,090 
18,169 




Decrease in inventories

1,095 
2,100 
Decrease/(increase) in trade and other receivables

1,884 
(252)
(Decrease)/increase in trade and other payables

(2,604)
513 
Interest paid

(1,548)
(42)
Preference dividends paid

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

 479 
(353)




Net cash flows from operating activities

23,387 
20,126 




CASH FLOWS FROM INVESTING ACTIVITIES



Purchase of property,plant and equipment

(16,629)
(32,501)
Capitalised interest paid

(4)
(547)
Investment in intangible assets

(207)
(6)
Net proceeds from disposal of investment

-
 1,579 
Net proceeds from disposal of fixed assets

3
16 




Net cash flows used in investing activities

(16,837)
(31,459)




CASH FLOWS FROM FINANCING ACTIVITIES



Equity dividends paid

(3,859)
(3,703)
Deposit interest received

36 
14 
Repayment of borrowings

-
(10,000)
Proceeds of borrowings

-
 30,000 




Net cash flows used in financing activities

(3,823)
16,311 




Net increase in cash and cash equivalents

2,727 
4,978 
Cash and cash equivalents at beginning of period

9,776 
4,798 




Net cash and cash equivalents at end of period

12,503 
9,776 
Notes to the accounts
Year ended 30 September 2015
1. Basis of Preparation
The consolidated financial statements of Jersey Electricity plc, for the year ended 30 September 2015 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 2016. 
The Group has considerable financial resources and 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. Thus they continue to adopt the going concern basis of accounting in preparing the annual financial statements.
2 Segmental information





Revenue and profit information are analysed between the businesses as follows:








2015
2015
2015

2014
2014
2014

External
Internal
Total

External
Internal
Total

000
000
000

000
000
000
Revenue







Energy
 80,698 
 129 
80,827 
79,459 
 141 
79,600 
Building Services
4,148
 808 
4,956
 3,294 
 907 
4,201
Retail 
 11,087 
 40 
11,127 
11,414 
 33 
11,447 
Property
 2,084 
 599 
2,683 
 1,957 
 616 
2,573 
Other 
 2,462 
777 
3,239 
 2,319 
 878 
3,197 

100,479 
2,353 
102,832

98,443 
 2,575 
101,018
Intergroup elimination


(2,353)



(2,575)
Revenue


100,479 



98,443 








Operating profit







Energy


 11,514 



 7,952 
Building Services


(58) 



(44)
Retail 


334



(86)
Property


1,562



1,415
Other


592



659
Operating profit before property revaluation


13,944 



9,896 
Revaluation of investment properties


(45)



145 








Exceptional item - RTE outage compensation 


479



-
 - impact of reversal of EDF1 provision


310



-
 - disposal of investment


-



(1,178)
 - provision for subsea cable repair 


-



(1,800)
 - restructuring costs in Retail business 


-



(570)








Group operating profit


14,688



6,493

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