REG - Jersey Electricity - Preliminary Announcement

Jersey ElectricityAnnouncement

14/12/2018 07:05

RNS Number : 4375K
Jersey Electricity PLC
14 December 2018
 


             
JERSEY ELECTRICITY plc                                                                                                                 Preliminary Announcement of Annual Results
Year Ended 30 September 2018
 
 
 
At a meeting of the Board of Directors held on 13 December 2018, the final accounts for the Group for the year to 30 September 2018 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 2018 or 2017, but is derived from those accounts. Statutory accounts for 2017, have been delivered to the Jersey Registrar of Companies, and those for 2018 will be delivered in early 2019. The auditor has reported on the accounts for both years and their reports were unmodified. 
A final dividend of 8.8p on the Ordinary and 'A' Ordinary shares in respect of the year ended 30 September 2018 was recommended (2017: 8.4p). Together with the interim dividend of 6.1p (2017: 5.8p) the proposed total dividend declared for the year was 14.9p on each share (2017: 14.2p).
           
The final dividend will be paid on 28 March 2019 to those shareholders registered in the books of the Company on 22 February 2019. A dividend on the 5% cumulative participating preference shares of 1.5% (2017: 1.5%) payable on 1 July 2019 was also recommended.
 
The Annual General Meeting of the Company will be held on 28 February 2019. On that date Geoffrey Grime will retire as Chairman and Director of the Company, and Phil Austin, currently a Board member, will assume the role of Chairman.
 
 
 
 
 
M.P. Magee                                                                           P.J. Routier
Finance Director                                                                   Company Secretary
 
Direct telephone number : 01534 505201                                      Direct telephone number :01534 505253
Email : mmagee@jec.co.uk                                                        Email : proutier@jec.co.uk
 
 
 
 
13 December 2018    
 
 
 
The Powerhouse
PO Box 45
Queens Road
St Helier
Jersey JE4 8NY
 
 
 
 
 
 
 
 
 
 
JERSEY ELECTRICITY plc            
Preliminary Announcement of Annual Results
Year ended 30 September 2018                                                                                                    
 
The Chairman, Geoffrey Grime, comments:
 
"The Group recorded its best ever financial performance for the third year in succession. Group revenue for the year 2017/18 was £105.9m, 4% higher than 2017 and profit before tax increased to £15.3m up from the £13.5m achieved last year. This was supported by strong underlying performance in the Energy business, which saw a new record peak demand of 178MW set and a 2% increase in unit sales volumes from 621m to 634m units. Our Powerhouse retail business also witnessed continued strong growth in a challenging sector, with profits up 11% to £0.8m on an increased turnover of £13.6m, up 5% on last year.
 
We have made excellent progress on all our major investment projects during the year. St Helier West Primary Substation is about to be commissioned. Our smart metering programme, SmartSwitch, is entering its final phase, with 87% of our customers now converted and benefits already being realised.  We successfully launched an innovative "smart home" demonstration store, Smarter Living, embedded in the Powerhouse retail store which is receiving great interest from customers. In France, we completed an important £1m upgrade on our Normandie 2 circuit to increase both import capacity and security of supply.
 
As the Island's leading energy supplier, we bear an enormous responsibility to our customers and we continue our programme of activities to seek feedback from them. We are aware that there is more to do to promote energy efficiency, local renewables and electric transportation, but it is reassuring we continue to receive positive feedback from stakeholders. Once again, I am pleased to report that our ratings in both our supply service and overall customer service showed improvements on last year.
 
Maintaining profitability is essential to continued investment in infrastructure and to providing a sustainable electricity service for everyone including all of our stakeholders. I am also pleased to report a proposed final dividend for this year of 8.8p, a 5% rise on the previous year, payable on 28 March 2019.
 
I will be formally stepping down as Chairman at the AGM on 28 February 2019 but I am delighted to be handing over to Phil Austin a Company that is well positioned for the future and I wish Phil and the whole Board the very best in continuing to steer Jersey Electricity through the many exciting opportunities ahead."
 




Financial Highlights


2018


2017




 


 


 




Revenue


£105.9m


£102.1m




Profit before tax 


£15.3m


£13.5m




Earnings per share 


39.5p


34.6p




Dividend paid per share


      14.5p


   13.8p




Final proposed dividend per share       


8.8p


8.4p




Net debt             


£14.3m


£21.9m




                       
  
Group revenue for the year to 30 September 2018 at £105.9m was 4% higher than in the previous financial year. Energy revenues at £82.3m were 2% higher than the £80.4m achieved in 2017 with a 2% increase in the unit sales volumes of electricity, largely driven by weather, being the main factor. Turnover in the Powerhouse retail business increased by 5% from £12.9m to £13.6m. Revenue in the Property business rose £0.1m to £2.3m due to higher rental income. Revenue from JEBS, our contracting and building services business, rose £0.8m from levels experienced in 2017 to £4.8m. Turnover in our other businesses rose £0.2m to £2.9m.
 
Cost of sales at £65.1m was £2.1m higher than last year with an increase in import costs in our Energy business and higher sales activity in the Powerhouse retail business being the main reasons.
 
Operating expenses, at £24.4m were at the same level as in 2017.
 
Profit before tax for the year to 30 September 2018, at £15.3m, increased by 14% from £13.5m in 2017. Our Energy business unit sales saw volumes increasing from 621m to 634m kilowatt hours with strong winter period sales and the benefits of switching customers from other heating fuels more than offsetting the continued impact of energy efficiency measures employed by our customers.
 
Profits in our Energy business moved up to £13.4m from £11.7m last year. The higher level of sales resulted in an improved gross margin and this was supplemented by ongoing initiatives to reduce both manpower and maintenance costs. Customer tariffs rose by 2% in June 2018 yet remained competitive with other jurisdictions but this accounted for only £0.4m of the increase in profits with the remainder driven by cost efficiencies and increased unit sales of electricity. The UK saw material increases in retail electricity prices for their customers during both 2017 and 2018 with an average rise of 24% across the 'Big 6' suppliers.
 
In the financial year we imported 95% of our requirements from France (2017: 93%) and generated only 0.2% of our electricity on-island at La Collette Power Station (2017: 1%). The remaining 5% (2017: 6%) of our electricity came from the local Energy from Waste plant being marginally below that seen in 2017.
 
Profits in our Property division, excluding the impact of investment property revaluation, at £1.8m, were £0.2m above the level last year due to a higher rental level and reduced costs. Our investment property portfolio was revalued upwards this year by £0.3m to £20.5m by the external consultants who review the position annually due primarily to the growth in the value of the residential properties that we rent to tenants.
 
Our Powerhouse retailing business saw continued strong growth in sales with profits moving up 11% to £0.8m in 2018.
 
JEBS, our contracting and business services unit had a challenging year and incurred a loss of £0.2m against a profit of £0.1m in 2017 as the business was impacted by both a decline in margins and some exceptional costs. Plans are being implemented to improve performance in this business unit.
 
Our other business units (Jersey Energy, Jendev, Jersey Deep Freeze and fibre optic lease rentals) produced profits of £0.6m being 12% higher than last year.
 
Net Interest in 2018 was £1.3m being £0.1m higher than last year because in 2017 there was still an element of capitalisation of interest associated with the new N1 subsea cable. The taxation charge at £3.2m was £0.3m higher than 2017 due to the increase in profit.
 
Group earnings per share rose to 39.5p compared to 34.6p in 2017 due mainly to increased profitability.
 
 
Dividends paid in the year, net of tax, rose by 5%, from 13.8p in 2017 to 14.5p in 2018. The proposed final dividend for this year is 8.8p, a 5% rise on the previous year. Dividend cover was 2.7 times compared to 2.5 times in 2017.
 
Net cash inflow from operating activities at £27.0m was £0.5m higher than in 2017 with higher operating profit being the primary driver. Capital expenditure, at £14.9m was marginally lower than £15.1m last year with spend on the St Helier West primary sub-station being the most material project in 2018. In the 2017 financial year the most material primary spend was on the N1 subsea cable project prior to commissioning in December 2016. The resultant position was that net debt at the year-end was £14.3m, being £30.0m of borrowings less £15.7m of cash and cash equivalents, which was £7.6m lower than last year.
 
Our defined benefits pension scheme, showed a surplus at 30 September 2018, under IAS 19 "Employee Benefits", of £3.8m, net of deferred tax, compared with a deficit of £3.4m at 30 September 2017. Scheme liabilities decreased 2% to £131.4m since the last year end with the discount rate assumption, which heavily influences the calculation of liabilities, rising from 2.7% in 2017 to 2.9% in 2018 to reflect sentiments in prevailing financial markets. In addition, scheme assets rose 5% to £136.2m in the same period.
 
 




Consolidated Income Statement


 


2018


 


2017




For the year ended 30 September 2018


 


£000


 


£000




 


 


 


 


 




Revenue


 


105,874


 


102,085




Cost of sales


 


(65,110)


 


(63,023)




Gross Profit


 


40,764


 


39,062




 


 


 


 


 




Revaluation of investment properties


 


310


 


40




Operating expenses


 


(24,380)


 


(24,379)




 


 


 


 


 




Group operating profit


 


16,694


 


14,723




Finance income


 


28


 


3




Finance costs


 


(1,377)


 


(1,268)




 


 


 


 


 




Profit from operations before taxation


 


15,345


 


13,458




 


 


 


 


 




Taxation


 


(3,152)


 


(2,834)




 


 


 


 


 




Profit from operations after taxation


 


12,193


 


10,624




 


 


 


 


 




Attributable to:


 


 


 


 




Owners of the Company


 


12,115


 


10,599




Non-controlling interests


 


78


 


25




 


 


                   12,193


 


                   10,624




 


 


 


 


 




Earnings per share


 


 


 


 




- basic and diluted


 


39.54p


 


34.59p




 
 




 Consolidated Statement of Comprehensive Income


 


2018


 


2017




 


 


£ 000


 


£ 000




 


 


 


 


 




Profit for the year


 


12,193


 


10,624




 


 


 


 


 




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


 


 


 


 




Actuarial gain on defined benefit scheme


 


10,166


 


8,859




Income tax relating to items not reclassified


 


(2,033)


 


(1,772)




 


 


8,133


 


7,087




 


 


 


 


 




Items that may be reclassified subsequently to profit or loss:


 


 


 


 




Fair value loss on cash flow hedges


 


(4,261)


 


(1,673)




Income tax relating to items that may be reclassified


 


852


 


335




 


 


(3,409)


 


(1,338)




 


 


 


 


 




Total comprehensive income for the year


 


16,917


 


16,373




 


 


 


 


 




Attributable to:


 


 


 


 




Owners of the Company


 


16,839


 


16,348




Non-controlling interests


 


78


 


25




 


 


16,917


 


16,373




 
 
A presentational change to the 2017 figures has arisen as a result of elements previously embedded within cost of sales and finance costs being reclassified and shown in revenue. There has been no impact on profit.
 
 
  




Consolidated Balance Sheet




30 September 2018




 


 


 


 


 


2018


 


2017




 


 


 


 


 


£ 000


 


£ 000




 


 


 


 


 


 


 


 




NON-CURRENT ASSETS


 


 


 


 


 


 


 




Intangible assets


 


 


 


 


938


 


          1,110




Property, plant and equipment


 


 


 


 


     215,153


 


       211,921




Investment properties


 


 


 


 


       20,460


 


         20,150




Trade and other receivables


 


 


 


 


           501


 


             592




Retirement benefit surplus


 


 


 


 


4,751


 


-




Derivative financial instruments


 


 


 


 


           682


 


          2,790




Other investments


 


 


 


 


5


 


                 5




Total non-current assets


 


 


 


     242,490


 


       236,568




CURRENT ASSETS


 


 


 


 


 


 


 




Inventories


 


 


 


 


7,092


 


          6,825




Trade and other receivables


 


 


 


 


       15,202


 


         15,782




Derivative financial instruments


 


 


 


 


         2,338


 


          4,454




Cash and cash equivalents


 


 


 


 


       15,735


 


          8,076




Total current assets


 


 


 


       40,367


 


         35,137




Total assets


 


 


 


 


     282,857


 


       271,705




LIABILITIES


 


 


 


 


 


 


 




Trade and other payables


 


 


 


 


15,284


 


         15,885




Current tax liabilities


 


 


 


 


2,299


 


          1,034




Derivative financial instruments


 


 


 


 


           120


 


               -  




Total current liabilities


 


 


 


       17,703


 


         16,919




NET CURRENT ASSETS


 


 


 


 


22,664


 


         18,218




NON-CURRENT LIABILITIES


 


 


 


 


 




 


 


 


 


 


 


 


 




Trade and other payables


 


 


 


 


       20,348


 


         20,177




Retirement benefit deficit


 


 


 


         -


 


          4,219




Derivative financial instruments


 


 


 


 


             89


 


             172




Financial liabilities - preference shares


 


 


 


 


           235


 


235




Borrowings


 


 


 


 


       30,000


 


         30,000




Deferred tax liabilities


 


 


 


 


       25,753


 


         23,719




Total non-current liabilities


 


 


76,425


 


         78,522




Total liabilities


 


 


 


94,128


 


         95,441




Net assets


 


 


 


 


     188,729


 


       176,264




EQUITY


 


 


 


 


 


 


 




Share capital


 


 


 


 


1,532


 


          1,532




Revaluation reserve


 


 


 


 


5,270


 


          5,270




ESOP reserve


 


 


 


 


(41)


 


(84)




Other reserves


 


 


 


 


2,249


 


5,658




Retained earnings


 


 


 


 


179,666


 


       163,862




 


 


 


 


 


 


 


 




Equity attributable to owners of the company


 


 


 


 


     188,676


 


       176,238




Non-controlling interests


 


 


 


 


53


 


               26




Total equity


 


 


 


 


     188,729


 


       176,264




 
 
  




Consolidated Statement of Changes in Equity for the year ended 30 September 2018


Share
capital


 Revaluation
 reserve


 ESOP
reserve


Other
reserves


Retained
earnings


Total




 


£ 000


£ 000


£ 000


£ 000


£ 000


£ 000




At 1 October 2017


1,532


5,270


(84)


5,658


163,862


176,238




Total recognised income and expense for the year


                  -  


                   -  


             -  


- 


12,115


12,115




Funding of employee share option scheme


                  -  


                   -  


(9)


             -  


            -  


(9)




Amortisation of employee share option scheme


                  -  


                   -  


52


             -  


            -  


52




Unrealised loss on hedges (net of tax)


                  -  


                   -  


             -  


(3,409)


-


(3,409)




Actuarial gain on defined benefit scheme (net of tax)


                  -  


                   -  


             -  


          -


8,133


8,133




Equity dividends


                  -  


                   -  


             -  


             -  


(4,444)


(4,444)




At 30 September 2018


1,532


5,270


(41)


2,249


179,666


188,676




 


 


 


 


 


 


 




 
 


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 loss on hedges (net of tax)


                  -  


                   -  


             -  


(1,338)


-


(1,338)




Actuarial gain to 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




 
 
  




Consolidated Statement of Cash Flows


 


2018


2017




for the year ended 30 September 2018


 


£ 000


£ 000




 


 


 


 




CASH FLOWS FROM OPERATING ACTIVITIES


 


 


 




 


 


 


 




Operating profit


 


16,694


14,723




Depreciation and amortisation charges


 


11,242


10,695




Share based reward charges


 


52


73




Gain on revaluation of investment property


 


(310)


(40)




Pension operating charge less contributions paid


 


1,196


1,607




Profit on sale of fixed assets


 


(1)


(4)




Operating cash flows before movement in working capital


 


28,873


27,054




Working capital adjustments:


 


 


 




      Increase in inventories


 


(267)


(863)




      Decrease in trade and other receivables


 


671


892




      Increase in trade and other payables


 


125


1,230




Net movement in working capital


 


529


1,259




Interest paid


 


(1,368)


(1,250)




Capitalised interest paid


 


-


(172)




Preference dividends paid


 


(9)


(9)




Income taxes paid


 


(1,045)


(421)




Net cash flows from operating activities


 


26,980


26,461




 


 


 


 




CASH FLOWS FROM INVESTING ACTIVITIES


 


 


 




Purchase of property, plant and equipment


 


(14,705)


(14,252)




Investment in intangible assets


 


(168)


(836)




Net proceeds from disposal of fixed assets


 


1


4




Net cash flows used in investing activities


 


(14,872)


(15,084)




 


 


 


 




CASH FLOWS FROM FINANCING ACTIVITIES


 


 


 




Equity dividends paid


 


(4,444)


(4,229)




Dividends paid to non-controlling interest


 


(51)


(59)




Deposit interest received


 


28


3




Proceeds of borrowings


 


-


18,000




Repayment of borrowings


 


-


(18,943)




Net cash flows used in financing activities


 


(4,467)


(5,228)




 


 


 


 




Net increase in cash and cash equivalents


 


7,641


6,149




 


 


 


 




Cash and cash equivalents at beginning of year


 


8,076


1,925




Effect of foreign exchange rates


 


18


2




 


 


 


 




Cash and cash equivalents at end of year


 


15,735


8,076




 
 
 
A presentational change to the 2017 figures has arisen as a result of elements previously embedded within cost of sales and finance costs being reclassified and shown in revenue. There has been no impact on profit.
 
 
Notes to the accounts
 
Year ended 30 September 2018
 
1.   Basis of Preparation
The consolidated financial statements of Jersey Electricity plc, for the year ended 30 September 2018, 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 2019.
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:




 


2018


2018


2018


 


2017


2017


2017




 


External


Internal


Total


 


External


Internal


Total




 


£000


£000


£000


 


£000


£000


£000




Revenue


 


 


 


 


 


 


 




Energy


82,332


133


82,465


 


80,408


143


80,551




Building Services


4,823


876


5,699


 


3,976


915


4,891




Retail


13,571


56


13,627


 


12,888


37


12,925




Property


2,277


604


2,881


 


2,187


599


2,786




Other


2,871


909


3,780


 


2,626


1,324


3,950




 


105,874


2,578


108,452


 


102,085


3,018


105,103




Intergroup elimination


 


 


(2,578)


 


 


 


(3,018)




Revenue


 


 


105,874


 


 


 


102,085




 


 


 


 


 


 


 


 




Operating profit / (loss)


 


 


 


 


 


 


 




Energy


 


 


13,418


 


 


 


11,651




Building Services


 


 


(245)


 


 


 


131




Retail


 


 


812


 


 


 


731




Property


 


 


1,813


 


 


 


1,645




Other


 


 


586


 


 


 


525




 


 


 


16,384


 


 


 


14,683




Revaluation of investment properties


 


 


310


 


 


 


40




 


 


 


 


 


 


 


 




 


 


 


 


 


 


 


 




Operating profit


 


 


16,694


 


 


 


14,723




 
A presentational change to the 2017 figures has arisen as a result of elements previously embedded within cost of sales (£163,000) and finance costs (£72,000) being reclassified and shown in revenue. There has been no impact on profit.
 
 




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