TIDMJEL
RNS Number : 1195Y
Jersey Electricity PLC
13 May 2016
Jersey Electricity plc
Interim Management Report
for the six months ended 31 March 2016
The Board approved at a meeting on 12 May 2016 the Interim
Management Report for the six months ended 31 March 2016 and
declared an interim dividend of 5.50p compared to 5.25p for 2015.
The dividend will be paid on 30 June 2016 to those shareholders
registered in the records of the Company on 3 June 2016.
The Interim Management Report is attached and will be available
to the public on the Company's website
www.jec.co.uk/about-us/investor-relations/financial-figures-and-reports.
The Interim Management Report for 2016 has not been audited or
reviewed by our external auditors nor have the results for the
equivalent period in 2015. The results for the year ended 30
September 2015 have been extracted from the statutory accounts
which had an unqualified audit opinion.
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 May 2016
The Powerhouse,
PO Box 45,
Queens Road,
St Helier,
Jersey JE4 8NY
Jersey Electricity plc
Unaudited Interim Management Report
for the six months to 31 March 2016
Financial Summary 6 months 6 months
2016 2015
--------------------------- --------- ---------
Electricity Sales in kWh
(000) 351,942 357,362
Revenue GBP57.0m GBP55.8m
Profit before tax GBP 7.9m GBP 8.0m
Profit in Energy business GBP 6.9m GBP 7.4m
Earnings per share 20.65p 20.75p
Final dividend paid per
ordinary share 7.60p 7.20p
Proposed interim dividend
per ordinary share 5.50p 5.25p
Net debt GBP21.1m GBP21.9m
Overall trading performance
Group revenue, at GBP57.0m, was 2% higher for the first half
year of 2016 than the same period in 2015 with this rise coming
from increased activity in the non-Energy business units. Profit
before tax was GBP7.9m being marginally behind the equivalent
period last year and remains at a level commensurate with a
sustainable rate of return typical for a regulated utility and at a
quantum needed to maintain our continued investment in
infrastructure. Cost of sales increased by GBP0.9m to GBP36.6m due
mainly to additional costs in the non-Energy business units
associated with the aforementioned rise in revenue. Operating
expenses at GBP11.9m were GBP0.4m above last year with an increase
in depreciation charges and pension costs being the primary
drivers. Earnings per share fell to 20.65p from 20.75p in 2015. Net
debt on the balance sheet at 31 March 2016 was GBP21.1m (2015:
GBP21.9m) but will rise in the second half driven by our continued
investment in infrastructure assets in our Energy business.
Energy Division
Unit sales of electricity fell by 1.5%, from 357m to 352m kWh,
compared with the same period in the prior year. Mild weather,
compared with long-term average temperatures, was experienced in
the first half of this financial year, resulting in a reduced use
of electricity primarily in the heating of residential properties.
Revenues in our Energy Division at GBP45.5m remained at the same
level as 2015 because although unit sales were lower the level of
activity in ad-hoc rechargeable work was much higher. Operating
profit in Energy at GBP6.9m was GBP0.5m lower than in the same
period last year with lower unit sales, higher depreciation,
increased maintenance and higher IAS19 pension costs being the
reasons. We imported 90% of our on-Island requirement from France
(2015: 94%) and generated 4% of our electricity in Jersey (2015:
2%). Additional training for power station staff was the main
reason for the higher level of generation/lower level of
importation between 2016 and the previous year. The remaining 6%
(2015: 4%) of our electricity came from the Energy from Waste
plant, owned by the States of Jersey.
Investment in infrastructure
Capital expenditure was GBP11.5m in the first 6 months of the
financial year. The main area of spend was for the N1 subsea cable
which is currently being manufactured in Italy and is expected to
be laid between Jersey and France later in 2016 and be commissioned
by early 2017. The previous EDF1 cable which it replaces was
successfully removed from the seabed during Spring 2016. N1 is a
joint project between Jersey Electricity and Guernsey Electricity
with a budgeted cost of around GBP40m and we are pleased with the
progress made to date in terms of both timing and cost. We are also
continuing with the preparation of the site for our new West of St
Helier Primary sub-station which has an estimated cost of GBP17m
and is planned to be commissioned in 2018.
Non-Energy performance
Year-on-year revenue in our retailing business, Powerhouse.je,
rose by 9% post the restructuring of this business unit in recent
years to GBP6.4m (2015: GBP5.9m) and encouragingly profitability
improved to GBP0.4m from GBP0.3m in what is a competitive
marketplace, both locally and off-island. Revenue rose by GBP0.1m
to GBP1.3m for our Property portfolio and profit rose to GBP0.9m
(2015: GBP0.8m) due to improved rental yield. JEBS, our contracting
and business services unit, saw a GBP0.5m increase in revenue to
GBP3.1m and moved from a breakeven position in 2015 to a profit of
GBP0.1m despite it being a challenge to recruit new skilled staff
in a tight local market. Our remaining business units were on
target and produced profits of GBP0.3m being at the same overall
level as in 2015.
Forward hedging of electricity and foreign exchange and customer
tariffs
Our goal, through use of our power purchase contract and
associated hedging policies, continues to be the delivery of
competitive and stable customer tariffs, along with secure
low-carbon electricity supplies whilst maintaining an appropriate,
fair return for our shareholders. Our electricity purchases are
materially hedged for the period 2016-19. As these are
contractually denominated in the Euro we enter into foreign
currency contracts to eliminate a large percentage of exposure to
aid tariff planning. We have seen significant volatility in foreign
exchange in the last six months against the Euro largely associated
with the impending UK vote as to whether to remain within the EU,
which is why we seek to largely eliminate exposure. This has
resulted in a fair value increase of GBP5.6m (net of tax) as shown
in the Condensed Consolidated Statement of Comprehensive Income,
and a resultant rise in our balance sheet net assets, whereas last
year we saw a movement in the opposite direction.
Debt and financing
The net debt figure, as expected, rose to GBP21.1m at 31 March
2016 compared to GBP17.5m at the last year end and we have
additional bank facilities in place to fund our continued forecast
investment spend. It is the aim of the Board that Jersey
Electricity continues to maintain a prudent level of debt in the
context of our overall balance sheet, which remains strong.
Dividend
Your Board proposes to pay an interim net dividend for 2016 of
5.50p (2015: 5.25p). We continue to aim to deliver sustained real
growth each year over the medium-term. The final dividend for 2015
of 7.60p, paid in late March in respect of the last financial year,
was an increase of 6% on the previous year.
Risk and outlook
The principal risks and uncertainties identified in our last
Annual Report have not materially altered in the interim period.
However as mentioned previously in the text above the potential
exit of the UK from the EU has created recent volatility in foreign
exchange markets. If the vote on 23 June results in a planned exit
it is likely that such volatility would continue and may influence
our longer-term tariff planning strategy (albeit we are largely
hedged in the short-term).
Your Board is satisfied that Jersey Electricity plc has
sufficient resources to continue in operation for the foreseeable
future, a period of not less than 12 months from the date of this
report. 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 contains 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.
C.J. AMBLER - Chief Executive M.P.MAGEE - Finance Director 13 May 2016
INVESTOR TIMETABLE FOR 2016
3 June Record date for interim ordinary dividend
30 June Interim ordinary dividend for year
ending 30 September 2016
1 July Payment date for preference share dividends
14 December Preliminary announcement of full year
results
Condensed Consolidated Income Statement (Unaudited)
Six months Six months Year ended
ended ended 30 September
31 March 31 March
2016 2015 2015
Note GBP000 GBP000 GBP000
Revenue 2 57,036 55,840 100,479
Cost of sales (36,610) (35,705) (64,604)
Gross profit 20,426 20,135 35,875
Revaluation of investment
properties - - (45)
Operating expenses (11,851) (11,408) (21,931)
----------- --------------- --------------
Group operating profit
before exceptional items 8,575 8,727 13,899
Exceptional items - RTE
outage compensation - - 479
- reversal of EDF1 related
provision - - 310
Group operating profit 2 8,575 8,727 14,688
Finance income 19 15 36
Finance expense (668) (786) (1,555)
Profit from operations
before taxation 7,926 7,956 13,169
Taxation 3 (1,573) (1,583) (2,397)
----------- --------------- --------------
Profit from operations
after taxation 6,353 6,373 10,772
Attributable to:
Owners of the Company 6,326 6,357 10,725
Non-controlling interests 27 16 47
----------- --------------- --------------
Profit for the period/year
attributable to the equity
holders of the parent
Company 6,353 6,373 10,772
----------- --------------- --------------
Earnings per share
- basic and diluted 20.65 20.75 35.00
Dividends per share
- paid 4 7.60 7.20 12.45
- proposed 4 5.50 5.25 7.60
Condensed Consolidated Statement of Comprehensive Income
(Unaudited)
Six months Six months Year ended
ended ended 30 September
31 March 31 March
2016 2015 2015
GBP000 GBP000 GBP000
Profit for the period/year 6,353 6,373 10,772
Items that will not be
reclassified subsequently
to
profit or loss:
Actuarial gain/(loss)
on defined benefit scheme 1,595 1,329 (5,706)
Income tax relating to
items not reclassified (319) (266) 1,141
1,276 1,063 (4,565)
Items that may be reclassified
subsequently to profit
or loss:
Fair value gain/(loss)
on cash flow hedges 6,979 (5,486) (874)
Income tax relating to
items that may be reclassified (1,396) 1,097 175
----------- ----------- --------------
5,583 (4,389) (699)
Total comprehensive income
for the period/year 13,212 3,047 5,508
Attributable to:
Owners of the Company 13,185 3,031 5,461
Non-controlling interests 27 16 47
----------- ----------- --------------
13,212 3,047 5,508
----------- ----------- --------------
Condensed Consolidated Statement of Changes in Equity
(Unaudited)
Share Revaluation ESOP Other Retained
capital reserve reserve reserves earnings Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 October 2015 1,532 5,270 (97) (4,214) 145,223 147,714
Total recognised income
and expense for the period - - - - 6,326 6,326
Additional shares for
employee share scheme - - (114) - - (114)
Amortisation of employee
share scheme - - 20 - - 20
Unrealised gain on hedges
(net of tax) - - - 5,583 - 5,583
Actuarial gain on defined
benefit scheme (net of
tax) - - - - 1,276 1,276
Equity dividends paid - - - - (2,329) (2,329)
------- ----------- ------- -------- -------- -------
At 31 March 2016 1,532 5,270 (191) 1,369 150,496 158,476
------- ----------- ------- -------- -------- -------
At 1 October 2014 1,532 5,270 (36) (3,515) 142,878 146,129
Total recognised income
and expense for the period - - - - 6,357 6,357
Additional shares for
employee share scheme - - (93) - - (93)
Amortisation of employee
share scheme - - 26 - - 26
Unrealised loss on hedges
(net of tax) - - - (4,389) - (4,389)
Actuarial gain on defined
benefit scheme (net of
tax) - - - - 1,063 1,063
Equity dividends paid - - - - (2,206) (2,206)
------- ----------- ------- -------- -------- -------
At 31 March 2015 1,532 5,270 (103) (7,904) 148,092 146,887
------- ----------- ------- -------- -------- -------
At 1 October 2014 1,532 5,270 (36) (3,515) 142,878 146,129
Total recognised income
and expense for the period - - - - 10,725 10,725
Additional shares for
employee share scheme - - (112) - - (112)
Amortisation of employee
share 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 paid - - - - (3,815) (3,815)
------- ----------- ------- -------- -------- -------
At 30 September 2015 1,532 5,270 (97) (4,214) 145,223 147,714
------- ----------- ------- -------- -------- -------
Condensed Consolidated Balance Sheet (Unaudited)
Note As at As at As at 30
31 March 31 March September
2016 2015 2015
GBP000 GBP000 GBP000
Non-current assets
Intangible assets 198 80 227
Property, plant and
equipment 192,780 183,377 187,845
Investment property 20,460 20,505 20,460
Secured loan accounts 708 731 731
Other investments 5 5 5
Total non-current assets 214,151 204,698 209,268
---------- ---------- -----------
Current assets
Inventories 5,853 6,173 6,239
Trade and other receivables 19,038 19,350 14,777
Derivative financial
instruments 6 4,423 - 1,194
Cash and cash equivalents 8,905 8,106 12,503
Total current assets 38,219 33,629 34,713
Total assets 252,370 238,327 243,981
---------- ---------- -----------
Current liabilities
Trade and other payables 15,620 16,113 17,597
Derivative financial
instruments 6 2,564 9,733 6,314
Current tax payable 619 - 404
Total current liabilities 18,803 25,846 24,315
---------- ---------- -----------
Net current assets 19,416 7,783 10,398
---------- ---------- -----------
Non-current liabilities
Trade and other payables 20,930 19,540 18,884
Retirement benefit
deficit 5,696 193 7,291
Financial liabilities
- preference shares 235 235 235
Borrowings 30,000 30,000 30,000
Deferred tax liabilities 18,185 15,603 15,529
Total non-current liabilities 75,046 65,571 71,939
---------- ---------- -----------
Total liabilities 93,849 91,417 96,254
---------- ---------- -----------
Net assets 158,521 146,910 147,727
---------- ---------- -----------
Equity
Share capital 1,532 1,532 1,532
Revaluation reserve 5,270 5,270 5,270
ESOP reserve (191) (103) (97)
Other reserves 1,369 (7,904) (4,214)
Retained earnings 150,496 148,092 145,223
---------- ---------- -----------
Equity attributable
to owners of the Company 158,476 146,887 147,714
Non-controlling interests 45 23 13
---------- ---------- -----------
Total equity 158,521 146,910 147,727
---------- ---------- -----------
Condensed Consolidated Cash Flow Statement (Unaudited)
Six months Six months Year ended
ended ended 30 September
31 March 31 March
Note 2016 2015 2015
GBP000 GBP000 GBP000
Cash flows from operating activities
Operating profit before exceptional
items 8,575 8,727 13,899
Depreciation and amortisation
charges 4,957 4,865 9,926
Loss on revaluation of investment
property - - 45
Pension operating charge less
contributions paid 300 150 213
Loss on sale of fixed assets - 4 7
Operating cash flows before movements
in working capital 13,832 13,746 24,090
Decrease in inventories 386 1,160 1,095
(Increase)/decrease in trade
and other receivables (4,222) (3,328) 1,884
Increase/(decrease) in trade
and other payables 860 (1,016) (2,604)
Interest paid (654) (782) (1,548)
Preference dividends paid (4) (4) (9)
Cash amounts relating to exceptional
items - - 479
Net cash flows generated from
operating activities 10,198 9,776 23,387
--------------------------------------- ------- ----------- ----------- --------------
Cash flows from investing activities
Purchase of property, plant and
equipment (11,335) (9,160) (16,629)
Capitalised interest paid (117) - (4)
Purchase of intangible assets (6) (67) (207)
Net proceeds from disposal of
fixed assets - - 3
Net cash used in investing activities (11,458) (9,227) (16,837)
--------------------------------------- ------- ----------- ----------- --------------
Cash flows from financing activities
Equity dividends paid 4 (2,357) (2,234) (3,859)
Deposit interest received 19 15 36
Net cash used in financing activities (2,338) (2,219) (3,823)
--------------------------------------- ------- ----------- ----------- --------------
Net (decrease)/increase in cash
and cash equivalents (3,598) (1,670) 2,727
Cash and cash equivalents at
beginning of period/year 12,503 9,776 9,776
Net cash and cash equivalents
at end of period/year 8,905 8,106 12,503
Notes to the Condensed Interim Accounts (Unaudited)
1. Accounting policies
Basis of preparation
The interim financial statements for the six months ended 31
March 2016 have been prepared on the basis of the accounting
policies set out in the 30 September 2015 annual report and
accounts using accounting policies consistent with International
Financial Reporting Standards (IFRS) and in accordance with IAS 34
'Interim Financial Reporting'.
Jersey Electricity plc has considerable financial resources and,
as a consequence, the directors believe that it 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 interim financial statements.
2. Revenue and profit
The contributions of the various activities to Group revenue and
profit are listed below:
Six months ended Six months ended Year ended
31 March 2016 31 March 2015 30 September
2015
External Internal Total External Internal Total External Internal Total
Revenue GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Energy 45,462 72 45,534 45,510 46 45,556 80,698 129 80,827
Building
Services 2,772 280 3,052 2,251 289 2,540 4,148 808 4,956
Retail 6,413 20 6,433 5,891 16 5,907 11,087 40 11,127
Property 1,046 299 1,345 962 299 1,261 2,084 599 2,683
Other 1,343 393 1,736 1,226 378 1,604 2,462 777 3,239
--------- --------- -------- --------- --------- -------- --------- --------- --------
57,036 1,064 58,100 55,840 1,028 56,868 100,479 2,353 102,832
Inter-segment
elimination (1,064) (1,028) (2,353)
-------- -------- --------
57,036 55,840 100,479
-------- -------- --------
Operating
profit
Energy 6,904 7,354 11,514
Building
Services 116 (4) (58)
Retail 411 286 334
Property 870 798 1,562
Other 274 293 592
-------- -------- --------
8,575 8,727 13,944
Revaluation
of investment
properties - - (45)
Exceptional
items :
RTE outage
compensation - - 479
Impact of
reversal
of EDF1
related
provision - - 310
Operating
profit 8,575 8,727 14,688
-------- -------- --------
Materially, all of the Group's operations are conducted within
the Channel Islands. All transfers between divisions are at an
arm's-length basis. The assets and liabilities of the Group are not
reported on as there has been no significant movement in the values
in the six months to 31 March 2016.
Notes to the Condensed Interim Accounts (Unaudited)
3. Taxation
Six months Year ended
ended 30 September
31 March
2016 2015 2015
GBP000 GBP000 GBP000
Current income tax 215 - 404
Deferred income tax 1,358 1,583 1,993
---------- ---------- --------------
Total income tax 1,573 1,583 2,397
========== ========== ==============
For the period ended 31 March 2016 and subsequent periods, the
Company is taxable at the rate applicable to utility companies of
20%.
4. Dividends
Six months Year
ended ended
31 March 30 September
2016 2015 2015
GBP000 GBP000 GBP000
Distributions to equity holders 2,329 2,206 3,815
======== ======== ==============
The distribution to equity holders in respect of the final
dividend for 2015 of GBP2,329,000 (7.60p net of tax per share) was
paid on 29 March 2016.
The Directors have declared an interim dividend of 5.50p per
share, net of tax (2015: 5.25p) for the six months ended 31 March
2016 to shareholders on the register at the close of business on 3
June 2016. This dividend was approved by the Board on 12 May 2016
and has not been included as a liability at 31 March 2016.
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, current market
values of investments and actual investment returns applicable
under IAS 19 'Employee Benefits', and consideration has also 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 at 31 March 2016.
Recurring fair value measurements: Six months Year
Ended
Ended 31 March
30 September
Foreign exchange currency hedges 2016 2015
GBP000 GBP000
Derivative assets 4,423 1,194
-------- ---------
Derivative liabilities (2,564) (6,314)
-------- ---------
Notes to the Condensed Interim Accounts (Unaudited)
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 to 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 Company currently leases the La Collette Power Station site
from its largest shareholder, the States of Jersey, for a
peppercorn rent of GBP1,000 per annum. This lease was subject to a
rent review as at June 2006 and the Company is in dispute with its
landlord, the States of Jersey, concerning the outstanding rent
review. The information usually required by IAS 37 Provisions,
'Contingent liabilities and contingent assets', is not disclosed on
the grounds that it may prejudice the outcome of the dispute.
Value Value of Value of
of electricity goods & goods &
services other services services Amounts Amounts
supplied supplied purchased due to due by
by Jersey by Jersey by Jersey Jersey Jersey
Electricity Electricity Electricity Electricity Electricity
Six months ended 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015
31 March
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
The States of
Jersey 3,761 3,867 725 590 1,102 561 732 661 1 128
JT Group Limited 980 980 268 173 19 66 157 118 3 -
Jersey Post
Int Limited 58 49 - - 17 16 7 7 - -
Jersey New
Waterworks
Ltd 409 417 74 47 64 55 63 63 7 -
The States of Jersey is the Group's majority and controlling
shareholder. Jersey New Waterworks is majority owned and controlled
by the States of Jersey. JT Group Limited and Jersey Post
International Limited are both wholly owned by the States of
Jersey. All transactions are undertaken at an arm's length
basis.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR LLFIEESIFLIR
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