TIDMJEL
RNS Number : 5909F
Jersey Electricity PLC
19 May 2017
Jersey Electricity plc
Interim Management Report
for the six months ended 31 March 2017
The Board approved at a meeting on 18 May 2017 the Interim
Management Report for the six months ended 31 March 2017 and
declared an interim dividend of 5.80p compared to 5.50p for 2016.
The dividend will be paid on 30 June 2017 to those shareholders
registered in the records of the Company at the close of business
on 2 June 2017.
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 2017 has not been audited or
reviewed by our external auditors nor have the results for the
equivalent period in 2016. The results for the year ended 30
September 2016 have been extracted from the statutory accounts. The
auditor has reported on those accounts and their report was
unmodified.
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
19 May 2017
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 2017
Financial Summary 6 months 6 months
2017 2016
--------------------------- --------- ---------
Electricity Sales in kWh
(000) 361,123 351,942
Revenue GBP58.0m GBP57.0m
Profit before tax GBP 8.9m GBP 7.9m
Profit in Energy business GBP 7.7m GBP 6.9m
Earnings per share 22.88p 20.65p
Final dividend paid per
ordinary share 8.00p 7.60p
Proposed interim dividend
per ordinary share 5.80p 5.50p
Net debt GBP29.4m GBP21.1m
Overall trading performance
Group revenue, at GBP58.0m, was 1.7% higher for the first half
year of 2017 than the same period in 2016 with this GBP1.0m rise
coming from a higher level of unit sales of electricity and also
the overall increased activity in the non-Energy business units.
Profit before tax was GBP8.9m being GBP1.0m ahead of 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 decreased by GBP1.1m to GBP35.5m
mainly due to a marginal reduction in import costs in our Energy
business. However operating expenses at GBP13.0m were GBP1.1m above
last year with an increase in depreciation charges, post our
continued investment in infrastructure, and pension costs being the
primary drivers. The taxation charge in the period of GBP1.9m is
GBP0.4m higher than during the same period in 2016 due to increased
profits. Earnings per share rose to 22.88p from 20.65p in 2016. Net
debt on the balance sheet at 31 March 2017 was GBP29.4m (2016:
GBP21.1m) compared to GBP29.0m at our last year end on 30 September
2016.
Energy performance
Unit sales of electricity rose by 2.6%, from 352m to 361m kWh,
compared with last year. The average temperature was lower than in
the first half of the 2016 financial year, resulting in an
increased use of electricity, primarily in the heating of
residential properties. Revenues in our Energy business at GBP46.2m
rose 1.5% in 2017 because of the aforementioned higher unit sales.
Operating profit in Energy at GBP7.7m was GBP0.8m higher than in
the same period last year with higher revenues offset by higher
depreciation and increased IAS 19 pension costs. We imported 93% of
our on-Island requirement from France (2016: 90%) and 5% (2016: 6%)
from the Energy from Waste plant, owned by the States of Jersey.
The remaining 2% of our electricity was generated in Jersey using
our own plant (2016: 4%).
Investment in infrastructure
Capital expenditure was GBP8.6m in the first 6 months of the
financial year. Our third undersea supply cable to France,
Normandie 1, was successfully commissioned on 1 December ahead of
schedule and below budget. We now have three cables being utilised
to import electricity from France and the expanded network has
performed to expectations in the post-commissioning period. We
continue with work on our new West of St Helier Primary sub-station
which has an estimated cost of GBP17m, of which GBP7m has been
expended to date, and is planned to be commissioned in late 2018.
Finally, our rollout of smart-enabled meters continues with 31,000
in customer premises at 31 March 2017 representing over 60% of our
customer base.
Non-Energy performance
Year-on-year revenue in our retailing business, Powerhouse.je,
rose by 11% to GBP7.1m (2016: GBP6.4m) and profitability marginally
increased to GBP0.5m in what is a very competitive marketplace,
both locally and off-island. Revenue and profit remained constant
for our Property portfolio (profit of GBP0.9m). JEBS, our
contracting and business services unit, saw a GBP0.2m decrease in
overall revenue to GBP2.9m whilst maintaining a profit of GBP0.1m,
on a par with 2016, in a tight local market. Our remaining business
units were ahead of target on an overall basis and produced profits
of GBP0.4m being GBP0.1m ahead of the same period in 2016.
Forward hedging of electricity and foreign exchange and customer
tariffs
We continue to focus on delivering secure low-carbon electricity
supplies and stable customer tariffs. Through the use of our power
purchase contract and hedging policies, this has been successfully
achieved whilst maintaining an appropriate and fair return for our
shareholders. Customer tariffs remain frozen at the same level as
when the last tariff rise of 1.5% was instigated in April 2014. Our
customers have been promised no movement in tariffs until at least
2018 despite material recent rises in other jurisdictions against
whom we benchmark. Our electricity purchases are materially hedged
for the period 2017-20, albeit not fully. 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 continued to see volatility in foreign
exchange in the last six months against the Euro primarily
associated with the UK Brexit decision, which is why we seek to
largely eliminate exposure. A five year extension of the existing
power importation contract with EDF was agreed during May. This
extends our importation framework to 2027 and will help maintain
reliable, low-carbon imported electricity supplies for the next
decade.
Debt and financing
The net debt figure, as expected, rose to GBP29.4m at 31 March
2017 compared to GBP29.0m at the last year end and we anticipate
that this is likely to be close to our peak funding level, subject
to any unexpected operational issues, post our relatively heavy
level of capital spending on undersea cables, and associated
infrastructure, over recent years. 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.
Pension scheme
The defined benefit pension scheme deficit (without deduction of
deferred tax) on our balance sheet at 31 March 2017 was GBP4.8m
compared to GBP11.5m at 30 September 2016 (and a deficit of GBP5.7m
at 31 March 2016). Since the last financial year end assets rose by
around GBP3m (GBP128m to GBP131m) and liabilities have fallen GBP4m
(GBP139m to GBP135m). This decrease in scheme liabilities is due to
an increase in relevant AA-rated bond yields (used in the
calculation) partially offset by an increase in assumed RPI
inflation. Cash paid into the scheme during the six month period
was GBP1.0m (2016: GBP1.0m) with the IAS 19 charge against profit
being GBP1.8m (2016: GBP1.2m). The defined benefit scheme has been
closed to new members since 2013.
Dividend
Your Board proposes to pay an interim net dividend for 2017 of
5.80p (2016: 5.50p). As stated in the past we continue to aim to
deliver sustained real growth each year over the medium-term. The
final dividend for 2016 of 8.00p, 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 have not materially altered in the interim
period.
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 18 May 2017
INVESTOR TIMETABLE FOR 2017
2 June Record date for interim ordinary dividend
30 June Interim ordinary dividend for year
ending 30 September 2017
3 July Payment date for preference share dividends
14 December Preliminary announcement of full year
results
Condensed Consolidated Income Statement (Unaudited)
Six months Six months
ended ended Year ended
31 March 31 March 30 September
2017 2016 2016
Note GBP000 GBP000 GBP000
Revenue 2 58,004 57,036 103,361
Cost of sales (35,507) (36,610) (65,249)
Gross profit 22,497 20,426 38,112
Revaluation of investment
properties - - (350)
Operating expenses (12,981) (11,851) (23,498)
----------- ----------- ---------------
Group operating profit
before exceptional item 9,516 8,575 14,264
Exceptional item - La
Collette rent accrual
reversal - - 1,676
Group operating profit 2 9,516 8,575 15,940
Finance income 1 19 22
Finance costs (588) (668) (1,154)
Profit from operations
before taxation 8,929 7,926 14,808
Taxation 3 (1,925) (1,573) (3,166)
----------- ----------- ---------------
Profit from operations
after taxation 7,004 6,353 11,642
Attributable to:
Owners of the Company 7,009 6,326 11,547
Non-controlling interests (5) 27 95
----------- ----------- ---------------
Profit for the period/year
attributable to the equity
holders of the parent
Company 7,004 6,353 11,642
----------- ----------- ---------------
Earnings per share
- basic and diluted 22.88 20.65 37.69
Condensed Consolidated Statement of Comprehensive Income
(Unaudited)
Six months Six months
ended ended Year ended
31 March 31 March 30 September
2017 2016 2016
GBP000 GBP000 GBP000
Profit for the period/year 7,004 6,353 11,642
Items that will not be
reclassified subsequently
to
profit or loss:
Actuarial gain/(loss)
on defined benefit scheme 7,547 1,595 (2,829)
Income tax relating to
items not reclassified (1,509) (319) 566
6,038 1,276 (2,263)
Items that may be reclassified
subsequently to profit
or loss:
Fair value (loss)/gain
on cash flow hedges (2,387) 6,979 13,865
Income tax relating to
items that may be reclassified 477 (1,396) (2,773)
----------- ----------- ---------------
(1,910) 5,583 11,092
Total comprehensive income
for the period/year 11,132 13,212 20,471
Attributable to:
Owners of the Company 11,137 13,185 20,376
Non-controlling interests (5) 27 95
----------- ----------- ---------------
11,132 13,212 20,471
----------- ----------- ---------------
Condensed Consolidated Balance Sheet (Unaudited)
Note As at As at As at
31 March 31 March 30 September
2017 2016 2016
GBP000 GBP000 GBP000
Non-current assets
Intangible assets 189 198 162
Property, plant and
equipment 210,597 192,780 209,168
Investment property 20,110 20,460 20,110
Trade and other receivables 622 708 683
Derivative financial
instruments 6 3,807 2,281 5,957
Other investments 5 5 5
Total non-current assets 235,330 216,432 236,085
---------- ---------- --------------
Current assets
Inventories 5,736 5,853 5,962
Trade and other receivables 20,571 19,038 16,583
Derivative financial
instruments 6 2,891 1,074 2,788
Cash and cash equivalents 4,556 8,905 1,925
Total current assets 33,754 34,870 27,258
---------- ---------- --------------
Total assets 269,084 251,302 263,343
---------- ---------- --------------
Current liabilities
Trade and other payables 13,058 15,620 16,084
Bank overdraft - - 943
Borrowings 4,000 - -
Derivative financial
instruments 6 13 1,468 -
Current tax payable 1,166 619 420
Total current liabilities 18,237 17,707 17,447
---------- ---------- --------------
Net current assets 15,517 17,163 9,811
---------- ---------- --------------
Non-current liabilities
Trade and other payables 20,751 20,930 19,600
Retirement benefit
deficit 4,764 5,696 11,471
Derivative financial
instruments 6 327 28 -
Financial liabilities
- preference shares 235 235 235
Borrowings 30,000 30,000 30,000
Deferred tax liabilities 21,992 18,185 20,482
Total non-current liabilities 78,069 75,074 81,788
---------- ---------- --------------
Total liabilities 96,306 92,781 99,235
---------- ---------- --------------
Net assets 172,778 158,521 164,108
---------- ---------- --------------
Equity
Share capital 1,532 1,532 1,532
Revaluation reserve 5,270 5,270 5,270
ESOP reserve (119) (191) (155)
Other reserves 4,968 1,369 6,878
Retained earnings 161,119 150,496 150,523
---------- ---------- --------------
Equity attributable
to owners of the Company 172,770 158,476 164,048
Non-controlling interests 8 45 60
---------- ---------- --------------
Total equity 172,778 158,521 164,108
---------- ---------- --------------
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 2016 1,532 5,270 (155) 6,878 150,523 164,048
Total recognised income
and expense for the period - - - - 7,009 7,009
Amortisation of employee
share scheme - - 36 - - 36
Unrealised loss on hedges
(net of tax) - - - (1,910) - (1,910)
Actuarial gain on defined
benefit scheme (net of
tax) - - - - 6,038 6,038
Equity dividends paid - - - - (2,451) (2,451)
------- ----------- ------- -------- -------- -------
At 31 March 2017 1,532 5,270 (119) 4,968 161,119 172,770
------- ----------- ------- -------- -------- -------
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 2015 1,532 5,270 (97) (4,214) 145,223 147,714
Total recognised income
and expense for the period - - - - 11,547 11,547
Additional shares for
employee share scheme - - (114) - - (114)
Amortisation of employee
share 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 paid - - - - (4,015) (4,015)
------- ----------- ------- -------- -------- -------
At 30 September 2016 1,532 5,270 (155) 6,878 150,523 164,048
------- ----------- ------- -------- -------- -------
Condensed Consolidated Cash Flow Statement (Unaudited)
Six months Six months
ended ended Year
31 March 31 March ended
30 September
2017 2016 2016
GBP000 GBP000 GBP000
Cash flows from operating
activities
Operating profit before
exceptional items 9,516 8,575 14,264
Depreciation and amortisation
charges 5,151 4,957 10,295
Loss on revaluation of
investment property - - 350
Pension operating charge
less contributions paid 840 300 1,351
Loss/(profit) on sale of
fixed assets 42 - (6)
Operating cash flows before
movements in working capital 15,549 13,832 26,254
Decrease in inventories 226 386 277
Increase in trade and other
receivables (3,928) (4,222) (1,758)
(Decrease)/increase in
trade and other payables (1,378) 860 2,359
Interest paid (590) (654) (1,148)
Capitalised interest paid (172) (117) (374)
Preference dividends paid (4) (4) (9)
Income taxes paid - - (396)
Net cash flows generated
from operating activities 9,703 10,081 25,205
-------------------------------- ----------- ----------- ---------------
Cash flows from investing
activities
Purchase of property, plant
and equipment (8,508) (11,335) (32,391)
Investment in intangible
assets (63) (6) (4)
Proceeds from part disposal
of subsidiary - - 10
Net proceeds from disposal
of fixed assets 3 - 9
Net cash used in investing
activities (8,568) (11,341) (32,376)
-------------------------------- ----------- ----------- ---------------
Cash flows from financing
activities
Equity dividends paid (2,490) (2,357) (4,067)
Deposit interest received 1 19 22
Payment for foreign exchange
option - - (250)
Repayment of borrowings (14,000) - (5,500)
Proceeds of borrowings 18,000 - 5,500
Net cash from / (used in)
financing activities 1,511 (2,338) (4,295)
-------------------------------- ----------- ----------- ---------------
Net increase/(decrease)
in cash and cash equivalents 2,646 (3,598) (11,466)
Cash and cash equivalents
at beginning of period/year 1,925 12,503 12,503
Effect of foreign exchange
rate changes (15) - (55)
Overdraft - - 943
Net cash and cash equivalents
at end of period/year 4,556 8,905 1,925
Notes to the Condensed Interim Accounts (Unaudited)
1. Accounting policies
Basis of preparation
The interim financial statements for the six months ended 31
March 2017 have been prepared on the basis of the accounting
policies set out in the 30 September 2016 annual report and
accounts using accounting policies consistent with International
Financial Reporting Standards and in accordance with International
Accounting Standards 34 'Interim Financial Reporting'.
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 Six months ended Year ended
ended 31 March 2016 30 September
31 March 2017 2016
External Internal Total External Internal Total External Internal Total
Revenue GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Energy 46,150 70 46,220 45,462 72 45,534 81,215 144 81,359
Property 1,088 299 1,387 1,046 299 1,345 2,143 599 2,742
Retail 7,102 16 7,118 6,413 20 6,433 11,933 45 11,978
Building Services 2,413 472 2,885 2,772 280 3,052 5,120 786 5,906
Other 1,251 915 2,166 1,343 393 1,736 2,950 876 3,826
--------- --------- -------- --------- --------- -------- --------- --------- --------
58,004 1,772 59,776 57,036 1,064 58,100 103,361 2,450 105,811
Intergroup
elimination (1,772) (1,064) (2,450)
-------- -------- --------
Revenue 58,004 57,036 103,361
-------- -------- --------
Operating
profit
Energy 7,694 6,904 11,650
Property 870 870 1,683
Retail 460 411 452
Building Services 104 116 134
Other 388 274 695
-------- -------- --------
9,516 8,575 14,614
Revaluation
of investment
properties - - (350)
Exceptional
item
La Collette
rent accrual
reversal - - 1,676
Operating
profit 9,516 8,575 15,940
-------- -------- --------
Materially, all of the Group's operations are conducted within
the Channel Islands. All transactions between divisions are on 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 2017.
Notes to the Condensed Interim Accounts (Unaudited)
3. Taxation
Six months Year ended
ended 31 30 September
March
2017 2016 2016
GBP000 GBP000 GBP000
Current income tax 1,166 215 420
Deferred income tax 759 1,358 2,746
-------- -------- --------------
Total income tax 1,925 1,573 3,166
======== ======== ==============
For the period ended 31 March 2017 and subsequent periods, the
Company is taxable at the rate applicable to utility companies in
Jersey of 20% (2016: 20%). The mix between current and deferred
income tax has changed following the utilisation of tax losses
associated with capital allowances.
4. Dividends paid and proposed
Six months Year ended
ended 30 September
31 March
2017 2016 2016
Dividends per share
- paid 8.00p 7.60p 13.10p
- proposed 5.80p 5.50p 8.00p
GBP000 GBP000 GBP000
Distributions to equity holders 2,451 2,329 4,015
------- ------- --------------
The distribution to equity holders in respect of the final
dividend for 2016 of GBP2,451,200 (8.00p net of tax per share) was
paid on 30 March 2017.
The Directors have declared an interim dividend of 5.80p per
share, net of tax (2016: 5.50p) for the six months ended 31 March
2017 to shareholders on the register at the close of business on 2
June 2017. This dividend was approved by the Board on 18 May 2017
and has not been included as a liability at 31 March 2017.
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 2017.
Fair value of currency hedges Six months
ended 31 Year ended
March 30 September
2017 2016 2016
Derivative assets GBP'000 GBP'000 GBP'000
Less than one year 2,891 1,074 2,788
Greater than one year 3,807 2,281 5,957
6,698 3,355 8,745
======== ======== ==============
Derivative liabilities
Less than one year 13 1,468 -
Greater than one year 327 28 -
340 1,496 -
======== ======== ==============
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 conducts a variety of transactions with the States
of Jersey and its associated entities:
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 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016
31 March
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
The States of
Jersey 3,803 3,761 581 725 588 1,102 616 732 99 1
JT Group Limited 996 980 177 268 83 19 50 157 - 3
Jersey Post
Int Limited 52 58 9 - 30 17 4 7 - -
Jersey New
Waterworks
Ltd 496 409 41 74 81 64 72 63 - 7
The States of Jersey is the Group's majority and controlling
shareholder. JT Group Limited and Jersey Post International Limited
are both wholly owned by the States of Jersey. Jersey New
Waterworks is majority owned and controlled by the States of
Jersey. All transactions are undertaken on an arm's length
basis.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR LLFIEEIITLID
(END) Dow Jones Newswires
May 19, 2017 02:00 ET (06:00 GMT)
Jersey Electricity (LSE:JEL)
Historical Stock Chart
From Aug 2024 to Sep 2024
Jersey Electricity (LSE:JEL)
Historical Stock Chart
From Sep 2023 to Sep 2024