TIDMJEL

RNS Number : 2766Z

Jersey Electricity PLC

14 December 2017

JERSEY ELECTRICITY plc Preliminary Announcement of Annual Results

Year Ended 30 September 2017

At a meeting of the Board of Directors held on 13 December 2017, the final accounts for the Group for the year to 30 September 2017 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 2017 or 2016, but is derived from those accounts. Statutory accounts for 2016 have been delivered to the Jersey Registrar of Companies and those for 2017 will be delivered in early 2018. The auditor has reported on the accounts for both years and their reports were unmodified.

A final dividend of 8.4p on the Ordinary and 'A' Ordinary shares in respect of the year ended 30 September 2017 was recommended (2016: 8.0p). Together with the interim dividend of 5.8p (2016: 5.5p) the proposed total dividend declared for the year was 14.2p on each share (2016: 13.5p).

The final dividend will be paid on 29 March 2018 to those shareholders registered in the books of the Company on 23 February 2018. A dividend on the 5% cumulative participating preference shares of 1.5% (2016: 1.5%) payable on 2 July 2018 was also recommended.

The Annual General Meeting of the Company will be held on 1 March 2018.

   M.P. Magee                                                                           P.J. Routier 

Finance Director Company Secretary

Direct telephone number : 01534 505321 Direct telephone number :01534 505253

Email : mmagee@jec.co.uk Email : proutier@jec.co.uk

13 December 2017

The Powerhouse

PO Box 45

Queens Road

St Helier

Jersey JE4 8NY

JERSEY ELECTRICITY plc

Preliminary Announcement of Annual Results

Year ended 30 September 2017

The Chairman, Geoffrey Grime, comments:

"I am delighted to report another excellent performance from Jersey Electricity for 2016/17. Group revenue for the year to 30 September 2017 was GBP102m and profit before tax and exceptional items at GBP13.5m, was 2.5% higher than the GBP13.1m achieved in 2016. This was supported by strong underlying performance in the Energy business as well as across our non-Energy businesses, especially our retail business, Powerhouse.je, which has had another particularly strong year. Overall, this has led to the Group's best ever financial performance, an outcome that is good for all stakeholders, for our ongoing investment programme and for a sustainable electricity service. I am therefore pleased to report a proposed final dividend for this year of 8.40p, a 5% rise on the previous year, payable on 29 March 2018.

Our first almost full year operating with three undersea supply cables to France has not only resulted in improved financial performance, but has also driven exceptional supply reliability, attractive pricing for customers and a virtually fully decarbonised electricity system. Our tariffs remain very competitive compared with other jurisdictions, including other islands and even the EU and UK which benefit from significant economies of scale. In addition, with the last tariff rise of 1.5% on 1 April 2014, Jersey Electricity is approaching four years without an increase - a notable achievement given the very significant rises over that period elsewhere.

As the sole supplier of over a third of Jersey's energy requirements, the Company has a huge responsibility to our customers and it is one all colleagues take very seriously. I am therefore pleased that our customer satisfaction ratings have improved further across the four key service areas leading to an increase in an overall rating which is independently assessed as 'excellent' when compared with other service providers."

 
 Financial Highlights                        2017        2016 
 
 Revenue                                GBP102.3m   GBP103.4m 
 Profit before tax pre-exceptional 
  items                                  GBP13.5m    GBP13.1m 
 Earnings per share pre-exceptional 
  items                                     34.6p       33.3p 
 Dividend paid per share                    13.8p       13.1p 
 Final proposed dividend per share           8.4p        8.0p 
 Net debt                                GBP21.9m    GBP29.0m 
------------------------------------  -----------  ---------- 
 

Group revenue for the year to 30 September 2017 at GBP102.3m was 1% lower than in the previous financial year. Unit sales volumes of electricity were marginally behind last year with Energy revenues at GBP80.5m against GBP81.2m in 2016. Turnover in Powerhouse.je, our retail business, increased by 9% from GBP11.9m to GBP13.0m. Revenue in the Property business rose by GBP0.1m to GBP2.2m due to higher rental income. Revenue from JEBS, our contracting and building services business, fell GBP1.1m from levels experienced in 2016 to GBP4.0m. Turnover in our other businesses fell GBP0.3m to GBP2.6m.

Overall cost of sales decreased by GBP2.1m to GBP63.2m mainly due to a reduction in import costs in our Energy business. Operating expenses, at GBP24.4m, rose by GBP0.9m from their 2016 level with an increase in depreciation charges, post our continued investment in infrastructure, and IAS19 pension costs being the main drivers.

Profit before tax, pre-exceptional items, for the year to 30 September 2017, at GBP13.5m, increased by 2.5% from GBP13.1m in 2016. Profit before tax post-exceptional items, fell from GBP14.8m last year to GBP13.5m in 2017 as we had an exceptional credit of GBP1.7m in 2016 associated with the release of a rent accrual that had been accumulated over many years for our La Collette Power Station site post the settlement of a long-running rent review which was settled by an arbiter in our favour.

Our Energy business unit sales saw volumes falling 0.6% from 625m to 621m kilowatt hours. Profits in our Energy business moved up marginally against last year to GBP11.7m. A lower cost of sales resulted in a higher margin but this was offset by increased depreciation and pension costs.

In the financial year we imported 93% of our requirements from France (2016: 92%) and generated 1% of our electricity on-island at La Collette Power Station (2016: 3%). Additional staff training on plant was the main reason for the higher level of generation in 2016 compared to this year. The remaining 6% of our electricity came from the local Energy from Waste plant being marginally above that seen in 2016. Customer tariffs have remained at the same level over the last three years and there were no changes during 2017 and our prices continue to remain competitive with other jurisdictions (EU and other islands). The UK saw material increases in retail electricity prices for their customers during 2017 with an average rise of 14% across the 'Big 6' but our last tariff movement was an average 1.5% increase in April 2014.

Profits in our Property division, excluding the impact of investment property revaluation, at GBP1.6m, were at the same level as last year with a higher rental level offset by increased maintenance costs. Our investment property portfolio was marginally revalued upwards this year to GBP20.2m by the external consultants who review the position annually. Our retailing business, Powerhouse.je, saw continued strong growth with profits moving GBP0.3m upwards to GBP0.7m in 2017. JEBS, our contracting and business services unit produced a profit of GBP0.1m on a par with that achieved in 2016 in a challenging industry with high competition for staff. Our other business units - Jersey Energy, Jendev and Jersey Deep Freeze were GBP0.2m behind last year as Jersey Deep Freeze had an exceptional year in 2016 which was not repeated in 2017.

Interest paid in 2017 was GBP1.3m against GBP1.1m in 2016 with a lower level of average debt, and a higher level of capitalisation of interest in 2016 associated with the new N1 subsea cable, being the primary reasons for the rise. The taxation charge at GBP2.8m was GBP0.3m lower than 2016 due mainly to the exceptional credit last year being a taxable item.

Group earnings per share, pre-exceptional items, rose to 34.6p compared to 33.3p in 2016 due mainly to the increase in profits. Earnings per share, before adjusting for exceptional items, stood at 37.7p in 2016 whilst there were no exceptional items to adjust for in 2017.

Dividends paid in the year, net of tax, rose by 5%, from 13.1p in 2016 to 13.8p in 2017. The proposed final dividend for this year is 8.4p, a 5% rise on the previous year. Dividend cover, pre-exceptional items, at 2.5 times was at a similar level to 2016. If exceptional items are included, dividend cover fell from 2.9 times last year to 2.5 times in this financial year.

Net cash inflow from operating activities at GBP26.5m was GBP1.3m higher than in 2016 with an increase in profit, prior to IAS 19 pension accounting, being the primary driver. Capital expenditure, at GBP15.1m fell from GBP32.4m last year as most of the cash on the N1 project was spent in 2016 in advance of the cable being commissioned during this financial year. Net debt, at the year-end was GBP21.9m being GBP7.1m lower than last year.

Our defined benefits pension scheme, which had an IAS 19 deficit of GBP9.2m, net of deferred tax, at the 2016 year end decreased to a GBP3.4m deficit as at 30 September 2017. Scheme liabilities fell 4% due to an increase in the discount rate applied, reflecting sentiments in financial markets, and assets rose 1%, since the last year end.

 
 Consolidated Income Statement                                 2017                       2016 
 For the year ended 30 September                             GBP000                     GBP000 
  2017 
 
 Revenue                                                    102,320                    103,361 
 Cost of sales                                             (63,186)                   (65,249) 
                                          -------------------------  ------------------------- 
 Gross Profit                                                39,134                     38,112 
 
 Revaluation of investment properties                            40                      (350) 
 Operating expenses                                        (24,379)                   (23,498) 
                                          -------------------------  ------------------------- 
 
 Group operating profit before 
  exceptional items                                          14,795                     14,264 
 Exceptional item - La Collette 
  rent accrual reversal                                           -                      1,676 
 Group operating profit                                      14,795                     15,940 
 Finance income                                                   3                         22 
 Finance costs                                              (1,340)                    (1,154) 
 
 Profit from operations before 
  taxation                                                   13,458                     14,808 
 
 Taxation                                                   (2,834)                    (3,166) 
                                          -------------------------  ------------------------- 
 
 Profit from operations after taxation                       10,624                     11,642 
                                          =========================  ========================= 
 
 Attributable to: 
 Owners of the Company                                       10,599                     11,547 
 Non-controlling interests                                       25                         95 
                                          -------------------------  ------------------------- 
                                                             10,624                     11,642 
                                          =========================  ========================= 
 
 Earnings per share 
 - basic and diluted                                         34.59p                     37.69p 
 
 
  Consolidated Statement of Comprehensive        2017      2016 
   Income 
                                                            GBP 
                                              GBP 000       000 
 
 Profit for the year                           10,624    11,642 
 
 Items that will not be reclassified 
  subsequently to profit or loss: 
 Actuarial gain / (loss) on defined 
  benefit scheme                                8,859   (2,829) 
 Income tax relating to items not 
  reclassified                                (1,772)       566 
                                             --------  -------- 
                                                7,087   (2,263) 
 
 Items that may be reclassified 
  subsequently to profit or loss: 
 Fair value (loss) / gain on cash 
  flow hedges                                 (1,673)    13,865 
 Income tax relating to items that 
  may be reclassified                             335   (2,773) 
                                             --------  -------- 
                                              (1,388)    11,092 
 
 Total comprehensive income for 
  the year                                     16,393    20,471 
 
 Attributable to: 
 Owners of the Company                         16,348    20,376 
 Non-controlling interests                         25        95 
                                             --------  -------- 
                                               16,373    20,471 
 
 
 Consolidated Balance Sheet                            2017      2016 
 For the year ended 30 September                                  GBP 
  2017                                              GBP 000       000 
 NON-CURRENT ASSETS 
 Intangible assets                                    1,110       162 
 Property, plant and equipment                      211,921   209,168 
 Investment properties                               20,150    20,110 
 Secured loans                                          592       683 
 Derivative financial instruments                     2,790     5,957 
 Other investments                                        5         5 
                                       --------------------  -------- 
 Total non-current assets                           236,568   236,085 
-------------------------------------  --------------------  -------- 
 CURRENT ASSETS 
------------------------------------   --------------------  -------- 
 Inventories                                          6,825     5,962 
 Trade and other receivables                         15,782    16,583 
 Derivative financial instruments                     4,454     2,788 
 Cash and cash equivalents                            8,076     1,925 
 Total current assets                                35,137    27,258 
                                       --------------------  -------- 
 Total assets                                       271,705   263,343 
-------------------------------------  --------------------  -------- 
 LIABILITIES 
------------------------------------   --------------------  -------- 
 Trade and other payables                            15,885    16,084 
 Bank overdraft                                           -       943 
 Current tax liability                                1,034       420 
 Total current liabilities                           16,919    17,447 
                                       --------------------  -------- 
 NET CURRENT ASSETS                                  18,218     9,811 
------------------------------------- 
 NON-CURRENT LIABILITIES 
------------------------------------   --------------------  -------- 
 Trade and other payables                            20,177    19,600 
 Retirement benefit deficit                           4,219    11,471 
 Derivative financial instruments                       172         - 
 Financial liabilities - preference 
  shares                                                235       235 
 Long-term borrowings                                30,000    30,000 
 Deferred tax liabilities                            23,719    20,482 
 Total non-current liabilities                       78,522    81,788 
                                       --------------------  -------- 
 Total liabilities                                   95,441    99,235 
                                       --------------------  -------- 
 Net assets                                         176,264   164,108 
-------------------------------------  --------------------  -------- 
 EQUITY 
------------------------------------   --------------------  -------- 
 Share capital                                        1,532     1,532 
 Revaluation reserve                                  5,270     5,270 
 ESOP reserve                                          (84)     (155) 
 Other reserves                                       5,658     6,878 
 Retained earnings                                  163,862   150,523 
                                       --------------------  -------- 
 Equity attributable to owners 
  of the Company                                    176,238   164,048 
 Non-controlling interests                               26        60 
                                       --------------------  -------- 
 Total equity                                       176,264   164,108 
-------------------------------------  --------------------  -------- 
 
 
 Consolidated 
 Statement 
 of Changes in 
 Equity 
 for the year 
 ended 30                         Share           Revaluation            ESOP           Other       Retained 
 September 2017                 capital               reserve         reserve        reserves       earnings     Total 
                                    GBP                                   GBP             GBP            GBP       GBP 
                                    000               GBP 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 gain 
  on hedges 
  (net of tax)                        -                     -               -         (1,388)              -   (1,388) 
 Actuarial loss on 
  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 
                    ===================  ====================  ==============  ==============  =============  ======== 
 
                                  Share           Revaluation            ESOP           Other       Retained 
                                capital               reserve         reserve        reserves       earnings     Total 
                                    GBP                                   GBP             GBP            GBP       GBP 
                                    000               GBP 000             000             000            000       000 
 At 1 October 2015                1,532                 5,270            (97)         (4,214)        145,223   147,714 
 Total recognised 
  income 
  and expense for 
  the year                            -                     -               -                         11,547    11,547 
 Funding of 
  employee share 
  option scheme                       -                     -           (114)               -              -     (114) 
 Amortisation of 
  employee 
  share option 
  scheme                              -                     -              56               -              -        56 
 Unrealised loss 
  on hedges 
  (net of tax)                        -                     -               -          11,092              -    11,092 
 Actuarial loss on 
  defined 
  benefit scheme 
  (net of 
  tax)                                -                     -               -               -        (2,263)   (2,263) 
 Adjustment 
  arising from 
  change in 
  non-controlling 
  interest                            -                     -               -               -             31        31 
 Equity dividends                     -                     -               -               -        (4,015)   (4,015) 
                    -------------------  --------------------  --------------  --------------  -------------  -------- 
 At 30 September 
  2016                            1,532                 5,270           (155)           6,878        150,523   164,048 
                    ===================  ====================  ==============  ==============  =============  ======== 
 
 
 Consolidated Statement of Cash 
  Flows                                            2017       2016 
 for the year ended 30 September 
  2017                                          GBP 000    GBP 000 
 
 CASH FLOWS FROM OPERATING ACTIVITIES 
 
 Operating profit before exceptional 
  items                                          14,795     14,264 
 Depreciation and amortisation 
  charges                                        10,695     10,295 
 Share based reward charges                          73         56 
 (Gain) / loss on revaluation 
  of investment property                           (40)        350 
 Pension operating charge less 
  contributions paid                              1,607      1,351 
 Profit on sale of fixed assets                     (4)        (6) 
                                              ---------  --------- 
 Operating cash flows before 
  movement in working capital                    27,126     26,310 
 Working capital adjustments: 
      (Increase) / decrease in inventories        (863)        277 
      Decrease / (increase) in trade 
       and other receivables                        892    (1,758) 
      Increase in trade and other 
       payables                                   1,230      2,303 
                                              ---------  --------- 
 Net movement in working capital                  1,259        822 
 Interest paid                                  (1,322)    (1,148) 
 Capitalised interest paid                        (172)      (374) 
 Preference dividends paid                          (9)        (9) 
 Income taxes paid                                (421)      (396) 
                                              ---------  --------- 
 Net cash flows from operating 
  activities                                     26,461     25,205 
 
 CASH FLOWS FROM INVESTING ACTIVITIES 
 Purchase of property, plant 
  and equipment                                (14,252)   (32,391) 
 Investment in intangible assets                  (836)        (4) 
 Proceeds from part disposal 
  of subsidiary                                       -         10 
 Net proceeds from disposal of 
  fixed assets                                        4          9 
                                              ---------  --------- 
 Net cash flows used in investing 
  activities                                   (15,084)   (32,376) 
 
 CASH FLOWS FROM FINANCING ACTIVITIES 
 Equity dividends paid                          (4,229)    (4,019) 
 Dividends paid to non-controlling 
  interest                                         (59)       (48) 
 Deposit interest received                            3         22 
 Payment for foreign exchange 
  option                                              -      (250) 
 Proceeds of borrowings                          18,000      5,500 
 Repayment of borrowings                       (18,943)    (5,500) 
                                              ---------  --------- 
 Net cash flows used in financing 
  activities                                    (5,228)    (4,295) 
 
 Net increase / (decrease) in 
  cash and cash equivalents                       6,149   (11,466) 
 
 Cash and cash equivalents at 
  beginning of year                               1,925     12,503 
 Effect of foreign exchange rates                     2       (55) 
 Overdraft                                            -        943 
                                              ---------  --------- 
 
 Cash and cash equivalents at 
  end of year                                     8,076      1,925 
 

Notes to the accounts

Year ended 30 September 2017

   1.   Basis of Preparation 

The consolidated financial statements of Jersey Electricity plc, for the year ended 30 September 2017, 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 2018.

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: 
                                       2017       2017      2017       2016       2016      2016 
                                   External   Internal     Total   External   Internal     Total 
                                     GBP000     GBP000    GBP000     GBP000     GBP000    GBP000 
 Revenue 
 Energy                              80,480        143    80,623     81,215        144    81,359 
 Building Services                    3,982        915     4,897      5,120        786     5,906 
 Retail                              13,045         37    13,082     11,933         45    11,978 
 Property                             2,187        599     2,786      2,143        599     2,742 
 Other                                2,626      1,324     3,950      2,950        876     3,826 
                                  ---------  ---------  --------  ---------  ---------  -------- 
                                    102,320      3,018   105,338    103,361      2,450   105,811 
 Intergroup elimination                                  (3,018)                         (2,450) 
                                                        --------                        -------- 
 Revenue                                                 102,320                         103,361 
                                                        --------                        -------- 
 
 Operating profit 
 Energy                                                   11,723                          11,650 
 Building Services                                           131                             134 
 Retail                                                      731                             452 
 Property                                                  1,645                           1,683 
 Other                                                       525                             695 
                                                        --------                        -------- 
                                                          14,755                          14,614 
 Revaluation of investment 
  properties                                                  40                           (350) 
 
 Exceptional item - La Collette 
  rent accrual reversal                                        -                           1,676 
 
 Operating profit                                         14,795                          15,940 
                                                        --------                        -------- 
 

This information is provided by RNS

The company news service from the London Stock Exchange

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