TIDMJEL
RNS Number : 6266O
Jersey Electricity PLC
21 May 2018
Jersey Electricity plc
Interim Management Report
for the six months ended 31 March 2018
The Board approved at a meeting on 18 May 2018 the Interim
Management Report for the six months ended 31 March 2018 and
declared an interim dividend of 6.1p compared to 5.8p for 2017. The
dividend will be paid on 29 June 2018 to those shareholders
registered in the records of the Company at the close of business
on 1 June 2018.
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 2018 has not been audited or
reviewed by our external auditors nor have the results for the
equivalent period in 2017. The results for the year ended 30
September 2017 have been extracted from the statutory accounts. The
auditor has reported on those accounts and their reports were
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
18 May 2018
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 2018
Financial Summary 6 months 6 months
2018 2017
---------------------------------------- --------- ---------
Electricity Sales in kWh (000) 368,200 361,123
Revenue GBP60.5m GBP58.0m
Profit before tax GBP 9.7m GBP 8.9m
Earnings per share 24.9p 22.9p
Final dividend paid per ordinary
share 8.4p 8.0p
Proposed interim dividend per ordinary
share 6.1p 5.8p
Net debt GBP20.2m GBP29.4m
Overall trading performance
Group revenue, at GBP60.5m, was 4% higher for the first half of
2018 than the same period in 2017 with GBP1.0m coming from a higher
level of unit sales of electricity and GBP0.8m from our
Powerhouse.je retailing business. Profit before tax was GBP9.7m
being GBP0.8m 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 at GBP37.5m
was GBP2.0m higher than last year with an increase in import costs
in our Energy business and higher sales activity in Powerhouse.je
being the main reasons. Operating expenses at GBP12.6m were GBP0.4m
lower than in 2017 due to a general reduction in overhead costs.
The taxation charge in the period of GBP2.0m was GBP0.1m higher
than during the same period in 2017 due to increased profits.
Earnings per share rose to 24.9p from 22.9p in 2017. Net debt on
the balance sheet at 31 March 2018 was GBP20.2m (2017: GBP29.4m)
compared to GBP21.9m at our last year end on 30 September 2017.
Energy performance
Unit sales of electricity rose 2%, from 361m to 368m kWh,
compared with last year. The average temperature was mixed with the
first quarter being milder, and the second quarter colder, than in
the first half of the 2017 financial year. On 1 March we saw our
highest ever maximum demand for electricity of 178 MW, when
temperatures fell to a very unseasonal minus 3 degrees centigrade,
being 11% higher than the previous record of 161 MW experienced in
2012. Revenues in our Energy business at GBP47.2m were GBP1.0m
higher than in 2017. Operating profit at GBP8.7m was GBP1.0m higher
than in the same period last year. Gross margin was impacted by
increased imported electricity costs but other costs, such as
manpower and maintenance were lower than the corresponding 2017
period. We imported 95% of our on-Island requirement from France
(2017: 93%) and 5% from the Energy from Waste plant (2017: 5%),
owned by the States of Jersey. Only 0.3% (1m units) of electricity
was generated in Jersey using our own plant (2017: 2%) due to the
availability of three subsea cables to France for the first full
winter period post the commissioning of our third interlink,
Normandie 1, in December 2016.
Investment in infrastructure
Capital expenditure was GBP7.1m in the first 6 months of the
financial year compared to GBP8.6m in the same period last year. We
continue with work on our new West of St Helier Primary sub-station
which has an estimated cost of GBP17m, of which GBP10m has been
expended to date, and is still planned to be commissioned in late
2018. Finally, our rollout of smart-enabled meters continues with
around 39,000 installed in customer premises as at 31 March 2018
representing over 78% of our customer base.
Non-Energy performance
Year-on-year revenue in our retail business, Powerhouse.je, rose
by 11% to GBP7.9m (2017: GBP7.1m) and profits rose 23% to GBP0.6m
in what is a very competitive marketplace, both locally and
off-island. Revenue and profit rose for our Property portfolio as a
result of increased rental flows (profit up 5% to GBP0.9m). JEBS,
our contracting and business services unit, saw a GBP0.2m increase
in overall revenue to GBP3.1m but delivered a break-even position,
down from a GBP0.1m profit in 2017 in a tight local market. Our
remaining business units produced profits of GBP0.3m being GBP0.1m
behind the same period in 2017.
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. Our electricity purchases are materially, albeit not
fully, hedged for the period 2018-21. As these are contractually
denominated in the Euro we enter into forward foreign currency
contracts to reduce the volatility of our cost base and aid tariff
planning. We have continued to see volatility in foreign exchange
in the last six months against the Euro primarily driven by the
uncertainty surrounding the UK Brexit decision, which is why we
seek to manage this exposure. In April 2018 we announced a below
inflation average rise in tariffs of 2%, from 1 June, largely
driven by a weakening of sterling relative to the Euro and other
inflationary factors. Customer tariffs last rose in April 2014 by
1.5%.
Debt and financing
The net debt figure fell to GBP20.2m at 31 March 2018 compared
to GBP29.4m at this time last year (and GBP21.9m at 30 September
2017). After a high level of capital spending on undersea cables,
and associated infrastructure, over recent years, the level of
expenditure and associated net debt in this current year, has
fallen. It is the aim of the Board that Jersey Electricity
continues to maintain a prudent level of debt relative to 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 2018, at GBP3.9m,
was similar to the GBP4.2m level at 30 September 2017 (and a
deficit of GBP4.8m at 31 March 2017). Since the last financial year
end, scheme assets rose by GBP4m (to GBP133m) and liabilities also
increased by GBP4m (to GBP137m). This increase in scheme
liabilities is due to a decrease in relevant AA-rated bond yields
partially offset by a decrease in assumed RPI inflation. Cash paid
into the scheme during the six month period was GBP0.9m (2017:
GBP1.0m) with the IAS 19 charge against profit being GBP1.6m (2017:
GBP1.8m). The defined benefit scheme has been closed to new members
since 2013.
Dividend
Your Board proposes to pay an interim net dividend for 2018 of
6.1p (2017: 5.8p). As stated previously we continue to aim to
deliver sustained real growth each year over the medium-term. The
final dividend for 2017 of 8.4p, 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, issued in January 2018, 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 2018
INVESTOR TIMETABLE FOR 2018
1 June Record date for interim ordinary dividend
29 June Interim ordinary dividend for year ending 30 September
2018
2 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
2018 2017 2017
Note GBP000 GBP000 GBP000
Revenue 2 60,463 58,004 102,320
Cost of sales (37,506) (35,507) (63,186)
Gross profit 22,957 22,497 39,134
Revaluation of investment properties - - 40
Operating expenses (12,553) (12,981) (24,379)
----------- ----------- ---------------
Group operating profit 2 10,404 9,516 14,795
Finance income 7 1 3
Finance costs (707) (588) (1,340)
----------- ----------- ---------------
Profit from operations before
taxation 9,704 8,929 13,458
Taxation 3 (2,023) (1,925) (2,834)
----------- ----------- ---------------
Profit from operations after taxation 7,681 7,004 10,624
Attributable to:
Owners of the Company 7,640 7,009 10,599
Non-controlling interests 41 (5) 25
----------- ----------- ---------------
Profit for the period/year attributable
to the equity holders of the parent
Company 7,681 7,004 10,624
----------- ----------- ---------------
Earnings per share
- basic and diluted 24.9p 22.9p 34.6p
Condensed Consolidated Statement of Comprehensive Income
(Unaudited)
Six months Six months
ended ended Year ended
31 March 31 March 30 September
2018 2017 2017
GBP000 GBP000 GBP000
Profit for the period/year 7,681 7,004 10,624
Items that will not be reclassified
subsequently to
profit or loss:
Actuarial gain on defined benefit
scheme 964 7,547 8,859
Income tax relating to items not
reclassified (193) (1,509) (1,772)
771 6,038 7,087
Items that may be reclassified
subsequently to profit
or loss:
Fair value loss on cash flow hedges (3,407) (2,387) (1,673)
Income tax relating to items that
may be reclassified 681 477 335
----------- ----------- ---------------
(2,726) (1,910) (1,338)
Total comprehensive income for
the period/year 5,726 11,132 16,373
Attributable to:
Owners of the Company 5,685 11,137 16,348
Non-controlling interests 41 (5) 25
----------- ----------- ---------------
5,726 11,132 16,373
----------- ----------- ---------------
Condensed Consolidated Balance Sheet (Unaudited)
Note As at 31 As at As at 30
March 31 March September
2018 2017 2017
GBP000 GBP000 GBP000
Non-current assets
Intangible assets 1,077 189 1,110
Property, plant and equipment 212,401 210,597 211,921
Investment property 20,150 20,110 20,150
Trade and other receivables 533 622 592
Derivative financial instruments 6 593 3,807 2,790
Other investments 5 5 5
Total non-current assets 234,759 235,330 236,568
--------- ---------- -----------
Current assets
Inventories 6,618 5,736 6,825
Trade and other receivables 21,559 20,571 15,782
Derivative financial instruments 6 3,337 2,891 4,454
Cash and cash equivalents 9,767 4,556 8,076
Total current assets 41,281 33,754 35,137
--------- ---------- -----------
Total assets 276,040 269,084 271,705
--------- ---------- -----------
Current liabilities
Trade and other payables 14,147 13,058 15,885
Borrowings - 4,000 -
Derivative financial instruments 6 8 13 -
Current tax payable 2,813 1,166 1,034
Total current liabilities 16,968 18,237 16,919
--------- ---------- -----------
Net current assets 24,313 15,517 18,218
--------- ---------- -----------
Non-current liabilities
Trade and other payables 21,820 20,751 20,177
Retirement benefit deficit 3,855 4,764 4,219
Derivative financial instruments 6 257 327 172
Financial liabilities - preference
shares 235 235 235
Borrowings 30,000 30,000 30,000
Deferred tax liabilities 23,490 21,992 23,719
Total non-current liabilities 79,657 78,069 78,522
--------- ---------- -----------
Total liabilities 96,625 96,306 95,441
--------- ---------- -----------
Net assets 179,415 172,778 176,264
--------- ---------- -----------
Equity
Share capital 1,532 1,532 1,532
Revaluation reserve 5,270 5,270 5,270
ESOP reserve (61) (119) (84)
Other reserves 2,932 4,968 5,658
Retained earnings 169,700 161,119 163,862
--------- ---------- -----------
Equity attributable to owners
of the Company 179,373 172,770 176,238
Non-controlling interests 42 8 26
--------- ---------- -----------
Total equity 179,415 172,778 176,264
--------- ---------- -----------
Condensed Consolidated Statement of Changes in Equity
(Unaudited)
Share Revaluation ESOP Other Retained Total
capital reserve reserve reserves earnings reserves
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 October 2017 1,532 5,270 (84) 5,658 163,862 176,238
Total recognised income and expense
for the period - - - - 7,640 7,640
Funding of employee share scheme - - (9) - - (9)
Amortisation of employee share
scheme - - 32 - - 32
Unrealised loss on hedges (net
of tax) - - - (2,726) - (2,726)
Actuarial gain on defined benefit
scheme (net of tax) - - - - 771 771
Equity dividends paid - - - - (2,573) (2,573)
------- ----------- ------- -------- -------- --------
At 31 March 2018 1,532 5,270 (61) 2,932 169,700 179,373
------- ----------- ------- -------- -------- --------
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 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 scheme - - (2) - - (2)
Amortisation of employee share
scheme - - 73 - - 73
Unrealised loss on hedges (net
of tax) - - - (1,338) - (1,338)
Actuarial gain on defined benefit
scheme (net of tax) - - - - 7,087 7,087
Adjustment to reserves - - - 118 (118) -
Equity dividends paid - - - - (4,229) (4,229)
------- ----------- ------- -------- -------- --------
At 30 September 2017 1,532 5,270 (84) 5,658 163,862 176,238
------- ----------- ------- -------- -------- --------
Condensed Consolidated Cash Flow Statement (Unaudited)
As at 31 As at As at 30
March 31 March September
2018 2017 2017
GBP000 GBP000 GBP000
Cash flows from operating activities
Operating profit 10,404 9,516 14,795
Depreciation and amortisation
charges 5,458 5,151 10,695
Share-based reward charges 32 36 73
Gain on revaluation of investment
property - - (40)
Pension operating charge less
contributions paid 654 840 1,607
Payment for foreign exchange option 250 - -
Loss/(profit) on sale of fixed
assets - 42 (4)
Operating cash flows before movements
in working capital 16,798 15,585 27,126
Working capital adjustments:
Decrease/(increase) in inventories 207 226 (863)
(Increase)/decrease in trade and
other receivables (5,718) (3,928) 892
Increase/(decrease) in trade and
other payables 1,017 (1,414) 1,230
--------- ---------- -----------
Net movement in working capital (4,494) (5,116) 1,259
Interest paid (703) (590) (1,322)
Capitalised interest paid - (172) (172)
Preference dividends paid (4) (4) (9)
Income taxes paid - - (421)
Net cash flows generated from operating
activities 11,597 9,703 26,461
-------------------------------------------- --------- ---------- -----------
Cash flows from investing activities
Purchase of property, plant and
equipment (6,914) (8,508) (14,252)
Investment in intangible assets (137) (63) (836)
Net proceeds from disposal of fixed
assets - 3 4
Net cash used in investing activities (7,051) (8,568) (15,084)
-------------------------------------------- --------- ---------- -----------
Cash flows from financing activities
Equity dividends paid (2,573) (2,451) (4,229)
Dividends paid to non-controlling
interest (25) (39) (59)
Deposit interest received 7 1 3
Payment for foreign exchange option (250) - -
Proceeds from borrowings - 18,000 18,000
Repayment of borrowings - (14,000) (18,943)
Net cash (used in) / generated
from financing activities (2,841) 1,511 (5,228)
-------------------------------------------- --------- ---------- -----------
Net increase in cash and cash equivalents 1,705 2,646 6,149
Cash and cash equivalents at beginning
of period/year 8,076 1,925 1,925
Effect of foreign exchange rate
changes (14) (15) 2
Net cash and cash equivalents at
end of period/year 9,767 4,556 8,076
Notes to the Condensed Interim Accounts (Unaudited)
1. Accounting policies
Basis of preparation
The interim financial statements for the six months ended 31
March 2018 have been prepared on the basis of the accounting
policies set out in the 30 September 2017 annual report and
accounts using accounting policies consistent with International
Financial Reporting Standards and in accordance with International
Accounting Standard 34 'Interim Financial Reporting'. There have
been no changes to accounting standards during the current
financial year that would be expected to impact the disclosures in
these financial statements, nor the full year financial statements
that will be prepared for 30 September 2018.
The directors have a reasonable expectation that the Group
(being the Company, Jersey Electricity plc and its subsidiary,
Jersey Deep Freeze Ltd) 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 2018 31 March 2017 30 September 2017
External Internal Total External Internal Total External Internal Total
Revenue GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Energy 47,174 64 47,238 46,150 70 46,220 80,480 143 80,623
Building Services 2,865 249 3,114 2,413 472 2,885 3,982 915 4,897
Retail 7,912 17 7,929 7,102 16 7,118 13,045 37 13,082
Property 1,115 305 1,420 1,088 299 1,387 2,187 599 2,786
Other 1,397 390 1,787 1,251 915 2,166 2,626 1,324 3,950
--------- --------- -------- --------- --------- -------- --------- --------- --------
60,463 1,025 61,488 58,004 1,772 59,776 102,320 3,018 105,338
Intergroup
elimination (1,025) (1,772) (3,018)
-------- -------- --------
Revenue 60,463 58,004 102,320
-------- -------- --------
Operating profit
Energy 8,667 7,694 11,723
Building Services (13) 104 131
Retail 567 460 731
Property 913 870 1,645
Other 270 388 525
-------- -------- --------
10,404 9,516 14,755
Revaluation of
investment
properties - - 40
Operating profit 10,404 9,516 14,795
-------- -------- --------
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 2018.
3. Taxation
Six months Year ended
ended 31 March 30 September
2018 2017 2017
GBP000 GBP000 GBP000
Current income tax 1,771 1,166 1,034
Deferred income tax 252 759 1,800
-------- -------- --------------
Total income tax 2,023 1,925 2,834
======== ======== ==============
For the period ended 31 March 2018 and subsequent periods, the
Company is taxable at the rate applicable to utility companies in
Jersey of 20% (2017: 20%).
4. Dividends paid and proposed
Six months Year ended
ended 30 September
31 March
2018 2017 2017
Dividends per share
- paid 8.4p 8.0p 13.8p
- proposed 6.1p 5.8p 8.4p
GBP000 GBP000 GBP000
Distributions to equity holders 2,573 2,451 4,228
------- ------- --------------
The distribution to equity holders in respect of the final
dividend for 2017 of GBP2,573,441 (8.4p net of tax per share) was
paid on 29 March 2018.
The Directors have declared an interim dividend of 6.1p per
share, net of tax (2017: 5.8p) for the six months ended 31 March
2018 to shareholders on the register at the close of business on 1
June 2018. This dividend was approved by the Board on 18 May 2018
and has not been included as a liability at 31 March 2018.
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 2018.
Fair value of currency hedges 31 March 30 September
2018 2017 2017
Derivative assets GBP'000 GBP'000 GBP'000
Less than one year 3,337 2,891 4,454
Greater than one year 593 3,807 2,790
Derivative liabilities
Less than one year (8) (13) -
Greater than one year (257) (327) (172)
Total net assets 3,665 6,358 7,072
======== ======== =============
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 of Value of
electricity goods & other Value of
services services goods & services
supplied supplied purchased Amounts due Amounts
by Jersey by Jersey by Jersey to Jersey due by Jersey
Electricity Electricity Electricity Electricity Electricity
Six months ended 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017
31 March
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
The States of
Jersey
and related
entities 5,139 5,347 1,165 808 791 782 564 742 6 99
The States of Jersey is the Group's majority and controlling
shareholder. Related entities include all corporatised entities
that remain wholly owned by, or controlled by, the States of
Jersey.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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