TIDMJEL
RNS Number : 5392X
Jersey Electricity PLC
20 December 2019
JERSEY ELECTRICITY plc Preliminary Announcement of Annual
Results
Year Ended 30 September 2019
At a meeting of the Board of Directors held on 19 December 2019,
the final accounts for the Group for the year to 30 September 2019
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 2019 or 2018, but is derived from those accounts.
Statutory accounts for 2018 have been delivered to the Jersey
Registrar of Companies, and those for 2019 will be delivered in
early 2020. The auditor has reported on the accounts for both years
and their reports were unmodified.
A final dividend of 9.25p on the Ordinary and 'A' Ordinary
shares in respect of the year ended 30 September 2019 was
recommended (2018: 8.80p). Together with the interim dividend of
6.45p (2018: 6.10p) the proposed total dividend declared for the
year was 15.70p on each share (2018: 14.90p).
The final dividend will be paid on 26 March 2020 to those
shareholders registered in the books of the Company on 21 February
2020. A dividend on the 5% cumulative participating preference
shares of 1.5% (2018: 1.5%) payable on 1 July 2020 was also
recommended.
The Annual General Meeting of the Company will be held on 5
March 2020 at 12.30 pm at the Powerhouse, Queens Road, St Helier,
Jersey.
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 December 2019
The Powerhouse
PO Box 45
Queens Road
St Helier
Jersey JE4 8NY
JERSEY ELECTRICITY plc
Preliminary Announcement of Annual Results
Year ended 30 September 2019
The Chairman, Phil Austin, comments:
"It was a privilege to be appointed Chairman of Jersey
Electricity at the AGM in February. I would like to offer my
sincere thanks to my predecessor Geoffrey Grime for his hard work
and commitment during 10 years as Chairman throughout which he
helped steer the Company through a significant and sustained
programme of investment. That investment is today bearing fruit for
customers in terms of supply reliability, competitive pricing and
carbon reduction, and for shareholders in terms of sustained growth
in dividends.
Jersey now benefits from an energy platform that is
substantially 'future proofed' for years to come, and the business
is strategically well positioned to meet the challenges and
opportunities ahead.
Group revenue for 2018/19 was GBP110.3m, 3% higher than last
year, however, profits were impacted by the mild winter which saw
electricity unit sales fall 1% to 627 million from 634 million.
Profit before tax fell 3% to GBP14.8m, down from the GBP15.3m
achieved last year. The Board has recommended a final dividend for
this year of 9.25p, a 5% rise on the previous year, payable on 26
March 2020.
Looking ahead, new technology and digitalisation are major
global factors impacting virtually all companies, including
utilities, and these have the potential to positively transform the
customer experience. We therefore expect new services, technologies
and digital to play an increasing role in our business.
Climate change presents us with both challenges and
opportunities. While warmer temperatures may have some adverse
impact on unit sales of electricity, Jersey Government's
declaration of a climate emergency and ambition to push for net
zero carbon by 2030 presents us with many opportunities for growing
our share of the energy market. Given that electricity is now
almost completely decarbonised, the main way the Island will reduce
carbon emissions further is by displacing fossil fuels with
electricity and energy efficiency. To adapt to this changing
landscape we have reset our Vision to 'enable life's essentials and
inspire a zero-carbon future' which recognises the importance of
working with the community, customers and partners. We have made
some key strategic management appointments this year and have also
welcomed to the Board a new non-Executive Director in Peter Simon.
We held a Board Away Day in March at which we established seven
strategic themes to achieve that Vision.
Our core objective, however, remains to serve our customers with
secure, affordable and sustainable electricity now and long into
the future. Our below inflation 3.5% tariff rise in April 2019 was
only our second rise in five years and our tariffs remain very
competitive compared with other jurisdictions, including the EU and
UK. The electricity we supply is not only virtually completely
decarbonised but one third of our imports is already from
certificated renewable sources. Furthermore, this year we have
invested in local renewables and brought solar PV on to the
grid.
As well as performing better than many UK power companies at an
operational level, this year we took part in the UK Customer
Satisfaction Index (UKCSI), which for the first time has enabled us
to benchmark ourselves against UK mainland utilities against
various customer service and satisfaction attributes. With an
overall rating of 78%, I am very pleased to report that we
delivered a solid debut result and materially outperformed UK
utilities, which averaged 72%.
These strong performance levels would not be possible without a
highly skilled and dedicated team. My thanks go to our Executive
and non-Executive Directors and, just as importantly, all
colleagues throughout the business for their commitment, hard work
and loyalty."
Financial Highlights 2019 2018
Revenue GBP110.3m GBP106.6m
Profit before tax GBP14.8m GBP15.3m
Earnings per share 38.42p 39.54p
Dividend paid per share 15.25p 14.50p
Final proposed dividend per share 9.25p 8.80p
Net debt GBP5.1m GBP14.3m
----------------------------------- ------------ ----------
Group revenue for the year to 30 September 2019 at GBP110.3m was
3% higher than in the previous financial year. Energy revenues at
GBP86.6m were 5% higher than the GBP82.3m achieved in 2018. The
sale of heavy fuel oil to Guernsey Electricity (amounting to
GBP2.7m) and a 3.5% rise in tariffs from 1 April 2019 were offset
by a 1% decrease in the unit sales volumes of electricity due to
milder weather. Revenue in the Powerhouse retail business increased
by 6% from GBP14.3m to GBP15.2m. Revenue in the Property business
at GBP2.3m was at the same level as last year. Revenue from JEBS,
our contracting and building services business, fell GBP1.6m from
levels experienced in 2018 to GBP3.3m as the previous year was
influenced by one exceptionally large contract. Revenue in our
other businesses remained at GBP2.9m.
Cost of sales at GBP69.3m was GBP3.4m higher than last year with
an increase in the imported cost of electricity, the cost
associated with the sale of heavy fuel oil to Guernsey Electricity
and higher sales activity in the Powerhouse retail business being
the main reasons.
Other income was recognised during the year arising from the
receipt of a GBP0.8m rebate for a subsea cable repair in 2014.
Operating expenses at GBP26.4m were GBP2.0m higher than 2018
primarily due to a GBP1.1m increase in the IAS 19 pensions cost as
explained in more detail later in this report and an increase of
GBP0.6m in depreciation charges.
Profit before tax for the year to 30 September 2019, at
GBP14.8m, decreased by 3% from GBP15.3m in 2018 largely due to
lower profits in our Energy business. A GBP0.7m upward revaluation
of our investment property portfolio (against GBP0.3m in 2018) was
another material year-on-year movement.
Profits in our Energy business fell from GBP13.4m in 2018 to
GBP12.3m this year. Unit sales volumes decreased from 634m to 627m
kilowatt hours with a milder winter period being the main reason.
Adverse foreign exchange, and rising wholesale prices, impacted the
cost of imported electricity. Customer tariffs rose by 3.5% in
April 2019 yet remained competitive with other jurisdictions.
During the year we sold our remaining stock of heavy fuel oil to
Guernsey Electricity which produced a profit of around GBP1.0m. The
oil was no longer required post the decommissioning of our legacy
on-Island steam plant. We also impaired assets associated with this
change of operating regime at a cost similar to the quantum of such
profit. In the 2014 financial year, a repair was performed to the
subsea cable between Jersey and Guernsey and Jersey Electricity
made a contribution of GBP1.8m towards the total cost. In March
2019 a cash payment of GBP0.8m was received which in effect was a
rebate towards the repair costs. A non-cash pension cost of GBP1.1m
was incurred in the year associated with the granting of an
ex-gratia rise in pensions in service.
In the financial year we imported 94% of our requirements from
France (2018: 95%) and generated only 0.3% of our electricity
on-island at La Collette Power Station (2018: 0.2%). The remaining
6% (2018: 5%) of our electricity was purchased from the local
Energy from Waste plant.
The GBP1.7m profits in our Property division, excluding the
impact of investment property revaluation, was GBP0.1m lower than
last year due to higher maintenance and depreciation costs. Our
investment property portfolio was revalued upwards this year by
GBP0.7m to GBP21.2m based on advice from our external consultants
who review the position annually, due primarily to the growth in
the value of the residential properties that we rent to tenants as
yields have increased in Jersey in the last year.
Our Powerhouse retail business saw continued strong growth in
sales with profits also improving by 10% to GBP0.9m in 2019.
JEBS, our contracting and business services unit had a
challenging year with a GBP0.1m loss, against a loss of GBP0.2m in
2018, and a plan is underway to re-focus, and improve performance,
in this business unit.
Our other business units (Jersey Energy, Jendev, Jersey Deep
Freeze and fibre optic lease rentals) produced profits of GBP0.6m
being at a similar level to last year.
Net interest paid in 2019 was GBP0.1m lower than last year at
GBP1.3m due to interest received on higher cash balances. The
taxation charge at GBP3.0m was GBP0.2m lower than 2018 due to the
decrease in taxable profit.
Group basic and diluted earnings per share fell to 38.42p
compared to 39.54p in 2018 due mainly to reduced profitability.
Dividends paid in the year, net of tax, rose by 5%, from 14.50p
in 2018 to 15.25p in 2019. The proposed final dividend for this
year is 9.25p, a 5% rise on the previous year. Dividend cover, at
2.5 times, was lower than the comparable 2.7 times in 2018.
Net cash inflow from operating activities at GBP27.7m was
GBP0.7m higher than in 2018 with the impact on working capital from
the sale of heavy fuel oil stock being a primary driver. Capital
expenditure, at GBP13.9m was GBP1.0m lower than GBP14.9m last year
with spend on the St Helier West primary sub-station being the most
material project in 2019. The resultant position was that net debt
at the year-end was GBP5.1m, being GBP30.0m of borrowings less
GBP24.9m of cash and cash equivalents, which was GBP9.2m lower than
last year.
Our defined benefits pension scheme showed an increased surplus
at 30 September 2019, under IAS 19 "Employee Benefits", of GBP8.3m,
net of deferred tax, compared with a surplus of GBP3.8m at 30
September 2018. Assets rose 14% from GBP136.2m to GBP154.7m during
the year. However, liabilities also increased 10% from GBP131.4m to
GBP144.2m since the last year-end. This was largely due to the
discount rate assumption, which heavily influences the calculation
of liabilities, falling from 2.9% in 2018 to 1.9% in 2019,
reflecting sentiments in prevailing financial markets.
Consolidated Income Statement 2019 2018
For the year ended 30 September 2019 GBP000 GBP000
Revenue 110,294 106,641
Cost of sales (69,282) (65,877)
--------- -------------------------
Gross Profit 41,012 40,764
Other income 750 -
Revaluation of investment properties 689 310
Operating expenses (26,369) (24,380)
--------- -------------------------
Group operating profit 16,082 16,694
Finance income 103 28
Finance costs (1,365) (1,377)
Profit from operations before taxation 14,820 15,345
Taxation (2,969) (3,152)
--------- -------------------------
Profit from operations after taxation 11,851 12,193
========= =========================
Attributable to:
Owners of the Company 11,773 12,115
Non-controlling interests 78 78
--------- -------------------------
11,851 12,193
========= =========================
Earnings per share
- basic and diluted 38.42p 39.54p
Consolidated Statement of Comprehensive 2019 2018
Income
GBP000 GBP000
Profit for the year 11,851 12,193
Items that will not be reclassified subsequently
to profit or loss:
Actuarial gain on defined benefit scheme 7,643 10,166
Income tax relating to items not reclassified (1,529) (2,033)
-------- --------
6,114 8,133
Items that may be reclassified subsequently
to profit or loss:
Fair value loss on cash flow hedges (3,007) (4,261)
Income tax relating to items that may be
reclassified 601 852
-------- --------
(2,406) (3,409)
Total comprehensive income for the year 15,559 16,917
Attributable to:
Owners of the Company 15,481 16,839
Non-controlling interests 78 78
-------- --------
15,559 16,917
A presentational change to the 2018 figures has arisen as a
result of elements previously embedded within cost of sales
(GBP767k rebates credit) being reclassified and shown in revenue.
Gross profit remains unchanged.
Consolidated Balance Sheet
30 September 2019
2019 2018
GBP000 GBP000
NON-CURRENT ASSETS
Intangible assets 683 938
Property, plant and equipment 217,046 215,153
Investment properties 21,240 20,460
Trade and other receivables 383 501
Retirement benefit surplus 10,417 4,751
Derivative financial instruments 208 682
Other investments 5 5
-------- ---------------
Total non-current assets 249,982 242,490
------------------------------------- -------- ---------------
CURRENT ASSETS
------------------------------------ -------- ---------------
Inventories 6,018 7,092
Trade and other receivables 17,995 15,202
Derivative financial instruments 197 2,338
Cash and cash equivalents 24,915 15,735
Total current assets 49,125 40,367
-------- ---------------
Total assets 299,107 282,857
---------------------------------------- -------- ---------------
LIABILITIES
------------------------------------ -------- ---------------
Trade and other payables 17,320 15,284
Current tax liabilities 2,714 2,299
Derivative financial instruments 298 120
Total current liabilities 20,332 17,703
-------- ---------------
NET CURRENT ASSETS 28,793 22,664
----------------------------------------
NON-CURRENT LIABILITIES
-------------------------------------- -------- ---------------
Trade and other payables 21,757 20,348
Derivative financial instruments 303 89
Financial liabilities - preference
shares 235 235
Borrowings 30,000 30,000
Deferred tax liabilities 26,936 25,753
Total non-current liabilities 79,231 76,425
-------- ---------------
Total liabilities 99,563 94,128
-------- ---------------
Net assets 199,544 188,729
---------------------------------------- -------- ---------------
EQUITY
------------------------------------ -------- ---------------
Share capital 1,532 1,532
Revaluation reserve 5,270 5,270
ESOP reserve (45) (41)
Other reserves (157) 2,249
Retained earnings 192,882 179,666
Equity attributable to owners of
the company 199,482 188,676
Non-controlling interests 62 53
-------- ---------------
Total equity 199,544 188,729
---------------------------------------- -------- ---------------
Consolidated
Statement of
Changes
in Equity for the
year ended Share Revaluation ESOP Other Retained
30 September 2019 capital reserve reserve reserves earnings Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 October 2018 1,532 5,270 (41) 2,249 179,666 188,676
Total recognised
income and
expense for the
year - - - - 11,773 11,773
Funding of
employee share
option
scheme - - (20) - - (20)
Amortisation of
employee share
option scheme - - 16 - - 16
Unrealised loss
on hedges (net
of tax) - - - (2,406) - (2,406)
Actuarial gain on
defined benefit
scheme (net of
tax) - - - - 6,114 6,114
Equity dividends - - - - (4,671) (4,671)
At 30 September
2019 1,532 5,270 (45) (157) 192,882 199,482
=================== ==================== ============== ============== ============= ========
Share Revaluation ESOP Other Retained
capital reserve reserve reserves earnings Total
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
year - - - - 12,115 12,115
Funding of
employee share
option
scheme - - (9) - - (9)
Amortisation of
employee share
option scheme - - 52 - - 52
Unrealised loss
on hedges (net
of tax) - - - (3,409) - (3,409)
Actuarial gain to
defined benefit
scheme (net of
tax) - - - - 8,133 8,133
Equity dividends - - - - (4,444) (4,444)
------------------- -------------------- -------------- -------------- ------------- --------
At 30 September
2018 1,532 5,270 (41) 2,249 179,666 188,676
=================== ==================== ============== ============== ============= ========
Consolidated Statement of Cash Flows 2019 2018
for the year ended 30 September 2019 GBP000 GBP000
CASH FLOWS FROM OPERATING ACTIVITIES
Operating profit 16,082 16,694
Depreciation and amortisation charges 11,604 11,242
Share based reward charges 16 52
Gain on revaluation of investment property (689) (310)
Pension operating charge less contributions
paid 1,977 1,196
Profit on sale of fixed assets (2) (1)
--------- ---------
Operating cash flows before movement in
working capital 28,988 28,873
Working capital adjustments:
Decrease/(increase) in inventories 1,074 (267)
(Increase)/decrease in trade and other
receivables (2,675) 671
Increase in trade and other payables 4,023 125
--------- ---------
Net movement in working capital 2,422 529
Interest paid (1,356) (1,368)
Preference dividends paid (9) (9)
Income taxes paid (2,300) (1,045)
--------- ---------
Net cash flows from operating activities 27,745 26,980
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment (13,850) (14,705)
Investment in intangible assets (90) (168)
Net proceeds from disposal of fixed assets 2 1
--------- ---------
Net cash flows used in investing activities (13,938) (14,872)
CASH FLOWS FROM FINANCING ACTIVITIES
Equity dividends paid (4,671) (4,444)
Dividends paid to non-controlling interest (69) (51)
Deposit interest received 103 28
--------- ---------
Net cash flows used in financing activities (4,637) (4,467)
Net increase in cash and cash equivalents 9,170 7,641
Cash and cash equivalents at beginning
of year 15,735 8,076
Effect of foreign exchange rates 10 18
Cash and cash equivalents at end of year 24,915 15,735
Notes to the accounts
Year ended 30 September 2019
1. Basis of Preparation
The consolidated financial statements of Jersey Electricity plc,
for the year ended 30 September 2019, 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). This is consistent with the accounting policies in the 30
September 2018 annual report and accounts, except for IFRS9 and
IFRS15, the impacts of which are disclosed in the 31 March 2019
interim report.
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 2020.
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:
2019 2019 2019 2018 2018 2018
External Internal Total External Internal Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Revenue
Energy - arising in the course
of ordinary business 83,907 126 84,033 82,332 133 82,465
- arising from the sale of heavy
fuel oil 2,723 - 2,723 - - -
Building Services 3,286 809 4,095 4,841 876 5,717
Retail 15,199 59 15,258 14,320 56 14,376
Property 2,262 612 2,874 2,277 604 2,881
Other 2,917 898 3,815 2,871 909 3,780
--------- --------- -------- --------- --------- --------
110,294 2,504 112,798 106,641 2,578 109,219
Intergroup elimination (2,504) (2,578)
-------- --------
Revenue 110,294 106,641
-------- --------
Operating profit / (loss)
Energy 12,281 13,418
Building Services (79) (245)
Retail 895 812
Property 1,679 1,813
Other 617 586
-------- --------
15,393 16,384
Revaluation of investment properties 689 310
Operating profit 16,082 16,694
-------- --------
A presentational change to the 2018 figures has arisen as a
result of elements previously embedded within cost of sales
(GBP767k rebates credit of which GBP18k is related to Building
Services and GBP749k to Retail) being reclassified and shown in
revenue. Gross profit remains unchanged.
The revaluation of investment properties is shown separately
from Property operating profit as this income is reflected solely
by a movement in reserves.
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END
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