Annual Information Update

RNS Number : 1155A

Jersey Electricity PLC

18 December 2014

 

 

 

JERSEY ELECTRICITY plc                                                                                         
Preliminary Announcement of Annual Results

Year Ended 30 September 2014

At a meeting of the Board of Directors held on 17 December 2014, the final accounts for the Group for the year to 30 September 2014 were approved, details of which are attached.

The financial information set out in the announcement does not constitute the Company's statutory accounts for the year ended 30 September 2014 or 2013, but is derived from those accounts. Statutory accounts for 2013 have been delivered to the Jersey Registrar of Companies and those for 2014 will be delivered in early 2015. The auditor has reported on those accounts and their reports were unmodified. 

A final dividend of 7.20p on the Ordinary and 'A' Ordinary shares in respect of the year ended 30 September 2014 was recommended (2013: 6.80p). Together with the interim dividend of 5.00p the proposed total dividend declared for the year was 12.20p on each share.

The final dividend will be paid on 27 March 2015 to those shareholders registered in the books of the Company on 20 February 2015. A dividend on the 5% cumulative participating preference shares of 1.5% (2013: 1.5%) payable on 1 July 2015 was also recommended.

The Annual General Meeting of the Company will be held on 5 March 2015.

John Stares, who has served as a non-executive director for the last five years will be retiring at our next Annual General Meeting on 5 March 2015.    

M.P. Magee                                                                           P.J. Routier

Finance Director                                                                   Company Secretary

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

Direct fax number : 01534 505466                                         Direct fax number : 01534 505515

Email : [e-mail]                                                   Email : [e-mail]

17 December 2014    

The Powerhouse

PO Box 45

Queens Road

St Helier

Jersey JE4 8NY

JERSEY ELECTRICITY plc            

Preliminary Announcement of Annual Results

Year ended 30 September 2014                                                                                                    

The Chairman, Geoffrey Grime, comments :

"2014 was the Company's 90th anniversary and there could be no better way to mark this celebration than with the landmark achievement of the successful installation of our third interconnector to France, Normandie 3 (N3) - under budget and ahead of its 2015 schedule. The N3 project, co-invested under our joint venture with Guernsey Electricity, our partners in the  Channel Islands Electricity Grid, has been 10 years in the making and more than doubles our importation capacity which had been severely restricted since June 2012 when our oldest interconnector, EDF1, failed and was removed from service. I said that last year we delivered a foundation for recovery.  This year we have built further on this with an expected upward movement in Energy profit, which reached the level of £8.0m on an operating basis, restoring it to pre-2012 levels. Importantly, this profitability reflects the return necessary to support continued investment."

Financial Summary	2014	2013 (restated)	% change
Revenue	£98.4m	£102.3m	(4)%
Profit before tax	£  6.5m	£  5.4m	21%
Earnings per share	16.10p	13.27p	21%
Dividends paid per ordinary share	11.80p	11.25p	5%

The 2013 profit figure was restated downwards by £1.2m to reflect the adoption of a new accounting policy to comply with changes to the revised International Accounting Standard 19, "Employee Benefits", in respect of pension costs as highlighted in our 2013 Annual Report. The original charge of £1.2m in 2013 was restated as £2.4m. 

Group revenue for the year to 30 September 2014 at £98.4m was 4% lower than in the previous financial year. Unit sales volumes of electricity were 6% lower than last year due to mild weather with revenues falling 3% to £79.5m as tariff rises reduced the impact of the units shortfall. Turnover in our Retail business decreased by 6% from £12.1m to £11.4m. The floor space utilised by the business was reduced as a substantial proportion was let to an external tenant from May 2014. Revenue in the Property business, including internal sales, fell from £2.9m to £2.6m mainly linked to changes in tenancy arrangements during the year including our disposal of Foreshore. Revenue in Building Services, including internal sales, rose 3% from levels experienced in 2013 to £4.2m. Turnover in our Other Businesses, including internal sales, remained at £3.2m.

Profit before tax for the year to 30 September 2014 rose 21% to £6.5m from £5.4m reflecting a recovery in our Energy business. As anticipated at the half year we incurred exceptional costs of around £0.6m and £1.2m in restructuring our Retail business and exiting our investment in Foreshore Ltd respectively. In addition, a £1.8m provision was made for our share of a preventative repair to the interconnector between Guernsey and Jersey which is scheduled to take place in January 2015. The cable, which was repaired in 2012, has been showing similar issues to those experienced two years ago and Guernsey Electricity is also currently seeking permissions to lay a replacement cable as soon as possible. Profit before tax pre-exceptional items, and post the restatement of the 2013 pension costs, rose from £5.9m last year to £10.0m in 2014.

Our Energy business unit sales saw volumes down 6%, falling from 663m to 621m kWh, due to a combination of the temperatures being above the seasonal norm last winter and the corresponding period in the 2013 financial year being particularly cold. Each of the six winter months in this financial year experienced higher temperatures than its corresponding month in 2012/13 and were at, or above, the long-term average level. Despite lower unit sales in our Energy business, profits recovered substantially to £8.0m, a level commensurate with the recognized rate of return required to advance sustainable investment in infrastructure assets.

Two main factors contributed to this increase in performance - lower generation and the impact of tariff rises. As reported previously, until the new interconnector to France was commissioned,

which occurred at the end of this financial year, we have been capacity constrained on importation and reliant on a heavier mix of more expensive on-island oil-fired generation, particularly in winter, when volumes are higher.

In the financial year we generated 15% of our electricity on-island (compared to 21% last year) and imported 80% of our requirements from France (up from 75% in 2013). The remaining 5% of our electricity came from the local Energy from Waste plant against 4% in the same period in 2013. The Energy revenue, and profitability, was also aided by an average 1.5% increase in customer tariffs from 1 April 2014 and the full year impact of the tariff increase in January 2013. In spite of these price rises, our tariffs continue to remain competitive with other jurisdictions.

Profits in our Property division, excluding the impact of investment property revaluation, fell from £1.6m to £1.4m with movements in tenancy arrangements being the main driver. It has been a positive year with 11k square feet of space previously used by our internal Retail business now being let to a UK retailer with a good covenant (SportsDirect.com). In addition, with the sale of our shareholding in Foreshore, we now have the local telecom operator, Sure (Jersey) Ltd, as tenants with a larger footprint than previously let. Our investment property portfolio was revalued upwards by £0.1m to £20.5m this year. Our Retailing business had a challenging year with turnover falling from £12.1m to £11.4m albeit the space utilised has reduced. A profit of £0.2m last year moved to a loss of £0.1m. As reported at the half year an exceptional cost of £0.6m was incurred in restructuring the Retail operation as the business has been facing increasing pressure on margins from UK on-line sales into Jersey. The Building Services business produced a marginal loss, being £0.1m behind last year due to competitive pressures on margin. Our other business units - Jersey Energy, Jendev and Jersey Deep Freeze all had a profitable year. Our shareholding in Foreshore, a data centre joint venture in which we have been involved since 2000, was sold in July and, as reported at the half year, an exceptional cost of £1.2m was associated with this exit.

Interest paid in 2014 was negligible as most of this cost was capitalised up to the date of commissioning of our new interconnector. The taxation charge at £1.5m was higher than in 2013 due to higher profits. Group earnings per share increased 21% to 16.10p (24.26p pre-exceptional costs) compared to restated 13.27p in 2013 due mainly to an increase in profitability.

Dividends paid in the year, net of tax, rose by 5%, from 11.25p in 2013 to 11.80p in 2014. The proposed final dividend for this year is 7.20p, a 6% rise on the previous year. Dividend cover rose from 1.2 times in 2013 to 1.4 times (and to 2.1 times if exceptional costs are excluded) due to a higher level of profits.

Net cash inflow from operating activities, at £20.1m, was £9.2m higher than in 2013 with increased profitability, and a working capital benefit from a lower level of oil stocks, being the main reasons. Capital expenditure, at £33.06m rose from £26.9m last year with Normandie 3 project spend at £24.0m, being the most material. Proceeds of £1.8m were received from the sale of assets associated with our Foreshore disposal. Net debt, at the year-end was £20.2m being £15.0m higher than last year.

Our defined benefits pension scheme, which had a £0.8m deficit, net of deferred tax, at the 2013 year end marginally increased to a £1.1m deficit as at 30 September 2014. Although the year-on-year movement was relatively small there were material swings in both assets and liabilities which largely offset each other. Scheme assets rose 11% since the last year end but liabilities increased 12% due to a reduction in the discount rate applied reflecting sentiments in financial markets.

Consolidated Income Statement
for the year ended 30 September 2014
						2014					2013
						£000					£000
											(restated)
Revenue						98,443					102,338
Cost of sales						(68,468)					(75,922)
Gross profit						29,975					26,416
Revaluation of investment properties						145					155
Operating expenses						(20,079)					(20,663)
Group operating profit before exceptional items						10,041					5,908
Exceptional item - disposal of investment						(1,178)					(600)
- provision for subsea cable                                   repair						(1,800)					-
- restructuring costs in Retail                                   business						(570)					-
Group operating profit						6,493					5,308
Interest (payable)/receivable						(26)					53
Finance costs						(11)					(11)
Profit from operations before taxation						6,456					5,350
Taxation						(1,478)					(1,243)
Profit from operations after taxation						4,978					4,107
Attributable to:
Owners of the Company						4,932					4,067
Non-controlling interests						46					40
						4,978					4,107
Earnings per share
- basic and diluted						16.10p					13.27p
Consolidated Statement of Comprehensive Income
for the year ended 30 September 2014
						2014					2013
						£000					£000
											(restated)
Profit for the year						4,978					4,107
Items that will not be reclassified subsequently to profit or loss
Actuarial (loss)/gain on defined benefit scheme						(392)					5,498
Reclassification of investment properties						-					4,822
Income tax relating to items not reclassified						78					(1,249)
						(314)					9,071
Items that will be reclassified subsequently to profit or loss
Fair value (loss)/gain on cash flow hedges						(4,567)					3,809
Income tax relating to items that may be reclassified						913					(842)
						(3,654)					2,967
Total comprehensive income for the year						1,010					16,145
Attributable to:
Owners of the Company						964					16,105
Non-controlling interests						46					40
						1,010					16,145
	Balance Sheets at 30 September 2014				Group								Company
					2014						2013		2014			2013
					£ 000						£ 000		£ 000			£ 000
	NON-CURRENT ASSETS										(restated)					(restated)
	Intangible assets				20						26		20			26
	Property, plant and equipment				184,846						155,191		184,841			155,177
	Investment properties				20,505						20,360		20,505			20,360
	Other investments				5						5		482			482
	Total non-current assets				205,376						175,582		205,848			176,045
	CURRENT ASSETS
	Inventories				7,334						9,434		7,268			9,365
	Trade and other receivables				16,750						16,498		16,576			16,360
	Derivative financial instruments				-						1,273		-			1,273
	Cash and cash equivalents				9,776						4,798		9,659			4,621
	Total current assets				33,860						32,003		33,503			31,619
	Total assets				239,236						207,585		239,351			207,664
	LIABILITIES
	Trade and other payables				24,113						14,332		24,049			14,272
	Derivative financial instruments				4,246						952		4,246			952
	Total current liabilities				28,359						15,284		28,295			15,224
	NET CURRENT ASSETS				5,501						16,719		5,208			16,395
	NON-CURRENT LIABILITIES
	Trade and other payables				18,279						17,851		18,279			17,851
	Retirement benefit deficit				1,372						1,018		1,372			1,018
	Financial liabilities - preference shares				235						235		235			235
	Borrowings				30,000						10,000		30,000			10,000
	Deferred tax liabilities				14,852						14,365		14,852			14,365
	Total non-current liabilities				64,738						43,469		64,738			43,469
	Total liabilities				93,097						58,753		93,033			58,693
	Net assets				146,139						148,832		146,318			148,971
	EQUITY
	Share capital				1,532						1,532		1,532			1,532
	Revaluation reserve				5,270						5,270		5,270			5,270
	ESOP reserves				(36)						(58)		(36)			(58)
	Other reserves				(3,515)						139		(3,515)			139
	Retained earnings				142,878						141,925		143,067			142,088
	Equity attributable to owners of the company				146,129						148,808		146,318			148,971
	Non-controlling interests				10						24		-			-
	Total equity				146,139						148,832		146,318			148,971

Cash Flow Statements
for the year ended 30 September 2014
		Group		Company
		2014	2013	2014	2013
		£ 000	£ 000	£ 000	£ 000
Cash flows from operating  activities			(restated)		(restated)
Operating profit		10,041	5,908	9,989	5,901
Depreciation and amortisation charges		8,259	8,166	8,256	8,163
Gain on revaluation of investment properties		(145)	(155)	(145)	(155)
Pension contributions paid less expense in Income Statement		(38)	448	(38)	448
Adjustment for foreign exchange hedges		63	(513)	63	(513)
Loss on sale of fixed assets		(11)	(21)	(11)	(21)
Operating cash flows before movement in working capital		18,169	13,833	18,114	13,823
Decrease/(increase) in inventories		2,100	(2,189)	2,097	(2,199)
(Increase)/decrease in trade and other receivables		(252)	1,472	(216)	1,377
Increase/(decrease) in trade and other payables		513	(1,545)	507	(1,559)
Interest (paid)/received		(28)	97	(28)	97
Preference dividends paid		(9)	(9)	(9)	(9)
Cash amounts relating to exceptional item		(353)	-	(353)	-
Income taxes paid		-	(762)	-	(762)
Net cash flows generated from operating activities		20,140	10,897	20,112	10,768
Cash flows from investing activities
Purchase of property, plant and equipment		(33,048)	(26,910)	(33,048)	(26,898)
Investment in intangible assets		(6)	(8)	(6)	(8)
Net proceeds from disposal of  investment		1,579	-	1,579	-
Net proceeds from disposal of  fixed assets		16	14	16	14
Short-term investments		-	9,020	-	9,020
Net cash flows used in investing activities		(31,459)	(17,884)	(31,459)	(17,872)
Cash flows from financing  activities
Equity dividends paid		(3,703)	(3,526)	(3,615)	(3,446)
Repayment of borrowings		(10,000)	-	(10,000)	-
Proceeds from borrowings		30,000	10,000	30,000	10,000
Net cash flows generated from financing activities		16,297	6,474	16,385	6,554
Net increase/(decrease) in cash and cash equivalents		4,978	(513)	5,038	(550)
Cash and cash equivalents at beginning of period		4,798	5,311	4,621	5,171
Net cash and cash equivalents at end of period		9,776	4,798	9,659	4,621

		Consolidated  Statement of Changes in Equity
		for the year ended 30 September 2014
			Share capital	Revaluation reserve	ESOP reserve	Other reserves	Retained earnings	Total
Group:			£ 000	£ 000	£ 000	£ 000	£ 000	£ 000
At 1 October 2013			1,532	5,270	(58)	139	141,925	148,808
Profit from operations after taxation			-	-	-	-	4,932	4,932
Amortisation of employee share scheme			-	-	22	-	(22)	-
Unrealised loss on hedges (net of tax)			-	-	-	(3,654)	-	(3,654)
Actuarial loss on defined benefit scheme (net of tax)			-	-	-	-	(314)	(314)
Equity dividends			-	-	-	-	(3,643)	(3,643)
At 30 September 2014			1,532	5,270	(36)	(3,515)	142,878	146,129
							(restated)	(restated)
At 1 October 2012			1,532	-	(100)	(2,381)	137,097	136,148
Reclassification of reserves			-	448	-	(448)	-	-
Profit from operations after taxation			-	-	-	-	5,022	5,022
Retrospective application of IAS 19R							(955)	(955)
Amortisation of employee share scheme			-	-	42	-	(42)	-
Unrealised gain on hedges (net of tax)			-	-	-	2,968	-	2,968
Actuarial gain on defined benefit scheme (net of tax)			-	-	-	-	4,249	4,249
Reclassification of investment properties			-	4,822	-	-	-	4,822
Equity dividends			-	-	-	-	(3,446)	(3,446)
At 30 September 2013			1,532	5,270	(58)	139	141,925	148,808
			Share capital	Revaluation reserve	ESOP reserve	Other reserves	Retained earnings	Total
Company:
At 1 October 2013			1,532	5,270	(58)	139	142,088	148,971
Profit from operations after taxation			-	-	-	-	4,930	4,930
Amortisation of employee share scheme			-	-	22	-	(22)	-
Unrealised gain on hedges (net of tax)			-	-	-	(3,654)	-	(3,654)
Actuarial gain on defined benefit scheme (net of tax)			-	-	-	-	(314)	(314)
Equity dividends			-	-	-	-	(3,615)	(3,615)
At 30 September 2014			1,532	5,270	(36)	(3,515)	143,067	146,318
							(restated)	(restated)
At 1 October 2012			1,532	-	(100)	(2,381)	137,227	136,278
Reclassification of reserves			-	448	-	(448)	-	-
Profit from operations after taxation			-	-	-	-	5,055	5,055
Retrospective application of IAS 19R							(955)	(955)
Amortisation of employee share scheme			-	-	42	-	(42)	-
Unrealised gain on hedges (net of tax)			-	-	-	2,968	-	2,968
Actuarial gain on defined benefit scheme (net of tax)			-		-	-	4,249	4,249
Reclassification of investment properties			-	4,822	-	-	-	4,822
Equity dividends			-	-	-	-	(3,446)	(3,446)
At 30 September 2013			1,532	5,270	(58)	139	142,088	148,971

Notes to the accounts

Year ended 30 September 2014

1.   Basis of Preparation

The consolidated financial statements of Jersey Electricity plc, for the year ended 30 September 2014 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 2015.

The Group has considerable financial resources and as a consequence, the directors believe that the Group is well placed to manage its business risks successfully despite the current uncertain economic outlook. 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 annual financial statements.

2    Segmental information
Revenue and profit information are analysed between the businesses as follows:
	2014	2014	2014		2013	2013	2013
	External	Internal	Total		External	Internal	Total
	£000	£000	£000		£000	£000	£000
Revenue
Energy	79,459	141	79,600		81,962	166	82,128
Building Services	3,294	907	4,201		3,606	476	4,082
Retail	11,414	33	11,447		12,145	39	12,184
Property	1,957	616	2,573		2,191	687	2,878
Other	2,319	878	3,197		2,434	751	3,185
	98,443	2,575	101,018		102,338	2,119	104,457
Intergroup elimination			(2,575)				(2,119)
Revenue			98,443				102,338
Operating profit
Energy			7,952				3,229
Building Services			(44)				104
Retail			(86)				188
Property			1,415				1,609
Other			659				623
Operating profit before property revaluation			9,896				5,753
Revaluation of investment properties			145				155
Exceptional items - disposal of investment			(1,178)				(600)
- provision for subsea cable repair			(1,800)				-
- restructuring costs in Retail business			(570)				-
Group operating profit			6,493				5,308

 

END

 

 

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