Preliminary Announcement of Annual Results

RNS Number : 8002V

Jersey Electricity PLC

18 December 2013

 

 

JERSEY ELECTRICITY plc                        

Preliminary Announcement of Annual Results

Year Ended 30 September 2013

At a meeting of the Board of Directors held on 17 December 2013, the final accounts for the Group for the year to 30 September 2013 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 2013 or 2012, but is derived from those accounts. Statutory accounts for 2012 have been delivered to the Jersey Registrar of Companies and those for 2013 will be delivered in early 2014. The auditor has reported on those accounts and their reports were unmodified. 

A final dividend of 6.80p on the Ordinary and 'A' Ordinary shares in respect of the year ended 30 September 2013 was recommended (2012:6.50p). Together with the interim dividend of 4.75p the proposed total dividend declared for the year was 11.25p on each share.

The final dividend will be paid on 28 March 2014 to those shareholders registered in the books of the Company on 21 February 2014. A dividend on the 5% cumulative participating preference shares of 1.5% (2012:1.5%) payable on 1 July 2014 was also recommended.

The Annual General Meeting of the Company will be held on 6 March 2014.

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 2013    

The Powerhouse

PO Box 45

Queens Road

St Helier

Jersey JE4 8NY

JERSEY ELECTRICITY plc            

Preliminary Announcement of Annual Results

Year ended 30 September 2013                                                                                                    

The Chairman, Geoffrey Grime, comments :

"If 2011/ 2012 was spent responding to extraordinary challenges, 2012/ 2013 was spent delivering a foundation for recovery. The loss in June 2012 of the older of our two interconnectors to France before our long planned third submarine cable, Normandie 3 could be installed, led to a severe restriction in importation capacity into Jersey. This meant re-mobilising La Collette Power Station from an emergency standby facility to a 24/7 generation hub.  Reallocating staff and accelerating plant capacity upgrades required extra investment and tremendous focus by all concerned.  As if this was not enough, the past winter saw the worst snow storms in a generation resulting in significant damage to our overhead network. Regrettably, events left us little choice but to increase tariffs by an average 9% in January 2013. However, our tariffs remain very competitive with peer jurisdictions and well within our target of +/-10% of the European average. We responded positively to restore a good operational performance in our Energy business and our supply reliability in the last financial year returned to a strong level at an average of 13 minutes of lost supply for each customer, around five times better than the most recent figures in the UK."

Financial Summary	2013	2012	% change
Turnover	£102.3m	£97.2m	5%
Profit before tax	£  6.5m	£  5.7m	14%
Profit in Energy business	£  4.4m	£  4.2m	4%
Earnings per share	16.39p	12.55p	31%
Dividends paid per ordinary share	11.25p	11.00p	2%

Group turnover for the year to 30 September 2013 at £102.3m was 5% higher than in the year ended 30 September 2012. Unit sales volumes of electricity were 4% higher than last year and combined with a tariff increase resulted in revenues in our Energy business rising 13% to £82.0m. On a like for like basis, turnover in our Retail business decreased by 2% from £12.4m to £12.2m. The total reduction was 21% due to the closure of our internet retailer, day2dayshop.com, in the second half of the last financial year. Revenues in the Property business, including internal revenues, rose marginally to £2.9m. Sales in Building Services, including internal revenues, fell 10% from levels experienced in 2012 to £4.1m. Turnover in our Other Businesses, including internal revenues, fell 4% from £3.3m to £3.2m on slightly lower trading activity.  

Profit before tax for the year to 30 September 2013 rose 14% to £6.5m from £5.7m. Our investment in Foreshore Ltd was impaired by £0.6m in 2013 against £1.1m in 2012 and therefore, excluding this item, the profit before tax in this year was 5% above the level in the previous year.

As anticipated, despite the 13% rise in revenues, profits in our Energy business only rose £0.2m from £4.2m to £4.4m due to the change in the winter operating regime, with less importation and more oil usage, following the failure of our oldest subsea interconnector cable in June 2012. As reported previously, until we install a new interconnector to France, which is scheduled for 2015, we are 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. During this financial year we generated 21% of our electricity on-Island (compared to only 2% last year) and imported 75% of our requirements from France (down from 92% in 2012). The remaining 4% of our electricity came from the Energy from Waste plant, owned by the States of Jersey, against 6% in the same period in 2012. Unit sales volumes were up 4% due to a combination of the temperatures being below the seasonal norm this winter and the corresponding period last year being particularly mild as each of the six winter months in this financial year experienced lower temperatures than its corresponding month in 2011/ 2012 and were at, or below, the long-term average level.

The remainder of the increase in Energy turnover was due to an average tariff increase of 9% in January 2013 largely to cover the increase in the cost base associated with a higher level of on-island generation. 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, were at the same level as 2012 at £1.6m. Our like for like investment property portfolio was revalued upwards by £0.2m to £15.0m this year. Additional freehold land and buildings were reclassified as investment properties in the year resulting in a further £4.8m increase in the revaluation reserve in the balance sheet as a result of a re-interpretation of our existing accounting policy.Our Retailing business had a challenging year with turnover falling from £12.4m to £12.2m on a like for like basis. Profitability improved from £0.1m to £0.2m but the 2012 figures had been impacted by the closure of our internet retailer, day2dayshop.com, due to the ending of the Low Value Consignment Relief tax concession by the UK Government in April 2012. The Building Services business produced a £0.1m profit, being £0.2m behind last year due to competitive pressures on both turnover and margins. Our other business units - Jersey Energy, Jendev and Jersey Deep Freeze all had a profitable year. An impairment review of our investment in Foreshore, our datacentre joint venture, resulted in the writing off of £0.6m in addition to the £1.1m reduction last year.

Interest received on deposits in 2013 was negligible compared to recent years due to our investment programme that has seen the previous cash balance move into a net debt position. Interest payable, associated with the Normandie 3 interconnector project, is being capitalised until the commissioning date. The taxation charge at £1.5m was lower than in 2012 due to a lower effective tax charge as the mix of taxable profits differed. Group earnings per share increased 31% to 16.39p compared to 12.55p in 2012 due to a combination of higher profits and a lower effective tax rate.

Dividends paid in the year, net of tax, rose by 2%, from 11.00p in 2012 to 11.25p in 2013. The proposed final dividend for this year is 6.80p, being a 5% rise on the previous year. Dividend cover rose from 1.1 times in 2012 to 1.5 times due to a higher level of profits. The aim going forward is to maintain our declared ambition for sustained real growth in dividends over the medium-term.  

Net cash inflow from operating activities at £10.9m was £1.0m lower than 2012. Working capital movements were broadly similar but the movement in the foreign exchange hedge adjustment, associated with a weaker Euro against Sterling at this year-end, and higher oil stock against the last year-end were the main reasons. Cash capital expenditure, at £26.9m  rose from £18.8m last year with Normandie 3 project spend at £16.2m being the most material project spend.  Net debt, at the year-end was £5.2m being a £19.5m swing from last year when cash held was £14.3m.

Our defined benefits pension scheme, which had a £4.9m deficit, net of deferred tax, at the 2012 year end showed a £0.8m deficit as at 30 September 2013. This movement was due mainly to a higher than expected increase in asset values associated with strong performance in financial markets.

Consolidated Income Statement
for the year ended 30 September 2013
						2013					2012
						£000					£000
Revenue						102,338					97,182
Cost of sales						(75,922)					(69,346)
Gross profit						26,416					27,836
Gain/(loss) on revaluation of investment properties						155					(325)
Operating expenses						(19,469)					(20,900)
Group operating profit before joint venture						7,102					6,611
Share of loss of joint venture						-					(15)
Exceptional item - impairment of investment						(600)					(1,137)
Group operating profit						6,502					5,459
Interest income						53					287
Finance costs						(11)					(11)
Profit from operations before taxation						6,544					5,735
Taxation						(1,482)					(1,796)
Profit from operations after taxation						5,062					3,939
Attributable to:
Owners of the Company						5,022					3,846
Non-controlling interests						40					93
						5,062					3,939
Earnings per share
- basic and diluted						16.39p					12.55p
Consolidated Statement of Comprehensive Income
for the year ended 30 September 2013
						2013					2012
						£000					£000
Profit for the year						5,062					3,939
Other comprehensive income
Actuarial gain/(loss) on defined benefit scheme						4,304					(2,278)
Fair value gain/(loss) on cash flow hedges						3,809					(4,021)
Reclassification of investment properties						4,822					-
Tax related components relating to other comprehensive income						(1,852)					1,227
Total comprehensive income/(loss) for the year						16,145					(1,133)
Attributable to:
Owners of the Company						16,105					(1,226)
Non-controlling interests						40					93
						16,145					(1,133)
	Balance Sheets at 30 September 2013				Group								Company
					2013						2012		2013			2012
					£ 000						£ 000		£ 000			£ 000
	NON-CURRENT ASSETS
	Intangible assets				26						51		26			51
	Property, plant and equipment				155,191						138,125		155,177			138,120
	Investment properties				20,360						14,865		20,360			14,865
	Other investments				5						5		482			482
	Long-term loans				-						400		-			400
	Total non-current assets				175,582						153,446		176,045			153,918
	CURRENT ASSETS
	Inventories				9,434						7,245		9,365			7,166
	Trade and other receivables				16,498						17,970		16,360			17,737
	Derivative financial instruments				1,273						-		1,273			-
	Short-term investments - cash deposits				-						9,020		-			9,020
	Cash and cash equivalents				4,798						5,311		4,621			5,171
	Total current assets				32,003						39,546		31,619			39,094
	Total assets				207,585						192,992		207,664			193,012
	LIABILITIES
	Trade and other payables				14,332						17,037		14,272			16,992
	Derivative financial instruments				952						4,002		952			4,002
	Borrowings				10,000						-		10,000			-
	Current tax payable				-						762		-			762
	Total current liabilities				25,284						21,801		25,224			21,756
	NET CURRENT ASSETS				6,719						17,745		6,395			17,338
	NON-CURRENT LIABILITIES
	Trade and other payables				17,851						17,644		17,851			17,642
	Retirement benefit deficit				1,018						6,068		1,018			6,068
	Financial liabilities - preference shares				235						235		235			235
	Deferred tax liabilities				14,365						11,033		14,365			11,033
	Total non-current liabilities				33,469						34,980		33,469			34,978
	Total liabilities				58,753						56,781		58,693			56,734
	Net assets				148,832						136,211		148,971			136,278
	EQUITY
	Share capital				1,532						1,532		1,532			1,532
	ESOP reserves				(58)						(100)		(58)			(100)
	Other reserves				5,409						(2,381)		5,409			(2,381)
	Retained earnings				141,925						137,097		142,088			137,227
	Equity attributable to owners of the company				148,808						136,148		148,971			136,278
	Non-controlling interests				24						63		-			-
	Total equity				148,832						136,211		148,971			136,278

Cash Flow Statements
for the year ended 30 September 2013
		Group		Company
		2013	2012	2013	2012
		£ 000	£ 000	£ 000	£ 000
Cash flows from operating  activities
Operating profit		7,102	6,611	7,095	6,444
Depreciation and amortisation charges		8,166	8,298	8,163	8,298
(Gain)/loss on revaluation of investment properties		(155)	325	(155)	325
Pension contributions paid less expense in Income Statement		(746)	(630)	(746)	(630)
Adjustment for foreign exchange hedges		(513)	465	(513)	465
Loss on sale of fixed assets		(21)	(16)	(21)	(16)
Operating cash flows before movement in working capital		13,833	15,053	13,823	14,886
Increase in inventories		(2,189)	(794)	(2,199)	(782)
Decrease/(increase) in trade and other receivables		1,472	(2,772)	1,377	(2,736)
(Decrease)/increase in trade and other payables		(1,545)	1,899	(1,559)	1,920
Interest received		97	347	97	347
Preference dividends paid		(9)	(9)	(9)	(9)
Income taxes paid		(762)	(1,820)	(762)	(1,820)
Net cash flows generated from operating activities		10,897	11,904	10,768	11,806
Cash flows from investing activities
Purchase of property, plant and equipment		(26,910)	(18,823)	(26,897)	(18,823)
Investment in intangible assets		(8)	9	(8)	9
Net proceeds from disposal of  fixed assets		14	53	14	53
Short-term investments		9,020	8,725	9,020	8,725
Net cash flows used in investing activities		(17,884)	(10,036)	(17,871)	(10,036)
Cash flows from financing  activities
Equity dividends paid		(3,526)	(3,414)	(3,447)	(3,370)
Bank loan		10,000	-	10,000	-
Net cash flows used in financing activities		6,474	(3,414)	6,553	(3,370)
Net (decrease)/increase in cash and cash equivalents		(513)	(1,546)	(550)	(1,600)
Cash and cash equivalents at beginning of period		5,311	6,787	5,171	6,701
Net cash and cash equivalents/(debt) at end of period		4,798	5,241	4,621	5,101
Overdraft		-	70	-	70
Cash and cash equivalents at end of period		4,798	5,311	4,621	5,171

	Consolidated  Statement of Changes in Equity
	for the year ended 30 September 2013
		Share capital	ESOP reserve	Other reserves	Retained earnings	Total reserves
Group:		£ 000	£ 000	£ 000	£ 000	£ 000
At 1 October 2012		1,532	(100)	(2,381)	137,097	136,148
Profit from operations after taxation		-	-	-	5,022	5,022
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)		-	-	-	3,294	3,294
Reclassification of investment properties		-	-	4,822	-	4,822
Equity dividends		-	-	-	(3,446)	(3,446)
At 30 September 2013		1,532	(58)	5,409	141,925	148,808
At 1 October 2011		1,532	-	836	138,477	140,845
Profit from operations after taxation		-	(100)	-	3,846	3,746
Unrealised losses on hedges (net of tax)		-	-	(3,217)	-	(3,217)
Actuarial loss on defined benefit scheme (net of tax)		-	-	-	(1,856)	(1,856)
Equity dividends		-	-	-	(3,370)	(3,370)
At 30 September 2012		1,532	(100)	(2,381)	137,097	136,148
		Share capital	ESOP reserve	Other reserves	Retained earnings	Total reserves
Company:
At 1 October 2012		1,532	(100)	(2,381)	137,227	136,278
Profit from operations after taxation		-	-	-	5,055	5,055
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)		-	-	-	3,294	3,294
Reclassification of investment properties			-	4,822	-	4,822
Equity dividends		-	-	-	(3,446)	(3,446)
At 30 September 2013		1,532	(58)	5,409	142,088	148,971
At 1 October 2011		1,532	-	836	139,337	141,705
Profit from operations after taxation		-	(100)	-	3,116	3,016
Unrealised losses on hedges (net of tax)		-	-	(3,217)	-	(3,217)
Actuarial loss on defined benefit scheme (net of tax)		-	-	-	(1,856)	(1,856)
Equity dividends		-	-	-	(3,370)	(3,370)
At 30 September 2012		1,532	(100)	(2,381)	137,227	136,278

Notes to the accounts

Year ended 30 September 2013

1.   Basis of Preparation

The consolidated financial statements of Jersey Electricity plc, for the year ended 30 September 2013 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 2014.

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:
	2013	2013	2013		2012	2012	2012
	External	Internal	Total		External	Internal	Total
	£000	£000	£000		£000	£000	£000
Revenue
Energy	81,962	166	82,128		72,671	197	72,868
Building Services	3,606	476	4,082		4,195	325	4,520
Retail	12,145	39	12,184		15,472	64	15,536
Property	2,191	687	2,878		2,141	690	2,831
Other	2,434	751	3,185		2,703	601	3,304
	102,338	2,119	104,457		97,182	1,877	99,059
Intergroup elimination			(2,119)				(1,877)
Revenue			102,338				97,182
Operating profit
Energy			4,423				4,240
Building Services			104				300
Retail			188				64
Property			1,609				1,609
Other			623				708
Operating profit before property revaluation			6,947				6,921
Gain/(loss) on revaluation of investment properties			155				(325)
Exceptional item - impairment of investment			(600)				(1,137)
Group operating profit			6,502				5,459

 

END

 

 

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