TIDMJEL
RNS Number : 0610J
Jersey Electricity PLC
17 December 2020
JERSEY ELECTRICITY plc Preliminary Announcement of Annual
Results
Year Ended 30 September 2020
At a meeting of the Board of Directors held on 17 December 2020,
the final accounts for the year ended 30 September 2020 were
approved, details of which follow.
The financial information set out in the announcement does not
constitute the statutory accounts for the year ended 30 September
2020 or 2019, but is derived from those accounts. Statutory
accounts for 2019 have been delivered to the Jersey Registrar of
Companies, and those for 2020 will be delivered in early 2021. The
auditor reported on the accounts for both years and their reports
were unmodified.
A final dividend of 9.70p on the Ordinary and 'A' Ordinary
shares in respect of the year ended 30 September 2020 was
recommended (2019: 9.25p) . Together with the interim dividend of
6.80p (2019: 6.45p) the proposed total dividend declared for the
year was 16.50p on each share (2019: 15.70p).
The final dividend will be paid on 25 March 2021 to those
shareholders registered on 19 February 2021. A dividend on the 5%
cumulative participating preference shares of 1.5% (2019: 1.5%)
payable on 1 July 2021 was also recommended.
The Annual General Meeting will be held on 4 March 2021 at 12.30
pm at the Powerhouse, Queens Road, St Helier, Jersey.
M.P. Magee L. Floris
Finance Director Company Secretary
Direct telephone number: 01534 505201 Direct telephone number:
01534 505253
Email: mmagee@jec.co.uk Email: lfloris@jec.co.uk
17 December 2020
The Powerhouse
PO Box 45
Queens Road
St Helier
Jersey JE4 8NY
JERSEY ELECTRICITY plc
Preliminary Announcement of Annual Results
Year ended 30 September 2020
The Chairman, Phil Austin, comments:
"When we entered the year, we could not have imagined that the
world would be so impacted by a virus. As I write, countries across
the globe are battling COVID-19 and both lives and economies are
being hugely disrupted, with tragic consequences. Even now, the
world is far from through it.
Strong response to COVID-19
Though unprecedented, a critical service provider like Jersey
Electricity should be prepared for such events. I am pleased to
report that we were well prepared.
The Company has a well-tested contingency plan and had been
closely monitoring the COVID-19 situation since the beginning of
January, formally invoking its Business Continuity Plan in April.
Throughout the crisis, we have taken steps to keep our people and
the community safe, as well as maintaining continuity of
electricity supplies and other essential services, on which the
Island so depends.
The response of the whole workforce has been exceptional and I'd
particularly like to thank those who went out every day in the
field, or into their place of work, to ensure that we continued to
keep our organisation functioning and able to power homes,
businesses and Government throughout this difficult period. Through
our ongoing investment in technology, our people were able to
successfully migrate to home working, such that overall
productivity and performance levels have been remarkably
unaffected.
As well as focusing on core services, we took immediate action
to lessen any financial hardship of customers by deferring our 2.5%
tariff rise by six months, at a cost of around GBP1m. We also
adopted a more flexible approach to electricity customers and
investment property tenants. Measures included a more sympathetic
debt collection process and suspension of service terminations, and
we worked closely with Government and charities to establish new
processes to support vulnerable customers.
Given Jersey Electricity's scale and role, we offered the full
strength of the Company in support of the community by providing,
without charge and on a fast-track basis, new infrastructure,
plumbing and electrical services for Jersey's Nightingale Hospital,
including professional services support. In addition, Jersey
Electricity has fulfilled all its own contractual obligations and
has not taken advantage of any forms of Government furlough or
other financial support schemes.
Leaders in clean energy
Last year we communicated our new Vision "to enable life's
essentials and inspire a zero-carbon future". Whilst we continue to
flesh out how we can best support the Island to deliver carbon
neutrality, the COVID-19 pandemic has only re-emphasised the
importance of this Vision to the Company and to the Island as a
whole. There now seems to be a clear and widespread recognition of
the climate issue and, crucially, a real appetite to take action.
We have made considerable progress during the year in transforming
this Vision into tangible work streams, including, for example,
conducting a larger scale assessment of what investment is required
to facilitate carbon neutrality by 2030. It is now well understood
that our grid is substantially decarbonised and the only way Jersey
can materially reduce its carbon emissions is by switching from
high-carbon fossil fuels to low carbon imported or locally
generated electricity.
Resilient performance
Despite the challenges of COVID-19, the Company's financial
performance has been remarkably resilient. Revenue for 2019/20 was
GBP111.7m, 1% higher than last financial year. Electricity unit
sales initially fell 13% in the immediacy of lockdown, but largely
recovered, and for the full year were 619m units, only 1% lower
than those in the 2018/19 financial year.
Profit before tax was unchanged from the prior year at a level
of GBP14.8m, with the cost impact of the deferred tariff being
completely offset by outperformance in other areas, most notably
our Powerhouse retail business, which saw profits increase by
almost one third from GBP0.9m to GBP1.2m.
The Board has therefore recommended a final dividend for the
year of 9.70p, a 5% increase on the previous year, and payable on
25 March 2021.
Our core objective remains to deliver an affordable, secure and
sustainable supply of electricity now and long into the future -
and our performance this year, across all our key metrics, reflects
real success."
Financial Highlights 2020 2019
Revenue GBP111.7m GBP110.7m
Profit before tax GBP14.8m GBP14.8m
Earnings per share 37.94p 38.42p
Dividend paid per share 16.05p 15.25p
Final proposed dividend per share 9.70p 9.25p
Net cash/(debt) GBP5.5m GBP(5.1)m
----------------------------------- ------------ ----------
Group revenue for the year to 30 September 2020 at GBP111.7m was
1% higher than in the previous financial year. Energy revenues at
GBP85.1m were 2% lower than the GBP87.0m achieved in 2019. Lower
unit sales of electricity, linked to the COVID-19 crisis, combined
with the sale of heavy fuel oil to Guernsey Electricity last year
were the main reasons for the reduction. Revenue in the Powerhouse
retail business increased 17% from GBP15.2m in 2019 to GBP17.8m.
The business had a strong first half, but was impacted when the
shop was forced to close due to COVID-19, but then recovered well
helped by the strong on-line offering. Revenue in the Property
business, at GBP2.3m, was at the same level as last year despite
initial concerns that rental flows could be impacted by COVID-19 .
Revenue from JEBS, our building services business, increased from
GBP3.3m in 2019 to GBP3.8m. Revenue in our other businesses, at
GBP2.7m, was marginally lower than in 2019.
Cost of sales at GBP69.7m was GBP0.4m higher than last year with
the increased revenue level in the Powerhouse Retail business being
offset by a lower volume of imported units of electricity in 2020
and the costs associated with the sale of heavy fuel oil to
Guernsey Electricity last year.
Other income was recognised during the previous year arising
from the receipt of a GBP0.8m rebate for a subsea cable repair.
Operating expenses at GBP26.4m were GBP0.4m lower than last year
primarily due to the pension cost in 2019 being GBP0.6m higher than
in 2020.
Profit before tax for the year to 30 September 2020, at
GBP14.8m, was maintained at the same level as 2019 despite the
challenges of COVID-19.
Profits in our Energy business, at GBP12.3m, were at the same
level as in 2019. Unit sales volumes decreased from 627m to 619m
kilowatt hours with the impact of COVID-19 in the second half of
the financial year being the main reason. However, revenue from
electricity sales was GBP0.8m higher due to the sales mix, with an
increase in usage in domestic premises more than offsetting the
fall in the commercial sector. In 2019 Energy had a GBP1m profit
from the sale of heavy fuel oil being a 'one-off' transaction.
During this year overhead costs were GBP0.9m lower than in 2019
largely due to lower depreciation charges. In the financial year we
imported 95% of our requirements from France (2019: 94%) and
generated 0.2% of our electricity on island from our solar and
diesel plant (2019: 0.3%). The remaining 5% (2019: 6%) of our
electricity was purchased from the local Energy from Waste plant. A
planned 2.5% tariff rise from 1 April 2020 was postponed to 1
October 2020 to provide some further assistance to our customers in
light of the COVID-19 pandemic.
The GBP1.3m profit in our Property division, excluding the
impact of investment property revaluation, was GBP0.4m lower than
last year due mainly to accelerated depreciation on air
conditioning plant that was replaced during this year. Our
investment property portfolio moved up in value by GBP0.5m to
GBP21.8m based on advice from our external consultants who review
the position annually, due primarily to the growth in the value of
residential properties despite COVID-19 challenges.
Our Powerhouse retail business saw profits rise by 31% from
GBP0.9m to GBP1.2m in a turbulent year where flexibility in the
business model, due to our strong on-line presence, aided this
business during the COVID-19 crisis. The business was also helped
by our customers appearing to have more spending power, due to less
travel taking place, with some sales lines seeing material growth -
such as electric bikes.
JEBS, our building services unit, positively moved to a profit
of GBP0.2m against a GBP0.1m loss in 2019 as a result of an
increase in revenue, and a move to higher margin work.
Our other business units (Jersey Energy, Jendev, Jersey Deep
Freeze and fibre optic lease rentals) produced increased profits of
GBP0.8m being GBP0.2m above last year.
The net interest cost in 2020 was GBP1.4m being GBP0.1m higher
than in 2019 due to the implementation of IFRS 16
('Leases'). The taxation charge at GBP3.1m was marginally higher than the level in 2019.
Group basic and diluted earnings per share at 37.94p compared to
38.42p in 2019 due to profitability being similar in both
years.
Dividends paid in the year, net of tax, rose by 5%, from 15.25p
in 2019 to 16.05p in 2020. The proposed final dividend for this
year is 9.70p, a 5% rise on the previous year. Dividend cover, at
2.4 times, was marginally lower than comparable 2.5 times in
2019.
Net cash inflow from operating activities at GBP26.9m was
GBP0.8m lower than in 2019. Capital expenditure , at GBP11.2m was
GBP2.7m lower than GBP13.9m last year as there was material spend
in 2019 in completing the St Helier West primary sub-station.
Dividends paid were GBP5.0m compared to GBP4.7m in 2019. The
resultant position was that net cash at the year-end was GBP5.5m,
being GBP30.0m of borrowings offset by GBP35.5m of cash and cash
equivalents, which was GBP10.6m more positive than last year.
Our defined benefits pension scheme showed a s urplus at 30
September 2020, under IAS 19 "Employee Benefits", of GBP5.9m, net
of deferred tax, compared with a surplus of GBP8.3m at 30 September
2019. Assets rose 1% from GBP154.7m to GBP156.6m during the year.
However, liabilities also increased 4% from GBP144.2m to GBP149.3m
since the last year-end. This was largely due to the discount rate
assumption, which heavily influences the calculation of
liabilities, falling from 1.9% in 2019 to 1.6% in 2020, reflecting
sentiments in prevailing financial markets.
Impact of new accounting standard - IFRS 16 was adopted from 1
October 2019, applying the "modified retrospective" approach
whereby comparative figures are not restated. In adopting this
approach, the results for the year to 30 September 2020 are not
directly comparable with those reported in the prior year under the
previous applicable accounting standard IAS 17 "Leases".
This adoption has resulted in an increase in Group operating
profit of GBP86k, (a GBP189k reduction in rent expense has been
partially offset by an increase of GBP103k in depreciation).
Finance costs have increased by GBP131k, resulting in a decrease in
profit from operations before taxation of GBP45k. At 30 September
2020 the net value of right of use assets under IFRS 16 totalled
GBP2.9m, with a corresponding lease liability of GBP2.9m.
Whilst there is no impact on total cash and cash equivalents,
there has been a reclassification of lease payments resulting in a
deterioration of net cash flows arising from financing activities,
whilst there is a corresponding increase in net cash flows from
operating activities.
Consolidated Income Statement 2020 2019
For the year ended 30 September 2020 GBP000 GBP000
Revenue 111,747 110,709
Cost of sales (69,695) (69,282)
--------- ---------
Gross Profit 42,052 41,427
Other income - 750
Revaluation of investment properties 515 689
Operating expenses (26,360) (26,784)
--------- ---------
Group operating profit 16,207 16,082
Finance income 139 103
Finance costs (1,516) (1,365)
Profit from operations before taxation 14,830 14,820
Taxation (3,090) (2,969)
--------- ---------
Profit from operations after taxation 11,740 11,851
========= =========
Attributable to:
Owners of the Company 11,624 11,773
Non-controlling interests 116 78
--------- ---------
11,740 11,851
========= =========
Earnings per share
- basic and diluted 37.94p 38.42p
In 2020 the Directors have made a classification change in
relation to the amortisation of deferred infrastructure charges. In
order to present the results in a consistent format, the Directors
have reclassified the prior year reported results, increasing both
Operating expenses and Revenue by GBP415k, with no impact to Group
operating profit.
Consolidated Statement of Comprehensive 2020 2019
Income
GBP000 GBP000
Profit for the year 11,740 11,851
Items that will not be reclassified subsequently
to profit or loss:
Actuarial (loss)/gain on defined benefit
scheme (1,663) 7,643
Income tax relating to items not reclassified 333 (1,529)
-------- --------
(1,330) 6,114
Items that may be reclassified subsequently
to profit or loss:
Fair value gain/(loss) on cash flow hedges 1,290 (3,007)
Income tax relating to items that may be
reclassified (258) 601
-------- --------
1,032 (2,406)
Total comprehensive income for the year 11,442 15,559
Attributable to:
Owners of the Company 11,326 15,481
Non-controlling interests 116 78
-------- --------
11,442 15,559
Consolidated Balance Sheet
30 September 2020
2020 2019
GBP000 GBP000
NON-CURRENT ASSETS
Intangible assets 479 683
Property, plant and equipment 217,936 217,046
Right of use assets 2,899 -
Investment properties 21,755 21,240
Trade and other receivables 300 383
Retirement benefit surplus 7,315 10,417
Derivative financial instruments 277 208
Other investments 5 5
-------- ---------------
Total non-current assets 250,966 249,982
------------------------------------- -------- ---------------
CURRENT ASSETS
------------------------------------ -------- ---------------
Inventories 6,028 6,018
Trade and other receivables 16,645 17,995
Derivative financial instruments 960 197
Cash and cash equivalents 35,520 24,915
Total current assets 59,153 49,125
-------- ---------------
Total assets 310,119 299,107
---------------------------------------- -------- ---------------
LIABILITIES
------------------------------------ -------- ---------------
Trade and other payables 18,193 17,320
Current tax liabilities 2,742 2,714
Lease liabilities 65 -
Derivative financial instruments 143 298
Total current liabilities 21,143 20,332
-------- ---------------
NET CURRENT ASSETS 38,010 28,793
----------------------------------------
NON-CURRENT LIABILITIES
-------------------------------------- -------- ---------------
Trade and other payables 22,714 21,757
Lease liabilities 2,879 -
Derivative financial instruments - 303
Financial liabilities - preference
shares 235 235
Borrowings 30,000 30,000
Deferred tax liabilities 27,209 26,936
Total non-current liabilities 83,037 79,231
-------- ---------------
Total liabilities 104,180 99,563
-------- ---------------
Net assets 205,939 199,544
---------------------------------------- -------- ---------------
EQUITY
------------------------------------ -------- ---------------
Share capital 1,532 1,532
Revaluation reserve 5,270 5,270
ESOP reserve (120) (45)
Other reserves 875 (157)
Retained earnings 198,259 192,882
Equity attributable to owners of
the company 205,816 199,482
Non-controlling interests 123 62
-------- ---------------
Total equity 205,939 199,544
---------------------------------------- -------- ---------------
Consolidated
Statement of
Changes
in Equity for the
year ended Share Revaluation ESOP Other Retained
30 September 2020 capital reserve reserve reserves earnings Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 October 2019 1,532 5,270 (45) (157) 192,882 199,482
Total recognised
income and
expense for the
year - - - - 11,624 11,624
Funding of
employee share
option
scheme - - (78) - - (78)
Amortisation of
employee share
option scheme - - 3 - - 3
Unrealised gain
on hedges (net
of tax) - - - 1,032 - 1,032
Actuarial loss on
defined benefit
scheme (net of
tax) - - - - (1,330) (1,330)
Equity dividends - - - - (4,917) (4,917)
At 30 September
2020 1,532 5,270 (120) 875 198,259 205,816
=================== ==================== ============== ============== ============= ========
Share Revaluation ESOP Other Retained
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 to
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
=================== ==================== ============== ============== ============= ========
Consolidated Statement of Cash Flows 2020 2019
for the year ended 30 September 2020 GBP000 GBP000
CASH FLOWS FROM OPERATING ACTIVITIES
Operating profit 16,207 16,082
Depreciation and amortisation charges 11,424 11,604
Share based reward charges 3 16
Gain on revaluation of investment property (515) (689)
Pension operating charge less contributions
paid 1,439 1,977
Profit on sale of fixed assets (24) (2)
--------- ---------
Operating cash flows before movement in
working capital 28,534 28,988
Working capital adjustments:
Decrease/(increase) in inventories (10) 1,074
(Increase)/decrease in trade and other
receivables 1,433 (2,675)
Increase in trade and other payables 1,071 4,023
--------- ---------
Net movement in working capital 2,494 2,422
Interest paid (1,376) (1,356)
Preference dividends paid (9) (9)
Income taxes paid (2,714) (2,300)
--------- ---------
Net cash flows from operating activities 26,929 27,745
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment (10,922) (13,850)
Investment in intangible assets (337) (90)
Deposit interest received 139 103
Net proceeds from disposal of fixed assets 24 2
--------- ---------
Net cash flows used in investing activities (11,096) (13,835)
CASH FLOWS FROM FINANCING ACTIVITIES
Equity dividends paid (4,917) (4,671)
Dividends paid to non-controlling interest (55) (69)
Purchase of shares by Employee Benefit
Trust (78) -
Repayment of lease liabilities (189) -
--------- ---------
Net cash flows used in financing activities (5,239) (4,740)
Net increase in cash and cash equivalents 10,594 9,170
Cash and cash equivalents at beginning
of year 24,915 15,735
Effect of foreign exchange rates 11 10
Cash and cash equivalents at end of year 35,520 24,915
In 2020 the Directors have made a presentational change in
relation to deposit interest received, presenting this within
investing activities, in compliance with IAS 7 "Statement of Cash
Flows". In the prior year deposit interest received was presented
within financing activities. In order to present the consolidated
cash flow statement in a consistent format, the Directors have
reclassified prior year's deposit interest received of GBP103k.
This adjustment has had no impact on the 2019 reported Net increase
in cash and cash equivalents.
Notes to the accounts
Year ended 30 September 2020
1. Basis of Preparation
The consolidated financial statements of Jersey Electricity plc,
for the year ended 30 September 2020, 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 2019 annual report and accounts, except for IFRS16, the
impacts of which are disclosed in the 31 March 2020 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 2021.
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, including the impact of
COVID-19. 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:
2020 2020 2020 2019 2019 2019
External Internal Total External Internal Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Revenue
Energy - arising in the course
of ordinary business 85,140 122 85,262 84,322 126 84,448
- arising from the sale of heavy
fuel oil - - - 2,723 - 2,723
Building Services 3,767 1,027 4,794 3,286 809 4,095
Retail 17,825 60 17,885 15,199 59 15,258
Property 2,266 645 2,911 2,262 612 2,874
Other 2,749 891 3,640 2,917 898 3,815
--------- --------- -------- --------- --------- --------
111,747 2,745 114,492 110,709 2,504 113,213
Intergroup elimination (2,745) (2,504)
-------- --------
Revenue 111,747 110,709
-------- --------
Operating profit
Energy 12,257 12,281
Building Services 216 (79)
Retail 1,176 895
Property 1,270 1,679
Other 773 617
-------- --------
15,692 15,393
Revaluation of investment properties 515 689
Operating profit 16,207 16,082
-------- --------
The revaluation of investment properties is shown separately
from Property operating profit as this income is reflected solely
by a movement in reserves.
In 2020 the Directors have made a classification change in
relation to the amortisation of deferred infrastructure charges. In
order to present the results in a consistent format, the Directors
have reclassified the prior year reported results, increasing both
Operating expenses and Revenue by GBP415k, with no impact to Group
operating profit.
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December 17, 2020 10:20 ET (15:20 GMT)
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