JERSEY ELECTRICITY plc - Preliminary Announcement of Annual Results

The financial information set out in the announcement does not constitute the Group's statutory accounts for the year ended 30 September 2018 or 2017, but is derived from those accounts. Statutory accounts for 2017, have been delivered to the Jersey Registrar of Companies, and those for 2018 will be delivered in early 2019. The auditor has reported on the accounts for both years and their reports were unmodified. 

A final dividend of 8.8p on the Ordinary and 'A' Ordinary shares in respect of the year ended 30 September 2018 was recommended (2017: 8.4p). Together with the interim dividend of 6.1p (2017: 5.8p) the proposed total dividend declared for the year was 14.9p on each share (2017: 14.2p).

The final dividend will be paid on 28 March 2019 to those shareholders registered in the books of the Company on 22 February 2019. A dividend on the 5% cumulative participating preference shares of 1.5% (2017: 1.5%) payable on 1 July 2019 was also recommended.

The Annual General Meeting of the Company will be held on 28 February 2019. On that date Geoffrey Grime will retire as Chairman and Director of the Company, and Phil Austin, currently a Board member, will assume the role of Chairman.

JERSEY ELECTRICITY plc            

Preliminary Announcement of Annual Results

Year ended 30 September 2018                                                                                                    

 

The Chairman, Geoffrey Grime, comments:

 

"The Group recorded its best ever financial performance for the third year in succession. Group revenue for the year 2017/18 was £105.9m, 4% higher than 2017 and profit before tax increased to £15.3m up from the £13.5m achieved last year. This was supported by strong underlying performance in the Energy business, which saw a new record peak demand of 178MW set and a 2% increase in unit sales volumes from 621m to 634m units. Our Powerhouse retail business also witnessed continued strong growth in a challenging sector, with profits up 11% to £0.8m on an increased turnover of £13.6m, up 5% on last year.

 

We have made excellent progress on all our major investment projects during the year. St Helier West Primary Substation is about to be commissioned. Our smart metering programme, SmartSwitch, is entering its final phase, with 87% of our customers now converted and benefits already being realised.  We successfully launched an innovative "smart home" demonstration store, Smarter Living, embedded in the Powerhouse retail store which is receiving great interest from customers. In France, we completed an important £1m upgrade on our Normandie 2 circuit to increase both import capacity and security of supply.

 

As the Island's leading energy supplier, we bear an enormous responsibility to our customers and we continue our programme of activities to seek feedback from them. We are aware that there is more to do to promote energy efficiency, local renewables and electric transportation, but it is reassuring we continue to receive positive feedback from stakeholders. Once again, I am pleased to report that our ratings in both our supply service and overall customer service showed improvements on last year.

 

Maintaining profitability is essential to continued investment in infrastructure and to providing a sustainable electricity service for everyone including all of our stakeholders. I am also pleased to report a proposed final dividend for this year of 8.8p, a 5% rise on the previous year, payable on 28 March 2019.

 

I will be formally stepping down as Chairman at the AGM on 28 February 2019 but I am delighted to be handing over to Phil Austin a Company that is well positioned for the future and I wish Phil and the whole Board the very best in continuing to steer Jersey Electricity through the many exciting opportunities ahead."

 

Financial Highlights

2018

2017

 

 

 

Revenue

£105.9m

£102.1m

Profit before tax 

£15.3m

£13.5m

Earnings per share 

39.5p

34.6p

Dividend paid per share

      14.5p

   13.8p

Final proposed dividend per share       

8.8p

8.4p

Net debt             

£14.3m

£21.9m

                       

Group revenue for the year to 30 September 2018 at £105.9m was 4% higher than in the previous financial year. Energy revenues at £82.3m were 2% higher than the £80.4m achieved in 2017 with a 2% increase in the unit sales volumes of electricity, largely driven by weather, being the main factor. Turnover in the Powerhouse retail business increased by 5% from £12.9m to £13.6m. Revenue in the Property business rose £0.1m to £2.3m due to higher rental income. Revenue from JEBS, our contracting and building services business, rose £0.8m from levels experienced in 2017 to £4.8m. Turnover in our other businesses rose £0.2m to £2.9m.

 

Cost of sales at £65.1m was £2.1m higher than last year with an increase in import costs in our Energy business and higher sales activity in the Powerhouse retail business being the main reasons.

 

Operating expenses, at £24.4m were at the same level as in 2017.

 

Profit before tax for the year to 30 September 2018, at £15.3m, increased by 14% from £13.5m in 2017. Our Energy business unit sales saw volumes increasing from 621m to 634m kilowatt hours with strong winter period sales and the benefits of switching customers from other heating fuels more than offsetting the continued impact of energy efficiency measures employed by our customers.

 

Profits in our Energy business moved up to £13.4m from £11.7m last year. The higher level of sales resulted in an improved gross margin and this was supplemented by ongoing initiatives to reduce both manpower and maintenance costs. Customer tariffs rose by 2% in June 2018 yet remained competitive with other jurisdictions but this accounted for only £0.4m of the increase in profits with the remainder driven by cost efficiencies and increased unit sales of electricity. The UK saw material increases in retail electricity prices for their customers during both 2017 and 2018 with an average rise of 24% across the 'Big 6' suppliers.

 

In the financial year we imported 95% of our requirements from France (2017: 93%) and generated only 0.2% of our electricity on-island at La Collette Power Station (2017: 1%). The remaining 5% (2017: 6%) of our electricity came from the local Energy from Waste plant being marginally below that seen in 2017.

 

Profits in our Property division, excluding the impact of investment property revaluation, at £1.8m, were £0.2m above the level last year due to a higher rental level and reduced costs. Our investment property portfolio was revalued upwards this year by £0.3m to £20.5m by the external consultants who review the position annually due primarily to the growth in the value of the residential properties that we rent to tenants.

 

Our Powerhouse retailing business saw continued strong growth in sales with profits moving up 11% to £0.8m in 2018.

 

JEBS, our contracting and business services unit had a challenging year and incurred a loss of £0.2m against a profit of £0.1m in 2017 as the business was impacted by both a decline in margins and some exceptional costs. Plans are being implemented to improve performance in this business unit.

 

Our other business units (Jersey Energy, Jendev, Jersey Deep Freeze and fibre optic lease rentals) produced profits of £0.6m being 12% higher than last year.

 

Net Interest in 2018 was £1.3m being £0.1m higher than last year because in 2017 there was still an element of capitalisation of interest associated with the new N1 subsea cable. The taxation charge at £3.2m was £0.3m higher than 2017 due to the increase in profit.

 

Group earnings per share rose to 39.5p compared to 34.6p in 2017 due mainly to increased profitability.

 

 

Dividends paid in the year, net of tax, rose by 5%, from 13.8p in 2017 to 14.5p in 2018. The proposed final dividend for this year is 8.8p, a 5% rise on the previous year. Dividend cover was 2.7 times compared to 2.5 times in 2017.

 

Net cash inflow from operating activities at £27.0m was £0.5m higher than in 2017 with higher operating profit being the primary driver. Capital expenditure, at £14.9m was marginally lower than £15.1m last year with spend on the St Helier West primary sub-station being the most material project in 2018. In the 2017 financial year the most material primary spend was on the N1 subsea cable project prior to commissioning in December 2016. The resultant position was that net debt at the year-end was £14.3m, being £30.0m of borrowings less £15.7m of cash and cash equivalents, which was £7.6m lower than last year.

 

Our defined benefits pension scheme, showed a surplus at 30 September 2018, under IAS 19 "Employee Benefits", of £3.8m, net of deferred tax, compared with a deficit of £3.4m at 30 September 2017. Scheme liabilities decreased 2% to £131.4m since the last year end with the discount rate assumption, which heavily influences the calculation of liabilities, rising from 2.7% in 2017 to 2.9% in 2018 to reflect sentiments in prevailing financial markets. In addition, scheme assets rose 5% to £136.2m in the same period.

 

 

Consolidated Income Statement

 

2018

 

2017

For the year ended 30 September 2018

 

£000

 

£000

 

 

 

 

 

Revenue

 

105,874

 

102,085

Cost of sales

 

(65,110)

 

(63,023)

Gross Profit

 

40,764

 

39,062

 

 

 

 

 

Revaluation of investment properties

 

310

 

40

Operating expenses

 

(24,380)

 

(24,379)

 

 

 

 

 

Group operating profit

 

16,694

 

14,723

Finance income

 

28

 

3

Finance costs

 

(1,377)

 

(1,268)

 

 

 

 

 

Profit from operations before taxation

 

15,345

 

13,458

 

 

 

 

 

Taxation

 

(3,152)

 

(2,834)

 

 

 

 

 

Profit from operations after taxation

 

12,193

 

10,624

 

 

 

 

 

Attributable to:

 

 

 

 

Owners of the Company

 

12,115

 

10,599

Non-controlling interests

 

78

 

25

 

 

                   12,193

 

                   10,624

 

 

 

 

 

Earnings per share

 

 

 

 

- basic and diluted

 

39.54p

 

34.59p