Source - LSE Regulatory
RNS Number : 7625O
Jersey Electricity PLC
02 February 2023
 

JERSEY ELECTRICITY plc                                                                                                

Financial Results Summary

Year Ended 30 September 2022

 

At a meeting of the Board of Directors held on 20 December 2022, the final accounts for the year ended 30 September 2022 were approved and have been published on our website (www.jec.co.uk).

 

The financial information set out in this summary does not constitute the statutory accounts for the year ended 30 September 2022, or 2021, but is derived from those accounts. Statutory accounts for 2021 have been delivered to the Jersey Registrar of Companies, and those for 2022 will be delivered in early 2023. The auditor reported on the accounts for both years and their reports were unmodified.

 

A final dividend of 10.80p on the Ordinary and 'A' Ordinary shares in respect of the year ended 30 September 2022 was recommended (2021: 10.20p). Together with the interim dividend of 7.60p (2021: 7.20p) the proposed total dividend declared for the year was 18.40p on each share (2021: 17.40p).

           

The final dividend will be paid on 23 March 2023 to those shareholders registered on 17 February 2023 (not 16 February as earlier stated). A dividend on the 5% cumulative participating preference shares of 1.5% (2021: 1.5%) payable on 3 July 2023 was also recommended.

 

The Annual General Meeting will be held on 8 March 2023 at 2.00 pm at the Powerhouse, Queen's Road, St Helier, Jersey.

 

 

 

 

 

M.P. Magee                                                                           

Finance Director                                                                  

 

Direct telephone number: 01534 505201                                     

Email: mmagee@jec.co.uk                                                       

 

 

 

 

 

20 December 2022    

 

 

 

The Powerhouse

PO Box 45

Queens Road

St Helier

Jersey JE4 8NY



 

Financial Results Summary

 

 

 

The Chair, Phil Austin, comments:

 

The turmoil that beset international energy markets in late 2021 has intensified further due to the escalating conflict between Russia and Ukraine, leading to a previously unthinkable global energy crisis. This has presented major new challenges to energy companies post the pandemic, sending wholesale prices soaring and threatening supply security throughout Europe. Jersey Electricity is not immune to these challenges, but we have shown resilience, returning a strong Group performance and protecting our customers from the huge retail price rises seen elsewhere, without Government intervention.

 

PERFORMANCE

Group revenue for the year at £117.4m was 1% lower than last year and profit before tax was £10.6m against £19.1m in 2021. If the non-cash upside from the revaluation of investment properties is excluded in both years, the underlying year-on-year profit before tax is £9.6m against £13.0m in 2021, a fall of 26%. This year's financial performance reflects the effects of COVID-19 post the pandemic. Coupled with a mild winter, a return to more normal patterns of work and behaviour has reduced demand, with both unit volume sales in Energy, and Retail revenues, down on last year as electricity consumption and Powerhouse product sales returned to historical levels. The Board has recommended a final dividend for the year of 10.80p, a 6% rise on the previous year, payable on 23 March 2023. Our target return on assets continues to be 6%-7% over the long term and was 4.2% this year, but 6.2% on a rolling five-year basis.

 

ENERGY MARKETS

Elsewhere, the scale of the energy crisis has prompted Governments across Europe to intervene, each in their own way, to mitigate the impact of the rising prices on their citizens. In the UK, such Government intervention averted a proposed 80% year-on-year increase in energy prices in October when Ofgem was due to raise the regulated price cap to £3,549. The new Energy Price Guarantee now limits this cap to £2,500 a year until April 2023 when the cap will be increased to £3,000, prompting a further 20% price rise.


Although our hedging and risk mitigation policies have so far sheltered Jersey customers from such material price increases, we are not immune to these market forces. We therefore implemented a 4% tariff rise from 1 January 2022 and a further 5% increase from 1 July 2022, at which time we announced a further 5% tariff increase effective from 1 January 2023 to give our customers some degree of certainty for the coming winter period.

 

CLIMATE CHANGE

Despite the current challenges presented by the global energy crisis, climate change remains the biggest challenge we all face. We remain optimistic about the future, however, and the opportunities a net-zero Jersey will bring. Our low-carbon, Smart-enabled grid provides a strong platform to support the Government of Jersey's net-zero 2050 carbon ambitions. In addition, increased digitalisation of our systems is enabling us to map scenarios and calculate the investment needed in the network. Publication of the Government's Carbon Neutral Roadmap in May gives us confidence to make these investments and ensure we are well-placed to meet future challenges.

 

In April 2022, the UK became the first G20 country to introduce legislation making it mandatory for large businesses to disclose climate-related financial information in line with the Taskforce on Climate-related Financial Disclosures (TCFD) recommendations. Jersey Electricity supports these recommendations and is working towards full compliance.

 

 

 

ENERGY SECURITY

Although last year's French fishing dispute, which raised questions about energy sovereignty and the security of imported power supplies, has been resolved, the global energy crisis has kept us focused on the issue. To mitigate the supply security threats the energy crisis is causing in Europe, from where we imported 95% of our power this year, we have modelled various scenarios and evaluated our mitigations for technical failures to the submarine cables and other disruptions to supply. We have also established contingency plans to implement increased local emergency generation if required.

 

To increase energy sovereignty longer term, we are reviewing our energy sourcing strategies, with more detailed investigations into the viability of offshore wind generation which has fallen significantly in cost.

 

IN CONCLUSION

I would like to thank our entire 'JE family' for their hard work, commitment and dedication this past year which has presented renewed challenges post COVID-19. I am immensely proud of what we have achieved together and the progress we have made on the course we have set. I also thank my fellow Board members for their hard work and commitment, and our shareholders for their support. I remain confident the Company and its people can take advantage of the opportunities the future holds and meet the challenges it will demand of us all.



 

Financial Highlights

2022

2021


 


Revenue

£117.4m

£118.6m

Profit before tax 

£10.6m

£19.1m

Earnings per share 

27.17p

52.73p

Dividend paid per share

      17.80p

     16.90p

Final proposed dividend per share       

10.80p

10.20p

Net cash             

£17.4m

£13.1m

 

Group revenue for the year to 30 September 2022 at £117.4m was 1% lower than in the previous financial year. Energy revenues at £89.7m were marginally lower than the £89.8m achieved in 2021. Lower unit sales of electricity were linked to a milder winter and the positive uplift from increased home working, due to COVID-19, in the previous year. This was offset by a 4% tariff rise from January 2022 and a 5% rise from 1 July 2022. Revenue in the Powerhouse retail business decreased 6% from £19.8m in 2021 to £18.7m. Revenue in the Property business at £2.3m was at the same level as last year. Revenue from JEBS, our building services business, remained at the same level as 2021 at £3.4m. Revenue in our other businesses at £3.3m, was in line with the prior year.

 

Cost of sales at £77.2m was £3.1m higher than last year with an increase in wholesale electricity prices offset by the lower revenue level in our Powerhouse Retail business.

 

Operating expenses at £29.3m were £0.7m lower than last year. The fall is largely due to £1.8m incurred in the previous financial year for a non-cash ex-gratia award for pensions in service, in our defined benefits pension offset by the increased spend in systems and people, associated with the de-carbonisation vision for the Island.

 

Profit before tax for the year to 30 September 2022 was £10.6m against £19.1m in 2021. However, if the non-cash upside from revaluation of investment properties is excluded in both years the underlying year on-year profit before tax was £9.6m in 2022 against £13.0m in 2021, a decrease of 26%.

 

Profit in our Energy business, at £7.5m, was below the £10.7m achieved in 2021, largely due to lower unit sales volumes. Our target return on assets employed continues to be in the 6%-7% range over the longer-term and was 4.2% in 2022 against 5.9% in 2021, but 6.2% on a rolling 5-year basis. Unit sales volumes decreased by 4% from 639m to 613m kilowatt hours, due to milder than normal weather, combined with the previous year having benefited from home-working linked to the pandemic. In the financial year we imported 95.3% of our requirements from France (2021: 95.2%) and generated 0.3% of our electricity on-Island from our solar and diesel plant (2021: 0.4%). The remaining 4.4% (2021: 4.4%) of our electricity was purchased from the local Energy from Waste plant. A customer tariff rise of 4% was instigated on 1 January 2022 and a subsequent 5% increase took place in July 2022 and notice was given that a further 5% rise would take place on 1 January 2023.

 

The £1.4m profit in our Property division, excluding the impact of investment property revaluation, was at the same level as last year. Our investment property portfolio moved up in value by £1.0m to £28.8m, based on advice from our external consultants, who review the position annually. This increase compared to £6.1m in the 2020/21 financial year was due primarily to a restructuring of the lease arrangement for our largest tenant, whereby the existing break clause was moved to a later date, post commercial discussions, which materially moved the valuation upwards. The increase in this financial year was due to continued buoyant market conditions in the residential sector.

 

Our Powerhouse retail business saw profits fall 23% from £1.5m to £1.2m. However, this is in the context that in the previous financial year profits rose by 30% by when COVID-19 continued to influence the behaviours, and spending patterns of local customers, for example, due to less travel taking place over that year.

 

 

JEBS, our building services unit, produced a profit of £0.3m, being marginally ahead of 2021.

 

Our other business units (Jersey Energy, Jendev, Jersey Deep Freeze and fibre optic lease rentals) produced profits of £0.5m being £0.1m lower than last year.

 

The net interest cost in 2022 was £1.3m being £0.1m lower than 2021 due to a higher level of interest received on deposits. The taxation charge at £2.1m was lower than the previous year, due to lower profits.

 

Group basic and diluted earnings per share

 

Dividends paid in the year, net of tax, rose by 5%, from 16.90p in 2021 to 17.80p in 2022. The proposed final dividend for this year is 10.80p, a 6% rise on the previous year. Dividend cover, at 1.6 times, was lower than the comparable 3.1 times in 2021 due mainly to the large non-cash increase in the revaluation of investment properties in 2021.

 

Net cash flows from operating activities at £21.2m was £1.2m lower than in 2021. Investing activities, at £11.1m was £1.9m higher than £9.2m last year. Dividends paid were £5.5m compared to £5.3m in 2021. The resultant position was that net cash at the year-end was £17.4m, being £30.0m of borrowings offset by £47.4m of cash and cash equivalents, which was £4.3m more than last year.

Consolidated Income Statement


2022

 

2021

For the year ended 30 September 2022


£000

 

£000



 



Revenue


117,421


118,608

Cost of sales


(77,242)


(74,159)

Gross Profit


40,179


44,449



 



Revaluation of investment properties


1,020


6,055

Operating expenses


(29,293)


(29,991)



 



Group operating profit


11,906


20,513

Finance income


218


112

Finance costs


(1,523)


(1,540)

 


 



Profit from operations before taxation


10,601


19,085



 



Taxation


(2,135)


(2,794)



 



Profit from operations after taxation


8,466


16,291



 



Attributable to:


 



Owners of the Company


8,326


16,155

Non-controlling interests


140


136



 

8,466


 

16,291



 



Earnings per share


 



- basic and diluted


27.17p


52.73p

 

 Consolidated Statement of Comprehensive Income


2022


2021

 


£000


£000



 



Profit for the year


8,466


16,291



 



Items that will not be reclassified subsequently to profit or loss:


 



Actuarial gain on defined benefit scheme


8,976


14,803

Income tax relating to items not reclassified


(1,795)


(2,961)



7,181


11,842



 



Items that may be reclassified subsequently to profit or loss:


 



Fair value gain/(loss) on cash flow hedges


4,815


(3,116)

Income tax relating to items that may be reclassified


(963)


623



3,852


(2,493)



 



Total comprehensive income for the year


19,499


25,640



 



Attributable to:


 



Owners of the Company


19,359


25,504

Non-controlling interests


140


136



19,499


25,640

 



 

Consolidated Balance Sheet as at 30 September 2022

 


 

2022

2021



£ 000

£ 000



 


NON-CURRENT ASSETS


 


Intangible assets


             967

             933

Property,plant and equipment

 

       216,235

       216,550

Right of use assets

 

          3,280

          3,113

Investment properties

 

        28,830

        27,810

Trade and other receivables

 

             300

             308

Retirement benefit asset

 

        26,434

        18,761

Derivative financial instruments

 

             2,640

             108

Other investments

 

                5

                5

Total non-current assets

 

       278,691

       267,588

CURRENT ASSETS

 

 


Inventories

 

7,173

          6,909

Trade and other receivables

 

19,934

        18,000

Derivative financial instruments

 

483

               -  

Cash and cash equivalents

 

47,397

        43,136

Total current assets

 

74,987

        68,045

Total assets

 

353,678

       335,633

LIABILITIES

 

 


Trade and other payables

 

21,043

        18,373

Current tax liabilites

 

2,088

          3,020

Lease liabilities

 

69

               72

Derivative financial instruments

 

330

          1,256

Total current liabilities

 

23,530

        22,721

NET CURRENT ASSETS

 

51,457

        45,324

NON-CURRENT LIABILITIES

 

 


 

 

 


Trade and other payables

 

25,162

        24,006

Lease liabilities

 

3,251

          3,035

Derivative financial instruments

 

-

             874

Financial liabilities - preference shares

 

235

             235

Borrowings

 

30,000

        30,000

Deferred tax liabilities

 

32,126

        29,321

Total non-current liabilities

 

90,774

        87,471

Total liabilities

 

114,304

       110,192

Net assets

 

239,374

       225,441

EQUITY

 

 


Share capital

 

1,532

          1,532

Revaluation reserve

 

5,270

          5,270

ESOP reserve

 

(38)

(79)

Other reserves

 

2,234

(1,618)

Retained earnings

 

230,232

       220,178


 

 


Equity attributable to owners of the company

 

239,230

       225,283

Non-controlling interests

 

144

             158

Total equity

 

239,374

       205,039



 

Consolidated Statement of Changes in Equity for the year ended 30 September 2022

 

 

Share

 Revaluation

 ESOP

*Other

Retained

Total

 

capital

 reserve

reserve

reserves

earnings

 


£ 000

£ 000

£ 000

£ 000

£ 000

£ 000

At 1 October 2021

1,532

5,270

(79)

(1,618)

220,178

225,283

Total recognised income and expense for the year

       -  

                 -  

          -  

         -  

8,326

8,326

Amortisation of employee share option scheme

       -  

                 -  

41

         -  

            -  

41

Movement on hedges (net of tax)

       -  

                 -  

          -  

3,852

            -  

3,852

Actuarial gain on defined benefit scheme (net of tax)

       -  

                 -  

          -  

         -  

7,181

7,181

Equity dividends

       -  

                 -  

          -  

         -  

(5,453)

(5,453)

At 30 September 2022

1,532

5,270

(38)

2,234

230,232

239,230

 

 

 

 

 

 

 


 

 

 

 

 

 

At 1 October 2020

1,532

5,270

(120)

875

197,359

204,916

Total recognised income and expense for the year

       -  

                 -  

          -  

         -  

16,155

16,155

Amortisation of employee share option scheme

       -  

                 -  

41

         -  

            -  

41

Movement on hedges (net of tax)

       -  

                 -  

          -  

(2,493)

            -  

(2,493)

Actuarial gain on defined benefit scheme (net of tax)

       -  

                 -  

          -  

         -  

11,842

11,842

Equity dividends

       -  

                 -  

          -  

         -  

(5,178)

(5,178)

At 30 September 2021

1,532

5,270

(79)

(1,618)

220,178

225,283



 

Consolidated Statement of Cash Flows

 

2022

2021

for the year ended 30 September 2022


£000

£000

 


 


CASH FLOWS FROM OPERATING ACTIVITIES


 




 


Operating profit


11,906

20,513

Depreciation and amortisation charges


11,094

10,924

Share based reward charges


41

41

Gain on revaluation of investment property


(1,020)

(6,055)

Pension operating charge less contributions paid


1,303

3,357

Deemed interest income from hire purchase arrangements


50

-

Profit on sale of property, plant and equipment


(7)

(6)

Operating cash flows before movement in working capital


23,367

28,774

Working capital adjustments:


 


      Increase in inventories


(257)

(881)

      Increase in trade and other receivables


(1,926)

(2,263)

      Increase in trade and other payables


4,444

904

Net movement in working capital


2,261

(2,240)

Interest paid


(1,380)

(1,395)

Preference dividends paid


(9)

(9)

Income taxes paid


(3,020)

(2,742)

Net cash flows from operating activities


21,219

22,388



 


CASH FLOWS FROM INVESTING ACTIVITIES

 

 


Purchase of property, plant and equipment

 

(11,001)

(8,513)

Investment in intangible assets

 

(319)

(805)

Deposit interest received


168

112

Net proceeds from disposal of fixed assets


7

6

Net cash flows used in investing activities


(11,145)

(9,200)



 


CASH FLOWS FROM FINANCING ACTIVITIES


 


Equity dividends paid


(5,453)

(5,178)

Dividends paid to non-controlling interest


(154)

(101)

Repayment of lease liabilities


(206)

(297)

Net cash flows used in financing activities


(5,813)

(5,576)

 


 


Net increase in cash and cash equivalents

 

4,261

7,612



 


Cash and cash equivalents at beginning of year


43,136

35,520

Effect of foreign exchange rates


-

4



 


Cash and cash equivalents at end of year


47,397

43,136



 

Notes to the accounts

Year ended 30 September 2022

 

1.   Basis of Preparation

The consolidated financial statements of Jersey Electricity plc, for the year ended 30 September 2022, 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 2021 annual report and accounts and the 31 March 2022 interim report.

While the financial information included in this summary 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. Full financial statements that comply with IFRS have additionally been published on our website; www.jec.co.uk.

 

 

 

Segmental information

 

 





Revenue and profit information are analysed between the business segments as follows:

 

2022

2022

2022

 

2021

2021

2021

 

External

Internal

Total

 

External

Internal

Total

 

£000

£000

£000

 

£000

£000

£000

Revenue

 







Energy

89,683

100

89,783


89,780

100

89,880

Building Services

3,365

780

4,145


3,399

645

4,044

Retail

18,695

41

18,736


19,808

68

19,876

Property

2,345

639

2,984


2,304

645

2,949

Other*

3,333

625

3,958


3,317

945

4,262


117,421

2,185

119,606


118,608

2,403

121,011

Intergroup elimination

 

 

(2,185)




(2,403)

Revenue

 

 

117,421




118,608

 

 

 

 





Operating profit

 

 

 





Energy

 

 

7,502




10,693

Building Services

 

 

266




217

Retail

 

 

1,174




1,533

Property

 

 

1,436




1,393

Other*

 

 

508




622

 

 

 

10,886




14,458

Revaluation of investment properties

 

 

1,020




6,055


 

 

 





Operating profit

 

 

11,906




20,513

 

*Other segment includes the divisions of Jersey Energy and Jendev as well as Jersey Deep Freeze Limited, the Group's sole subsidiary.

 

Materially, all the Group's operations are conducted within the Channel Islands. All transfers between divisions are on an arms-length basis.

 

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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