Source - LSE Regulatory
RNS Number : 5291X
Jersey Electricity PLC
20 December 2023
 

 


 

JERSEY ELECTRICITY Plc                                                                                           

Financial Results Summary

Year Ended 30 September 2023

 

 

At a meeting of the Board of Directors held on 20 December 2023, the final accounts for the year ended 30 September 2023 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 2023, or 2022, but is derived from those accounts. Statutory accounts for 2022 have been delivered to the Jersey Registrar of Companies, and those for 2023 will be delivered in early 2024. The auditor reported on the accounts for both years and their reports were unmodified.

 

A final dividend of 11.40p on the Ordinary and 'A' Ordinary shares in respect of the year ended 30 September 2023 was recommended (2022: 10.80p). Together with the interim dividend of 8.00p (2022: 7.60p) the proposed total dividend declared for the year was 19.40p on each share (2022: 18.40p).

               

The final dividend will be paid on 15 March 2024 to those shareholders registered on 23 February 2024. A dividend on the 5% cumulative participating preference shares of 1.5% (2022: 1.5%) payable on 1 July 2024 was also recommended.

 

The Annual General Meeting will be held on 5 March 2024 at 2.00 pm at the Powerhouse, Queen's Road, St. Helier, Jersey.

 

 

 

 

 

L.G. Fulton                                                                                         

Chief Financial Officer                                                                                 

 

Direct Line:           01534 505270

Mobile Number: 07797 778688                                                                      

Email: lfulton@jec.co.uk                                                                                    

 

 

 

 

 

20 December 2023          

 

 

 

The Powerhouse

PO Box 45

Queens Road

St. Helier

Jersey JE4 8NY



 

 

 

JERSEY ELECTRICITY plc                

Financial Results Summary

Year ended 30 September 2023                                                                                                                                               

 

The Chair, Phil Austin, comments:

 

Performance

The Group has achieved another solid year of operational and financial performance and is strategically well-positioned for the future. Wholesale prices have eased in the last year, but they remain high in relative terms, in what continues to be a challenging economic environment.


Our Energy Business delivered a Return on Assets of 7.2% in the year, restoring the under recovery of costs from prior years and bringing the 5-year rolling average to 6.2% within the target range of 6%-7%.


We implemented a 5% rise in tariffs in January 2023 to help keep pace with wholesale prices but, due to our strong hedged position, and coupled with contractual provisions, we have been able to significantly shelter Islanders from the recent turmoil in energy markets. However, whilst wholesale prices have recently come down, they remain well above our long-term hedged position and therefore we expect further upward pressure on retail prices over the next few years.


To give customers some certainty over the coming winter, we announced a further 12% tariff rise in June, to take effect from January 2024. As we look forward to 2025 - 2027, approximately one third of our energy is already hedged at fixed prices and our focus now is on transitioning our customers through this difficult period, whilst keeping bills as stable and at as low a cost as possible.  


Our other businesses within the Group continued to perform in line with expectations, providing consistent year-on-year return.

 

The Board has recommended a final dividend for the year of 11.40p, a 6% rise on the previous year, payable on 15 March 2024.


Climate Change

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. At Jersey Electricity, we have made significant progress towards establishing our net-zero strategy, together with key priorities, metrics and targets. Details of our progress are set out on pages 22-33 of the 2023 Annual Report and Accounts.

 

Energy Security
This year we completed a review of our Supply Security Standard. The review was driven by the recent energy crisis, the demands of the Government of Jersey's (GoJ) Carbon Neutral Roadmap
(CNR) and the French fishing dispute of 2021. Following this review, and subject to securing long-term tenure on our site at La Collette, the Board has approved a four-year £22.6m project to enhance our on-Island emergency generation capacity at La Collette Power Station.


While we continue to deploy solar PV across the Island, with a view to increasing energy sovereignty and long-term supply diversity, as well as supporting the local economy, we have at the same time continued more detailed investigations into the viability of offshore wind generation and how it might integrate into Jersey's future energy system. We are actively engaging with GoJ to determine the future approach and role Jersey Electricity Plc (JE)should play in the development of such a project.


In Conclusion

I am very proud of the response efforts from the JE team and our customers following storm Ciarán. I wish to thank all our teams and fellow Board members for their hard work and dedication this past year, as well as our shareholders for their continued support. We have achieved much together during what has been a very successful year, while keeping Jersey Electricity on course to take advantage of the opportunities the future holds and meet the challenges it will demand of us.

 

Financial Performance

 

Financial Highlights

2023

2022


 


Revenue

£125.1m

£117.4m

Profit before tax 

£14.9m

£10.6m

Earnings per share 

36.81p

27.17p

Dividend paid per share

18.80p

17.80p

Final proposed dividend per share       

11.40p

10.80p

Net cash             

£17.4m

£17.4m

In Year Return on Assets

7.2%

4.2%

Return on Assets - 5 year rolling average

6.2%

6.2%

 

2022/23 has seen a return to a less volatile operating environment following the pandemic. Our hedging strategy for the procurement of power has protected us against a volatile wholesale energy market which has seen prices reach over 10 times historical levels in the same period. Escalating inflation has put pressure on the cost base as the business continues to maintain performance and build towards a decarbonised future. Our balance sheet continues to be healthy underpinned by high quality assets.


Group revenue for the year to 30 September 2023 increased year on year by £7.7m (6.5%) due to tariff price increases in the Energy Business. Revenue across the wider group remained in line with the previous financial year.


Group Profit before tax for the year to 30 September 2023 was £14.9m compared to £10.6m in 2022. The profit increase is attributed to £1.8m from the energy business and £1.6m income from interest earnings. In the year the energy business received a rebate of £3.6m relating to prior year wholesale energy costs and following a full review, our property portfolio was devalued by £1.2m.
Underlying profit before tax (excluding the impacts of the rebate and property valuation) was £12.5m in 2023 against £9.6m in 2022.


Energy Business: Operating Profit, excluding the rebate of past energy costs, at £9.3m, was £1.8m above the £7.5m achieved in 2022. This is due a £7.4m increase in revenues, following a tariff price increase on 1 January 2023 which has been offset by a £5.6m increase in wholesale energy costs and operating costs.
Operating costs have increased due to increased inflation and increased investment in our systems and people, as we head into a period of increased capital investment and enhancing our capability as we continue to achieve our net-zero ambition and supporting the GoJ in meeting its Carbon Neutral Roadmap objectives and a net-zero Jersey.

Our 2023 in year Return on Assets (see other information, Alternative Performance Measures, p127 of the 2023 Annual report and Accounts) is 7.2% compared to 4.2% in 2022. This increase is effectively a 'truing up' of prior years under recovery and includes the rebate on prior year energy costs. We target Return on Assets to be within a 6% to 7% range over a 5-year rolling average basis. Our 2023 5-year rolling average Return on Assets is 6.2%.


Property: The £1.1m profit in our property division, is £0.3m lower than in 2022 due to one of the commercial spaces being vacated in March 2023. A new tenant is expected for the space during early 2024.


Powerhouse.je: Our Powerhouse retail business saw profits fall 22% from £1.2m to £0.9m, despite a marginal fall in revenues of 1%, due to increased overheads in staff and storage costs.

JEBS: Profits fell by £0.1m across our building services business due to an under recovery in revenue from a lower-than-expected number of fuel switches. The reduction was due to a slowing in the pace of switching for a short time as the government incentive scheme was being launched.


Other business units (Jersey Energy, Jendev, Jersey Deep Freeze and fibre optic lease rentals) produced combined profits of £0.6m, being £0.1m higher than last year.


Net interest income was £0.3m in 2023 compared to a net interest cost of £1.3m in 2022 due to a higher level of interest earned on deposits from rising interest rates. Taxation at £3.4m was higher than the previous year, due to increased taxable profits.


Group basic and diluted earnings per share, at 36.81p, compared to 27.17p in 2022, rose due to increased profitability. Dividends paid in the year, net of tax, rose by 6%, from 17.80p in 2022 to 18.80p in 2023. The proposed final dividend for this year is 11.40p, a 6% rise on the previous year. Dividend cover, at 2 times has increased from 1.5 times in 2022.

 

Net cash flows from operating activities at £17.6m was £3.6m lower than in 2022. Investing activities, at £11.4m, was 3% higher than the prior financial year. Dividends paid were £5.8m compared to £5.5m in 2022. 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 the same as last year.


Consolidated Income Statement for the year ended 30 September 2023


 


2023

 

2022

 


£000

 

£000



 



Revenue


125,078


117,421

Cost of sales


(80,924)


(77,242)

Rebate of past energy costs - non recurring item


3,593


-

Gross Profit


47,747


40,179



 



Movement in valuation of investment properties


(1,215)


1,020

Operating expenses


(32,010)


(29,293)

Group operating profit


14,522


11,906



 



Finance income


1,871


218

Finance costs


(1,528)


(1,523)

Profit from operations before taxation


14,865


10,601



 



Taxation


(3,432)


(2,135)

Profit from operations after taxation


11,433


8,466



 



Attributable to:


 



Owners of the Company


11,280


8,326

Non-controlling interests


153


140



11,433


 8,466

Earnings per share


 



- basic and diluted


36.81p


27.17p

  

Consolidated Statement of Comprehensive Income

 



2023


2022

 


£000


£000



 



Profit for the year


11,433


8,466



 



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


 



Actuarial (loss)/gain on defined benefit scheme


(815)


8,976

Income tax relating to items not reclassified


163


(1,795)



(652)


7,181



 



Items that may be reclassified subsequently to profit or loss:


 



Fair value (loss)/gain on cash flow hedges


(3,361)


4,815

Income tax relating to items that may be reclassified


672


(963)



(2,689)


3,852



 



Total comprehensive income for the year


8,092


19,499



 



Attributable to:


 



Owners of the Company


7,939


19,359

Non-controlling interests


153


140



8,092


19,499

 

Consolidated Balance Sheet as at 30 September 2023

 


 

2023

2022



£ 000

£ 000



 


NON-CURRENT ASSETS


 


Intangible assets


681

             967

Property, plant and equipment

 

216,136

       216,235

Right of use assets

 

3,194

          3,280

Investment properties

 

27,615

        28,830

Trade and other receivables

 

300

             300

Retirement benefit asset

 

25,545

        26,434

Derivative financial instruments

 

129

             2,640

Other investments

 

5

                5

Total non-current assets

 

273,606

       278,691

CURRENT ASSETS

 

 


Inventories

 

9,187

7,173

Trade and other receivables

 

25,959

19,934

Derivative financial instruments

 

64

483

Cash and cash equivalents

 

47,429

47,397

Total current assets

 

82,639

74,987

Total assets

 

356,245

353,678

LIABILITIES

 

 


Trade and other payables

 

19,459

21,043

Current tax liabilities

 

3,301

2,088

Lease liabilities

 

81

69

Derivative financial instruments

 

536

330

Total current liabilities

 

23,377

23,530

NET CURRENT ASSETS

 

59,262

51,457

NON-CURRENT LIABILITIES

 

 


Trade and other payables

 

26,249

25,162

Lease liabilities

 

3,193

3,251

Derivative financial instruments

 

225

-

Financial liabilities - preference shares

 

235

235

Borrowings

 

30,000

30,000

Deferred tax liabilities

 

31,422

32,126

Total non-current liabilities

 

91,324

90,774

Total liabilities

 

114,701

114,304

Net assets

 

241,544

239,374

EQUITY

 

 


Share capital

 

1,532

1,532

Revaluation reserve

 

5,270

5,270

ESOP reserve

 

(35)

(38)

Other reserves

 

(455)

2,234

Retained earnings

 

235,100

230,232

Equity attributable to owners of the company

 

241,412

239,230

Non-controlling interests

 

132

144

Total equity

 

241,544

239,374

 

Consolidated Statement of Changes in Equity for the year ended 30 September 2023

 

 

Share

 Revaluation

 ESOP

Other

Retained

Total

 

capital

 reserve

reserve

reserves*

earnings

 


£ 000

£ 000

£ 000

£ 000

£ 000

£ 000

At 1 October 2022

1,532

5,270

(38)

2,234

230,232

239,230

Total recognised income and expense for the year

       -  

                 -  

          -  

         -  

11,280

11,280

Amortisation of employee share option scheme

       -  

                 -  

3

         -  

            -  

3

Movement on hedges (net of tax)

       -  

                 -  

          -  

(2,689)

            -  

(2,689)

Actuarial gain on defined benefit scheme (net of tax)

       -  

                 -  

          -  

         -  

(652)

(652)

Equity dividends

       -  

                 -  

          -  

         -  

(5,760)

(5,760)

At 30 September 2023

1,532

5,270

(35)

(455)

235,100

241,412

 

 

 

 

 

 

 


 

 

 

 

 

 

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

*'Other reserves' represents the foreign currency hedging reserve.

 

Consolidated Statement of Cash Flows for the year ended 30 September 2023

 

 

 

2023

2022

 


£000

£000

 


 


CASH FLOWS FROM OPERATING ACTIVITIES


 




 


Operating profit


14,522

11,906

Depreciation and amortisation charges


11,581

11,094

Share based reward charges


3

41

Loss/(gain) on revaluation of investment property


1,215

(1,020)

Pension operating charge less contributions paid


73

1,303

Deemed interest income from hire purchase arrangements


183

50

Profit on sale of property, plant and equipment


(3)

(7)

Operating cash flows before movement in working capital


27,574

23,367

Working capital adjustments:


 


      Increase in inventories


(2,014)

(257)

      Increase in trade and other receivables


(3,835)

(1,926)

      (Decrease)/increase in trade and other payables


(617)

4,444

Net movement in working capital


(6,466)

2,261

Interest paid


(1,368)

(1,380)

Preference dividends paid


(9)

(9)

Income taxes paid


(2,089)

(3,020)

Net cash flows from operating activities


17,642

21,219



 


CASH FLOWS FROM INVESTING ACTIVITIES

 

 


Purchase of property, plant and equipment

 

(13,046)

(11,001)

Investment in intangible assets

 

(92)

(319)

Deposit interest received


1,688

168

Net proceeds from disposal of fixed assets


3

7

Net cash flows used in investing activities


(11,447)

(11,145)



 


CASH FLOWS FROM FINANCING ACTIVITIES


 


Equity dividends paid


(5,760)

(5,453)

Dividends paid to non-controlling interest


(165)

(154)

Repayment of lease liabilities


(242)

(206)

Net cash flows used in financing activities


(6,167)

(5,813)

 


 


Net increase in cash and cash equivalents

 

28

4,261



 


Cash and cash equivalents at beginning of year


47,397

43,136

Effect of foreign exchange rates


4

-

Cash and cash equivalents at end of year


47,429

47,397

Notes to the accounts

Year ended 30 September 2023

 

1.   Basis of Preparation

The consolidated financial statements of Jersey Electricity plc, for the year ended 30 September 2023, 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 2022 annual report and accounts and the 31 March 2023 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:

 

2023

2023

2023

 

2022

2022

2022

 

External

Internal

Total

 

External

Internal

Total

 

£000

£000

£000

 

£000

£000

£000

Revenue

 







Energy - arising during the course of ordinary business

97,053

89

97,142


89,683

100

89,783

Building Services

3,349

831

4,180


3,365

780

4,145

Retail

18,514

56

18,570


18,695

41

18,736

Property

2,350

641

2,991


2,345

639

2,984

Other*

3,812

466

4,278


3,333

625

3,958


125,078

2,083

127,161


117,421

2,185

119,606

Intergroup elimination

 

 

(2,083)




(2,185)

Revenue

 

 

125,078




117,421

 

 

 

 





Operating profit

 

 

 





Energy profit before rebate of past energy costs**

 

 

9,329




7,502

Rebate of past energy costs

 

 

3,593




-

Energy profit including rebate

 

 

12,922




7,502

Building Services

 

 

162




266

Retail

 

 

917




1,174

Property

 

 

1,149




1,436

Other*

 

 

587




508

 

 

 

15,737




10,886

Revaluation of investment properties

 

 

(1,215)




1,020

Operating profit

 

 

14,522




11,906

 

 

 

 





*Other segment includes the divisions of Jersey Energy, 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.

 

Revenues disclosed by the business segments above are recognised both on a point in time and over time basis. The treatment of revenue recognition in accordance with IFRS 15 is detailed for each of these business segments in note 1 in the full version of these financial statements.

 

**During the year ended 30 September 2023, the Company received a credit which has been disclosed as 'Rebate of past energy costs - non-recurring item' within gross profit in these financial statements. This was a rebate from the French network operator (RTE) in respect of payments made in 2022 which they were instructed to return to us as part of a regulatory decision due to volatility in the energy marketplace during 2022. Due to the unknown timing, amount and eligibility regarding this reimbursement, it was not possible to disclose this rebate in relation to the prior year ending 30 September 2022.

 

 

 

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