TIDMJEL

RNS Number : 9825L

Jersey Electricity PLC

18 May 2022

Jersey Electricity plc

Interim Management Report

for the six months ended 31 March 2021

The Board approved at a meeting on 18 May 2022 the Interim Management Report for the six months ended 31 March 2022 and declared an interim dividend of 7.60p compared to 7.20p for 2021. The dividend will be paid on 21 June 2022 to those shareholders registered in the records of the Company at the close of business on 3 June 2021.

The Interim Management Report is attached and will be available to the public on the Company's website www.jec.co.uk/investors/figures-reports .

The Interim Management Report for 2021 has not been audited, or reviewed, by our external auditors, nor have the results for the equivalent period in 2021. The results for the year ended 30 September 2021 were extracted from the statutory accounts. The auditor has reported on those accounts and their report was unmodified.

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

18 May 2022

The Powerhouse,

PO Box 45,

Queens Road,

St Helier,

Jersey JE4 8NY

Directors' Statement

Financial Summary

 
                                                                                                                                                                                                                 6 months                                                                                             6 months 
                                                                                                                                                                                                                     2022                                                                                                 2021 
===================================================================================================================  ====================================================================================================  =================================================================================================== 
                                                                                           Electricity Sales in kWh                                                                                                359.4m                                                                                               374.9m 
===================================================================================================================  ====================================================================================================  =================================================================================================== 
                                                                                           Revenue                                                                                                               GBP65.0m                                                                                             GBP67.1m 
===================================================================================================================  ====================================================================================================  =================================================================================================== 
                                                                                           Profit before tax                                                                                                      GBP7.0m                                                                                             GBP10.5m 
===================================================================================================================  ====================================================================================================  =================================================================================================== 
                                                                                           Earnings per share                                                                                                      17.78p                                                                                               27.00p 
===================================================================================================================  ====================================================================================================  =================================================================================================== 
                                                                                           Final dividend paid per                                                                                                 10.20p                                                                                                9.70p 
                                                                                            ordinary share 
===================================================================================================================  ====================================================================================================  =================================================================================================== 
                                                                                           Proposed interim                                                                                                         7.60p                                                                                                7.20p 
                                                                                            dividend per ordinary 
                                                                                            share 
===================================================================================================================  ====================================================================================================  =================================================================================================== 
 

COVID-19 - impact on trading performance

The pandemic continued throughout the period since the end of our last financial year but has not materially impacted our overall trading performance even though COVID-19 cases have remained relatively high. It has however influenced comparisons with the same trading period in the last financial year. In our Energy business we saw lower unit sales, and although the year-on-year fall is due largely to milder weather, there is an element attributable to a decrease in domestic consumption associated with less home-working, than in the same period last year. Our Retail business has also seen revenue fall from record levels as the trading position has normalised with customers starting to travel more widely resulting in spending power returning to pre-COVID levels.

Energy - security of supply and price volatility

In our 2021 Annual Report we highlighted the escalation of political issues between the EU and the UK on fishing rights between Jersey and France. This tension appears to have largely dissipated for the moment, but we maintain a watching brief as it has potential to re-surface in the future. We saw unprecedented volatility in energy markets in the second half of 2021 and this has further intensified throughout 2022 with the Russian invasion of Ukraine exacerbating uncertainty and prolonging high prices. We continue to monitor developments on both security of supply and volatility in energy markets. We have strong relationships with our French partners, EDF (as supplier) and RTE (as network operator) that span more than 35 years and the Company benefits from legal and contractual arrangements which cover imported electricity supplies to the end of 2027.

Hedging of electricity and foreign exchange, and customer tariffs

We continue to focus on delivering secure, low-carbon electricity supplies and our goal is to maintain relative stability in customer tariffs, despite volatility in both European wholesale electricity and foreign exchange markets. This is however extremely challenging in the current climate. Our electricity purchases are materially, but not fully, hedged for the period 2022-24. We also have around one third of our expected 2025-27 requirements hedged at largely fixed prices. As these are contractually denominated in the Euro, we also enter into forward foreign currency contracts, on a three-year rolling basis, to reduce the volatility on our cost base, and to aid tariff planning. In January 2022 we implemented a 4% rise in customer tariffs.

Given the continued upward pressure on wholesale prices flowing into costs, we have recently announced a 5% tariff increase from 1 July 2022 and an intention to implement a further 5% rise from 1 January 2023. Even with these rises, the prices payable by our customers continue to benchmark well against other jurisdictions. From 1 April 2022, the "default maximum tariff" applied by Ofgem (the UK electricity regulator) to cap domestic prices payable in the UK is set at a level that is nearly double the current average standard domestic tariff in Jersey, and this UK default maximum tariff is expected to materially rise again from 1 October 2022. Other UK Islands are also implementing material rises in customer tariffs with the Isle of Man having instigated a 15% increase on 1 April 2022 and a further 15% rise from 1 July 2022. Guernsey Electricity has also announced that they will increase electricity tariffs by 9% from the beginning of July 2022, subject to regulatory approval.

Overall trading performance in the 6 months to 31 March

Group revenue, at GBP65.0m, was 3% lower for the first half of 2022 compared with GBP67.1m for the same period last year mainly due to a fall in both Energy and Retail revenue. Profit before tax at GBP7.0m was GBP3.5m lower than 2021 primarily due to a material fall in profit in our Energy business. Cost of sales at GBP42.9m was GBP1.1m higher than last year with the rise in wholesale energy costs being the main factor. Operating expenses at GBP14.4m were GBP0.3m higher than last year due mainly to general inflationary pressures. The taxation charge in the period of GBP1.5m was GBP0.7m lower than last year due to decreased profits. Earnings per share, at 17.78p, were below 27.00p in 2021 due to lower profits. Net cash on the balance sheet, which comprises borrowings less cash and cash equivalents, at 31 March 2022, was GBP13.1m compared with GBP5.9m at this time last year (and GBP13.1m of net cash at our last year end on 30 September 2021).

Energy performance

Unit sales of electricity fell 4% from 375m to 359m kWh, compared with the same period last year. We experienced milder weather in the first half of this financial year, with the temperature in all months being above the long-term average and five months being warmer than the corresponding period in the previous year. There was also lower domestic consumption associated with less home-working linked to the pandemic compared with last year. Revenue in our Energy business at GBP50.8m was GBP1.2m lower than in 2021 with the year-on-year decrease in unit sales more than offsetting the 4% tariff rise in January 2022. Operating profit at GBP5.9m was GBP3.2m lower than the corresponding period last year due to the decreased revenue and higher costs, including increased wholesale import prices, recruitment of new employees, and other inflationary pressures. We imported 98% of our on-island requirement from France and 2% from the Energy from Waste plant, owned by the Government of Jersey. Only 0.2% (less than 1m units) of electricity was generated in Jersey using our traditional oil-fired plant (which is run during testing regimes) and we also saw a rising trend in our solar generation albeit still at a low level compared with overall requirements. These importation and generation levels were materially consistent with the same period last year albeit the imports from the Energy from Waste plant were around half the normal level as maintenance work was being performed for an extended time in this period.

Non-Energy performance

Year-on-year revenue in our Powerhouse retail business, fell by 11% to GBP9.5m (2021: GBP10.7m) and profits fell by GBP0.4m to GBP0.7m as the business returned to more normalised levels of trading post last year's strong trading performance which was associated with factors including a substantial proportion of customers having more disposable income due to COVID-19 travel restrictions. Profit from our Property portfolio at GBP0.7m was GBP0.1m lower than last year, due to additional maintenance costs. JEBS, our building services unit, saw external revenue rise GBP0.2m to GBP1.8m and profitability rise to GBP0.1m from breakeven level last year. Our remaining business units produced profits of GBP0.3m at the same level as 2021.

Liquidity and cashflow

No net cash was generated in the period (2021: GBP0.4m) post the continued investment in infrastructure of GBP6.0m (2021: GBP4.8m). The net cash figure of GBP5.9m at 31 March 2021 moved to a net cash figure of GBP13.1m at 31 March 2022 (being at the same level as 30 September 2021). Net cash consists of GBP30.0m of long-term debt offset by cash and cash equivalents of GBP43.1m.

Pension scheme

The defined benefit pension scheme surplus (without deduction of deferred tax) on our balance sheet at 31 March 2022 stood at GBP22.0m, compared with a surplus of GBP18.8m at 30 September 2021 (and a surplus of GBP17.1m at 31 March 2021). Since the last financial year end, scheme liabilities have materially decreased by approximately GBP13m (to GBP129m). This fall was primarily due to an increase to the discount rate assumptions from 2.1% at the last financial year end to 2.8% at 31 March 2022 associated with a rise in UK AA corporate bond yields in the interim. Assets in the Scheme fell by around GBP10m (to GBP151m). The defined benefit scheme has been closed to new members since 2013 and the next triennial valuation of the scheme, as at 31 December 2021, is currently being performed by Aon and the results will be reported in our 2022 Annual Report.

Dividend

Your Board proposes to pay an interim net dividend for 2022 of 7.60p (2021: 7.20p). As stated in previous years, we continue to aim to deliver sustained real growth each year over the medium-term. The final dividend for 2021 of 10.20p, paid in late March in respect of the last financial year, was an increase of 5% on the previous year.

Risk and outlook

The principal risks and uncertainties identified in our last Annual Report, issued in January 2022, have not materially altered in the interim period. We, however, highlighted earlier in this report, the current unprecedented volatility in energy markets. This continues to be closely monitored by the Board as this adds unpredictability into the price we will pay for any unhedged elements of our future electricity costs. Your Board is satisfied that Jersey Electricity plc has sufficient resources to continue in operation for the foreseeable future, a period of not less than 12 months from the date of approval of this report. Accordingly, we continue to adopt the going concern basis in preparing the condensed financial statements.

Responsibility statement

We confirm to the best of our knowledge:

(a) the condensed set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting';

(b) the Interim Directors Statement includes a fair review of the information required by the Disclosure and Transparency Rule DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and

(c) the Interim Directors Statement includes a fair review of the information required by the Disclosure and Transparency Rule DTR 4.2.8R (disclosure of related party transactions and changes therein); and

this half yearly interim report looks at certain forward looking statements with respect to the operations, performance and financial condition of the Group. By their nature, these statements involve uncertainty since future events and circumstances can cause results and developments to differ materially from those anticipated.The forward-looking statements reflect knowledge and information available at the date of preparation of this half yearly financial report and the Company undertakes no obligation to update these forward-looking statements. Nothing in this half yearly financial report should be construed as a profit forecast.

   C.J. AMBLER - Chief Executive           M.P. MAGEE - Finance Director 

18 May 2022

Investor timetable 2022

 
                                                                                           3 June Record date for 
                                                                                           interim ordinary 
                                                                                           dividend 
====================================================================================================================== 
    21 June Interim ordinary dividend 
     for year ending 
     30 September 2022 
====================================================================================================================== 
                                                                                           1 July Payment date for 
                                                                                           preference 
                                                                                           share dividends 
====================================================================================================================== 
                                                                                           20 December Announcement of 
                                                                                           full 
                                                                                           year results 
====================================================================================================================== 
 

Condensed Consolidated Income Statement (Unaudited)

 
                                                                                                                                                                                                                                                                                                               Six        Six months                                                                                                      Year 
                                                                                                                                                                                                                                                                                                            months 
                                                                                                                                                                                                                                                                                                             ended               ended             ended 
                                                                                                                                                                                                                                                                                                          31 March           31 March                                                                                                30 
                                                                                                                                                                                                                                                                                                                                                                                                                                     September 
                                                                                                                                                                                                        Note                                                                                                  2022                2021                                                                                                    2021 
                                                                                                                                                                                                                                                                                                            GBP000                GBP000                                                                                                GBP000 
                                                                                           Revenue 
===========================================================================================================  ================================================================================================  ===================================================================================================  ====================  ==================================================================================================== 
                                                                                           Cost of sales         2                                                                                                                                                                                          64,995              67,098           118,608 
                                                                                           Gross profit                                                                                                                                                                                                   (42,859)             (41,743)          (74,159) 
                                                                                                                                                                                                                                                                                                            22,136              25,355            44,449 
                                                                                           Profit on revaluation of investment 
                                                                                            properties                                                                                                                                                                                                           -                     -                                                                                                 6,055 
                                                                                           Operating expenses                                                                                                                                                                                             (14,412)             (14,108)          (29,991) 
                                                                                           Group operating       2                                                                                                                                                                                           7,724              11,247            20,513 
                                                                                           profit 
                                                                                           Finance income                                                                                                                                                                                                       10                   26                                                                                                    112 
                                                                                           Finance costs                                                                                                                                                                                                     (764)                (779)           (1,540) 
                                                                                           Profit from operations before taxation                                                                                                                                                                            6,970              10,494            19,085 
                                                                                           Taxation              3                                                                                                                                                                                         (1,464)              (2,162)           (2,794) 
                                                                                           Profit from operations after taxation 
                                                                                            Attributable to:                                                                                                                                                                                                 5,506                8,332           16,291 
=============================================================================================================================================================================================================  ===================================================================================================  ====================  ==================================================================================================== 
                                                                                           Owners of the Company                                                                                                                                                                                             5,488                8,274           16,155 
                                                                                           Non-controlling                                                                                                                                                                                                      58                   58                                                                                                    136 
                                                                                           interests 
                                                                                           Profit for the period/year attributable 
                                                                                            to the equity holders of the parent 
                                                                                            Company 
                                                                                            Earnings per share                                                                                                                                                                                               5,506                8,332           16,291 
=============================================================================================================================================================================================================  ===================================================================================================  ====================  ==================================================================================================== 
                                                                                           - basic and diluted                                                                                                                                                                                              17.78p              27.00p            52.73p 
 

Condensed Consolidated Statement of Comprehensive Income (Unaudited)

 
                                                                                                                                                                                                                               Six        Six months                                                                                                      Year 
                                                                                                                                                                                                                            months 
                                                                                                                                                                                                                             ended               ended             ended 
                                                                                                                                                                                                                                31           31 March                                                                                                30 
                                                                                                                                                                                                                             March                                                                                                                   September 
                                                                                                                                                                                                                              2022                2021                                                                                                    2021 
                                                                                                                                                                                                                            GBP000                GBP000                                                                                                GBP000 
                                                                                           Profit for the period/year 
                                                                                            Items that will not be reclassified 
                                                                                            subsequently 
                                                                                            to profit or loss:                                                                                                               5,506                8,332           16,291 
===============================================================================================================================  =================================================================================================  ====================  ==================================================================================================== 
                                                                                           Actuarial gain on defined benefit 
                                                                                            scheme                                                                                                                           3,805              10,499            14,803 
                                                                                           Income tax relating to items not 
                                                                                            reclassified                                                                                                                     (761)              (2,100)           (2,961) 
 
                                                                                                                   Items that 
                                                                                                                   may be 
                                                                                                                   reclassified 
                                                                                                                   subsequently 
                                                                                                                   to profit or 
                                                                                                                   loss:                                                                                                     3,044                8,399           11,842 
===============================================================================================================================  =================================================================================================  ====================  ==================================================================================================== 
                                                                                           Fair value loss on cash flow hedges                                                                                               (118)              (4,194)           (3,116) 
                                                                                           Income tax relating to items that                                                                                                    24                  839                                                                                                    623 
                                                                                           may 
                                                                                           be reclassified 
                                                                                                                                                                                                                              (94)              (3,355)           (2,493) 
                                                                                           Total comprehensive income for the 
                                                                                            period/year                                                                                                                      8,456              13,376            25,640 
===============================================================================================================================  =================================================================================================  ====================  ==================================================================================================== 
                                                                                           Attributable to: 
===============================================================================================================================  =================================================================================================  ====================  ==================================================================================================== 
                                                                                           Owners of the Company                                                                                                             8,398              13,318            25,504 
                                                                                           Non-controlling interests                                                                                                            58                   58                                                                                                    136 
                                                                                                                                                                                                                             8,456              13,376            25,640 
 

Condensed Consolidated Balance Sheet (Unaudited)

 
                                                                                                                                                                                                                                                                                                         As at                 As at                                                                                                 As at 
                                                                                                                                                                                                                                                                                                            31           31 March                                                                                                30 
                                                                                                                                                                                                                                                                                                         March                                                                                                                   September 
                                                                                                                                                                                                     Note                                                                                                 2022                2021                                                                                                    2021 
                                                                                                                                                                                                                                                                                                        GBP000                GBP000                                                                                                GBP000 
                                                                                           Non-current 
                                                                                           assets 
========================================================================================================  ================================================================================================  ==================================================================================================  ====================  ==================================================================================================== 
                                                                                           Intangible assets                                                                                                                                                                                               790                  622                                                                                                    933 
                                                                                           Property, plant and equipment                                                                                                                                                                               216,138             216,787           216,550 
                                                                                           Right of use                                                                                                                                                                                                  3,301                2,849                                                                                                  3,113 
                                                                                           assets 
                                                                                           Investment properties                                                                                                                                                                                        27,810              21,755            27,810 
                                                                                           Trade and                                                                                                                                                                                                       303                  300                                                                                                    308 
                                                                                           other 
                                                                                           receivables 
                                                                                           Retirement benefit surplus                                                                                                                                                                                   21,991              17,064            18,761 
                                                                                           Derivative         6                                                                                                                                                                                             79                     -                                                                                                   108 
                                                                                           financial 
                                                                                           instruments 
                                                                                           Other                                                                                                                                                                                                             5                     5                                                                                                     5 
                                                                                           investments 
                                                                                           Total non-current assets 
                                                                                            Current assets                                                                                                                                                                                             270,417             259,382           267,588 
==========================================================================================================================================================================================================  ==================================================================================================  ====================  ==================================================================================================== 
                                                                                           Inventories                                                                                                                                                                                                   6,907                5,561                                                                                                  6,909 
                                                                                           Trade and other receivables                                                                                                                                                                                  23,375              25,461            18,000 
                                                                                           Cash and cash equivalents                                                                                                                                                                                    43,110              35,882            43,136 
                                                                                           Total current assets                                                                                                                                                                                         73,392              66,904            68,045 
                                                                                           Total assets 
                                                                                            Current liabilities                                                                                                                                                                                        343,809             326,286           335,633 
==========================================================================================================================================================================================================  ==================================================================================================  ====================  ==================================================================================================== 
                                                                                           Trade and other payables                                                                                                                                                                                     19,558              18,100            18,373 
                                                                                           Lease                                                                                                                                                                                                            73                   66                                                                                                     72 
                                                                                           liabilities 
                                                                                           Derivative         6                                                                                                                                                                                            677                  818                                                                                                  1,256 
                                                                                           financial 
                                                                                           instruments 
                                                                                           Current tax                                                                                                                                                                                                   2,613                3,604                                                                                                  3,020 
                                                                                           liabilities 
                                                                                           Total current liabilities                                                                                                                                                                                    22,921              22,588            22,721 
                                                                                           Net current assets                                                                                                                                                                                           50,471              44,316            45,324 
==========================================================================================================================================================================================================  ==================================================================================================  ====================  ==================================================================================================== 
                                                                                           Non-current 
                                                                                           liabilities 
========================================================================================================  ================================================================================================  ==================================================================================================  ====================  ==================================================================================================== 
                                                                                           Trade and other payables                                                                                                                                                                                     24,762              23,701            24,006 
                                                                                           Lease                                                                                                                                                                                                         3,247                2,847                                                                                                  3,035 
                                                                                           liabilities 
                                                                                           Retirement                                                                                                                                                                                                      575                     -                                                                                                     - 
                                                                                           benefit 
                                                                                           deficit 
                                                                                           Derivative         6                                                                                                                                                                                          1,542                2,282                                                                                                    874 
                                                                                           financial 
                                                                                           instruments 
                                                                                           Financial                                                                                                                                                                                                       235                  235                                                                                                    235 
                                                                                           liabilities - 
                                                                                           preference 
                                                                                           shares 
                                                                                           Borrowings                                                                                                                                                                                                   30,000              30,000            30,000 
                                                                                           Deferred tax liabilities                                                                                                                                                                                     30,353              28,313            29,321 
                                                                                           Total non-current liabilities                                                                                                                                                                                90,139              87,378            87,471 
                                                                                           Total liabilities                                                                                                                                                                                           113,060             109,966           110,192 
                                                                                           Net assets 
                                                                                            Equity                                                                                                                                                                                                     230,749             216,320           225,441 
==========================================================================================================================================================================================================  ==================================================================================================  ====================  ==================================================================================================== 
                                                                                           Share capital                                                                                                                                                                                                 1,532                1,532                                                                                                  1,532 
                                                                                           Revaluation                                                                                                                                                                                                   5,270                5,270                                                                                                  5,270 
                                                                                           reserve 
                                                                                           ESOP reserve                                                                                                                                                                                                   (58)                  (99)                                                                                                  (79) 
                                                                                           Other reserves                                                                                                                                                                                              (1,712)              (2,480)           (1,618) 
                                                                                           Retained earnings                                                                                                                                                                                           225,545             211,960           220,178 
                                                                                           Equity attributable to the owners 
                                                                                            of the Company                                                                                                                                                                                             230,577             216,183           225,283 
                                                                                           Minority                                                                                                                                                                                                        172                  137                                                                                                    158 
                                                                                           interest 
                                                                                           Total equity                                                                                                                                                                                                230,749             216,320           225,441 
 

Condensed Consolidated Statement of Changes in Equity (Unaudited)

 
                                                                                                            Share                                                                                                                                                                                    Revaluation                                                                                                ESOP                                                                                                *Other                                               Retained                                                                                                                                           Total 
                                                                                                             Capital                                                                                                                                                                                    Reserve                                                                                                Reserve                                                                                             Reserves                                               Earnings                                                                                                                                        Reserve 
                                                                                                            GBP000                                                                                                                                                                                      GBP000                                                                                                 GBP000                                                                                               GBP000                                                                                             GBP000                                                                                              GBP000 
                                                                                           At 1 October 
                                                                                            2021             1,532                                                                                                                                                                                       5,270                                                                                                  (79)                                                                                               (1,618)                                                                                            220,178                                                                                             225,283 
                                                                                           Total                                                                                                      -                                                       -                                                                                                      -                                                                                                     -                                                                                                                                            5,448                                                                                               5,448 
                                                                                           recognised 
                                                                                           income 
                                                                                           and expense 
                                                                                           for the 
                                                                                           period 
                                                                                           Amortisation                                                                                               -                                                      -                                                                                                      21                                                                                                     -                                                                                                                                                -                                                                                                  21 
                                                                                           of employee 
                                                                                           share scheme 
                                                                                           Movement on                                                                                                -                                                       -                                                                                                      -                                                                                                  (94)                                                                                                                                                -                                                                                                (94) 
                                                                                           hedges (net 
                                                                                           of tax) 
                                                                                           Actuarial                                                                                                  -                                                       -                                                                                                      -                                                                                                     -                                                                                                                                            3,044                                                                                               3,044 
                                                                                           gain on 
                                                                                           defined 
                                                                                           benefit 
                                                                                           scheme (net 
                                                                                           of 
                                                                                           tax) 
                                                                                           Equity 
                                                                                            dividends 
                                                                                            paid                                                                                                       -                                                       -                                                                                                      -                                                                                                    -                                                                                                                                          (3,125)                                                                                             (3,125) 
                                                                                           As at 31         1,532                                                                                                                                                                                       5,270                                                                                                   (58)      (1,712)                                                                                                                                                                                     225,545                                                                                             230,577 
                                                                                           March 2022 
--------------------------------------------------------------------------------------------------------   ---------------------------------------------------------------------------------------------  -------------------------------------------------------------------------------------------------------  ---------------------------------------------------------------------------------------------------  ---------------------------------------------------------------------------------------------------  ------------------------------------------------------------------------------------------------  -------------------------------------------------------------------------------------------------- 
                                                                                           At 1 October     1,532                                                                                                                                                                                       5,270                                                                                                  (120)                                                     875                                                                                                                                          197,359                                                                                             204,916 
                                                                                           2020 - 
                                                                                           restated 
                                                                                           Total                                                                                                      -                                                       -                                                                                                      -                                                                                                     -                                                                                                                                            8,274                                                                                               8,274 
                                                                                           recognised 
                                                                                           income 
                                                                                           and expense 
                                                                                           for the 
                                                                                           period 
                                                                                           Funding of                                                                                                 -                                                      -                                                                                                      21                                                                                                     -                                                                                                                                                -                                                                                                  21 
                                                                                           employee 
                                                                                           share 
                                                                                           option scheme 
                                                                                           Movement on 
                                                                                            hedges (net 
                                                                                            of tax)                                                                                                    -                                                       -                                                                                                      -                                                                                                                                            (3,355)                                                                                                  -                                                                                             (3,355) 
                                                                                           Actuarial                                                                                                  -                                                       -                                                                                                      -                                                                                                     -                                                                                                                                            8,399                                                                                               8,399 
                                                                                           gain on 
                                                                                           defined 
                                                                                           benefit 
                                                                                           scheme (net 
                                                                                           of 
                                                                                           tax) 
                                                                                           Equity 
                                                                                            dividends 
                                                                                            paid                                                                                                       -                                                       -                                                                                                      -                                                                                                    -                                                                                                                                          (2,972)                                                                                             (2,972) 
                                                                                           As at 31         1,532                                                                                                                                                                                       5,270                                                                                                   (99)      (2,480)                                                                                                                                                                                     211,060                                                                                             215,283 
                                                                                           March 2021 - 
                                                                                           restated 
--------------------------------------------------------------------------------------------------------   ---------------------------------------------------------------------------------------------  -------------------------------------------------------------------------------------------------------  ---------------------------------------------------------------------------------------------------  ---------------------------------------------------------------------------------------------------  ------------------------------------------------------------------------------------------------  -------------------------------------------------------------------------------------------------- 
                                                                                           At 1 October     1,532                                                                                                                                                                                       5,270                                                                                                  (120)                                                     875                                                                                                                                          197,359                                                                                             204,916 
                                                                                           2020 - 
                                                                                           restated 
                                                                                           Total 
                                                                                            recognised 
                                                                                            income 
                                                                                            and expense 
                                                                                            for the 
                                                                                            period                                                                                                     -                                                       -                                                                                                      -                                                                                                    -                                                                                                                                           16,155                                                                                              16,155 
                                                                                           Amortisation                                                                                               -                                                      -                                                                                                      41                                                                                                     -                                                                                                                                                -                                                                                                  41 
                                                                                           of employee 
                                                                                           share scheme 
                                                                                           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 
                                                                                            paid                                                                                                       -                                                       -                                                                                                      -                                                                                                    -                                                                                                                                          (5,178)                                                                                             (5,178) 
                                                                                           At 30             1,532                                                                                                                                                                                       5,270                                                                                                  (79)      (1,618)                                                                                                                                                                                     220,178                                                                                             225,283 
                                                                                            September 
                                                                                            2021 
---------------------------------------------------------------------------------------------------------   ---------------------------------------------------------------------------------------------  -------------------------------------------------------------------------------------------------------  --------------------------------------------------------------------------------------------------  ---------------------------------------------------------------------------------------------------  ------------------------------------------------------------------------------------------------  -------------------------------------------------------------------------------------------------- 
 

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

Condensed Consolidated Cash Flow Statement (Unaudited)

 
                                                                                                                                                                                                                    Six        Six months                                                                                                      Year 
                                                                                                                                                                                                                 months 
                                                                                                                                                                                                                  ended               ended             ended 
                                                                                                                                                                                                                     31           31 March                                                                                                30 
                                                                                                                                                                                                                  March                                                                                                                   September 
                                                                                                                                                                                                                   2022                2021                                                                                                    2021 
                                                                                                                                                                                                                 GBP000                GBP000                                                                                                GBP000 
                                                                                           Cash flows from 
                                                                                           operating activities 
===================================================================================================================  ==================================================================================================  ====================  ==================================================================================================== 
                                                                                           Operating profit before 
                                                                                            exceptional items 
                                                                                            Adjustments to add 
                                                                                            back/(deduct) non-cash 
                                                                                            items and items 
                                                                                            disclosed elsewhere on 
                                                                                            the CFS:                                                                                                              7,724              11,247            20,513 
===================================================================================================================  ==================================================================================================  ====================  ==================================================================================================== 
                                                                                           Depreciation and 
                                                                                            amortisation charges                                                                                                  5,525                5,363           10,924 
                                                                                           Share-based reward                                                                                                        21                   21                                                                                                     41 
                                                                                           charges 
                                                                                           (Gain)/loss on 
                                                                                            revaluation of 
                                                                                            investment 
                                                                                            property                                                                                                                  -                     -          (6,055) 
                                                                                           Pension operating charge                                                                                                 462                  838                                                                                                  3,357 
                                                                                           less contributions 
                                                                                           paid 
                                                                                           (Profit)/loss on sale of                                                                                                 (1)                   (4)                                                                                                   (6) 
                                                                                           property, plant 
                                                                                           and equipment 
                                                                                           Operating cash flows 
                                                                                            before movement in 
                                                                                            working capital 
                                                                                            Working capital 
                                                                                            adjustments:                                                                                                         13,731              17,465            28,774 
===================================================================================================================  ==================================================================================================  ====================  ==================================================================================================== 
                                                                                              Decrease/(increase)                                                                                                     2                  467                                                                                                  (881) 
                                                                                              in inventories 
                                                                                              Increase in 
                                                                                               receivables                                                                                                      (5,370)              (8,816)           (2,263) 
                                                                                              Increase in payables                                                                                                3,127                1,267                                                                                                    904 
                                                                                           Net movement in working 
                                                                                            capital                                                                                                             (2,241)              (7,082)           (2,240) 
                                                                                           Interest paid                                                                                                          (692)                (709)           (1,395) 
                                                                                           Preference dividends                                                                                                     (4)                   (4)                                                                                                   (9) 
                                                                                           paid 
                                                                                           Income taxes paid                                                                                                    (1,510)              (1,371)           (2,742) 
                                                                                           Net cash flows from 
                                                                                            operating activities                                                                                                  9,284                8,299           22,388 
===================================================================================================================  ==================================================================================================  ====================  ==================================================================================================== 
                                                                                           Cash flows from 
                                                                                           investing activities 
===================================================================================================================  ==================================================================================================  ====================  ==================================================================================================== 
                                                                                           Purchase of property, 
                                                                                            plant and equipment                                                                                                 (6,041)              (4,563)           (8,513) 
                                                                                           Investment in intangible                                                                                                   -                (232)                                                                                                  (805) 
                                                                                           assets 
                                                                                           Deposit interest                                                                                                          10                   26                                                                                                    112 
                                                                                           received 
                                                                                           Net proceeds from                                                                                                          1                     4                                                                                                     6 
                                                                                           disposal of fixed assets 
                                                                                           Net cash flows used in 
                                                                                            investing activities                                                                                                (6,030)              (4,765)           (9,200) 
===================================================================================================================  ==================================================================================================  ====================  ==================================================================================================== 
                                                                                           Cash flows from 
                                                                                           financing activities 
===================================================================================================================  ==================================================================================================  ====================  ==================================================================================================== 
                                                                                           Equity dividends paid                                                                                                (3,125)              (2,972)           (5,178) 
                                                                                           Dividends paid to                                                                                                       (45)                  (45)                                                                                                 (101) 
                                                                                           non-controlling interest 
                                                                                           Repayment of lease                                                                                                     (103)                  (98)                                                                                                 (297) 
                                                                                           liabilities 
                                                                                           Net cash flows used in 
                                                                                            financing activities                                                                                                (3,273)              (3,115)           (5,576) 
                                                                                           Net (decrease)/increase                                                                                                 (19)                  419                                                                                                  7,612 
                                                                                           in cash and cash 
                                                                                           equivalents 
                                                                                           Cash and cash 
                                                                                            equivalents at the 
                                                                                            beginning 
                                                                                            of the year                                                                                                          43,136              35,520            35,520 
                                                                                           Effect of foreign                                                                                                        (7)                  (57)                                                                                                     4 
                                                                                           exchange rate changes 
                                                                                           Cash and cash 
                                                                                            equivalents at the end 
                                                                                            of 
                                                                                            the period                                                                                                           43,110              35,882            43,136 
 

Of the GBP43.1m cash and cash equivalents at 31 March 2022, GBP35.0m (30 September 2021: GBP35.0m) is on fixed term deposits with an average of 45 days remaining (30 September 2021: 79 days).

1 Accounting policies

Basis of preparation

The interim accounts for the six months ended 31 March 2022 have been prepared on the basis of the accounting policies set out in the 30 September 2021 annual report and accounts using accounting policies consistent with International Financial Reporting Standards (IFRS) as adopted by the EU and in accordance with IAS 34 'Interim Financial Reporting'. There have been no changes to accounting standards during the current financial period that has impacted the disclosures in these financial statements and the full year financial statements that will be prepared for 30 September 2022.

Jersey Electricity plc 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.

Prior year adjustment

As disclosed in the 30 September 2021 annual report and in accordance with IAS 8, GBP0.9m was written off and treated as a prior year adjustment against the 2019 financial year. Accordingly, the opening balances of retained earnings disclosed in the Consolidated Statement of Changes in Equity align with the revised opening balances shown in the 2021 annual report.

   2              Revenue and profit 

The contributions of the various activities of the Group to turnover and profit are listed below:

 
                                                                                                                                                                                                                                                             Six months ended                                                                                                                                                                                                                                                                                                                                         Six months ended                                                                                                                                                                                                                                                  Year ended 
                                                                                                                                                                                                                                                              31 March 2022                                                                                                                                                                                                                                                                                                                                             31 March 2021                                                                                                                                                                                                                                                30 September 2021 
                                                                                                                                                                                                         External                                                                                              Internal      Total                                                                                            External Internal                                                                                                                                                                                                                                                                                Total                                                                                              External                                                                                             Internal                                                  Total 
                                                                                                                     GBP000                                                                                                                                        GBP000                                                                                                                                            GBP000                                                GBP000                                                                                                                                          GBP000    GBP000                                                                                                                                                                                        GBP000                                                                                               GBP000                                                  GBP000 
                                                                                           Revenue 
============================================================================================================  ====================================================================================================  ====================================================================================================  =================================================================================================  =================================================================================================  =================================================================================================  ==================================================================================================  ===================================================================================================  ===================================================================================================  ================================================================================================== 
                                                                                           Energy                                                             50,782                                                                                                   49                                                  50,831                                                                                                                                                                                       51,969                                                                                               51                                                                                               52,020    89,780                                                                                                                                               100                                                  89,880 
                                                                                           Retail                   9,504                                                                                                                                              21                                                                                                                                             9,525                                                                                             10,725                                                                                               40                                                                                               10,765                                                                                               3,399                                                     645                                                                                                4,044 
                                                                                           Building Services        1,795                                                                                                                                             252                                                                                                                                             2,047                                                1,610                                                  299                                                                                               1,909                                                                                               19,808                                                                                                                                                68                                                  19,876 
                                                                                           Property                 1,159                                                                                                                                             320                                                                                                                                             1,479                                                1,133                                                  322                                                                                               1,455                                                                                                                                                                                          2,304                                                     645                                                                                                2,949 
                                                                                           Other*                   1,755                                                                                                                                             387                                                                                                                                             2,142                                                1,661                                                  425                                                                                               2,086                                                                                                                                                                                          3,317                                                     945                                                                                                4,262 
                                                                                                                                                              64,995                                                                                                1,029                                                  66,024                                                                                                                                                                                       67,098                                                                                             1,137                                                                                              68,235                                                                                              118,608                                                                                               2,403                                                                                               121,011 
                                                                                           Inter-segment                                                                                                                                                                                                                   (1,029)                                                                                                                                                                                                                                                                                                                                                                                            (1,137)                                                                                                                                                                                                             (2,403) 
                                                                                            elimination 
============================================================================================================  ====================================================================================================  ====================================================================================================  =================================================================================================  =================================================================================================  =================================================================================================  ==================================================================================================  ===================================================================================================  ===================================================================================================  ================================================================================================== 
                                                                                                                                                                                                                                                                                                                           64,995                                                                                                                                                                                                                                                                                                                                                                                             67,098                                                                                                                                                                                                                                                                                                        118,608 
                                                                                            Operating profit 
============================================================================================================  ====================================================================================================  ====================================================================================================  =================================================================================================  =================================================================================================  =================================================================================================  ==================================================================================================  ===================================================================================================  ===================================================================================================  ================================================================================================== 
                                                                                           Energy                                                                                                                                                                                                                                                                                                                     5,943                                                                                                                                                                                                         9,154                                                                                                                                                                                                                                                                                                         10,693 
                                                                                           Retail                                                                                                                                                                                                                                                                                                                       661                                                                                                                                                                                                         1,012                                                                                                                                                                                                                                                                                                             217 
                                                                                           Building Services                                                                                                                                                                                                                                                                                                            103                                                                                                                                                                                                                                                          3                                                                                                                                                                                                                                                                                                          1,533 
                                                                                           Property                                                                                                                                                                                                                                                                                                                     717                                                                                                                                                                                                                                                        783                                                                                                                                                                                                                                                                                                          1,393 
                                                                                           Other*                                                                                                                                                                                                                                                                                                                       300                                                                                                                                                                                                                                                        295                                                                                                                                                                                                                                                                622 
                                                                                           Operating profit 
                                                                                            before property 
                                                                                            revaluation/sale                                                                                                                                                                                                                                                                                                          7,724                                                                                                                                                                                                                                                                                                   11,247                                                                                                                                                                                                              14,458 
                                                                                           Gain on revaluation 
                                                                                            of investment 
                                                                                            properties                                                                                                                                                                                                                                                                                                                    -                                                                                                                                                                                                                                                          -                                                                                                                                                                                                                                                                                                          6,055 
                                                                                           Operating profit                                                                                                                                                                                                                                                                                                           7,724                                                                                                                                                                                                                                                                                                   11,247                                                                                                                                                                                                              20,513 
 

*Other segment includes Jersey Energy, Jendev (both divisions) and Jersey Deep Freeze Limited, the Group's sole subsidiary.

Materially, all the Groups operations are conducted within the Channel Islands. All transfers between divisions are on an armslength basis.

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 in the 30 September 2021 annual report.

3 Taxation

 
                                                                                                                                                                                                     Six         Six months                                                                                                      Year 
                                                                                                                                                                                                  months 
                                                                                                                                                                                                   ended               ended              ended 
                                                                                                                                                                                                      31           31 March                                                                                                 30 
                                                                                                                                                                                                   March                                                                                                                    September 
                                                                                                                                                                                                    2022                2021                                                                                                     2021 
                                                                                                                                                                                                  GBP000                GBP000                                                                                                 GBP000 
                                                                                           Current 
                                                                                            income 
                                                                                            tax                                                                                                    1,431                2,233                                                                                                   3,020 
                                                                                           Deferred                                                                                                   33                  (71)                                                                                                  (226) 
                                                                                            income 
                                                                                            tax 
                                                                                           Total                                                                                                   1,464                2,162                                                                                                   2,794 
                                                                                            income 
                                                                                            tax 
 

For the period ended 31 March 2022 and subsequent periods, the Company is taxable at the rate applicable to utility companies in Jersey of 20%. (2021: 20%).

4 Dividends paid and proposed

 
                                                                                                                                                                                                        Six        Six months                                                                                                      Year 
                                                                                                                                                                                                     months 
                                                                                                                                                                                                      ended               ended             ended 
                                                                                                                                                                                                         31           31 March                                                                                                30 
                                                                                                                                                                                                      March                                                                                                                   September 
                                                                                                                                                                                                       2022                2021                                                                                                    2021 
                                                                                           Dividends per 
                                                                                           share 
========================================================================================================  =================================================================================================  ====================  ==================================================================================================== 
                                                                                           Paid                                                                                                      10.20p                9.70p           16.90p 
                                                                                           Proposed                                                                                                   7.60p                7.20p           10.20p 
                                                                                                                                                                                                        Six        Six months                                                                                                      Year 
                                                                                                                                                                                                     months 
                                                                                                                                                                                                      ended               ended             ended 
                                                                                                                                                                                                         31           31 March                                                                                                30 
                                                                                                                                                                                                      March                                                                                                                   September 
                                                                                                                                                                                                       2022                2021                                                                                                    2021 
                                                                                                                                                                                                     GBP000                GBP000                                                                                                GBP000 
                                                                                           Distribution                                                                                               3,125                2,972                                                                                                  5,178 
                                                                                            to equity 
                                                                                            holders and 
                                                                                            by 
                                                                                            subsidiaries 
                                                                                            in the 
                                                                                            period 
 

The distribution to equity holders in respect of the final dividend for 2021 of GBP3,125,066 (10.20p net of tax per share) was paid on 24 March 2022.

The Directors have declared an interim dividend of 7.60p per share, net of tax (2021: 7.20p) for the six months ended 31 March 2022 to shareholders on the register at the close of business on 3 June 2022. This dividend was approved by the Board on 18 May 2022 and has not been included as a liability at 31 March 2022.

5 Pensions

In consultation with the independent actuaries to the scheme, the valuation of the pension scheme assets and liabilities has been updated to reflect current market discount rates, current market values of investments and actual investment returns applicable under IAS 19 'Employee Benefits', and also consideration has been given as to whether there have been any other events that would significantly affect the pension liabilities.

6 Financial Instruments

The Group held the following derivative contracts, classified as level 2 financial instruments at 31 March 2022.

 
                                                                                                                                                                                                               Six        Six months                                                                                                      Year 
                                                                                                                                                                                                            months 
                                                                                                                                                                                                             ended               ended             ended 
                                                                                                                                                                                                                31           31 March                                                                                                30 
                                                                                                                                                                                                             March                                                                                                                   September 
                                                                                                                                                                                                              2022                2021                                                                                                    2021 
 Fair value of currency hedges                                                                                                                                                                              GBP000                GBP000                                                                                                GBP000 
                                                                                           Derivative assets 
==============================================================================================================  ==================================================================================================  ====================  ==================================================================================================== 
                                                                                           Less than one year                                                                                                    -                     -                                                                                                     - 
                                                                                           Greater than one 
                                                                                            year 
                                                                                            Derivative 
                                                                                            liabilities                                                                                                         79                     -                                                                                                   108 
==============================================================================================================  ==================================================================================================  ====================  ==================================================================================================== 
                                                                                           Less than one year                                                                                                (677)                (818)           (1,256) 
                                                                                           Greater than one                                                                                                (1,542)              (2,282)                                                                                                  (874) 
                                                                                           year 
                                                                                           Total net 
                                                                                            assets/liabilities                                                                                             (2,140)              (3,100)           (2,022) 
 

All financial instruments for which fair value is recognised or disclosed are categorised within the fair value hierarchy. This hierarchy is based on the underlying assumptions used to determine the fair value measurement as a whole and is categorised as follows:

Level 1 financial instruments are those with values that are immediately comparable to quoted (unadjusted) market prices in active markets for identical assets or liabilities.

Level 2 financial instruments are those with values that are determined using valuation techniques for which the basic assumptions used to calculate fair value are directly or indirectly observable (such as readily available market prices).

Level 3 financial instruments are shown at values that are determined by assumptions that are not based on observable market data (unobservable inputs).

The derivative contracts for foreign currency shown above are classified as level 2 financial instruments and are valued based on using a discounted cash flow valuation technique. Future cash flows are estimated based on forward exchange rates (from observable forward exchange rates at the end of the reporting period) and contract forward rates, discounted at a rate that reflects the credit risk of various counterparties.

7 Related Party Transactions

The Government of Jersey (the "Government") treats the Company as a strategic investment. Whilst it holds the majority voting rights in the Company, the Government does not view the Company as being under its control and as such, it is not consolidated within the Government accounts. The Government is understood by the Directors to have significant influence but not control of the Company. The Company has elected to take advantage of the disclosure exemptions available in IAS 24, paragraphs 25 and 26. All transactions are undertaken on an arms-length basis in the course of ordinary business. Interim Report 2022

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END

IR FLFLVETITLIF

(END) Dow Jones Newswires

May 18, 2022 09:22 ET (13:22 GMT)

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