TIDMJEL

RNS Number : 7625O

Jersey Electricity PLC

02 February 2023

JERSEY ELECTRICITY plc

Financial Results Summary

Year Ended 30 September 2022

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

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

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

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

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

M.P. Magee

Finance Director

Direct telephone number: 01534 505201

Email: mmagee@jec.co.uk

20 December 2022

The Powerhouse

PO Box 45

Queens Road

St Helier

Jersey JE4 8NY

JERSEY ELECTRICITY plc

Financial Results Summary

Year ended 30 September 2022

The Chair, Phil Austin, comments:

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

PERFORMANCE

Group revenue for the year at GBP117.4m was 1% lower than last year and profit before tax was GBP10.6m against GBP19.1m in 2021. If the non-cash upside from the revaluation of investment properties is excluded in both years, the underlying year-on-year profit before tax is GBP9.6m against GBP13.0m in 2021, a fall of 26%. This year's financial performance reflects the effects of COVID-19 post the pandemic. Coupled with a mild winter, a return to more normal patterns of work and behaviour has reduced demand, with both unit volume sales in Energy, and Retail revenues, down on last year as electricity consumption and Powerhouse product sales returned to historical levels. The Board has recommended a final dividend for the year of 10.80p, a 6% rise on the previous year, payable on 23 March 2023. Our target return on assets continues to be 6%-7% over the long term and was 4.2% this year, but 6.2% on a rolling five-year basis.

ENERGY MARKETS

Elsewhere, the scale of the energy crisis has prompted Governments across Europe to intervene, each in their own way, to mitigate the impact of the rising prices on their citizens. In the UK, such Government intervention averted a proposed 80% year-on-year increase in energy prices in October when Ofgem was due to raise the regulated price cap to GBP3,549. The new Energy Price Guarantee now limits this cap to GBP2,500 a year until April 2023 when the cap will be increased to GBP3,000, prompting a further 20% price rise.

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

CLIMATE CHANGE

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

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

ENERGY SECURITY

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

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

IN CONCLUSION

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

 
 Financial Highlights                        2022         2021 
 
 Revenue                                GBP117.4m    GBP118.6m 
 Profit before tax                       GBP10.6m     GBP19.1m 
 Earnings per share                        27.17p       52.73p 
 Dividend paid per share                   17.80p       16.90p 
 Final proposed dividend per share         10.80p       10.20p 
 Net cash                                GBP17.4m     GBP13.1m 
-----------------------------------  ------------  ----------- 
 

Group revenue for the year to 30 September 2022 at GBP117.4m was 1% lower than in the previous financial year. Energy revenues at GBP89.7m were marginally lower than the GBP89.8m achieved in 2021. Lower unit sales of electricity were linked to a milder winter and the positive uplift from increased home working, due to COVID-19, in the previous year. This was offset by a 4% tariff rise from January 2022 and a 5% rise from 1 July 2022. Revenue in the Powerhouse retail business decreased 6% from GBP19.8m in 2021 to GBP18.7m. Revenue in the Property business at GBP2.3m was at the same level as last year. Revenue from JEBS, our building services business, remained at the same level as 2021 at GBP3.4m. Revenue in our other businesses at GBP3.3m, was in line with the prior year.

Cost of sales at GBP77.2m was GBP3.1m higher than last year with an increase in wholesale electricity prices offset by the lower revenue level in our Powerhouse Retail business.

Operating expenses at GBP29.3m were GBP0.7m lower than last year. The fall is largely due to GBP1.8m incurred in the previous financial year for a non-cash ex-gratia award for pensions in service, in our defined benefits pension offset by the increased spend in systems and people, associated with the de-carbonisation vision for the Island.

Profit before tax for the year to 30 September 2022 was GBP10.6m against GBP19.1m in 2021. However, if the non-cash upside from revaluation of investment properties is excluded in both years the underlying year on-year profit before tax was GBP9.6m in 2022 against GBP13.0m in 2021, a decrease of 26%.

Profit in our Energy business, at GBP7.5m, was below the GBP10.7m achieved in 2021, largely due to lower unit sales volumes. Our target return on assets employed continues to be in the 6%-7% range over the longer-term and was 4.2% in 2022 against 5.9% in 2021, but 6.2% on a rolling 5-year basis. Unit sales volumes decreased by 4% from 639m to 613m kilowatt hours, due to milder than normal weather, combined with the previous year having benefited from home-working linked to the pandemic. In the financial year we imported 95.3% of our requirements from France (2021: 95.2%) and generated 0.3% of our electricity on-Island from our solar and diesel plant (2021: 0.4%). The remaining 4.4% (2021: 4.4%) of our electricity was purchased from the local Energy from Waste plant. A customer tariff rise of 4% was instigated on 1 January 2022 and a subsequent 5% increase took place in July 2022 and notice was given that a further 5% rise would take place on 1 January 2023.

The GBP1.4m profit in our Property division, excluding the impact of investment property revaluation, was at the same level as last year. Our investment property portfolio moved up in value by GBP1.0m to GBP28.8m, based on advice from our external consultants, who review the position annually. This increase compared to GBP6.1m in the 2020/21 financial year was due primarily to a restructuring of the lease arrangement for our largest tenant, whereby the existing break clause was moved to a later date, post commercial discussions, which materially moved the valuation upwards. The increase in this financial year was due to continued buoyant market conditions in the residential sector.

Our Powerhouse retail business saw profits fall 23% from GBP1.5m to GBP1.2m. However, this is in the context that in the previous financial year profits rose by 30% by when COVID-19 continued to influence the behaviours, and spending patterns of local customers, for example, due to less travel taking place over that year.

JEBS, our building services unit, produced a profit of GBP0.3m, being marginally ahead of 2021.

Our other business units (Jersey Energy, Jendev, Jersey Deep Freeze and fibre optic lease rentals) produced profits of GBP0.5m being GBP0.1m lower than last year.

The net interest cost in 2022 was GBP1.3m being GBP0.1m lower than 2021 due to a higher level of interest received on deposits. The taxation charge at GBP2.1m was lower than the previous year, due to lower profits.

Group basic and diluted earnings per share , at 27.17p, compared to 52.73p in 2021 due to decreased profitability.

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

Net cash flows from operating activities at GBP21.2m was GBP1.2m lower than in 2021. Investing activities, at GBP11.1m was GBP1.9m higher than GBP9.2m last year. Dividends paid were GBP5.5m compared to GBP5.3m in 2021. The resultant position was that net cash at the year-end was GBP17.4m, being GBP30.0m of borrowings offset by GBP47.4m of cash and cash equivalents, which was GBP4.3m more than last year.

 
 Consolidated Income Statement                  2022       2021 
 For the year ended 30 September 2022         GBP000     GBP000 
 
 Revenue                                     117,421    118,608 
 Cost of sales                              (77,242)   (74,159) 
                                           ---------  --------- 
 Gross Profit                                 40,179     44,449 
 
 Revaluation of investment properties          1,020      6,055 
 Operating expenses                         (29,293)   (29,991) 
                                           ---------  --------- 
 
 Group operating profit                       11,906     20,513 
 Finance income                                  218        112 
 Finance costs                               (1,523)    (1,540) 
 
 Profit from operations before taxation       10,601     19,085 
 
 Taxation                                    (2,135)    (2,794) 
                                           ---------  --------- 
 
 Profit from operations after taxation         8,466     16,291 
                                           =========  ========= 
 
 Attributable to: 
 Owners of the Company                         8,326     16,155 
 Non-controlling interests                       140        136 
                                           ---------  --------- 
 
                                               8,466     16,291 
                                           =========  ========= 
 
 Earnings per share 
 - basic and diluted                          27.17p     52.73p 
 
 
  Consolidated Statement of Comprehensive                2022      2021 
   Income 
                                                       GBP000    GBP000 
 
 Profit for the year                                    8,466    16,291 
 
 Items that will not be reclassified subsequently 
  to profit or loss: 
 Actuarial gain on defined benefit scheme               8,976    14,803 
 Income tax relating to items not reclassified        (1,795)   (2,961) 
                                                     --------  -------- 
                                                        7,181    11,842 
 
 Items that may be reclassified subsequently 
  to profit or loss: 
 Fair value gain/(loss) on cash flow hedges             4,815   (3,116) 
 Income tax relating to items that may be 
  reclassified                                          (963)       623 
                                                     --------  -------- 
                                                        3,852   (2,493) 
 
 Total comprehensive income for the year               19,499    25,640 
 
 Attributable to: 
 Owners of the Company                                 19,359    25,504 
 Non-controlling interests                                140       136 
                                                     --------  -------- 
                                                       19,499    25,640 
 

Consolidated Balance Sheet as at 30 September 2022

 
                                                       2022               2021 
                                                    GBP 000            GBP 000 
 
 NON-CURRENT ASSETS 
 Intangible assets                                      967                933 
 Property,plant and equipment                       216,235            216,550 
 Right of use assets                                  3,280              3,113 
 Investment properties                               28,830             27,810 
 Trade and other receivables                            300                308 
 Retirement benefit asset                            26,434             18,761 
 Derivative financial instruments                     2,640                108 
 Other investments                                        5                  5 
                                         ------------------  ----------------- 
 Total non-current assets                           278,691            267,588 
---------------------------------------  ------------------  ----------------- 
 CURRENT ASSETS 
--------------------------------------   ------------------  ----------------- 
 Inventories                                          7,173              6,909 
 Trade and other receivables                         19,934             18,000 
 Derivative financial instruments                       483                  - 
 Cash and cash equivalents                           47,397             43,136 
 Total current assets                                74,987             68,045 
                                         ------------------  ----------------- 
 Total assets                                       353,678            335,633 
---------------------------------------  ------------------  ----------------- 
 LIABILITIES 
--------------------------------------   ------------------  ----------------- 
 Trade and other payables                            21,043             18,373 
 Current tax liabilites                               2,088              3,020 
 Lease liabilities                                       69                 72 
 Derivative financial instruments                       330              1,256 
 Total current liabilities                           23,530             22,721 
                                         ------------------  ----------------- 
 NET CURRENT ASSETS                                  51,457             45,324 
--------------------------------------- 
 NON-CURRENT LIABILITIES 
--------------------------------------   ------------------  ----------------- 
 
 Trade and other payables                            25,162             24,006 
 Lease liabilities                                    3,251              3,035 
 Derivative financial instruments                         -                874 
 Financial liabilities - preference 
  shares                                                235                235 
 Borrowings                                          30,000             30,000 
 Deferred tax liabilities                            32,126             29,321 
 Total non-current liabilities                       90,774             87,471 
                                         ------------------  ----------------- 
 Total liabilities                                  114,304            110,192 
                                         ------------------  ----------------- 
 Net assets                                         239,374            225,441 
---------------------------------------  ------------------  ----------------- 
 EQUITY 
--------------------------------------   ------------------  ----------------- 
 Share capital                                        1,532              1,532 
 Revaluation reserve                                  5,270              5,270 
 ESOP reserve                                          (38)               (79) 
 Other reserves                                       2,234            (1,618) 
 Retained earnings                                  230,232            220,178 
 
 Equity attributable to owners of the 
  company                                           239,230            225,283 
 Non-controlling interests                              144                158 
                                         ------------------  ----------------- 
 Total equity                                       239,374            205,039 
---------------------------------------  ------------------  ----------------- 
 

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

 
                                Share         Revaluation         ESOP      *Other       Retained     Total 
                              capital             reserve   reserve       reserves       earnings 
                                  GBP                              GBP         GBP            GBP 
                                  000             GBP 000          000         000            000   GBP 000 
 At 1 October 2021              1,532               5,270         (79)     (1,618)        220,178   225,283 
 Total recognised income 
  and expense for the year          -                   -            -           -          8,326     8,326 
 Amortisation of employee 
  share option scheme               -                   -           41           -              -        41 
 Movement on hedges (net 
  of tax)                           -                   -            -       3,852              -     3,852 
 Actuarial gain on defined 
  benefit scheme (net of 
  tax)                              -                   -            -           -          7,181     7,181 
 Equity dividends                   -                   -            -           -        (5,453)   (5,453) 
 At 30 September 2022           1,532               5,270         (38)       2,234        230,232   239,230 
                             ========  ==================  ===========  ==========  =============  ======== 
 
 
 At 1 October 2020              1,532               5,270        (120)         875        197,359   204,916 
 Total recognised income 
  and expense for the year          -                   -            -           -         16,155    16,155 
 Amortisation of employee 
  share option scheme               -                   -           41           -              -        41 
 Movement on hedges (net 
  of tax)                           -                   -            -     (2,493)              -   (2,493) 
 Actuarial gain on defined 
  benefit scheme (net of 
  tax)                              -                   -            -           -         11,842    11,842 
 Equity dividends                   -                   -            -           -        (5,178)   (5,178) 
 At 30 September 2021           1,532               5,270         (79)     (1,618)        220,178   225,283 
                             ========  ==================  ===========  ==========  =============  ======== 
 
 
 Consolidated Statement of Cash Flows                 2022      2021 
 for the year ended 30 September 2022               GBP000    GBP000 
 
 CASH FLOWS FROM OPERATING ACTIVITIES 
 
 Operating profit                                   11,906    20,513 
 Depreciation and amortisation charges              11,094    10,924 
 Share based reward charges                             41        41 
 Gain on revaluation of investment property        (1,020)   (6,055) 
 Pension operating charge less contributions 
  paid                                               1,303     3,357 
 Deemed interest income from hire purchase              50         - 
  arrangements 
 Profit on sale of property, plant and 
  equipment                                            (7)       (6) 
                                                 ---------  -------- 
 Operating cash flows before movement in 
  working capital                                   23,367    28,774 
 Working capital adjustments: 
      Increase in inventories                        (257)     (881) 
      Increase in trade and other receivables      (1,926)   (2,263) 
      Increase in trade and other payables           4,444       904 
                                                 ---------  -------- 
 Net movement in working capital                     2,261   (2,240) 
 Interest paid                                     (1,380)   (1,395) 
 Preference dividends paid                             (9)       (9) 
 Income taxes paid                                 (3,020)   (2,742) 
                                                 ---------  -------- 
 Net cash flows from operating activities           21,219    22,388 
 
 CASH FLOWS FROM INVESTING ACTIVITIES 
 Purchase of property, plant and equipment        (11,001)   (8,513) 
 Investment in intangible assets                     (319)     (805) 
 Deposit interest received                             168       112 
 Net proceeds from disposal of fixed assets              7         6 
                                                 ---------  -------- 
 Net cash flows used in investing activities      (11,145)   (9,200) 
 
 CASH FLOWS FROM FINANCING ACTIVITIES 
 Equity dividends paid                             (5,453)   (5,178) 
 Dividends paid to non-controlling interest          (154)     (101) 
 Repayment of lease liabilities                      (206)     (297) 
                                                 ---------  -------- 
 Net cash flows used in financing activities       (5,813)   (5,576) 
 
 Net increase in cash and cash equivalents           4,261     7,612 
 
 Cash and cash equivalents at beginning 
  of year                                           43,136    35,520 
 Effect of foreign exchange rates                        -         4 
 
 Cash and cash equivalents at end of year           47,397    43,136 
 

Notes to the accounts

Year ended 30 September 2022

   1.   Basis of Preparation 

The consolidated financial statements of Jersey Electricity plc, for the year ended 30 September 2022, have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU), including International Accounting Standards and Interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC). This is consistent with the accounting policies in the 30 September 2021 annual report and accounts and the 31 March 2022 interim report.

While the financial information included in this summary announcement has been prepared in accordance with the appropriate recognition and measurement criteria, this announcement does not itself contain sufficient information to comply with IFRS. Full financial statements that comply with IFRS have additionally been published on our website; www.jec.co.uk.

 
 
   Segmental information 
 Revenue and profit information are analysed between the business segments 
  as follows: 
                                             2022       2022      2022       2021       2021      2021 
                                         External   Internal     Total   External   Internal     Total 
                                           GBP000     GBP000    GBP000     GBP000     GBP000    GBP000 
 Revenue 
 Energy                                    89,683        100    89,783     89,780        100    89,880 
 Building Services                          3,365        780     4,145      3,399        645     4,044 
 Retail                                    18,695         41    18,736     19,808         68    19,876 
 Property                                   2,345        639     2,984      2,304        645     2,949 
 Other*                                     3,333        625     3,958      3,317        945     4,262 
                                        ---------  ---------  --------  ---------  ---------  -------- 
                                          117,421      2,185   119,606    118,608      2,403   121,011 
 Intergroup elimination                                        (2,185)                         (2,403) 
                                                              --------                        -------- 
 Revenue                                                       117,421                         118,608 
                                                              --------                        -------- 
 
 Operating profit 
 Energy                                                          7,502                          10,693 
 Building Services                                                 266                             217 
 Retail                                                          1,174                           1,533 
 Property                                                        1,436                           1,393 
 Other*                                                            508                             622 
                                                              --------                        -------- 
                                                                10,886                          14,458 
 Revaluation of investment properties                            1,020                           6,055 
 
 Operating profit                                               11,906                          20,513 
                                                              --------                        -------- 
 

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

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

The revaluation of investment properties is shown separately from Property operating profit as this income is reflected solely by a movement in reserves.

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