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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Jersey Electricity Plc | LSE:JEL | London | Ordinary Share | JE00B43SP147 | 'A'ORD 5P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 427.00 | 414.00 | 440.00 | 427.00 | 427.00 | 427.00 | 2 | 08:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
Electric Services | 125.08M | 11.28M | 0.3681 | 11.60 | 130.83M |
TIDMJEL
RNS Number : 6266O
Jersey Electricity PLC
21 May 2018
Jersey Electricity plc
Interim Management Report
for the six months ended 31 March 2018
The Board approved at a meeting on 18 May 2018 the Interim Management Report for the six months ended 31 March 2018 and declared an interim dividend of 6.1p compared to 5.8p for 2017. The dividend will be paid on 29 June 2018 to those shareholders registered in the records of the Company at the close of business on 1 June 2018.
The Interim Management Report is attached and will be available to the public on the Company's website www.jec.co.uk/about-us/investor-relations/financial-figures-and-reports.
The Interim Management Report for 2018 has not been audited or reviewed by our external auditors nor have the results for the equivalent period in 2017. The results for the year ended 30 September 2017 have been extracted from the statutory accounts. The auditor has reported on those accounts and their reports were unmodified.
M.P. Magee P.J. Routier Finance Director Company Secretary Direct telephone number : 01534 505201 Direct telephone number : 01534 505253 Email : mmagee@jec.co.uk Email : proutier@jec.co.uk
18 May 2018
The Powerhouse,
PO Box 45,
Queens Road,
St Helier,
Jersey JE4 8NY
Jersey Electricity plc
Unaudited Interim Management Report
for the six months to 31 March 2018
Financial Summary 6 months 6 months 2018 2017 ---------------------------------------- --------- --------- Electricity Sales in kWh (000) 368,200 361,123 Revenue GBP60.5m GBP58.0m Profit before tax GBP 9.7m GBP 8.9m Earnings per share 24.9p 22.9p Final dividend paid per ordinary share 8.4p 8.0p Proposed interim dividend per ordinary share 6.1p 5.8p Net debt GBP20.2m GBP29.4m
Overall trading performance
Group revenue, at GBP60.5m, was 4% higher for the first half of 2018 than the same period in 2017 with GBP1.0m coming from a higher level of unit sales of electricity and GBP0.8m from our Powerhouse.je retailing business. Profit before tax was GBP9.7m being GBP0.8m ahead of the equivalent period last year and remains at a level commensurate with a sustainable rate of return typical for a regulated utility and at a quantum needed to maintain our continued investment in infrastructure. Cost of sales at GBP37.5m was GBP2.0m higher than last year with an increase in import costs in our Energy business and higher sales activity in Powerhouse.je being the main reasons. Operating expenses at GBP12.6m were GBP0.4m lower than in 2017 due to a general reduction in overhead costs. The taxation charge in the period of GBP2.0m was GBP0.1m higher than during the same period in 2017 due to increased profits. Earnings per share rose to 24.9p from 22.9p in 2017. Net debt on the balance sheet at 31 March 2018 was GBP20.2m (2017: GBP29.4m) compared to GBP21.9m at our last year end on 30 September 2017.
Energy performance
Unit sales of electricity rose 2%, from 361m to 368m kWh, compared with last year. The average temperature was mixed with the first quarter being milder, and the second quarter colder, than in the first half of the 2017 financial year. On 1 March we saw our highest ever maximum demand for electricity of 178 MW, when temperatures fell to a very unseasonal minus 3 degrees centigrade, being 11% higher than the previous record of 161 MW experienced in 2012. Revenues in our Energy business at GBP47.2m were GBP1.0m higher than in 2017. Operating profit at GBP8.7m was GBP1.0m higher than in the same period last year. Gross margin was impacted by increased imported electricity costs but other costs, such as manpower and maintenance were lower than the corresponding 2017 period. We imported 95% of our on-Island requirement from France (2017: 93%) and 5% from the Energy from Waste plant (2017: 5%), owned by the States of Jersey. Only 0.3% (1m units) of electricity was generated in Jersey using our own plant (2017: 2%) due to the availability of three subsea cables to France for the first full winter period post the commissioning of our third interlink, Normandie 1, in December 2016.
Investment in infrastructure
Capital expenditure was GBP7.1m in the first 6 months of the financial year compared to GBP8.6m in the same period last year. We continue with work on our new West of St Helier Primary sub-station which has an estimated cost of GBP17m, of which GBP10m has been expended to date, and is still planned to be commissioned in late 2018. Finally, our rollout of smart-enabled meters continues with around 39,000 installed in customer premises as at 31 March 2018 representing over 78% of our customer base.
Non-Energy performance
Year-on-year revenue in our retail business, Powerhouse.je, rose by 11% to GBP7.9m (2017: GBP7.1m) and profits rose 23% to GBP0.6m in what is a very competitive marketplace, both locally and off-island. Revenue and profit rose for our Property portfolio as a result of increased rental flows (profit up 5% to GBP0.9m). JEBS, our contracting and business services unit, saw a GBP0.2m increase in overall revenue to GBP3.1m but delivered a break-even position, down from a GBP0.1m profit in 2017 in a tight local market. Our remaining business units produced profits of GBP0.3m being GBP0.1m behind the same period in 2017.
Forward hedging of electricity and foreign exchange, and customer tariffs
We continue to focus on delivering secure low-carbon electricity supplies and stable customer tariffs. Through the use of our power purchase contract and hedging policies, this has been successfully achieved whilst maintaining an appropriate and fair return for our shareholders. Our electricity purchases are materially, albeit not fully, hedged for the period 2018-21. As these are contractually denominated in the Euro we enter into forward foreign currency contracts to reduce the volatility of our cost base and aid tariff planning. We have continued to see volatility in foreign exchange in the last six months against the Euro primarily driven by the uncertainty surrounding the UK Brexit decision, which is why we seek to manage this exposure. In April 2018 we announced a below inflation average rise in tariffs of 2%, from 1 June, largely driven by a weakening of sterling relative to the Euro and other inflationary factors. Customer tariffs last rose in April 2014 by 1.5%.
Debt and financing
The net debt figure fell to GBP20.2m at 31 March 2018 compared to GBP29.4m at this time last year (and GBP21.9m at 30 September 2017). After a high level of capital spending on undersea cables, and associated infrastructure, over recent years, the level of expenditure and associated net debt in this current year, has fallen. It is the aim of the Board that Jersey Electricity continues to maintain a prudent level of debt relative to our overall balance sheet, which remains strong.
Pension scheme
The defined benefit pension scheme deficit (without deduction of deferred tax) on our balance sheet at 31 March 2018, at GBP3.9m, was similar to the GBP4.2m level at 30 September 2017 (and a deficit of GBP4.8m at 31 March 2017). Since the last financial year end, scheme assets rose by GBP4m (to GBP133m) and liabilities also increased by GBP4m (to GBP137m). This increase in scheme liabilities is due to a decrease in relevant AA-rated bond yields partially offset by a decrease in assumed RPI inflation. Cash paid into the scheme during the six month period was GBP0.9m (2017: GBP1.0m) with the IAS 19 charge against profit being GBP1.6m (2017: GBP1.8m). The defined benefit scheme has been closed to new members since 2013.
Dividend
Your Board proposes to pay an interim net dividend for 2018 of 6.1p (2017: 5.8p). As stated previously we continue to aim to deliver sustained real growth each year over the medium-term. The final dividend for 2017 of 8.4p, 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 2018, have not materially altered in the interim period.
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 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
(d) this half yearly interim report contains 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 2018
INVESTOR TIMETABLE FOR 2018
1 June Record date for interim ordinary dividend 29 June Interim ordinary dividend for year ending 30 September 2018 2 July Payment date for preference share dividends 14 December Preliminary announcement of full year results
Condensed Consolidated Income Statement (Unaudited)
Six months Six months ended ended Year ended 31 March 31 March 30 September 2018 2017 2017 Note GBP000 GBP000 GBP000 Revenue 2 60,463 58,004 102,320 Cost of sales (37,506) (35,507) (63,186) Gross profit 22,957 22,497 39,134 Revaluation of investment properties - - 40 Operating expenses (12,553) (12,981) (24,379) ----------- ----------- --------------- Group operating profit 2 10,404 9,516 14,795 Finance income 7 1 3 Finance costs (707) (588) (1,340) ----------- ----------- --------------- Profit from operations before taxation 9,704 8,929 13,458 Taxation 3 (2,023) (1,925) (2,834) ----------- ----------- --------------- Profit from operations after taxation 7,681 7,004 10,624 Attributable to: Owners of the Company 7,640 7,009 10,599 Non-controlling interests 41 (5) 25 ----------- ----------- --------------- Profit for the period/year attributable to the equity holders of the parent Company 7,681 7,004 10,624 ----------- ----------- --------------- Earnings per share - basic and diluted 24.9p 22.9p 34.6p
Condensed Consolidated Statement of Comprehensive Income (Unaudited)
Six months Six months ended ended Year ended 31 March 31 March 30 September 2018 2017 2017 GBP000 GBP000 GBP000 Profit for the period/year 7,681 7,004 10,624 Items that will not be reclassified subsequently to profit or loss: Actuarial gain on defined benefit scheme 964 7,547 8,859 Income tax relating to items not reclassified (193) (1,509) (1,772) 771 6,038 7,087 Items that may be reclassified subsequently to profit or loss: Fair value loss on cash flow hedges (3,407) (2,387) (1,673) Income tax relating to items that may be reclassified 681 477 335 ----------- ----------- --------------- (2,726) (1,910) (1,338) Total comprehensive income for the period/year 5,726 11,132 16,373 Attributable to: Owners of the Company 5,685 11,137 16,348 Non-controlling interests 41 (5) 25 ----------- ----------- --------------- 5,726 11,132 16,373 ----------- ----------- ---------------
Condensed Consolidated Balance Sheet (Unaudited)
Note As at 31 As at As at 30 March 31 March September 2018 2017 2017 GBP000 GBP000 GBP000 Non-current assets Intangible assets 1,077 189 1,110 Property, plant and equipment 212,401 210,597 211,921 Investment property 20,150 20,110 20,150 Trade and other receivables 533 622 592 Derivative financial instruments 6 593 3,807 2,790 Other investments 5 5 5 Total non-current assets 234,759 235,330 236,568 --------- ---------- ----------- Current assets Inventories 6,618 5,736 6,825 Trade and other receivables 21,559 20,571 15,782 Derivative financial instruments 6 3,337 2,891 4,454 Cash and cash equivalents 9,767 4,556 8,076 Total current assets 41,281 33,754 35,137 --------- ---------- ----------- Total assets 276,040 269,084 271,705 --------- ---------- ----------- Current liabilities Trade and other payables 14,147 13,058 15,885 Borrowings - 4,000 - Derivative financial instruments 6 8 13 - Current tax payable 2,813 1,166 1,034 Total current liabilities 16,968 18,237 16,919 --------- ---------- ----------- Net current assets 24,313 15,517 18,218 --------- ---------- ----------- Non-current liabilities Trade and other payables 21,820 20,751 20,177 Retirement benefit deficit 3,855 4,764 4,219 Derivative financial instruments 6 257 327 172 Financial liabilities - preference shares 235 235 235 Borrowings 30,000 30,000 30,000 Deferred tax liabilities 23,490 21,992 23,719 Total non-current liabilities 79,657 78,069 78,522 --------- ---------- ----------- Total liabilities 96,625 96,306 95,441 --------- ---------- ----------- Net assets 179,415 172,778 176,264 --------- ---------- ----------- Equity Share capital 1,532 1,532 1,532 Revaluation reserve 5,270 5,270 5,270 ESOP reserve (61) (119) (84) Other reserves 2,932 4,968 5,658 Retained earnings 169,700 161,119 163,862 --------- ---------- ----------- Equity attributable to owners of the Company 179,373 172,770 176,238 Non-controlling interests 42 8 26 --------- ---------- ----------- Total equity 179,415 172,778 176,264 --------- ---------- -----------
Condensed Consolidated Statement of Changes in Equity (Unaudited)
Share Revaluation ESOP Other Retained Total capital reserve reserve reserves earnings reserves GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 At 1 October 2017 1,532 5,270 (84) 5,658 163,862 176,238 Total recognised income and expense for the period - - - - 7,640 7,640 Funding of employee share scheme - - (9) - - (9) Amortisation of employee share scheme - - 32 - - 32 Unrealised loss on hedges (net of tax) - - - (2,726) - (2,726) Actuarial gain on defined benefit scheme (net of tax) - - - - 771 771 Equity dividends paid - - - - (2,573) (2,573) ------- ----------- ------- -------- -------- -------- At 31 March 2018 1,532 5,270 (61) 2,932 169,700 179,373 ------- ----------- ------- -------- -------- -------- At 1 October 2016 1,532 5,270 (155) 6,878 150,523 164,048 Total recognised income and expense for the period - - - - 7,009 7,009 Amortisation of employee share scheme - - 36 - - 36 Unrealised loss on hedges (net of tax) - - - (1,910) - (1,910) Actuarial gain on defined benefit scheme (net of tax) - - - - 6,038 6,038 Equity dividends paid - - - - (2,451) (2,451) ------- ----------- ------- -------- -------- -------- At 31 March 2017 1,532 5,270 (119) 4,968 161,119 172,770 ------- ----------- ------- -------- -------- -------- At 1 October 2016 1,532 5,270 (155) 6,878 150,523 164,048 Total recognised income and expense for the year - - - - 10,599 10,599 Funding of employee share scheme - - (2) - - (2) Amortisation of employee share scheme - - 73 - - 73 Unrealised loss on hedges (net of tax) - - - (1,338) - (1,338) Actuarial gain on defined benefit scheme (net of tax) - - - - 7,087 7,087 Adjustment to reserves - - - 118 (118) - Equity dividends paid - - - - (4,229) (4,229) ------- ----------- ------- -------- -------- -------- At 30 September 2017 1,532 5,270 (84) 5,658 163,862 176,238 ------- ----------- ------- -------- -------- --------
Condensed Consolidated Cash Flow Statement (Unaudited)
As at 31 As at As at 30 March 31 March September 2018 2017 2017 GBP000 GBP000 GBP000 Cash flows from operating activities Operating profit 10,404 9,516 14,795 Depreciation and amortisation charges 5,458 5,151 10,695 Share-based reward charges 32 36 73 Gain on revaluation of investment property - - (40) Pension operating charge less contributions paid 654 840 1,607 Payment for foreign exchange option 250 - - Loss/(profit) on sale of fixed assets - 42 (4) Operating cash flows before movements in working capital 16,798 15,585 27,126 Working capital adjustments: Decrease/(increase) in inventories 207 226 (863) (Increase)/decrease in trade and other receivables (5,718) (3,928) 892 Increase/(decrease) in trade and other payables 1,017 (1,414) 1,230 --------- ---------- ----------- Net movement in working capital (4,494) (5,116) 1,259 Interest paid (703) (590) (1,322) Capitalised interest paid - (172) (172) Preference dividends paid (4) (4) (9) Income taxes paid - - (421) Net cash flows generated from operating activities 11,597 9,703 26,461 -------------------------------------------- --------- ---------- ----------- Cash flows from investing activities Purchase of property, plant and equipment (6,914) (8,508) (14,252) Investment in intangible assets (137) (63) (836) Net proceeds from disposal of fixed assets - 3 4 Net cash used in investing activities (7,051) (8,568) (15,084) -------------------------------------------- --------- ---------- ----------- Cash flows from financing activities Equity dividends paid (2,573) (2,451) (4,229) Dividends paid to non-controlling interest (25) (39) (59) Deposit interest received 7 1 3 Payment for foreign exchange option (250) - - Proceeds from borrowings - 18,000 18,000 Repayment of borrowings - (14,000) (18,943) Net cash (used in) / generated from financing activities (2,841) 1,511 (5,228) -------------------------------------------- --------- ---------- ----------- Net increase in cash and cash equivalents 1,705 2,646 6,149 Cash and cash equivalents at beginning of period/year 8,076 1,925 1,925 Effect of foreign exchange rate changes (14) (15) 2 Net cash and cash equivalents at end of period/year 9,767 4,556 8,076
Notes to the Condensed Interim Accounts (Unaudited)
1. Accounting policies
Basis of preparation
The interim financial statements for the six months ended 31 March 2018 have been prepared on the basis of the accounting policies set out in the 30 September 2017 annual report and accounts using accounting policies consistent with International Financial Reporting Standards and in accordance with International Accounting Standard 34 'Interim Financial Reporting'. There have been no changes to accounting standards during the current financial year that would be expected to impact the disclosures in these financial statements, nor the full year financial statements that will be prepared for 30 September 2018.
The directors have a reasonable expectation that the Group (being the Company, Jersey Electricity plc and its subsidiary, Jersey Deep Freeze Ltd) 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 interim financial statements.
2. Revenue and profit
The contributions of the various activities to Group revenue and profit are listed below:
Six months ended Six months ended Year ended 31 March 2018 31 March 2017 30 September 2017 External Internal Total External Internal Total External Internal Total Revenue GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 Energy 47,174 64 47,238 46,150 70 46,220 80,480 143 80,623 Building Services 2,865 249 3,114 2,413 472 2,885 3,982 915 4,897 Retail 7,912 17 7,929 7,102 16 7,118 13,045 37 13,082 Property 1,115 305 1,420 1,088 299 1,387 2,187 599 2,786 Other 1,397 390 1,787 1,251 915 2,166 2,626 1,324 3,950
--------- --------- -------- --------- --------- -------- --------- --------- -------- 60,463 1,025 61,488 58,004 1,772 59,776 102,320 3,018 105,338 Intergroup elimination (1,025) (1,772) (3,018) -------- -------- -------- Revenue 60,463 58,004 102,320 -------- -------- -------- Operating profit Energy 8,667 7,694 11,723 Building Services (13) 104 131 Retail 567 460 731 Property 913 870 1,645 Other 270 388 525 -------- -------- -------- 10,404 9,516 14,755 Revaluation of investment properties - - 40 Operating profit 10,404 9,516 14,795 -------- -------- --------
Materially, all of the Group's operations are conducted within the Channel Islands. All transactions between divisions are on an arm's-length basis. The assets and liabilities of the Group are not reported on as there has been no significant movement in the values in the six months to 31 March 2018.
3. Taxation Six months Year ended ended 31 March 30 September 2018 2017 2017 GBP000 GBP000 GBP000 Current income tax 1,771 1,166 1,034 Deferred income tax 252 759 1,800 -------- -------- -------------- Total income tax 2,023 1,925 2,834 ======== ======== ==============
For the period ended 31 March 2018 and subsequent periods, the Company is taxable at the rate applicable to utility companies in Jersey of 20% (2017: 20%).
4. Dividends paid and proposed Six months Year ended ended 30 September 31 March 2018 2017 2017 Dividends per share - paid 8.4p 8.0p 13.8p - proposed 6.1p 5.8p 8.4p GBP000 GBP000 GBP000 Distributions to equity holders 2,573 2,451 4,228 ------- ------- --------------
The distribution to equity holders in respect of the final dividend for 2017 of GBP2,573,441 (8.4p net of tax per share) was paid on 29 March 2018.
The Directors have declared an interim dividend of 6.1p per share, net of tax (2017: 5.8p) for the six months ended 31 March 2018 to shareholders on the register at the close of business on 1 June 2018. This dividend was approved by the Board on 18 May 2018 and has not been included as a liability at 31 March 2018.
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 consideration has also 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 2018.
Fair value of currency hedges 31 March 30 September 2018 2017 2017 Derivative assets GBP'000 GBP'000 GBP'000 Less than one year 3,337 2,891 4,454 Greater than one year 593 3,807 2,790 Derivative liabilities Less than one year (8) (13) - Greater than one year (257) (327) (172) Total net assets 3,665 6,358 7,072 ======== ======== =============
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 to 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 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 Company conducts a variety of transactions with the States of Jersey and its associated entities:
Value of Value of electricity goods & other Value of services services goods & services supplied supplied purchased Amounts due Amounts by Jersey by Jersey by Jersey to Jersey due by Jersey Electricity Electricity Electricity Electricity Electricity Six months ended 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 31 March GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 The States of Jersey and related entities 5,139 5,347 1,165 808 791 782 564 742 6 99
The States of Jersey is the Group's majority and controlling shareholder. Related entities include all corporatised entities that remain wholly owned by, or controlled by, the States of Jersey.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
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