Annual Information Update

RNS Number : 1155A

Jersey Electricity PLC

18 December 2014

 

    JERSEY ELECTRICITY plc                                                                                         
Preliminary Announcement of Annual Results Year Ended 30 September 2014

At a meeting of the Board of Directors held on 17 December 2014, the final accounts for the Group for the year to 30 September 2014 were approved, details of which are attached.

The financial information set out in the announcement does not constitute the Company's statutory accounts for the year ended 30 September 2014 or 2013, but is derived from those accounts. Statutory accounts for 2013 have been delivered to the Jersey Registrar of Companies and those for 2014 will be delivered in early 2015. The auditor has reported on those accounts and their reports were unmodified. 

A final dividend of 7.20p on the Ordinary and 'A' Ordinary shares in respect of the year ended 30 September 2014 was recommended (2013: 6.80p). Together with the interim dividend of 5.00p the proposed total dividend declared for the year was 12.20p on each share.

The final dividend will be paid on 27 March 2015 to those shareholders registered in the books of the Company on 20 February 2015. A dividend on the 5% cumulative participating preference shares of 1.5% (2013: 1.5%) payable on 1 July 2015 was also recommended.

The Annual General Meeting of the Company will be held on 5 March 2015.

John Stares, who has served as a non-executive director for the last five years will be retiring at our next Annual General Meeting on 5 March 2015.    

M.P. Magee                                                                           P.J. Routier

Finance Director                                                                   Company Secretary

Direct telephone number : 01534 505321                              Direct telephone number : 01534 505253

Direct fax number : 01534 505466                                         Direct fax number : 01534 505515

Email : mmagee@jec.co.uk                                                   Email : proutier@jec.co.uk

17 December 2014    

The Powerhouse

PO Box 45

Queens Road

St Helier

Jersey JE4 8NY

JERSEY ELECTRICITY plc            

Preliminary Announcement of Annual Results

Year ended 30 September 2014                                                                                                    

The Chairman, Geoffrey Grime, comments :

"2014 was the Company's 90th anniversary and there could be no better way to mark this celebration than with the landmark achievement of the successful installation of our third interconnector to France, Normandie 3 (N3) - under budget and ahead of its 2015 schedule. The N3 project, co-invested under our joint venture with Guernsey Electricity, our partners in the  Channel Islands Electricity Grid, has been 10 years in the making and more than doubles our importation capacity which had been severely restricted since June 2012 when our oldest interconnector, EDF1, failed and was removed from service. I said that last year we delivered a foundation for recovery.  This year we have built further on this with an expected upward movement in Energy profit, which reached the level of £8.0m on an operating basis, restoring it to pre-2012 levels. Importantly, this profitability reflects the return necessary to support continued investment."

The 2013 profit figure was restated downwards by £1.2m to reflect the adoption of a new accounting policy to comply with changes to the revised International Accounting Standard 19, "Employee Benefits", in respect of pension costs as highlighted in our 2013 Annual Report. The original charge of £1.2m in 2013 was restated as £2.4m. 

Group revenue for the year to 30 September 2014 at £98.4m was 4% lower than in the previous financial year. Unit sales volumes of electricity were 6% lower than last year due to mild weather with revenues falling 3% to £79.5m as tariff rises reduced the impact of the units shortfall. Turnover in our Retail business decreased by 6% from £12.1m to £11.4m. The floor space utilised by the business was reduced as a substantial proportion was let to an external tenant from May 2014. Revenue in the Property business, including internal sales, fell from £2.9m to £2.6m mainly linked to changes in tenancy arrangements during the year including our disposal of Foreshore. Revenue in Building Services, including internal sales, rose 3% from levels experienced in 2013 to £4.2m. Turnover in our Other Businesses, including internal sales, remained at £3.2m.

Profit before tax for the year to 30 September 2014 rose 21% to £6.5m from £5.4m reflecting a recovery in our Energy business. As anticipated at the half year we incurred exceptional costs of around £0.6m and £1.2m in restructuring our Retail business and exiting our investment in Foreshore Ltd respectively. In addition, a £1.8m provision was made for our share of a preventative repair to the interconnector between Guernsey and Jersey which is scheduled to take place in January 2015. The cable, which was repaired in 2012, has been showing similar issues to those experienced two years ago and Guernsey Electricity is also currently seeking permissions to lay a replacement cable as soon as possible. Profit before tax pre-exceptional items, and post the restatement of the 2013 pension costs, rose from £5.9m last year to £10.0m in 2014.

Our Energy business unit sales saw volumes down 6%, falling from 663m to 621m kWh, due to a combination of the temperatures being above the seasonal norm last winter and the corresponding period in the 2013 financial year being particularly cold. Each of the six winter months in this financial year experienced higher temperatures than its corresponding month in 2012/13 and were at, or above, the long-term average level. Despite lower unit sales in our Energy business, profits recovered substantially to £8.0m, a level commensurate with the recognized rate of return required to advance sustainable investment in infrastructure assets.

Two main factors contributed to this increase in performance - lower generation and the impact of tariff rises. As reported previously, until the new interconnector to France was commissioned,

which occurred at the end of this financial year, we have been capacity constrained on importation and reliant on a heavier mix of more expensive on-island oil-fired generation, particularly in winter, when volumes are higher.

In the financial year we generated 15% of our electricity on-island (compared to 21% last year) and imported 80% of our requirements from France (up from 75% in 2013). The remaining 5% of our electricity came from the local Energy from Waste plant against 4% in the same period in 2013. The Energy revenue, and profitability, was also aided by an average 1.5% increase in customer tariffs from 1 April 2014 and the full year impact of the tariff increase in January 2013. In spite of these price rises, our tariffs continue to remain competitive with other jurisdictions.

Profits in our Property division, excluding the impact of investment property revaluation, fell from £1.6m to £1.4m with movements in tenancy arrangements being the main driver. It has been a positive year with 11k square feet of space previously used by our internal Retail business now being let to a UK retailer with a good covenant (SportsDirect.com). In addition, with the sale of our shareholding in Foreshore, we now have the local telecom operator, Sure (Jersey) Ltd, as tenants with a larger footprint than previously let. Our investment property portfolio was revalued upwards by £0.1m to £20.5m this year. Our Retailing business had a challenging year with turnover falling from £12.1m to £11.4m albeit the space utilised has reduced. A profit of £0.2m last year moved to a loss of £0.1m. As reported at the half year an exceptional cost of £0.6m was incurred in restructuring the Retail operation as the business has been facing increasing pressure on margins from UK on-line sales into Jersey. The Building Services business produced a marginal loss, being £0.1m behind last year due to competitive pressures on margin. Our other business units - Jersey Energy, Jendev and Jersey Deep Freeze all had a profitable year. Our shareholding in Foreshore, a data centre joint venture in which we have been involved since 2000, was sold in July and, as reported at the half year, an exceptional cost of £1.2m was associated with this exit.

Interest paid in 2014 was negligible as most of this cost was capitalised up to the date of commissioning of our new interconnector. The taxation charge at £1.5m was higher than in 2013 due to higher profits. Group earnings per share increased 21% to 16.10p (24.26p pre-exceptional costs) compared to restated 13.27p in 2013 due mainly to an increase in profitability.

Dividends paid in the year, net of tax, rose by 5%, from 11.25p in 2013 to 11.80p in 2014. The proposed final dividend for this year is 7.20p, a 6% rise on the previous year. Dividend cover rose from 1.2 times in 2013 to 1.4 times (and to 2.1 times if exceptional costs are excluded) due to a higher level of profits.

Net cash inflow from operating activities, at £20.1m, was £9.2m higher than in 2013 with increased profitability, and a working capital benefit from a lower level of oil stocks, being the main reasons. Capital expenditure, at £33.06m rose from £26.9m last year with Normandie 3 project spend at £24.0m, being the most material. Proceeds of £1.8m were received from the sale of assets associated with our Foreshore disposal. Net debt, at the year-end was £20.2m being £15.0m higher than last year.

Our defined benefits pension scheme, which had a £0.8m deficit, net of deferred tax, at the 2013 year end marginally increased to a £1.1m deficit as at 30 September 2014. Although the year-on-year movement was relatively small there were material swings in both assets and liabilities which largely offset each other. Scheme assets rose 11% since the last year end but liabilities increased 12% due to a reduction in the discount rate applied reflecting sentiments in financial markets.

Notes to the accounts

Year ended 30 September 2014

1.   Basis of Preparation

The consolidated financial statements of Jersey Electricity plc, for the year ended 30 September 2014 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). 

While the financial information included in this preliminary 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.  The Group expects to publish full financial statements that comply with IFRS in early 2015.

The Group 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.

This information is provided by RNS

The company news service from the London Stock Exchange