DRIVING CHANGE FOR A
ZERO-CARBON FUTURE
INTERIM REPORT 2021
6 months ended 31 March 2021
CONTENTS | DIRECTORS, OFFICERS AND |
PROFESSIONAL ADVISERS |
DIRECTORS' STATEMENT | 2 |
CONDENSED CONSOLIDATED INCOME STATEMENT (UNAUDITED) | 4 |
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE | |
INCOME (UNAUDITED) | 5 |
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED) | 6 |
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY | |
(UNAUDITED) | 7 |
CONDENSED CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED) | 8 |
NOTES TO THE CONDENSED INTERIM ACCOUNTS (UNAUDITED) | 9 |
NON-EXECUTIVE DIRECTORS
Phil Austin MBE, FCIB, FCMI (Chairman)
Alan Bryce MSc, CEng, FIET
Wendy Dorman BA, ACA
Tony Taylor BSc
Peter Simon MA, MBA (Distinction)
Amanda Astall BA (Hons)
EXECUTIVE DIRECTORS
Christopher Ambler BA, MEng, CDipAF, CEng, MIMechE, MBA
(Chief Executive)
Martin Magee CA (Finance)
SECRETARY
Lisa Floris LLB (Hons)
REGISTERED OFFICE
Queen's Road, St. Helier, Jersey
PLACE OF INCORPORATION
Both Jersey Electricity plc ('the Company') and Jersey Deep Freeze Limited (together 'the Group') are incorporated in Jersey.
AUDITORS
PricewaterhouseCoopers CI LLP, 37 Esplanade, St Helier, Jersey, JE1 4XA
BANKERS
Royal Bank of Scotland International Limited, 71 Bath Street, St. Helier, Jersey
BROKERS
Canaccord Genuity Wealth Management,
PO Box 3, 37 The Esplanade, St. Helier, Jersey
REGISTRAR
Computershare Investor Services (Jersey) Limited, 13 Castle Street, St. Helier, Jersey
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DIRECTORS' STATEMENT
Financial Summary
6 months | 6 months | |
2021 | 2020 | |
Electricity Sales in kWh | 374.9m | 371.4m |
Revenue | £67.1m | £64.2m |
Profit before tax | £10.5m | £10.0m |
Earnings per share | 27.00p | 25.95p |
Final dividend paid per ordinary share | 9.70p | 9.25p |
Proposed interim dividend per ordinary share | 7.20p | 6.80p |
Net cash/(debt) | £5.9m | £(2.9m) |
COVID-19 - impact on trading performance
The pandemic continued throughout the period since the end of our last financial year but did not materially impact our overall trading performance. In our Energy business we saw lower unit sales in the hospitality and retail sectors, due to lockdown measures but this was more than offset by increased domestic consumption associated with a combination of "home-working", and a colder winter period than in the previous year. Our other business units have not been greatly affected by the COVID-19 crisis, and as highlighted in our 2020 Annual Report, our Retail business continues to benefit from customers appearing to have more spending power, due to less travel taking place. We will continue to closely monitor the COVID-19 position as it develops, as we cannot be complacent, but our balance sheet, with no gearing, remains strong.
Brexit - licensing of French fishing vessels
In early May, post the balance sheet date, there was extensive media coverage of a dispute relating to a new licensing system for French fishing vessels in Jersey waters, introduced under the UK-EU Trade and Cooperation Agreement (TCA). During this incident, the French Maritime Minister made reference, within the French Parliament, to implementing retaliatory measures, including the possibility of cutting off electricity supplies transported to Jersey via submarine cables. The Company consider this a political issue to be resolved between the governments. Furthermore, we have strong relationships with our French partners, EDF (as supplier) and RTE (as network operator), that spans more than 35 years, and benefits from legal and contractual arrangements which cover imported electricity supplies to the end of 2027. Both RTE and EDF have confirmed our existing supply arrangements are unlikely to be impacted.
Overall trading performance in the 6 months to 31 March
Group revenue, at £67.1m, was 5% higher for the first half of 2020 compared to the same period last year mainly due to a rise in both Energy and Retail revenue. Profit before tax at
£10.5m was £0.5m higher than 2020 primarily due to a rise in Property and Retail profits. Cost of sales at £41.7m was £2.5m higher than last year with the rise in wholesale energy costs, and additional stock purchases associated with the increase
in Retail revenue being the main factors. Operating expenses at £14.1m were marginally lower than last year. The taxation charge in the period of £2.2m was £0.1m higher than last year due to increased profits. Earnings per share, at 27.00p, were ahead of 25.95p in 2020 due to higher profits. Net cash on the balance sheet, which comprises borrowings less cash and cash equivalents, at 31 March 2021, was £5.9m compared to £2.9m of net debt at this time last year (and £5.5m of net cash at our last year end on 30 September 2020).
Energy performance
Unit sales of electricity rose 1% from 371m to 375m kWh, compared with the same period last year. The mix of consumption altered from the same period in the prior year with lower sales to the commercial marketplace more than offset by increased domestic consumption associated with "home-working" and colder weather than in the previous year. Revenues in our Energy business at £52.0m were £1.8m higher than in 2020 with the year-on-year increase in unit sales and the 2.5% tariff rise in October 2020 being the primary drivers. Operating profit at £9.2m was £0.1m higher than the corresponding period last year as the increased revenue was largely offset by higher costs including increased wholesale import prices. We imported 96% of our on-island requirement from France and 4% from the Energy from Waste plant, owned by the Government of Jersey. Only
0.3% (around 1m units) of electricity was generated in Jersey using our traditional oil-fired plant (mainly for testing purposes) and we also saw a rising trend in our solar generation albeit still at a relatively low level compared to overall requirements. These importation and generation levels were materially consistent with the same period last year.
Non-Energy performance
Year-on-year revenue in our Powerhouse retail business, rose by 12% to £10.7m (2020: £9.6m) and profits rose by £0.2m to £1.0m with continued strong revenue growth linked to a combination of factors including a substantial proportion of customers having more disposable income due to an inability to travel, resulting from COVID-19 restrictions. Profit from our Property portfolio at £0.8m was £0.3m higher than last year, as we had an accelerated depreciation charge for air conditioning equipment of £0.4m, in our Powerhouse building, in the same period last year. JEBS, our building services unit, saw external revenue falling £0.3m to £1.6m and profitability at breakeven level compared to a profit of £0.1m last year. Our remaining business units produced profits of £0.3m being marginally behind that delivered in 2020.
Liquidity and cashflow
Net cash generated in the period was £0.4m (2020: £2.2m) post the continued investment in infrastructure of £4.8m (2020: £5.1m). The net debt figure of £2.9m at 31 March 2020 moved to a net cash figure of £5.9m at 31 March 2021 (being net cash of £5.5m at 30 September 2020). Net cash consists of £30.0m of long-term debt offset by cash and cash equivalents of £35.9m.
Forward 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
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tariffs, despite volatility in both European wholesale electricity | Valuation of investment properties |
and foreign exchange markets. We are seeing a rising trend in | We formally revalue investment properties, using an external |
future wholesale prices in Europe, associated with carbon prices | valuer, once per annum to coincide with our financial year |
reaching record levels, and we continue to monitor this position. | end, and any movement is reflected in our Income Statement. |
Our electricity purchases are materially, albeit not fully, hedged | The value of such properties at 30 September 2020 was |
for the period 2021-23. We also have around one third of our | around £22m, compared to the total net asset value, on our |
expected 2024-27 liabilities hedged at known prices. As these | Consolidated Balance Sheet, of around £206m. We have not |
are contractually denominated in the Euro, we enter into forward | revalued at this interim stage being consistent with previous |
foreign currency contracts, on a three-year rolling basis, to | practice. The overall value of our investment properties may have |
reduce the volatility of our cost base, and to aid tariff planning. | risen, despite uncertainties of COVID-19, due to the restructuring |
In October 2020 we implemented a 2.5% rise in customer tariffs, | of one of our commercial leases in late March, along with current |
largely driven by a rising trend in wholesale electricity prices, | buoyancy in the residential sector. |
which we had delayed from 1 April 2020, in response to the | Dividend |
COVID-19 crisis. The tariffs payable by an average customer | |
Your Board proposes to pay an interim net dividend for 2021 of | |
continue to benchmark well against other jurisdictions. The | |
7.20p (2020: 6.80p). As stated in previous years, we continue to | |
'default maximum tariff', introduced by Ofgem (the UK electricity | |
aim to deliver sustained real growth each year over the medium- | |
regulator) to cap prices payable in the UK, is set at a level over | |
term. At this time, we do not expect the COVID-19 outbreak to | |
35% higher than the average standard domestic tariff in Jersey. | |
influence our dividend strategy, but we will continue to review the | |
Pension scheme | |
position. The final dividend for 2020 of 9.70p, paid in late March | |
The defined benefit pension scheme surplus (without deduction | |
in respect of the last financial year, was an increase of 5% on the | |
of deferred tax) on our balance sheet at 31 March 2021 stood | previous year. |
at £17.1m, compared to a surplus of £7.3m at 30 September | Risk and outlook |
2020 (and a surplus of £14.3m at 31 March 2020). Since the last | |
financial year end, scheme liabilities have materially decreased | The principal risks and uncertainties identified in our last Annual |
by approximately £10m (to £140m). This fall was primarily due | Report, issued in January 2021, have not materially altered in |
to an increase to the discount rate assumptions from 1.6% at the | the interim period. We however have highlighted earlier in this |
last financial year end to 2.1% at 31 March 2021 associated with | report, the current Brexit related fishing rights dispute, which |
a rise in UK AA corporate bond yields in the interim. Assets in the | will hopefully be resolved in due course. Your Board is satisfied |
Scheme rose by around £1m (to £157m). The defined benefit | that Jersey Electricity plc has sufficient resources to continue in |
scheme has been closed to new members since 2013 and the | operation for the foreseeable future, a period of not less than |
next triennial valuation of the scheme, as at 31 December 2021, | 12 months from the date of approval of this report. Accordingly, |
will be performed in 2022. | 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 | (d) this half yearly interim report contains certain forward- | |
prepared in accordance with IAS 34 'Interim Financial | looking statements with respect to the operations, | ||
Reporting'; | performance and financial condition of the Group. By | ||
(b) | the Interim Directors Statement includes a fair review of the | their nature, these statements involve uncertainty since | |
information required by the Disclosure and Transparency | future events and circumstances can cause results and | ||
Rule DTR 4.2.7R (indication of important events during | developments to differ materially from those anticipated. | ||
the first six months and description of principal risks and | The forward-looking statements reflect knowledge and | ||
uncertainties for the remaining six months of the year); and | information available at the date of preparation of this | ||
(c) | the Interim Directors Statement includes a fair review of the | half yearly financial report and the Company undertakes | |
no obligation to update these forward-looking statements. | |||
information required by the Disclosure and Transparency | |||
Nothing in this half yearly financial report should be | |||
Rule DTR 4.2.8R (disclosure of related party transactions | |||
construed as a profit forecast. | |||
and changes therein); and | |||
C.J. AMBLER - Chief Executive | M.P. MAGEE - Finance Director | 13 May 2021 |
Investor timetable for 2021
4 | June | Record date for interim ordinary dividend | |
25 | June | Interim ordinary dividend for year ending 30 September 2021 | |
1 | July | Payment date for preference share dividends | |
15 | December | Preliminary announcement of full year results | |
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FINANCIAL STATEMENTS
Condensed Consolidated Income Statement (Unaudited)
Six months ended | Six months ended | Year ended | |||||
31 March | 31 March | 30 September | |||||
2021 | 2020 | 2020 | |||||
Note | £000 | £000 | £000 | ||||
Revenue | 2 | 67,098 | 64,198 | 111,747 | |||
Cost of sales | (41,743) | (39,287) | (69,695) | ||||
Gross profit | 25,355 | 24,911 | 42,052 | ||||
Profit on revaluation of investment properties | - | - | 515 | ||||
Operating expenses | (14,108) | (14,152) | (26,360) | ||||
Group operating profit | 2 | 11,247 | 10,759 | 16,207 | |||
Finance income | 26 | 89 | 139 | ||||
Finance costs | (779) | (806) | (1,516) | ||||
Profit from operations before taxation | 10,494 | 10,042 | 14,830 | ||||
Taxation | 3 | (2,162) | (2,064) | (3,090) | |||
Profit from operations after taxation | 8,332 | 7,978 | 11,740 | ||||
Attributable to: | |||||||
Owners of the Company | 8,274 | 7,953 | 11,624 | ||||
Non-controlling interests | 58 | 25 | 116 | ||||
8,332 | 7,978 | 11,740 | |||||
Earnings per share | |||||||
- basic and diluted | 27.00p | 25.95p | 37.94p | ||||
In 2020 the Directors made a classification change in relation to the amortisation of deferred infrastructure charges. In order to present the results in a consistent format, the Directors have reclassified the prior half year reported results, increasing both Operating expenses and Revenue by £221k, with no impact on Group operating profit.
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Jersey Electricity plc published this content on 18 May 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 18 May 2021 08:34:03 UTC.