At a meeting of the Board of Directors held on 20 December 2023, the final accounts for the year ended 30 September 2023 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 2023, or 2022, but is derived from those accounts. Statutory accounts for 2022 have been delivered to the Jersey Registrar of Companies, and those for 2023 will be delivered in early 2024. The auditor reported on the accounts for both years and their reports were unmodified.
A final dividend of 11.40p on the Ordinary and ‘A’ Ordinary shares in respect of the year ended 30 September 2023 was recommended (2022: 10.80p). Together with the interim dividend of 8.00p (2022: 7.60p) the proposed total dividend declared for the year was 19.40p on each share (2022: 18.40p).
The final dividend will be paid on 15 March 2024 to those shareholders registered on 23 February 2024. A dividend on the 5% cumulative participating preference shares of 1.5% (2022: 1.5%) payable on 1 July 2024 was also recommended.
The Annual General Meeting will be held on 5 March 2024 at 2.00 pm at the Powerhouse, Queen’s Road, St. Helier, Jersey.
The Chair, Phil Austin, comments:
Performance
The Group has achieved another solid year of operational and financial performance and is strategically well-positioned for the future. Wholesale prices have eased in the last year, but they remain high in relative terms, in what continues to be a challenging economic environment.
Our Energy Business delivered a Return on Assets of 7.2% in the year, restoring the under recovery of costs from prior years and bringing the 5-year rolling average to 6.2% within the target range of 6%-7%.
We implemented a 5% rise in tariffs in January 2023 to help keep pace with wholesale prices but, due to our strong hedged position, and coupled with contractual provisions, we have been able to significantly shelter Islanders from the recent turmoil in energy markets. However, whilst wholesale prices have recently come down, they remain well above our long-term hedged position and therefore we expect further upward pressure on retail prices over the next few years.
To give customers some certainty over the coming winter, we announced a further 12% tariff rise in June, to take effect from January 2024. As we look forward to 2025 – 2027, approximately one third of our energy is already hedged at fixed prices and our focus now is on transitioning our customers through this difficult period, whilst keeping bills as stable and at as low a cost as possible.
Our other businesses within the Group continued to perform in line with expectations, providing consistent year-on-year return.
The Board has recommended a final dividend for the year of 11.40p, a 6% rise on the previous year, payable on 15 March 2024.
Climate Change
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. At Jersey Electricity, we have made significant progress towards establishing our net-zero strategy, together with key priorities, metrics and targets. Details of our progress are set out on pages 22-33 of the 2023 Annual Report and Accounts.
Energy Security
This year we completed a review of our Supply Security Standard. The review was driven by the recent energy crisis, the demands of the Government of Jersey’s (GoJ) Carbon Neutral Roadmap
(CNR) and the French fishing dispute of 2021. Following this review, and subject to securing long-term tenure on our site at La Collette, the Board has approved a four-year £22.6m project to enhance our on-Island emergency generation capacity at La Collette Power Station.
While we continue to deploy solar PV across the Island, with a view to increasing energy sovereignty and long-term supply diversity, as well as supporting the local economy, we have at the same time continued more detailed investigations into the viability of offshore wind generation and how it might integrate into Jersey’s future energy system. We are actively engaging with GoJ to determine the future approach and role Jersey Electricity Plc (JE)should play in the development of such a project.
In Conclusion
I am very proud of the response efforts from the JE team and our customers following storm Ciarán. I wish to thank all our teams and fellow Board members for their hard work and dedication this past year, as well as our shareholders for their continued support. We have achieved much together during what has been a very successful year, while keeping Jersey Electricity on course to take advantage of the opportunities the future holds and meet the challenges it will demand of us.
Financial Performance
| Financial Highlights | 2023 | 2022 |
| Revenue | £125.1m | £117.4m |
| Profit before tax | £14.9m | £10.6m |
| Earnings per share | 36.81p | 27.17p |
| Dividend paid per share | 18.80p | 17.80p |
| Final proposed dividend per share | 11.40p | 10.80p |
| Net cash | £17.4m | £17.4m |
| In Year Return on Assets | 7.2% | 4.2% |
| Return on Assets – 5 year rolling average | 6.2% | 6.2% |
2022/23 has seen a return to a less volatile operating environment following the pandemic. Our hedging strategy for the procurement of power has protected us against a volatile wholesale energy market which has seen prices reach over 10 times historical levels in the same period. Escalating inflation has put pressure on the cost base as the business continues to maintain performance and build towards a decarbonised future. Our balance sheet continues to be healthy underpinned by high quality assets.
Group revenue for the year to 30 September 2023 increased year on year by £7.7m (6.5%) due to tariff price increases in the Energy Business. Revenue across the wider group remained in line with the previous financial year.
Group Profit before tax for the year to 30 September 2023 was £14.9m compared to £10.6m in 2022. The profit increase is attributed to £1.8m from the energy business and £1.6m income from interest earnings. In the year the energy business received a rebate of £3.6m relating to prior year wholesale energy costs and following a full review, our property portfolio was devalued by £1.2m.
Underlying profit before tax (excluding the impacts of the rebate and property valuation) was £12.5m in 2023 against £9.6m in 2022.
Energy Business: Operating Profit, excluding the rebate of past energy costs, at £9.3m, was £1.8m above the £7.5m achieved in 2022. This is due a £7.4m increase in revenues, following a tariff price increase on 1 January 2023 which has been offset by a £5.6m increase in wholesale energy costs and operating costs. Operating costs have increased due to increased inflation and increased investment in our systems and people, as we head into a period of increased capital investment and enhancing our capability as we continue to achieve our net-zero ambition and supporting the GoJ in meeting its Carbon Neutral Roadmap objectives and a net-zero Jersey.
Our 2023 in year Return on Assets (see other information, Alternative Performance Measures, p127 of the 2023 Annual report and Accounts) is 7.2% compared to 4.2% in 2022. This increase is effectively a ‘truing up’ of prior years under recovery and includes the rebate on prior year energy costs. We target Return on Assets to be within a 6% to 7% range over a 5-year rolling average basis. Our 2023 5-year rolling average Return on Assets is 6.2%.
Property: The £1.1m profit in our property division, is £0.3m lower than in 2022 due to one of the commercial spaces being vacated in March 2023. A new tenant is expected for the space during early 2024.
Powerhouse.je: Our Powerhouse retail business saw profits fall 22% from £1.2m to £0.9m, despite a marginal fall in revenues of 1%, due to increased overheads in staff and storage costs.
JEBS: Profits fell by £0.1m across our building services business due to an under recovery in revenue from a lower-than-expected number of fuel switches. The reduction was due to a slowing in the pace of switching for a short time as the government incentive scheme was being launched.
Other business units (Jersey Energy, Jendev, Jersey Deep Freeze and fibre optic lease rentals) produced combined profits of £0.6m, being £0.1m higher than last year.
Net interest income was £0.3m in 2023 compared to a net interest cost of £1.3m in 2022 due to a higher level of interest earned on deposits from rising interest rates. Taxation at £3.4m was higher than the previous year, due to increased taxable profits.
Group basic and diluted earnings per share, at 36.81p, compared to 27.17p in 2022, rose due to increased profitability. Dividends paid in the year, net of tax, rose by 6%, from 17.80p in 2022 to 18.80p in 2023. The proposed final dividend for this year is 11.40p, a 6% rise on the previous year. Dividend cover, at 2 times has increased from 1.5 times in 2022.
Net cash flows from operating activities at £17.6m was £3.6m lower than in 2022. Investing activities, at £11.4m, was 3% higher than the prior financial year. Dividends paid were £5.8m compared to £5.5m in 2022. The resultant position was that net cash at the year-end was £17.4m, being £30.0m of borrowings offset by £47.4m of cash and cash equivalents, which was the same as last year.
Consolidated Income Statement for the year ended 30 September 2023
| 2023 | 2022 | |||
| £000 | £000 | |||
| Revenue | 125,078 | 117,421 | ||
| Cost of sales | (80,924) | (77,242) | ||
| Rebate of past energy costs – non recurring item | 3,593 | – | ||
| Gross Profit | 47,747 | 40,179 | ||
| Movement in valuation of investment properties | (1,215) | 1,020 | ||
| Operating expenses | (32,010) | (29,293) | ||
| Group operating profit | 14,522 | 11,906 | ||
| Finance income | 1,871 | 218 | ||
| Finance costs | (1,528) | (1,523) | ||
| Profit from operations before taxation | 14,865 | 10,601 | ||
| Taxation | (3,432) | (2,135) | ||
| Profit from operations after taxation | 11,433 | 8,466 | ||
| Attributable to: | ||||
| Owners of the Company | 11,280 | 8,326 | ||
| Non-controlling interests | 153 | 140 | ||
| 11,433 | 8,466 | |||
| Earnings per share | ||||
| – basic and diluted | 36.81p | 27.17p |
Consolidated Statement of Comprehensive Income
| 2023 | 2022 | |||
| £000 | £000 | |||
| Profit for the year | 11,433 | 8,466 | ||
| Items that will not be reclassified subsequently to profit or loss: | ||||
| Actuarial (loss)/gain on defined benefit scheme | (815) | 8,976 | ||
| Income tax relating to items not reclassified | 163 | (1,795) | ||
| (652) | 7,181 | |||
| Items that may be reclassified subsequently to profit or loss: | ||||
| Fair value (loss)/gain on cash flow hedges | (3,361) | 4,815 | ||
| Income tax relating to items that may be reclassified | 672 | (963) | ||
| (2,689) | 3,852 | |||
| Total comprehensive income for the year | 8,092 | 19,499 | ||
| Attributable to: | ||||
| Owners of the Company | 7,939 | 19,359 | ||
| Non-controlling interests | 153 | 140 | ||
| 8,092 | 19,499 |
Consolidated Balance Sheet as at 30 September 2023
| 2023 | 2022 | ||
| £ 000 | £ 000 | ||
| NON-CURRENT ASSETS | |||
| Intangible assets | 681 | 967 | |
| Property, plant and equipment | 216,136 | 216,235 | |
| Right of use assets | 3,194 | 3,280 | |
| Investment properties | 27,615 | 28,830 | |
| Trade and other receivables | 300 | 300 | |
| Retirement benefit asset | 25,545 | 26,434 | |
| Derivative financial instruments | 129 | 2,640 | |
| Other investments | 5 | 5 | |
| Total non-current assets | 273,606 | 278,691 | |
| CURRENT ASSETS | |||
| Inventories | 9,187 | 7,173 | |
| Trade and other receivables | 25,959 | 19,934 | |
| Derivative financial instruments | 64 | 483 | |
| Cash and cash equivalents | 47,429 | 47,397 | |
| Total current assets | 82,639 | 74,987 | |
| Total assets | 356,245 | 353,678 | |
| LIABILITIES | |||
| Trade and other payables | 19,459 | 21,043 | |
| Current tax liabilities | 3,301 | 2,088 | |
| Lease liabilities | 81 | 69 | |
| Derivative financial instruments | 536 | 330 | |
| Total current liabilities | 23,377 | 23,530 | |
| NET CURRENT ASSETS | 59,262 | 51,457 | |
| NON-CURRENT LIABILITIES | |||
| Trade and other payables | 26,249 | 25,162 | |
| Lease liabilities | 3,193 | 3,251 | |
| Derivative financial instruments | 225 | – | |
| Financial liabilities – preference shares | 235 | 235 | |
| Borrowings | 30,000 | 30,000 | |
| Deferred tax liabilities | 31,422 | 32,126 | |
| Total non-current liabilities | 91,324 | 90,774 | |
| Total liabilities | 114,701 | 114,304 | |
| Net assets | 241,544 | 239,374 | |
| EQUITY | |||
| Share capital | 1,532 | 1,532 | |
| Revaluation reserve | 5,270 | 5,270 | |
| ESOP reserve | (35) | (38) | |
| Other reserves | (455) | 2,234 | |
| Retained earnings | 235,100 | 230,232 | |
| Equity attributable to owners of the company | 241,412 | 239,230 | |
| Non-controlling interests | 132 | 144 | |
| Total equity | 241,544 | 239,374 |
Consolidated Statement of Changes in Equity for the year ended 30 September 2023
| Share | Revaluation | ESOP | Other | Retained | Total | |
| capital | reserve | reserve | reserves* | earnings | ||
| £ 000 | £ 000 | £ 000 | £ 000 | £ 000 | £ 000 | |
| At 1 October 2022 | 1,532 | 5,270 | (38) | 2,234 | 230,232 | 239,230 |
| Total recognised income and expense for the year | – | – | – | – | 11,280 | 11,280 |
| Amortisation of employee share option scheme | – | – | 3 | – | – | 3 |
| Movement on hedges (net of tax) | – | – | – | (2,689) | – | (2,689) |
| Actuarial gain on defined benefit scheme (net of tax) | – | – | – | – | (652) | (652) |
| Equity dividends | – | – | – | – | (5,760) | (5,760) |
| At 30 September 2023 | 1,532 | 5,270 | (35) | (455) | 235,100 | 241,412 |
| 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 |
*’Other reserves’ represents the foreign currency hedging reserve.
Consolidated Statement of Cash Flows for the year ended 30 September 2023
| 2023 | 2022 | ||
| £000 | £000 | ||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||
| Operating profit | 14,522 | 11,906 | |
| Depreciation and amortisation charges | 11,581 | 11,094 | |
| Share based reward charges | 3 | 41 | |
| Loss/(gain) on revaluation of investment property | 1,215 | (1,020) | |
| Pension operating charge less contributions paid | 73 | 1,303 | |
| Deemed interest income from hire purchase arrangements | 183 | 50 | |
| Profit on sale of property, plant and equipment | (3) | (7) | |
| Operating cash flows before movement in working capital | 27,574 | 23,367 | |
| Working capital adjustments: | |||
| Increase in inventories | (2,014) | (257) | |
| Increase in trade and other receivables | (3,835) | (1,926) | |
| (Decrease)/increase in trade and other payables | (617) | 4,444 | |
| Net movement in working capital | (6,466) | 2,261 | |
| Interest paid | (1,368) | (1,380) | |
| Preference dividends paid | (9) | (9) | |
| Income taxes paid | (2,089) | (3,020) | |
| Net cash flows from operating activities | 17,642 | 21,219 | |
| CASH FLOWS FROM INVESTING ACTIVITIES | |||
| Purchase of property, plant and equipment | (13,046) | (11,001) | |
| Investment in intangible assets | (92) | (319) | |
| Deposit interest received | 1,688 | 168 | |
| Net proceeds from disposal of fixed assets | 3 | 7 | |
| Net cash flows used in investing activities | (11,447) | (11,145) | |
| CASH FLOWS FROM FINANCING ACTIVITIES | |||
| Equity dividends paid | (5,760) | (5,453) | |
| Dividends paid to non-controlling interest | (165) | (154) | |
| Repayment of lease liabilities | (242) | (206) | |
| Net cash flows used in financing activities | (6,167) | (5,813) | |
| Net increase in cash and cash equivalents | 28 | 4,261 | |
| Cash and cash equivalents at beginning of year | 47,397 | 43,136 | |
| Effect of foreign exchange rates | 4 | – | |
| Cash and cash equivalents at end of year | 47,429 | 47,397 |