Jersey Electricity (LON:JLEC) delivered for both shareholders and customers in FY17. After an extended period of heavy investment in infrastructure, we believe JEL is well placed to continue to provide secure, sustainable and affordable electricity for its customers, generate attractive returns for shareholders and adapt to any regulatory changes. JEL has established an impressive track record of DPS growth (five-year CAGR c 5%) and shareholders should look forward to continuing growth in the DPS (we forecast c 5% pa) underpinned by a strengthening balance sheet.
Stable returns for shareholders in FY17
JEL posted another year of stable returns in FY17. PBT before exceptional items rose by 2.5% to £13.5m, (our forecast: £13.4m), despite a c 1% decline in revenues. Due to the significant fall in capex, from £32.4m in FY16 to £15.1m in FY17, net debt reduced from £29.0m to £21.9m over the period. We expect another year of stable profits and capex in FY18 and forecast a fall in net debt to £16.9m. The FY17 DPS was increased by 5% to 14.2p, in line with our forecasts. We expect further growth in the DPS of 5% pa, but the improving balance sheet position will allow JEL greater flexibility in determining the level of the payment.
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