Treasury and Resources
Ministerial Decision Report
JERSEY ELECTRICITY PLC 2013 ANNUAL GENERAL MEETING VOTING INSTRUCTIONS
- Purpose of Report
To consider the resolutions put forward for Jersey Electricity plc (JEC) Annual General Meeting (AGM) on Monday 4 March 2013.
- Background
The States of Jersey is the holder of all the Ordinary 5p shares of the JEC which represents 86.4% of the total voting rights. The directors of the company have proposed 5 ordinary resolutions to be considered at the AGM, these are outlined below and in the Notice of Annual General Meeting (Appendix B) and Form of Proxy (Appendix C). The AGM will be held on Monday 4 March 2013.
- Resolutions
The following resolutions have been put forward for consideration at the AGM.
3.1 Ordinary Resolution 1 -To receive the accounts and the reports of the Directors and the Auditors thereon for the year ended 30 September 2012
The company’s Annual Report and Accounts contains the full Directors’ Report, Accounts and Auditors Report. The following paragraphs summarise the key financial matters.
Group revenue for the year to 30 September 2012 was £97.18m, 3% lower than the previous year. The Energy business contributed £72.9m of this turnover, 2% lower than last year, in line with unit sales volumes being 2% lower due to the mild weather, other revenues were down in building and retail areas. On 1st May 2012 a price rise took effect at 2.9%.
Turnover in other business segments is summarised below:
- Retail £15.5m – decrease of 6%, about half of this reduction relating to the e-retailing internet business, daytodayshop.com which JEC closed in August 2012 due to the ending of the Low Value Consignment Relief (LVCR) tax concession by the UK Government.
- Property (including internal revenues) £2.8m – fell by £0.1m due to the loss of a commercial tenant.
- Building Services £4.2m – decrease of 11% on the previous year.
- Other businesses £2.7m – increased by £0.1m, with revenue increases seen in both Jendev and Jersey Energy.
The cost of sales fell by £0.6m to £69.3m associated with the rise in revenues in JEC’s Energy and Retail business units. Operating expenses at £20.9m were £1.3m higher than in 2011. The increase in costs was largely due to the interconnector issues during the year with £0.9m relating to the portion of uninsured risk on the Guernsey-Jersey cable repair (repair cost £9m) and an estimated £0.5m cost to decommission the failed interconnector to France being the most material movements.
Profit before tax, for the year to 30 September 2012 declined from £11.1m to £5.7m. This reduction was mostly due to JEC’s Energy business seeing a £3.5m of this reduction with mild weather (unit sales down 2%) and issues directly and indirectly associated with interconnector failures during the year being the primary drivers. In addition, the non-cash, £1.1m impairment of their investment in Foreshore Ltd was the other material reason for reduced year-on-year group profit.
During 2012 JEC received £0.2m in proceeds from the sale of their remaining shares/loans in Newtel.
Interest received on deposits of £0.3m remained in line with 2011 with a lower cash level offset by marginally better achieved returns..
The taxation charge for the year at £1.8m was lower than 2011 because of reduced profits.
Group earnings per share fell 55% to 12.55p compared with 28.05p in 2011 due to lower profits in the energy business as a result of seeing a reduction in volumes due to the mild weather and issues directly and indirectly associated with interconnector failures during the year being the primary drivers. In addition, the non-cash, £1.1m impairment of their investment in Foreshore Ltd was the other material reason.
The opinion provided in the Auditors’ Report, signed by Deloitte LLP, is that:
- In our opinion the financial statements give a true and fair view of the state of the Group’s and the parent company’s affairs as at 30 September 2012 and of the Group’s profit for the year then ended;
- the financial statements have been properly prepared in accordance with IFRs as adopted by the European Union; and
- the financial statements have been properly prepared in accordance with the Companies (Jersey) Law 1991.
Appendix A provides a summary of the key performance figures.
3.2 Ordinary Resolution 2 - To declare a dividend
86.4% of the total voting rights are owned by the States of Jersey with the remaining 13.6% held by other shareholders via a full listing on the London Stock Exchange. Of the other listed shareholders there is one large institution, Utilico Limited, which represents 4.5% of the total voting rights.
The proposed final dividend for this year is 6.50p per share, net of tax, the same level as the previous year’s final dividend. During the year an interim dividend of 4.50p per share, net of tax, was paid (2011 4.25p).
In 2011 a special one-off dividend of 3.25p per share was received for the proceeds distributed from JEC’s associate – Newtel, for the sale of assets.
3.3 Ordinary Resolutions 3 and 4 - To Re-elect Directors of the Company
In accordance with Article 127 of the Company’s articles, the following Directors are seeking re-election to the board of directors:-
Re-elect Mike J Liston as a Director of the Company:-
Having previously held a number of senior posts in the United Kingdom’s Electricity Supply Industry, Mike joined Jersey Electricity in 1986 as Chief Engineer and was Chief Executive for 15 years before retiring in 2008 to focus on his non-executive directorships.
He is Chairman of AIM listed, Renewable Energy Generation Limited, and Chairman of the postal
utility, Jersey Post. He also sits on the boards of private equity and venture capital companies in the international solar energy sector. Mike is a Fellow of the Royal Academy of Engineering and a
Fellow of the Institution of Engineering and Technology where he has served on its Council, Audit and Disciplinary Committees.
He is a Companion of the Chartered Management Institute and past Chairman of its Jersey Branch. He was until 2010, Chairman of the Jersey Appointments Commission, which was established by government to ensure probity in public sector appointments.
He is Chairman of the Nominations Committee. Mike was awarded an OBE in 2007.
Re-elect Clive A Chaplin as a Director of the Company:-
Clive joined the board in 2003. He trained as a solicitor in London qualifying in 1977 and moved to Jersey in 1979. He was admitted as a solicitor of the Royal Court, Jersey, in 1985 and since 1994 has been a partner of Ogier. He retired as a partner of the firm on 31st January 2012 but remains a consultant to the Ogier Group and Chairman of its Fiduciary Services Holding Company. He is a director of a number of other companies operating in the financial services sector and is also Chairman of the Jersey Law Commission. He is Chairman of the Remuneration Committee.
3.4 Ordinary Resolution 5 - To re-appoint the Auditors and authorise the Directors to agree their remuneration
In accordance with Article 178, It is proposed to re-appoint Deloitte LLP as the auditors until the next Annual General Meeting.
For the year to 30 September 2012 the Auditors were remunerated £75,000 for audit services.
- Recommendation
The Treasurer of the States and Greffier of the States is recommended to vote, by proxy, in favour of the resolutions to be put before the Annual General Meeting of The Jersey Electricity Plc on the 4th March 2013.
- Reason for Decision
To fulfill the States’ role as shareholder of the Jersey Electricity Plc by exercising voting rights at the Annual General Meeting.
- Resource Implications
The financial implications are as detailed in the report.
Report author : Head of Shareholder Relations | Document date : 19th February 2013 |
Quality Assurance / Review : Treasurer of the States | File name and path: L:\Treasury\Sections\Corporate Finance\Ministerial Decisions\DSs, WRs and SDs\2013-0010 - JEC 2013 Annual General Meeting Voting Instructions - LJR\WR - JEC 2013 Annual General Meeting Voting Instructions - LJR.doc |
MD sponsor : Treasurer of the States |
gov.je