Treasury and Resources
Ministerial Decision Report
JERSEY ELECTRICITY PLC 2015 ANNUAL GENERAL MEETING VOTING INSTRUCTIONS
- Purpose of Report
To consider the resolutions put forward for Jersey Electricity plc (JEC) Annual General Meeting (AGM) on Thursday 5 March 2015.
- 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 6 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 Thursday 5 March 2015.
- 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 2014
The company’s Annual Report and Accounts contains the full Directors’ Report, Accounts and Auditors Report. The following paragraphs summarise the key financial matters.
2013 numbers referred to below, have been restated due to JEC applying IAS 19 “Employee Benefits” for pension costs.
Group revenue for the year to 30 September 2014 was £98.4 million, 4% lower than the previous year. The Energy business contributed £79.5 million of this turnover, 3% lower than last year. Unit sales volumes of electricity were 6% lower than last year due to mild weather however tariff rises reduced the impact of the units shortfall.
Turnover in other business segments is summarised below:
- Retail £11.4 million – a decrease of 6%. The floor space utilized by the retail business was reduced substantially and was let to an external tenant from May 2014.
- Property (including internal revenues) £2.6 million – marginally fell by £0.3 million, mainly due to changes in tenancy arrangements during the year including the disposal of Foreshore.
- Building Services (JEBS) £4.2 million – rose by 3% on the previous year.
- Other businesses, including internal revenues remained at £3.2 million.
The cost of sales fell by £7.5 million to £68.5 million associated with mainly the milder weather experienced in 2014, compared with a colder than average 2013.
Operating expenses, excluding exceptional costs at £20.1 million were marginally lower than in 2013.
Interest paid in 2014 was negligible as most of these costs were capitalised to the date of commissioning for the new the Normandie 3 interconnector project.
Profit before tax, after exceptional costs, for the year to 30 September 2014 rose from £5.4 million to £6.5 million, reflected in a recovery of the Energy business.
Exceptional costs of £3.5 million were made up as follows:-
- Disposal of investment in Foreshore Ltd - £1.2 million
- Provision for JEC’s share of a preventative repair to the subsea cable between Guernsey and Jersey - £1.8 million
- Restructuring costs in retail business - £0.6 million
The taxation charge for the year at £1.5 million was higher than 2013 (£1.2 million) due to higher taxable profits.
Group earnings per share increased 21.3% to 16.10p (24.26p pre-exceptional costs) compared with 13.27p (restated) in 2013 due to an increase in profitability. The restatement relates to the impact of applying IAS 19 “Employee Benefits” for pension costs, restating the 2013 Operating profit figure downwards by £1.1 million (reducing earning per share by 3.12p in 2013.)
Over the last two years, JEC has moved from a period of holding cash resources on the balance sheet to requiring debt due to continued investment in infrastructure assets, and in particular the
N3 interconnector to France. In late 2012, a two-year banking facility was established to cover the expected period when the new interconnector was being manufactured and commissioned.
It was always planned that once the final project cost and the participation of Guernsey Electricity in the project was clearer, that longer-term financing would be put in place to largely mirror the
expected life of the assets in which Jersey Electricity Plc was investing in.
In 2013/14 long-term funding for £30 million was obtained by way of a private placement. This was made up of £15 million for 20 years and a further £15 million for 25 years. The proceeds were received in July from Pricoa Capital Group (an affiliate of Prudential Financial, Inc.). This was further supplemented with a 5 year £40 million revolving credit facility from The Royal Bank of Scotland International Limited which provides flexibility as the timing of further planned capital expenditure.
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 and company’s affairs as at 30 September 2014 and of the group’s profit for the year then ended;
- have been properly prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union; and
- 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. Huntress Nominees (CI) Limited is the largest shareholder for the listed shares, representing 4.6% of the total voting rights. It is understood that the underlying owners of these shares are substantially private investors based in the Channel Islands.
The proposed final dividend for this year is 7.20p per share, net of tax, a 5.9% increase on the previous year’s final dividend (2013: 6.80p). During the year an interim dividend of 5.0p per share, net of tax, was paid (2013: 4.75p).
3.3 Ordinary Resolutions 3 and 5 - 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 Geoffrey J Grime as a Director of the Company:-
Geoffrey joined the Board in 2003. He retired in 1999 as Chairman of Abacus Financial Services, a leading offshore trust company in which he played an instrumental role as one of its founders. A Chartered Accountant, his career in Jersey commenced in 1969 with Cooper Brothers & Co. and progressed to his appointment as Channel Islands Senior Partner of Coopers & Lybrand in 1990. He currently holds a number of professional appointments as both Director and Trustee. In November 2002 he was elected as a Deputy in the States of Jersey and he retired from that position in December 2005. In September of 2014 he was elected as a Jurat of the Royal Court of Jersey where he sits as a lay judge.
Re-elect Clive A C 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 of Jersey in 1985 and from
1994 until his retirement on 31 January 2012 was a partner of Ogier. He remained Chairman of its
Fiduciary Services Holding Company until 31 January 2014. He is now Chairman of Bathroom Brands Plc and a Director of a number of companies operating in the financial services sector.
He is also Chairman of the Jersey Law Commission. He is Chairman of the Remuneration Committee.
Re-elect Mike J Liston as a Director of the Company:-
Mike joined Jersey Electricity Plc in 1986 from the UK Power industry as Chief Engineer and was Chief Executive for 15 years before retiring in 2008 to focus on his portfolio of Directorships with listed investment funds and operating companies in the international energy infrastructure, wind, solar and bio-fuels sectors. His current Board roles include Chairman of London-listed, Renewable Energy Generation Ltd, and Chairman of the postal utility, Jersey Post. His private equity and venture capital Directorships include the global Fiduciary Services firm, JTC Group. Mike is a Fellow of the Royal Academy of Engineering and a Fellow of the Institution of Engineering
and Technology. He was until 2010, Chairman of the Jersey Appointments Commission, established by government to ensure probity in public sector appointments. Mike was awarded an OBE in Her Majesty the Queen’s 2007 New Year Honours List and in 2012 he was elected Jurat of the Royal Court of Jersey, where he sits as a lay judge.
3.4 Ordinary Resolution 6 - 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 2014 the Auditors were remunerated £79,000 for audit services.
- Recommendation
The Treasurer of the States and Greffier of the States are 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 5th March 2015.
- 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 2015 |
Quality Assurance / Review : Head of Decision Support | File name and path: L:\Treasury\Sections\Corporate Finance\Ministerial Decisions\DSs, WRs and SDs\2015-0025 - JEC 2015 AGM\WR - JEC 2015 AGM.doc |
MD sponsor : Head of Shareholder Relations |
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