Treasury and Resources
Ministerial Decision Report
Jersey Electricity plc 2019 Annual General Meeting voting instructions
- Purpose of Report
To consider the resolutions put forward for the Jersey Electricity plc (“JEC”) Annual General Meeting (“AGM”) on Thursday 28th February 2019.
- Background
The States of Jersey is holder of all of the Ordinary 5p shares which amounts to 62% of the ordinary share capital of the JEC. This represents 86.4% of the total voting rights. The Directors of the company have proposed 10 Ordinary resolutions to be considered at the AGM. These are outlined below and in the Notice of Annual General Meeting (Appendix A) and Form of Proxy (Appendix B).
- Resolutions
The following resolutions have been put forward for consideration at the AGM.
Ordinary Resolution 1 – To receive the accounts and the reports of the Directors and the Auditors thereon for the year ended 30 September 2018.
The company’s Annual Report and Accounts contains the full Directors’ Report, Accounts and Auditors Report. A copy of the Report and Accounts 2018 is attached as Appendix C. The following paragraphs summarise the key financial matters.
Group revenue for the year to 30th September 2018 was £105.9 million, which was 4% higher than the previous financial year.
Pre-tax profits, rose by nearly 14% to £15.3 million from £13.5 million in 2017.
Unit sales volumes of electricity increased by 2%, largely driven by weather increasing energy revenues to £80.5 million against £82.3 million. Volumes increased from 621m to 634m kilowatt hours. Profits in the Energy business rose marginally from £11.7 million to £13.4 million. The higher level of sales resulted in an improved gross margin which was supplemented by ongoing initiatives to reduce both manpower and maintenance costs. Customer tariffs rose by 2% in June 2018, which accounted for £0.4 million of the increase.
Turnover/Profit (external only) in other business segments was as follows:-
- Retail: Turnover was £13.6 million – an increase of 5% on 2017. Profit was £0.8 million compared to £0.7 million in 2017.
- Property: Turnover was £2.3 million - which was £0.1milion up from 2017. Profit excluding the impact of investment property revaluation, at £1.8 million, was £0.2 million above that of 2017.
- Building services (JEBS): Turnover was £4.8 million, an increase of £0.8 million. A loss of £0.2 million was incurred against a profit of £0.1 million in 2017 as the business was impacted by both a decline in margins and some exceptional costs.
- Other businesses (Jersey Energy, Jendev and Jersey Deep Freeze and fibre optic lease rentals): Turnover was £2.9 million, up £0.2million on 2017. Profits were £0.6 million being 12% higher than 2017.
Cost of sales increased by £2.1 million to £65.1 million, with an increase in import costs in the Energy business and higher sales activity in the Powerhouse retail business being the main reasons.
Net Interest paid in 2018 was £1.3 million, being £0.1 million higher than 2017.
The taxation charge at £3.2 million was £0.3 million higher than 2017 due mainly to the increase in profit.
Dividends paid in the year, net of tax, rose by 5% from 13.8p in 2017 to 14.5p in 2018. The proposed final dividend for the year is 8.8p, a 5% rise on the previous year.
Capital expenditure for the year was £14.9 million compared to £15.1 million in the previous year, with spend on the St Helier West primary sub-station being the most material project.
Net debt at the financial year end was £14.3 million which was £7.6 million lower than 2017.
Defined benefit pension scheme – as at 30th September 2018 the scheme surplus under IAS 19 “Employee Benefits” rules was £3.8 million, net of deferred tax, compared with a deficit of £3.4 million as at 30th September 2017. The defined benefits pension scheme is identified as an area of risk that continues to require careful monitoring. The final salary scheme was closed to new members in 2013. The last triennial actuarial valuation of the defined benefit scheme was as at 31st December 2015. The next funding valuation is due no later than 31st December 2018.
Ordinary Resolution 2 – To declare a dividend
62% of the ordinary share capital of the Company is owned by the States of Jersey with the remaining 38% held by around 600 shareholders via a full listing on the London Stock exchange.
A final dividend of 8.80 pence on the Ordinary and “A” shares for the year ended 30th September 2018 is recommended for payment by the Directors. If approved, this will be paid on 28th March 2019 to shareholders who were on the register of members at the close of business on 22nd February 2019.
A participating dividend of 1.5 per cent per annum less Income Tax on the Cumulative Participating Preference Share Capital for the period ended 30th September 2018 will also become payable, 1st July 2017, to Shareholders on the Register on 1st June 2019.
Ordinary resolutions 3 to 9 – Re-election of Directors
The Board has made a decision that all Directors will seek re-election annually at each AGM. Geoffrey Grime will be formally stepping down as Chairman, and from the Board, at the AGM. It is the intention that Phil Austin will take over as Chairman.
Resolution 3 – To re-elect P Austin as a Director of the Company
Joined the Board in May 2016. Sits on Remuneration Committee. CV as per Report and Accounts (page 43).
Resolution 4 – To re-elect A D Le Cornu as a Director of the Company
Joined the Board in January 2011. Sits on the Audit and Risk and Remuneration Committees. CV as per Report and Accounts (page 42).
Resolution 5 – To re-elect Mr A A Bryce as a Director of the Company.
Joined the board in December 2015. Sits on the Audit and Risk Committee and Nominations Committee. CV as per Report and Accounts (page 43).
Resolution 6 – To re-elect W J Dorman as a Director of the Company
Joined the Board in July 2016. Sits on the Audit and Risk Committee and the Nominations Committee. CV as per Report and Accounts (page 43).
Resolution 7 – To re-elect T Taylor as a Director of the Company
Joined the Board in September 2017. Sits on the Remuneration Committee and Nominations Committee. CV as per Report and Accounts (page 43).
Resolution 8 – To re-elect C J ambler as a Director of the Company
Appointed to the Board as Chief Executive in October 2008. CV as per Report and Accounts (page 42).
Resolution 9 – To re-elect MP Magee as a Director of the Company
Appointed to the Board as Finance Director in May 2002. CV as per Report and Accounts (page 42).
Resolution 10 – To re-appoint the Auditors and authorise the Directors to agree their remuneration.
Resolution 10 relates to the appointment of Deloitte LLP as the Company’s auditors to hold office until the next AGM of the Company and authorises the Directors to set their remuneration.
It should be noted that the Directors have delegated the responsibility of setting the auditors’ remuneration to the Board’s Audit & Risk Committee. The Audit fee for 2018 was £90,000 compared with £94,000 for 2017.
- Recommendation
The Assistant Minister for Treasury and Resources is recommended to instruct the Treasurer of the States and the Greffier of the States to vote by proxy in favour of the resolutions to be put before the Annual General Meeting of Jersey Electricity plc on the 28th February 2019.
- Reason for Decision
To fulfil the States’ role as shareholder of the Jersey Electricity plc by exercising voting rights at the Annual General Meeting.
The States of Jersey is holder of all of the Ordinary 5p shares which amounts to 62% of the ordinary share capital of Jersey Electricity plc. This represents 86.4% of the total voting rights. The Directors of the Company have proposed 7 Ordinary resolutions to be considered at the AGM. These are outlined in the report and in the Notice of Annual General Meeting (Appendix A) and Form of Proxy (Appendix B).
- Resource Implications
The financial implications are as detailed above.
Report author : Head of Shareholder Relations | Document date: 21st February 2019. |
Quality Assurance / Review : Head of Decision Support | File name and path: L:\Treasury\Sections\Corporate Finance\Ministerial Decisions\DS, WR and SD\2019-0021 - Jersey Electricity plc 2019 Annual General Meeting Voting Instructions |
MD sponsor : Director, Treasury and Investment Management |
gov.je