Treasury and Resources
Ministerial Decision Report
Jersey New Waterworks Company Limited 2012 Annual General Meeting voting instructions
- Purpose of Report
To consider the resolutions put forward for Jersey New Waterworks Company Limited (JNWW) Annual General Meeting on Friday 20th April 2012.
- Background
JNWW is a public company with its ordinary shares being traded, relatively infrequently, (the current price being in the region of £4.70). The States of Jersey is the majority shareholder owning 100% of ‘A’ Ordinary shares, 50% of the issued Ordinary shares and a substantial holding of Preference Shares. This gives the States of Jersey 83% of voting rights.
At the 2011 AGM resolutions were passed to revise the company’s capital structure. The reorganisation was carried out during 2011 as a result of which the number of equity shares in issue increased by a factor of twenty. Accordingly, dividends declared and proposed since the capital reorganisation have been reduced to take into account the increase in shares.
- Resolutions
The following resolutions have been put forward for consideration at the AGM.
3.1 Ordinary Resolution 1 -To receive the Financial Statements and the Directors and Auditors Report of the Jersey New Waterworks Company Limited for the year end 31 December 2011
The following paragraphs summarise the key financial matters that are included the company’s Financial Statements: -
Turnover for 2011 was £14,811,000 (2010: £14,652,000), water related income totalled £13,973,000 (2010: £13,854,000). Prices for metered water remained unchanged in 2011 whilst those for unmeasured water increased by 1.5% from 1 April 2011
Operating expenditure for the year was £9,953,000 (2010: £9,594,000). This 3.7% increase is due to the following factors: -
- In 2011 there were costs of £240,000 associated with the operation of the desalination plant due to long dry periods of weather. Production of desalinated water commenced on 2 November 2011 and the company produced 200 million litres of water. Production of water at the desalination plant ceased on 16 December 2011.
- In 2011 there were one off charges in relation to staff changes totalling £128,000.
- There were unavoidable increases in completed works depreciation of £196,000 associated with the roll out of metering, mains renewals and other important capital projects. However these costs were offset by other savings in operating expenditure.
The operating profit for the year was £4,858,000 (2010: £5,058,000), a decrease of 4% from the prior year.
The total recognised gains for the year amounts to £3,470,000 (2010: £4,719,000). The main reason for the reduction on the prior year is due to an unrealised loss on the defined benefit pension scheme of £(1,111,000) (2010: gain of £84,000). There were no gains or losses arising from the revaluation of investment property during the year.
Earnings per ordinary share of £0.47 (2010: £0.34) is based on earnings of £4,581,000 (2010: £3,321,000), being the profit available for distribution to equity shareholders and 9,660,000 (2010: 9,660,000) ordinary and ‘A’ ordinary shares of £0.50 in issue. Earnings per share and the number of shares in issue for 2010 have been restated for the capital reorganisation during 2011.
The opinion provided in the Auditors’ Report, signed by PricewaterhouseCoopers CI LLP, is that the financial statements:
- give a true and fair view of the state of the Company’s affairs as at 31 December 2011 and of its profit and cash flows for the year then ended;
- have been properly prepared in accordance with United Kingdom Accounting Standards; and
- have been prepared in accordance with the requirements of the Companies (Jersey) Law 1991.
Appendix B provides a summary of the key performance Indicators.
3.2 Ordinary Resolution 2 - To Declare Dividends
The States of Jersey hold 50% of the Ordinary shares and 100% of the ‘A’ Ordinary shares.
The proposed final dividend for this year is 11.75p per share, a 5% increase from the previous year where a final dividend of 11.2p (restated) was declared and paid. During the year an interim dividend of 6.10p per share was paid (2010: 5.80p (restated)). The dividend due to the States of Jersey is favourably ahead of the planned 2012 budget; although the final out-turn against plan is dependent on the interim dividend declared in October 2012.
JNWW have advised that over the past 5 years dividends have increased by 29% in real terms (i.e. after the effects of Jersey retail price inflation), despite a real terms reduction in charges for water.
3.3 Ordinary Resolutions 3 – 5 - To Re-elect Directors of the Company
The Board has undertaken a formal assessment of its performance and the individual Directors, including structured meetings between the Directors being assessed and the Chairman. Following the review, the Chairman has confirmed that the Directors standing for re-election at the Annual General Meeting continue to perform effectively and demonstrate commitment to their roles.
In accordance with the provisions of Article 49 of the Company’s Articles of Association, Anthony Cooke, Mary Curtis, Carl Hinault and Stephen Marie will retire at the Annual General Meeting, and with the exception of Carl Hinault, offer themselves for re-election. Carl Hinault is retiring from the Board and will not seek re-election.
3.4 Re-elect Anthony Cooke as a Director of the Company
Anthony Cooke became a Non-Executive Director in June 2008. He is an economist by background and he is the former Managing Director of Bournemouth and West Hampshire Water Plc. He has previously held a number of Chief Executive and senior management roles in the United Kingdom and internationally.
He is a Trustee of Utilities and Service Industries Training Ltd. Anthony holds the position of Senior Independent Director and is a member of the Audit and Nomination Committees
3.5 Re-elect Mary Curtis as a Director of the Company
Mary Curtis joined the Board as a Non-Executive Director in June 2008. She is a Fellow of the Chartered Institute of Personnel and Development and is a Director of a privately owned consultancy business, Calmera Business Consultancy. She formerly worked in London before moving to Jersey in the roles of Offshore Island Regional Human Resources Manager at Deloitte and Touche and then Director of Human Resources at Mourant du Feu and Jeune (now Mourant Ozannes). Mary is a member of both the Remuneration Committee and the Nomination Committee.
3.6 Re-elect Stephen Marie as a Director of the Company
Stephen Marie became a Non-Executive Director of the Company in 2002. He is the Managing Director of ComProp (CI) Limited, a Channel Island commercial property development company and has previously been involved, at both senior executive and director levels, in the property industry for a number of years. He is a fellow of the Institute of Clerks of Works and Construction Inspectorate of Great Britain Inc., a member of the Institute of Facilities Management and an associate of the Chartered Institute of Building. Stephen chairs the Remuneration Committee and is a member of the Nomination Committee.
3.7 Ordinary Resolution 6 - To approve the Directors fees for 2012 of £22,500 for the Chairman and £15,000 for the Non-Executives Directors
The shareholders are asked to approve the payment of fees to the Chairman and Non-Executive Directors. An increase of £2,500 is proposed for the Chairman and £3,000 for each Non-Executive Director. Fees have not changed since 2008.
The Remuneration Committee comprises of Stephen Marie (Chairman), Mary Curtis and Kevin Keen. The Executive Directors, Howard Snowden and Helier Smith, may also attend the meeting by invitation. No directors play any role in the determination of their own remuneration. The Remuneration Committee met twice during the year. The Committee also reviews and determines the levels of remuneration for senior management.
3.8 Ordinary Resolution 7 - To re-appoint the Auditors and authorise the Directors to agree their remuneration
It is proposed to re-appoint PricewaterhouseCoopers CI LLP as the auditors.
For the year to 31 December 2011, the Auditors were remunerated £41,000 for the statutory audit of Jersey New Waterworks Company Limited. A further £7,000 was paid in relation to the Pension Scheme audit and Tax compliance services.
- Recommendation
The Treasurer of the States and Greffier of the States are instructed to vote, by proxy, in favour of the resolutions outlined above.
- Reason for Decision
To fulfil the States’ role as shareholder of the Jersey New Water Works Company Limited 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 : 29 March 2012 |
Quality Assurance / Review : Business Manager | File name and path: L:\Treasury\Sections\Corporate Finance\Ministerial Decisions\DSs, WRs and SDs\2012-0039 -\WR - JNWCL AGM voting instructions - DS.doc |
MD sponsor : Treasurer of the States |
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