Treasury and Resources
Ministerial Decision Report
JERSEY ELECTRICITY PLC ANNUAL GENERAL MEETING VOTING INSTRUCTIONS
- Purpose of Report
To consider the resolutions put forward for Jersey Electricity plc (JEC) Annual General Meeting on Thursday 3 March 2011.
- Background
The States of Jersey is the holder of all the ordinary shares of the JEC which represents 86.4% of the total voting rights. The directors of the company have proposed 7 ordinary resolutions and 1 special resolution to be considered at the AGM, these are outlined below and in the notice of meeting (Appendix B) and Form of Proxy (Appendix C). The Annual General Meeting will be held on Thursday 3 March 2011.
- Resolutions
The following resolutions have been put forward for consideration at the AGM.
3.1 Ordinary Resolution 1 -To receive the Directors’ Report, the Annual Accounts and Auditors’ Report of the Jersey Electricity Plc (JEC) for 2010
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 2010 was £98.9, 6% higher than the previous year. The Energy business contributed £74.5m of this turnover (up 2% from prior year) mainly due to unit sales being marginally higher and the timing of tariff changes.
Turnover in other businesses is summarised below:
- Retail £14.4m – increase of 11% Lower sales in our traditional white/brown goods offering were more than offset by gains in our computer retailing, toy/hobbies and e-retailing internet businesses within our Retail portfolio.
- Property £3.3m – increase of 31% on the previous year due to improved rental yields from tenants.
- Building Services £4.3m – increase of 20% on previous year
- Other businesses £3.1m with £1.0m being attributable to largely non-recurring revenues from our Newtel associate.
The cost of sales rose by £1.9m to £68.8m associated with the rise in revenues in our non-Energy business units. Operating expenses at £18.2m were £0.4m higher than in 2009 with additional IAS 19 pension costs being the main factor.
Profit before tax, for the year to 30 September 2010 rose to £14.6m from £9.3m but £2.4m was attributable to the revaluation of our investment property portfolio and £1m from the distribution of proceeds by our associate Newtel from the sale of assets.
Interest received on deposits in 2010 was £0.3m against £0.6m last year due primarily to lower interest rates associated with the UK base rate remaining at 0.5% throughout this financial year.
The taxation charge for the year rose £0.2m to £2.2m due to the higher level of taxable profits.
Group earnings per share rose 71% to £8.04 compared with £4.70 in 2009 due to higher profits but also because a sizeable element of the increase was due to non-recurring windfall revenues and a material upside from the revaluation of the investment property portfolio (which is not taxable as it is a non realised capital adjustment).
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, in accordance with IFRS as adopted for use in the European Union, of the state of affairs of the Company and the Group as at 30 September 2010 and of the profit of the Group for the year then ended; 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 Dividends
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 4.9% of the total voting rights.
The proposed final dividend for this year is 124p per share, a rise from 118p on the previous year. During the year an interim dividend of 81p per share was paid (2009 77p).
A special dividend of 65p per share has been proposed.
3.3 Ordinary Resolutions 3 – 5 - To Re-elect Directors of the Company
The following directors are seeking re-election to the board of directors:
Re-elect Clive 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 has been a partner of Ogier since 1994. With effect from 1 February 2009 he became Chairman of Ogier Group. He is a director of a number of other companies operating in the financial sector and is also a member of the Jersey Law Commission. He is Chairman of the Remuneration Committee.
Re-elect Mike Liston as a Director of the Company
Mike joined Jersey Electricity in 1986 as Chief Engineer and became Managing Director in 1993. He previously held a number of senior posts in the United Kingdom’s Electricity Supply Industry. He is Chairman of AIM listed, Renewable Energy Generation Limited, and non-executive Chairman of Jersey Post. Mike is a Fellow of the Royal Academy of Engineering, a Fellow of the Institution of Engineering and Technology and a Member of its Audit and Disciplinary Committees. He is a Companion of the Chartered Management Institute and past Chairman of its Jersey Branch. He was appointed by the States of Jersey in 2002 as Chairman of the Jersey Appointments Commission. Mike was awarded an OBE in 2007. Mike retired as an executive director on 31 December 2008 and became a non-executive director from that date. He is Chairman of the Nominations Committee.
Re-elect Aaron Le Cornu as a Director of the Company
Aaron joined the board in January 2011. Aaron is the Ogier Group Finance Director, prior to joining Ogier Aaron spent the last 10 years working for HSBC involved in the management of various businesses. Recent responsibilities included being Deputy CEO of HSBC Bank International in Jersey, managing the acquisition of M&S Money and sitting on the Board as a Non-Executive Director on behalf of HSBC and setting up greenfield operations in Poland, Hungary, Czech Republic and Slovak Republic.
Prior to that, Aaron trained as a Chartered Accountant with Andersen in London working with numerous financial services clients and also worked for Andersen in Australia and France.
3.4 Ordinary Resolution 6 - To re-appoint the Auditors and authorise the Directors to agree their remuneration
It is proposed to re-appoint Deloitte LLP as the auditors.
3.5 Ordinary Resolution 7 – To authorise the Directors to establish an Employee Share Plan.
The Directors’ propose to introduce and employee share plan to encourage, motivate and retain all eligible employees of the Company and to align their interests more closely with those of the Company. Under the plan eligible employees will have the opportunity to acquire a beneficial interest in the “A” Ordinary share capital of the company. The aggregate value of “A” Ordinary shares issued under the plan shall not exceed £300,000 during a financial year. The total number of “A” Ordinary shares included under the plan when added in aggregate to any other employee share scheme shall not exceed 10% of the “A” Ordinary share capital of the company.
The Minister has previously supported this proposal as detailed in Ministerial Decision number MD-TR-2010-0155.
3.6 Special Resolution – Sub-division of Ordinary and ‘A’ Ordinary Share Capital and consequential amendments to the Memorandum and Articles of Association
The Company is proposing to sub-divide its Ordinary and ‘A’ Ordinary shares on a ‘twenty for one’ basis. The Board believes this will bring the share price in-line with market norms and may assist with the liquidity of the shares. Consequential changes are needed to the Memorandum and Articles of Association to reflect this change to the Company’s capital structure and the attendant voting rights.
The Minister has previously supported this proposal as detailed in Ministerial Decision number MD-TR-2010-0155.
- 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 3rd March 2011.
- Reason for Decision
To fulfil the States’ role as shareholder of the Jersey Electricity Plc by exercising voting rights at the Annual General Meeting.
- Resource Implications
This decision has no resource implications.
Report author : Investment Management Accountant 1 | Document date : 8 February 2011 |
Quality Assurance / Review : Investment Management Accountant 2 | File name and path: L:\Treasury\Sections\Corporate Finance\Ministerial Decisions\DSs, WRs and SDs\2011-0015 - 2011 JEC AGM voting instructions - JT\WR - 2011 JEC AGM voting instructions - JT.doc |
MD sponsor : Deputy Treasurer |
Appendix A – Summary of Key Performance Indicators
Appendix B – Notice of Annual General Meeting
Appendix C – Proxy form for JEC Annual General Meeting
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