Treasury and Resources
Ministerial Decision Report
JERSEY ELECTRICITY PLC 2014 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 6 March 2014.
- 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 7 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 6 March 2014.
- 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 2013
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 2013 was £102.3 million, 5% higher than the previous year. The Energy business contributed £82.0 million of this turnover, 13% higher than last year, in line with unit sales volumes being 4% higher than last year combined with a tariff increase. Other revenues were down in building and retail areas.
Turnover in other business segments is summarised below:
- Retail £12.2 million – decrease of 21%, was due to the closure of JEC’s internet retailer, day2dayshop.com in the second half of the last financial year due to the ending of the Low Value Consignment Relief (LVCR) tax concession by the UK Government.
- Property (including internal revenues) £2.9 million – marginally rose by £0.1 million.
- Building Services £4.1 million – fell by 10% on the previous year.
- Other businesses, including internal revenues £3.2 million – fell by 4% (£0.1 million), on slightly lower trading activity.
The cost of sales rose by £6.6 million to £75.9 million associated mainly with the requirement to purchase oil offset by lower costs in Retail because of the closure of day2dayshop.com in August 2012.
Operating expenses at £19.5 million were £1.4 million lower than in 2012. The decrease in costs was largely linked to additional maintenance costs incurred during the previous financial year associated with the interconnector issues experienced.
Profit before tax, for the year to 30 September 2013 rose from £5.7 million to £6.5 million. The investment in Foreshore Ltd was impaired by £0.6 million in 2013 against £1.1 million in 2012 and therefore, excluding this item, the profit before tax in this year was 5% above the level in the previous year.
Until JEC install the new interconnector to France, which is scheduled for 2015, they are capacity constrained on importation and reliant on a heavier mix of more expensive on-Island oil-fired generation, particularly in winter, when volumes are higher. In the financial year JEC generated 21% of the electricity on island (compared to only 2% last year) and imported 75% of the requirements from France (down from 92% in 2012). The remaining 4% of our electricity came from the Energy from Waste plant, owned by the States of Jersey.
Interest received on deposits in 2013 was negligible compared to recent years due to JEC’s investment programme that has seen the previous cash balance move into a net debt position. Interest payable, associated with the Normandie 3 interconnector project is being capitalised until the commissioning date.
The taxation charge for the year at £1.5 million was lower than 2012 (£1.8 million) due to a lower effective tax charge as the mix of taxable profits differed.
Group earnings per share increased 31% to 16.39p compared with 12.55p in 2012 due to a combination of higher profits and a lower effective tax rate. The 2012 earnings per share were much lower than previous years due to 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 in 2012, 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 and company’s affairs as at 30 Septmber 2013 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 two larger institutions; Huntress Nominees (CI) Limited which represent 4% of the total voting rights and Utilico Limited, which represents 2% of the total voting rights.
The proposed final dividend for this year is 6.80p per share, net of tax, a 4.6% increase on the previous year’s final dividend (2012: 6.50p). During the year an interim dividend of 4.75p per share, net of tax, was paid (2012: 4.50p).
3.3 Ordinary Resolutions 3 to 6 (inclusive) - 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 is currently the Chairman of EFG Offshore Limited and also holds many 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.
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.
Re-elect Mike J Liston as a Director of the Company:-
Mike joined Jersey Electricity 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.
Re-elect Aaron A Le Cornu as a Director of the Company:-
Aaron was appointed to the Board as Non-Executive Director in January 2011 and is currently the Group Chief Operating Officer for Ogier, a Legal and Fiduciary Firm with headquarters in Jersey and operations in 10 countries. Prior to that appointment, Aaron held a number of senior positions within HSBC, latterly as the Deputy CEO of HSBC International. During his 10 years with HSBC, he held a number of Board positions for HSBC subsidiaries and was also involved in acquisitions (such as the purchase of Marks & Spencer Money) and setting up Greenfield retail banking operations in Central Europe. Aaron is a Chartered Accountant. He qualified with and worked for Andersen for eight years, including two years in Australia. He also has a First Class Honours Degree in European Management Science from Swansea University.
3.4 Ordinary Resolution 7 - 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 2013 the Auditors were remunerated £77,000 for audit services (2012: £75,000).
- 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 6th March 2014.
- 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 : 18th February 2014 |
Quality Assurance / Review : Treasurer of the States | File name and path: L:\Treasury\Sections\Corporate Finance\Ministerial Decisions\DSs, WRs and SDs\2014-0010 - JEC 2014 AGM voting instructions\WR - JEC 2014 AGM voting instructions.doc |
MD sponsor : Treasurer of the States |
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