TREASURY AND RESOURCES
THE JERSEY ELECTRICITY COMPANY LTD - ANNUAL GENERAL MEETING 5 TH MARCH 2008
1. Purpose of Report
To instruct the Treasurer of the States and Greffier of the States to vote on the resolutions put forward for consideration at Jersey Electric Company Ltd (JEC) Annual General Meeting on 5th March 2008.
2. Background
The States of Jersey is the holder of all the ordinary shares of the JEC which represents 62% of the company’s equity share capital. The Annual General Meeting will be held on Wednesday 5th March 2008 at 2.30pm at the Powerhouse, Queens Road.
3. Resolutions
3.1 To receive the Directors’ Report, the Annual Accounts and Auditors’ Report of the Jersey Electricity Company Ltd (JEC) for 2007
Group turnover for the year to 30 September 2007 at £75.9m was 16% higher than in the year ended 30 September 2006. The Energy business contributed £57.0m of the Group turnover which was £6.6m above last year due to a 19% rise in tariffs from January 2007 offset by a 3% reduction in units sold because of a mild winter in 2006/07. Turnover in our Retail business rose substantially by 36%, and 20% on a like for like basis, to £11.9m, due to buoyant flat screen television and laptop sales combined with the opening of our hobbies, crafts and toys outlet in September 2006. Turnover in the Property business, including internal revenues, rose by 24% to £2.3m due to increased rental revenues from existing and new tenants. Turnover in Building Services rose marginally from levels experienced in 2006 to £3.2m. Turnover in our Other Business Businesses increased by 21% to £2.2m on increased trading activity.
Profit before tax, for the year to 30 September 2007 rose by 19% to £8.7m due to a strong performance in non-core businesses. Profit in our core Energy business, increased by £0.2m to £4.5m with a rise in tariffs offset by a fall in unit sales, due to a mild winter, and higher electricity importation costs. As stated last year profitability is expected to rise in 2008 to levels
achieved prior to our decision to absorb an element of the substantial rise in our electricity costs. Our Property division delivered profits, excluding upside from property revaluation and disposals, of £1.0m which were £0.6m higher than in 2006 due mainly to higher internal rental flows. Gains from the revaluation and sale of properties have remained on a par with last year at
£1.2m driven by market rises in both the commercial and residential market sectors in Jersey. The Retail business increased profits by 25% to £0.5m due to higher turnover offset by losses in first year of trading of our hobby, crafts and toy shop, and in our e-retailing venture day2dayshop.com. The Building Services business produced profits of £0.3m being 27% higher than last year on higher turnover and increased margins. Our other business units, including joint ventures and associates, produced an improved position with profits at £0.5m against a breakeven position in 2006. Jersey Energy, Jendev, and Jersey Deep Freeze all had a successful year with growth in both revenues and profit. The share of losses at our data centre joint venture, Foreshore, fell substantially from £0.3m to £0.1m on an increased turnover which rose 59% to £3.5m.
Appendix A details Directors’ remuneration for the year and Appendix B provides a summary of the key performance figures.
3.2 To Declare Dividends
62% of the ordinary share capital of the Company is owned by the States of Jersey with the remaining 38% held by around 300 shareholders via a full listing on the London Stock Exchange. Of the listed shareholders there is one large institution, Utilico Investment Trust Ltd, which own just over 20% of the total ordinary share capital.
Dividends paid, net of tax, rose by 10% from £1.06 in 2006 to £1.17 in 2007. Dividend cover rose from 3.7 times in 2006 to 4.2 times this year due primarily to the higher level of profits and transition rules governing tax assessments in Jersey moving from a prior year to current year basis.
The proposed final dividend for this year is £0.75, again being a 10% rise on the previous year.
3.3 To Re-elect J. Le Maistre as a Director of the Company
Non-Executive Director (63) J. Le Maistre joined the Board in 1997. He was elected to the States of Jersey as a Deputy of St. Helier in 1972, as a Senator in 1987, and retired from the States in December 2005. As a member of the States he served on many committees and represented the British and Mediterranean Region on the World Executive Committee of the Commonwealth Parliamentary Association for a term of three years and was elected Vice-Chairman of the Association in 2004.
It is proposed to re-elect Mr. J. Le Maistre as a Director of the Company
3.4 To re-appoint the Auditors and authorise the Directors to agree their remuneration
Following the transfer of their business to Deloitte & Touche LLP with effect from 1 October 2006, Deloitte & Touche resigned as auditors on 15 December 2006 and the directors appointed their successor, Deloitte & Touche LLP, as auditors.
It is proposed to re-appoint Deloitte & Touche LLP as auditors.
4. Recommendation
The Treasurer of the States and Greffier of the States be instructed to vote, by proxy, in favour of the four resolutions outlined above.
States Treasury, Corporate Financial Strategy Division
20 th February 2008
Appendix A – Directors’ Remuneration
Appendix B – Summary of Key Performance Indicators
IFRS | IFRS | IFRS | UK GAAP | UK GAAP |
| 2007 | 2006 | 2005 | 2004 | 2003 |
FINANCIAL STATEMENTS | | |
PROFIT AND LOSS ACCOUNT (£m) | | |
Turnover | 75.9 | 65.6 | 56.1 | 57.7 | 59.8 |
Operating profit*¹ | 8.0 | 6.9 | 10.5 | 8.1 | 7.5 |
Profit before tax*¹ | 8.7 | 7.3 | 10.5 | 7.0 | 6.1 |
Profit after tax*¹ | 7.6 | 5.9 | 8.6 | 5.3 | 4.1 |
Dividends | 1.8 | 1.6 | 1.5 | 1.4 | 1.1 |
Special dividend | - | 6.8 | - | - | - |
| | |
BALANCE SHEET (£m) | | |
Property, plant and equipment*² | 109.8 | 108.3 | 109.8 | 126.7 | 129.7 |
Net current assets(/liabilities) | 20.4 | 20.5 | 19.5 | 11.3 | 3.6 |
Non-current liabilities*² | (27.5) | (26.0) | (24.9) | (23.2) | (20.8) |
Net assets | 128.9 | 115.7 | 115.9 | 114.8 | 112.5 |
| | |
FINANCIAL RATIOS AND STATISTICS | | |
Earnings per ordinary share*¹ | £4.94 | £3.88 | £5.61 | £3.41 | £2.66 |
Gross dividend per ordinary share | 146.25p | 133.0p | 120.0p | 115.0p | 91.0p |
Net dividend per ordinary share | 111.70p | 106.0p | 96.0p | 92.0p | 72.8p |
Dividend cover (times)*¹*³ | 4.2 | 3.7 | 5.8 | 3.7 | 3.7 |
Cash at bank(/net debt) (£m) | 16.4 | 15.1 | 10.9 | 2.9 | (4.5) |
Capital expenditure (£m) | 8.9 | 5.7 | 5.4 | 5.5 | 8.5 |
| | |
ELECTRICITY STATISTICS | | |
Units sold (m)*4 | 608 | 624 | 603 | 595 | 581 |
% movement | (3%) | 3% | 1% | 2% | 3% |
% of units imported | 89% | 97% | 98% | 95% | 97% |
% of units generated locally | 11% | 3% | 2% | 5% | 3% |
Maximum demand (megawatts) | 142 | 142 | 142 | 133 | 150 |
Number of customers | 46,357 | 45,839 | 44,877 | 44,348 | 43,845 |
Average price per kilowatt hour sold | 9.1p | 7.9p | 7.3p | 7.3p | 7.3p |
| | |
MANPOWER STATISTICS | | |
Energy | 185 | 183 | 179 | 188 | 190 |
Other | 133 | 117 | 105 | 107 | 122 |
Trainees | 4 | 3 | 6 | 5 | 12 |
Total | 322 | 303 | 290 | 300 | 324 |
| | |
Units sold per energy employee (000’s) | 3,286 | 3,414 | 3,368 | 3,164 | 3,057 |
Number of customers per energy employee | 251 | 251 | 251 | 236 | 231 |
|
*1 excludes exceptional costs 2004 of 1.545m - impairment of investment in Newtel Holdings Limited.
*2 2003 has been restated in prior years following change in treatment of capital contributions.
*3 excludes the special dividend paid in 2006.
*4 excludes 11 million in 2007 and 12 million units in 2006 (referred to in note 2 to the accounts on page 40) representing in both cases £1,000,000 of revenue. |
Appendix C – Proxy form for JEC Annual General Meeting
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