TREASURY AND RESOURCES MINISTER
jersey water annual report and financial statements FOR THE YEAR ENDED 31st december 2007
1. Purpose of Report
1.0 For the Treasury and Resources Minister to note the results of the Jersey New Waterworks Company Limited (JerseyWater) for the year ended 31st December 2007, to agree to vote by proxy on the resolutions being proposed at the Company’s Annual General Meeting on the 12th June 2008.
2. Background
2.0 The States of Jersey hold half the ordinary shares in JerseyWater and also 100% of the issued ‘A’ ordinary shares and 100% of the issued 7.5%-10% cumulative fifth preference shares. Annually the main details of company performance are reported to the Minister.
2.1 The Annual General Meeting will be held on Thursday 12th of June at 10.00am at the Beauport Room, Hotel de France, St Helier.
3. Comments
3.1 The resolutions for the AGM are as follows;
1. To increase the number of Directors permitted to hold office at any one time from seven to ten in accordance with paragraph 63 of the Articles of Association of the Company (which permit such an amendment by Ordinary Resolution).
2. To receive the Financial Statements for the year ended 31st December 2007.
3. To declare a final net dividend of 164 pence per share on the ordinary and ‘A’ ordinary shares of the Company.
4. To re-elect Mr Helier Smith, the director retiring by rotation.
5. To elect Mr Anthony Cook as a Director of the Company. Mr Cook will be filling the vacancy left by Mr Richard Pirouet who will retire as a Director of the Company at the Annual General Meeting.
6. To elect Mrs Mary Curtis as a Director of the Company. This resolution will be proposed subject to the approval of resolution 1 at the meeting.
7. To approve the Directors’ fees for 2008 of £18,000 for the Chairman and £10,000 for other directors. (2007: £15,000 and £8,000 respectively).
8. To re-appoint Ernst and Young LLP as Auditors at a fee to be agreed by the Directors.
Proposal to increase the number of directors
3.2 Although the resolution seeks approval to increase the total number of Directors to ten the Company has confirmed that at present it only has plans to appoint one additional Director, taking the total number of Directors to eight. The reason for the appointment is to increase the level of Director level expertise in the field of Human Resources. The purpose of requesting approval for two further Director posts is to allow flexibility in the future. Regardless of the number of Directors permitted by the Articles the shareholder retains ultimate control as all directors appointments must be ratified at shareholder meetings.
Accounts and results for the year
3.3 Profit before tax rose 13% (on the restated 2006 figure) to £3.5m for the year. This increase was for the most part the result of (1) not having to operate the desalination plant during the year and (2) other reductions in operating costs across a range of business activities.
3.4 Company turnover for the year to the 31st December 2007 increased by 2.4% to £13.8m.
3.5 Operating expenditure fell by 3.2% to £9.3m this operational savings other than for the desalination plant were achieved in the following areas: (1) Administration, (2) Insurance and (3) Installation costs.
Dividends
3.6 A final dividend of 205 pence per ordinary and ‘A’ ordinary share (gross) has been recommended which together with the interim dividend of 110 pence per share makes a total equity dividend of 315 pence. This represents a 10% increase on the 286 pence of equity dividends paid in 2006.
3.7 The dividend summary below shows the total proposed dividend payable to the States of Jersey for the financial year to 31st December 2007.
Dividend summary 2007 | Interim payment 2007 | Proposed final payment 2007 | Total dividend 2007 |
| £ | £ | £ |
£1 ‘A’ ordinary shares (231,000 shares 100% holding) | 254,100 | 473,550 | 727,650 |
£1 ordinary shares (126,000 shares, 50% holding) | 138,600 | 258,300 | 396,900 |
71/2%-10% Cum. fifth preference shares (900,000 shares, 100% holding) | 225,000 | 225,000 | 450,000 |
Received in year | 617,700 | 956,850 | 1,574,550 |
The total dividend received for all three shares for the financial year to 31st December 2006 was £1.47 million.
Appointment of directors
3.8 It is proposed to re-appoint Helier Smith, retiring by rotation, as Finance Director. It is also proposed to appoint Mr Anthony Cooke as Director, replacing the retiring Mr Richard Pirouet. Mr Cooke is an economist and Managing Director of Bournemouth and West Hampshire Water Plc.
3.9 As mentioned at 3.2 above it is proposed to appoint Mrs Mary Curtis as a new Director of the Company. Her field of expertise is human resources.
Directors fees
3.10 Resolution seven seeks approval of increases to director fees for 2008 of £3,000 for the Chairman and £2,000 for the other non-executive directors. There was no increase to their fees in 2007.
Other comments
3.11 During 2003 the company took out a loan with HSBC to fund the ongoing capital programme. The States of Jersey have given unconditional guarantees for the repayment of loans up to a maximum of £16.2m with HSBC and the company had the following loans outstanding as at 31 December 2007.
Facilities drawn down | Repayment dates | 2006 (£) | 2005 (£) |
HSBC Bank PLC | 2010 | 3,650,000 | 3,650,000 |
HSBC Bank PLC | 2011 | 5,250,000 | 5,250,000 |
HSBC Bank PLC | 2013 | 6,000,000 | 6,000,000 |
| | 14,900,000 | 14,900,000 |
Attached at Appendix A is a notice of the forthcoming Annual General meeting and the proposed re-elections and resolutions.
4. Recommendation
4.0 The Minister is recommended to agree to vote by proxy in favour of the resolutions.
5. Reason for Decision
5.1. The resolutions at Appendix A are, in accordance with the Minister’s expectations, non-contentious and the Report and Accounts for the year shows a steady performance and future planning.
States Treasury
13 June, 2008 for decision 9th June 2008
gov.je