The Powerhouse, PO Box 45
Queens Road, St Helier JE4 8NY
Tel 01534 505460
Fax 01534 505565
email jec@jec.co.uk
www.jec.co.uk
SUSTAINING LIFE AND GROWTH,
INVESTING FOR THE FUTURE
REPORT AND ACCOUNTS 2015
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Printed on paper from
a sustainable source.
A YEAR IN FOCUS
K
C
A
K
P
R
O
S B
F I T
O
C
A
R
N T
• G r o u p t u r n o v e r
£ 1 0 0 m
c e e d s
r e -t a x
e x
• G r o u p P
u p 2 4 %
s
p r o fi t
t o £ 1 2 . 4 m
p r o fi t
4 4 % t o £ 1 1 . 5 m
E n e r g y
•
s
u p
ENVIRONMENT
• Delivered power at our lowest
ever carbon intensity level of
33g CO2e/kWh
JERSEY-GUERNSEY CABLE REPAIR
• Successful pre-emptive repair
to GJ1 in February, 500 metres off
Guernsey coast when an 850-metre
section was lifted from the seabed,
cut and replaced
OUR YEAR
KEY ACHIEVEMENTS 2015
PEAK DEMAND
• 148MW recorded 5 February
at 9.30pm, up on last year’s
139MW but still below our
all-time record of 161MW on 2
February 2012
ENERGY GROWTH
• Unit sales up 1% to 627 million
• Over 100 homes fuel switched
from gas and oil heating
• Continue to win 95% of new
developments
• Success converting commerical
kitchens to all electric with
induction technology
RETAIL ANNIVERSARY TURNAROUND
• July marked 90 years of Jersey
Electricity Retail known as the
Powerhouse today
• £0.1m loss last year turned into a
£0.3m profit
• 475,000 customers visit
Powerhouse store
• 142,000 in-store sales conversions
NORMANDIE 1 ON TARGET
• Planning permissions
granted May
• Contracts for manufacture
and installation signed July
• Seabed survey of route
concluded August
• Contract for reactors
signed October
SECURITY A N D R
I A B I L I TY OF SUPPLY
L
E
• Just seven Customer Minutes Lost on
average
• Ten times better than UK network
EXTERNAL AWARDS RECOGNITION
• Normandie 3 named Jersey
Construction Council (JeCC) Project
of the Year over £1m
• Former Project Manager Peter
Snape receives JeCC Lifetime
Achiever Award
• Powerhouse Retail division wins
Travel Solutions Customer Service
Strategy Award
INVESTMENT IN PEOPLE
• New Human Resources Director
appointed
• New Talent Manager appointed
• New Head of Consultancy
(Jersey Energy)
• New Contracts and Operations
Manager (JEBS)
• Additional HSE Technician
AFFORDABILITY
• No tariff movements since April 2014
• Prices 5% lower than EU15
standard domestic tariff on average
• Tariffs materially lower than peer
island jurisdictions
NORMANDIE 3 OFFICIAL SWITCH ON
• Normandie 3 ‘officially switched
on’ by Réseau Transport d’Électricité
(RTE) Paris and Normandy Region
Director General Jean-Louis
Muscagorry on 27 January in a
ceremony attended by the Chief
Minister, several other leading
political figures and representatives
from our contract partners Guernsey
Electricity, Prysmian, ABB and
Schneider
A YEAR IN FOCUS
K
C
A
K
P
R
O
S B
F I T
O
C
A
R
N T
• G r o u p t u r n o v e r
£ 1 0 0 m
c e e d s
r e -t a x
e x
• G r o u p P
u p 2 4 %
s
p r o fi t
t o £ 1 2 . 4 m
p r o fi t
4 4 % t o £ 1 1 . 5 m
E n e r g y
•
s
u p
ENVIRONMENT
• Delivered power at our lowest
ever carbon intensity level of
33g CO2e/kWh
JERSEY-GUERNSEY CABLE REPAIR
• Successful pre-emptive repair
to GJ1 in February, 500 metres off
Guernsey coast when an 850-metre
section was lifted from the seabed,
cut and replaced
OUR YEAR
KEY ACHIEVEMENTS 2015
PEAK DEMAND
• 148MW recorded 5 February
at 9.30pm, up on last year’s
139MW but still below our
all-time record of 161MW on 2
February 2012
ENERGY GROWTH
• Unit sales up 1% to 627 million
• Over 100 homes fuel switched
from gas and oil heating
• Continue to win 95% of new
developments
• Success converting commerical
kitchens to all electric with
induction technology
RETAIL ANNIVERSARY TURNAROUND
• July marked 90 years of Jersey
Electricity Retail known as the
Powerhouse today
• £0.1m loss last year turned into a
£0.3m profit
• 475,000 customers visit
Powerhouse store
• 142,000 in-store sales conversions
NORMANDIE 1 ON TARGET
• Planning permissions
granted May
• Contracts for manufacture
and installation signed July
• Seabed survey of route
concluded August
• Contract for reactors
signed October
SECURITY A N D R
I A B I L I TY OF SUPPLY
L
E
• Just seven Customer Minutes Lost on
average
• Ten times better than UK network
EXTERNAL AWARDS RECOGNITION
• Normandie 3 named Jersey
Construction Council (JeCC) Project
of the Year over £1m
• Former Project Manager Peter
Snape receives JeCC Lifetime
Achiever Award
• Powerhouse Retail division wins
Travel Solutions Customer Service
Strategy Award
INVESTMENT IN PEOPLE
• New Human Resources Director
appointed
• New Talent Manager appointed
• New Head of Consultancy
(Jersey Energy)
• New Contracts and Operations
Manager (JEBS)
• Additional HSE Technician
AFFORDABILITY
• No tariff movements since April 2014
• Prices 5% lower than EU15
standard domestic tariff on average
• Tariffs materially lower than peer
island jurisdictions
NORMANDIE 3 OFFICIAL SWITCH ON
• Normandie 3 ‘officially switched
on’ by Réseau Transport d’Électricité
(RTE) Paris and Normandy Region
Director General Jean-Louis
Muscagorry on 27 January in a
ceremony attended by the Chief
Minister, several other leading
political figures and representatives
from our contract partners Guernsey
Electricity, Prysmian, ABB and
Schneider
A YEAR IN FOCUS
K
C
A
K
P
R
O
S B
F I T
O
C
A
R
N T
• G r o u p t u r n o v e r
£ 1 0 0 m
c e e d s
r e -t a x
e x
• G r o u p P
u p 2 4 %
s
p r o fi t
t o £ 1 2 . 4 m
p r o fi t
4 4 % t o £ 1 1 . 5 m
E n e r g y
•
s
u p
ENVIRONMENT
• Delivered power at our lowest
ever carbon intensity level of
33g CO2e/kWh
JERSEY-GUERNSEY CABLE REPAIR
• Successful pre-emptive repair
to GJ1 in February, 500 metres off
Guernsey coast when an 850-metre
section was lifted from the seabed,
cut and replaced
OUR YEAR
KEY ACHIEVEMENTS 2015
PEAK DEMAND
• 148MW recorded 5 February
at 9.30pm, up on last year’s
139MW but still below our
all-time record of 161MW on 2
February 2012
ENERGY GROWTH
• Unit sales up 1% to 627 million
• Over 100 homes fuel switched
from gas and oil heating
• Continue to win 95% of new
developments
• Success converting commerical
kitchens to all electric with
induction technology
RETAIL ANNIVERSARY TURNAROUND
• July marked 90 years of Jersey
Electricity Retail known as the
Powerhouse today
• £0.1m loss last year turned into a
£0.3m profit
• 475,000 customers visit
Powerhouse store
• 142,000 in-store sales conversions
NORMANDIE 1 ON TARGET
• Planning permissions
granted May
• Contracts for manufacture
and installation signed July
• Seabed survey of route
concluded August
• Contract for reactors
signed October
SECURITY A N D R
I A B I L I TY OF SUPPLY
L
E
• Just seven Customer Minutes Lost on
average
• Ten times better than UK network
EXTERNAL AWARDS RECOGNITION
• Normandie 3 named Jersey
Construction Council (JeCC) Project
of the Year over £1m
• Former Project Manager Peter
Snape receives JeCC Lifetime
Achiever Award
• Powerhouse Retail division wins
Travel Solutions Customer Service
Strategy Award
INVESTMENT IN PEOPLE
• New Human Resources Director
appointed
• New Talent Manager appointed
• New Head of Consultancy
(Jersey Energy)
• New Contracts and Operations
Manager (JEBS)
• Additional HSE Technician
AFFORDABILITY
• No tariff movements since April 2014
• Prices 5% lower than EU15
standard domestic tariff on average
• Tariffs materially lower than peer
island jurisdictions
NORMANDIE 3 OFFICIAL SWITCH ON
• Normandie 3 ‘officially switched
on’ by Réseau Transport d’Électricité
(RTE) Paris and Normandy Region
Director General Jean-Louis
Muscagorry on 27 January in a
ceremony attended by the Chief
Minister, several other leading
political figures and representatives
from our contract partners Guernsey
Electricity, Prysmian, ABB and
Schneider
CONTENTS
CONTENTS
DIRECTORS, OFFICERS AND
PROFESSIONAL ADVISERS
CHAIRMAN'S STATEMENT
CHIEF EXECUTIVE'S REVIEW
GROUP PURPOSE
ENERGY GROWTH
MAINTAINING AFFORDABLE ELECTRICITY
AND PRICE STABILITY
ENSURING SECURITY AND RELIABILITY
OF SUPPLY
NORMANDIE 1
GENERATION, TRANSMISSION,
DISTRIBUTION AND SMART SWITCH
PROTECTING THE ENVIRONMENT
AND CONSERVING RESOURCES
CUSTOMER SERVICE STANDARDS
COMMERCIAL - POWERHOUSE.JE, JENDEV
JEBS, JERSEY ENERGY AND PROPERTY
HEALTH AND SAFETY
SUSTAINABILITY IN THE COMMUNITY
OUR PEOPLE
OUTLOOK
FINANCIAL REVIEW
GOVERNANCE
FINANCIAL STATEMENTS
2
4
6
8
10
12
14
16
18
20
22
24
26
28
30
32
35
40
56
NON-EXECUTIVE DIRECTORS
Geoffrey Grime FCA (Chairman)
Clive Chaplin BA
Michael Liston OBE FREng, BSc, CEng, FIEE, CIMgt
Aaron Le Cornu BSc, ACA
EXECUTIVE DIRECTORS
Christopher Ambler BA, MEng, CDipAF, CEng, MIMechE, MBA (Chief Executive)
Martin Magee CA (Finance)
SECRETARY
Peter Routier BSc, FCIS
REGISTERED OFFICE
Queen’s Road, St. Helier, Jersey
PLACE OF INCORPORATION
Jersey
AUDITOR
Deloitte LLP, PO Box 403, 44 The Esplanade, St. Helier, Jersey
BANKERS
Royal Bank of Scotland International Limited,
71 Bath Street, St. Helier, Jersey
BROKERS
Canaccord Genuity Wealth Management,
38-39 The Esplanade, St. Helier, Jersey
REGISTRAR
Computershare Investor Services (Jersey) Limited,
Queensway House, Hilgrove Street, St. Helier, Jersey
and of our intention to make a pre-emptive repair. This
challenging task was successfully completed in February
when an 850- metre section of cable was lifted from the
seabed, 500 metres off the Guernsey coast, cut and
replaced by VBMS, our long-term partner in submarine
cable maintenance services.
Our other non-Energy business units together produced a
strong overall performance and, in particular, Powerhouse.je,
our retail business, turned a £0.1m loss last year into a
£0.3m profit in a challenging market following a significant
restructure, re-brand and re-launch.
I am pleased to report a proposed final dividend for this
year of 7.60p payable on 29 March 2016, being a 6%
increase on last year.
During this year, we have put considerable effort
into our Board succession plan.
Clive Chaplin has decided it is right
for him to retire at the next
AGM and I would
CHAIRMAN'S
STATEMENT
2014/15 has been an exceptionally good year for Jersey
Electricity. The completion of our Normandie 3 (N3)
submarine cable to France at the end of the last financial
year and the resultant first full year with our importation
capacity restored to pre-2012 levels has transformed our
business in several ways. Profitability, supply reliability and
carbon intensity have all showed a marked improvement
when compared with the last three years.
Group revenue for the year to 30 September 2015 rose
2% to exceed £100m and reflects good underlying,
sustainable progress in achieving our strategic goals.
Pre-tax profits, pre-exceptional items, rose 24% to £12.4m
from £10.0m. Profit before tax, after exceptional items,
rose from £6.5m to £13.2m.
Our Energy business delivered a strong performance, with
unit sales offsetting energy efficiency pressures, increasing
by 1% from 621 million to 627 million units, with profits
rising from £8.0m last year to £11.5m.
The strong performance has meant that despite our
significant investment in N3, we have been able to
maintain tariffs at current levels whilst at the same time
restore returns in our Energy business to a more normalised
regulatory level which is key to funding on-going investment
in our network.
Providing a secure and reliable electricity supply is
fundamental to our proposition. With the 100MW N3
subsea cable working in parallel with our existing 90MW
Normandie 2 (N2) submarine cable since 16 October
2014, our supply reliability has, this financial year,
reached the exceptional level of just seven minutes loss of
supply per customer (CMLs). A similar positive effect is seen
on the carbon intensity of the power we distribute which
is at an all-time low of 33g CO2e/kWh this year. Both of
these metrics come in at around ten times better than
typical UK levels.
We are as committed as ever to our successful long-term
importation strategy, initiated in the late Seventies, using
a series of subsea cables built in partnership with our
neighbours Guernsey Electricity (GEL) and overseen by the
Channel Islands Electricity Grid (CIEG). In July we signed
contracts worth £20m with an international consortium for
the manufacture and installation of an enhanced 100MW
Normandie 1 (N1) link to replace EDF1, our first submarine
cable that came to the end of its life in 2012. N1 is on
plan and scheduled to be in service in 2017 at a total cost
of around £40m.
Last year I reported concerns over the condition of the
Jersey-Guernsey cable (GJ1), a shared asset with GEL,
1
2
and of our intention to make a pre-emptive repair. This
challenging task was successfully completed in February
when an 850 - metre section of cable was lifted from the
seabed, 500 metres off the Guernsey coast, cut and
replaced by VBMS, our long-term partner in submarine
cable maintenance services.
Our other non-Energy business units together produced a
strong overall performance and, in particular, Powerhouse.je,
our retail business, turned a £0.1m loss last year into a
£0.3m profit in a challenging market following a significant
restructure, re-brand and re-launch.
I am pleased to report a proposed final dividend for this
year of 7.60p payable on 29 March 2016, being a 6%
increase on last year.
During this year, we have put considerable effort
into our Board succession plan.
Clive Chaplin has decided it is right
for him to retire at the next
AGM and I would
CHAIRMAN'S
STATEMENT
2014/15 has been an exceptionally good year for Jersey
Electricity. The completion of our Normandie 3 (N3)
submarine cable to France at the end of the last financial
year and the resultant first full year with our importation
capacity restored to pre-2012 levels has transformed our
business in several ways. Profitability, supply reliability and
carbon intensity have all showed a marked improvement
when compared with the last three years.
Group revenue for the year to 30 September 2015 rose
2% to exceed £100m and reflects good underlying,
sustainable progress in achieving our strategic goals.
Pre-tax profits, pre-exceptional items, rose 24% to £12.4m
from £10.0m. Profit before tax, after exceptional items,
rose from £6.5m to £13.2m.
Our Energy business delivered a strong performance, with
unit sales offsetting energy efficiency pressures, increasing
by 1% from 621 million to 627 million units, with profits
rising from £8.0m last year to £11.5m.
The strong performance has meant that despite our
significant investment in N3, we have been able to
maintain tariffs at current levels whilst at the same time
restore returns in our Energy business to a more normalised
regulatory level which is key to funding on-going investment
in our network.
Providing a secure and reliable electricity supply is
fundamental to our proposition. With the 100MW N3
subsea cable working in parallel with our existing 90MW
Normandie 2 (N2) submarine cable since 16 October
2014, our supply reliability has, this financial year,
reached the exceptional level of just seven minutes loss of
supply per customer (CMLs). A similar positive effect is seen
on the carbon intensity of the power we distribute which
is at an all-time low of 33g CO2e/kWh this year. Both of
these metrics come in at around ten times better than
typical UK levels.
We are as committed as ever to our successful long-term
importation strategy, initiated in the late Seventies, using
a series of subsea cables built in partnership with our
neighbours Guernsey Electricity (GEL) and overseen by the
Channel Islands Electricity Grid (CIEG). In July we signed
contracts worth £20m with an international consortium for
the manufacture and installation of an enhanced 100MW
Normandie 1 (N1) link to replace EDF1, our first submarine
cable that came to the end of its life in 2012. N1 is on
plan and scheduled to be in service in 2017 at a total cost
of around £40m.
Last year I reported concerns over the condition of the
Jersey-Guernsey cable (GJ1), a shared asset with GEL,
2
like to thank him for the enormous contribution he has
made to the Board and the Company over his 12 years of
service. We welcome Alan Bryce to the Board who joins
us from the UK with significant power sector and island
experience.
Finally, I would like to thank our Executive and non-
Executive Directors and colleagues at all levels for their
continued hard work and dedication. They have not only
put Jersey Electricity back on track, but they have exceeded
expectations and we are well poised as a Group to take
advantage of many future opportunities.
Geoffrey Grime
Chairman
17 December 2015
CHAIRMAN’S STATEMENT
3
4
ENERGY
CHIEF EXECUTIVE’S REVIEW
CHIEF EXECUTIVE'S
REVIEW
I am delighted to report an exceptional set of results for
2014/15. Having successfully negotiated some
challenging circumstances over the past
three years we have returned to a level
of profitability necessary for continued
investment. Group turnover broke through
£100m and pre-tax profits, pre-exceptional
items, rose 24% from £10.0m to £12.4m.
The main factor that enabled this increased
performance was the shift towards using a
higher mix of lower cost imported power,
following the completion of our Normandie 3
(N3) interconnector which was delivered into
service in October 2014, three months ahead
of schedule and 10% below budget.
Since 2012, when our first interconnector, EDF1,
came to the end of its working life, restricted
levels of importation have been supplemented
with more expensive, on-Island oil-fired generation
at our La Collette Power Station. Our singular
Group focus has been on restoring this importation
capacity and 2014/15 was the first full year of
operation of that restored capacity. This financial
year saw our imports return to the levels of pre-2012,
with 94% of our requirements imported from France,
up from 80% in 2014. We generated 1% of our
electricity on-Island compared with 15% last year, with
the remaining 5% coming from the States of Jersey-
owned Energy from Waste plant. The result was a 44%
increase in Energy profits from £8m to £11.5m.
Increased electricity imports have also improved our
carbon credentials. As this was the first full year of
operation under our 10-year supply agreement with EDF
– an agreement that guarantees power from certified low
carbon hydro and nuclear sources – the average carbon
intensity of power distributed to customers during the year
was at an all-time low of 33g CO2e/ kWh.
But N3 was not just focused on capacity. Laid entirely
underground and connecting into a different, more robust
400kV section of the French grid, the cable was designed
with supply security paramount. I am therefore delighted that
our security performance was the best for seven years with
only seven minutes on average of disconnected supply per
customer, around ten times better than the UK average.
Investment in our subsea cable network has continued
this year with a pre-emptive repair to the Jersey-Guernsey
link (GJ1) completed in February and rapid progress on
an additional link to France to replace EDF1. Planning
permissions for the new cable known as Normandie 1 (N1)
were granted in May, contracts for its manufacture and
installation were signed in July and a survey of the seabed
along the same route as EDF1 was completed in August. All
being well, EDF1 will be lifted from the seabed next spring
in preparation for N1’s installation later in the year.
At 100MW, N1 will be ‘future-proofed’, having an
enhanced capacity compared with its 55MW predecessor,
albeit its initial operation will be at 55MW followed by an
upgrade to 70MW.
Following our experiences over recent years with the failure
of critical infrastructure during difficult scenarios, we have
examined our on-Island generating capabilities in some
detail. As a result the Board has approved the installation of
a 5MW ‘black start’ diesel generator at La Collette to assist
in quicker, more robust restoration during major interruptions
to imported supplies, in this case protecting supplies that
the Power Station itself needs to implement a full island
restoration. We expect its installation and commissioning to
be completed next year at a total cost of around £2m.
Though progress on our £17m project to build a new St
Helier West primary substation has been hampered by
structural complications on site and civil design issues, works
are expected to commence in early 2016 and we hope to
have this important new facility in service by 2018, securing
new and existing supplies to the north and west of St Helier.
SmartSwitch, our programme to install Smart Meters across
the Island, has gained momentum this year. In February we
appointed a Programme Manager to oversee the day-to-day
logistics of this project and manage a team which has been
installing the single element meter on a pilot basis. The dual
element meter is undergoing a comprehensive programme
of testing. We expect deployment of both types of meter to
ramp up in 2016.
Elsewhere in the business, the re-structure and re-branding
of our Powerhouse retail business has paid dividends with a
£0.1m loss last year turned into a £0.3m profit. Our Property
division, Jersey Energy, Jendev and Jersey Deep Freeze all
had profitable years. JEBS, our building services business,
has also undergone a management re-structure and re-focus
on its core activities. This has resulted in a near 20% increase
in revenue to £4.9m. Though margins are under pressure due
to competition in the sector, we are making progress with the
foundations that are necessary for the future.
We have made some significant appointments during the
year in JEBS, Jersey Energy and HR and have realigned
resources to better focus on our business imperatives.
Significantly, after an extensive recruitment process, we
appointed a new Human Resources Director who has
launched a multi-year programme of transformation to ensure
our people processes, including people development, are
better aligned to the future needs of the business.
5
GROUP
PURPOSE
Our purpose is simple: To sustainably serve our community
with affordable, secure, and low carbon energy, today and
long into the future, enabling residents and businesses in
Jersey to thrive and prosper.
Our vision
Our vision is to responsibly and sustainably deliver value to
customers by:
At the centre of our purpose is the customer. We must better
understand our customers and deliver the service they need
in the most efficient way. To achieve this, it is essential that
every employee understands our purpose – why we exist –
and the part they as individuals play in our common goals
and our shared vision. The Purpose, Vision and Values
work (known as PVV) launched across the Company last
year was designed to do this. It reinforced the principles
of sustainability across the business, helping staff better
understand the role each of them plays.
This year we have built on that early work by implementing
many practical suggestions from the outputs of PVV. We
have also facilitated improved communications and a better
understanding between our businesses and functions. We
have made some significant appointments and re-aligned
resources in direct response to our employees’ comments.
Nowhere is that more evident than in Human Resources
where a new HR Director has been appointed to take
forward a programme of transformation and better align
HR services to business needs. The HR team has already
been restructured to follow a business partnering model to
implement strategic initiatives through collaboration and
consultation. We have introduced the role of Talent Manager
to the HR team. This role is focused on helping the business
‘unlock potential’ of our people and our organisation; living
our values, delivering performance and achieving our vision.
Our values
Our values are of central importance to our culture. They
are what we can expect of each other and the way we work
together day-in, day-out.
They are;
• Safety
• Customer focus
• Teamwork
• Responsibility
• Excellence
• Reliability
1. Growing unit sales and offsetting pressure from energy
efficiency by fuel switching from fossil fuels as well
as finding new applications for electricity through
new technologies; especially heating, cooking and
transportation
2. Developing services and solutions that create value for
customers by designing, installing, maintaining, repairing
and financing equipment and any new technologies that
use electricity
3. Developing 'Smart' infrastructure that will supply clean
electricity securely in the most cost effective manner
4. Strengthening our relationships with customers by better
understanding their needs and meeting them
Our priorities
• Deliver Normandie 1 submarine cable project on time and
to budget
• Deliver multi-year SmartSwitch Smart Metering programme
reliably and with minimum inconvenience to customers
• Deliver St Helier West primary substation investment on
time and to budget
• Finalise the design and develop the plan for new Queen’s
Road infrastructure
• Working with Guernsey Electricity, facilitate the installation
of the next Jersey-Guernsey link under the supervision of
the Channel Islands Electricity Grid
• Grow electricity’s market share using resources in Energy
Solutions, JEBS and the Energy business in an integrated
way; winning fuel switches and developing new
technology partnerships
• Optimise/ enhance La Collette Power Station to robustly
protect customers’ supplies in the most efficient way
6
GROUP PURPOSE
CHIEF EXECUTIVE’S REVIEW
7
“ Introducing our
new 24-hour
heating tariff -
Economy 20+ ”
ENERGY GROWTH
Unit sales were 1% higher than last year,
rising from 621 million to 627 million, despite
a second successive mild winter and continued
pressure from increased energy efficiency.
• The total number of customers on supply at
year-end was 49,320, an increase of 379 on
last year
• Over 500 new domestic customers joined our
discounted space and water heating tariffs
Comfort Heat, Economy 7 and Economy 20,
bringing the total number of customers now
on these tariffs to 16,131
• Peak load for the year was 148MW
recorded on 5 February at 9.30pm. This was
an increase on last year’s peak of 139MW
but well below our all-time record of 161MW
set on 2 February 2012
Energy Solutions
Launched at the end of last year from existing
resources, we formed a new team, Energy
Solutions, in response to a comprehensive
study on load growth that identified several
key opportunities. This small, specialist team
is focused on unlocking new unit sales growth
using new technologies in heating, cooling,
cooking and transportation applications, across
the commercial, residential and public sectors.
Fuel switch
Although our efforts will take many months,
and in some cases years, before we will enjoy
the full effect on unit sales growth, we are
making progress in the commercial sector with
real traction in switching professional kitchens
to all electric by using modern induction
cooking technology as well as commercial
scale, ultra-efficient heat pump technology.
We note a considerable shift in preference of
professional chefs from gas to electric, assisted
by significant new technological developments.
In the residential market, the Energy Solutions
team, backed by a summer marketing
campaign, made good progress increasing fuel
switching by over 50% compared with normal
baseline levels. The team has developed new
user-friendly propositions for customers, a more
streamlined system for handling the customer
journey and has developed enhanced finance
packages in support of fuel switching. It is also
developing relationships with new technology
providers to offer state-of-the-art solutions in
Jersey for in-home energy services. Of note is
the introduction of a new 24-hour heating tariff,
Economy 20 Plus (E20+) which will launch in
2016 and provide attractively priced 24-hour
electric heating for customers at a mix of off-
peak rate and normal rate for approved heating
systems.
Whilst we believe there is considerable
opportunity for the States of Jersey to reduce its
own energy bill, it has so far been difficult to
make progress. We continue to try to engage at
the highest levels to persuade it of the significant
opportunity to save money and carbon across its
building stock and in transportation.
Encouraging the use of high efficiency, lower
cost off-peak heating across our customer base
encourages customers to use electricity when
supplies from France are cheaper. It also flattens
the peak electricity demand, which is a significant
driver of infrastructure costs. This enables Jersey
Electricity to keep prices significantly lower than
they otherwise would be.
8
ENERGY GROWTH
CHIEF EXECUTIVE’S REVIEW
New build
Despite the fall in oil prices, we have maintained
our position in securing electricity as the fuel of
choice for new build and this year more than
95% of new buildings were heated and cooled
by all-electric solutions. Developers choose clean,
low carbon electricity for heating in energy
efficient building designs to meet increasingly
stringent standards on energy use and emissions.
Electric heating is also space efficient and
avoids the need for storage tanks and flues. In
the commercial sector, electric heating systems
can also be designed to cool, increasing cost
effectiveness.
Energy Plan
The Energy Plan recognises the importance
of electricity to delivering a low carbon future
and we are working closely with the new
Energy Partnership forum, a community panel
established by the Planning and Environment
Department, the States of Jersey ministry
responsible for facilitating the plan.
Electric transportation
One third of the Island’s carbon emissions is
attributable to transportation and whilst some of
this market is not presently accessible, a good
portion of it is with existing technology. We
strive for the States of Jersey to work with us to
encourage uptake – action which supports the
Clean Air Policy and the Sustainable Transport
Plan and essential if the Island is to stand any
realistic chance of meeting its Energy Plan
target of an 80% reduction in carbon emissions
by 2050. We are also seeing an increase in
requests from developers to install electric vehicle
charging points as part of the initial build.
We estimate there are around 150 registered all-
electric vehicles in the Island today but potential
for significantly more. The market does require
incentivisation and we have made a number of
proposals to the States of Jersey to assist this.
We continue to innovate and adapt to market
conditions as we strive to maintain underlying
unit sales across our network and where
possible ‘sell out’ spare capacity in the load
curve. We have no doubt low carbon electricity
is the ‘energy of the future’ in our Island and we
actively encourage our customers to get the best
possible value from our service, encouraging
energy efficiency whilst at the same time
looking for opportunities to offset its impact by
converting customers to electric solutions using
the most cost effective technologies available.
We position Jersey Electricity as the Channel
Islands’ ‘low carbon, energy experts’ that
customers can trust.
9
MAINTAINING
AFFORDABLE ELECTRICITY
AND PRICE STABILITY
According to independent research, absolute energy prices and price
stability are unsurprisingly the greatest concern of customers. As the sole
supplier of over 40% of the energy used in Jersey, we are acutely aware
of our responsibility to deliver affordable energy not only at a point in time
but sustainably into the future. We follow prices of local heating oil and LPG
gas closely in Jersey and we regularly benchmark electricity prices in other
countries using an external independent consultancy.
There were no changes to electricity prices during 2015 and we are
delighted that our tariffs remained competitive, despite the heavy on-going
investment in infrastructure (on which we need to earn a return) and our
relatively small scale. We benchmark positively against the EU 15 Average
and though that differential has reduced year-on-year due to the strength
of Sterling against the Euro, we have comfortably achieved our goal
of keeping our domestic tariffs within +/-10% of the EU Average. Our
average prices at year-end were around 5% lower than the EU standard
tariff for domestic customers. We also compare favourably with other island
jurisdictions particularly as measured by our standard tariff, which is the
normal measure used in international comparisons.
Although forecasting prices remains difficult, we
believe we are well positioned, with lower cost
import capacity available due to the successful
installation of Normandie 3 (N3), coupled with
a largely fixed hedge book on both power and
foreign exchange over the next two to three
years. These lower importation costs offset the
higher borrowing costs associated with N3.
We continue to explore more innovative,
customer focused heating tariffs which can
deliver more value to consumers, including our
new 24-hour Economy 20+ Tariff which will
supply uninterrupted electricity to approved
heating systems, improving sales, comfort
levels and equipment performance. Today over
16,000 customers benefit from our lower cost,
off-peak tariffs for heating and we are seeking
to build on this further.
10
MAINTAINING AFFORDABLE ELECTRICITY AND PRICE STABILITY
CHIEF EXECUTIVE’S REVIEW
Source: UK Energy Saving Trust
Jersey Electricity is the
sole supplier of over
40% of the energy
used on island
11
Space Heating 46%Hot Water 22%Consumer Electronics 8%Cooking 6%Lighting 6%Wet Appliances 5%Cold Appliances 5%ICT 2% ENSURING SECURITY AND
RELIABILITY OF SUPPLY
SUPPLY SECURITY
STANDARD
To meet Jersey Electricity’s
Security Standard, the
electricity system is designed
to meet:
• A one-in-eight year winter
peak demand
• All normal load in the event
of the loss of the single
largest interconnector with
France (N minus 1) plus a
simultaneous failure of the
largest:
o diesel generator; and
o gas turbine
• 75% of peak winter load
for 48 hours from on-Island
generation (no simultaneous
loss of on-Island capacity)
• No coincidence of the above
We aim to maintain security of electricity supply
by first ensuring we have enough supply –
whether by local generation or importation –
to meet demand, coupled with making sure that
our network is sufficiently resilient and diverse
to maintain supplies to consumers during
various asset failure scenarios. We work to an
“N minus 1” standard adapted for our unique
island system. Broadly, this standard seeks
to maintain supplies during the failure of the
largest component in the system (see panel).
‘Supply margin’ is defined as the total excess
supply capacity over total peak demand. Most
UK large-scale networks aim to maintain a
supply margin above 5% and generally around
10%. This winter however, there are fears
of major power cuts in the UK as the supply
margin is expected to fall to around 2% off
the back of the decommissioning of old coal
and ‘out-of-the-money’ gas plant. As a result
larger scale customers in the UK are to be
compensated for curtailing their demand in
certain situations. Fortunately in Jersey, we have
secured access to a diverse range of supply
sources and we have invested in our network
to ensure more than enough capacity to meet
demand. In particular, with two submarine
cables in service, Jersey Electricity now has
access to at least 150MW of importation
capacity, close to our peak demand of
around 160MW even assuming no on-Island
generation is available.
We remind our customers that like all public
network operators, we cannot guarantee
security of supplies but we seek to manage the
risk by minimising the probability of an asset
failure, and when supplies are interrupted,
ensuring that we are well prepared to restore
them quickly. For this reason, we always
recommend customers conduct their own
business risk assessments and put in place
battery backup or standby generation to
support high value ‘business critical’ processes
during times when the grid is not available.
As the sole provider of electricity in Jersey we
continue to invest heavily in our subsea cable
transmission network under the oversight of the
Channel Islands Electricity Grid (CIEG). Our
large investment in the 100MW Normandie 3
(N3) French link, completed last September, is
7 AVERAGE CUSTOMER MI N U T E S L O S T
A R O U ND 10 TIMES BETTER THAN THE UK
* Island Monitor 3 is the
third of six reports of island
communities produced
annually by Island Global
Research
12
ENSURING SECURITY AND RELIABILITY OF SUPPLY
CHIEF EXECUTIVE’S REVIEW
already paying dividends and has reduced the risk in the supply system.
We measure reliability in Customer Minutes Lost (CMLs) which is the
average duration of interrupted supplies during the year faced by each
customer. Our supply reliability this year is our best since 2008 at a level
of just seven, around ten times better than the UK.
This was reinforced by independent global research into ‘island
vulnerability factors’ which rated Jersey among the top four islands
worldwide for energy security. Only Iceland, the Isle of Man, and
Tasmania were able to match Jersey with a top rating on energy
security out of 25 islands studied for the Island Monitor.*
We have had only four Island-wide power failures in nine years.
The last was in January 2014 when lightning in France cut
overhead supplies to our Normandie 2 (N2) submarine cable on
which we were solely reliant during the period from 2012 until
N3’s completion. With security paramount, the N3 circuit not only
connects into a different part of the French network to that of N2,
it was designed and installed underground over its entire 58km
route from South Hill, Jersey, to Périers, deep in the Normandy
countryside. Going forward, our recently installed System
Integrity Protection Scheme (SIPS) is designed to carefully
and safely match demand with supplies when we
experience asset failures or other disruption on the
network, protecting assets and controlling network
isolation.
7 AVERAGE CUSTOMER MI N U T E S L O S T
A R O U ND 10 TIMES BETTER THAN THE UK
13
“ Supply security will be
further enhanced by our
£40m investment in another
100MW French link,
known as Normandie 1 ”
14
ENSURING SECURITY AND RELIABILITY OF SUPPLY
CHIEF EXECUTIVE’S REVIEW
Normandie 1
Supply security, so important to the Island’s
£3.9bn economy, will be further enhanced
by the £40m investment in another 100MW
French link, Normandie 1 (N1), shared with
Guernsey Electricity. The capacity of this asset
will start at 55MW before being increased to
70MW and ultimately to 100MW. This is a
direct replacement of the 55MW EDF1, our first
interconnector installed in 1984, which came to
the end of its life in 2012 after 28 years’ service.
We have made great strides with this project
this year after being granted final planning
permission in May. The initial survey of the
seabed along the same 27km route as EDF1
from St Remy des Landes, Normandy, to
Archirondel, Jersey, was carried out over several
weeks in July and August. The survey vessel
Askholmen, chartered from Swedish company
MMT, carried out the work along a 100-metre-
wide corridor alongside the decommissioned
cable. The vessel also carried out survey work
on our existing N2 and N3 cables.
We awarded the contract for the manufacture
and installation of N1 to an international
consortium in July. World leading cable
specialists Prysmian, who manufactured and
installed N3 and its adjoining land cables, will
manufacture the subsea cable in Naples, Italy.
Dutch specialists VBMS, with whom the
CIEG developed an innovative Power Cable
Maintenance Agreement in 2012, will be
responsible for its installation, employing, we
expect, the cable laying vessel Stemat Spirit.
Unlike the N3 submarine cable, which took
11 weeks to install, the installation of N1
is expected to take around three weeks as
it will be laid on or just below the seabed,
like its predecessor, rather than being fully
buried beneath it. Minimal land works will be
necessary as the new cable will connect to
existing 90kV infrastructure on both sides of the
Channel.
The 1984 cable has been prepared in readiness
for removal from the seabed next year in
accordance with planning permissions, before
N1 is laid. The small substation at St Remy des
Landes, known as ‘Poste de Surville’, which
served EDF1, will be dismantled and the land
returned to nature once the new circuit has been
commissioned in 2017.
15
ELECTRICITY SOURCES 2014-2015
ELECTRICITY SOURCES IN %
Year
JE
EfW
+13.8%
Import
2009-10
5.9%
0.6%
93.5%
2010-11
1.8%
2.6%
95.6%
2011-12
2.5%
5.2%
92.3%
2012-13
20.7% 3.9%
75.4%
2013-14
14.9% 4.9%
80.2%
2014-15
1.4%
4.6%
94%
-13.5% - 0.3%
16
ENSURING SECURITY AND RELIABILITY OF SUPPLY
CHIEF EXECUTIVE’S REVIEW
Generation
Though we have scaled back some of our less cost
effective steam generation capacity at La Collette
Power Station following the completion of N3,
all-Island supply failures on 25 September 2012
and 27 January 2014 led to a decision to install
a ‘black start’ diesel generator at La Collette. This
is designed to start using compressed air and
will enable the Company to restore full supplies
to the Power Station and all its ancillary controls
in the event of a situation of complete darkness
under distressed conditions. It will also enable
the Company to continue to meet its published
Security of Supply Standard by adding another
flexible unit of 5.5MW generation. Whilst we do
not expect the generator to be heavily used, it
provides some additional insurance in the unlikely
event of major interruptions to imported supplies.
We have sourced a reconditioned 5.5MW Sulzer
Diesel generator – an eight cylinder version of
our four existing 11MW V16 Sulzers – at a cost,
including installation, of around £2m. Installation
is now underway by Swiss contractors MIE. We
have also replaced the control systems on our two
emergency gas turbines at Queen’s Road.
Peak demand this year was 148MW recorded
at 9.30pm on 5 February, above last year’s
139MW but still well below our all-time record
of 161MW in February 2012. We view this
positively as we work hard to reduce this peak
and flatten demand. The completion of N3 has
restored our imports to 94% of our requirements
with La Collette this year generating just 1% and
the remaining 5% coming from the States of Jersey
Energy from Waste Plant.
Transmission
In February 2015, we supported Guernsey
Electricity in the successful pre-emptive repair to
the Jersey-Guernsey link (GJ1) during which an
850-metre section of cable was lifted from the
seabed, 500 metres off the Guernsey coast, cut
and replaced by VBMS, our submarine cable
maintenance service partner. GJ1 has now
experienced two repairs so we continue to monitor
the entire cable using a new DTS fibre optic
temperature monitoring system recently installed
for this purpose. We expect to install this system
on our N3 and N2 cables over the coming year.
Also in partnership with Guernsey Electricity, we
have installed an extremely important System
Integrity Protection System (SIPS) across the
transmission network. SIPS is designed to minimise
the impact of asset failures and other network
stress by load shedding to match supply and
demand across the whole of the Channel Islands
transmission network, from France through Jersey
to Guernsey. In the event of the loss of a major
asset such as a submarine cable, a generator
or a 90kV on-Island transmission cable or other
component, the system will react instantly to
protect our people and the network and minimise
the disruption to electricity supplies by load
shedding certain sections of the network and
stabilising the system.
Distribution
On-going investment in and maintenance of our
distribution network is vital to maintain supply
security. We plan many years ahead to meet
future demand and maintain network resilience.
We decided in 2006 that we needed a new
primary substation to secure existing supplies and
enable new ones in the north and west of St Helier
but our search for a suitable site took many years.
Having secured a site at Westmount and having
obtained planning permission last year, progress
on its actual construction has unfortunately
been hampered due to known risks of structural
instability on the site that have necessitated more
extensive civils preparatory work. Commissioning
of the new 90kV substation, known as St Helier
West, is now expected in 2018.
The long awaited upturn in the construction industry
has contributed to a 25% increase in new electricity
connections. The number of switching operations
however, has fallen by 13% compared with the
previous year as the demand for new supplies has
reduced the amount of resource available for the
more complex asset replacement work. We expect
to recover this in the next two years.
Overall, we installed on our network almost 6MVA
of new transformer capacity, around 34km of
new cable, nine new substations, 20 refurbished
substations and 925 new services. We maintained
156 substations and almost 15km of overhead
line. Substations on the network now number 765.
SmartSwitch
We have continued to make good
progress with our Smart Metering
programme, SmartSwitch, with
the launch of a pilot deployment
alongside ‘business as usual’
replacement of meters. We have
learned a great deal during this
process, and this has already been
incorporated into organisational
and process changes. A team of
installers has fitted the Liberty 140
Single Element Meter in around
2,700 homes, with over 3,000
installed as ‘business as usual’
replacements. The total number of
Smart Meters capable of automated
control and remote reading is now
over 16,000 when added to the
10,500 Horstmann Mainscom
Meters already in existence. The
Liberty 115 Twin Element Meter
is now undergoing testing and
technical trials and will be deployed
next year. This will enable off-peak
heating customers to enjoy the
benefits of Smart Metering.
Extensive work by our own
Metering team, in-house software
and data specialists Jendev and
our Swiss Post Solutions (SPS)
billing partner has enabled the
development of an online customer
portal Smart Account which staff
have trialled. This will allow
collection, analysis and presentation
of data for customers to better
understand their consumption via a
user friendly interface. This is now
under-going further development
and enhancement based on initial
learnings.
633 GWh
Imported from EDF
27 GWh
Generated by
EfW plant
10 GWh
JE locally
generated
Hydro 35% ä
Nuclear 65% ã
17
PROTECTING THE ENVIRONMENT
AND CONSERVING RESOURCES
The States of Jersey’s endorsement of the Energy
Plan – Pathway 2050 commits Jersey to reducing
carbon emissions by 80% of its 1990 level by
2050 and broadly attempts to set out how this
is to be achieved. Jersey Electricity has played
a central role in helping the Island make good
progress towards this target and as the only
provider of decarbonised energy in the Island, has
an important role going forward in influencing
sources of energy in its portfolio as well as how
this energy is consumed.
We can help all our customers reduce their
impact on the drivers of climate change by
supplying them with low carbon power and by
educating them to become more energy efficient.
The completion of Normandie 3 (N3) last year
and subsequent return to full importation capacity
under our ten-year supply agreement with EDF
that guarantees power from certified low carbon
sources has meant we have delivered power this
year at 125g CO2e (three-year average*) with
our lowest ever annual carbon intensity level
of 33g CO2e/kWh. This is 14 times cleaner
than the UK Electricity system, calculated at
462g CO2e/kWh** and around seven times
cleaner than fossil fuels used locally in Jersey,
with heating oil at 265g CO2e/kWh and LPG at
234g CO2e/kWh.***
Low carbon imports met 94% of our total
requirements of 670GWh (up from 80% last
year). Of that 65% came from nuclear generation
and 35% hydro. We only generated 1% of our
electricity on-Island compared with 15% last year,
with the remaining 5% from the States of Jersey-
owned Energy from Waste plant.
Whilst minimising the Island’s impact on climate
change is at the centre of our environmental
strategy, we work hard to minimise any direct
impact on the environment as a result of our own
operations. Following a British Safety Council
(BSC) Five Star environmental pre-audit in 2012,
we undertook the full BSC Five Star Audit in July.
The process involved an in-depth examination
of our entire environmental management system
and associated arrangements. It focused on
key aspects of our approach to managing our
environmental impact and offered a structured
path for continuous improvement. We were
delighted to be awarded Four Stars or a ‘very
good’ rating. The auditor praised our strong
commitment and leadership in environmental
performance improvement and sustainability
across the business. The audit results will help JE to
refine and improve an already robust system.
We reinforced our commitment to Health, Safety
and the Environment by recruiting an additional
member to the team this year ahead of an
experienced member’s retirement to ensure vital
continuity. We also continued our own energy
saving measures by extending LED lighting to all
offices and meeting rooms in the Powerhouse
and have procured additional LEDs for La Collette
stores. We are poised to trial an innovative
lighting scheme for the main office which, if
successful, will be rolled out next year. These and
other measures, along with our large photovoltaic
(PV) array at the Powerhouse, have contributed
to energy savings across our sites of over 30%,
though our target remains 50%.
After many months of effort working with the
authorities, Jersey Electricity has finally removed
around 2.5 tons of Waste Refrigerant Gas (WRG)
from refrigeration systems, playing our part in
removing the now banned ozone-depleting CFCs
from Jersey. WRG is collected by JEBS (Building
Services) during air-conditioning and refrigeration
works. Ours is the first company in the Island to be
granted a Trans Frontier Shipment Notification, or
licence, to ship WRG to the UK for recovery.
18
PROTECTING THE ENVIRONMENT
AND CONSERVING RESOURCES
ENVIRONMENT | RENEWABLES
CHIEF EXECUTIVE’S REVIEW
“We have delivered power at
our lowest ever carbon intensity,
more than ten times cleaner than
the UK electricity supply”
We have now fully restored the land adjacent to the N3 cable landing site. Our
work involved clearing invasive species of trees that had taken over part of the
dune. With the help of an ecology consultant the land has been protected from
the public and restored to its natural grassland state, providing a haven for
wildlife. Staff have also been involved in the removal of invasive species on two
volunteer environmental days with beach cleans instigated last year and which
we aim to continue in future.
Renewables
Despite the abundance of renewable energy in Jersey, the lack of financial
subsidies for its development remains a significant barrier in the uptake
of new large scale and distributed renewable energy. Nevertheless as
technology costs fall and energy prices rise, we expect opportunities to
emerge to develop and access these indigenous supplies of solar, wind and
tidal energy.
As Jersey Electricity has already decarbonised its energy system by
importing cleaner, low carbon power from France, energy ‘diversity’ and
energy ‘independence’ are our key motivation. With the right cost structure,
we expect that these larger scale renewable technologies will become
economically viable in the future and could provide a modest source of
income for the States of Jersey.
During the year, we continued to explore the potential of offshore wind
with a series of briefings for key States Members and civil servants. We
also presented a longer term, multi-year proposal for how we might work
together to develop this opportunity with the States of Jersey and we await
a response from the Government. As well as working on tidal energy and
offshore wind, we conducted considerable research on solar PV technology
and its application in the Channel Islands, building on the knowledge of our
actual experiences installing and operating a commercial solar PV array on
the Powerhouse building. Our strategy in solar is under development, but
we expect that it will remain a part of our services offer to customers.
* Due to improvements in the
underlying calculation methodology,
previous years have been restated
where appropriate. All updates can
be viewed on:
https://www.jec.co.uk/about-us/
responsibility/environment/
** Defra Carbon Factors
*** Source SAP Building calculator as at
30 September 2015.
19
CUSTOMER SERVICE
STANDARDS
As an organisation we seek to put the customer at the heart of our
business and this is reflected in our Vision statement. Customer focus
is also one of our six core Values for which we hold all our colleagues
accountable, not just those that are externally facing: ‘We listen to our
customers and seek to understand and respond to their needs, treating
them the way we would wish to be treated, with respect and honesty.’
We believe that continually demonstrating that we meet customer needs
better and better is one of the most important ways of protecting our
franchise in the community.
Our Energy Solutions team is developing new energy products and
services involving new technology-tariff combinations that better meet
the longer-term needs of customers. To obtain even more insight into
customers, we have this year undertaken a series of focus groups. The
results are already proving invaluable informing our fuel switching
strategy and corporate communications.
Customer focus, of course, is not just reflected in the design of our
products and services, it is also reflected in the way we interact with
our customers, dealing with their day-to-day needs as well as handling
complications. We believe we should invest in customer service in a
way that reflects what customers want and what they are willing to pay
for, whilst ensuring that our more vulnerable customers are looked after.
To this end, in recent years, we have concentrated on developing more
customer friendly ways of ‘self-help’ using various new interfaces such
as our website, our kiosks and automated telephone services, leaving
our Customer Care Advisers to handle the more complex situations that
require personal intervention.
This year we continued to make considerable progress in encouraging
customers to migrate from the more costly payment methods, such as
cash and cheque, to the more efficient Direct
Debit and where appropriate, Pay-As-You-Go
solutions. We have also made great strides in
migrating customers to more efficient methods of
communication such as email, which for many
of our customers is preferred and leads to a
lower cost to serve. The productivity released
from this work has enabled Customer Care
to provide better support for our new Smart
Metering project, SmartSwitch, as well as the
Energy Solutions team, providing initial advice
to customers on energy solutions and making
appointments for engineer visits.
We regularly monitor customer satisfaction using
an external specialist analytics company to
undertake annual market research of both our
domestic and commercial customers. This enables
us to compare our performance year-on-year as
well as providing vital new insights into changing
customer needs and expectations.
2015 has also been the first full year that our
new Microsoft Dynamics Customer Relationship
Management System (CRM) has been in operation.
This software was customised for us by Corefocus,
a local Microsoft accredited company, which also
worked closely with our own in-house Microsoft
Dynamics NAV team, Jendev, to integrate the two
systems together. This development has enabled
20
CUSTOMER SERVICE STANDARDS
CHIEF EXECUTIVE’S REVIEW
Supply security
Customers surveyed rated security and quality
of supply as particularly important for an
energy company and with just seven Customer
Minutes Lost on average this year, our rating
soared to an unprecedented 8.4 out of 10.
Value for money
Our overall ‘value for money’ rating increased
for the third successive year to 6.7, though
our rating for one component of this measure,
‘running costs and price stability’, fell from
6.3 to 5.4 despite no increases in tariffs since
April 2014. Given how competitive tariffs are
compared with other power utilities, we intend
to focus on how we communicate this better
going forward.
us to more robustly measure our performance
and monitor our customer interactions against the
promises and commitments set out in our Customer
Charter and published Service Standards. CRM is
designed to help us log and track every customer
compliment, comment and complaint together with
enquiries relevant to our Charter right across the
business.
Overall rating
I am pleased to report that our surveys confirm
that we are making progress particularly in those
areas that customers say are important. Our
overall customer service rating in the domestic
customer market research rose for the third
successive year from 7.6 last year to 7.7 out of
10 which we are advised is an excellent result
compared with similar peers in the market.
This rating encompasses:
• Technical problem resolution -
speed of response
• Clarity of electricity bills
• Helpfulness in dealing with telephone
enquiries
• Helpfulness of showroom staff
• Support in electricity bill payments
• Regular advice on energy efficiency
21
The shopping experience has been improved
by a modern, more spacious store layout,
better product displays, including a new LED
lighting centre, more accessible payment zones
and customer service desks. A key objective of
our restructuring was to reduce our cost base
and this has enabled the business to be more
price competitive, regaining our position in the
local marketplace and fighting back against
the online threat from the UK.
We are building on this progress. We will soon
be introducing the biggest display of built-in
kitchen appliances in Jersey and we intend to
exploit new technologies and lead the way
on smart appliances and products. The future
remains challenging and there is more work to
be done but we are now far better prepared to
meet and overcome those challenges.
COMMERCIAL
BUSINESS
Powerhouse.je
I am delighted with the considerable progress
made by our Retail business, the Powerhouse
online and in-store. This business has faced
particular competitive challenges in recent
years and the 48-strong Retail and Logistics
team has risen to these and adapted to
significant changes this past year. The
restructure we completed in February 2014
was a difficult one but the streamlining,
coupled with a management restructure, the
rebrand, new store layout and investment in
product knowledge and customer service is
having a positive impact on operational and
financial performance.
The business has turned a £0.1m loss last
year into a £0.3m profit this year on slightly
reduced revenues of £11.1m. The re-focusing
of staff under the new management structure
has delivered improved efficiency and
customer service, which is such an important
differentiator in the local market and which
was recognised with the external Travel
Solutions Customer Service Strategy Award
late in the year. Our new strong ‘joined-
up’ Powerhouse brand is now instantly
recognisable following extensive investment in
traditional and digital marketing, and we are
beginning to secure a loyal online following.
22
COMMERCIAL
CHIEF EXECUTIVE’S REVIEW
Jendev
Jendev, a Microsoft® certified
Dynamics NAVTM Partner
specialising in software
development for utilities, is a
key in-house asset for Jersey
Electricity and continues to
play an important role in the
Group’s portfolio.
The business continues to
move through a busy period
of renewal focused on the
redevelopment of its flagship
solution Jenworks Billing, which
targets small and medium
sized water, electricity and gas
utilities. Jendev is now planning
to extend the Jenworks brand
to include Jenworks CRM,
based upon leading Dynamics
CRMTM technology. This related
diversification will significantly
strengthen Jendev’s value
proposition when tendering for
new business.
Comprised of a small team
of highly experienced utility
industry IT professionals,
Jendev continues to support
Jersey Electricity in a number of
strategically important projects
including Jersey Electricity’s
major smart metering project,
SmartSwitch. The business
will also play a critical role
in JE’s upcoming enterprise
system upgrade delivering
the latest Microsoft Dynamics
NAVTM technology, providing
a significantly improved user
interface and increased system
flexibility and efficiency.
Jendev serves external utility
customers in Guernsey, the
Isle of Man and the UK and
generated revenues of over
£1m this financial year. In
line with Jendev’s plans for
sustainable revenue growth, a
number of strategic partners
have been identified and the
business is actively engaged
in commercial opportunities in
export markets.
23
Property
Our Property portfolio comprises the Jersey
Electricity Retail Park and a number of residential
properties, as well as income from the leasing
of mobile aerial sites. The Retail Park comprises
our main office and retail building, Jersey’s B&Q
store and a large medical centre. The ground
floor of the main office building is home to our
own retail store, Powerhouse.je, which occupies
approximately half of the available space, with
the other half being occupied by SportsDirect.
com. The middle floor of the building is
occupied by the telecoms operator Sure and
their subsidiary, Foreshore, the data centre
operator formerly owned by the Company. The
Company’s offices are situated on the top floor
of the building.
Overall, our Property business saw profits
increase from £1.4m to £1.6m, excluding the
impact of investment property revaluation. To
a large extent this reflects the high levels of
occupancy in the portfolio over the past year.
Our investment property portfolio valuation
remained at £20.5m.
Building Services (JEBS)
We have continued to develop JEBS, our building services business,
into a more commercial, customer focused enterprise following the
re-structure we instigated last year under a new Head of Commercial
Services. JEBS provides electrical, mechanical and plumbing installation
and maintenance services, including air-conditioning and refrigeration,
to domestic and commercial customers. To better exploit the larger
scale commercial opportunities in new build, we appointed a new JEBS
Contracts and Operations Manager, who brings a wealth of commercial
experience to the day-to-day running of the team, improving contract
tendering and delivery processes, while continuing to progress the
necessary change programme.
The team has had success with a number of large contracts, including
a new Channel Islands Co-operative Society store, the States of Jersey
Health and Social Services Department’s Legionella Risk Assessment
programme across all its buildings, including the General Hospital and
the new heat pump system for the Ports of Jersey Airport Departures Hall.
In the domestic market, the team has had a most successful summer fuel
switching private homes from fossil fuels to electric heating following a
sustained summer marketing campaign and new regulations covering oil
storage tanks.
JEBS has also been responsible for a pilot installation of new meters
across the Island as part of our SmartSwitch Project and its Public Lighting
Engineers have been busy installing LED Amenity Lighting on behalf of the
States of Jersey.
While all this activity has grown revenues from £4.2m last year to £5m,
there remain challenges at the margin level given the intensity of the
competition in the local market. We are committed to a future in services
and JEBS is an important feature of this. A firm foundation is being
developed to take the business forward on a more commercial
and sustainable footing.
24
COMMERCIAL
CHIEF EXECUTIVE’S REVIEW
Jersey Energy
Jersey Energy and its Guernsey office, Channel Design
Consultants (CDC), provides premium environmental and
building services advisory services for architects and
developers serving the commercial and residential sectors. It
has had a very successful year with revenue over £0.5m and
profit ahead of expectations. As a leading Channel Islands
building services consultancy, our offer is under continual
development to meet increasing client expectations. The
business has been rewarded with a consistent work stream of
repeat business from satisfied clients and, significantly, winning
some high value, long-term contracts. These have included
the entire Mechanical, Electrical and Public Health (MEP)
contract for the Royal Bank of Canada’s new headquarters at
66 Esplanade and a large private trust housing development
of 125 units at Grands Vaux. The Guernsey office has also
developed a strong order book and, in partnership with an off-
Island consultancy, was awarded the building services contract
for a major new States school there.
Staff training and development are crucial to the business.
Techniques such as 3D modelling and visualisations, once seen
as a speciality, are now frequently in demand and sought after
as they are such an effective aid to the planning process. The
business has therefore reinforced its commitment to developing
local engineering skills by recruiting two trainee Building
Services Engineers, one in each island. We have also made an
important appointment at the top of the business by appointing
a new Head of Consultancy Services who brings with him
a wealth of experience amassed over 35 years’ in building
services, latterly as Operations Director of a regional branch of
a UK consultant.
25
HEALTH
AND SAFETY
In view of the hazardous activities in which many of our 340
staff are engaged on a daily basis, managing Health and
Safety risk is of paramount importance and an area in which
we invest considerable resource in manpower, training and
senior management commitment. Safety is also one of our
six core values: ‘We do everything safely and responsibly or
not at all – nothing is more important than the safety of the
public, our customers and our staff’ and we are proud of our
safety record and culture.
observed during his site inspections, we would have retained
the five stars we achieved in 2012. But the BSC has made
considerable changes to the audit specification since then and
the four stars awarded reflected a very good performance
against new, more exacting standards. A number of areas
for improvement came out of the review, including a need
for a more integrated documentation policy. The HSE team
is working with line management to address this, developing
action plans with responsibilities and timescales.
This year we have enhanced slightly the size our Health,
Safety and Environmental (HSE) team as part of our
succession planning in this vital area. Each year the HSE
team produces a plan that aligns its aims with our business
objectives, and in particular seeks to address improvement
opportunities identified in audits. Governance is provided
by various HSE Committees and includes a forum for
direct communication between myself as Chief Executive,
Senior Management and Safety Representatives. Safety
Representatives play a vital role within operational teams
to help create the conditions and culture for safe working
among all colleagues, contractors and the public.
Our approach to HSE is flexible and ‘risk based’ to prevent
complacency and it seeks to address new legislation and
adapt to the changing operational environment. We ensure
all our colleagues are fully competent in the work we ask
them to do and all employees are trained to recognise
their own limits of competency. They are also expected to
proactively identify hazards and take action to mitigate the
risks associated with those hazards in their day-to-day work
so that the potential for injury or damage is removed or
reduced to an acceptable minimal level. We identify third
party service providers and temporary contractors as a
particular risk that needs close management and this is an
area we have focused on over recent years.
In March the British Safety Council (BSC) carried out
our third audit of our occupational health and safety
management arrangements. The auditor was particularly
impressed with the strong Health and Safety culture, saying
that if the audit had been based solely on what he had
Though we have scaled back generating activity at La Collette
Power Station since the completion of Normandie 3 (N3), the
Production team has been heavily engaged in the
de-commissioning of steam plant and enhancing our ‘black
start’ capabilities at both La Collette and our Queen’s Road
sites as well as the installation of a new highly complex
transmission protection scheme. Having any Lost Time
Accidents (LTAs) at all is regrettable, but our Energy Division
suffered only two LTAs this year from minor injuries, reflecting
our positive HSE culture.
RIDDOR (Reporting of Injuries, Diseases and Dangerous
Occurrence Regulations) is the UK standard for reporting
Health and Safety statistics and in the UK, an LTA is classed as
an accident that results in the injured person being away from
work or unable to do their normal work for more than seven
days. Jersey Electricity applies the more stringent standard of
more than three days. This enables us to benchmark against
other peer group entities and allows us better oversight on
risk trends. We have suffered a total of six LTAs throughout the
entire Company this year, five applying the three-day standard.
Thankfully, none of these was serious. Had the seven-day UK
standard been applied, the figure would be one LTA.
My thanks go to all colleagues for their individual contribution
in making Jersey Electricity, and all the people the Company
touches, safe. I would particularly thank our Safety
Representatives and the Health and Safety team for their
commitment, passion and professionalism in supporting all
our employees. They have helped create our excellent
safety culture.
26
RIDDOR is the acronym
for Reporting of Injuries,
Diseases and Dangerous
Occurrence Regulations and
is the UK standard used for
the reporting of health and
safety statistics.
A Lost Time Accident (LTA) is
an accident that results in the
injured person being away
from work or unable to do
their normal work for more
than seven days in the UK but
we at Jersey Electricity apply
the more stringent standard
of three days (including any
days they would not normally
be expected to work such
as weekends, rest days or
holidays) and not counting
the day of the injury itself.
DAYS LOST
(RIDDOR)
HEALTH AND SAFETY
CHIEF EXECUTIVE’S REVIEW
LOST TIME ACCIDENTS
(RIDDOR)
6
2
0
0
6
“...nothing is
more important
than the safety
of the public
and staff ”
27
SUSTAINABILITY
IN THE COMMUNITY
As the leading provider of energy in Jersey, our responsibility
to our community goes far beyond the provision of sustainable,
low carbon energy and our other business activities.
We strive to be a partner in our community, supporting
Jersey’s many volunteer groups, schools and charities,
focusing largely on health, education and the environment.
We are committed to protecting Jersey’s environment and
believe it is fitting that we recognise and reward those
who are equally passionate. This year we were pleased
to sponsor the inaugural Pride of Jersey Environmentalist
Award, organised by the Jersey Evening Post as part of a
series of community awards nominated and voted for by the
community. We also continued our long-term support for the
Jersey Construction Council’s (JeCC) Sustainability Award that
recognises environmental best practice in this vital industry.
At a corporate level, we continue to sponsor the National
Trust, Jersey Heritage, Genuine Jersey and the JeCC and
we backed the Council’s Brick Foundation charity in its
refurbishment project at Durrell. We have helped a multitude
of charities, including Family Nursing & Home Care, Autism
Jersey, Headway, Age Concern, Stroke Association and St
John’s Ambulance. We also supported the Channel Islands
Mountain Bike Association’s ‘Urban in the Park’ event around
the site of our proposed new primary substation in Westmount
Gardens, St Helier. We support our staff in their many
collective fund raising activities. We had our biggest ever
entry in the Lions Club of Jersey Swimarathon and Dragon
Boats Festival in aid of Jersey Hospice Care, while a ten-man
team again competed in a round-island extreme relay in aid
of the Silkworth Charity Group.
Our colleagues raise thousands of pounds for good causes
in their own right and in all cases this year, the Company
matched the money raised. The innovative monthly Staff
Number Charity Draw continues to raise over £3,000
a year for staff-nominated charities, including Teenage
Cancer Trust, Friends of Jersey Oncology, Guide Dogs for
the Blind Association (Jersey), Jersey Hyperbaric Treatment
Centre, Friends of Special Care Baby Unit, Brooke Hospital
for Animals, Help A Jersey Child, CAT Action Trust, Hope
for John, Help an African School Child Trust and Diabetes
Jersey. In addition, our staff Charity Committee has
supported Macmillan Cancer Support, After Breast Cancer
Jersey, Headway Jersey, Help A Jersey Child and Yes (Youth
Enquiry Service), a youth counselling and advice service.
The completion of the restoration of Plémont headland
from a disused holiday camp site to its natural state by the
National Trust for Jersey was one of the most significant
environmental successes in the Island for many years. We
were proud to have played an important part, not just
in terms of sponsorship but also pro-bono services in the
form of removal and replacement of old but still in-service
electrical infrastructure, including the relocation of a
substation and cabling.
In recent years we have supported the work undertaken by
Durrell Wildlife Conservation Trust but this year we provided
funding for an important new conservation project led by the
Société Jersiaise Marine Biology Section. In 2010 we gifted
the Société the sediment cores extracted from the seabed
during our surveys for our Normandie 3 subsea cable and
from which scientists and historians have plotted the ancient
terrestrial landscape that existed between Jersey and France
millennia ago. This year we have enabled the Société to
start to create an interactive biological map of Jersey’s coasts
and offshore reefs to form a baseline from which to monitor
changes to the health of key habitats brought about by rising
sea levels, climate change, ocean acidification and invasive
marine species then act to mitigate against these dangers.
28
SUSTAINABILITY IN THE COMMUNITY
CHIEF EXECUTIVE’S REVIEW
“We strive to
be a partner in
our community,
supporting Jersey’s
many volunteer
groups, schools
and charities”
29
Our employees are unquestionably our most important asset and we rely on them
tremendously. As the sole supplier of electricity in a small offshore island our workforce is
diverse, highly skilled, flexible and dedicated to serving the community.
Their efforts were recognised this year by a number of external awards. Our Normandie
3 (N3) Project, involving a large team right across the organisation, was named Jersey
Construction Council Project of the Year in the largest Over £1million category. N3’s former
Project Manager received the Council’s Lifetime Achievement Award, while our Senior
Projects Engineer was short-listed as Achiever of the Year for his work on the project. In
addition, our Powerhouse Retail team was rewarded at the Travel Solutions Customer
Service Awards with the Customer Service Strategy Award.
We are fortunate to have many long-serving staff who have acquired the skills and
experience necessary to deliver a first class service over many years but as the industry
changes we must re-set our compass and ensure we and our workforce are fit for the future.
The Purpose, Vision and Values (PVV) work, started in 2013 to re-focus everyone on our
objectives and chart the way we work together to meet them, has continued this year.
Last year all our staff have attended workshops, Toolbox Talks and inter-site visits to help
them better understand each other’s roles and how to work together to achieve our goals.
30
OUR PEOPLE
CHIEF EXECUTIVE’S REVIEW
This year we have built further on this work. Crucially, PVV,
coupled with an Employee Survey at the end of last year,
gave us a measure of where we are and where we need
to improve. To this end we have made some significant
appointments this year that reinforce the Company’s
commitment to developing our people and attracting the best
new recruits.
In March, we appointed a new Director of Human Resources
and in September she was joined by a new Talent Manager.
The HR Director has written the HR Strategy clearly laying
out the next three to five years in determining our people
approach. This has been supported by the Talent Manager
who has developed our Talent Strategy capturing the
important work started under EmPower, our cultural change
programme covering training and development, succession
management, career planning, reward and progression of
our people – areas that were key themes in the feedback
received from our colleagues through EmPower workshops,
PVV and the Employee Survey. Both will play vital roles in
overseeing EmPower.
Two areas that have already undergone significant change
are the Powerhouse Retail store and JEBS, our Building
Services business. JEBS are working through the challenges
of major management re-structures and changes in working
practices while results can already be seen in the Powerhouse
in terms of improved performance and employee job
satisfaction. Our aim is to fairly and transparently recognise
and reward good performance throughout the business and
make Jersey Electricity a better place to work.
We have traditionally also recognised and rewarded long-
service and this year was no exception. We presented two
employees with awards for 21 years’ service and two for 40
years. The average length of service is currently 14.3 years
and the average age of the workforce is 43.5 years. At the
year end, we employed 340 people across the Group of
which 282 were full time, 52 part time and six were zero
hours. Staff turnover is at a low level of just 4.5% and we
also enjoy a low sickness rate.
In a year when we have seen improved performance in terms
of financial results, unit sales, supply reliability, significant
project progress and excellent customer service ratings, I
would like to extend a personal thank you to all colleagues
who have been so central to this successful year.
31
OUTLOOK
Over recent years we have worked hard
to develop and progress our infrastructure
strategy, the end game of which is to deliver
three submarine cables between Jersey and
France, in service, along diverse routes
and co-owned and operated alongside our
long-term partners Guernsey Electricity (GEL).
The important Normandie 3 (N3) submarine
cable project was successfully completed at
the beginning of this financial year and the
Channel Islands have enjoyed close to 12
months of stable operation.
Our tariffs remain competitively priced and
stable and have been over the last few
years. Whilst the energy sector, driving
wholesale power prices in Europe, and
financial markets, driving foreign exchange
rates, remain uncertain and unpredictable,
we have established robust risk management
processes to help mitigate volatility. Putting
aside any major infrastructure failure, our
hedge book remains strong and we hope this
will continue to support customers and the
Jersey economy with stable pricing.
In an industry that is changing significantly
across the globe, Jersey Electricity faces
challenges in its businesses. However, with
the support of capable people coupled with
a well-invested network, we are confident
that electricity will remain an important
technology for the Channel Islands for many
years to come.
Chris Ambler
Chief Executive
17 December 2015
We are making progress with Normandie
1 (N1), the next submarine cable, installed
on a fast-track basis to replace EDF1 which
came to the end of its life in 2012. Although
half way through its life, the Normandie
2 (N2) submarine cable is performing
well. We continue to work with GEL to
deliver either an additional submarine cable
between Guernsey and Jersey or a cable
along the more challenging route direct
from Guernsey to France. These cable assets
are the cornerstone of our operations and
provide a stable platform to service our
existing demand securely and economically
as well as provide capacity for growth.
Whilst energy efficiency is having an effect
on our business, we will continue to support
our customers in getting the best possible
value from our product. Our challenge
however, is to offset this by finding new
applications and developing new tariffs to
exploit off-peak periods when demand is
low and when capacity is available. The
Energy Plan is a significant endorsement
of electricity, given its low carbon intensity
and should provide several opportunities for
further development of our business.
32
OUTLOOK
CHIEF EXECUTIVE’S REVIEW
“ Our infrastructure
strategy is to deliver
three submarine cables
between Jersey and
France...”
33
34
FINANCIAL REVIEW
FINANCIAL REVIEW
Group Financial Results
Key Financial Information
Revenue
2015
£100.5m
2014
£98.4m
Profit before tax pre-exceptional items £12.4m
£10.0m
Earnings per share pre-exceptional items 32.94p
24.26p
Dividend paid per share
12.45p
11.80p
new submarine cable to France was commissioned in September
2014, we had been 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 we imported 94% of our requirements from
France (up from 80% in 2014) and only generated 1% of our
electricity on-island (compared to 15% last year). The remaining
5% of our electricity came from the local Energy from Waste plant
Final proposed dividend per share
7.60p
7.20p
being at the same level as in 2014. There were no customer
Net debt
£17.5m
£20.2m
tariff movements during 2015 and our tariffs continue to remain
Group revenue for the year to 30 September 2015 at £100.5m
was 2% higher than in the previous financial year. Unit sales
volumes of electricity were 1.0% higher than last year with Energy
revenues rising 1.6% to £80.7m. Turnover in Powerhouse.je, our
retail business, decreased by 3% from £11.4m to £11.1m as the
floor space utilised by the business was reduced following the
leasing of floor space to a new external tenant from May 2014.
Revenue in the Property business rose from £2.0m to £2.1m
linked to changes in tenancy arrangements during the last two
financial years. Revenue from JEBS, our building services business,
including internal sales, rose 18% from levels experienced in 2014
to £5.0m. Turnover in our Other Businesses, including internal
sales, remained at £3.2m.
Cost of sales fell by £3.9m to £64.6m associated mainly with
a higher level of electricity importation displacing oil purchases
in our Energy business. Operating expenses, at £22.0m,
rose by £1.9m from their 2014 level with a £1.7m rise in
depreciation, associated with our recent material infrastructure
spend, being the main item.
Profit before tax, pre-exceptional items, for the year to 30
September 2015, rose 24% to £12.4m, from £10.0m in 2014,
reflecting a strong performance in our Energy business, and a
recovery in our retail interests, Powerhouse.je. Profit before tax
post-exceptional items, rose from £6.5m last year to £13.2m in
2015. Exceptional items have had a material impact on profits
in the last two years and a narrative detailing the background to
competitive with other jurisdictions.
Profits in our Property division, excluding the impact of investment
property revaluation, rose by £0.1m from £1.4m last year
with changes in occupancy levels being the main driver. Our
investment property portfolio was revalued downwards marginally
this year whereas it moved up by £0.1m in 2014. Our retailing
business, Powerhouse.je, had a year of change post a reduction
in floor space, a restructuring and re-branding of the business
during the 2014 financial year. This has been positive with the loss
of £0.1m last year moving to a profit of £0.3m in 2015. JEBS, our
contracting and business services unit produced a marginal loss
due to competitive pressures. Our other business units - Jersey
Energy, Jendev and Jersey Deep Freeze all had a profitable year.
Interest paid in 2015 was £1.5m whereas in 2014 it was
negligible as most of this cost was capitalised up to the date
of commissioning of our new N3 subsea cable. The taxation
charge at £2.4m was materially higher than the 2014 figure of
£1.5m due to higher profits and the taxation of the exceptional
items. Group earnings per share, pre-exceptional items,
increased 36% to 32.94p compared to 24.26p in 2014 due
mainly to an increase in profitability. Earnings per share, after
exceptional items, rose from 16.10p in 2014 to 35.00p in 2015.
Dividends paid in the year, net of tax, rose by 6%, from 11.80p
in 2014 to 12.45p in 2015. The proposed final dividend for this
year is 7.60p, a 6% rise on the previous year. Dividend cover,
pre-exceptional items, rose from 2.1 times in 2014 to 2.6 times
due to a higher level of profits. If exceptional items are included
dividend cover rose from 1.4 times last year to 2.8 times in this
such items is contained within the Financial Review.
financial year.
Our Energy business unit sales saw volumes up 1%, rising
from 621m to 627m kWh. The first quarter of the financial
year was milder than the corresponding period in the previous
year but there was a reversal in the second quarter. However
both the overall winter periods in the last two years have seen
temperatures above the long-term average and therefore milder
than anticipated. Profits in our Energy business rose from £8.0m
to £11.5m. Two main factors contributed to this increase in
performance; firstly lower generation and secondly, the rising
asset base (on which we apply a return) due to heavy spend on
infrastructure in recent years. As reported previously, until the
Ordinary Dividends
2015 2014
Dividend paid
- final for previous year
7.20p 6.80p
- interim for current year 5.25p 5.00p
Dividend proposed - final for current year
7.60p 7.20p
Net cash inflow from operating activities at £23.4m was
£3.3m higher than in 2014 with increased profitability being
the primary driver. Capital expenditure, at £16.8m fell from
£33.0m last year as the Normandie 3 project spend dominated
35
last year albeit there was the settlement of £5.5m of residual
project cost in quarter 1 of this financial year. Net debt, at the
year-end was £17.5m, which was £2.7m lower than last year.
Treasury matters and hedging
policies
£23.4m
£20.1m
As a substantial proportion of the cost base is the importation
Cash Flows
Summary cash flow data
2015
2014
Net cash inflow from
operating activities
Capital expenditure
and financial investment
£(16.8)m
£(33.0)m
Net proceeds from assets disposal
-
£1.6m
Dividends
£(3.9)m
£(3.7)m
Decrease/(Increase) in net debt
£2.7m
£(15.0)m
Exceptional items
A number of items of an exceptional nature were incurred in the
last two financial years.
During this financial year we had two exceptional credits
amounting to £0.8m which have been adjusted in arriving at
our underlying profit figure. The first exceptional item resulted
from a network issue in France during March 2015 for which
the CIEG received a compensation payment from RTE (the grid
operator) and the net upside for the Jersey Electricity proportion
was £0.5m. Secondly we had created a provision in 2012 in
relation to work associated with the failure of the EDF1 subsea
cable. Now that the N1 project is progressing, the provision is
Operating within policies approved by the Board and overseen
by the Finance Director, the treasury function manages liquidity,
funding, investment and risk from volatility in foreign exchange
and counterparty credit risk.
of power from Europe, which is contractually denominated in
the Euro, the Company enters into forward currency contracts
to reduce exposure and as a tool to aid tariff planning. The
average Euro/Sterling rate underpinning our power purchases
during the financial year, as a result of the hedging program,
was 1.21 €/£. The average applicable spot rate during this
financial year was 1.35 €/£. In addition we also materially
hedge any foreign exchange exposure attributable to capital
expenditure once planning consents and firm pricing is known
and hedges were placed in July 2015 for €27.5m at an average
rate of €1.42 in respect of our N1 subsea cable project.
Interest rate exposure is an area of potential risk but is managed
by the £30m of private placement monies received in July 2014
having a fixed coupon and represents all of our borrowings at
present.
The Group may be exposed to credit-related loss in the event of
non-performance by counterparties in respect of cash and cash
equivalents and derivative financial instruments. However, such
potential non-performance is monitored despite the high credit
ratings (investment grade and above) of the established financial
institutions with which we transact.
no longer required, as such work is part of the wider project,
In the last financial year the Company imported 94% of
and £0.3m in relation to this issue was released back to
profit and is viewed as exceptional. All these items have been
assumed to be taxable.
In the 2014 Annual Report we reported exceptional costs of
£0.6m and £1.2m in restructuring our retail business,
Powerhouse.je, and exiting our investment in Foreshore Ltd
respectively. In addition, a £1.8m provision was established in
September 2014 for a repair to the subsea cable between Jersey
and Guernsey. As reported in our Interim Report this pre-emptive
repair was successfully performed during January 2015 with the
cost fully covered by the provision.
the electricity requirements of Jersey from Europe. It jointly
purchased this power, with Guernsey Electricity, through the
Channel Islands Electricity Grid, from EDF in France. The supply
contract allows power prices to be fixed in Euros in advance of
decisions being made on customer tariffs. A ten year contract
power purchase agreement with EDF commenced in January
2013 which combines a fixed price component with the ability to
price fix future purchases over a rolling three year period based
on a market related mechanism linked to the EEX European
Futures Exchange. The goal is to provide our customers with a
market based price but with a degree of certainty in a volatile
energy marketplace. A CIEG Risk Management Committee
exists, consisting of members from Jersey Electricity, Guernsey
Electricity and an independent energy market adviser and follows
guidelines approved by the Board.
36
FINANCIAL REVIEW
FINANCIAL REVIEW
Defined benefit pension scheme
arrangements
As at 30 September 2015 the scheme deficit, under IAS 19
“Employee Benefits” rules, was £5.8m, net of deferred tax,
compared with a deficit of £1.1m at 30 September 2014. Scheme
assets rose 2% from £104.8m to £106.8m since the last year
end. However asset values as at our half year were £117.5m but
have been impacted in the interim by turbulent equity markets
in the last quarter of our financial year. Liabilities increased 7%
from £106.1m to £114.0m in the last year with the discount
rate assumption, which heavily influences the scheme liabilities,
falling from an assumed 3.9% in 2014 to 3.6% in 2015 to reflect
sentiments in prevailing financial markets.
The share price at 30 September 2015, at £4.50, was 35%
above the level of £3.34 at the 2014 year end. This gives a
market capitalisation of £138m as at 30 September 2015
against a balance sheet net assets position of around £150m.
However the illiquidity of our shares, due mainly to having one
large shareholder, combined with an overall small number in
circulation, constrains the ability of the management team to
influence the share price. At the 2011 Annual General Meeting
an all-employee share scheme, to more closely align the interests
of both employees and shareholders, was approved, and during
2015, 266 qualifying staff received 100 shares each at a value
of around £4 per share at the time of issue (which will vest in
2018) and this is likely to be repeated going forward. We also
appointed Edison (an investment research firm) during the year
to market our shares to a wider body of potential investors. Such
Our defined benefits pension scheme is an area of risk that
initiatives seek to improve our longer-term liquidity.
continues to require careful monitoring as it is driven largely
by movements in financial markets and materially impacted
by relatively small movements in the underlying actuarial
assumptions. If, for example, the discount rate applied to the
liabilities had been 3.1%, rather than the 3.6% advised by our
actuaries under IAS 19 for 2015, the net deficit of £5.8m would
rise to a net deficit of £13.3m.
The last triennial actuarial valuation was performed as at
31 December 2012 and resulted in a deficit of £9.3m. The
Our largest shareholder, the States of Jersey also owns holdings
in other utilities in Jersey. It holds 100% of Jersey Telecom and
Jersey Post, as well as around 75% of Jersey Water. The total
direct cash return to the States of Jersey from Jersey Electricity in
the last year was £7.3m (2014: £7.0m). Note that no corporation
tax was paid in 2014 or 2015 due to capital allowances
associated with our heavy investment spend.
2015
2014
£2.4m
£2.2m
contribution rate by Jersey Electricity was increased to 20.6% of
Ordinary dividend
pensionable salaries from January 2013 (up from the previous
level of 14.2%). Employees continue to contribute an additional
6% to the pension scheme. The final salary scheme was closed
to new members in 2013, with new employees, since that time,
being offered defined contribution pension arrangements. Unlike
most UK schemes, the Jersey Electricity pension scheme is not
Goods and Services Tax (GST)
£4.1m
£3.9m
Corporation tax
£ -
£ -
Social Security - employers contribution
£0.8m
£0.9m
£7.3m
£7.0m
funded to pay mandatory annual rises on retirement. The next
The Company regularly communicates with its largest
triennial actuarial valuation of the defined benefit scheme has
shareholders and details of discussions, including any concerns,
an effective date of 31 December 2015, the results of which are
are reported to the Board by both the Chief Executive and the
expected to be known in this coming financial year.
Finance Director.
Returns to shareholders
62% of the ordinary share capital of the Company is owned by
the States of Jersey with the remaining 38% held by around 600
shareholders via a full listing on the London Stock Exchange.
Of the holders of listed shares Huntress (CI) Nominees Ltd owns
5.8m (50%) of our ‘A’ Ordinary shares which represents 19% of
our overall Ordinary shares and around 5% of Voting Rights.
This nominee company is held within the broker firm Ravenscroft
which has placed our stock with a number of private clients
residing largely in the Channel Islands and also an investment
fund specialising in local business. During the year the ordinary
dividend paid increased by 6% from 11.80p net of tax to 12.45p.
Group Risk Management
Approach
The Board is ultimately responsible for managing the Group’s
approach to risk and determining a strategy for managing
identified risks within the business. The Board is supported by
the Audit and Risk Committee which has delegated responsibility
for reviewing the effectiveness of the Group’s system of internal
controls and risk management. The Board recognises that any
risk management process cannot eliminate all level of risk but
rather manages the Group’s exposures, and sets the acceptable
level of tolerance required to successfully deliver the Group’s
strategy and growth.
The proposed final dividend for 2015, at 7.60p, is a 6% increase
The management team has an established risk management
on last year and consistent with the underlying dividend pattern in
framework which is designed to identify the key risks.
recent years and with our stated policy to aim to deliver sustained
This framework also assists in developing risk mitigation
real growth in the medium-term.
37
activities and making assessments of their effectiveness. In its
Key changes to the risk profile of the Group in 2015
maintenance of the Group’s Risk Register, each business unit,
together with the executive management team, identify the
principal risks together with the mitigation strategies in place.
Following this process the principal risks and mitigation actions
are collated and reviewed by the management team, Audit &
Risk Committee and Board. The output from this exercise forms
the basis of the key principal risks set out below.
Other key features of our system of risk management, which
have been in place throughout the financial year, include:
The successful commissioning of Normandie 3 (N3) has
significantly reduced a number of exposures associated with
the potential operational loss of the existing subsea cable to
France (N2) or issues with on-Island generation plant. This was
generally viewed as the largest existing risk which was largely
mitigated when the N3 project was delivered on 24 September
2014. This asset has subsequently become “bedded in” during
the 2015 financial year.
Principal risks
• Regular business and financial reviews by the Executive team
The Directors have carried out a robust assessment of the
and the Board;
• Established and documented risk management policies
including a schedule of matters reserved for the Board;
• Systems and tools to monitor key risks with the aim of
providing regular and succinct information to the Board and
Executive team; and
• A comprehensive insurance programme.
principal risks facing the Company, including those that would
threaten its business model, future performance, solvency or
liquidity.
The table below summarises the Group’s principal risks and
how they are managed. The Board considers these to be the
most significant risks that could materially affect the Group’s
financial condition, ongoing performance and future strategy.
The risks listed do not comprise all risks faced by the Group
and are not set out in any order of priority. Additional risks not
presently known to management, or currently deemed to be less
material, may also have an adverse effect on the business.
Risk
Description and possible impact
Mitigation activities
Regulatory / Political or Legislative change
Regulatory
Not acting in line with ‘expectations on behaviours’
of a monopoly utility resulting in the introduction of
sector specific regulation with the attendant cost of
compliance and impact on public relations.
Ensure we find the correct balance associated with being a key service
provider on an Island but recognising our responsibilities to a wide
number of stakeholders.
Regular communication with key stakeholders.
Political
Unfavourable political and/or legislative
developments which cause a significant change to
the operation of the business.
Major capital project management
Benchmark ourselves against comparable Key Performance Indicators with
other jurisdictions (e.g. Tariffs, Customer Minutes Lost, CO2 emissions,
Lost Time Accidents).
Monitor political and legislative developments (e.g. the Government’s
Energy Plan) and analyse the opportunities and threats to enable us
to respond effectively. Develop proposals for approval by the Board to
address any specific risks identified.
Project
Unsuccessful delivery of our major projects resulting
in inability to achieve overall project objectives.
Project risks are recorded and monitored and regular progress updates
issued to both management and the Board.
Financial - Treasury & Tax / Energy Portfolio Management / Pension Liabilities
Asset failure
Financial implications associated with the loss of
significant plant and/or importation assets.
Scenario and sensitivity analysis as part of our long- term budgeting
process. Insurance obtained where appropriate/cost effective.
Financial /
Reputational
Impact of the economic environment on the
profitability of our Retail and Building Services
operations.
Pension Liabilities
Volatility of markets impacting our Defined Benefit
Pension Scheme position e.g. liabilities increase due
to market conditions or demographic changes and/
or investments underperform.
Volatility
A significant proportion of our profitability and price
competitiveness is dependent upon our ability to
manage exposure to increasingly volatile power and
foreign exchange markets.
Effective monitoring and maintenance of the plant / assets.
Our retail business, Powerhouse.je, was restructured/rebranded during
2014 with a stronger online presence.
JEBS, our building services business, has a new management team in
place with considerable experience in the sector. A review and rebrand
of this business is in progress.
The Board regularly monitors the latest position regarding the Scheme
and the impact that it is having on the Company.
The Defined Benefit scheme was closed to new members in 2013.
Triennial valuation to formally report on performance.
Power and foreign exchange are hedged in accordance with the agreed
strategies which are themselves reviewed and approved by the Board on
a periodic basis.
38
FINANCIAL REVIEW FINANCIAL REVIEW
Security of Supply / Supply Chain / Asset & Plant Management
Business Continuity
Failure and/or unavailability of significant plant and/
or importation assets which cause disruption to our
operations.
A range of predefined Security of Supply standards have been devel-
oped and we seek to design the system to meet those standards.
A programme of maintenance exists to optimise the life of assets.
Asset & Plant
Management
Failure of ageing metering infrastructure.
Supply Chain
Impact on ability to generate due to availability,
storage and transportation of heavy fuel oil.
Health, Safety & Environment
Use of a comprehensive business continuity planning process including
periodic performance of scenario exercises.
A number of diverse sources of supply have been developed such
as importation cables and on-Island generation (deploying various
technologies) to ensure that we are not over-reliant on any single source,
fuel or technology.
The SmartSwitch project will result in a smarter more modern metering
solution replacing legacy systems. Contingency plans are under continu-
ous development to enable the Company to mitigate the failure of the
key systems.
Programme in place to ensure all fuel tank storage facilities are
refurbished. Contract in place with Esso for supply of fuel to 31
December 2016.
H,S & E
Non-compliance with relevant legislation, regulations
and accepted codes of practice resulting in
unnecessary exposure to our staff, customer, member
of the general public or our plant and equipment.
A proactive Health, Safety and Environment culture has been nurtured
throughout the organisation supported by a safety management
structure, safety representatives, programmes of site inspections, regular
training and employee induction amongst other areas.
Use of British Safety Council for external benchmarking.
People / Succession Planning
People
The Group’s strategy is largely dependent on the
skills, experience and knowledge of its employees.
The inability to retain executives and other key
employees, or a failure to adequately plan for
succession, could negatively impact Group
performance.
Around 40% of the current work-force are anticipated
to retire from the business in the next 10 to 15 years.
The Group has appointed a new Human Resources Director and Talent
Manager to develop an HR strategy that effectively supports the business.
This includes focus on development/training, succession and new
approaches for reward within Jersey Electricity.
Succession plans are under continuous development covering our
Energy business and plans are also in place for other key areas within
the wider business.
Cyber Security
Catastrophic breach
of our systems
Due to the nature of our business we recognise that
our critical infrastructure systems may be a potential
target for cyber threats. We must protect our business
assets, infrastructure and sensitive customer data and
be prepared for any malicious attack.
We continue to use industry best practices as part of our cyber security
policies, processes and technologies.
We have also commissioned a review by an external consultancy of
the measures we employ to mitigate our cyber security. The results of
the review have confirmed that we are ‘in a sensible cyber security
state’ although further initiatives have been identified and are being
pursued that will further strengthen our security posture. We also intend
instigating an ‘awareness campaign’ for our managers to ensure they
understand that this is seen as a rising area of potential risk for all
companies.
System improvements to our SCADA (supervisory control and data
acquisition) operational package are scheduled in the next planned upgrade.
Disaster recovery procedures are incorporated within our business
continuity arrangements and periodic external reviews are undertaken.
Viability Statement
In accordance with provision C.2.2 of the 2014 revision on the
base case are considered. Based on the results of this analysis
the Directors have a reasonable expectation that the Company
Code, the Directors have assessed the prospect of the Company
will be able to continue in operation and meet its liabilities as
over a longer period than the 12 months required by the ‘Going
they fall due over the five-year period of their assessment.
Concern’ provision. The Board conducted this review for a
period of five years, selected because an annual refreshment of
the Five Year Plan is performed with the latest version approved
by the Board on 1 October 2015. This document considers our
forecast investment, hedging policy for electricity procurement
and linked foreign exchange requirements, debt levels and
other anticipated costs, and the resultant impact on likely
customer tariff evolution. In addition, material sensitivities to this
39
Board of Directors
Clive Chaplin
Non-Executive Director
(64) A/N/R
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
of Jersey in 1985 and from
1994 until his retirement
on 31 January 2012 was
a partner of Ogier. He
remained Chairman of its
Fiduciary Services Holding
Company until 31 January
2014. He is now Chairman
of Bathroom Brands Plc
and a director of a number
of companies operating in
the financial services sector.
He is also Chairman of the
Jersey Law Commission.
He is Chairman of the
Remuneration Committee.
Chris Ambler
Chief Executive
(46) N
Chris was appointed
to the Board as Chief
Executive on 1 October
2008. He previously
held a number of senior
international positions in
the global utility, chemicals
and industrial sectors
for major corporations
including Centrica/British
Gas, The BOC Group
and ICI/Zeneca as well
as corporate finance
and strategic consulting
roles. He is a Director of
Channel Islands Electricity
Grid Limited. Externally,
he is also a non-Executive
Director of Apex Global
Alpha and Foresight Solar
Fund Limited, both being
listed funds on The London
Stock Exchange. Chris
is a Chartered Engineer
with the Institution of
Mechanical Engineers and
has a First Class Honours
Degree from Queens’
College, Cambridge and a
MBA from INSEAD.
Mike Liston
Non-Executive Director
(64) N/R
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.
Geoffrey Grime
Chairman
(68) R/N
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 currently holds
a number of 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.
In September of 2014 he
was elected as a Jurat of
the Royal Court of Jersey
where he sits as a lay
judge.
40
GOVERNANCE Martin Magee
Finance Director
(55)
Martin joined the Board as
Finance Director in May
2002. He moved from
Scottish Power plc, after
nine years in a variety of
senior finance roles. He
previously worked for nine
years with Stakis plc (now
part of the Hilton Hotels
Group). He is Chairman of
Jersey Deep Freeze Limited
and a Director of the
Channel Islands Electricity
Grid Limited. Externally,
he is also the non-
Executive Audit Committee
Chairman for AIM listed
Stanley Gibbons plc and
non-Executive Chairman
of the Standard Life Wealth
Offshore Strategy Fund
Limited. He is a member of
the Institute of Chartered
Accountants of Scotland
having qualified in 1984.
Aaron Le Cornu
Non-Executive Director
(45) A/R
Aaron was appointed to
the Board as non-Executive
Director in January 2011
and is currently the Chief
Financial Officer for Elian,
a 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.
GOVERNANCE
Directors
All non-Executive Directors
are viewed as being
independent with the
exception of Mike Liston who
was formerly the Company’s
Chief Executive. Geoffrey
Grime and Clive Chaplin are
still regarded as independent
even though they are now in
their 13th year as Directors.
The Nomination Committee
has formulated a plan for
a controlled change in the
constitution of non-Executive
Directors going forward.
Key to membership
of committees
A Audit and Risk Committee
N Nominations Committee
R Remuneration Committee
41
Directors’ Report
for the year ended 30 September 2015
The directors present their annual report and the audited financial statements of Jersey Electricity plc for the year ended 30 September 2015.
Principal activities
The Company is the sole supplier of electricity in Jersey. It is involved in the generation and distribution of electricity and jointly operates
the Channel Islands Electricity Grid System with Guernsey Electricity Limited importing power for both islands. It also engages in retailing,
property management, building services and has other business interests, including software development and consulting.
Dividends
The Directors have declared and now recommend the following dividends in respect of the year ended 30 September 2015:
Preference dividends
5% Cumulative Participating Preference Shares at 6.5%
3.5% Cumulative Non-Participating Preference Shares at 3.5%
Ordinary dividends
Ordinary and ‘A’ Ordinary Shares
2015
£
5,200
3,773
2014
£
5,200
3,773
Interim paid at 5.25p net of tax for the year ended 30 September 2015 (2014: 5.00p net of tax)
Final proposed at 7.60p net of tax for the year ended 30 September 2015 (2014: 7.20p net of tax)
1,608,600
2,328,640
3,946,213
1,532,000
2,206,080
3,747,053
Re-election of directors
In accordance with the requirements of the UK Corporate Governance Code, Directors should offer themselves for re-election no less
frequently than every three years. Accordingly, Aaron Le Cornu will retire and, being eligible, offers himself for re-election. Furthermore,
Directors with more than 9 years’ service should offer themselves for re-election on an annual basis. Accordingly, Geoffrey Grime and Mike
Liston will retire and, being eligible, will offer themselves for re-election. Clive Chaplin will not offer himself for re-election as he is retiring at
the AGM.
Directors’ and officers’ insurance
During the year the Company maintained liability insurance for its Directors and Officers.
Policy on payment of creditors
It is Group policy, in respect of all of its suppliers, to settle the terms of payment when agreeing each transaction, to ensure that suppliers are
made aware of the terms of payment and to abide by those terms. The number of creditor days in relation to trade creditors outstanding at
the year end was 19 days (2014: 21 days).
42
GOVERNANCE
GOVERNANCE
Directors’ Report
for the year ended 30 September 2015
Substantial shareholdings
As at 17 December 2015 the Company has been notified of the following holdings of voting rights of 5% or more in its issued share capital:
Equity
Ordinary Shares
The States of Jersey hold all of the Ordinary shares which amounts to 62% of the ordinary share capital and represents 86.4% of the total
voting rights.
‘A’ Ordinary Shares
‘A’ Ordinary shares entitle the holder to 1 vote for every 100 shares held whereas the Ordinary shares carry voting rights of 1 vote for every
20 shares held.
Huntress Nominees (CI) Limited are the largest shareholder of our listed shares and hold 5,840,070 ‘A’ Ordinary shares which represent
5.3% of the total voting rights. It is understood that the underlying owners of these shares are substantially private investors based in the
Channel Islands.
Auditor
A resolution to re-appoint Deloitte LLP as auditor will be proposed at the next Annual General Meeting.
BY ORDER OF THE BOARD
P.J. ROUTIER
Secretary
17 December 2015
43
Corporate Governance
Corporate Governance
The Directors are committed to maintaining a high standard of Corporate Governance in accordance with The UK Corporate Governance
Code September 2014 (“the Code”), as incorporated within The Listing Rules, issued by the Financial Conduct Authority. The Listing Rules
require the Company to set out how it has applied the main principles of the Code and to explain any instances of non-compliance.
In accordance with Listing Rule (“LR”) 9.8.4 R, the agreement related to ‘Independent business’ required by LR 9.2.2A (2) (a) R has been
entered into with the States of Jersey, the controlling shareholder, with effect from 17 November 2014. The company has complied with the
independence provisions included in the agreement during this financial year and believes the controlling shareholder is also compliant. The
other applicable information required by LR 9.8.4 R (5)/(6) is disclosed in external appointments.
Statement of Compliance
The Board considers that the Company is a “smaller company” for the purposes of the Code as it is not a member of the FTSE350. Throughout
the financial year ended 30 September 2015 the Board considers that it has complied with the Code, with the following exceptions:
The Code (Provision B.2.1) recommends that a majority of members of the Nomination Committee should be independent non-Executive
Directors. Throughout the year the Company’s Nomination Committee has comprised Mike Liston, Geoffrey Grime, Chris Ambler and Clive
Chaplin. Whilst the Board acknowledges that Mike Liston cannot be considered independent due to his membership of the Company’s
pension scheme he has served a number of years as Chairman of the Jersey Appointments Commission, established by the government of
Jersey to ensure probity in all public appointments, and is considered eminently qualified to Chair the company’s Nominations committee.
The Main Principle B.6 states that annual board performance evaluations should take place. Whilst the Board is in total agreement that their
effectiveness is vital to the success of the Company it has concluded that due to the stability and size of the business these do not necessarily
have to be performed annually. An external evaluation took place during the course of this financial year.
The Main Principle B.7 states that all directors should be submitted for re-election at regular intervals, subject to satisfactory performance.
Executive Directors are not subject to retirement by rotation but they are subject to the same periods of notice of termination of employment
as other members of the Company’s senior management. This is deemed appropriate by the Board because it is felt that our largest
shareholders have sufficient powers to remove Executive Directors if they saw fit.
The Board
The Board provides effective leadership and currently comprises four non-Executive and two Executive Directors. They are collectively
responsible for the long-term success of the Company and bring together a balance of skills, experience, independence and knowledge.
The Chairman and the Chief Executive roles are divided with the former being appointed by the Directors from amongst their number. Clive
Chaplin is the Senior Independent Director.
Independence
All the non-Executive Directors are viewed as being independent with the exception of Mike Liston who was formerly the Company’s Chief
Executive. The Board have determined that Geoffrey Grime and Clive Chaplin remain independent notwithstanding that they have served on
the Board for more than thirteen years. In making this determination, the Board took into account their breadth of experience, their financial
independence and their other business interests.
There have been no appointments to the Board during the financial year 2014/15 but Alan Bryce was appointed subsequently. On appointment
to the Board the required time commitment is established and any significant changes to their time commitments are notified to the Board.
An induction process is in place for all newly appointed Directors. Clive Chaplin, one of our non-Executive Directors, will be retiring at the
forthcoming Annual General Meeting.
The Board is responsible to the Company’s shareholders for the proper management of the Company. It meets regularly to set and monitor
strategy, review trading performance and risk management, examine business plans and capital and revenue budgets, formulate policy on
key issues and reporting to shareholders. Board papers are circulated, with reasonable notice, prior to each meeting in order to facilitate
informed discussion of the matters at hand.
Members of the Board hold meetings with major shareholders to develop an understanding of the views they have about the Company.
44
GOVERNANCE GOVERNANCE
Corporate Governance
The following table sets out the number of meetings (including Committee meetings) held during the year under review and the number of
meetings attended by each Director.
Board Audit and Risk Remuneration Nominations
No of meetings
G.J. Grime
C.A.C. Chaplin
A.D. Le Cornu
M.J. Liston
J.B. Stares
C.J. Ambler
M.P. Magee
*
attendees by invitation
7
7
7
6
6
3
7
7
5
-
5
4
-
2
4*
5*
3
3
3
3
3
2
3*
-
2
2
2
-
2
2*
2
-
Nominations Committee
The Nominations Committee members are currently Mike Liston (Chairman), Geoffrey Grime, Chris Ambler and Clive Chaplin. They:
• consider and make recommendations to the Board on all new appointments of Directors having regard to the overall balance and
composition of the Board;
• consider succession planning; and
• make recommendations to the Board concerning the reappointment of any non-Executive Director following conclusion of his or her
specified term of office.
A Company-wide policy exists on diversity. The Board recognises the benefits of diversity and will continue to appoint Executive and
non-Executive Directors to ensure diversity of background and on the basis of their skills and experience. The Terms of Reference for the
Nominations Committee and the Terms and Conditions of the Appointment of non-Executive Directors are available on request.
During the year a plan was formulated for a controlled change in the constitution of non-Executive Directors going forward in light of
corporate governance requirements on independence. It is suggested that Alan Bryce will join the Audit and Risk Committee to replace Clive
Chaplin.
Audit and Risk Committee
The Audit and Risk Committee’s members are Aaron Le Cornu (Chairman) and Clive Chaplin. The meetings provide a forum for discussions
with the external auditor. Meetings are also attended, by invitation, by the Chief Executive, the Finance Director, the Financial Controller, the
Company Secretary, and members of both the external audit and internal audit teams.
The Audit and Risk Committee is responsible for reviewing the Annual and Interim Management Statements and accompanying reports
before their submission to the Board for approval and for the reporting of its findings to the Board. As part of the review process the Audit
and Risk Committee reviews the likely significant issues in advance of the publication of both the Half and Full Year Results and in particular
any critical accounting judgements identified by both the Company and the external auditor most of which are disclosed in Note 2 to the
Financial Statements (Critical Accounting Judgements). Comprehensive position papers on each key area are produced by the Finance
Director at both the half and full year. Some of the areas are recurring items such as revenue recognition, impairment of assets, retirement
benefit obligations and hedge accounting. The Committee reviews any year-on-year changes in methodology for reasonableness. In addition
there may be ‘one-off’ issues that surface. The Committee also takes comfort that the Finance Director liaises with our external auditor during
the course of the year to establish a consensus opinion where possible.
45
Corporate Governance
The Committee generally meets four times a year and is also responsible for monitoring the controls which are in force (including
financial, operational and compliance controls and risk management procedures) to ensure the integrity of the financial information
reported to the shareholders. It also considers reports from the internal and external auditors and from management. It reports and makes
recommendations to the Board. In addition, the Audit and Risk Committee regularly reviews the scope and results of the work undertaken by
both the internal and external auditors. The Terms of Reference for the Audit and Risk Committee are available on request.
The Committee has approved the external auditor’s remuneration and terms of engagement and is fully satisfied with the performance,
objectivity, quality of challenge and independence of the external auditor. Having undertaken a tender process, the Committee has
recommended that a resolution to reappoint the external auditor as the Company’s statutory auditor is to be proposed at the Company’s
forthcoming AGM. In the 2014 Annual Report and Accounts it was reported that consideration was likely to be given to conducting a
competitive tender to select an external auditor for the year ending 30 September 2016. This was on the basis that this coincided with the
rotation of the Deloitte LLP partner and also because they have been incumbent since 2003. A tender took place during this financial year
and Deloitte LLP were reappointed. Non-audit services are reviewed on a case by case basis and also in terms of materiality of the fee by the
Audit and Risk Committee. Note 6 to the Financial Statements details the quantum and split of auditor fees.
The Board requested that the Committee advise them on whether they believe the Annual Report and Financial Statements, taken as a whole,
is fair, balanced and understandable and provides the information necessary for the shareholders to assess the Company’s performance,
business model and strategy. The Audit and Risk Committee has concluded that this is the case and has reported this to the Board. The
Committees’ terms of reference have been modified to reflect this additional responsibility.
Internal Control
The Board is responsible for establishing and maintaining the Company’s system of internal control and for the management of risk. Internal
control systems are designed to meet the particular needs of the business and the risks to which it is exposed, and by their nature can provide
reasonable but not absolute assurance against material misstatement or loss. This process has been in place throughout the year up to the
date of approval of the financial statements and is in accordance with The UK Corporate Governance Code. Whistleblowing arrangements
are reviewed annually by the Audit and Risk Committee.
The key procedures which the Board has established to provide effective controls are:
Board Reports
Key strategic decisions are taken at Board meetings following due debate and with the benefit of Board papers circulated
beforehand. The risks associated with such decisions are a primary consideration in the information presented and discussed by the
Board who are responsible for determining the nature and extent of the significant risk it is willing to take to achieve the strategic
objectives. Prior to significant investment decisions being taken, due diligence investigations include the review of business plans by
the Board.
Management Structure
Responsibility for operating the systems of internal control is delegated to management. There are also specific matters reserved for
decision by the Board; and these have been formally documented and a summary of the key types of decision made by the Board is
as follows:
• Strategy and Management including:
Approval of the Company’s long-term objectives and commercial strategy.
Approval of the annual operating and capital expenditure budgets and any subsequent material changes to them.
• Changes in structure and capital of the Company
46
GOVERNANCE GOVERNANCE
Corporate Governance
• Financial reporting and controls including:
Approval of the Annual Report and Financial Statements.
Declaration of the interim dividend and recommendation of the final dividend.
• Internal controls/Risk Management
Reviewing the effectiveness of the Company’s internal control and risk management systems. An external review of the risk
management process is conducted every three years.
• Contracts approval of
Major capital projects.
Major contracts.
Major investments.
• Board membership and other appointments
Approval of changes to the structure, size and composition of the Board and key committees, following recommendations from the
Nominations Committee.
• Remuneration
Determining the remuneration policy for the directors and other senior management, following recommendations from the
Remuneration Committee.
• Corporate governance matters
Undertaking a formal and rigorous review every two years of its own performance, that of its committees and individual Directors.
Review of the Company’s overall corporate governance arrangements.
• Approval of key Company policies
Internal Audit/Risk Management
There is a permanent team of internal audit staff involved in a continuous structured review of the Company’s systems and processes,
both financial and non-financial. Internal Audit manage the process of strategic and operational risk reviews and facilitate risk review
workshops with departmental managers. The Head of Internal Audit routinely reports to the Company Secretary with direct access
to the Audit and Risk Committee Chairman and also attends Audit and Risk Committee meetings, at which internal audit’s plans are
discussed and approved. During this financial year an independent review was performed of the effectiveness of the Internal Audit
function. This was largely positive with some recommendations for improvement which have, or will be, implemented.
Personnel
The Company ensures that personnel are able to execute their duties in a competent and professional manner through its
commitment to staff training, regular staff appraisals and organisational structure.
Budgetary Control
Detailed phased budgets are prepared at profit centre level. These budgets are approved by the Board, which receives sufficiently
detailed financial data to monitor the performance of the Company with explanations of any material variances.
Audit and Risk Committee
The Audit and Risk Committee reviews the effectiveness of the internal control and risk management processes throughout the
accounting period as outlined above. In addition it regularly conducts “deep dive” reviews on specific identified risks to test
assumptions on the substance of such risks and their mitigation. More detail on the Group’s principal risks, and how they are
managed, is provided in the Financial Review within this Annual Report.
47
Statement of Directors’ Responsibilities
Directors’ Responsibilities for the Financial Statements
The Directors are responsible for preparing the Annual Report, Directors’ Remuneration Report and the financial statements in accordance
with applicable law and regulations.
Company Law requires the Directors to prepare Financial Statements for each financial year. The Directors are required by the IAS Regulation
to prepare the Group Financial Statements under IFRS as adopted by the European Union. The Financial Statements are also required by
Company Law to give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.
International Accounting Standard 1 requires that Financial Statements present fairly for each financial year the Company’s financial position,
financial performance and cash flows. This requires the faithful representation of the effects of transactions, other events and conditions in
accordance with the definitions and recognition criteria for assets, liabilities, income and expenses set out in the International Accounting
Standards Board’s ‘Framework for the preparation and presentation of financial statements’. In virtually all circumstances, a fair presentation
will be achieved by compliance with all applicable IFRS. However, Directors are also required to:
• properly select and apply accounting policies;
• present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable
information;
• provide additional disclosures when compliance with the specific requirements in IFRS are insufficient to enable users to understand the
impact of particular transactions, other events and conditions on the entity’s financial position and financial performance; and
• make an assessment of the Company’s ability to continue as a going concern.
The Directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position
of the Company and enable them to ensure that the financial statements comply with the Companies (Jersey) Law 1991. They are also
responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and
other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s
website. Legislation in Jersey and in the United Kingdom governing the preparation and dissemination of Financial Statements may differ
from legislation in other jurisdictions.
The Directors consider that the Group has adequate resources to continue in operational existance for the foreseeable future. The Financial
Statements are therefore prepared on a going concern basis. Further details of the Group’s going concern review are provided in note 1 of
the financial statements on page 60.
Having taken advice from the Audit and Risk Committee, the Board considers the annual report and financial statements, taken as a
whole, to be fair, balanced and understandable and that it provides the information necessary for shareholders to assess the Company’s
performance, business model and strategy.
Responsibility Statement
We confirm that to the best of our knowledge:
• the financial statements, prepared in accordance with International Financial Reporting Standards as adopted by the European Union,
give a true and fair view of the assets, liabilities, financial position and profit or loss of the company and the undertakings included in the
consolidation taken as a whole; and
• the management report includes a fair review of the development and performance of the business and the position of the Company and
the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that
they face.
By order of the Board
C.J. AMBLER
Chief Executive Officer
17 December 2015
M.P. MAGEE
Finance Director
17 December 2015
48
GOVERNANCE GOVERNANCE
Remuneration Report
Remuneration Committee
The Remuneration Committee (the Committee) is chaired by Clive Chaplin and its membership includes all non-Executive Directors. The
Committee operates within terms of reference agreed by the Board and such terms are regularly reviewed.
Remuneration Policy
The policy of the Committee is to ensure the provision of remuneration packages for the Executive Directors that fairly reward them for
their contribution to the overall performance of the Group. Remuneration packages comprise basic salary and benefits together with a
performance related annual bonus. Benefits for Executive Directors principally comprise a car or car allowance, private health care and
housing subsidy.
The salary and benefits of the executive team are reviewed by the Committee annually and any adjustments take effect on 1st April. The
Committee make use of a locally focussed benchmarking report as well as assessing the remuneration of the executive team by reference to
comparable companies within the United Kingdom. The Committee seeks to ensure that, excluding any share based remuneration (of which
there is none other than the all-employee share scheme disclosed later in the report), the overall value of the remuneration package of the
executive team members including bonus and other benefits matches, in broadest terms, relevant comparative benchmarks for executive
director remuneration. The bonus payable to the Executive Directors is performance related and as highlighted last year we developed more
clearly defined criteria and constructed bonuses around key project milestones for the Company. The criteria remain deliberately unrelated to
profit. One of the project milestones related to the installation of the strategically important Normandie 3 subsea cable and as the conditions
surrounding the project were fully satisfied specific bonus payments were made to the Executive Directors in early 2015 in addition to their
normal bonus arrangements based on overall performance.
The remuneration of individual Directors for the year ended 30 September 2015 was as follows:
EXECUTIVE DIRECTORS
C.J. Ambler
M.P. Magee
R.A. Plaster (resigned from the Board
on 30 May 2014)
NON-EXECUTIVE DIRECTORS
G.J. Grime
M.J. Liston1
C.A.C. Chaplin2
J.B. Stares3 (retired from the Board
on 5 March 2015)
A.D. Le Cornu3/4
Basic
Bonus
Bonus
salary/fees
normal Normandie 3
£
£
£
Benefits
in kind
£
Total
2015
£
Total
2014
£
207,901
172,342
74,884
47,353
110,000
77,000
13,869
11,753
406,654
308,448
289,548
221,161
-
31,500
17,850
19,950
8,983
19,629
-
-
-
-
-
-
-
-
-
-
-
-
-
-
308,318
3,404
1,702
1,602
766
1,602
34,904
19,552
21,552
34,562
19,381
21,499
9,749
21,231
22,531
19,399
Total
478,155
122,237
187,000
34,698
822,090
936,399
Includes fees as Chairman of the Nominations Committee - £2,100.
Includes fees as Member of the Audit and Risk Committee - £2,100 and as Chairman of the Remuneration Committee - £2,100.
Includes pro rata fees as Chairman of the Audit and Risk Committee - £5,250.
Includes pro rata fees as Member of the Audit and Risk Committee - £2,100.
1
2
3
4
.
49
Remuneration Report
Service Contracts
The Executive Directors’ service contracts provide for a notice period of six months. Non-Executive Directors’ service contracts have no
unexpired term at the time of election or re-election at the Annual General Meeting.
Pension Benefits
Set out below are details of the pension benefits to which each of the Directors is entitled. These pensions are restricted to the scheme in
which the Director has earned benefits during service as a Director, but include benefits under the scheme for service both before and after
becoming a Director, including any service transferred into the scheme from a previous employment.
Increase
in accrued
pension
during the year1
Accrued
pension at
30.9.20152
Transfer
value at
30.9.20153
Transfer
Directors’
Increase in
value at
30.9.20143
contributions
transfer value
during year
C.J. Ambler
M.P. Magee5
£4,003
£4,244
£34,535
£73,025
£471,932
£1,294,971
£352,935
£1,075,249
-
£10,336
less directors
contributions4
£118,997
£209,386
Notes
1. The increase in accrued pension during the year represents the additional accrued pension entitlement at the year end compared to the
previous year end.
2. The pension entitlement shown is that which would be paid annually on retirement at age 60, based on service at the year end.
3. The transfer values have been calculated using the basis and method appropriate at each accounting date. It is assumed that the deferred
pension commences from the earliest age at which the member can receive an unreduced pension.
4. The increase in transfer value over the year is after deduction of contributions made by the director during the year.
5. Along with all other Scheme members, Directors have the option to pay Additional Voluntary Contributions (AVCs) to the Scheme to
purchase additional final salary benefits. AVCs paid by the Directors during the year were nil. The transfer values include the value of any
accrued AVC pensions.
All-Employee Share Scheme
At the 2011 Annual General Meeting approval was granted to launch an all-employee share scheme. During the 2012 financial year 100
‘A’ Ordinary Shares were issued to all staff (subject to Scheme Rules) including the Executive Directors. These shares vested on 2 July 2015.
A further 100 ‘A’ Ordinary Shares were issued to all staff (subject to Scheme Rules) during 2015 and these are due to vest on 18 February
2018.
There are no other share-based incentives such as option schemes or long-term incentive plans operated by the Company.
Non-Executive Directors’ Remuneration
The remuneration of the non-Executive Directors is determined by the Board with the assistance, if required, of independent advice
concerning comparable organisations and appointments. The non-Executive Directors who Chair the Audit and Risk, Nominations and
Remuneration Committees, and those Directors who are members of the Audit and Risk Committee, receive an additional fee due to the
additional time involved.
External Appointments
The Company encourages Executive Directors to diversify their experience by accepting non-executive appointments to companies or other
organisations outside the Group. Such appointments are subject to the approval by the Board, which also determines the extent to which
any fees may be retained by the director. The current policy is that 80% of such fees may be retained. At the balance sheet date the external
appointments held by Executive Directors, excluding those directly connected with their employment by the Company, were as follows:
C.J. Ambler
Foresight Solar Fund Limited and Apax Global Alpha Limited (total non-Executive Director fees £101,167 of which £80,934 retained). The
fees received also include those from a previous directorship with Abbey National International Limited which ceased during the financial
year.
M.P. Magee
Standard Life Wealth Offshore Strategy Fund Limited and Stanley Gibbons Group plc (total non-Executive Director fees £55,000 of which
£44,000 retained).
50
GOVERNANCE
GOVERNANCE
Remuneration Report
Directors’ Loans
The Company provides secured loans to a number of Executive Directors which bear interest at base rate. The balances on such loans were:
30.9.2015
£440,157
£290,571
30.9.2014
£496,320
£341,571
C. J. Ambler
M. P. Magee
Directors’ Share Interests
The Directors’ beneficial interests in the shares of the Company at 30 September 2015 are:
5% and 3.5%
‘A’ Ordinary Shares
Preference Shares
2015
2014
2015
2014
C.J. Ambler*
M.P. Magee*
G.J. Grime
C.A.C. Chaplin
M.J. Liston
5,005
8,984
4,905
8,884
10,000
10,000
6,000
2,000
6,000
2,000
-
960
-
-
-
-
960
-
-
-
31,989
31,789
960
960
*Both C. J. Ambler and M. P. Magee have a beneficial interest in a further 100 ‘A’ Ordinary Shares that are due to vest in February 2018.
There have been no other changes in the interests set out above between 30 September 2014 and 17 December 2015.
On behalf of the Board
C.A.C. CHAPLIN
Chairman
17 December 2015
51
Independent Auditor’s Report
to the Shareholders of Jersey Electricity plc
Opinion on financial statements of Jersey Electricity plc
In our opinion the financial statements:
• give a true and fair view of the state of the group’s affairs as at 30 September 2015 and of the group’s profit for the year then ended;
• have been properly prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union;
and
• have been properly prepared in accordance with the Companies (Jersey) Law, 1991.
The financial statements comprise the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the
Consolidated Balance Sheet, the Consolidated Statement of Cash Flow, the Consolidated Statement of Changes in Equity and the related
notes 1 to 23. The financial reporting framework that has been applied in their preparation is applicable law and IFRSs as adopted by the
European Union.
Going concern and the Directors’ assessment of the principal risks that would threaten the solvency or liquidity of the group
We have reviewed the Directors’ statement regarding the appropriateness of the going concern basis of accounting contained within note 1
to the financial statements and the Directors’ statement on the longer-term viability of the group contained on page 39.
We have nothing material to add or draw attention to in relation to:
• the Directors’ confirmation on page 38 that they have carried out a robust assessment of the principal risks facing the group, including
those that would threaten its business model, future performance, solvency or liquidity;
• the disclosures on pages 38 to 39 that describe those risks and explain how they are being managed or mitigated;
• the Directors’ statement in note 1 to the financial statements about whether they considered it appropriate to adopt the going concern
basis of accounting in preparing them and their identification of any material uncertainties to the group’s ability to continue to do so over
a period of at least twelve months from the date of approval of the financial statements;
• the Director’s explanation on page 39 as to how they have assessed the prospects of the group, over what period they have done so and
why they consider that period to be appropriate, and their statement as to whether they have a reasonable expectation that the group
will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment, including any related
disclosures drawing attention to any necessary qualifications or assumptions.
We agreed with the Directors’ adoption of the going concern basis of accounting and we did not identify any such material uncertainties.
However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the group’s ability to continue
as a going concern.
Independence
We are required to comply with the Financial Reporting Council’s Ethical Standards for Auditors and we confirm that we are independent of
the group and we have fulfilled our other ethical responsibilities in accordance with those standards. We also confirm we have not provided
any of the prohibited non-audit services referred to in those standards.
Our assessment of risks of material misstatement
The assessed risks of material misstatement described below are those that had the greatest effect on our audit strategy, the allocation of
resources in the audit and directing the efforts of the engagement team.
Risk
How the scope of our audit responded to the risk
Accrual for unbilled units of electricity
There is a significant risk associated with the determination
of the value of unbilled units of electricity of £5.1m
(2014: £5.9m) which is included within revenue and trade
receivables. This is because of the level of assumptions and
judgement used in determining the number of units used by
customers between their last billing date and the year-end
date. The entity’s considerations around this judgement are
set out in the critical accounting judgements in note 2i.
We used an internal team of Information Technology specialists to reconstruct
the model used by management to determine the level and value of unbilled
units at the year-end (“the Model”). We challenged the assumptions and
judgements used in the Model and performed substantive procedures on
the inputs into the Model, which includes historical data and billing rates.
We compared the output from the reconstructed model to management’s
calculation and investigated any material differences. We also tested the
reconciliation of total units imported and generated, adjusted for units used
internally by the Company and units lost through the network for technical
and other reasons (“distribution loss”) to the total units recorded as sold.
We benchmarked the distribution loss percentage against comparable and
historical data for Europe, adjusted for Jersey specific considerations. In
addition, we assessed whether the revenue recognition policies adopted
comply with IFRS.
52
GOVERNANCE GOVERNANCE
Independent Auditor’s Report
to the Shareholders of Jersey Electricity plc
Accounting for the hedging of forward foreign exchange contracts
The fair value of derivative financial instruments held at the
year-end is £5.1m (2014: £4.2m). The accounting for the
hedging of forward foreign exchange contracts entered
into by the group is considered a significant risk due to
the complexity of the accounting treatment required for
such transactions, the level of complexity involved in the
valuation of such contracts and the detailed disclosure
requirements required in the financial statements. Further
details about this risk are given in note 22.
We engaged internal financial instrument specialists to challenge the
accounting and hedging treatment applied to the forward foreign exchange
contracts which included a review of the hedge effectiveness testing and
the hedging documentation for a sample of contracts. The specialists also
independently challenged the valuation of contracts through using data from
an independent source. We obtained and agreed external confirmations for
contracts at the year end to the accounting records.
We performed a review of the hedging and financial instrument related
disclosures in the financial statements to assess whether the disclosures
presented comply with IFRS.
Defined benefit pension scheme assumptions and applicability of International Financial Reporting Interpretations
Committee (“IFRIC”) 14
The group has a retirement benefit deficit at the year-end of
£7.3m (2014: £1.4m). The defined benefit pension scheme
assumptions are considered a significant risk due to the
level of judgement required in determining the assumptions
most appropriate to the circumstances of the entity.
IFRIC 14, which addresses the interaction between
minimum funding requirements and the measurement of
the defined benefit liability, is also considered a significant
risk due to the scheme being in deficit and the complexity in
assessing whether or not the arrangements of the pension
scheme include a minimum funding requirement.
We considered the appropriateness of management’s assumptions used in
the determination of the pension scheme balances and disclosures, detailed
in note 17 to the financial statements. We did this through comparison of the
key assumptions to third party data for reasonableness and assessment of
the competence and independence of management’s actuarial expert who
derived the balances and disclosures.
We also assessed the basis for concluding that no additional liability was
required in respect of IFRIC 14 through reviewing the minutes of meetings
of the Trustees of the pension scheme and method by which it is intended
to manage any existing deficit and corroborating this with management’s
actuarial expert.
Normandie 1 contract
During the year the Normandie 1 contract was entered
into and the activities which formed the basis of the
unutilised provision for decommissioning EDF 1 became
part of the contract for Normandie 1. Guernsey Electricity
is also a participant to the Normandie 1 contract. There is
judgement involved in determining if the previously incurred
decommissioning costs are directly required to enable the
Normandie 1 contract to proceed and how these should be
treated, and how the remaining provision should be treated,
including the amount contributed by Guernsey Electricity.
Management’s judgements around provisions are discussed
in note 2v.
La Collette site rental provision
The group leases the La Collette Power Station site from
its largest shareholder, the States of Jersey. This lease was
subject to a rent review as at June 2006 but the amount
due as a result of the rent review is subject to a legal
action. There is judgement applied in the determination
of the amount to be provided in respect of the rental due.
Further details of this are given in note 23a to the financial
statements.
We reviewed the contract for Normandie 1 to understand what activities
constituted site preparation activities and were permitted to be capitalised
under IAS 16 Property, Plant and Equipment (“IAS 16”). We further reviewed
the treatment of the costs already incurred, including the contribution by
Guernsey Electricity, and challenged the judgements made by management
in determining how those costs should be classified, including whether those
costs are directly required to enable the Normandie 1 contract to proceed.
We reviewed the latest correspondence relating to the dispute and the legal
action and used this and other external evidence to challenge the basis
of management’s provision. We note that as disclosed in note 23a, the
information usually required by IAS 37 ‘Provisions, Contingent liabilities and
contingent assets’, is not disclosed on the grounds that it can be expected to
prejudice seriously the outcome of the dispute.
Last year our report included a risk which is not included in our report this year: the provision for the subsea cable repair (which was an event
which occurred in the prior year and was concluded in the current year so did not have a significant effect on our current year audit strategy,
the allocation of resources in the audit and directing the efforts of the engagement team).
The description of risks above should be read in conjunction with the significant issues considered by the Audit & Risk Committee discussed
on page 45.
53
Independent Auditor’s Report
to the Shareholders of Jersey Electricity plc
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
Our application of materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic decisions of a
reasonably knowledgeable person would be changed or influenced. We use materiality both in planning the scope of our audit work and in
evaluating the results of our work.
We determined materiality for the group to be £915,000 (2014: £615,000), which is below 7.5% (2014: 7.5%) of adjusted pre-tax profit and
below 1% (2014: 1%) of equity. Pre-tax profit has been adjusted by removing the effects of the exceptional credits of £789,000 in relation to
compensation received from RTE and the reversal of the remaining EDF 1 provision recognised during the year as these were considered to be
one-off events. In the prior year an adjustment was also made to pre-tax profits in order to calculate materiality through removing the £1.8m
expense recognised in respect of the sub-sea cable repair which was also considered to be a one-off event.
We agreed with the Audit & Risk Committee that we would report to the Committee all uncorrected audit differences in excess of £18,300 (2014:
£13,000), as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We also report to the Audit &
Risk Committee on uncorrected disclosure matters that we identified when assessing the overall presentation of the financial statements.
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the group and its environment, including internal control, and assessing the
risks of material misstatement at the group level. Audit work to respond to the risks of material misstatement was performed directly by the audit
engagement team.
Consistent with the prior year, our Group audit scope focused primarily on the audit of the Company as the other component was not considered
to be significant. The Company represents the principal business unit within the group and accounts for 100% (2014: 100%) of the Group’s
net assets, 99% (2014: 99%) of the Group’s revenue and 99% (2014: 98%) of the Group’s profit before tax. It was also selected to provide an
appropriate basis for undertaking audit work to address the risks of material misstatement identified above. Our audit work on the Group was
executed at the levels of materiality detailed above.
Matters on which we are required to report by exception
Adequacy of explanations received and accounting records
Under the Companies (Jersey) Law, 1991 we are required to report to you if, in our opinion:
• we have not received all the information and explanations we require for our audit; or
• proper accounting records have not been kept by the parent company, or proper returns adequate for our audit have not been received from
branches not visited by us; or
• the financial statements are not in agreement with the accounting records and returns.
We have nothing to report in respect of these matters.
Corporate Governance Statement
Under the Listing Rules we are also required to review part of the Corporate Governance Statement relating to the company’s compliance with
certain provisions of the UK Corporate Governance Code. We have nothing to report arising from our review.
Our duty to read other information in the Annual Report
Under International Standards on Auditing (UK and Ireland), we are required to report to you if, in our opinion, information in the annual report is:
• materially inconsistent with the information in the audited financial statements; or
• apparently materially incorrect based on, or materially inconsistent with, our knowledge of the group acquired in the course of performing our
audit; or
• otherwise misleading.
In particular, we are required to consider whether we have identified any inconsistencies between our knowledge acquired during the audit and
the directors’ statement that they consider the annual report is fair, balanced and understandable and whether the annual report appropriately
discloses those matters that we communicated to the Audit & Risk Committee which we consider should have been disclosed. We confirm that we
have not identified any such inconsistencies or misleading statements.
Respective responsibilities of directors and auditor
As explained more fully in the Directors’ Responsibilities Statement, the Directors are responsible for the preparation of the Financial Statements
and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the Financial Statements in
accordance with applicable law and International Standards on Auditing (UK and Ireland). We also comply with International Standard on Quality
Control 1 (UK and Ireland). Our audit methodology and tools aim to ensure that our quality control procedures are effective, understood and
applied. Our quality controls and systems include our dedicated professional standards review team and independent partner reviews.
54
GOVERNANCE GOVERNANCE
Independent Auditor’s Report
to the Shareholders of Jersey Electricity plc
This report is made solely to the company’s members, as a body, in accordance with Article 113A of the Companies (Jersey) Law, 1991. Our
audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s
report and/or those further matters we have expressly agreed to report to them on in our engagement letter and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a
body, for our audit work, for this report, or for the opinions we have formed.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the Financial Statements sufficient to give reasonable assurance
that the Financial Statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether
the accounting policies are appropriate to the Group’s circumstances and have been consistently applied and adequately disclosed; the
reasonableness of significant accounting estimates made by the Directors; and the overall presentation of the Financial Statements. In addition, we
read all the financial and non-financial information in the Annual Report to identify material inconsistencies with the audited Financial Statements
and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the
course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for
our report.
GREGORY BRANCH, BSc, FCA
for and on behalf of
Deloitte LLP
Chartered Accountants and Recognized Auditor
Jersey, Channel Islands
17 December 2015
55
Consolidated Income Statement
for the year ended 30 September 2015
Consolidated Statement of Comprehensive Income
for the year ended 30 September 2015
All results in the year have been derived from continuing operations.
The notes on pages 60 to 83 form an integral part of these accounts. The independent auditor’s report is on pages 52 to 55.
56
Note 2015 2014 £000 £000Revenue 3 100,479 98,443Cost of sales (64,604) (68,468)Gross profit 35,875 29,975Revaluation of investment properties 11 (45) 145Operating expenses 4 (21,931) (20,079)Group operating profit before exceptional items 6 13,899 10,041Exceptional items - RTE outage compensation 479 - - impact of reversal of EDF1 related provision 310 - - impairment of investment - (1,178) - subsea cable repair - (1,800) - restructuring costs - (570)Group operating profit 3 14,688 6,493Finance income 36 14Finance costs (1,555) (51)Profit from operations before taxation 13,169 6,456Taxation 7 (2,397) (1,478)Profit from operations after taxation 10,772 4,978Attributable to: Owners of the Company 10,725 4,932Non-controlling interests 19 47 46 10,772 4,978Earnings per share - basic and diluted 9 35.00p 16.10p Note 2015 2014 £000 £000Profit for the year 10,772 4,978Items that will not be reclassified subsequently to profit or loss: Actuarial loss on defined benefit scheme 17 (5,706) (392)Income tax relating to items not reclassified 7 1,141 78 (4,565) (314)Items that may be reclassified subsequently to profit or loss: Fair value loss on cash flow hedges 22 (874) (4,567)Income tax relating to items that may be reclassified 7 175 913 (699) (3,654)Total comprehensive income for the year 5,508 1,010Attributable to: Owners of the Company 5,461 964Non-controlling interests 47 46 5,508 1,010FINANCIAL STATEMENTS FINANCIAL STATEMENTS
Consolidated Balance Sheet
as at 30 September 2015
Approved by the Board on 17 December 2015
G.J. GRIME
Director
M.P. MAGEE
Director
The notes on pages 60 to 83 form an integral part of these accounts. The independent auditor’s report is on pages 52 to 55.
57
Note 2015 2014 £000 £000Non-current assets Intangible assets 10 227 20Property, plant and equipment 11 187,845 184,846Investment properties 11 20,460 20,505Secured loan accounts 14 731 838Other investments 12 5 5Total non-current assets 209,268 206,214Current assets Inventories 13 6,239 7,334Trade and other receivables 14 14,777 16,474Derivative financial instruments 22 1,194 -Cash and cash equivalents 12,503 9,776Total current assets 34,713 33,584Total assets 243,981 239,798Current liabilitiesTrade and other payables 15 17,597 24,675Current tax liability 7 404 -Derivative financial instruments 22 6,314 4,246Total current liabilities 24,315 28,921Net current assets 10,398 4,663Non-current liabilities Trade and other payables 15 18,884 18,279Retirement benefit deficit 17 7,291 1,372Financial liabilities - preference shares 18 235 235Long-term borrowings 16 30,000 30,000Deferred tax liabilities 7 15,529 14,852Total non-current liabilities 71,939 64,738Total liabilities 96,254 93,659Net assets 147,727 146,139EquityShare capital 18 1,532 1,532Revaluation reserve 5,270 5,270ESOP reserve (97) (36)Other reserves (4,214) (3,515)Retained earnings 145,223 142,878Equity attributable to the owners of the Company 147,714 146,129Non-controlling interests 19 13 10Total equity 147,727 146,139
Consolidated Statement of Cash Flows
for the year ended 30 September 2015
The notes on pages 60 to 83 form an integral part of these accounts. The independent auditor’s report is on pages 52 to 55.
58
2015 2014 £000 £000Cash flows from operating activitiesOperating profit 13,899 10,041Depreciation and amortisation charges 9,926 8,259Loss/(gain) on revaluation of investment property 45 (145)Pension operating charge less contributions paid 213 (38)Adjustment for foreign exchange hedges - 63Loss/(profit) on sale of fixed assets 7 (11)Operating cash flows before movement in working capital 24,090 18,169Decrease in inventories 1,095 2,100Decrease/(increase) in trade and other receivables 1,884 (252)(Decrease)/increase in trade and other payables (2,604) 513Interest paid (1,548) (42)Preference dividends paid (9) (9)Cash amounts relating to exceptional item 479 (353)Net cash flows generated from operating activities 23,387 20,126Cash flows from investing activitiesPurchase of property, plant and equipment (16,629) (32,501)Capitalised interest paid (4) (547)Investment in intangible assets (207) (6)Net proceeds from disposal of investment - 1,579Net proceeds from disposal of fixed assets 3 16Net cash flows used in investing activities (16,837) (31,459)Cash flows from financing activitiesEquity dividends paid (3,859) (3,703)Deposit interest received 36 14Repayment of borrowings - (10,000)Proceeds from borrowings - 30,000Net cash flows (used in)/generated from financing activities (3,823) 16,311Net increase in cash and cash equivalents 2,727 4,978Cash and cash equivalents at beginning of period 9,776 4,798Net cash and cash equivalents at end of period 12,503 9,776FINANCIAL STATEMENTS FINANCIAL STATEMENTS
Consolidated Statement of Changes in Equity
for the year ended 30 September 2015
At 1 October 2014
1,532
5,270
(36)
(3,515)
142,878
146,129
Note
Share Revaluation
reserve
capital
ESOP
reserve
Other
reserves
Retained
earnings
Total
£000
£000
£000
£000
£000
£000
Total recognised income and expense for the year
Funding of employee share option scheme
Amortisation of employee share scheme
Unrealised loss on hedges (net of tax)
Actuarial loss on defined benefit scheme (net of tax)
Equity dividends
At 30 September 2015
At 1 October 2013
Total recognised income and expense for the year
Amortisation of employee share scheme
Unrealised loss on hedges (net of tax)
Actuarial loss on defined benefit scheme (net of tax)
Equity dividends
At 30 September 2014
8
8
-
-
-
-
-
-
-
-
-
-
-
-
-
(112)
51
-
-
-
-
-
-
(699)
10,725
10,725
-
-
-
(112)
51
(699)
(4,565)
(3,815)
-
-
(4,565)
(3,815)
1,532
5,270
(97)
(4,214)
145,223
147,714
1,532
5,270
-
-
-
-
-
-
-
-
-
-
(58)
-
22
-
-
-
139
141,925
148,808
-
-
4,932
(22)
4,932
-
(3,654)
-
(3,654)
-
-
(314)
(314)
(3,643)
(3,643)
1,532
5,270
(36)
(3,515)
142,878
146,129
The notes on pages 60 to 83 form an integral part of these accounts. The independent auditor’s report is on pages 52 to 55.
59
Notes to the Financial Statements
for the year ended 30 September 2015
1 Accounting policies
Basis of preparation
The Group’s accounting policies as applied for the year ended 30 September 2015 are based on all International Financial Reporting
Standards (IFRS) issued by the International Accounting Standards Board (IASB) and which have been adopted by the EU, including
International Accounting Standards (IAS) and interpretations issued by the International Financial Reporting Interpretations Committee
(IFRIC). The principal accounting policies which have been applied consistently are:
Basis of accounting
The consolidated financial statements have been prepared under the historic cost convention as modified by the revaluation of investment
properties and derivative financial instruments.
Basis of consolidation
The Group’s consolidated financial information for the year ended 30 September 2015 comprises the Company and its subsidiary.
Subsidiaries are those entities over which the Group has the power to govern the financial and operating policies, accompanying a
shareholding that confers more than half of the voting rights.
Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the Group’s equity therein.
Non-controlling interests consist of the amount of those interests at the date of the original business combination and the non-controlling
interest’s share of changes in equity since the date of the combination.
The consolidated financial information includes the Group’s share of the post-tax results and net assets under IFRS of the jointly controlled
entity using the equity method of accounting. Equity accounting is a method of accounting by which an equity investment is initially
recorded at cost and subsequently adjusted to reflect the investor’s share of the net profit or loss of the investee. Jointly controlled entities
are those entities over which the Group has joint control with one or more other parties and over which there has to be unanimous
consent by all parties to the strategic, financial and operating decisions.
Under Article 101 (11) of the Companies (Jersey) Law 1991 (“the Law”), the Directors of a holding company need not prepare separate
financial statements if consolidated accounts for the company are prepared, unless required to do so by the members of the Company
by ordinary resolution. The members of the Company had not passed a resolution requiring separate financial statements and, in the
opinion of the Directors, the Company meets the definition of a holding company as set out in the Law. As permitted by the Law, the
Directors have elected not to prepare separate financial statements.
Going Concern
The Group’s business activities, together with the factors likely to affect its future development, performance and position are set out in the
Chairman’s Statement (see pages 2 to 3). The financial position of the Group, its cash flow and its liquidity position are described in the
Financial Review (see pages 35 to 39). In addition, note 22 to the financial statements include the Group’s objectives, policies and processes
for managing its capital; its financial risk management objectives; details of its financial instruments and hedging activities; and its exposures
to risks. The Group has considerable financial resources together with a large number of customers both corporate and individual. As a
consequence, the directors believe that the Group is well placed to manage its business risks successfully. The directors have a reasonable
expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason, they
continue to adopt the going concern basis in preparing the financial statements and in making the viability statement on page 39.
Foreign currencies
The functional and presentation currency of the Group is Sterling. Transactions in currencies other than Sterling are recorded at the rates
of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated
in foreign currencies are translated at the rates prevailing on the balance sheet date. Non-monetary items carried at fair value that are
denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary
items that are measured in terms of historical cost in a foreign currency are not retranslated. Gains and losses arising on translation are
included in net profit or loss for the year.
Revenue
Revenue is recognised to the extent that it is probable that economic benefits will flow to the Group and revenue can be reliably
measured. Revenue is measured at the fair value of consideration received or receivable and represents amounts for goods and services
provided in the normal course of business. Revenues exclude the goods and services tax levied on our customers.
The following specific criteria must also be met before revenue is recognised:
Energy supply
Revenue is recognised on the basis of energy supplied during the period. Revenue for energy supply includes an estimated assessment of
energy supplied to customers between the date of the last meter reading and the balance sheet date, using historical consumption patterns.
60
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the Financial Statements
for the year ended 30 September 2015
Revenue continued
Indefeasible rights of use (IRU) sales
With the connection of the Channel Islands Electricity Grid Ltd (CIEG) telecom network between Jersey, France and Guernsey,
the Group has the ability to sell dark fibre to other telecom network operators seeking to extend their own networks through IRU
agreements. Income from IRUs where an IRU agreement does not transfer substantially all the risks and benefits of ownership to the
buyer or is deemed not to extend for substantially all of the assets’ expected useful lives, is recognised on a straight-line basis over the
life of the agreement, even when the payments are not received on such a basis. Where agreements extend for substantially all of the
assets’ expected useful lives and transfer substantially all the risks and benefits of ownership to the buyer, the resulting profit/(loss) is
recognised in the income statement as a gain/(loss) on disposal of fixed assets.
Taxation
The tax expense represents the sum of tax currently payable and deferred tax. The tax currently payable is based on taxable profit for the
year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are
taxable or deductible in other years and it further excludes items that are never taxable or deductible.
Deferred tax is the tax expected to be payable or recoverable on the difference between the carrying amounts of assets and liabilities in
the balance sheet and the corresponding tax bases used in the computation of taxable profits, and is accounted for using the balance
sheet liability method. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised
to the extent that it is probable that future taxable profit will be available against which deductible temporary differences can be utilised.
Deferred tax is calculated at the tax rates that are expected to apply in the period in which the liability is settled or the asset is realised,
on a non-discounted basis, and is recorded in the income statement, except where it relates to items recorded to equity via other
comprehensive income, in which case the deferred tax is also dealt with in that statement.
Exceptional items
As permitted by IAS 1 “Presentation of financial statements”, the Group has disclosed additional information in respect of exceptional
items in the consolidated financial statements to aid understanding of the Group’s financial performance.
An item is exceptional if it is considered unusual by nature and scale and of such significance that separate disclosure is required for the
financial statements to be properly understood.
Intangible assets
The costs of acquired computer software are capitalised on the basis of the costs incurred to acquire and bring to use the specific software
and are amortised over their useful lives. Costs directly associated with the development of computer software programmes that will
generate economic benefits over a period in excess of one year are capitalised and amortised over their estimated useful lives. Costs
include employee costs relating to software development and an appropriate proportion of directly attributable overheads. Amortisation is
charged on a straight-line basis over its expected useful life which is estimated to be up to 4 years.
Property, plant and equipment
In accordance with IAS 16 costs are capitalised where it is probable that future economic benefits associated with the asset being
purchased or constructed will flow to the entity; and the cost of the asset can be measured reliably.
For assets under construction, all costs incurred which are directly attributable to bringing the asset to a point of commissionable
use, including direct materials and direct labour costs are capitalised once an executive decision has been taken to proceed with the
construction of the asset.
Property, plant and equipment excludes investment property and is stated at cost less accumulated depreciation and impairment losses, if
any. Assets are depreciated on the straight-line method to their expected residual values over their estimated useful lives. Property, plant
and equipment include capitalised employee, interest and other costs that are directly attributable to construction of these assets. Property,
plant and equipment under the course of construction is not depreciated and is carried at cost less impairment.
Depreciation is charged as follows:
Buildings
Interlinks
up to 50 years
up to 30 years
Plant, mains cables and services
up to 40 years
Fixtures and fittings
Computer equipment
Vehicles
up to 10 years
up to 4 years
up to 10 years
61
Notes to the Financial Statements
for the year ended 30 September 2015
The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the
carrying amount of the asset and is recognised in the income statement.
Capital grants and customer contributions in respect of additions to plant are treated as deferred income within non-current liabilities and
released to the income statement over the estimated operational lives of the related assets.
Impairment of tangible and intangible assets
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the
asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless
the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised
estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been
determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment
loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the
impairment loss is rated as a revaluation increase.
Investment properties
Investment property is stated at its fair value at the balance sheet date. Gains or losses arising from changes in the fair value of investment
property are included in the income statement for the period in which they arise. The Group’s policy on freehold properties is to classify
it as an investment property both when the property is held for capital appreciation or rental purposes and when it is fully occupied by
external tenants.
Investment in joint venture
The results and assets and liabilities of the joint venture are incorporated using the equity method. Investment in the joint venture is
therefore carried in the Group balance sheet at cost as adjusted by changes in the Group’s share of net assets, less any impairment.
Operating leases
Lessee
Rentals payable under operating leases, where a significant portion of the risks and rewards of ownership are retained by the lessors,
are charged to the income statement on a straight-line basis over the period of the leases.
Lessor
Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease. Initial indirect costs
incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and received on a
straight-line basis over the lease term.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials and, where applicable, direct labour
and overheads that have been incurred in bringing the inventories to their location and condition at year end. Cost is calculated using
the weighted average method with the exception of fuel oil which is calculated using the first-in first-out method. Net realisable value
represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.
Financial instruments
Cash and cash equivalents
Cash and cash equivalents comprise cash and short-term deposits with a maturity of three months or less.
Short-term investments
Short-term investments comprise cash deposits which have a maturity greater than three months at the time of inception.
Trade and other receivables
Trade receivables are initially recognised at invoice value and do not carry any interest and are subsequently stated at their amortised
cost using the effective interest method as reduced by appropriate allowances for estimated irrecoverable amounts.
Trade payables
Trade payables are initially recognised at invoice value and are not interest bearing and are subsequently stated at their amortised
cost. Amortised cost is considered by the directors to be equivalent to invoiced value.
Borrowings
Loans that have fixed or determinable payments that are not quoted in an active market are classified as ‘Borrowings’. Loans are
measured at amortised cost using the effective interest method. Interest expense is recognised by applying the effective interest rate.
62
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the Financial Statements
for the year ended 30 September 2015
Financial instruments continued
Derivative financial instruments
Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently re-measured to
their fair value at each balance sheet date. Changes in the fair value of derivative financial instruments which are designated as highly
effective hedges of future cash flows are recognised directly in other comprehensive income and any ineffective portion is recognised
immediately in the income statement. When hedges mature that do not result in the recognition of an asset or a liability, amounts
deferred in other comprehensive income are recognised in the income statement in the same period in which the hedged item affects
net profit or loss.
Changes in the fair value of derivative financial instruments that do not qualify for hedge accounting are recognised in the income
statement as they arise.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or exercised, or no longer qualifies for
hedge accounting. Until that time, any cumulative gain or loss on the hedging instrument recognised in other comprehensive income is
kept in equity until the forecasted transaction occurs. If a hedged transaction is no longer expected to occur, the net cumulative gain or
loss that has been recognised in other comprehensive income is transferred to the income statement.
Borrowing cost
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily
take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the
assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings
pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. All other borrowing costs are
recognised in the income statement in the period in which they occured.
Dividends
Dividends are recorded in the Group’s financial statements in the period in which they are approved by the Company’s shareholders.
Interim dividends are recorded in the period in which they are paid.
Share capital
Ordinary shares are classified as equity. Mandatorily redeemable preference shares are classified as liabilities. Incremental costs directly
attributable to the issue of new ordinary shares or options are shown in equity as a deduction, net of tax, from the proceeds.
Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, and where it is
probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can
be made of the amount of the obligation. Provisions are reviewed at each balance sheet date and are adjusted to reflect the current best
estimate.
Retirement benefits
The Group provides pensions through both a defined contributions scheme and a defined benefit scheme. In the latter the cost of
providing benefits is determined using the projected unit credit method, with full actuarial valuations being carried out at a minimum
every three years. Actuarial gains and losses are recognised in full, directly in retained earnings in the period in which they occur and are
shown in the statement of comprehensive income. The net figure derived from the current service cost element of the pension charge, the
expected return on pension scheme assets and interest on pension scheme liabilities, including past service cost, is deducted in arriving
at operating profit. Retirement benefits recorded in the balance sheet represent the net financial position of the Group’s defined pension
scheme.
Share-based payments
Equity-settled share-based payments to employees and others providing similar services are measured at fair value of the equity
instruments at the grant date. The fair value excludes the effect of non-market-based vesting conditions. Details regarding the
determination of the fair value of equity-settled share-based transactions are not separately disclosed due to their immaterial value.
The fair value determined at the grant date of the equity-settled share-based payments is expensed over the vesting period, based on the
Group’s estimate of equity instruments that will eventually vest. At each balance sheet date, the Group revises its estimate of the number
of equity instruments expected to vest as a result of the effect of non market-based vesting conditions. The impact of the revision of the
original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding
adjustment to equity reserves.
63
Notes to the Financial Statements
for the year ended 30 September 2015
Accounting developments
In preparing these Financial Statements, the Group has applied all relevant IFRS, IAS and Interpretations issued by the IFRIC which have
been adopted by the EU as of the date of approval of these Financial Statements. The following new accounting standards, amendments
to existing accounting standards and/or interpretations of existing accounting standards are mandatory for the current period and have
been adopted by the Group. All other new standards, amendments to existing standards and new interpretations that are mandatory for
the current year have no bearing on the operating activities and disclosure’s of the Group and consequently have not been listed. The
Group has not adopted any new standards or interpretations that are not mandatory.
At the date of authorisation of these financial statements, the following Standards and Interpretations, which have not been applied in
these financial statements, were in issue but not yet effective and in some cases, not adopted by the EU:
Standards effective in current period:
IAS 32 (amendment) Offsetting Financial Assets and Financial Liabilities, which was effective for annual periods beginning on or after
1 January 2014
IAS 36 (amendment) Recoverable Amount Disclosures for Non-Financial Assets, which was effective for annual periods beginning on or
after 1 January 2014
IAS 39 (amendment) Novation of Derivatives and Continuation of Hedge Accounting, which was effective for annual periods beginning
on or after 1 January 2014
Standards in issue not yet effective:
IAS 19 (amendment) Defined Benefit Plans: Employee Contributions, which is effective for annual periods beginning on or after 1 February
2015
Annual Improvements to IFRSs 2010-2012 Cycle, which is effective for annual periods beginning on or after 1 February 2015
Annual Improvements to IFRSs 2011-2013 Cycle, which is effective for annual periods beginning on or after 1 January 2015
Annual Improvements to IFRSs 2012-2014 Cycle, which is effective for annual periods beginning on or after 1 January 2016
Disclosure Initiative (Amendments to IAS 1), which is effective for annual periods beginning on or after 1 January 2016
Accounting for Acquisitions of Interests in Joint Operations (Amendments to IFRS 11), which is effective for annual periods beginning on or
after 1 January 2016
Clarification of Acceptable Methods of Depreciation and Amortisation (Amendments to IAS 16 and IAS 38)’, which is effective for annual
periods beginning on or after 1 January 2016
IFRS 15 Revenue from Contracts with Customers, which is effective for annual periods beginning on or after 1 January 2017
IFRS 9 Financial Instruments, which is effective for annual periods beginning on or after 1 January 2018
Jersey Electricity plc is not permitted to adopt a standard until it has been adopted by the EU.
The directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material impact on the
financial statements of the Group except for IFRS 9 which will introduce fair value hierarchy disclosure for non-financial assets and
liabilities recognised at fair value.
64
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the Financial Statements
for the year ended 30 September 2015
2 Critical Accounting Judgements
In preparing the financial statements in conformity with IFRS, the directors are required to make estimates and assumptions that impact on
the reported amounts of revenues, expenses, assets and liabilities. Actual results may differ from these estimates. Certain of the Group’s
accounting policies have been identified as requiring critical accounting judgements or involving particularly complex or subjective
decisions or assessments. These are discussed below and have been determined by the Group’s senior management and approved by the
Audit and Risk Committee and should be read in conjunction with ‘Accounting Policies’.
i Revenue
The assessment of energy sales to customers is based on meter readings, which are carried out on a systematic basis throughout the
year. At the end of each accounting period, amounts of energy delivered to customers since the last billing date are estimated taking
into account energy acquired and estimating distribution losses and the corresponding unbilled revenue is estimated and recorded as
sales. Unbilled revenues included within trade and other receivables in the balance sheet relating to such customers at 30 September
2015 amounted to £5.1m (2014: £5.9m).
ii Impairment of property, plant, equipment and investments
On at least an annual basis and when indicators of impairment are present, accounting standards require property, plant, equipment
and investments to be reviewed for impairment. When a review for impairment is conducted, the recoverable amount is assessed by
reference to the net present value of the future cash flows of the relevant Cash Generating Unit (CGU), or disposal value if higher. The
discount rate applied is based on the Group’s weighted average cost of capital with appropriate adjustments for the risks associated
with the CGU. Estimates of cash flows involve a significant degree of judgement and are consistent with management’s plans and
forecasts.
iii Retirement benefit obligations
The Group provides pensions through a defined benefits scheme for its employees which is accounted for in accordance with IAS 19
‘Employee Benefits’. The expense and balance sheet items relating to the Group’s accounting for pension schemes under IAS 19 are
based on actuarial valuations. Inherent in these valuations are key assumptions, including discount rates, earnings’ increases, mortality
rates and inflation. These actuarial assumptions are reviewed annually in line with the requirements of IAS 19 and are based on prior
experience, market conditions and the advice of the scheme actuaries. The Group chooses a discount rate which reflects yields on high
quality, fixed-income investments. The discount rate used in 2015 was 3.6% and in 2014 was 3.9%. If, for example, the discount rate
applied to the liabilities had been 3.1%, rather than the 3.6% advised by our actuaries under IAS 19 for 2015, the IAS 19 net deficit of
£5.8m would have been a net deficit of £13.3m.
iv Hedge accounting
The Group utilises currency derivatives to hedge its future purchases of power from France which currently extend to the next three
calendar years. All such currency derivatives are fair valued, based on market values of equivalent instruments at balance sheet date.
v Decommissioning
The Company still believes that it does not have any set obligation to de-commission any of our material assets but a risk exists that
costs may be incurred in the future. The assets concerned are our power station at La Collette, which is leasehold with a current
end date of 2056, and our subsea interconnectors to France and Guernsey. None of the assets have a definitive planning or legal
obligation to decommission at the end of life but obligations could develop over time, for example, for environmental reasons. There
are varying external opinions as to whether subsea cables should be left in place, or removed, at the end of their useful life as over
time the interconnector asset becomes part of the marine infrastructure. We had looked at this topic in some depth and reached the
conclusion that this is an area where a watching brief will be maintained going forward.
65
Notes to the Financial Statements
for the year ended 30 September 2015
3 Business segments
The contributions of the various activities of the Group to revenue and profit are listed below:
66
2015 2015 2015 2014 2014 2014 External Internal Total External Internal Total £000 £000 £000 £000 £000 £000RevenueEnergy 80,698 129 80,827 79,459 141 79,600Building Services 4,148 808 4,956 3,294 907 4,201Retail 11,087 40 11,127 11,414 33 11,447Property 2,084 599 2,683 1,957 616 2,573Other 2,462 777 3,239 2,319 878 3,197 100,479 2,353 102,832 98,443 2,575 101,018Interdivision elimination (2,353) (2,575)Revenue 100,479 98,443 Operating profit Energy 11,514 7,952 Building Services (58) (44) Retail 334 (86) Property 1,562 1,415 Other 592 659 13,944 9,896Revaluation of investment properties (45) 145 Exceptional items - RTE outage compensation 479 - - impact of reversal of EDF1 related provision 310 - - impairment of investment - (1,178) - subsea cable repair - (1,800) - restructuring costs - (570) Operating profit 14,688 6,493 Finance income 36 14 Finance costs (1,555) (51) Profit from operations before taxation 13,169 6,456 Taxation (2,397) (1,478) Profit from operations after taxation 10,772 4,978 Attributable to: Owners of the Company 10,725 4,932Non-controlling interests 47 46 10,772 4,978Materially, all the Group’s operations are conducted within the Channel Islands. All transfers between divisions are on an arms-length basis.FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the Financial Statements
for the year ended 30 September 2015
3 Business segments (continued)
Operating assets, liabilities, net capital additions and depreciation/amortisation are analysed as follows:
4 Operating expenses
5 Directors and employees
Detailed information in respect of Directors’ shareholdings and emoluments, pensions and benefits is given in the Remuneration Report
on pages 49 to 51. The number of persons employed by the Group (including non-executive directors) at 30 September was as follows:
The aggregate payroll costs of these persons were as follows:
67
2015 2015 2014 2014 2015 2015 2014 2014 Assets Liabilities Assets Liabilities Net capital Depreciation/ Net capital Depreciation/ additions amortisation additions amortisation £000 £000 £000 £000 £000 £000 £000 £000Energy 190,652 (69,284) 188,237 (72,383) 13,025 (9,340) 39,346 7,695 Building Services 547 (233) 615 (62) 14 (56) 20 45Retail 3,551 (459) 3,582 (147) 33 (73) 101 67Property 34,136 (495) 34,812 (413) (46) (415) 421 413Other* 1,073 (864) 804 (883) 87 (42) 31 36Unallocated 14,022 (24,919) 11,748 (19,771) - - - - 243,981 (96,254) 239,798 (93,659) 13,113 (9,926) 39,919 8,256Unallocated assets includes cash deposits, investments and the retirement benefit obligation surplus. Unallocated liabilities includes deferred taxation, current taxation, and the retirement benefit obligation deficit. Capital additions for the ‘Property’ segment includes a £45k downward adjustment - (2014: £145k upward adjustment) for revaluation of investment properties.*Other segment includes Jersey Energy, Jendev and Jersey Deep Freeze. 2015 2014 £000 £000Distribution costs 11,306 11,096Administration expenses 10,625 8,983 21,931 20,079 2015 2014 Number NumberEnergy 201 204Other businesses 106 95Trainees 12 9 319 308 2015 2014 £000 £000Wages and salaries 15,569 15,910Social security costs 834 852Pension (note 17) 2,165 2,057 18,568 18,819Capitalised manpower costs* (1,799) (2,002) 16,769 16,817* Capitalised manpower costs are included in note 11 under categories ‘Mains cables and services’, ‘Fixtures, fittings, vehicles etc’ and ‘Interlinks’ Notes to the Financial Statements
for the year ended 30 September 2015
6 Group operating profit before exceptional items
Operating profit is after charging:
Fees payable to Group auditors
Auditor’s remuneration for audit services
Auditor’s remuneration for non-audit services
Other operating charges
Operating lease charges
Depreciation of property, plant and equipment
Amortisation of intangible assets
Maintenance and repairs
Legal and professional
Bad debt write-offs
7 Taxation
Current tax:
Jersey Income Tax - ordinary activities before exceptional items
- adjustments in respect of prior periods
Total current tax
Deferred tax:
Adjustments in respect of prior periods
Current year
Total tax on profit on ordinary activities
2015
£000
80
1
470
9,911
15
2,927
357
57
2014
£000
79
2
71
8,248
14
2,907
222
80
2015
£000
2014
£000
404
-
404
(414)
2,407
-
-
-
-
1,478
2,397
1,478
The differences between the total tax charge shown above and the amount calculated by applying the standard rate of Jersey Income Tax
to the profit before tax is as follows:
Profit from ordinary activities before tax
Tax on profit on ordinary activities at standard income tax rate of 20% (2014: 20%)
Effects of:
Adjustments in respect of prior periods
Expenses not deductible for tax purposes
Income not taxable for tax purposes
Impairment of investment
Non-qualifying depreciation
Group current tax charge for year
2015
£000
13,169
2,634
(414)
26
(114)
-
265
2,397
2014
£000
6,456
1,291
-
22
(454)
350
269
1,478
68
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the Financial Statements
for the year ended 30 September 2015
7 Taxation (continued)
Deferred Tax
The following is the major deferred tax assets/liabilities recognised by the Group.
Deferred tax movements in the year
The deferred tax asset arising on losses carried forward has been recognised as it is considered likely that future profits will be available
for set off.
8 Dividends paid and proposed
Equity:
The proposed dividend is subject to approval at the forthcoming AGM and have not been included as liabilities in these financial
statements. These dividends are shown net of 20% tax.
Dividends paid out to non controlling interests in relation to Jersey Deep Freeze are disclosed in note 19.
69
Per Share In Total 2015 2014 2015 2014 pence pence £000 £000Ordinary and ‘A’ Ordinary:Dividend paid final for previous year 7.20 6.80 2,206 2,083 interim for current year 5.25 5.00 1,609 1,532 12.45 11.80 3,815 3,615Dividend proposed final for current year 7.60 7.20 2,330 2,206 2015 2014 £000 £000Accelerated capital allowances 19,112 16,762Derivative financial instruments (1,024) (849)Pensions (1,458) (274)Losses carried forward (1,101) (787)Provisions for deferred tax 15,529 14,852 2015 2014 £000 £000At 1 October 14,852 14,365Charged to profit and loss account 1,993 1,478Charged to statement of comprehensive income (1,316) (991)At 30 September 15,529 14,852
Notes to the Financial Statements
for the year ended 30 September 2015
9 Earnings per Ordinary share
Earnings per Ordinary and ‘A’ Ordinary share (basic and diluted) of 35.00p (2014: 16.10p) are calculated on the Group profit, after taxation,
of £10,725,000 (2014: £4,932,000), and on the 30,640,000 (2014: 30,640,000) Ordinary and ‘A’ Ordinary shares in issue throughout the
financial year and at 30 September 2015. There are no share options in issue and therefore there is no difference between basic and diluted
Computer Software
£000
219
222
(43)
398
199
15
(43)
171
227
306
8
(95)
219
280
14
(95)
199
20
earnings per share.
10 Intangible assets
Cost as at 1 October 2014
Additions
Disposals
At 30 September 2015
Amortisation
At 1 October 2014
Charge for year
Disposals
At 30 September 2015
Net book value
At 30 September 2015
Cost as at 1 October 2013
Additions
Disposals
At 30 September 2014
Amortisation
At 1 October 2013
Charge for year
Disposals
At 30 September 2014
Net book value
At 30 September 2014
The above amortisation charges are included within operating expenses in the consolidated income statement.
70
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the Financial Statements
for the year ended 30 September 2015
11 Property, plant, equipment and investment properties
Freehold land
Leasehold
Main cables Fixtures, fittings,
Investment
and buildings
buildings
Plant
and services
vehicles etc
Interlinks
Total
properties*
£000
£000
£000
£000
£000
£000
£000
£000
24,547
130
-
-
-
24,677
7,491
519
-
-
8,010
17,036
-
-
-
(34)
17,002
5,685
369
-
(34)
6,020
129,204
5,363
(337)
-
(710)
133,520
94,282
2,836
(8)
(710)
96,400
76,514
2,303
337
-
-
79,154
24,379
1,728
8
-
26,115
16,882
2,986
-
-
(1,040)
18,828
10,729
1,416
-
(1,014)
11,131
78,510
2,154
-
-
-
80,664
15,281
3,043
-
-
18,324
342,693
12,936
-
-
(1,784)
353,845
157,847
9,911
-
(1,758)
166,000
20,505
-
-
(45)
-
20,460
-
-
-
-
-
16,667
10,982
37,120
53,039
7,697
62,340
187,845
20,460
Freehold land
Leasehold
Main cables Fixtures, fittings,
Investment
and buildings
buildings
Plant
and services
vehicles etc
Interlinks
Total
properties*
£000
£000
£000
£000
£000
£000
£000
£000
26,456
83
-
(1,992)
24,547
7,433
533
(475)
7,491
17,036
-
-
-
17,036
126,509
3,502
-
(807)
129,204
5,316
369
-
5,685
91,450
3,434
(602)
94,282
74,383
2,294
-
(163)
76,514
22,768
1,673
(62)
24,379
16,407
1,909
-
(1,434)
16,882
10,952
1,012
(1,235)
10,729
46,379
32,131
-
-
78,510
307,170
39,919
-
(4,396)
342,693
20,360
-
145
-
20,505
14,054
1,227
-
15,281
151,973
8,248
(2,374)
157,847
-
-
-
-
17,056
11,351
34,922
52,135
6,153
63,229
184,846
20,505
Cost or valuation
At 1 October 2014
Expenditure
Reclassification
Revaluation
Disposals
At 30 September 2015
Depreciation
At 1 October 2014
Charge for the year
Reclassification
Disposals
At 30 September 2015
Net book value at
30 September 2015
Cost or valuation
At 1 October 2013
Expenditure
Revaluation
Disposals
At 30 September 2014
Depreciation
At 1 October 2013
Charge for the year
Disposals
At 30 September 2014
Net book value at
30 September 2014
71
Notes to the Financial Statements
for the year ended 30 September 2015
11 Property, plant, equipment and investment properties (continued)
a No depreciation is charged on freehold land. Depreciation is included in operating costs in the income statement.
b Investment properties, which are all freehold, were valued on an open market existing use basis at 30 September 2015 by qualified
independent valuers Sarre and Company who have extensive experience in Jersey property market valuation.
Such properties are not depreciated. The rental income arising from the properties during the year was £1,285k, (2014: £1,175k) with
maintenance and repair costs of £39k (2014: £32k).
c The gross carrying amount of tangible assets at net book value of zero at 30 September 2015 was £92.7m (2014: £85.7m).
d £4,003k (2014: £184k) for Normandie 3 and £1,602k (2014: £466k) for St Helier Primary is classified in interlinks and plant,
respectively, and is ‘work in progress’.
*Investment Properties
The B&Q lease is a fully-repairing lease with a 48-year term from May 2000 and a tenant-only break option on the 23rd anniversary.
The medical centre lease is an internal repairing lease with a 30-year term from May 2005 and break options at 15, 20 and 25
year anniversaries. Commercial properties have been valued on the basis of a yield between 7.15% and 8.5% before deductions for
acquisition costs.
The residential properties comprise 29 units which are let out on licences or leases with terms no greater than one year.
The minimum lease payments are detailed in note 21.
12 Other investments
Principal group investments
The Company has investments in the following subsidiary undertaking and joint arrangement which principally affected the profits or net
assets of the Group.
Joint venture:
Country of
incorporation or
principal business
address
Principal
activity
Shareholdings
%
Holding
Financial
year end
Channel Islands Electricity Grid Limited
Jersey
Association with
5,000 Ordinary
50
30 November
Guernsey Electricity
Limited
Subsidiary undertaking:
Jersey Deep Freeze Limited
Jersey
Sale and
60 Ordinary
60
31 January
maintenance
of catering
equipment
72
2015 2014 £000 £000Joint venture 5 5FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the Financial Statements
for the year ended 30 September 2015
12 Other investments (continued)
Channel Islands Electricity Grid Limited (CIEG)
The joint arrangement between the Company and Guernsey Electricity Limited for the installation of a second interconnector system
between France, Jersey and Guernsey required a control point through which the interconnector project manager could communicate
and also, to be the customer which Électricité de France would invoice for their energy sales. CIEG, a company jointly owned and
managed on a 50/50 basis by the Company and Guernsey Electricity Limited, was established in July 1998 to deal with these aspects and
also to manage the way in which the second interconnector would be operated. In May 2013, Jersey Electricity and Guernsey Electricity
signed an agreement to share the cost and capacity of the Normandie 3 project. It also provided for cost and capacity sharing of the
Normandie 1 project as a replacement of the original EDF1 interconnector between Jersey and France that failed in June 2012.
The Company’s interest in CIEG is accounted for as a joint arrangement under IFRS 11 ‘Joint arrangements’.
Jersey Deep Freeze Limited
The Company owns 60% of the issued ordinary share capital of Jersey Deep Freeze Limited, a Jersey company whose principal business is the
sale and maintenance of refrigeration equipment to commercial businesses. The results are consolidated into these Group financial statements.
13 Inventories
The amounts attributed to the different categories are as follows:
14 Trade and other receivables
The secured loan accounts are loans to Directors. See the Remuneration Report on pages 49 to 51 in the Report of the Directors for
disclosure of the Directors’ loans.
The fair value of trade and other receivables is considered by the Directors to be equivalent to its carrying value.
73
2015 2014 £000 £000Fuel oil 4,134 5,019Commercial stocks and work in progress 1,428 1,459Generation, distribution spares and sundry 677 856 6,239 7,334At 30 September 2015 stocks are stated net of obsolete provisions of £557k (2014: £321k). 2015 2014 £000 £000Amounts receivable within one year:Trade receivables (includes unbilled units) 12,739 13,287Prepayments 1,277 1,926Other receivables 761 1,261 14,777 16,474Amounts receivable after more than one year:Secured loan accounts 731 838
Notes to the Financial Statements
for the year ended 30 September 2015
15 Trade and other payables
Provisions held:
16 Borrowings
The long-term funding via a private placement is in place with Pricoa Capital Group (an affiliate of Prudential Financial, Inc) and £30m of
finance drawn on 17 July 2014. This consists of:
a £15m for 20 years at a fixed rate coupon of 4.41%
b £15m for 25 years at a fixed rate coupon of 4.52%
74
2015 2014 £000 £000Amounts falling due within one year:Trade payables 1,129 1,553Other payables including other taxation and social security 5,921 6,957Accruals and deferred income 10,547 14,105Provisions - 2,060 17,597 24,675Amounts falling due after more than one year:Accruals 369 394Deferred income 18,515 17,885 18,884 18,279The fair value of trade payables is considered by the directors to be equivalent to its carrying value. 2015 2014 £000 £000Unsecured borrowing at amortised costLoan obtained from private placement 30,000 30,000In addition the above borrowings are supplemented by a 5 year revolving credit facility from the Royal Bank of Scotland International Limited (RBSI) which provides flexibility as the timing of further planned capital expenditure is variable. Following a review of future cash requirements this facility was reduced from £40m to £25m in October 2015. A one year £2m overdraft facility also exists with RBSI. Neither RBSI facility was drawn as at 30 September 2015 and like the Pricoa loans they are unsecured. 2015 2014 £000 £000At 1 October 2,060 460Provision for subsea cable repair - 1,800Utilisation of subsea cable repair/decommission (1,800) (200)Release of subsea cable decommission (260) -At 30 September - 2,060FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the Financial Statements
for the year ended 30 September 2015
17 Pensions
The Company sponsors a funded defined benefit pension plan for qualifying Jersey Electricity employees. The plan is administered by
a separate board of Trustees which is legally separate from the Company. The Trustees are composed of representatives of both the
employer and employees, plus an independent trustee. The Trustees are required by law to act in the interest of all relevant beneficiaries
and are responsible for the investment policy with regard to the assets plus the day-to-day administration of the benefits.
Under the plan, employees are entitled to annual pensions on retirement at age 65 of one-sixtieth or one-eightieth (depending on category
of membership) of final pensionable salary for each year of service. Pensionable salary is broadly defined as the best successive 12 months’
salary in the past three years. Benefits are also payable on death and following other events such as withdrawing from active service.
No other post-retirement benefits are provided by the Scheme to these employees.
Profile of the Scheme
The defined benefit obligation includes benefits for current employees, former employees and current pensioners.
Broadly, about 55% of the liabilities are attributable to current employees, 8% to former employees and 37% to current pensioners.
The Scheme duration is an indicator of the weighted-average time until benefit payments are made. For the Scheme as a whole, the
duration is around 16 years reflecting the approximate split of the defined benefit obligation.
Regular employer contributions to the Scheme in 2016 are estimated to be £2.4m.
The actual amount to be charged to the income statement for the next financial year might be different to that estimated. This may be due
to the contributions and benefit payments differing from expected, changes to scheme benefits or settlement/curtailment events that are
not yet known.
Funding requirements
The last funding valuation of the Scheme was carried out by a qualified actuary as at 31 December 2012 and showed a deficit of £9.3m.
Investment returns are expected to make good this shortfall by 31 December 2023, albeit the deficit of that part has reduced. In Jersey there are
no legal or regulatory requirements governing pension schemes and therefore no imposed minimum funding requirement. The next funding
valuation is due no later than 31 December 2015 at which progress towards full-funding will be reviewed. The Company pays contributions of
20.6% (26.6% for non-contributory members) of pensionable salaries (of which 19.0% is in respect of current accrual, 0.6% in respect of death
in service lump sums and 1% in respect of expenses) with active members paying a further 6% of pensionable salaries.
Risks associated with the Scheme
The Scheme exposes the Company to a number of risks, the most significant of which are:
Asset volatility
The liabilities are calculated using a discount rate set with reference to corporate bond yields; if assets underperform this yield, this will
create a deficit. The Scheme holds a significant proportion of growth assets (equities) which, though expected to outperform corporate
bonds in the long-term, create volatility and risk in the short-term. The allocation to growth assets is monitored to ensure it remains
appropriate given the Scheme’s long term objectives.
Changes in bond yields
A decrease in corporate bond yields will increase the value placed on the Scheme’s liabilities for accounting purposes, although this will be
partially offset by an increase in the value of the Scheme’s bond holdings.
Inflation risk
A proportion of the Scheme’s benefit obligations are linked to inflation, and higher inflation will lead to higher liabilities. The majority of the
assets are either unaffected by or only loosely correlated with inflation, meaning that an increase in inflation will also increase the deficit.
Life expectancy
The majority of the Scheme’s obligations are to provide benefits for the life of the member, so increases in life expectancy will result in an
increase in the liabilities.
Reporting at 30 September 2015
The results of the latest funding valuation at 31 December 2012 have been adjusted to the balance sheet date taking account of
experience over the period since 31 December 2012, changes in the market conditions, and differences in the financial and demographic
assumptions. The present value of the defined benefit obligation, the related current service cost, and any past service costs were measured
using the Projected Unit Credit Method.
75
Notes to the Financial Statements
for the year ended 30 September 2015
17 Pensions (continued)
The principal assumptions used by the independent qualified actuaries to calculate the liabilities under IAS19 are set out below:
The Scheme assets are invested in the following asset classes, each of which have a quoted market:
76
Main financial assumptions: 2015 2014 % pa % paInflation 3.2 3.3Rate of general increase in salaries - short term (year 1) 3.0 2.6 - long term (year 2 onwards) 4.2 4.3Rate of increase to pensions in payment - -Increasing pensions purchased with AVCs 3.2 3.3Discount rate for scheme liabilities 3.6 3.9The financial assumptions reflect the nature and term of the Scheme’s liabilities. Value at 30 Value at 30 September September 2015 2014 £000 £000UK Fixed Interest 24,933 23,744UK Equities 21,398 16,354Overseas Equities 38,519 48,083Property Unit Trusts 1,597 1,476Other 8,811 6,293Cash Instruments 1,668 3,321Cash and Commitments 9,825 5,495 106,751 104,766 30 September 2015 30 September 2014Post-retirement mortality assumption - base tableSAPS ‘S1’ tables with CMI 2011 improvements to the calculation date with suitable scaling actors appliedSAPS ‘S1’ tables with CMI 2011 improvements to the calculation date with suitable scaling factors appliedPost-retirement mortality assumption - future improvementsCMI 2011 core projections with long-term improvement rate of 1.25% p.a. for men and womenCMI 2011 core projections with long-term improvement rate of 1.25% p.a. for men and womenLife expectancy for male currently aged 6028.328.2Life expenctancy for female currently aged 6030.830.7Life expectancy at 60 for male currently aged 4030.430.2Life expectancy at 60 for female currently aged 4032.932.7Cash commutationMembers assumed to exchange 15% of their pension for a cash lump sum at retirementMembers assumed to exchange 15% of their pension for a cash lump sum at retirement.FINANCIAL STATEMENTS
Notes to the Financial Statements
for the year ended 30 September 2015
17 Pensions (continued)
The amounts recognised in the balance sheet are set out below:
Reconciliation of funded status to balance sheet:
Breakdown of amounts recognised in profit and loss
and other comprehensive income
Operating cost
Service costs:
Current service cost
Administration expenses
Financing cost
Interest on net defined benefit liability
Total pension expense recognised in profit and loss
Remeasurements in OCI:
Return on plan assets (in excess of)/below that recognised in net interest
Actuarial (gains)/losses due to changes in financial assumptions
Actuarial (gains)/losses due to liability experience
Total amount recognised in OCI
Total amount recognised in profit and loss and OCI
Changes to the present value of the defined
benefit obligation during the year
Opening defined benefit obligation
Current service cost
Interest expense on scheme liabilities
Contributions by scheme participants
Actuarial losses on scheme liabilities arising from changes in financial assumptions
Actuarial losses on scheme liabilities arising from experience
Net benefits paid out
Closing defined benefit obligation
Changes to the fair value of Scheme assets during the year
Opening fair value of Scheme assets
Interest income on Scheme assets
Remeasurement (losses)/gains on scheme assets
Contributions by the employer
Contributions by scheme participants
Net benefits paid out
Administration costs incurred
Closing fair value of scheme assets
FINANCIAL STATEMENTS
2015
£000
2014
£000
2,023
125
17
2,165
724
4,790
192
5,706
1,925
130
2
2,057
(7,261)
7,633
20
392
7,871
2,449
2015
£000
2014
£000
106,138
95,030
2,023
4,079
542
4,790
192
1,925
4,128
592
7,633
20
(3,722)
(3,190)
114,042
106,138
2015
£000
104,766
4,062
(724)
1,952
542
(3,722)
(125)
2014
£000
94,012
4,126
7,261
2,095
592
(3,190)
(130)
106,751
104,766
77
2015 2014 £000 £000Fair value of Scheme assets 106,751 104,766Present value of Scheme liabilities (114,042) (106,138)Deficit in Scheme (7,291) (1,372)Related deferred tax asset 1,458 274Net pension liability (5,833) (1,098)
Notes to the Financial Statements
for the year ended 30 September 2015
17 Pensions (continued)
Actual return on scheme assets
Interest income on scheme assets
Remeasurement (loss)/gain on scheme assets
Actual return on scheme assets
Analysis of amounts recognised in other comprehensive income (SoCI)
Total remeasurement losses in other comprehensive income
2015
£000
4,062
(724)
3,338
2015
£000
(5,706)
2014
£000
4,126
7,261
11,387
2014
£000
(392)
Estimated profit and loss change for next year
We estimate the charge to the profit and loss account for the next financial year as shown in the table below. This is based on an
estimated pensionable payroll of £9.6 million for next year.
The actual amount to be charged to the profit and loss account for the next financial year might be different to that estimated above. This
may be due to pensionable salaries or contributions differing from expected, changes to scheme benefits or settlement/curtailment events
that are not yet known. The estimated profit and loss charge shown above is subject to change.
Discount rate sensitivity
To show sensitivity of the results to the discount rate, we have set out below the balance sheet and profit and loss impact of adopting a
discount rate of 3.1% p.a. as at 30 September 2015.
78
Main financial assumptions 30 September 2015 % p.a.Inflation 3.2Rate of general increase in salaries - short term (year 1) 3.0- long term (year 2 onwards) 4.2Rate of increase to pensions in payment -Increasing pensions purchased with AVCs 3.2Discount rate for scheme liabilities 3.1 Analysis of amount charged to profit and loss account For year ending 30 September 2016 £000Current service cost 2,226Administration expenses 129Net interest on net defined benefit liability 229Total estimated pension expense 2,584 Reconciliation of funded status to balance sheet Value at 30 September 2015 £000Fair value of scheme assets 106,751Present value of funded defined benefit obligation (123,399)Funded status and asset/(liability) recognised on the balance sheet (16,648) FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the Financial Statements
for the year ended 30 September 2015
17 Pensions (continued)
18 Called up share capital
‘A’ Ordinary shares 5p each (2014: 5p each)
Ordinary shares 5p each (2014: 5p each)
5% Cumulative participating preference shares £1 each
3.5% Cumulative non-participating preference shares £1 each
Authorised
2015
Issued and fully paid
2015
£000
1,250
1,500
2,750
100
150
250
£000
582
950
1,532
100
135
235
Authorised
2014
£000
1,250
1,500
2,750
100
150
250
Issued and fully paid
2014
£000
582
950
1,532
100
135
235
Equity shares
‘A’ Ordinary shares entitle the holder to 1 vote for every 100 shares held whereas the Ordinary shares carry voting rights of 1 vote for
every 20 shares held. At 30 September 2015 there were 11,640,000 ‘A’ Ordinary and 19,000,000 Ordinary shares in issue.
Preference shares
Preference shares are classified as financial liabilities under IFRS. Dividends paid to preference shareholders in the year were £9,000
(2014: £9,000) and are recorded in finance costs in the income statement. 5% preference shares carry voting rights of 1 vote per 5 shares
and 3.5% preference shares carry voting rights of 1 vote per 10 shares.
ESOP reserve
The Jersey Electricity Employee Benefit Trust was established on 24 May 2012 when the Company introduced a new employee share
scheme (“Scheme 1”) for eligible employees of the Group based on a three year vesting period. Over the course of the scheme 26,800
shares were awarded to employees who met the three year vesting period requirements. A second scheme (“Scheme 2”) was set up in
February 2015 with the same three year vesting requirement. The Trust currently holds 28,400 shares for this scheme. The shares have
been purchased in instalments since the inception of the Trust at an average of £3.74 per share. The Trust was funded by way of an
interest free loan and for accounting purposes is seen as an extension of the Group.
19 Non-controlling interests
Equity
79
2015 2014 £000 £000At 1 October 10 24Share of profit on ordinary activities after taxation 47 46Dividends paid (44) (60)At 30 September 13 10 Expected charge to income statement 30 September 2015 £000Service cost 2,513Total administration expenses 129Interest on the net defined benefit liability 488Expense recognised in income statement 3,130In presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognised in the balance sheet.
Notes to the Financial Statements
for the year ended 30 September 2015
20 Financial commitments
21 Leasing
Operating leases with tenants
The Group leases out all its investment properties and certain other freehold properties under operating leases. The future aggregate
minimum rentals receivable under non-cancellable operating leases are as follows:
22 Derivatives and financial instruments and their risk management
The primary financial risk faced by the Group is foreign exchange exposure as the largest single cost in the Income Statement is the importation
of electricity from Europe that is denominated in Euros.
In the previous two financial years, oil derivatives were included in the financial statements. With the commissioning of the N3 interconnector
in September 2015 the volume of oil consumed is expected to be immaterial and no hedges exist at this year end.
The Group’s currency exposure at 30 September 2015, taking into account the effect of forward contracts placed to manage such exposures,
was £2.5m (2014: £1.8m) being the translated Euro liability due for imports made in September but payable in October.
All financial instruments for which fair value is recognised or disclosed are categorised within the fair value hierarchy. This hierarchy is based on
the underlying assumptions used to determine the fair value measurement as a whole and is categorised as follows:
Level 1 financial instruments are those with values that are immediately comparable to quoted (unadjusted) market prices in active markets for
identical assets or liabilities;
Level 2 financial instruments are those with values that are determined using valuation techniques for which the basic assumptions used to
calculate fair value are directly or indirectly observable (such as to readily available market prices);
Level 3 financial instruments are shown at values that are determined by assumptions that are not based on observable market data
(unobservable inputs).
The derivative contracts for foreign currency shown above are classified as level 2 financial instruments and are valued using a discounted cash
flow valuation technique. Future cash flows are estimated based on forward exchange rates (from observable forward exchange rates at the end
of the reporting period) and contracted forward rates, discounted at a rate that reflects the credit risk of various counterparties.
80
2015 2014 £000 £000Less than one year 2,033 1,964Greater than one year and less than five years 6,360 5,876More than five years 3,853 5,323 12,246 13,163 2015 2014 £000 £000a Five year capital expenditure approved by the directors:Contracted 13,799 5,998Not contracted 68,351 88,963 82,150 94,961b Current rental commitments under operating leases are as follows:Lease payments under operating leases recognised as an expense in the year 470 452Payable within one year 452 443After one year but within five years 1,740 1,651 After five years 20,713 19,481 22,905 21,575 FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the Financial Statements
for the year ended 30 September 2015
22 Derivatives and financial instruments and their risk management (continued)
Foreign exchange risk
The Group utilises currency derivatives to hedge the payment of its future purchases of power from France which currently extend to the next three
calendar years, as well as to reduce exposure to currency movements for material capital projects.
Currency derivatives
At the balance sheet date, the total notional amount of outstanding forward foreign exchange contracts that the Group has committed are
as below:
Forward foreign exchange contracts
At 30 September 2015, the fair value of the Group’s currency derivatives is estimated to be a net liability of approximately £5.1m over the next
three years (2014: £4.2m liability). The fair value of currency derivatives that are designated and effective as cash flow hedges amount to a
liability of £5.1m (2014: £4.2m liability) and has been deferred in equity. Given the limited exposure to foreign exchange rate risk at the year
end no sensitivity analysis has been presented.
The fair value of currency derivatives that are designated and ineffective as cash flow hedges amount to £nil (2014: £nil). In the current
period amounts of £0.9m were debited (2014: £4.6m were debited) to equity and £3.6m (2014: £0.1m) recycled to the income statement.
Gains and losses on the derivatives are recycled through the income statement at the time the purchase of power is recognised in the income
statement.
Fair value of currency hedges
These amounts are based on market values of equivalent instruments at the balance sheet date.
Commodity risk
Power purchases
The Group has power purchase agreements with EDF in France. As at 30 September 2015, the import prices, but not volumes, have
been substantially fixed for 2016. The Group entered into a 10 year framework agreement with EDF on 1 January 2013 which has a
commitment to procure around 30% of volume requirements at known prices. The remainder of the requirement will be decided by a
market pricing mechanism, but with no volume commitment, with a goal to deliver a degree of stability in tariff pricing to our customers.
The Company has the ability to generate power as an alternative to importation if this was viewed to be commercially and
environmentally acceptable.
81
2015 2014 £000 £000Derivative assets 1,194 -Derivative liabilities (6,314) (4,246) (5,120) (4,246) 2015 2014 £000 £000Less than one year - operational expenditure 31,393 34,241Less than one year - capital expenditure 15,216 -Greater than one year and less than three years 49,860 48,638 96,469 82,879 Notes to the Financial Statements
for the year ended 30 September 2015
22 Derivatives and financial instruments and their risk management (continued)
Credit risk
The Group’s principal financial assets are cash and cash equivalents, short-term investments, trade and other receivables. The Group’s credit
risk is primarily attributable to its trade and other receivables. The amounts presented in the balance sheet are net of allowances for doubtful
receivables. Allowances are made where there is an identified loss event which, based on previous experience, is evidence of a reduction in
the recoverability of cash flows. The trade receivables at 30 September 2015 outside the standard 30 day credit terms are as follows:
The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with high credit ratings
assigned by international credit-rating agencies. The Group monitors its credit exposure to its counterparties via their credit ratings and
through its treasury policy, thereby limiting its exposure to any one party to ensure that they are within Board approved limits and that there
are no significant concentrations of credit risk.
For trading related receivables, the credit worthiness and financial strength of customers is assessed at inception and on an ongoing basis.
Payment terms are set in accordance with industry standards. The Group will enhance credit protection, when appropriate, taking into
consideration the Group’s exposure to the customer, by requesting securities such as deposits, changing customers to prepayment meters to
manage credit risk and implementing payment plans for customers in arrears.
The Group has no other significant concentration of credit risk, with exposure spread over a large number of counterparties and customers.
Capital management
Strong capital management is an integral part of the directors’ strategy to achieve the Group’s stated objectives. The Directors review
financial capital KPI’s on a monthly basis. The £30m private placement drawn down in July 2014 provides long-term funding to the
Group supplemented by a 5 year £40m revolving credit facility. Liquid funds are managed on a daily basis and placed on short-term
deposits maturing to meet liabilities when they fall due.
Liquidity risk
The Group maintains a strong liquidity position and manages the liquidity profile of its assets, liabilities and commitments so that cashflows are
appropriately balanced and all financial obligations are met when due.
Maturity of financial liabilities at 30 September
Borrowing facilities
The Group had undrawn borrowing facilities at 30 September 2015 of £42.0m (2014: £42.0m) in respect of which all conditions
precedent had been met. The overdraft facility of £2.0m is annually renewable, and the Revolving Credit Facility which expires on 30 May
2019, is expected to be renewable.
Maturity of financial assets and liabilities
The financial assets of the Group comprise deposits placed on the money market with banks which all expire in less than one year.
The maturity profile of the Group’s financial assets and liabilities at 30 September was as follows:
Maturity of financial assets at 30 September
Interest rate risk
Interest rate exposure is managed by the £30m of private placements borrowing having a fixed coupon.
82
2015 2014 £000 £000Less than 3 months: cash and cash equivalents and short-term investments 12,503 9,776Greater than 3 months: short-term investments - - 2015 2014 £000 £000Greater than 30 days 385 419Greater than 60 days 69 136Greater than 90 days 313 380 767 935 2015 2014 £000 £000Less than one year 24,315 28,921More than one year and less than five years 41,939 34,738More than five years 30,000 30,000 96,254 93,659FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the Financial Statements
for the year ended 30 September 2015
23 Related party transactions
a Trading transactions and balances arising in the normal course of business
The Company currently leases the La Collette Power Station site from its largest shareholder, the States of Jersey, for a peppercorn rent
of £1,000 per annum. This lease was subject to a rent review as at June 2006 which is being negotiated. The Company is in dispute with
its landlord, The States of Jersey, concerning an overdue rent review. The information usually required by IAS 37 ‘Provisions, contingent
liabilities and contingent assets’, is not disclosed on the grounds that it can be expected to prejudice seriously the outcome of the dispute.
Counterparty
Value of electricity
services supplied
by Jersey Electricity
Value of goods &
other services supplied
by Jersey Electricity
Value of goods &
services purchased
by Jersey Electricity
Amounts due to
Jersey Electricity
Amounts due by
Jersey Electricity
2015
£000
2014
£000
2015
£000
2014
£000
2015
£000
2014
£000
2015
2014
£000
£000
2015
£000
2014
£000
The States of Jersey
JT Group Limited
7,223
7,095
1,549
1,104
1,211
1,577
2,059
2,042
392
258
Jersey Post International Limited
Jersey New Waterworks Limited
100
930
123
833
-
118
1
67
141
33
108
156
38
101
568
558
-
138
525
138
-
75
-
-
-
-
17
-
-
-
The States of Jersey is the Company’s majority and controlling shareholder. Jersey New Waterworks is majority owned and controlled by
the States of Jersey. JT Group Limited and Jersey Post International Limited are both wholly owned by the States of Jersey. All transactions
are undertaken on an arm’s length basis.
b Energy from Waste Plant
A new Energy from Waste plant was commissioned in Jersey during 2011. Jersey Electricity signed a 25 year agreement in 2008 to
take electricity produced at the plant by the States of Jersey and to share existing facilities with the Energy from Waste plant. The value
of electricity purchased from the facility during the year was £1.1m (2014: £1.2m) and the value of services provided to the plant was
£0.4m (2014: £0.5m).
c Remuneration of key management personnel
The remuneration of key management personnel of the Group (which is defined as the Executive Directors) is set out below. Further
information about the remuneration of individual Directors is provided in the Remuneration Report on pages 49 to 51.
83
2015 2014 £000 £000Short-term employee benefits 715 819Post-employment benefits 105 92 820 911
Five Year Group Summary (unaudited)
Financial Statements
2015
2014
2013
2012
2011
(restated)*
102.3
97.2
100.5
5.3
5.4
5.9
4.1
3.4
-
155.2
16.7
(43.5)
148.8
13.27
15.23
14.06
11.25
1.2
1.4
(5.2)
25.7
663
4.1%
75.4%
20.7%
3.9%
155
5.5
5.7
6.9
3.9
3.4
-
138.1
17.7
(35.0)
136.2
12.55
16.26
13.70
11.00
1.1
1.5
14.2
18.5
637
(2.1%)
92.1%
2.4%
5.5%
161
10.8
11.1
11.1
8.6
3.2
1.0
128.3
29.1
(33.0)
140.9
28.05
28.05
13.06
10.45
2.1
2.7
24.5
15.6
651
0.9%
95.6%
1.9%
2.5%
154
98.4
6.5
6.5
10.0
5.0
3.6
-
184.8
4.7
(64.7)
146.1
16.10
24.26
14.75
11.80
1.4
2.1
(20.2)
39.9
621
(6.3%)
80.2%
14.9%
4.9%
139
100.5
14.7
13.2
12.4
10.8
3.8
-
187.8
10.4
(71.9)
147.7
35.00
32.94
15.56
12.45
2.8
2.6
(17.5)
13.2
627
0.9%
94.0%
1.4%
4.6%
148
49,320
48,941
48,623
48,452
47,990
7
12.8p
201
106
12
319
3,118
245
110
12.7p
204
95
9
308
3,044
240
13
12.3p
201
117
11
329
3,297
242
293
11.4p
203
126
12
341
3,136
239
45
11.4p
191
136
10
337
3,408
251
Income Statement (£m)
Turnover
Operating profit
Profit before tax
Profit before tax (pre-exceptional costs)
Profit after tax
Dividends
Special dividend
Balance Sheets (£m)
Property, plant and equipment
Net current assets
Non-current liabilities
Net assets
Financial Ratios and Statistics
Earnings per ordinary share (pence)
Earnings per ordinary share (pre-exceptional costs) (pence)
Gross dividend paid per ordinary share (pence)
Net dividend paid per ordinary share (pence)
Dividend cover (times)*1
Dividend cover (pre-exceptional costs) (times)*1
(Net debt)/Cash at bank (£m)
Capital expenditure (£m)
Electricity Statistics
Units sold (m)
% movement
% of units imported
% of units generated
% of units from Energy from Waste plant
Maximum demand (megawatts)
Number of customers
Customer minutes lost
Average price per kilowatt hour sold (pence)
Manpower Statistics
Energy
Other
Trainees
Total
Units sold per energy employee (000’s)
Number of customers per energy employee
*1 excludes the special dividend paid in 2011.
* restated in the 2014 accounts following changes to IAS 19.
84
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Financial Calendar
4 January 2016
Preference share dividend
19 February 2016
Record date for final dividend
3 March 2016
Annual General Meeting
29 March 2016
Final dividend for year ended 30 September 2015
13 May 2016
Interim Management Statement – six months to 31 March 2016
3 June 2016
Record date for Interim Ordinary dividend
30 June 2016
Interim dividend for year ending 30 September 2016
1 July 2016
Preference share dividend
14 December 2016
Preliminary announcement of full year results
Annual General Meeting
The Annual General Meeting will be held at the Powerhouse, Queens Road, St. Helier, Jersey on Thursday 3 March 2016 at 2:30pm.
Details of the resolutions to be proposed are contained in the Notice convening the Meeting.
Press releases and up-to-date information on the Company can be found on the Company’s website (www.jec.co.uk).
85
The Powerhouse, PO Box 45
Queens Road, St Helier JE4 8NY
Tel 01534 505460
Fax 01534 505565
email jec@jec.co.uk
www.jec.co.uk
SUSTAINING LIFE AND GROWTH,
INVESTING FOR THE FUTURE
REPORT AND ACCOUNTS 2015
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