CONTENTS
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
GENERATION AND TRANSMISSION
DISTRIBUTION
SMARTSWITCH
PROTECTING THE ENVIRONMENT
AND CONSERVING RESOURCES
CUSTOMER SERVICE STANDARDS
COMMERCIAL
POWERHOUSE.JE
JENDEV
PROPERTY AND JEBS
JERSEY ENERGY
HEALTH AND SAFETY
SUSTAINABILITY IN THE COMMUNITY
OUR PEOPLE
OUTLOOK
FINANCIAL REVIEW
GOVERNANCE
FINANCIAL STATEMENTS
2
4
6
8
10
11
12
14
16
18
20
22
23
24
25
26
28
30
32
35
40
59
NON-EXECUTIVE DIRECTORS
Geoffrey Grime FCA (Chairman)
Aaron Le Cornu BSc, ACA
Alan Bryce MSc, CEng, FIET
Phil Austin MBE, FCIB, FCMI
Wendy Dorman BA (Hons), ACA
Tony Taylor BSc
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
AUDITORS
Deloitte LLP, PO Box 403, 66-72 The Esplanade, St. Helier, Jersey
BANKERS
Royal Bank of Scotland International Limited,
71 Bath Street, St. Helier, Jersey
BROKERS
Canaccord Genuity Wealth Management,
PO Box 3, 37 The Esplanade, St. Helier, Jersey
REGISTRAR
Computershare Investor Services (Jersey) Limited,
Queensway House, Hilgrove Street, St. Helier, Jersey
2
CHAIRMAN’S STATEMENT
CHAIRMAN'S
STATEMENT
I am delighted to report another excellent performance
from Jersey Electricity for 2016/17. Group revenue for the
year to 30 September 2017 was £102m and profit before
tax, and exceptional items, at £13.5m, was 2.5% higher
than the £13.1m achieved in 2016. This was supported
by strong underlying performance in the Energy business
as well as across our non-Energy businesses, especially
our retail business, Powerhouse.je, which has had another
particularly strong year. Overall, this has led to the Group’s
best ever financial performance, an outcome that is good
for all stakeholders, for our ongoing investment programme
and for a sustainable electricity service. I am therefore
pleased to report a proposed final dividend for this year
of 8.40p, a 5% rise on the previous year, payable on 29
March 2018.
Our first almost full year operating with three undersea
supply cables to France has not only resulted in improved
financial performance, but has also driven exceptional
supply reliability, attractive pricing for customers and a
virtually fully decarbonised electricity system. Our tariffs
remain very competitive compared with other jurisdictions,
including other islands and even the EU and UK which
benefit from significant economies of scale. In addition,
with the last tariff rise of 1.5% on 1 April 2014, Jersey
Electricity is approaching four years without an
increase – a notable achievement given the very
significant rises over that period elsewhere.
As the sole supplier of over a third of Jersey’s energy
requirements, the Company has a huge responsibility to
our customers and it is one all colleagues take very
seriously. I am therefore pleased that our customer
satisfaction ratings have improved further across the four
key service areas leading to an increase in an overall
rating which is independently assessed as ‘excellent’ when
compared with other service providers.
Our Board renewal programme, which began in 2015,
continued with the appointment of Tony Taylor as non-
Executive Director in September 2017. He has vast
experience in the marketing, communications and customer
service arena having worked for several leading global
advertising agencies, most recently as a Regional Director
of J. Walter Thompson, part of WPP.plc.
My thanks, as always, go to our Executive and non-
Executive Directors and colleagues throughout the business
for their commitment, hard work and loyalty that have made
Jersey Electricity the great success it is today and positions
us well for future challenges.
13 December 2017
3
CHIEF EXECUTIVE'S
REVIEW
Group results have surpassed last year’s and I am delighted
to again report that we have delivered our best ever financial
performance. Profit, before exceptional items, increased
2.5% to £13.5m on turnover of £102.3m, reflecting an
overall improved performance in our business units.
Importantly, unit sales of electricity were only marginally
down on last year at 621 million kilowatt hours despite the
ongoing and inevitable impact on demand due to energy
efficiency. This strong unit sales position is mainly a reflection
of our success in fuel switching customers from gas and
oil to electric heating and part due to a colder winter in
2016/17 relative to the previous year. Energy revenues
at £80.5m were 1% lower than in 2016 but profitability
was maintained at the same level as last year at £11.7m.
As indicated in previous years, maintaining profitability,
consistent with a regulatory return, is of central importance
given the last five years or so of heavy investment in
infrastructure.
Our retail success story continues with turnover in
Powerhouse.je up 9% to £13.0m and growth in profit to
£0.7m being at the highest level of profitability in its history.
This is a huge credit to the team in Powerhouse.je in driving
performance in a sector that is very competitive both in
Jersey and via the internet. Elsewhere, our Property business
maintained profit at £1.6m and JEBS, our contracting and
building services business, saw profit levels at £0.1m being
on par with 2016 – again a respectable performance in a
challenging and highly competitive sector. Our other business
units, Jersey Energy, Jendev and Jersey Deep Freeze were
£0.2m behind last year due to profits in Jersey Deep Freeze
having been at a much higher level than normal in 2016.
After five years of intense investment in new assets, our
focus is now shifting to asset optimisation and using
demand-side measures to yield higher performance. Almost
a full year operating with three undersea supply cables to
France, importing lower cost, low carbon power, has not
only resulted in improved financial performance but also
improved supply reliability and lower carbon emissions.
We measure supply reliability using Customer Minutes Lost
(CMLs) which is the average duration of interrupted supplies
experienced by each customer. This year, our CMLs were
down to a level of just eight - around ten times better than the
latest available UK average*. Our average carbon intensity
of distributed electricity reduced from 47g CO2e/kWh last
year to just 35g CO2e/kWh for this financial year, reflecting
enhanced importation capacity and we expect further
reductions going forward.
*Source: Ofgem RIIO ED1 Annual Report 2015-16
4
The commissioning of Diesel 5, our 5.5MW ‘black start’
Sulzer Diesel Generator, procured in 2016 and completely
overhauled, refurbished and installed this year, has also
further enhanced our emergency on-Island generation
capabilities. It enables us to restore full electrical supplies to
La Collette Power Station and all its ancillary controls in the
event of a complete blackout without itself being reliant on
electrical power for start-up.
Although our latest French link, Normandie 1, enables us
to meet Jersey’s full electricity requirements with low carbon
imports, we are contractually obliged to purchase power
from the States-owned Energy from Waste plant (EfW)
when the plant is available. This year we imported 93% of
our supplies from France, generated just 1% on Island and
obtained 6% from the EfW plant.
In May, we renegotiated our supply agreement with EDF by
five years, extending our importation framework from 2022
to 2027, to help maintain a stable importation regime over
a potentially uncertain Brexit period and take advantage
of lower wholesale prices in the market. This contract also
provides surety over the low carbon credentials of imported
power, authenticating hydro-electric and nuclear sources
we use in a manner which prevents this energy being sold
elsewhere.
Providing affordable electricity is, according to our
customers, the single most important factor in the provision
of our service and I am pleased we have been able to
maintain our tariffs at the same level for nearly four years.
This is a particularly important achievement given that the UK
has seen the ‘Big Six’ increase retail electricity prices by an
average of 14% in 2017 alone. At year end, our standard
domestic tariff was 14% below the UK average benchmark
and 15% below the EU average – outperforming our target
of keeping within +/-10% of the EU15.
Understanding and meeting our customers’ needs is vitally
important to us and has been a significant focus over recent
years. We use several channels for gaining such insights.
Price is one of four main supply attributes, along with supply
security, technical support and environmental performance,
in which our customer satisfaction rating has improved
this year. Together this has led to an an overall rating of
‘excellent’ in these areas which our customers value most.
All this has been possible while continuing major investment
projects. Our £17m St Helier West primary substation
project has made progress with complex civil works
completed in September and French contractors Engie
INEO beginning a one-year main build. The facility is
expected to be commissioned by November 2018.
Our SmartSwitch project has now seen around 75% to date
of the Island’s premises fitted with Smart Meters and the
customer facing online portal, Smart Account that runs in
tandem with Smart Meters, made live. This gives customers
more information than ever before on their electricity
consumption through a user-friendly interface.
Our biggest and most complex project of the year, however,
has been the Navision enterprise system upgrade. Led by
in-house developer Jendev, the project touched virtually every
part of our business. A programme of further development
promises to improve business processes, improving service
levels and efficiencies. Regarding our growth agenda, we
have maintained fuel switching rates at twice the underlying
baseline rate for another year and electricity continues to
achieve over 95% penetration of new build heating, cooling
and cooking applications.
Investment in our people continued with the first cohort
completing our ‘HOW TO…’ Management Development
Programme and the new Cornerstone employee portal
and appraisal system JE Connect launched. We have also
welcomed a new Operations Director and new Director of
Human Resources, both of whom come with many years’
experience in their respective fields. Both promise to bring
new perspectives and deep insight and have already
identified great opportunities for improvement.
ENERGY
CHIEF EXECUTIVE’S REVIEW
5
GROUP PURPOSE
6
GROUP PURPOSE
CHIEF EXECUTIVE’S REVIEW
Our corporate purpose is to ‘sustainably serve our community
with affordable, secure, low carbon energy, today and
long into the future, enabling quality of life for residents
and economic prosperity for businesses’. Our vision is to
‘responsibly and sustainably deliver value to customers’. In
the absence of competition in the electricity supply market or
formal regulation, we let our customers drive everything we
do. We must understand our customers and serve them fairly
and efficiently while striving to understand and meet their
changing needs and demands.
To do this our workforce must be aligned and every employee
must know the part they have to play. They must understand
our purpose – why what they do is so important to our
customers and how it helps us achieve our vision. Our
six values help explain who we are and how we perform
our roles. They are: Safety, Customer focus, Teamwork,
Responsibility, Excellence and Reliability.
To build on the foundations of the Purpose, Vision and
Values (PVV) work instigated in 2013 and further embed our
values in our culture, we have sought to build these into our
core processes to make them real and consequential. For
example, we have now incorporated our values into the
Performance Management and Learning module of our new
employee portal and appraisal system JE Connect. From now
on managers will be able to set objectives clearly aligned to
our Purpose, Vision and Values and accurately measure our
progress and performance against them. Employees will also
be able to browse a catalogue of training events and learning
materials aligned to our values.
‘Sustainably serving our community’ means not only protecting
the environment and conserving resources, it means providing
secure and reliable services, fair pricing to customers in a way
that ensures the business is economically viable, and it means
protecting the safety and health of all the people touched by
our business.
Our vision
Our vision is to responsibly and sustainably deliver value to
customers by:
• Growing unit sales and offsetting pressure from energy
efficiency by fuel switching from fossil fuels as well as
finding new applications for electricity.
• Strengthening our relationships with customers by better
understanding and meeting their needs.
Our priorities
• Grow electricity’s market share using resources in Energy
Solutions, JEBS and Energy in a more efficient and
coordinated way.
• Continue our roll-out of the multi-year SmartSwitch Smart
Metering programme safely and reliably, in a way that
delivers more value to the customer.
• Keep our major St Helier West primary substation project
on track for delivery by winter 2018 and in accordance
with budget.
• Design and develop our new Queen’s Road infrastructure,
securing final Board consent for the investment.
• Optimise the operation of La Collette Power Station to
robustly protect supplies in the most efficient way.
• Continue the development of our non-Energy businesses
so that they are sustainable and provide support to the
core electricity business.
• Continue our programme of ‘managed change’,
succession and people development across the business.
Our values
• Safety: 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.
• Customer focus: 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.
• Teamwork: We respect and value our colleagues as
individuals and we believe we are stronger as a team,
leading to better solutions and a more enjoyable and
rewarding work life.
• Responsibility: We accept responsibility for everything we
do, safeguarding the natural environment and the local
community, as well as the interests of all our customers
and staff.
• Developing services and solutions that create value for
• Excellence: We strive to work in a way that is both
customers by designing, installing, maintaining, repairing
and financing equipment and any new technologies
that use electricity or provide value added services to
customers.
• Developing ‘Smart’ infrastructure that will supply clean
electricity securely in the most cost effective manner.
effective and efficient, continuously improving everything
we do – innovating where we can but keeping things
simple.
• Reliability: We are trustworthy, dependable and reliable,
delivering on our commitments and always there when
you need us.
7
total customers
49,894
ENERGY GROWTH
16,862
customers
on discounted
tariffs
When we remove the effects of weather from electricity
demand, unit sales volumes have remained broadly fl at
despite the ever-increasing downward pressure of energy
effi ciency. Although we actively encourage our customers
to become more energy effi cient, we strive to counter the
impact by developing propositions that encourage fuel
switching from gas and oil to electricity in both the domestic
and commercial markets. The team dedicated to load growth
by fuel switching is Energy Solutions.
Energy solutions
Now in its third full year of operation, the team has again
made progress ahead of target, achieving over 170 fuel
switches in the domestic market and accounting for a
projected new load of 1.7 million units which helped us to
achieve unit sales for the year of 621 million, marginally
below last year’s 625 million, but maintaining a very
respectable level when compared with power utilities in
other jurisdictions. Using traditional and new technologies
in heating, cooling, cooking, lighting and transportation, the
team has also made signifi cant progress in the commercial
sector, with professional kitchens, in particular, continuing to
switch to all electric solutions using energy effi cient induction
cooking technology as well as commercial scale, ultra-
effi cient heating and cooling heat pump technology.
As well as improved fi nance packages and a streamlined
customer journey from quotation to installation, the team has
done much work this year to strengthen our relationship with the
trade at large. This has included enhancing the trade section
of our corporate website, promoting electric solutions in trade
merchants and hosting seminars and other trade events in
conjunction with some of the top manufacturers such as Dimplex
and Mitsubishi.
Our new Economy 20 Plus (E20+) tariff, launched last year off
the back of our Smart Metering programme and which offers 24-
hour uninterrupted low price heating with a mix of off-peak rate
and normal rate for approved heating systems, has also proved
a good leverage for fuel switches. Encouraging customers to
use lower cost off-peak heating when supplies from France are
cheaper means we can offer better value while fl attening peak
demand, which is a signifi cant driver of infrastructure costs.
Though we have made progress in the commercial sector,
we still believe there are huge opportunities to reduce both
carbon emissions and costs within the States of Jersey property
portfolio and we continue our efforts to persuade it of the
signifi cant fi nancial and carbon reduction opportunities across
its building stock and its transportation needs. We believe there
is a signifi cant opportunity for the States of Jersey to take a
leadership role in promoting low carbon solutions that are fully
compatible with the States’ approved Energy Plan.
ELECTRIC VEHICLES
CURRENTLY ON JERSEY REGISTER
165
52
8
ENERGY GROWTH
CHIEF EXECUTIVE’S REVIEW
New build
Electricity remains the fi rst choice for
developers seeking energy effi cient building
designs. Building standards today mean
little energy is needed for heating so most
of the opportunity is in general light and
power and cooling applications. We have
maintained our position with over 95% of
new build choosing effi cient electric solutions
for heating and cooling.
Electric transportation
There were a total of 271 all-electric
vehicles registered in Jersey at year end,
up from last year’s total of 215. Advances
in technology and the increased range of
models from all major car manufacturers
are encouraging more drivers to make the
switch. Though uptake in private ownership
is still slow without the purchase incentives
we see in other jurisdictions, more and more
commercial businesses are realising the
environmental and fi nancial advantages of
electrifying their transport.
Jersey Post has continued the de-
carbonisation of its 110-vehicle fl eet
following the success of last year’s trial
of 15 Nissan ENV200s which Jersey
Electricity helped to facilitate. Jersey Post
this year added a further 15 ENV200s
when their diesel predecessors came out
of warranty. We have also seen several
smaller businesses start the move to electric
as refl ected in the increased number of vans
registered from 29 to 52.
As the gap in price between electric and
traditional vehicles narrows and an increasing
choice of models become available, we hope
to see continued growth in this area. Given the
commitments of the major vehicle marques and
an industry move away from diesel, we expect
choice and demand for electric vehicles to
increase signifi cantly over the next few years.
Jersey Electricity has already helped reduce
the Island’s carbon emissions by over a third in
the last three decades and with transportation
comprising around a third of current total
emissions, uptake of electric vehicles could
have a signifi cant favourable impact on carbon
emissions.
1
5
4
M
W
-
2
6
J
A
N
2
0
1
7
9
.
3
0
P
M
15
39
TOTAL
271
AS AT
30 SEPT 2017
9
Energy usage
Source: UK Energy Saving Trust
MAINTAINING AFFORDABLE
ELECTRICITY AND PRICE STABILITY
tariffs. Our new Economy 20 Plus (E20+) tariff is now
in its second year and this 24-hour, uninterrupted
heating tariff offering a mix of off-peak rate and normal
rate for approved heating systems, is proving popular
with customers and supports our fuel switch strategy.
This year over 370 new domestic customers joined our
discounted space and water heating tariffs bringing
the total number of customers now on our off-peak
tariffs to 16,862. As part of our on-going strategy, we
continue to explore innovative tariffs that work for new
technology applications and customer segments.
viding 4 0 % o f
o
r
P
J ersey’s non-tr
a
n
s
p
o
r
t
e
n
e
r
g
y
Providing affordable electricity is the single most important factor
to our customers in the provision of our service and I am pleased
we have been able to maintain our tariffs at the same level since
April 2014.
This is a particularly important achievement given the scale
of our investment in infrastructure over the last fi ve years and
when compared with the UK that has seen the ‘Big Six’ increase
retail electricity prices by an average of 14% in 2017 alone. At
year end, our standard domestic tariff was 14% below the UK
average benchmark levels and 15% below the EU average –
outperforming our target of keeping within +/-10% of the EU15.
In May, we renegotiated our supply agreement with EDF,
extending our importation framework by a further fi ve years from
2022 to 2027 to help maintain a stable importation regime over
a potentially uncertain Brexit period which has already seen
Sterling deteriorate against most currencies, including the Euro,
the currency in which we procure from France.
This agreement combines a fi xed price component with the
ability to price fi x future purchases over a rolling three-year
period ahead based on a market related mechanism linked to
the European Energy Exchange (EEX). This ‘hedging’ on power
and foreign exchange enables us to provide our customers with a
degree of near-term certainty in the volatile worlds of the energy
and foreign exchange markets.
While striving to ensure our main tariff is competitive, we also
invest in developing more innovative, customer focused heating
10
ENSURING SECURITY AND RELIABILITY OF SUPPLY
CHIEF EXECUTIVE’S REVIEW
SUPPLY SECURITY STANDARD
Jersey Electricity’s system is
designed to meet an ‘adapted
N-1 security standard’
as follows:
• 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
*Source: Ofgem RIIO ED1
Annual Report 2015-16
ENSURING SECURITY AND
RELIABILITY OF SUPPLY
Supply security is rated as the second most
important element of our service by our
customers behind price stability. It is also
crucial to our reputation as an essential service
utility company and we invest heavily in
excelling in this area.
We measure our reliability in Customer Minutes
Lost (CMLs). This is the average minutes of
service disconnection time per customer in a
year. This year our CMLs were just eight. This
is around ten times better than the ‘Big Six’
UK electricity distributers which in 2015-2016
averaged 74 CMLs.*
a record demand of 161MW in February
2012, our margin is around 20% even without
taking account of our on-Island generation
assets at La Collette Power Station and
Queen’s Road.
We have enhanced security this year with the
commissioning of the ‘black start’ 5.5MW
Diesel 5 Sulzer generator at La Collette and
we have also carried out further works on the
Channel Islands Electricity Grid (CIEG) System
Integrity Protection Scheme (SIPS), which
provides cover and balance to the transmission
network at times of stress.
Our supply margin (plant capacity v peak
demand), an important consideration for
supply security, is also greater than the UK’s
which aims for a margin of around 10% above
peak demand. Here, with three supply links to
France, across two diverse routes, giving us
access to 190MW of imported power against
We work to an adapted ‘N minus 1’ standard.
This means, we seek to maintain supplies
during the failure of the largest component
in the system (see panel) and we strive to
minimise the risk of such an asset failure and
we ensure we are well prepared to restore
supplies quickly when a failure does occur.
11
616 GWh
Imported from EDF
Hydro 36% Nuclear 64%
39 GWh
Generated by EfW plant
10 GWh
JE locally generated
12
ENSURING SECURITY AND RELIABILITY OF SUPPLY
CHIEF EXECUTIVE’S REVIEW
ELECTRICITY SOURCES
2016/2017 IN %
+0.3%
EfW
0.6%
2.6%
5.2%
3.9%
4.9%
4.6%
5.5%
5.8%
+1%
Import
93.5%
95.6%
92.3%
75.4%
80.2%
94.0%
91.6%
92.6%
YEAR
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
2015-16
2016-17
JE
5.9%
1.8%
2.5%
20.7%
14.9%
1.4%
2.9%
1.5%
-1.4%
Generation
Despite the successful integration into our transmission network
of our 100MW Normandie 1 third French undersea link,
our investment in on-Island generation assets - and their
maintenance - continued this year. We completed the £2m
project began in 2016 to add a 5.5MW Sulzer Diesel 5
generator to our existing four 11MW Sulzers at La Collette
Power Station. This latest addition to our standby generation
plant has a ‘black start’ capability and uses air driven and on-
engine pumps for auxiliary systems and will restore full supplies
to the Power Station without the need for electrical power to
energise the start-up in the unlikely event of complete blackout.
The reconditioned, 78-tonne engine was sourced by Swiss
main contractors MIE from Lisbon, Portugal. It is an eight-
cylinder version of our four existing 11MW Sulzers and was
installed by Madeiran sub-contractors Vapour Ilhas and UK
based Gynnwood Electrical contractors who installed two of
the existing Sulzers in 2012.
Since its arrival in March 2016, 350 tonnes of concrete that
formed the bed for one of the original GEC 30MW Steam
Turbines, installed in 1965 and scrapped in 2011, were
removed and recycled, and a new bed laid for the Sulzer. This
was carried out by Geomarine during a 12-hour continuous
pour when 426 tonnes of new concrete was laid.
In addition, six tonnes of reinforcing steel and almost four
tonnes of post tensioning bars were used.
After a complete refurbishment, Diesel 5 was successfully
started for the fi rst time in February and fully commissioned in
June following a 100-hour endurance run. As well as a vital
back-up asset, Diesel 5 also enables us to meet our published
Security of Supply Standard by adding another 5.5MW
of generation.
Transmission
Our three interconnectors are by far our most valuable
infrastructure assets. On-going investment in maintenance
of this 90kV transmission network is vital to supply security
and 2016/17 has been a busy year with a number of
important activities being performed which necessitated
several carefully planned outages. The Normandie 3 (N3)
regulator at South Hill Switching Station was tapped to
improve load sharing across all three submarine cables. N3
was also switched off for a period in May to allow us to carry
out further improvements to the Channel Islands Electricity
Grid (CIEG) System Integrity Protection System (SIPS), started
last year. In addition, GJ1, the cable between Jersey and
Guernsey, was switched off for 19 days to allow a repaired
regulator to be reinstalled at Barkers Quarry substation,
Guernsey. In parallel with this work, two lengths of the GJ1
cable that had previously been repaired were reburied in the
seabed.
Normandie 2 (N2) was switched out for six weeks to allow
planned replacement of the Protection and Control to take
place which had reached the end of its useful life. At the
same time, reburying work was undertaken on the N2 circuit
where the protective layer of cement bound sand had become
partially exposed on the beach at Surville in France.
As part of our ongoing asset replacement programme, we
replaced our Supervisory Control and Data Acquisition
(SCADA) system which we use to monitor, operate and
control the 90kV network to bring it up to the latest standards.
Improvements in our testing regime also revealed an issue
with the insulation of the switchgear at our Queen’s Road
90kV substation which was successfully resolved by our
own teams.
13
Distribution
We have made excellent progress on our biggest infrastructure
investment project of the year, the new £17m St Helier West primary
substation. After protracted investigations of the site in a former
coastal quarry throughout 2015, local fi rm Jayen Ltd completed
the highly complex civil works in September 2017 and the site was
handed over to French specialist contractors Engie INEO to begin
the build which is expected to take a year.
This is the fourth time we have
used Engie INEO on such a project
following Rue des Pres and Western
Primary Substations and South Hill
Switching Station. On the mainland,
substations of this size would normally be built outdoors. These
installations are not aesthetically pleasing, plus, wind-borne salt
contamination can be a problem on islands. The Engie INEO design
uses simple air insulated components integrated into the structure
of the building. Crucially, using this technology allows Jersey
Electricity to carry out its own maintenance and repairs without
the expense and delay in using off-Island assistance in the event
of plant failure. The use of a building also means an aesthetically
pleasing appearance can be achieved that better blends into the
environment.
We acquired the 10,000 sq ft, steeply sloping site from the Parish of
St Helier in September 2014. Once a quarry dating back over 100
years, it is a relatively small site resulting in considerable constraints
on design and subsequent construction works. Over 27,000 tonnes
of material, including 5,000 tonnes of rock, were removed during
excavations which reached over 20m deep at the rear of the site.
A retaining wall was then constructed to form and protect the
site. The area in front of the wall was piled and a concrete slab
formed to accommodate the substation building. When fi nished,
the façade and retaining wall will be clad in granite to blend into
the surrounding landscape and a public viewing platform created
overlooking St Aubin’s Bay looking south of the substation.
Once in service, late next year, the new substation will give relief
to around 70-80% of St Helier’s network and will provide future
proofi ng to meet the increasing demand for electricity. Landscaping
around the facility is expected to be complete in early 2019.
14
Apr 2 0 1 4
ENSURING SECURITY AND RELIABILITY OF SUPPLY
CHIEF EXECUTIVE’S REVIEW
Signing the contract with
Engie INEO
This year we installed around
35km of new cable, six new
substations and 660 new
services. We also refurbished
18 substations and
maintained 159 substations
and 10km of overhead line.
Substations on the network
now total 780.
St Helier West
Oct 2017
Jan 2 0 1 6
Apr 2 0 1 6
Oct 2 0 1 6
BEFORE
Queens Road
Q
Q
Queens Road
(Primary)
(Primary)
Kensington Place
Kensington Place
AFTER
NEW
St. Helier West
(Primary)
)
NEW
St. Helier West
(Primary)
)
Marina Court
Marina Court
Esplanade
y)
(
(Primary)
Esplanade
(Primary)
y)
(
Queens Road
Q
Q
Queens Road
(Primary)
(Primary)
Kensington Place
Kensington Place
Marina Court
Marina Court
Esplanade
y)
(
(Primary)
Esplanade
(Primary)
y)
(
Bay View
ay View
Bay View
ay View
West Park
WW
WW
West Park
Esplanade
Esplanade
Bay View
ay View
Bay View
ay View
West Park
WW
WW
West Park
Esplanade
Esplanade
Waterfront
Waterfront
Waterfront
Waterfront
15
home/
business
Exisiting cable
Substation
Wireless signal
JE
SMARTSWITCH
Following the signifi cant progress last year, our Smart Metering
programme, SmartSwitch, has continued apace this year. Our
dedicated team of installers working on the roll-out, combined
with our Metering Technicians carrying out ‘business as usual’
meter changes, have now installed Smart-enabled meters in
around 75% of Island homes. At year end 36,000 (2016:
25,000) Smart Meters had been installed across the 12
parishes from a customer base of around 50,000, bringing
multiple benefi ts to both customers and the business.
Our dedicated microsite www.smartthinking.je that provides
customers with all they need to know about Smart Meters went
live in September and the customer facing online portal, Smart
Account, developed for Jersey Electricity by Swiss Post Solutions
(SPS) and which enables us to present consumption profi ling
data to customers, was also launched to the public. Our
Metering Technicians have now also made live 635 Local Data
Collectors (LDCs) on the network.
The new meters are capable of automated control, enabling
swift change of tariff from credit to Pay As You Go (PAYG)
functionality, plus remote reading. As well as avoiding the
cost and inconvenience of Meter Readers visiting premises,
estimated bills and self reads, customers with Smart Meters are
now benefi ting from Post Code Billing. This means they receive
four equal quarterly bills each for a standard 90-day period,
reducing the number of billing queries we receive.
The remaining 25% of meters still to be replaced are generally
The remaining 25% of meters still to be replaced are generally
either PAYG or 3 Phase. The roll-out of both is expected to
either PAYG or 3 Phase. The roll-out of both is expected to
start in March 2018 when the new 3 Phase meter becomes
start in March 2018 when the new 3 Phase meter becomes
available and the technical systems around PAYG have been
available and the technical systems around PAYG have been
fi nalised between Meterlink International Ltd, our remote
fi nalised between Meterlink International Ltd, our remote
communication system provider, Payzone, our transaction
communication system provider, Payzone, our transaction
provider and Jendev, our own in-house software developer.
provider and Jendev, our own in-house software developer.
SmartSwitch is now expected to be completed early in 2019.
SmartSwitch is now expected to be completed early in 2019.
As well as being in line with our strategy to build for a ‘Smart’
As well as being in line with our strategy to build for a ‘Smart’
future, SmartSwitch strengthens our relationships with customers
future, SmartSwitch strengthens our relationships with customers
and provides opportunities to develop new products and
and provides opportunities to develop new products and
services.
16
ENSURING SECURITY AND RELIABILITY OF SUPPLY
CHIEF EXECUTIVE’S REVIEW
Smart Account
Smart Account is an online portal specifi cally
designed for Jersey Electricity customers by
Swiss Post Solutions to run alongside Smart
Meters. It provides our customers with more
information on their electricity usage than
ever before. A customer’s unique account
number is a combination of their Customer
and Premise Numbers.
As well as receiving and storing their bills in
Smart Account, customers can opt for half-
hourly profi ling data collection enabling them
to review and compare their usage daily,
weekly and monthly and with that of similar
properties in the form of graphs and charts.
We hope this extra information will help our
customers to better understand and manage
their energy usage and facilitate lower
consumption and lower bill sizes.
36,000
SMART METERS
INSTALLED SO FAR
17
PROTECTING THE ENVIRONMENT
AND CONSERVING RESOURCES
JERSEY ELECTRICITY
35G CO2e /KWH
JERSEY LPG
241G CO2e /KWH*
298G CO2e /KWH*
JERSEY HEATING OIL
UK ELECTRICITY
352G CO2e /KWH**
*Building Bye-Laws (Jersey) Technical Guidance Document 11.1B 2016
** Department for Business, Energy and Industrial Strategy
Greenhouse Gas Reporting - Conversion Factors 2017
18
ENVIRONMENT | RENEWABLES
CHIEF EXECUTIVE’S REVIEW
As a signatory to the Kyoto Protocol, adopted in 1997 and
entered into force in 2005, Jersey committed to reducing its
carbon emissions. The States of Jersey Energy Plan ‘Pathway
2050’, approved in 2014, set a target of an 80% reduction on
1990 levels by 2050. Jersey Electricity’s importation strategy
has helped the Island make significant strides towards that
goal. Our achievement was acknowledged in this year’s States
document ‘Future Jersey 2017-2037’ which stated: ‘Between
1990 and 2014 Jersey achieved a 36% reduction in emissions
(measured in tonnes of carbon dioxide equivalent, CO2e),
mainly due to the one-off switch from local electricity production
to importation from France.’
We are proud of the progress we have made on our
decarbonisation agenda which continued last year with the
installation of our £30m Normandie 1(N1) cable. This gives
us three live links to France and provides the Channel Islands
with access to 245MW of low carbon imported power of
which Jersey has 190MW enabling us to meet the Island’s full
power requirements with low carbon supplies even during the
winter peak. Our supply agreement with EDF guarantees that
our imports are from certified low carbon sources, and in May
this year we extended our importation framework by five years
from 2022 to 2027. Using the DEFRA Greenhouse Gas (GHG)
Reporting Guidelines in addition to adopting the principles of
GHG Protocol for Electricity Emissions Reporting, this has meant
that we have delivered power to customers for the financial
year 2016/17 at a level of 35g CO2e/kWh, more than10
times cleaner than UK’s electricity system, calculated at 352g
CO2e/kWh. Our five-year average is 103g CO2e/kWh and
we expect further reductions going forward.
We also encourage our customers to become more energy
efficient through various self-help measures coupled with
advisory services and we aim to lead from the front in this
area. Following the installation of LED lighting in the La Collette
Power Station offices, we have now completed the installation
in the main Powerhouse offices which are also supplemented
by our own photovoltaic array. Next year we plan to invest
£1.2m in a new, more energy efficient heating, ventilation and
air conditioning system and expand our solar installation. We
have also introduced companywide environmental awareness
training and are revising and improving all our systems in
preparation of our next British Safety Council (BSC) Five Star
Environmental Audit in 2018.
Renewables
Although Jersey Electricity has in effect already decarbonised
its electricity system and has already secured access to
hydro-electric electricity from EDF in France under our
long-term contract, it has for some years been exploring
commercial opportunities to develop renewable energy in its
home territory. Given the relatively high cost of production
from renewable sources and low priced electricity supplied
by the Company, this has proven challenging to achieve
without a costly subsidy that would have to be borne by
other customers, in the form of higher prices, or tax-payers, if
funded by the States of Jersey.
Despite the strong currents and high tidal range, large
scale tidal power generation requires significant capital
and carries a high development risk. Large scale offshore
wind power is closer to economic viability although it still
requires subsidy. Our research has revealed that European
subsidies may be accessible by exporting renewable
electricity into the European power market but this is unlikely
to be straightforward. Onshore wind is also difficult due
to planning and noise issues and land price constraints. A
smaller, localised test development may be possible in the
industrial zone at La Collette. We have constructed proposals
to work with the States of Jersey in many of these areas but all
require some up-front investment in establishing a regulatory
and consenting regime that is necessary to attract the inward
investment needed. Despite Jersey Electricity being willing to
provide some level of financial support, such schemes have
proven difficult for the States to commit to given the current
public finances situation.
With relatively good daylight levels and what we believe
could be a sympathetic planning approach, we believe large
scale, ground based solar PV is closer to grid parity and
has some potential in Jersey. We have explored how this
technology can be used in a way that might allow Jersey to
at least partially generate some of its own power, minimising
the risk of subsidy and allowing the benefits to be socialised
across all islanders. We are close to launching a scheme that
we believe would allow this in an economically viable and
socially desirable manner.
Jersey Electricity remains committed to connecting smaller
scale generators to its network as it has done for many years
– including embedded renewable generators. Our general
view, however, which is consistent with our ‘user pays for an
efficient service’ philosophy, is that this should be done on
‘fair’ terms that allow the Company to apply a charge for the
grid backup services enjoyed by these commercial facilities.
Without levying this charge, other customers – including many
from low income social groups who do not have the funding,
type of property or knowledge – would pick up an increasing
proportion of grid costs in the form of higher retail prices and
in a manner that is socially inequitable. Indeed, this is already
happening in many jurisdictions, leading to higher retail
prices.
We previously reviewed our existing Standby Charges for
all smaller scale generators that rely on backup power from
the grid. In November 2016, we gave one year’s notice of
our intention to extend Standby Charges. This was further
extended by five months following a Proposition lodged in the
States by a Deputy. Our proposals are now under review by
a third party adviser to the States. If the Company is required
to provide free backup services, then this is likely to lead to
higher electricity prices for other, non-generating customers.
19
CUSTOMER SERVICE
STANDARDS
As the sole supplier of over a third of the Island’s energy
requirements, Jersey Electricity has a huge responsibility to
customers for all the services it provides and in our interactions
dealing with their day-to-day needs. We seek to put our
customers at the heart of everything we do and constantly strive
to exceed their expectations.
To gain insights into those expectations we have engaged
with our customers in numerous ways in recent years to obtain
essential feedback on our services and products as well as
sounding out their views and opinions on future energy related
issues. We believe that demonstrating that we meet customers’
needs is one of the most important ways of protecting our
monopoly franchise in the community.
Regularly garnering customers’ feedback is not only important
for measuring our performance against their expectations but
also provides vital insights for our business strategy.
We have four main channels for capturing feedback
• Our annual customer surveys, conducted by an
independent analytics company
• Customer focus groups, which seek to tease out insights on
specific issues and opportunities
• Web-based customer feedback forms that feed into and
are recorded on our call logging software Microsoft
Dynamics Customer Relationship Management System
(CRM)
• Letters, emails and phone calls into our Customer Care
Centre which are also logged and recorded on CRM
• Feedback/ complaints cards used by all customer facing
teams
By far the most commonly-used channel on a day-to-day basis
is provided via email and phone calls to Customer Care.
Now in its third year, our CRM system logs and helps us track
every customer interaction against our Customer Charter and
Standards of Service.
Customer Care receive on average 1,300 calls or emails
and around 250 customer visits each week. The vast majority
of these are ‘business as usual’ interactions such as change
of tenancy and payments and therefore do not need to be
logged on CRM. Approximately 350 CRM cases related to our
Customer Charter and Standards of Service are raised each
month, including complaints and compliments. Complaints
are dealt with by the appropriate department and staff are
responsible for resolving the case in the time frame set out in
Standard of Service 5.
Our annual customer surveys, conducted by an external
specialist analytics company Island Global Research (IGR),
enable us to benchmark our overall ‘customer offer’ year-on-
year. This provides the Company with key insights for future
planning. Customers are asked to ‘weight’ out of 100 the
importance of four electricity supply functions then rate our
performance against four elements as follows:
• Running costs and price stability
• Security and quality of supply
• Customer and technical service support
• Environmental performance
I am pleased to report that our ratings showed improvement
on 2016 in all these areas, including the most important
attribute of our service, ‘running costs and price stability’ which
customers ‘weighted’ at 37/100 in level of importance. As we
have held prices for almost four years, it is not surprising our
rating in this area increased slightly from 54% to 58%.
Price is followed by ‘security and quality of supply’ at 27/100
in degree of importance. And again customer satisfaction
levels improved from 82% to 85%. Environmental performance
is gradually becoming more important, with customers giving it
19/100 and I am pleased to see our actual rating going up in
this area to 68% compared with 54% in 2011 (2016: 64%).
Finally, according to our customers, ‘customer/technical
support’ remains the least important (17/100) to respondents
probably because of the limited interactions that the vast
majority of households have with the Company during the
year. Our rating however also showed improvement from 72%
to 76%.
When combined into an overall average rating over the four
functions, our rating for 2016/17 was 70%, a slight increase
on last year’s 69%. IGR considers any score above 70% as
‘excellent’.
As in previous years, we also seek an ‘overall customer service’
rating that 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
Although slightly down on last year, this again was rated
excellent at 74% (2016: 77%). This dip could again be
explained by the limited number of households who experience
the direct contact/ support being measured. Going forward,
we have plans to further enhance how we assess our customer
performance using new tools and techniques. We are
delighted, however, to have continued the progress we have
made in recent years. We are advised by research agencies
that Jersey Electricity scores extremely well compared with other
utilities and across other sectors.
20
CUSTOMER SERVICE STANDARDS
CHIEF EXECUTIVE’S REVIEW
“ We have improved our
rating in the four electricity
supply functions.”
One of our six core Values
is: Customer focus -
‘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’.
2017
70%
2016
69%
2015
67%
2014
67%
2013
66%
2012
65%
2011
66%
Previous years have been restated due to a change in the underlying
calculation methodology that takes a total overall weighted rating
from all four electricity supply function ratings.
21
Powerhouse.je
Our retail business, the Powerhouse and its online arm
powerhouse.je, delivered its best financial result ever
continuing a period of year-on-year profit growth since
2014. Revenues were up 9% from £11.9m to £13.0m,
taking the business from a loss of £0.1m in 2014 to a profit
of £0.7m this year. This is a significant achievement given
the intense competition in the local marketplace and from
online UK retailers.
After an intense period of restructure and reinvestment
the last two years have provided an opportunity for
consolidation and further enhancement. We chose to exit the
lower margin, bulky, toy category preferring instead to build
out our home electricals and technology offering which has a
better fit with our strategy. We have continued to expand the
range of heating products and smart technology, including
subcategories ‘wearables’ and ‘rideables’ such as electric
cycles. We have also seen some encouraging improvements
in trading levels in our St Helier town store, where we have
revised our proposition to focus more on high tech consumer
electricals, including TVs in which we are particularly
competitively priced.
This year we have started to use technology extensively in
the way we run the business - assisting us with category
management, ranging, pricing and margin analysis. Also
crucial to our success, we have maintained our investment in
people development and staff training by introducing a new
training programme aimed at further enhancing customer
service skills and product knowledge among our key
customer-facing staff. Whilst customer feedback on pricing
is very positive, we believe staff engagement and customer
service remain critical to differentiating our offer in the local
market and in particular against the UK online threat.
We are continuing to embrace significant new opportunities
in electrical retailing in an increasingly ‘smart’ future and rise
of the ‘interconnected’ home.
22
COMMERCIAL
CHIEF EXECUTIVE’S REVIEW
Jendev
Jendev, our in-house software developer has maintained its
position as a strategically important asset in the Group’s
portfolio serving external clients as well as Jersey Electricity
with high value enterprise system consultancy services.
A Microsoft® partner in Dynamics NAVTM, Jendev specialises
in software development and confi guration for the utility
industry with a focus on billing. First established in 1998,
the business is now well-placed to target sustainable growth
through its fl agship product ‘Jenworks Billing’.
This year, this small team of highly experienced utility
industry developers successfully led the implementation of
the biggest IT upgrade in Jersey Electricity in over a decade.
In addition, Jendev continued to support a number of other
business critical projects including the Smart Metering
project, SmartSwitch, a project with enormous implication for
accurate and timely billing and for customer service.
The NAV project involved a full system upgrade to the latest
version of Microsoft Dynamics NAVTM, the enterprise system
at the heart of our business, being a single, central data
repository and management system serving the majority of
our business units.
The project delivered new or enhanced functionality in many
areas of the business including Energy, JEBS, the Powerhouse
and Procurement. The upgraded version of Microsoft
Dynamics NAVTM was launched successfully and with a
seamless customer transition. Something of a rarity in the
utility industry where upgraded billing systems can be fraught
with customer issues and the threat of reputational harm.
The latest iteration of NAV is easier to use and more
fl exible than before with signifi cantly enhanced reporting
and integration capabilities. The application provides
the foundation for further process engineering, effi ciency
improvement and enhanced data management. It can also
be easily and fl exibly developed to take advantage of new
opportunities right across the business.
Owing to the diversity of Jersey Electricity’s business units
and activities, the upgrade was complex and involved
a sustained and broad commitment from all parts of the
business. The scale of the project was signifi cant involving
over 200 users and 55 super user/trainers. Effective
teamwork was a key enabler of the project’s success and
was a credit to all involved.
The project was an important milestone in Jendev’s business
renewal programme.
23
Commercial tenants leasing parts of the Powerhouse building
are SportsDirect, which shares the ground floor with our own
retail business Powerhouse.je, and telecoms operator Sure,
which occupies the middle floor. We also lease mobile aerial
sites and fibre optics to telecoms operators.
Revenue in the Property business rose £0.1m to £2.2m
due to higher income from inflationary rental increases
from residential properties and an additional space taken
by Sure. This was offset by higher maintenance costs
resulting in profits remaining the same as last year at £1.6m.
Our investment property portfolio was revalued upwards
marginally this year to £20.2m by the external consultants
who review the position annually.
The business continues to support our Energy Solutions team
in its load growth strategy by installing electric heating
systems for customers switching from gas and oil-fired
systems. The Maintenance and Services team continues to
thrive and this year launched a domestic home maintenance
proposition, CosyCare, providing a three-tiered maintenance
and repair service for home electric heating systems.
JEBS operates in a very competitive marketplace where
competition for skilled staff is as tough as winning customer
contracts and I am pleased to see the business continuing to
move toward a more commercial and sustainable footing.
Total revenues including internal sales, at around £5m, are
£1m lower than in 2016 as the previous year was impacted
by one particular large project but profit remained on a par
with last year at £0.1m.
Property
Our Property portfolio includes a B&Q store and Medical
Centre situated on our Powerhouse retail and administration
office site at Queen’s Road as well as 29 private houses
and flats which are rented on the open market. We were
pleased to become the Island’s first ‘Rent Safe’ landlord to
be awarded Five Stars for all our domestic rental properties
under the new States of Jersey Environmental Health
Department’s Rent Safe Scheme. Each of our domestic
dwellings was given its own Five-Star certificate of excellence
following a week-long inspection of every property by
Environmental Health officials. To attain five stars the
scheme states: ‘The property exceeds the minimum Rent Safe
standard and has achieved accreditation through compliance
with legal standards. Energy efficiency measures are also in
place.’
Building Services (JEBS)
JEBS is our contracting and building services business that
provides electrical, mechanical and plumbing installation
and maintenance services, including air-conditioning,
heating and refrigeration, to domestic and commercial
customers. JEBS continues to develop into a more commercial
and customer-focused business unit, delivering trade services
that support the core electricity business. Now with a
Contracts and Operations Manager, working under the
Head of Commercial Services, to improve contract tendering
and delivery, JEBS has built further on last year’s restructuring
foundation by again winning several major contracts in
a highly competitive marketplace. These have included
the electrical, mechanical and air conditioning services
installation at Eaton House, a four-storey office block in
St Helier, and the installation of lighting and air conditioning
at First Tower School. JEBS has also started work on the
refurbishment of La Moye Golf Club clubhouse where the
team is providing all the electrical, plumbing, heating,
ventilation and air conditioning services for this
prestigious project.
The new team, launched last year to provide a wider
range of Amenity Lighting Services, has also had success,
providing the external LED lighting of the car parks of the
Channel Islands Co-operative Society’s Grand Marche at
St Peter and B&Q, St Helier, reducing light pollution and
saving energy.
24
COMMERCIAL
CHIEF EXECUTIVE’S REVIEW
Jersey Energy
Jersey Energy and its Guernsey office, Channel Design
Consultants, provides premium environmental and building
services advisory, detail design and site administration
services to end user clients, architects, the States of
Jersey and Guernsey, Parish Town Halls and developers
– predominantly in the healthcare, retail, commercial and
residential sectors.
As a leading pan-Channel Islands consultancy, the team
is continually developing skill sets, intellectual knowledge
and services offered to meet increasing client expectations.
They have been rewarded with a consistent work stream
of repeat business from satisfied clients and, significantly,
winning high value, long-term contracts. These have
included Jersey Energy winning the new States of Jersey
central administration building, Grainville School Music
School extension, Future Hospital Project Westaway Court
Outpatients/Administration High Rise Tower and Future
Hospital Project Temporary Modular Building Wards.
The Guernsey office has also had a full order book
this year. Its projects have included the refurbishment
of Guernsey Grammar School and fit-out of Dorey
Court Office Development. The construction industry
is particularly active in Jersey and we are hopeful of
continued strong performance into next year, reflecting the
business’s respected and elevated position within the
sector. We are continuing to develop the business by
forming strategic alliances with UK consultancies that
enable Jersey Energy and Channel Design Consultants
to increase their capacity as and when required to
secure bigger commissions on a more cost effective,
flexible basis. We have also been very successful this
year by forming on-Island multi-disciplinary consortiums
to win work with high capital expenditure clients.
Although Jersey Energy is fuel neutral, the business has
successfully broadened Jersey Electricity’s services and
solutions offer into the marketplace and its knowledge
compliments Energy Solutions and JEBS.
Turnover in the year at £0.6m was at a similar level to
2016 and the business remains at a breakeven level.
25
HEALTH
AND SAFETY
Nothing is more important to us than the safety of our staff,
contractors, customers and the public and so I am delighted
to report that we have completed the year without a single
Lost Time Accident (LTA) anywhere in the business. Our proud
record on Health and Safety is testament to the vigilance
of our staff all through the business but in particular our
dedicated Health, Safety and Environment (HSE) team and
our Safety Representatives who do much to help create a
culture for safe working among colleagues, contractors and
the public.
On-going major infrastructure projects involving international
teams of contractors continue to make managing HSE
challenging and higher risk in a business in which many
staff already work in hazardous conditions on a daily basis.
Madeiran contractors have completed the refurbishment of
our Diesel 5 generator at La Collette Power Station and local
civil engineering contractors have now handed over the
site of our new St Helier West primary substation to French
specialists contractors Engie INEO, having completed the
immensely complex civils works on a diffi cult, constrained
piece of land without any HSE issues. Our HSE team,
alongside management at all levels, regularly conducts on-site
inspections to closely monitor all our project teams, raise
inspections to closely monitor all our project teams, raise
awareness of health and safety matters and then discusses
awareness of health and safety matters and then discusses
any fi ndings and learnings.
any fi ndings and learnings.
The appointment of a new Operations Director has brought
The appointment of a new Operations Director has brought
fresh insight and challenge to our HSE programme. He is
fresh insight and challenge to our HSE programme. He is
already building on the solid foundations we have in place
already building on the solid foundations we have in place
in this area by increasing further our focus on proactive
in this area by increasing further our focus on proactive
measures such as enhanced safety plans, site inspections and
measures such as enhanced safety plans, site inspections and
incident investigation and reporting procedures.
incident investigation and reporting procedures.
Our approach to HSE continues to be ‘risk
based’. We seek to address new and revised
legislation and adapt to operational environments. We
ensure staff are fully competent in the work we ask them to
do and they recognise their own limits of competency. They
are also expected to proactively identify hazards through
regular risk assessments and take action to mitigate the risks
associated with those hazards in their day-to-day work.
Various HSE Committees provide governance. This includes a
forum for direct communication between the Chief Executive,
Senior Management and Safety Representatives.
We work with the Health and Safety Inspectorate (HSI) and
this year reiterated a key safety message to the community
with another important radio campaign warning of the
dangers of working near electricity cables and urging
building contractors and DIY enthusiasts to contact us before
they start work to enable us to identify cables around their
building sites and properties. We have also included a
section on electrical safety in the home in a comprehensive
new customer guide to ‘All Things Electric’.
Electricity generation and transmission are hazardous
activities if left unmanaged. Safety is one of our six core
values: ‘We do everything safely and responsibly or not at
values: ‘We do everything safely and responsibly or not at
all – nothing is more important than the safety of the public,
all – nothing is more important than the safety of the public,
our customers and our staff’. My thanks go to everyone for
our customers and our staff’. My thanks go to everyone for
upholding this value by contributing to ensuring that Jersey
upholding this value by contributing to ensuring that Jersey
Electricity and all the people the Company touches stay safe
Electricity and all the people the Company touches stay safe
and healthy.
and healthy.
26
HEALTH AND SAFETY
CHIEF EXECUTIVE’S REVIEW
2013
2015
2014
LOST TIME ACCIDENTS (RIDDOR)
2016 2017
RIDDOR (Reporting of Injuries, Diseases and Dangerous Occurrence Regulations) is the UK standard for reporting
Accidents and Near Misses. In the UK, an LTA is defi ned 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.
DAYS LOST (RIDDOR)
0
2013
39
37
2014
2015
7
2016
0
2017
27
“I am immensely proud
of the hard work and
commitment from all
colleagues...”
SUSTAINABILITY
IN THE COMMUNITY
As a public utility providing a vital service to every household
and business in the Island, Jersey Electricity has a special
‘social responsibility’ that goes beyond the traditional CSR
activities. In fact, we don’t really think of CSR as an initiative
– it is embedded in who we are as a business and transcends
all our activities. It is our purpose and responsibility to
‘sustainably’ serve our community with affordable, secure,
low carbon energy, today and long into the future to enable
quality of life and economic prosperity. As a company with
a long history in the Island we are very much part of the
community we serve, supporting charities, schools, volunteer
groups and our own staff, in fund raising and activities that
benefit worthwhile local causes.
Following the success of last year’s trial Sustainability in the
Community Event that ‘married’ our corporate support for
Jersey Zoo with a staff volunteer day, cleaning and weeding
a moat at the zoo, we formed a similar ‘marriage’ this year
in support of the National Trust for Jersey. By funding the
Trust’s elm tree and hedge planting projects we joined up our
strategic objective of moving customers to paperless ebilling
with corporate sponsorship and another Sustainability in the
Community Event.
A donation of £5 for every customer who switched to ebilling
in autumn 2016/17 funded the Trust’s 80th anniversary
project to plant 80 elms across the Island and helped launch
the Wildlife Hedge Planting Project in which staff themselves
volunteered to plant 300 hawthorns and blackthorns around
a large Trust-owned farm. This successful initiative, which also
earned considerable publicity, brought together volunteers
from Production, Distribution, Finance and Planning.
As is often the case, it doesn’t always take lots of money to
make a difference in the community as our Linesmen showed
with some community spirit of their own in March, salvaging
several telegraph poles, removed as part of our strategy to
move overhead supplies underground for added security, and
delivering them to Jersey Zoo to create aerial pathways for
howler monkeys.
28
Our time and expertise can be a potent force for good and
when combined with corporate financial support, we can
make a huge impact. We are therefore delighted to have
pledged support for the Jersey Cheshire Home Big Build
by funding and carrying out works on a new all-electric
staff block that forms part of improvements to Jersey’s
only residential home for disabled adults. We will also be
enabling Acorn, which provides employment training and
support for people with disabilities and enduring health
conditions, to extend its operation by providing the electrical
works for a new, larger Reuse Centre and Shop.
We continue to recognise and reward others who are
passionate about the environment with our sponsorship of the
Jersey Evening Post-organised Pride of Jersey Environmentalist
Award and Jersey Construction Council’s (JeCC)
Sustainability Award. The former was this year won by Jersey
Beekeepers Association with the Sustainability Award going
to the States Recycling Centre.
As well as supporting many charities at corporate level,
we also support staff in charity events, including this year
the Lions Club Swimarathon, the Dragon Boats Festival for
Jersey Hospice Care, the Silkworth Round Island Extreme
Challenge, the Jersey Marathon, Sand Storm and charity
football matches. One staff initiative this year raised almost
£3,500 for Cystic Fibrosis Channel Islands.
Our Monthly Staff Number Charity Draw, now in its fourth
year, raises funds for staff-nominated charities which this year
included Caring Cooks of Jersey, Channel Islands Air Search,
Jersken Little Angels Home, Jersey Deaf Society, Diabetes
Jersey, British Heart Foundation Appeal and After Breast
Cancer Support Group, the Grace Trust, Eyecan, RNLI,
Age Concern and BeachAbility. Even staff of our
main contractor on the Normandie 1 subsea
cable installation, Dutch company VBMS,
raised 2,500 euros, which Jersey Electricity
matched, to donate £5,000 to St Catherine
RNLI Station as part of a safety initiative
during the project.
I am immensely proud of the hard work and
commitment from all colleagues investing in
charity and community work much of which is
done in staff’s own time.
SUSTAINABILITY IN THE COMMUNITY
CHIEF EXECUTIVE’S REVIEW
29
OUR PEOPLE
Jersey Electricity is a capital intensive, asset driven business,
but it is nothing without its people. To assist with a heavy
programme of activity across the people agenda, we have
this year appointed an experienced HR Director who will build
further on the cultural change programme we have initiated.
As the system develops, we will see the addition of new
modules on Succession Management, Absence Management
and eRecruitment modules made available to employees and
managers to deliver a fully integrated HR system. Functionality
currently available in the system includes:
We have many long-serving, dedicated employees who have
acquired the skills and experience necessary to deliver a fi rst
class service over many years. To meet future challenges we
must invest in our staff to ensure we continue to maintain a
highly skilled, fl exible and dedicated workforce.
This year we have focused on succession which recognises
that over the next 10 years we expect to see almost half of our
workforce retire. This presents a challenge in lost knowledge
and people risk management but equally a huge opportunity
for the talent that remains. It has led to a signifi cant programme
of management training and staff development to give a new
generation the best opportunity for promotion.
We see great opportunity for the business in developing
management capability at all levels. This year we piloted the
HOW TO…Management Development programme, aimed
at providing a consistent approach to management across the
Company. The programme, designed in collaboration with
Cybele Offshore, was trialled with 11 managers to ensure the
topics are suitable and will address the needs of the business.
Making use of 360 degree feedback and psychometric
tools to highlight strengths and development areas of
each participant, the eight-session programme covered
subjects from performance management, team building and
infl uencing to effective presentations and communication. The
second programme began in September.
Throughout the year, the HR team and Talent Manager have
also implemented the fi rst stage of a new HR Enterprise System
– JE Connect . The system, developed with HR software
specialists Cornerstone, is designed to give employees access
to a range of HR processes; including performance appraisals,
learning events, discussion boards and feedback requests.
• Performance objective planning and appraisal
• Ongoing task monitoring and progress tracking
• Enrolment on classroom learning events
• Updating employee training records
• Feedback requests
• Employee ‘bio’ and information regarding skills and
interests
The system will eventually track employee career aspirations
ensuring we can better align development planning to
individual employees and the future needs of the business.
This fi nancial year a number of employees took up
professional qualifi cations, with many completing City &
Guilds certifi cates, Higher National Certifi cates or function-
specifi c qualifi cations such as Marketing or HR qualifi cations.
Completion of professional qualifi cations ensures a depth
of industry-specifi c knowledge as we continue to develop
our employees to support future skills needs and manage
succession.
The new HR System will help us to track these skill sets across
the business and ensure that we maintain the necessary level
of competence across the roles we employ. We will also
offer training and development on a continuing basis through
the portal, allowing employees to seek out and complete the
training they require. Through these innovations, and many
others, we aim to make our colleagues and Jersey Electricity
fi t for the future.
Jersey Electricity has great strengths in its people. Compared
with UK utilities, we have made great progress in developing
a fl exible workforce with a tremendous ‘can do’ attitude.
I would like to offer my thanks to all colleagues who have
worked so hard to get the Company to where it is today.
30
OUR PEOPLE
CHIEF EXECUTIVE’S REVIEW
31
OUTLOOK
32
OUTLOOK
CHIEF EXECUTIVE’S REVIEW
“We have enjoyed the strong
operation of our new Normandie 1
interconnector. This has led to world
class reliability and a near fully
decarbonised system.”
The Company has reached an important stage in its
development. The network is well invested and extremely
well positioned for the future. We have enjoyed the strong
operation of our new Normandie 1 interconnector. This has
led to world class reliability and a near fully decarbonised
system. Crucially, this has been done while keeping
prices stable and competitive when compared with peer
jurisdictions, including large European economies.
Going forward, we look to build resilience in people
succession. Over the next 10 years we will lose almost half
of our talent and experience. This represents a risk due to
the loss of skill and experience, but on the other hand a
great opportunity to further develop our remaining talent, by
building flexible skills, reshaping roles to drive efficiencies
and improvements, coupled with more extensive use of
modern technology. We are investing considerably in talent
development that will give our people the very best possible
opportunities to succeed and perform well for the Company,
ensuring it stays on course for a great future.
Chris Ambler
Chief Executive
13 December 2017
Over the last five years Jersey Electricity has made
considerable progress with its investment programme.
In 2012, the Company faced multiple infrastructure
challenges but by 2017 these have largely been resolved,
with the Company enjoying supplies from three resilient
interconnectors between Jersey and France, which have
themselves benefited from further technical enhancements
during the year. This robust importation system is further
supported by an optimal mix of fast start generation to
support our supply security standard.
Over the next five years, the Company will shift its focus from
‘asset deployment’ to ‘asset optimisation’, enhancing and
extending our services to customers and building on further
demand-side measures such as fuel switching. This is so
important to maintaining unit volumes which, in turn, helps us
to deliver more competitively priced electricity.
We also focus strongly on the potential risks facing our
business. As far as electricity supply is concerned, we
have achieved a strong hedge book that is substantially
secure over the short term but faces some uncertainty over
the longer term with Brexit risk driving a weak Pound/
Euro rate, coupled with some energy price uncertainty in
UK and Europe. In an effort to respond to this and provide
some ‘transitionary’ certainty through the Brexit period, we
extended our contract with EDF for a further five years to
2027. While this framework does not guarantee continued
low prices, it offers ability for the Company to better manage
risk through regular price fixing. This contract also secures
the composition of our electricity from certificated low carbon
sources which is important to maintaining the Island’s strong
carbon position.
The Company faces new risks but also opportunities in the
form of new distributed technology such as solar PV, storage,
heat pump and the smart home/business. We are embracing
these technologies and have developed a strategy that
should allow the Island to benefit from them in a way that
will minimise risk and cost, strengthening the Company but
continuing to provide value for money, comfort and control to
consumers and businesses alike.
33
34
FINANCIAL REVIEW
FINANCIAL REVIEW
Group Financial Results
electricity prices for their customers during 2017 with an average
rise of 14% across the ‘Big 6’. Our last tariff movement was over
Key Financial Information
2017
2016
three years ago by an average 1.5% increase in April 2014.
Revenue
£102.3m £103.4m
Profit before tax pre-exceptional items £13.5m
£13.1m
Profits in our Property division, excluding the impact of investment
property revaluation, at £1.6m, were at the same level as last
Earnings per share pre-exceptional items 34.59p
33.31p
year with a higher rental level offset by increased maintenance
Dividend paid per share
13.80p
13.10p
Final proposed dividend per share
8.40p
8.00p
Net debt
£21.9m
£29.0m
Group revenue for the year to 30 September 2017 at £102.3m
was 1% lower than in the previous financial year. Unit sales volumes
of electricity were marginally behind last year with Energy revenues
at £80.5m against £81.2m in 2016. Turnover in Powerhouse.je,
our retail business, increased by 9% from £11.9m to £13.0m.
Revenue in the Property business rose marginally to £2.2m due
to higher rental income. Revenue from JEBS, our contracting and
building services business, fell £1.1m from levels experienced in
2016 to £4.0m. Turnover in our other businesses fell £0.3m to
£2.6m.
Overall cost of sales decreased by £2.1m to £63.2m mainly
due to a reduction in import costs in our Energy business.
Operating expenses, at £24.4m, rose by £0.9m from their
2016 level with an increase in depreciation charges, post our
continued investment in infrastructure, and IAS 19 pension costs
being the main drivers.
Profit before tax, pre-exceptional items, for the year to 30
September 2017, at £13.5m, increased by 2.5% from £13.1m in
2016. Profit before tax post-exceptional items, fell from £14.8m
last year to £13.5m in 2017 as we had an exceptional credit of
£1.7m in 2016 associated with the release of a rent accrual that
had been accumulated over many years for our La Collette Power
Station site post the settlement of a long-running rent review which
was settled by an arbiter in our favour.
Our Energy business unit sales saw volumes falling 0.6% from
625m to 621m kilowatt hours. Profits in our Energy business
moved up marginally against last year to £11.7m. A lower cost of
sales resulted in a higher margin but this was offset by increased
depreciation and pension costs.
In the financial year we imported 93% of our requirements from
France (2016: 92%) and generated 1% of our electricity on-island
at La Collette Power Station (2016: 3%). Additional staff training
on plant was the main reason for the higher level of generation in
2016 compared to this year. The remaining 6% of our electricity
came from the local Energy from Waste plant being marginally
above that seen in 2016. Customer tariffs have remained at
the same level over the last three years. There were no changes
during 2017 and our prices continue to remain competitive
with other jurisdictions. The UK saw material increases in retail
costs. Our investment property portfolio was marginally revalued
upwards this year to £20.2m by the external consultants who
review the position annually. Our retailing business, Powerhouse.
je, saw continued strong growth with profits moving £0.3m
upwards to £0.7m in 2017. JEBS, our contracting and business
services unit produced a profit of £0.1m on a par with that
achieved in 2016 in a challenging industry with high competition
for staff. Our other business units (Jersey Energy, Jendev and
Jersey Deep Freeze) were £0.2m behind last year as Jersey Deep
Freeze had an exceptional year in 2016 which was not repeated
in 2017.
Interest paid in 2017 was £1.3m against £1.1m in 2016 with a
lower level of average debt, and a higher level of capitalisation of
interest in 2016 associated with the new N1 subsea cable, being
the primary reasons for the rise. The taxation charge at £2.8m
was £0.3m lower than 2016 due mainly to the exceptional credit
last year being a taxable item.
Group earnings per share, pre-exceptional items, rose to
34.59p compared to 33.31p in 2016 due mainly to the increase in
profits. Earnings per share, before adjusting for exceptional items
stood at 37.69p in 2016 whilst there were no exceptional items to
adjust for in 2017.
Dividends paid in the year, net of tax, rose by 5%, from 13.1p
in 2016 to 13.8p in 2017. The proposed final dividend for this
year is 8.4p, a 5% rise on the previous year. Dividend cover, pre-
exceptional items, at 2.5 times was at a similar level to 2016. If
exceptional items are included, dividend cover fell from 2.9 times
last year to 2.5 times in this financial year.
Ordinary Dividends
2017 2016
Dividend paid
- final for previous year
8.00p 7.60p
- interim for current year 5.80p 5.50p
Dividend proposed - final for current year
8.40p 8.00p
Net cash inflow from operating activities at £26.5m was
£1.3m higher than in 2016 with an increase in profit, prior to
IAS 19 pension accounting, being the primary driver. Capital
expenditure, at £15.1m fell from £32.4m last year as most of
the cash in the N1 project was spent in 2016 in advance of the
cable being commissioned during this financial year. Net debt at
the year-end was £21.9m, being £7.1m lower than last year.
35
Cash Flows
of decisions being made on customer tariffs. A ten year power
purchase agreement with EDF, which commenced in 2013, was
Summary cash flow data
2017
2016
extended by a further five years to 2027 during this financial
Net cash inflow from
operating activities
Capital expenditure
£26.5m
£25.2m
and financial investment
£(15.1)m
£(32.4)m
Dividends
£(4.3)m
£(4.1)m
year. This 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 Risk Management Committee exists,
Payment for foreign exchange option
£ -
£(0.2)m
consisting of members from Jersey Electricity, Guernsey Electricity
Decrease/(Increase) in net debt
£7.1m
£(11.5)m
and an independent energy market adviser and follows
guidelines approved by the Board.
Treasury matters and hedging
policies
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.
As a substantial proportion of the cost base relates to the
importation of power from Europe, which is contractually
denominated in 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 electricity
purchases during the financial year, as a result of the hedging
program, was 1.24 €/£. The average applicable spot rate
during this financial year was 1.15 €/£, having fallen from the
average level of €1.28 in 2016 with the UK decision to leave the
EU continuing to bring volatility to foreign exchange markets.
In addition, we also materially hedge any foreign exchange
exposure attributable to capital expenditure once planning
consents and firm pricing is known and the commitment is made
to proceed with the 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.
In the last financial year Jersey Electricity imported 93% of
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
36
Defined benefit pension scheme
arrangements
As at 30 September 2017 the scheme deficit, under IAS 19
“Employee Benefits”, was £3.4m, net of deferred tax, compared
with a deficit of £9.2m at 30 September 2016. Scheme liabilities
decreased 4% from £139.2m to £133.5m since the last year end
with the discount rate assumption, which heavily influences the
calculation of liabilities, rising from 2.3% in 2016 to 2.7% in 2017
to reflect sentiments in prevailing financial markets. In addition
scheme assets rose 1% from £127.8m to £129.3m in the same
period.
Our defined benefits pension scheme is an area of risk that
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 the discount rate applied to the liabilities had been
either 0.5% lower or higher than the 2.7% under IAS 19 for 2017,
the net deficit of £3.4m would have risen to around £13m, or
moved to a surplus of £5m, respectively. In a bid to mitigate the
impact of movements in interest rates and inflation the trustees of
the scheme have recently adopted a Liability Driven Investment
(LDI) approach with the goal of reducing funding volatility. It does
this by reducing the risk that asset and liability values change at
different rates, or even move in different directions.
The last triennial actuarial valuation as at 31 December 2015
resulted in a surplus of £6.9m. Unlike most UK schemes, the
Jersey Electricity pension scheme is not funded to pay mandatory
annual rises on retirement. In 2016 the Pension Scheme Trustees
recommended an ex-gratia award be made to pensioners in light
of the surplus and the Board approved this recommendation. The
capital cost of this 1.5% rise to pensions in service was £0.7m and
was paid by the Scheme but generated a £0.7m charge against
the income statement of the Company in 2016. No such award
was granted during the 2017 financial year. The contribution rate
by Jersey Electricity was maintained at the previous rate of 20.6%
FINANCIAL REVIEW
FINANCIAL REVIEW
of pensionable salaries. Employees continue to contribute an
Our largest shareholder, the States of Jersey also owns holdings
additional 6% to the pension scheme. The final salary scheme was
in other utilities in Jersey. It holds 100% of JT Group, Ports of
closed to new members in 2013, with new employees, since that
Jersey, Andium Homes and Jersey Post, as well as around 75%
time, being offered defined contribution pension arrangements.
of Jersey Water. The total direct cash return to the States of Jersey
The next triennial actuarial valuation of the defined benefit scheme
from Jersey Electricity in the last year was £7.9m (2016: £7.9m).
has an effective date of 31 December 2018.
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 Limited
owns 5.3m (46%) of our ‘A’ Ordinary shares representing 18%
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, and a
fund, residing largely in the Channel Islands. During the year the
ordinary dividend paid increased by 5% from 13.10p net of tax to
13.80p. The proposed final dividend for 2017, at 8.40p, is a 5%
increase on last year and consistent with the underlying dividend
pattern in recent years and with our stated policy to aim to deliver
sustained real growth in the medium-term. The chart below shows
the evolution of dividend payments over the last 15 years.
Dividend paid per ordinary share 2002-2017
e
r
a
h
s
r
e
p
e
c
n
e
p
16
14
12
10
8
6
4
2
0
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
The share price at 30 September 2017 was £4.53 against
£4.25 at the 2016 year end. This gives a market capitalisation
of £139m as at 30 September 2017 compared with a balance
sheet net assets position of £176m. However the illiquidity of our
shares, due mainly to having one large majority shareholder,
A relatively small amount of corporation tax was paid in 2016
and 2017 due to capital allowances associated with our recent
heavy investment spend in infrastructure.
Ordinary dividend
2017
2016
£2.6m
£2.5m
Goods and Services Tax (GST)
£4.0m
£4.1m
Corporation tax
£0.4m
£0.4m
Social Security - employers contribution
£0.9m
£0.9m
£7.9m
£7.9m
The Company regularly communicates with its largest
shareholders and details of discussions, including any concerns
are reported to the Board. The Chairman meets once or twice
a year with the States of Jersey, and ensures there is a direct
communication between the non-Executives and our largest
shareholder.
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 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.
combined with an overall small number in circulation, constrains
The management team has an established risk management
the ability of the management team to influence the share price.
framework which is designed to identify, assess and help
However we use Edison (an investment research firm) to produce
manage the key risks. This framework also assists in developing
regular research on our performance to aid the marketing of
risk mitigation activities and making assessments of their
our shares to a wider body of potential investors in the quest to
effectiveness. In its maintenance of the Group’s Risk Register,
improve our longer-term liquidity. The chart below shows the
each business unit, together with the executive management
trending of our listed share price over the last 15 years.
‘A’ Ordinary share price movements 2002-2017
e
r
a
h
s
r
e
p
£
5
4.5
4
3.5
3
2.5
2
1.5
1
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
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 and Risk Committee and Board.
The output from this exercise forms the basis of the key
principal risks.
37
Other key features of our system of risk management, which
The risks listed do not comprise all risks faced by the Group
have been in place throughout the financial year, include:
and are not set out in any order of priority. Additional risks not
• Regular business and financial reviews by the Executive team
presently known to management, or currently deemed to be less
and the Board;
material, may also have an adverse effect on the business.
• 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
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.
As noted in the Annual Report last year we continue to maintain
a watching brief on Brexit developments. Although Jersey is
not in the EU, the UK decision to exit has created a level of
uncertainty for the Island. The most material individual trading
relationship we have is our electricity importation arrangement
with EDF in France. We received confirmation in 2016 that this
long-term contractual agreement would not be impacted and
that is still our understanding. In addition, we extended the
current arrangements with EDF by a further five years, during
2017, to the end of 2027.
Risk
Description and possible impact
Mitigation activities
Regulatory / Political or Legislative change
Regulatory
Political
Not acting in line with ‘expectations of
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.
Ensure transparency of objectives and regular communication with key stakeholders.
Benchmark ourselves against comparable Key Performance Indicators with other
jurisdictions (e.g. Tariffs, Customer Minutes Lost, CO2 emissions, Lost Time Accidents).
Unfavourable political and/or legislative
developments which cause a significant
change to the operation of, or prospects for,
the business.
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.
Major capital project management
Project
Unsuccessful delivery of our major projects
resulting in inability to achieve overall project
objectives and/or additional costs or delays.
Project milestones, costs and risks are recorded and monitored and regular
progress updates issued to both management and the Board, including plans to
address any issues.
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 and where it can be cost effective.
Effective monitoring and maintenance of the plant/assets.
Financial
Reduction in unit sales of electricity due to,
for example, energy efficiency or emerging
disruptive technologies and the corresponding
impact on the competitiveness of electricity in
the heating marketplace.
In principle the ‘user pays’ model implies that if unit sales of electricity fell then
Jersey Electricity would raise tariffs to retain our target return on assets. However
one of our prime defences to offset an expected continued focus on energy
efficiency is to migrate existing customers who use gas/oil as their primary
heating source to all-electric solutions. A dedicated team work on initiatives in this
area and maintain a watching brief on developing technologies.
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.
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 including major
emergency, incident or loss of electricity
supplies to customers.
The Board regularly monitors the latest position regarding the Scheme and the
impact that it is having on the Company. The Trustees have recently implemented
an LDI strategy to reduce the exposure to movements in the value of pension
liabilities.
The Defined Benefit scheme was closed to new members in 2013 and a triennial
valuation formally reports on performance and any required funding actions are
instigated based on such results.
Power price and foreign exchange are hedged in accordance with the agreed
strategies which are themselves reviewed and approved by the Board on a
periodic basis.
A Security of Supply standard has been developed and published and we seek to
design the system to meet those standards.
A programme of maintenance is applied to optimise the life of assets.
Use of a comprehensive business continuity planning process including periodic
testing under various 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.
38
FINANCIAL REVIEW
FINANCIAL REVIEW
Asset & Plant
Management
Supply Chain
Failure of ageing metering infrastructure.
The SmartSwitch project will result in a smarter more modern metering solution
replacing legacy systems. As at 30 September 2017 around 75% of our customers
had such new meters installed. Contingency plans are under continuous
development to enable the Company to mitigate the failure of the key systems.
Impact on ability to generate due to
availability, storage and transportation of
heavy fuel oil.
Programme was completed during this year to ensure all fuel tank storage
facilities were refurbished. Contract in place with Esso for supply of fuel to
31 December 2018.
Health, Safety & Environment
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 Health, Safety and Environment team has been resourced to put in place
standards and to monitor performance against those standards. A proactive safety
culture has been nurtured throughout the organisation supported by a safety
management structure, Safety Representatives, programmes of site inspections,
regular training and induction amongst other areas.
Use of British Safety Council for external benchmarking.
People / Succession Planning
People
Cyber Security
Catastrophic
breach of our
systems
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 half of the current work-force is
anticipated to retire from the business in the
next 10 years.
We have developed a long range HR Strategy. HR now has the resource and
capability to provide frameworks for developing succession plans, development
plans and attracting new talent to enable planning for the future and mitigate and
reduce the talent drain from Jersey Electricity. Extensive networks have been built
including access to UK (Utility) skills to enable best practice development.
We recruited a new Operations Director for the Energy business as the incumbent
retired in 2017. In addition, a new HR Director was appointed in October 2017.
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.
Cyber awareness training has been carried out with all staff with access to corporate
IT systems and there is a programme of follow-up monitoring and training.
Following a review by external cybercrime security consultants, additional security
appliances with enhanced mitigation technologies are being installed.
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 2016 revision of the
Based on the results of this analysis the Directors have a
reasonable expectation that the Company will be able to
Code, the Directors have assessed the prospect of the Company
continue in operation and meet its liabilities as they fall due over
over a longer period than the 12 months required by the ‘Going
the five-year period of their assessment.
In making this statement the Directors have considered the
resilience of the Company taking into account its current
position, the principal risks facing the Company and the control
measures in place to mitigate each of them. In particular,
the Directors recognise the significance of the strong Jersey
Electricity plc balance sheet, and committed lending facilities
that could be drawn down in most circumstances.
Concern’ provision. As disclosed last year, the Board conducted
this review for a period of five years, selected because annually
a refreshment of the Five Year Plan is performed with the
latest version approved by the Board on 21 September 2017.
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 base case are considered.
Stress testing of the cost base of our Energy business was
performed to establish the impact of material movements in both
foreign exchange and wholesale electricity prices. However as
we employ a ‘user pays’ model the Board has comfort on the
longer term consequences of a permanent weakening in Sterling
or a material rise in European wholesale power prices (albeit we
continue to strive to deliver price stability for our customer base).
39
Board of Directors
Martin Magee
Finance Director
(57)
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 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.
Chris Ambler
Chief Executive
(48) 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
Apax Global Alpha Limited
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.
Aaron Le Cornu
Non-Executive Director
(47) A/R
Aaron was appointed to the
Board as a non-Executive
Director in January
2011 and is currently
the Chief Operating
Officer of GLI Finance,
an alternative finance
provider and strategic
investor in numerous
Fintech platforms. Aaron
left his previous role as
Chief Financial Officer of
Elian, a Fiduciary Firm,
headquartered in Jersey
and with operations in 17
countries, following the sale
of the business to Intertrust
Group in 2016. Prior to
this, 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 and Spencer Money).
Aaron is a Chartered
Accountant having qualified
with Andersen in London.
He also has a First Class
Honours Degree in
European Management
Science from Swansea
University.
Geoffrey Grime
Chairman
(70) 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. In 2001, he became
the founding Chairman
of Jersey Finance Limited,
the body set up as a
joint venture between the
Government of Jersey
and its finance industry,
to represent and promote
the industry at home and
abroad. 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 2014 he
was elected as a Jurat of
the Royal Court of Jersey
where he sits as a lay
judge.
40
GOVERNANCE GOVERNANCE
Tony Taylor
Non-Executive Director
(59) R/N
Tony joined the Board as a
non-Executive Director in
September 2017.
His career spans over
35 years in marketing
and communications,
having worked for three
of the world’s leading
global advertising agency
networks, in senior
management roles. Most
recently, Tony has been
a Regional Director at
J Walter Thompson, part
of WPP plc.
Born in Jersey, Tony
has lived in the UK and
Singapore and has worked
with numerous blue-chip
companies around the
world.
Tony is also a Director of
Jersey Sport and Jersey
Dairy. He has a BSc in
Psychology from the City
University, London.
Key to membership of
committees
A Audit and Risk Committee
R Remuneration Committee
N Nominations Committee
41
Alan Bryce
Non-Executive Director
(57) A/R
Alan was appointed to the
Board as a non-Executive
Director in December
2015 and is currently a
non-Executive Director at
Scottish Water, Chair of the
wind-farm developer Viking
Energy and an advisor in
the utilities industry. He is
a former non-Executive
Director of Infinis Energy
plc and Iberdrola USA.
Prior to 2010, he held a
number of senior positions
at Scottish Power, including
Managing Director of
Energy Networks, and
Managing Director of
Generation. He was also
Strategy and Planning
Director for Scottish Power’s
UK Division, which included
the company’s Generation,
Energy Management and
Retail businesses. He is a
Chartered Engineer and
Fellow of the Institution
of Engineering and
Technology.
Phil Austin MBE
Non-Executive Director
(68) R
Phil was appointed to the
Board in May 2016 and
spent most of his career
in banking with HSBC in
London and, ultimately,
Jersey where, from 1997
to 2001, he was Deputy
Chief Executive of the Bank’s
business in the Offshore
Islands. In 2001, he became
the founding CEO of Jersey
Finance Limited, the body
set up as a joint venture
between the Government
of Jersey and its Finance
Industry, to represent and
promote the Industry at
home and abroad. In 2009,
he took on a portfolio of
non-Executive directorships –
a portfolio consisting of both
public and privately-owned
businesses. Phil is a Fellow
of the Chartered Institute
of Bankers and a Fellow of
the Chartered Management
Institute. In January 2016,
he was awarded an MBE
in the Queen’s New Year’s
Honours list. Phil is currently
a non-Executive Director of
City Merchants High Yield
Trust, a publicly quoted
company.
Wendy Dorman
Non-Executive Director
(56) A/R
Wendy was appointed
to the Board as a non-
Executive Director in
July 2016. Wendy is a
Chartered Accountant
who began her career as
an auditor and went on
to specialise in financial
services taxation. In 2001
she moved from London
to Jersey and she led the
Channel Islands tax practice
of PwC until June 2015.
Wendy has over twenty
five years’ experience in
taxation gained both in
the UK and the offshore
environment, working both
in practice and in industry.
Wendy was Chairman of
the Jersey branch of the
Institute of Directors from
2014 to 2016 and is a
former President of the
Jersey Society of Chartered
and Certified Accountants.
Wendy is a non-Executive
Director of 3i Infrastructure
plc and CQS New City High
Yield Fund Limited, both
listed companies, as well as
Jersey Finance Limited.
Directors’ Report
for the year ended 30 September 2017
The Directors present their annual report and the audited financial statements of Jersey Electricity plc for the year ended 30 September 2017.
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 2017:
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
2017
£
5,200
3,773
8,973
2016
£
5,200
3,773
8,973
Interim paid at 5.80p net of tax for the year ended 30 September 2017 (2016: 5.50p net of tax)
Final proposed at 8.40p net of tax for the year ended 30 September 2017 (2016: 8.00p net of tax)
1,777,120
2,573,760
4,350,880
1,685,200
2,451,200
4,136,400
Re-election of directors
In accordance with Article 115 of the Company’s Articles of Association, Tony Taylor will retire at the Annual General Meeting and, being
eligible, offers himself for re-election.
In accordance with Article 127, Aaron Le Cornu and Alan Bryce will retire and, being eligible, offer themselves for re-election.
Furthermore, Directors with more than 9 years’ service should offer themselves for re-election on an annual basis. Accordingly, Geoffrey
Grime will retire and, being eligible, will offer himself for re-election.
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 16 days (2016: 12 days).
42
GOVERNANCE
GOVERNANCE
Directors’ Report
for the year ended 30 September 2017
Substantial shareholdings
As at 13 December 2017 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 (CI) Nominees Limited are the largest shareholder of our listed shares and hold 5,327,562 ‘A’ Ordinary shares which represent 5%
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
13 December 2017
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 April 2016 (“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 FTSE 350. Throughout
the financial year ended 30 September 2017 the Board considers that it has complied with the Code, with the following exceptions:
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 Code (Provision D.2.1) states that the Board should establish a
Remuneration Committee of independent non-Executive directors. Until 31 December 2016, when Mike Liston retired, the Board acknowledges
that he could not be considered independent. However during the remainder of the year the Board considered the Remuneration Committee to
be compliant.
The Board
The Board provides effective leadership and currently comprises six 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. Aaron Le
Cornu is the Senior Independent Director.
Independence
The non-Executive Directors during the year were Geoffrey Grime, Wendy Dorman, Aaron Le Cornu, Alan Bryce, Phil Austin,Tony Taylor and
Mike Liston and they were all considered independent with the exception of Mike Liston, who retired in December 2016, and was formerly
the Company’s Chief Executive. The Board have determined that Geoffrey Grime remained independent notwithstanding that he has served
on the Board for more than fourteen years. In making this determination, the Board took into account his breadth of experience, his financial
independence and his other business interests. In addition, he has also served less than nine years on the Board prior to his appointment as
Chairman.
Tony Taylor was appointed during the financial year and Mike Liston retired in December 2016. On appointment to the Board the required
time commitment is established and any significant changes to time commitments are notified to the Board. An induction process is in place
for all newly appointed Directors.
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, perform a robust assessment of the principal risks that could threaten the business model, future
performance, solvency or liquidity (see Principal Risks section on pages 38 and 39), examine business plans and capital and revenue
budgets, formulate policy on key issues and review the 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
A.D. Le Cornu
P.J. Austin
A.A. Bryce
W.J. Dorman
C.J. Ambler
M.P. Magee
T. Taylor1
M.J. Liston2
*
1
2
attendees by invitation
Appointed 21 September 2017
Retired 31 December 2016
5
5
5
5
5
5
5
5
1
-
3
-
3
-
3
3
-
3*
-
-
4
4
4
4
1*
1*
2*
-
-
1
2
2
-
-
2
2
2
-
-
-
During the last year there were not any significant changes to the commitments of the Chairman.
Performance Evaluation
The effectiveness of the Board is vital to the success of the Company. An external evaluation took place during the course of 2015 and
internal evaluations were undertaken by the Chairman in both 2016 and 2017.
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 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
• 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. There was also an externally facilitated session with all members of the Board in March 2017 to
review, rate and clarify risks.
• Contracts approval of
Major capital projects.
Major contracts.
Major investments.
45
Corporate Governance
• 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 annual evaluation 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 risk based internal audit’s plans are discussed and
approved. Following its most recent review our Internal Audit was given the highest rating – Generally Conforms by the IIA on Standards
and Code of Ethics. During the previous financial year an independent review was performed of the risk management processes within the
organisation. This was largely positive with some recommendations for improvement, the majority of which have been 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 (see the Principal Risks section on pages 38 and 39).
46
GOVERNANCE GOVERNANCE
Nominations Committee Report
The Nominations Committee (the Committee) is chaired by Alan Bryce with Geoffrey Grime, Wendy Dorman, Tony Taylor and Chris Ambler
being the other members, a majority of whom are independent non-Executive Directors. During the last financial year the Committee
formally met twice.
The principle responsibilities of the Committee are to:
• 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 for both the Board and for senior positions in the wider organisation; and
• make recommendations to the Board concerning the reappointment of any non-Executive Director following conclusion of his or her
specified term of office.
The Committee recognises the benefits of diversity and will continue to appoint Executive and non-Executive Directors to ensure diversity of
background based on attributes including gender, age, industry experience, background and race. During the year the Board diversity policy
has been refreshed. The current profile of the Board is as follows:
Gender
Male
Female
7
1
Tenure
<1 year
1-3 years
4-9 years
>9 years
Age
41-50
51-60
61-70
1
3
2
2
2
4
2
Sector
Utilities
Financial Services
Marketing
Taxation
3
3
1
1
During 2015 a plan was formulated for a controlled change in the constitution of non-Executive Directors going forward in line with good
practice and corporate governance requirements on independence. The plan’s implementation progressed further during 2017 when, as
part of this strategy, Mike Liston retired from the Board in December 2016 and Tony Taylor was appointed in September 2017. Four of
the six non-Executive directors now have a tenure of less than three years and all have been deemed by the Board to be independent. The
Committee believes that the Board has a strong pipeline in place to manage its near and medium-term succession requirements.
For the appointment of the new non-Executive director during this year, the Committee appointed Hassell Blampied, an external recruitment
consultancy firm which has no direct connection with the Company. As part of the open process, adverts were run in a local newspaper and
on selected web channels. A strong emphasis was placed on enhancing diversity of experience on the Board, and Mr Taylor’s background in
international marketing, advertising and customer-focussed brands brings a new set of skills to the Board.
The Committee is also involved in succession planning for Executive Directors and the wider management team within Jersey Electricity, and
at the July Board meeting the Board received a presentation on the Company’s talent management and succession planning processes. In
addition, during the year the Committee was actively involved in the recruitment process for two senior roles within the Company. In February
2017 Mark Preece was appointed as Operations Director within our Energy business and in October 2017 Andrew Welsby joined us as
Human Resources Director.
The Terms of Reference for the Nominations Committee and the Terms and Conditions of the Appointment of non-Executive Directors are
available on our website (www.jec.co.uk).
On behalf of the Committee
A. BRYCE
Chairman
13 December 2017
47
Audit and Risk Committee Report
The Audit and Risk Committee (the Committee) is chaired by Aaron Le Cornu supported by Wendy Dorman and Alan Bryce as members.
Both Aaron and Wendy are Chartered Accountants with recent experience in both commerce and private practice. Alan is a Chartered
Engineer with extensive experience of the utility sector and experience of serving on Audit Committees elsewhere. Full biographies of all
members are provided on pages 40 and 41. The meetings provide a forum for discussions with both Company staff and 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 Committee is responsible for protecting the interests of shareholders and this includes reviewing the Annual and Interim Financial
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 Committee reviews the likely significant issues in advance of the preparation, and subsequent publication,
of the external financial statements and in particular any critical accounting judgements identified by both the Company and the external
auditor, 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 – as an example a review was performed of the likely
life of subsea cables by benchmarking our depreciation policy against other operators. The conclusion was that the existing policy of using
an assumed thirty year life was still appropriate. In addition the Committee was made aware of some potential IT control issues associated
with the successful upgrade of the Microsoft NAV system during 2017. We are satisfied that management reacted to this issue to ensure the
control environment is improved for this coming financial year. 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.
The Committee formally met three times in the last financial year (aligned to the financial timetable) 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. In addition a further meeting was facilitated by the Committee, inclusive of
the wider Board members and an external consultant, to review in detail the key risks across the business to ensure they were appropriately
captured, documented and being properly monitored. The Committee also considers reports from the internal and external auditors and
from management and provides comment on salient issues to the Board. In addition, the 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
our website (www.jec.co.uk).
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. Non-audit services are reviewed on a case by case basis and also
in terms of materiality of the fee by the 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 position
and performance, business model and strategy. This requires the Committee to consider consistency of messaging, including comparison to
prior years, reporting by the external auditor on potential inconsistencies and a verification exercise on statements made. The Committee
requested internal audit to conduct a review of the various non-financial KPI’s included in the Annual Report and no issues were identified as
a result of their work. The Committee has concluded that this is the case and has reported this to the Board.
48
GOVERNANCE GOVERNANCE
Audit and Risk Committee Report
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
Committee.
The Committee members have regular meetings with Internal Audit to evaluate both performance, and any impediments that might exist, which
would constrain their work. The Committee also approve the plan of work for the Internal Audit function in advance of the following year. In
addition independent reviews are undertaken on a regular basis. In 2015 a benchmarking exercise was performed, and in 2016 a review of the
risk management process was undertaken by an external consultant. Such exercises provide further comfort to the Committee on the effectiveness of
Internal Audit.
On behalf of the Committee
A. LE CORNU
Chairman
13 December 2017
49
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 Group’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 existence 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 63.
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 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
13 December 2017
50
M.P. MAGEE
Finance Director
13 December 2017
GOVERNANCE GOVERNANCE
Remuneration Committee Report
Remuneration Committee
The Remuneration Committee (the Committee) is chaired by Phil Austin who was supported throughout the year by members Geoffrey Grime
and Aaron Le Cornu. Mike Liston was a member until his retirement date and Tony Taylor was appointed in September 2017. The Committee
operates within terms of reference agreed by the Board which are regularly reviewed and are available on our website (www.jec.co.uk). Four
Committee meetings took place during the last financial year.
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 1 April. The
Committee were advised during the year by Mercer, as external remuneration consultants, who used locally focussed benchmarking data, as
well as assessing the remuneration of the executive team by reference to comparable companies within the UK, as this defines the relevant
labour market for the skills required. It is confirmed that Mercer have no connection to the Company other than as a provider of such
services. 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 taking account of their individual responsibilities within the Company and is dependent
on the results of the Group against expectations across a wide range of performance criteria. It included recognition of the delivery of the
strategically important Normandie 1 subsea cable, which was successfully commissioned during the year.
The remuneration paid to individual Directors during the year ended 30 September 2017 was as follows:
EXECUTIVE DIRECTORS
C.J. Ambler
M.P. Magee
NON-EXECUTIVE DIRECTORS
G.J. Grime
A.D. Le Cornu
A.A. Bryce
P.J. Austin
W. Dorman
T. Taylor (appointed 21 September 2017)
M.J. Liston (retired 31 December 2016)
C.A.C. Chaplin (retired 3 March 2016)
Basic
salary/fees
£
Bonus
£
Benefits
in kind
£
Total
2017
£
Total
2016
£
223,323
179,299
140,206
93,728
15,041
12,249
378,570
285,276
307,186
239,881
36,500
23,000
25,429
20,429
18,000
-*
4,500
-
-
-
-
-
-
-
-
-
3,446
1,726
1,726
1,726
1,726
-
-
-
39,946
24,726
27,155
22,155
19,726
-
39,912
24,706
19,537
7,636
4,928
-
4,500
21,712
-
10,070
Total
530,480
233,934
37,640
802,054
675,568
*Fees payable quarterly in arrears
.
51
Remuneration Committee Report
Service Contracts
The Executive Directors’ service contracts provide for a notice period of six months. The 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
30.9.20172
Transfer
value at
30.9.20173
Transfer
value at
30.9.20163
Directors’
contributions
during year
Increase/(decrease)
in transfer value
less Directors
contributions4
C.J. Ambler
M.P. Magee5
£5,943
£4,439
£44,600
£81,954
£699,966
£1,653,966
£694,350
£1,670,530
-
£11,238
£5,616
£(28,639)
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. The transfer values include any accrued Additional Voluntary Contributions (AVC) pensions.
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 AVC’s to the Scheme to purchase additional final salary benefits. AVC’s paid by the Directors during the year
were nil.
All-Employee Share Scheme
At the 2011 Annual General Meeting approval was granted to launch an all-employee share scheme. During the 2015 and 2016 financial
years 100 ‘A’ Ordinary Shares were issued to all staff (subject to Scheme Rules) including the Executive Directors and these shares vest in
February 2018 and February 2019 respectively. 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 Executive directors with the assistance of independent advice concerning
comparable organisations and appointments and also taking into account the particular Committees in which they are involved. As with
executive pay, Mercer was used to provide such advice. A small premium was paid in the financial year to those who chaired Committees
(Audit and Risk: £5,000; Nomination/Remuneration: £2,000) for additional responsibility, and to Directors based off-Island (£5,000) for
travelling time.
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 approval by the Board, which also determines the extent to which any
fees may be retained by the Director. 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.
The total non-Executive Director fees for such appointments were £92,500 of which £74,000 was retained, and the remainder paid to the
Company, by the individual.
M.P. Magee
Standard Life Wealth Offshore Strategy Fund Limited.
The total non-Executive Director fees for this appointment was £20,000 of which £16,000 was retained, and the remainder paid to the
Company, by the individual.
52
GOVERNANCE
GOVERNANCE
Remuneration Committee Report
Directors’ Loans
The Company provides secured loans to the Executive Directors which bear interest at base rate. The balances on such loans were:
30.9.2017
£372,365
£188,571
30.9.2016
£407,997
£239,571
C. J. Ambler
M. P. Magee
Directors’ Share Interests
The Directors’ beneficial interests in the shares of the Company at 30 September 2017 are:
5% and 3.5%
‘A’ Ordinary Shares
Preference Shares
2017
2016
2017
2016
7,420
13,500
10,000
-**
4,500
5,000
5,005
10,500
10,000
2,000
4,500
-
-
960
-
-
-
-
-
960
-
-
-
-
40,420
32,005
960
960
C.J. Ambler*
M.P. Magee*
G.J. Grime
M.J. Liston
A.A. Bryce
P.J. Austin
*Both C.J. Ambler and M.P. Magee each have a beneficial interest in a further 200 ‘A’ Ordinary Shares that are due to vest in equal quantities in February 2018 and February 2019.
**M.J. Liston still held 2,000 ‘A’ Ordinary Shares as at 30 September 2017 but was no longer a Director at that date.
During the financial year the following Directors purchased ‘A’ Ordinary shares:
C.J. Ambler
M.P. Magee
P.J. Austin
2,415
3,000
5,000
There have been no other changes in the interests set out above between 30 September 2017 and 13 December 2017.
On behalf of the Committee
P. AUSTIN
Chairman
13 December 2017
53
Independent Auditor’s Report
to the Shareholders of Jersey Electricity plc
Report on the audit of the financial statements
Opinion
In our opinion the financial statements:
• give a true and fair view of the state of the group’s affairs as at 30 September 2017 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 that we have audited comprise:
• the Consolidated Income Statement;
• the Consolidated Statement of Comprehensive Income;
• the Consolidated Balance Sheet;
• the Consolidated Statement of Changes in Equity;
• the Consolidated Statement of Cash Flows; 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.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities
under those standards are further described in the auditor’s responsibilities for the audit of the financial statements section of our report.
We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the
UK, including the FRC’s Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in
accordance with these requirements. We confirm that the non-audit services prohibited by the FRC’s Ethical Standard were not provided to
the Group company.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Summary of our audit approach
Key audit matters
the accrual for unbilled electricity units;
the discount rate assumption in the defined benefit pension scheme; and,
the NAV upgrade project.
The key audit matters that we identified in the current year were:
•
•
•
Within this report, any new audit matters are identified with
the same as the prior year are identified with
.
and any key audit matter which are
Materiality
Scoping
The materiality that we used in the current year was £1,000,000 which was determined on the basis
of approximately 7.5% of profit before tax.
The group includes three separate legal entities of which only Jersey Electricity plc was considered to
be a significant component.
Significant changes in our
approach
In the prior year we identified hedge accounting as a key audit matter; this was not a key audit matter
in the current year because, owing to improvements in the group’s financial reporting processes, it
was not a matter that had the greatest effect on the audit and the allocation of resources.
54
GOVERNANCE GOVERNANCE
We confirm that we have nothing
material to add or draw attention
to in respect of these matters.
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.
Independent Auditor’s Report
to the Shareholders of Jersey Electricity plc
Conclusions relating to principal risks, going concern and viability statement
•
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 within the Financial Review on pages 35 to 39.
We are required to state whether we have anything material to add or draw attention to in relation to:
the disclosures on pages 38 to 39 that describe the principal risks and explain how they are
•
being managed or mitigated;
the directors’ confirmation on page 39 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 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 directors’ 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; or
•
•
• whether the directors’ statements relating to going concern and the prospects of the company
required in accordance with Listing Rule 9.8.6R(3) are materially inconsistent with our knowledge
obtained in the audit.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of
the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified.
These matters included those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing
the efforts of the engagement team.
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.
Accrual for unbilled electricity units
Key audit matter
description
How the scope of our
audit responded to the
key audit matter
Total revenue for the Group is impacted by the year end process of calculating the number of unbilled units of
electricity and the value of these units £5,099k (2016: £5,950k). The calculation is based on a model which
uses historical customer and tariff data and uses automated calculations to generate the overall figure. There
is significant judgement required by management when determining what historical data is appropriate to
use to reflect unit usage and cost in the unbilled period. We therefore identified inappropriate recognition
of accrued revenue as a significant risk and an area of potential fraud. Further details of the considerations
around revenue recognition are set out in the critical accounting judgements in note 2 and in the Audit and
Risk Committee report on page 48.
We have reviewed the design and implementation of key controls relating to the unbilled units process.
We engaged our data analytics specialists to build a model to estimate the unbilled units accrual which
approximates the model used by Jersey Electricity plc. The historical data used in the model such as billed units
data and tariff information was tested for completeness and accuracy through agreement to billing records and
historical tariff data.
To assess whether the historical data appropriately reflected consumption in the unbilled period we challenged
the judgements applied by management, for example through assessing consideration of seasonality
adjustments and any significant changes in the customer base or the nature of properties.
We also reviewed the accuracy of previous judgements applied by management through reviewing the
adequacy of previous unbilled units accruals compared to subsequent billings.
Key observations
As a result of our audit procedures we concluded that the assumptions in the revenue accrual were reasonable
and that the amount recognised in revenue and trade debtors at the reporting date was appropriate and in
accordance with the requirements of IAS 18.
55
Independent Auditor’s Report
to the Shareholders of Jersey Electricity plc
Discount rate assumption in the defined benefit pension scheme
Key audit matter
description
The group has a gross retirement benefit deficit at the year end of £4.2m (2016: £11.5m). There is inherent
uncertainty over the assumptions used by actuaries in assessing the present value of scheme liabilities due to
those assumptions being long-term. We identified the most significant assumption and key audit matter to be
the discount rate used of 2.7% (2016: 2.3%), as is disclosed in note 17.
The assumption applied in determining the pension balances is subject to significant judgement and has the
ability to materially impact the current deficit recognised on the balance sheet.
How the scope of our
audit responded to the
key audit matter
We have performed a review of the design and implementation of key controls relating to the review of the
assumptions used by management in determining the value of the scheme’s obligations.
We have assessed the independence, objectivity and qualifications of the expert which management engaged
to support them in determining the pension assumption, balances and related disclosures.
We have reviewed and challenged the discount rate used by the expert and approved by management, against
independent data and consulted with our own internal experts to benchmark and rationalise the assumption.
Key observations
Through the performance of our review of the design and implementation of key controls relating to the
pension assumptions, we did not identify any material deficiencies.
As a result of our audit procedures we concluded that the discount rate used was reasonable.
NAV upgrade project
Key audit matter
description
How the scope of our
audit responded to the
key audit matter
Key observations
The group uses Microsoft NAV as their accounting and operating software package.
As referred to on page 23, the group underwent a significant IT upgrade to its NAV installation during the
current financial year. This was to improve performance, efficiency of use and the IT control environment.
We have engaged our internal IT specialists to assess the change management process and consider the
change management controls in place.
Our IT Specialists have performed testing on the before and after instances of NAV and specific procedures
over the data migration process.
We have also understood and challenged the upgrade process and assessed the design and implementation
of the key controls within group’s information systems that are relevant to the financial reporting process and
other operating activities.
We have identified certain user accounts with master IT access rights, created as part of the upgrade project for
the use of appropriate IT personnel, but for which user activity was not tracked or logged. We considered this
to be failure in the general IT control environment.
Where the control failure affected applications and databases within the scope of our audit, we extended the
scope of our substantive audit procedures.
At the point of issuance of this report management have addressed the observations made by the audit team.
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.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Group materiality
£1,000,000 (2016: £900,000)
Basis for determining
materiality
Approximately 7.5% of pre-tax profit (2016: 7.5% of adjusted pre-tax profit).
Rationale for the
benchmark applied
Given that this is a trading group we have considered profit before tax to be the most suitable benchmark to
use as it is one of the key performance indicators used by investors.
56
GOVERNANCE GOVERNANCE
Independent Auditor’s Report
to the Shareholders of Jersey Electricity plc
PBT £13.5m
Group materiality £1m
PBT
Group materiality
Audit & Risk Committee reporting threshold £0.05m
We agreed with the Committee that we would report to them all audit differences in excess of £50,000 (2016: £18,000), as well as differences
below that threshold that, in our view, warranted reporting on qualitative grounds. We also report to the Committee on 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.
Jersey Electricity plc as a stand-alone entity contributes approximately 99% of the revenue and profit before tax presented within the Consolidated
Income Statement and a similar proportion of the net assets presented on the Consolidated Balance Sheet.
At the group level we also tested the consolidation process and carried out analytical procedures to conclude that there were no significant risks of
material misstatement of the financial information of the parent company’s subsidiary, Jersey Deep Freeze Limited, and the parent company’s joint
arrangement, Channel Islands Electricity Grid Limited, which were not subject to a separate audit.
We have nothing to report
in respect of these matters.
Other information
The directors are responsible for the other information. The other information comprises the information
included in the annual report other than the financial statements and our auditor’s report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form
of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial statements or
our knowledge obtained in the audit or otherwise appears to be materially misstated.
If we identify such material inconsistencies or apparent material misstatements, we are required to determine
whether there is a material misstatement in the financial statements or a material misstatement of the other
information. If, based on the work we have performed, we conclude that there is a material misstatement of
this other information, we are required to report that fact.
In this context, matters that we are specifically required to report to you as uncorrected material misstatements
of the other information include where we conclude that:
• Fair, balanced and understandable – the statement given by the directors that they consider the annual
report and financial statements taken as a whole is fair, balanced and understandable and provides the
information necessary for shareholders to assess the group’s performance, business model and strategy, is
materially inconsistent with our knowledge obtained in the audit; or
• Audit committee reporting – the section describing the work of the audit committee does not appropriately
address matters communicated by us to the audit committee; or
• Directors’ statement of compliance with the UK Corporate Governance Code – the parts of the directors’
statement required under the Listing Rules relating to the company’s compliance with the UK Corporate
Governance Code containing provisions specified for review by the auditor in accordance with Listing
Rule 9.8.10R(2) do not properly disclose a departure from a relevant provision of the UK Corporate
Governance Code.
Responsibilities of directors
As explained more fully in the statement of 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, and for such internal control as the directors determine is necessary to enable
the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s ability to continue as a going concern, disclosing as
applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the
Group or to cease operations, or have no realistic alternative but to do so.
57
Independent Auditor’s Report
to the Shareholders of Jersey Electricity plc
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but
is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Use of our report
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 those 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.
Report on other legal and regulatory requirements
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.
Other matters
Auditor tenure
Following the recommendation of the Audit and Risk committee, we were appointed by the Board of Directors on 2 March 2017 to audit the
financial statements for the year ending 30 September 2017 and subsequent financial periods. The period of total uninterrupted engagement
including previous renewals and reappointments of the firm is 15 years, covering the years ending 30 September 2003 to today’s date.
Consistency of the audit report with the additional report to the audit committee
Our audit opinion is consistent with the additional report to the audit committee we are required to provide in accordance with ISAs (UK).
ANDREW ISHAM, BA, FCA
for and on behalf of
Deloitte LLP
Recognised Auditor
St Helier, Jersey
13 December 2017
58
GOVERNANCE FINANCIAL STATEMENTS
Consolidated Income Statement
for the year ended 30 September 2017
Consolidated Statement of Comprehensive Income
for the year ended 30 September 2017
All results in the year have been derived from continuing operations.
The notes on pages 63 to 86 form an integral part of these accounts. The independent auditor’s report is on pages 54 to 58.
59
Note 2017 2016 £000 £000Revenue 3 102,320 103,361Cost of sales (63,186) (65,249)Gross profit 39,134 38,112Revaluation of investment properties 11 40 (350)Operating expenses 4 (24,379) (23,498)Group operating profit before exceptional items 6 14,795 14,264Exceptional item - La Collette rent accrual reversal - 1,676Group operating profit 3 14,795 15,940Finance income 3 22Finance costs (1,340) (1,154)Profit from operations before taxation 13,458 14,808Taxation 7 (2,834) (3,166)Profit from operations after taxation 10,624 11,642Attributable to: Owners of the Company 10,599 11,547Non-controlling interests 19 25 95 10,624 11,642Earnings per share - basic and diluted 9 34.59p 37.69p Note 2017 2016 £000 £000Profit for the year 10,624 11,642Items that will not be reclassified subsequently to profit or loss: Actuarial gain/(loss) on defined benefit scheme 17 8,859 (2,829)Income tax relating to items not reclassified 7 (1,772) 566 7,087 (2,263)Items that may be reclassified subsequently to profit or loss: Fair value (loss)/gain on cash flow hedges 22 (1,673) 13,865Income tax relating to items that may be reclassified 7 335 (2,773) (1,338) 11,092Total comprehensive income for the year 16,393 20,471Attributable to: Owners of the Company 16,348 20,376Non-controlling interests 25 95 16,373 20,471FINANCIAL STATEMENTS Consolidated Balance Sheet
as at 30 September 2017
Approved by the Board on 13 December 2017
G.J. GRIME
Director
M.P. MAGEE
Director
The notes on pages 63 to 86 form an integral part of these accounts. The independent auditor’s report is on pages 54 to 58.
60
Note 2017 2016 £000 £000Non-current assets Intangible assets 10 1,110 162Property, plant and equipment 11 211,921 209,168Investment properties 11 20,150 20,110Secured loans 14 592 683Derivative financial instruments 22 2,790 5,957Other investments 12 5 5Total non-current assets 236,568 236,085Current assets Inventories 13 6,825 5,962Trade and other receivables 14 15,782 16,583Derivative financial instruments 22 4,454 2,788Cash and cash equivalents 8,076 1,925Total current assets 35,137 27,258Total assets 271,705 263,343Current liabilitiesTrade and other payables 15 15,885 16,084Bank overdraft - 943Current tax liability 7 1,034 420Total current liabilities 16,919 17,447Net current assets 18,218 9,811Non-current liabilities Trade and other payables 15 20,177 19,600Retirement benefit deficit 17 4,219 11,471Derivative financial instruments 22 172 -Financial liabilities - preference shares 18 235 235Long-term borrowings 16 30,000 30,000Deferred tax liabilities 7 23,719 20,482Total non-current liabilities 78,522 81,788Total liabilities 95,441 99,235Net assets 176,264 164,108EquityShare capital 18 1,532 1,532Revaluation reserve 5,270 5,270ESOP reserve (84) (155)Other reserves 5,658 6,878Retained earnings 163,862 150,523Equity attributable to the owners of the Company 176,238 164,048Non-controlling interests 19 26 60Total equity 176,264 164,108 FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Consolidated Statement of Changes in Equity
for the year ended 30 September 2017
Note
Share Revaluation
reserve
capital
ESOP
reserve
Other
reserves
Retained
earnings
Total
£000
£000
£000
£000
£000
£000
At 1 October 2016
1,532
5,270
(155)
6,878
150,523
164,048
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 gain on defined benefit scheme (net of tax)
Adjustment to reserves
Equity dividends
At 30 September 2017
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2)
73
-
-
-
-
-
-
-
(1,338)
-
118
10,599
10,599
-
-
-
7,087
(118)
(2)
73
(1,338)
7,087
-
-
(4,229)
(4,229)
1,532
5,270
(84)
5,658
163,862
176,238
8
At 1 October 2015
Total recognised income and expense for the year
1,532
-
5,270
-
Funding of employee share option scheme
Amortisation of employee share scheme
Unrealised gain on hedges (net of tax)
Actuarial loss on defined benefit scheme (net of tax)
Adjustment arising from change in non-controlling interest
Equity dividends
At 30 September 2016
8
-
-
-
-
-
-
-
-
-
-
-
-
(97)
-
(114)
56
-
-
-
-
(4,214)
-
145,223
11,547
147,714
11,547
-
-
11,092
-
-
-
-
-
-
(2,263)
31
(114)
56
11,092
(2,263)
31
(4,015)
(4,015)
1,532
5,270
(155)
6,878
150,523
164,048
The notes on pages 63 to 86 form an integral part of these accounts. The independent auditor’s report is on pages 54 to 58.
61
Consolidated Statement of Cash Flows
for the year ended 30 September 2017
The notes on pages 63 to 86 form an integral part of these accounts. The independent auditor’s report is on pages 54 to 58.
62
2017 2016 £000 £000Cash flows from operating activitiesOperating profit before exceptional items 14,795 14,264Depreciation and amortisation charges 10,695 10,295Share-based reward charges 73 56(Gain)/loss on revaluation of investment property (40) 350Pension operating charge less contributions paid 1,607 1,351Profit on sale of fixed assets (4) (6)Operating cash flows before movement in working capital 27,126 26,310Working capital adjustments: (Increase)/decrease in inventories (863) 277 Decrease/(increase) in trade and other receivables 892 (1,758) Increase in trade and other payables 1,230 2,303Net movement in working capital 1,259 822Interest paid (1,322) (1,148)Capitalised interest paid (172) (374)Preference dividends paid (9) (9)Income taxes paid (421) (396)Net cash flows from operating activities 26,461 25,205Cash flows from investing activitiesPurchase of property, plant and equipment (14,252) (32,391)Investment in intangible assets (836) (4)Proceeds from part disposal of subsidiary - 10Net proceeds from disposal of fixed assets 4 9Net cash flows used in investing activities (15,084) (32,376)Cash flows from financing activitiesEquity dividends paid (4,229) (4,019)Dividends paid to non-controlling interest (59) (48)Deposit interest received 3 22Payment for foreign exchange option - (250)Proceeds from borrowings 18,000 5,500Repayment of borrowings (18,943) (5,500)Net cash flows used in financing activities (5,228) (4,295)Net increase/(decrease) in cash and cash equivalents 6,149 (11,466)Cash and cash equivalents at beginning of year 1,925 12,503Effect of foreign exchange rate changes 2 (55)Overdraft - 943Cash and cash equivalents at end of year 8,076 1,925FINANCIAL STATEMENTS FINANCIAL STATEMENTS
Notes to the Financial Statements
for the year ended 30 September 2017
1 Accounting policies
Basis of preparation
The Group’s accounting policies as applied for the year ended 30 September 2017 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 2017 comprises the Company and its subsidiary.
The subsidiary is an entity 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 includes 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 43.
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. Revenue excludes the goods and services tax levied on our customers.
i) 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. For the majority of customers who are on smart meters this is between the date of the last meter reading
and the balance sheet date, using historical consumption patterns. For customers on traditional meters this is between the last billing
date and the balance sheet date, again using historical consumption patterns.
63
Notes to the Financial Statements
for the year ended 30 September 2017
Revenue continued
ii) Retail
Revenue resulting from the sales of goods within our retail business is recognised on sale to the customer, as this is the point at
which the company recognises the transfer of risks and rewards.
iii) Building Services
Revenue within JEBS, our contracting and building services business, is recognised as the service is provided, on a stage of
completion basis according to expected profit margins on a project by project basis.
iv) Property
Rental income is accrued on a time basis by reference to the agreements entered.
v) Other
Other income is recognised as the service is provided or on receipt of payment as appropriate. Other income also includes
indefeasible rights of use (IRU) sales. With the connection of the Channel Islands Electricity Grid Limited (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.
64
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the Financial Statements
for the year ended 30 September 2017
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 from the year
following acquisition. 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
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
At the end of each reporting period, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether
there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the
asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable
amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. When
a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units,
or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can
be identified.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash
flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of
money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
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 the income
statement, 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 the income statement, 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 properties are stated at fair value at the balance sheet date. Gains or losses arising from changes in the fair value of
investment properties 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.
65
Notes to the Financial Statements
for the year ended 30 September 2017
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 and other payables
Trade and other 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.
Long-term borrowings
Loans that have fixed or determinable payments that are not quoted in an active market are classified as ‘long-term borrowings’. Loans
are measured at amortised cost using the effective interest method. Interest expense is recognised by applying the effective interest rate.
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 costs
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 occurred.
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 shares or options are shown 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.
66
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the Financial Statements
for the year ended 30 September 2017
Retirement benefits
The Company 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 benefit 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 the income statement such that the cumulative expense reflects the revised estimate, with a
corresponding adjustment to equity reserves.
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:
Annual Improvements to IFRSs: 2012-2014 Cycle, which is effective for annual periods beginning on or after 1 January 2016
IAS 16 and IAS 38 (amendment) Clarification of Acceptable Methods of Depreciation and Amortisation, which is effective for annual periods
beginning on or after 1 January 2016
IAS 27 (amendment) Equity Method in Separate Financial Statements, which is effective for annual periods beginning on or after 1 January 2016
Standards in issue not yet effective:
IFRS 2 (amendment) Classification and Measurement of Share-based Payment Transactions, which is effective for annual periods beginning
on or after 1 January 2018
IAS 7 (amendment) Disclosure Initiative, 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
IFRS 11 (amendment) Accounting for Acquisitions of Interests in Joint Operations, which is effective for annual periods beginning on or after 1
January 2016
IAS 12 (amendment) Recognition of Deferred Tax Assets for Unrealised Losses, which is effective for annual periods beginning on or after 1
January 2017
IFRS 15 (clarification) Revenue from Contracts with Customers, which is effective for annual periods beginning on or after 1 January 2018
IFRS 16 Leases, which is effective for annual periods beginning on or after 1 January 2019
IFRS 17 Insurance Contracts, supersedes IFRS 4 Insurance Contracts as of 1 January 2021.
Annual Improvements to IFRS Standards 2014–2016 Cycle – Amendments to IFRS 12, which is effective for annual periods beginning on or
after 1 January 2017
Annual Improvements to IFRS Standards 2014–2016 Cycle – Amendments to IFRS 1 and IAS 28, 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.
A review has been undertaken of those changes to Standards and Interpretations that are considered to be most relevant to the Group.
These include; IFRS 9, IFRS 15 and IFRS 16. Of these, IFRS 15 and changes to recognition of revenue from contracts with customers is
not expected to result in any differences in either revenue values or disclosures. Changes resulting from IFRS 9 will introduce fair value
hierarchy disclosure for non-financial assets and liabilities recognised at fair value. There are also expected to be changes resulting
from IFRS 16 where the Group is lessee of properties. IFRS 16 will include these leased properties on the balance sheet. The impact to
the income statement is not expected to be material.
67
Notes to the Financial Statements
for the year ended 30 September 2017
2 Critical Accounting Judgements
In the application of the Group’s accounting policies, which are described in note 1, the Directors are required to make judgements,
estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The
estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual
results may differ from these estimates.
The estimates and underlying assumptions are monitored on an ongoing basis. Changes to accounting estimates are recognised in the
period in which an estimate is revised if the modification affects only that period (or also in future periods if applicable).
Critical accounting judgements
The following are the critical judgements, apart from those involving estimations (which are dealt with separately below), that the directors
have made in the process of applying the Group’s accounting policies and that have the most significant effect on the amounts recognised
in financial statements.
i Hedge accounting
The Group utilises currency derivatives to hedge a proportion of its future purchases of electricity from France which currently extend to
the next three calendar years as well as for any foreign currency denominated capital contracts. Judgement is applied in establishing
the quantum of these future foreign exchange commitments as the volume and price of imported electricity vary annually. All such
currency derivatives are fair valued, based on market values of equivalent instruments at balance sheet date.
ii Decommissioning
A judgement has been made that the Company does not meet the recognition criteria (set out in IAS 37 Provisions) as 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.
Key sources of estimation uncertainty
i Retirement benefit obligations
The Group provides pensions through a defined benefits scheme for a number of its employees which is accounted for in accordance
with IAS 19 ‘Employee Benefits’. The benefit obligation is discounted at a rate set by reference to market yields at the end of the
reporting period on high quality corporate bonds. Significant judgement is required when setting the criteria for bonds to be included
in the population from which the yield curve is derived. The most significant criteria considered for the selection of bonds include the
issue size of the corporate bonds, quality of the bonds and the identification of outliers which are excluded. The discount rate used in
2017 was 2.7% and in 2016 was 2.3%. If the discount rate applied to the liabilities had been either 0.5% lower or higher than the
2.7% applied for 2017, the net deficit of £3.4m would have risen to around £13m, or moved to a surplus of £5m, respectively.
ii Revenue
The assessment of energy sales to customers is based on meter readings, which are carried out on a systematic basis throughout the
year. Revenue for energy supply includes an estimated assessment of electricity supplied to customers between the date of the last
meter reading, using historical consumption patterns. Unbilled revenues included within trade and other receivables in the balance
sheet relating to such customers at 30 September 2017 amounted to £5.1m (2016: £5.9m). If the unbilled estimate at the year-end
was misstated by 10% then profits would be impacted by around £0.5m.
68
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the Financial Statements
for the year ended 30 September 2017
3 Business segments
The business segments below are those reported to the Group’s Chief Executive for the purposes of resource allocation and performance
assessment:
69
2017 2017 2017 2016 2016 2016 External Internal Total External Internal Total £000 £000 £000 £000 £000 £000RevenueEnergy 80,480 143 80,623 81,215 144 81,359Building Services 3,982 915 4,897 5,120 786 5,906Retail 13,045 37 13,082 11,933 45 11,978Property 2,187 599 2,786 2,143 599 2,742Other* 2,626 1,324 3,950 2,950 876 3,826 102,320 3,018 105,338 103,361 2,450 105,811Intergroup elimination (3,018) (2,450)Revenue 102,320 103,361Operating profit Energy 11,723 11,650 Building Services 131 134Retail 731 452Property 1,645 1,683Other 525 695 14,755 14,614Revaluation of investment properties 40 (350)Exceptional item - La Collette rent accrual reversal - 1,676Operating profit 14,795 15,940Finance income 3 22Finance costs (1,340) (1,154)Profit from operations before taxation 13,458 14,808Taxation (2,834) (3,166)Profit from operations after taxation 10,624 11,642Attributable to: Owners of the Company 10,599 11,547Non-controlling interests 25 95 10,624 11,642*Other segment includes Jersey Energy, Jendev and Jersey Deep Freeze Limited.Materially, all the Group’s operations are conducted within the Channel Islands. All transfers between divisions are on an arms-length basis.
Notes to the Financial Statements
for the year ended 30 September 2017
4 Operating expenses
5 Directors and employees
Detailed information in respect of Directors’ shareholdings and emoluments, pensions and benefits is given in the Remuneration
Committee Report on pages 51 to 53. The number of persons (full time equivalents) employed by the Group (including non-Executive
Directors) at 30 September was as follows:
The aggregate payroll costs of these persons were as follows:
70
2017 2016 £000 £000Distribution costs 12,222 11,173Administration expenses 12,157 12,325 24,379 23,498 2017 2016 Number NumberEnergy 201 203Other businesses 116 114Trainees 9 10 326 327 2017 2016 £000 £000Wages and salaries 17,422 16,524Social security costs 923 881Pension (note 17) 3,526 3,286 21,871 20,691Capitalised manpower costs* (1,946) (1,865) 19,925 18,826* Capitalised manpower costs are included in note 11 under categories ‘Mains cables and services’, ‘Fixtures, fittings, computer equipment and vehicles’ and ‘Interlinks’.FINANCIAL STATEMENTS Notes to the Financial Statements
for the year ended 30 September 2017
6 Group operating profit before exceptional items
Operating profit is after charging/(crediting):
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/(write back)
Movement in bad debt provisions
7 Taxation
Current tax:
Jersey Income Tax - ordinary activities
- adjustments in respect of prior periods
Total current tax
Deferred tax:
Used losses
Current year
FINANCIAL STATEMENTS
2017
£000
94
4
231
10,501
194
2,768
126
1
(23)
2017
£000
1,043
(9)
1,034
406
1,394
2016
£000
80
4
246
10,226
69
2,777
206
(49)
72
2016
£000
420
-
420
-
2,746
Total tax on profit on ordinary activities
2,834
3,166
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% (2016: 20%)
Effects of:
Adjustments in respect of prior periods
Expenses not deductible for tax purposes
Income not taxable for tax purposes
Non-qualifying depreciation
Group current tax charge for year
2017
£000
13,458
2,692
(9)
8
(137)
281
2,834
2016
£000
14,808
2,962
-
54
(122)
272
3,166
71
Notes to the Financial Statements
for the year ended 30 September 2017
7 Taxation (continued)
Deferred Tax
The following outlines the major deferred tax assets/liabilities recognised by the Group:
Deferred tax movements in the year
The Company is taxed solely in Jersey as it has no legal presence in any other jurisdiction. The applicable rate of income tax for utility
companies in Jersey is 20%, whilst the applicable rate for companies in general, such as Jersey Deep Freeze Limited is 0%. There are
no current indications, political or otherwise, that these rates are expected to change in the foreseeable future. The effective tax rate on
pre-tax profits is 21% (2016: 21%) due to the manner in which capital allowances are applied in place of depreciation expenses which
are included in the pre-tax profit figure. As the tax liability rests with the States of Jersey, the right to offset assets and liabilities allows the
balance sheet to show the net deferred tax liability position.
8 Dividends paid and proposed
Equity:
The proposed dividend is subject to approval at the forthcoming AGM and has 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 Limited are disclosed in note 19.
72
Per Share In Total 2017 2016 2017 2016 pence pence £000 £000Ordinary and ‘A’ Ordinary:Dividend paid final for previous year 8.00 7.60 2,451 2,330 interim for current year 5.80 5.50 1,777 1,685 13.80 13.10 4,228 4,015Dividend proposed final for current year 8.40 8.00 2,574 2,451 2017 2016 £000 £000Accelerated capital allowances 23,149 21,433Derivative financial instruments 1,414 1,749Pensions (844) (2,294)Losses carried forward - (406)Provisions for deferred tax 23,719 20,482 2017 2016 £000 £000At 1 October 20,482 15,529Charged to income statement 1,800 2,746Charged to statement of comprehensive income 1,437 2,207At 30 September 23,719 20,482FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the Financial Statements
for the year ended 30 September 2017
9 Earnings per Ordinary share
Earnings per Ordinary and ‘A’ Ordinary share (basic and diluted) of 34.59p (2016: 37.69p) are calculated on the Group profit, after taxation,
of £10,599,000 (2016: £11,547,000), and on the 30,640,000 (2016: 30,640,000) Ordinary and ‘A’ Ordinary shares in issue throughout
the financial year and at 30 September 2017. There are no share options in issue nor any changes to the employee share option scheme and
therefore there is no difference between basic and diluted earnings per share.
10 Intangible assets
Cost as at 1 October 2016
Additions
Reclassification from tangible assets
Disposals
At 30 September 2017
Amortisation
At 1 October 2016
Charge for the year
Disposals
At 30 September 2017
Net book value
At 30 September 2017
Cost as at 1 October 2015
Additions
Disposals
At 30 September 2016
Amortisation
At 1 October 2015
Charge for the year
Disposals
At 30 September 2016
Net book value
At 30 September 2016
The above amortisation charges are included within operating expenses in the consolidated income statement.
Computer Software
£000
397
836
306
(141)
1,398
235
194
(141)
288
1,110
Computer Software
£000
398
4
(5)
397
171
69
(5)
235
162
73
Notes to the Financial Statements
for the year ended 30 September 2017
11 Property, plant, equipment and investment properties
Fixtures, fittings,
computer
Freehold land
Leasehold
Main cables equipment and
Investment
and buildings
buildings
Plant
and services
£000
£000
£000
£000
vehicles
£000
Interlinks
£000
Total
properties*
£000
£000
Cost or valuation
At 1 October 2016
Expenditure
Reclassification to intangible assets
Revaluation
Disposals/write offs
At 30 September 2017
24,904
260
-
-
(23)
25,141
16,952
238
-
-
(142)
17,048
101,444
4,983
-
-
(797)
105,630
8,522
531
(23)
9,030
6,339
368
(142)
6,565
57,746
2,636
(797)
59,585
81,927
3,757
-
-
-
85,684
27,909
1,864
-
29,773
20,292
2,140
(306)
-
(2,380)
19,746
11,025
1,681
(2,373)
10,333
96,321
2,189
-
-
(1,401)
97,109
341,840
13,567
(306)
-
(4,743)
350,358
20,110
-
-
40
-
20,150
21,131
3,421
(1,401)
23,151
132,672
10,501
(4,736)
138,437
-
-
-
-
16,111
10,483
46,045
55,911
9,413
73,958
211,921
20,150
Fixtures, fittings,
computer
Freehold land
Leasehold
Main cables equipment and
Investment
and buildings
buildings
Plant
and services
£000
£000
£000
£000
vehicles
£000
Interlinks
£000
Total
properties*
£000
£000
24,677
239
-
(12)
24,904
8,010
524
(12)
8,522
17,002
-
-
(50)
16,952
133,520
9,079
-
(41,155)
101,444
6,020
369
(50)
6,339
96,400
2,501
(41,155)
57,746
79,154
2,773
-
-
81,927
26,115
1,794
-
27,909
18,837
3,019
-
(1,564)
20,292
11,140
1,442
(1,557)
11,025
80,664
16,446
-
(789)
96,321
353,845
31,556
-
(43,570)
341,831
20,460
-
(350)
-
20,110
18,324
3,596
(789)
21,131
166,000
10,226
(43,563)
132,663
-
-
-
-
16,382
10,613
43,698
54,018
9,267
75,190
209,168
20,110
Depreciation
At 1 October 2016
Charge for the year
Disposals/write offs
At 30 September 2017
Net book value at
30 September 2017
Cost or valuation
At 1 October 2015
Expenditure
Revaluation
Disposals/write offs
At 30 September 2016
Depreciation
At 1 October 2015
Charge for the year
Disposals/write offs
At 30 September 2016
Net book value at
30 September 2016
*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 7.5% and 8.75% 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.
74
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the Financial Statements
for the year ended 30 September 2017
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 2017 by qualified
independent valuers Sarre and Company who have extensive experience in Jersey property market valuation.
Such properties are not depreciated in accordance with IAS 40. The rental income arising from the properties during the year was
£1,396k (2016: £1,392k), with maintenance and repair costs of £119k (2016: £37k). Under the terms of the lease arrangements
with residential tenants, the Company is obliged to keep the rented premises in a good state of condition and repair. The Company
is obliged to keep the Medical Centre wind and water tight and structurally sound, whilst no obligations exist to the Company with
regards to the B&Q lease which is fully repairing.
c The Group figures are tabled together with fixtures, fittings and vehicles for our subsidiary of £42k (2016: £36k) at cost and a
depreciated value of £30k (2016: £33k).
d The gross carrying amount of tangible assets at net book value of zero at 30 September 2017 was £49.5m (2016: £52.2m).
e £1,620k (2016: £19,953k) for Normandie 1 and £2,878k (2016: £5,036k) for St Helier Primary is classified in interlinks and plant,
respectively, and are assets under construction. During this financial year £172k of interest was capitalised (2016: £374k) using an
average rate on borrowing of 4.42% (2016: 4.37%).
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
Shareholding
%
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
51 Ordinary
51
31 January
maintenance
of refrigeration and
catering equipment
75
2017 2016 £000 £000Joint arrangement 5 5
Notes to the Financial Statements
for the year ended 30 September 2017
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’. CIEG has a reporting period
end of 30 November based on the Company inception date.
Jersey Deep Freeze Limited
The Company owns 51% (2016: 51%) of Jersey Deep Freeze Limited, a Jersey company whose principal business is the sale and maintenance
of refrigeration and catering equipment to commercial businesses. The results are consolidated into these Group financial statements, as the
Group is considered to exert control under IFRS 10. Jersey Deep Freeze Limited has an historical reporting period end of 31 January which
remains unchanged.
13 Inventories
The amounts attributed to the different categories are as follows:
14 Trade and other receivables
The secured loans include loans to Directors and to a shareholder in the subsidiary Jersey Deep Freeze Limited. See the Remuneration
Committee Report on page 53 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.
76
2017 2016 £000 £000Fuel oil 3,943 3,724Commercial stocks and work in progress 2,301 1,622Generation, distribution spares and sundry 581 616 6,825 5,962During the year £11.3m (2016: £11.3m) was recognised directly in cost of sales in respect of inventories sold or used in operations or production. 2017 2016 £000 £000Amounts receivable within one year:Trade receivables (includes unbilled units) 13,965 14,020Prepayments and other receivables 1,817 2,563 15,782 16,583Amounts receivable after more than one year:Secured loans 592 683FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the Financial Statements
for the year ended 30 September 2017
15 Trade and other payables
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%
77
2017 2016 £000 £000Amounts falling due within one year:Trade payables 1,601 2,271Other payables including other taxation and social security 7,510 6,275Accruals and deferred income 6,774 7,538 15,885 16,084Amounts falling due after more than one year:Accruals 328 1,123Deferred income 19,849 18,477 20,177 19,600The fair value of trade and other payables is considered by the Directors to be equivalent to its carrying value. 2017 2016 £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 £25m to £15m in May 2017. A one year £2m overdraft facility also exists with RBSI.
Notes to the Financial Statements
for the year ended 30 September 2017
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 53% of the liabilities are attributable to current employees, 12% to former employees and 35% 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 17 years reflecting the approximate split of the defined benefit obligation.
Funding requirements
The last funding valuation of the Scheme was carried out by a qualified actuary as at 31 December 2015 and showed a surplus of £6.9m. 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 2018 at which the funding level of the Scheme will be reviewed. The Company pays
contributions of 20.6% (26.6% for non-contributory members) of pensionable salaries (including 1% in respect of expenses) with contributory
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 2017
The results of the latest funding valuation at 31 December 2015 have been adjusted to the balance sheet date taking account of
experience over the period since 31 December 2015, changes in the market conditions, and differences in the financial and demographic
assumptions. The present value of the defined benefit obligation and the related current service cost, were measured using the Projected
Unit Credit Method.
78
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the Financial Statements
for the year ended 30 September 2017
17 Pensions (continued)
The principal assumptions used by the independent qualified actuaries to calculate the liabilities under IAS 19 are set out below:
The Scheme assets are invested in the following asset classes, each of which have a quoted market:
79
Main financial assumptions: 2017 2016 % pa % paInflation 3.5 3.3Rate of general increase in salaries - short term (year 1) 3.5 2.5 - long term (year 2 onwards) 4.5 4.3Pension increases in payment - -Pension increases in payment for pensions purchased with AVCs 3.5 3.3Discount rate for scheme liabilities 2.7 2.3The financial assumptions reflect the nature and term of the Scheme’s liabilities. Value at 30 Value at 30 September September 2017 2016 £000 £000LDI/UK Gilts 33,155 37,014Equities 43,512 38,355Diversified Growth Funds 52,612 51,873Cash and Commitments (23) 511 129,256 127,753 30 September 2017 30 September 2016Post-retirement mortality assumption - base tableSAPS ‘S2’ tables with CMI 2015 improvements to the calculation date with suitable scaling actors appliedSAPS ‘S2’ tables with CMI 2015 improvements to the calculation date with suitable scaling factors appliedPost-retirement mortality assumption - future improvementsCMI 2015 core projections with long-term improvement rate of 1.25% p.a. for men and womenCMI 2015 core projections with long-term improvement rate of 1.25% p.a. for men and womenLife expectancy for male currently aged 6027.927.8Life expectancy for female currently aged 6030.029.9Life expectancy at 60 for male currently aged 4029.829.7Life expectancy at 60 for female currently aged 4032.031.9Cash 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.
Notes to the Financial Statements
for the year ended 30 September 2017
17 Pensions (continued)
The amounts recognised in the balance sheet and comprehensive income 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
Past service cost (including curtailments)
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 that recognised in net interest
Actuarial (gains)/losses due to changes in financial assumptions
Acturial gains due to changes in demographic assumptions
Actuarial losses/(gains) due to liability experience
Total (gains)/losses recognised in OCI
Total (credit)/charge 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
Acturial gains due to changes in demographic assumptions
Actuarial (gains)/losses on scheme liabilities arising from changes in financial assumptions
Actuarial losses/(gains) on scheme liabilities arising from experience
Net benefits paid out
Past service cost (including curtailments)
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 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
80
2017
£000
2016
£000
3,082
200
-
244
3,526
(1,300)
(7,611)
-
52
(8,859)
2,142
215
700
229
3,286
(19,326)
27,980
(2,541)
(3,284)
2,829
(5,333)
6,115
2017
£000
2016
£000
139,224
114,042
3,082
3,154
566
-
(7,611)
52
(4,992)
-
2,142
4,049
569
(2,541)
27,980
(3,284)
(4,433)
700
133,475
139,224
2017
£000
2016
£000
127,753
106,751
2,910
1,300
1,919
566
(4,992)
(200)
3,820
19,326
1,935
569
(4,433)
(215)
129,256
127,753
2017 2016 £000 £000Fair value of Scheme assets 129,256 127,753Present value of funded defined benefit obligations (133,475) (139,224)Funded Status and liability recognised on the balance sheet (4,219) (11,471)Related deferred tax asset 844 2,294Net pension liability (3,375) (9,177)FINANCIAL STATEMENTS
Notes to the Financial Statements
for the year ended 30 September 2017
17 Pensions (continued)
Actual return on scheme assets
Interest income on scheme assets
Remeasurement gain on scheme assets
Actual return on scheme assets
Analysis of amounts recognised in comprehensive income (SoCI)
FINANCIAL STATEMENTS
2017
£000
2,910
1,300
4,210
2017
£000
2016
£000
3,820
19,326
23,146
2016
£000
Total remeasurement gains/(losses) in other comprehensive income
8,859
(2,829)
Estimated profit and loss charge 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 £9.4m for next year.
The estimated net interest on net defined benefit liabilities of £91k shown above is made up of:
• Interest expense on defined benefit obligation of £3,542k; less
• Interest income on scheme assets of £3,451k.
The actual amount to be charged to the income statement for the next financial year might be different to that estimated above. This may
be due to contributions and benefit payments differing from expected, changes to scheme benefits or settlement/curtailment events that
are not yet known.
Although it is not possible to give a reliable indication of the impact, you should make it clear in your budgeting process that 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 income statement impact of adopting a
discount rate of 3.2% p.a. as at 30 September 2017.
81
Main financial assumptions 30 September 2017 % p.a.Inflation 3.5Rate of general increase in salaries - short term (year 1) 3.5- long term (year 2 onwards) 4.5Pension increases in payment -Pension increases in payment for pensions purchased with AVCs 3.5Discount rate for scheme liabilities 3.2 Analysis of amount charged to income statement For year ending 30 September 2018 £000Current service cost 2,900Administration expenses 200Net interest on net defined benefit liability 91Total estimated pension expense 3,191 Reconciliation of funded status to balance sheet Value at 30 September 2017 £000Fair value of scheme assets 129,256Present value of funded defined benefit obligation (122,500)Funded status and asset/(liability) recognised on the balance sheet 6,756
FINANCIAL STATEMENTS
Notes to the Financial Statements
for the year ended 30 September 2017
17 Pensions (continued)
18 Called up share capital
‘A’ Ordinary shares 5p each (2016: 5p each)
Ordinary shares 5p each (2016: 5p each)
5% Cumulative participating preference shares £1 each
3.5% Cumulative non-participating preference shares £1 each
Authorised
2017
Issued and fully paid
2017
£000
1,250
1,500
2,750
100
150
250
£000
582
950
1,532
100
135
235
Authorised
2016
£000
1,250
1,500
2,750
100
150
250
Issued and fully paid
2016
£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 2017 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
(2016: £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 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. Subsequent schemes were set up in February 2015 and
February 2016 with the same three year vesting requirement. The Trust currently holds 50,300 shares for both remaining active schemes.
The shares have been purchased in instalments since the inception of the Trust at an average of £4.19 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
82
2017 2016 £000 £000At 1 October 60 13Share of profit on ordinary activities after taxation 25 95Dividends paid (59) (48)At 30 September 26 60 Expected charge to income statement 30 September 2017 £000Service cost 2,600Total administration expenses 200Interest on the net defined benefit liability (244)Expense recognised in income statement 2,556In 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.Regular employer contributions to the Scheme in 2018 are estimated to be £1.9m.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 pensionable salaries or contributions differing from expected, changes to scheme benefits or settlement/curtailment events that are not yet known.FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the Financial Statements
for the year ended 30 September 2017
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.
The Group’s currency exposure at 30 September 2017, taking into account the effect of forward contracts placed to manage such exposures,
was £2.2m (2016: £2.1m) 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.
83
2017 2016 £000 £000Less than one year 1,738 1,675Greater than one year and less than five years 5,051 5,352More than five years 1,275 2,326 8,064 9,353 2017 2016 £000 £000a Five year capital expenditure approved by the directors:Contracted 8,088 12,635Not contracted* 66,066 49,087 74,154 61,722b Current rental commitments under operating leases are as follows:Lease payments under operating leases recognised as an expense in the year 246 246Payable within one year 245 245After one year but within five years 831 892 After five years 12,771 12,962 13,847 14,099 *Although this sum is approved it is still subject to formal business cases being reviewed in due course.
FINANCIAL STATEMENTS
Notes to the Financial Statements
for the year ended 30 September 2017
22 Derivatives and financial instruments and their risk management (continued)
Foreign exchange risk
The Group utilises currency derivatives to hedge the payment of a proportion 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 2017, the fair value of the Group’s currency derivatives is estimated to be a net asset of approximately £7.1m over the next
three years (2016: £8.7m asset). The fair value of currency derivatives that are designated and effective as cash flow hedges amount to an
asset of £7.1m (2016: £8.7m asset) and these amounts have 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 (2016: £nil). In the current period
amounts of £1.6m were credited (2016: £13.9m debited) to equity and £2.6m credit (2016: £2.6m debit) 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 2017, the import prices, but not volumes, have
been substantially fixed for 2018. 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. During 2017 this agreement was extended a further 5
years to 2027. 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.
84
2017 2016 £000 £000Derivative assetsLess than one year 4,454 2,788Greater than one year 2,790 5,957Derivative liabilitiesLess than one year - -Greater than one year (172) -Total net assets 7,072 8,745 2017 2016 £000 £000Less than one year - operational expenditure 30,381 38,375Less than one year - capital expenditure 1,541 -Greater than one year and less than three years 47,552 45,851 79,474 84,226 FINANCIAL STATEMENTS FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the Financial Statements
for the year ended 30 September 2017
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 and 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 and other receivables at 30 September 2017 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, moving customers to pay as you go meters to
manage credit risk and implementing payment plans for customers in arrears.
The Group has no other significant concentration of credit risk. Exposure is spread over a large number of counterparties and customers with
a maximum credit exposure of £26.8m (2016: £17.3m).
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 £15m 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. The Group is subject to externally imposed capital requirements in respect of the
borrowing facilities detailed in note 16. The Group has complied with these requirements throughout the year.
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
Following a reduction of £10m to the RCF the Group had undrawn borrowing facilities at 30 September 2017 of £17.0m (2016:
£26.1m) 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 if required.
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 on the £30m of private placements borrowing is managed by having fixed coupons.
85
2017 2016 £000 £000Less than 3 months: cash and cash equivalents and short-term investments 8,076 1,925 2017 2016 £000 £000Greater than 30 days 35 124Greater than 60 days 15 98Greater than 90 days 356 409 406 631 2017 2016 £000 £000Less than one year 17,127 17,447More than one year and less than five years 24,595 31,306More than five years 30,000 30,000 71,722 78,753
Notes to the Financial Statements
for the year ended 30 September 2017
23 Related party transactions
a Trading transactions and balances arising in the normal course of business
Counterparty
The States of Jersey
and related entities
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
2017
£000
2016
£000
2017
£000
2016
£000
2017
£000
2016
£000
2017
2016
£000
£000
2017
£000
2016
£000
10,324 10,110
1,699
1,382
1,606
2,154
596
565
11
1
The States of Jersey is the Company’s majority and controlling shareholder. Related entities includes all corporatised entities that remain
wholly owned by, or controlled by, the States of Jersey.
During July, August and September, the Company paid pension contributions on behalf of the Jersey Electricity Pension Scheme owing to
delays arising from changing the main banking service provider for the Scheme. In total the Company paid £298,000 on behalf of the
Scheme but was reimbursed fully by the Scheme during the year.
b Energy from Waste Plant
An Energy from Waste plant was commissioned in Jersey during 2011. Jersey Electricity signed a 25 year agreement in 2008 to purchase
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 (2016: £1.1m) and the value of services provided to the plant was
£0.4m (2016: £0.4m).
c Remuneration of key management personnel
The remuneration of key management personnel of the Group (which is defined as the Executive and non-Executive Directors) is set out
below. Further information about the remuneration of individual Directors is provided in the Remuneration Report on pages 51 to 53.
86
2017 2016 £000 £000Short-term employee benefits 664 547Post-employment benefits 147 154Non-Executive Director’s benefits 138 129 949 830FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Five Year Group Summary (unaudited)
Financial Statements
2017
2016
2015
2014
2013
Income Statement (£m)
Revenue
Operating profit
Profit before tax
Profit before tax (pre-exceptional items)
Profit after tax
Dividends paid (£m)
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)
Dividend cover (pre-exceptional costs) (times)
Net debt (£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 (full time equivalents)
Energy
Other
Trainees
Total
Units sold per energy employee (000’s)
Number of customers per energy employee
* restated in the 2014 accounts following changes to IAS 19.
102.3
103.4
100.5
14.8
13.5
13.5
10.6
4.2
211.9
18.0
78.3
176.3
34.66
34.66
17.25
13.80
2.5
2.5
(21.9)
14.4
621
(0.6%)
92.6%
1.5%
5.8%
154
15.9
14.8
13.1
11.6
4.0
209.2
9.8
(81.8)
164.1
37.69
33.31
16.38
13.10
2.9
2.5
(29.0)
31.6
625
(0.3%)
91.6%
2.9%
5.5%
149
14.7
13.2
12.4
10.8
3.8
187.8
12.4
(74.4)
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
(restated)*
102.3
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
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
49,894
49,532
49,320
48,941
48,623
8
12.9p
201
116
9
326
3,091
248
24
12.8p
203
114
10
327
3,079
244
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
87
Financial Calendar
2 January 2018
Preference share dividend
23 February 2018
Record date for final dividend
1 March 2018
Annual General Meeting
29 March 2018
Final dividend for year ended 30 September 2017
21 May 2018
Interim Management Statement – six months to 31 March 2018
1 June 2018
Record date for interim Ordinary dividend
29 June 2018
Interim dividend for year ending 30 September 2018
2 July 2018
Preference share dividend
14 December 2018
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 1 March 2018 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).
88