Jersey Electricity Plc Annual Report 2019

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FY2019 Annual Report · Jersey Electricity Plc

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INSPIRING A ZERO CARBON FUTURE
REPORT AND ACCOUNTS 2019

KEY ACHIEVEMENTS 2019

JERSEY ELECTRICITY KPIs

Revenue (£m)

Profit before tax (£m)

Ordinary dividend paid per share (p)

Unit sales of electricity (m)

Lost time accidents

Return on energy assets (%)

Customer minutes lost

CO2 level (gCO2e/kWh)

Customer service score

Employee engagement score

2019

110.3

14.8

15.3

627

6.8

78%

7.8

2018

106.6

15.3

14.5

634

7.5

N/A*

7.6

*Like for like data not available as new methodology adopted.

Detail on why these items are viewed as key indicators of performance
is contained in the relevant sections within the Annual Report.

PROFITS AND REVENUES

ENERGY GROWTH AND SOLUTIONS

• Group revenues up 3% to £110.3m

• 627 million units of electricity sold

• Group pre-tax profits down 3% to £14.8m

• 51,103 customers on supply, an increase of 542

• Powerhouse.je revenue up 6% to £15.2m

• Over 900 customers switched to discounted space

• Powerhouse.je profit levels up by 10% to £0.9m

and water heating tariffs

• Smarter Living aids the increase of fuel switch leads

ST HELIER WEST PRIMARY SUBSTATION

• Commissioned and in service December 2018

• Relieves pressure on supplies to 80% of St Helier previously
served by Esplanade and Queen’s Road primary substations

HEALTH AND SAFETY

• Awarded British Safety Council Sword of Honour

• Future proofs network to meet increasing demand

• One minor Lost Time Accident (LTA)

RENEWABLES

•

Installed largest solar PV array in Jersey
on Power Station roofs

• 81kW peak array expected to generate

over 90,000 kWhs a year

• Plans for first solar car-port installation

• Ground-mounted solar farm pilot plans advanced

• Dedicated Solar Projects Officer appointed

AFFORDABILITY

• 3.5% tariff increase only second rise in five years

• Standard domestic tariff 18% below UK average
(and 30% below the Ofgem default maximum
tariff) and 16% below EU average

SMARTSWITCH

• 46,522 Smart enabled meters installed

• Over 90% of customer base now covered

• Pay-as-you-go option roll-out imminent

ELECTRIC TRANSPORT

• 572 pure electric vehicles now

registered in Jersey

• Almost 1,000 hybrid vehicles registered

• Entire public charger network upgraded

to smart pay-as-you-go

• Public charger network extended to 22

• First public pay-as-you-go 50kW rapid
charger installed at the Powerhouse

PEAK DEMAND

• 150MW recorded on 15 December 2018

• Last year's all-time record was 178MW

SUPPLY SECURITY

• Only six Customer Minutes Lost (CMLs)

• 13 times more reliable than UK average

ENVIRONMENT

• Delivered power at a carbon intensity level of 26g CO2e /kWh

• Around one tenth of UK grid carbon levels

• 90% less carbon than local gas

• 92% less carbon than local heating oil

PEOPLE

• New Head of Digital Technology

• Wellbeing Group established following

• New Head of Customer Experience

successful pilot Wellbeing Week

and Communications

• Mental Health Awareness course rolled out

• Employee Conference ‘Power Up’ held

• 85% response rate to employee survey
and increase in rating from 7.6 to 7.8

• 150 employees now attended
Living Leader programme

• Five employees completed the INSEAD
Gender Diversity course

•

Improved recruitment process

• Ten 21-years’ service awards

• Four 40-years’ service awards

CONTENTS

DIRECTORS, OFFICERS AND
PROFESSIONAL ADVISERS

CHAIRMAN'S STATEMENT

CHIEF EXECUTIVE'S REVIEW

GROUP PURPOSE

CLIMATE EMERGENCY

ENERGY GROWTH

MAINTAINING AFFORDABLE ELECTRICITY
AND PRICE STABILITY

ENSURING SECURITY AND RELIABILITY
OF SUPPLY

GENERATION AND TRANSMISSION

DISTRIBUTION

SMARTSWITCH

CUSTOMER SERVICE STANDARDS

COMMERCIAL

JENDEV AND POWERHOUSE.JE

PROPERTY AND JEBS

JERSEY ENERGY

HEALTH AND SAFETY

SUSTAINABILITY IN THE COMMUNITY

OUR PEOPLE

OUTLOOK

FINANCIAL REVIEW

GOVERNANCE

FINANCIAL STATEMENTS

NON-EXECUTIVE DIRECTORS
Phil Austin MBE, FCIB, FCMI (Chairman)
Aaron Le Cornu BSc, ACA
Alan Bryce MSc, CEng, FIET
Wendy Dorman BA, ACA
Tony Taylor BSc
Peter Simon MA, MBA (Distinction)

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
Both Jersey Electricity plc (‘the Company’) and Jersey Deep
Freeze Limited (together ‘the Group’) are incorporated in 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

CHAIRMAN'S STATEMENT

It was a privilege to be appointed Chairman of Jersey
Electricity at the AGM in February. I would like to offer my
sincere thanks to my predecessor Geoffrey Grime for his
hard work and commitment during 10 years as Chairman
throughout which he helped steer the Company through a
significant and sustained programme of investment. That
investment is today bearing fruit for customers in terms of
supply reliability, competitive pricing and carbon reduction,
and for shareholders in terms of sustained growth in
dividends.

Jersey now benefits from an energy platform that is
substantially ‘future proofed’ for years to come, and
the business is strategically well positioned to meet the
challenges and opportunities ahead.

Group revenue for 2018/19 was £110.3m, 3% higher
than last year, however, profits were impacted by the mild
winter which saw electricity unit sales fall 1% to 627 million
from 634 million. Profit before tax fell 3% to £14.8m,
down from the £15.3m achieved last year. The Board has
recommended a final dividend for this year of 9.25p, a 5%
rise on the previous year, payable on 26 March 2020.

Looking ahead, new technology and digitalisation are
major global factors impacting virtually all companies,
including utilities, and these have the potential to positively
transform the customer experience. We therefore expect
new services, technologies and digital to play an increasing
role in our business.

Climate change presents us with both challenges and
opportunities. While warmer temperatures may have
some adverse impact on unit sales of electricity, Jersey
Government’s declaration of a climate emergency and
ambition to push for net zero carbon by 2030 presents
us with many opportunities for growing our share of
the energy market. Given that electricity is now almost
completely decarbonised, the main way the Island will
reduce carbon emissions further is by displacing fossil
fuels with electricity and energy efficiency. To adapt to
this changing landscape we have reset our Vision to
‘enable life’s essentials and inspire a zero-carbon future’

which recognises the importance of working with the
community, customers and partners.We have made some
key strategic management appointments this year and have
also welcomed to the Board a new non-Executive Director
in Peter Simon. We held a Board Away Day in March at
which we established seven strategic themes to achieve that
Vision.

Our core objective, however, remains to serve our
customers with secure, affordable and sustainable electricity
now and long into the future. Our below inflation 3.5%
tariff rise in April 2019 was only our second rise in five
years and our tariffs remain very competitive compared with
other jurisdictions, including the EU and UK. The electricity
we supply is not only virtually completely decarbonised
but one third of our imports is already from certificated
renewable sources. Furthermore, this year we have invested
in local renewables and brought solar PV on to the grid.

As well as performing better than many UK power
companies at an operational level, this year we took part
in the UK Customer Satisfaction Index (UKCSI), which for
the first time has enabled us to benchmark ourselves against
UK mainland utilities against various customer service and
satisfaction attributes. With an overall rating of 78%, I am
very pleased to report that we delivered a solid debut result
and materially outperformed UK utilities, which
averaged 72%.

These strong performance levels would not be possible
without a highly skilled and dedicated team. My thanks go
to our Executive and non-Executive Directors and, just as
importantly, all colleagues throughout the business for their
commitment, hard work and loyalty.

19 December 2019

“Jersey benefits from an
energy platform that is
substantially ‘future proofed’
for years to come.”

CHIEF EXECUTIVE'S REVIEW

“We are now focusing
on our Vision of ‘inspiring
a zero-carbon future’ and
helping the Island achieve
its carbon ambitions.”

Group pre-tax profits were down 3% to £14.8m from
£15.3m on an increased turnover of £110.3m (£106.6m
2018). Revenues in our Energy business at £86.6m were
5% higher than 2018 (£82.3m), a drop in unit sales over
winter being offset by the sale of heavy fuel oil to Guernsey
Electricity (GEL) and the 3.5% price rise in April 2019,
resulting in profits of £12.3m compared with £13.4m
in 2018.

The seventh warmest winter since records began and a
particularly mild February have, not unexpectedly, impacted
unit sales of electricity – down 1% to 627 million kWhs from
last year’s 634 million. This was also reflected in a lower peak
demand which fell 16% from an all-time record of 178MW in
March 2018 to 150MW recorded on 15 December 2018.

Our Powerhouse store and online retail business continued
to perform well. Revenue rose 6% to £15.2m from last year’s
£14.3m and operating profit rose 10% to £0.9m. Elsewhere,
other business units performed at a similar level to last year.
JEBS, our contracting and business services unit, was around
break-even. Our Property business achieved profits at £1.7m,
while other business units produced operating profit of £0.6m,
similar to that delivered in 2018.

The year 2018/19, our 95th anniversary, however, marked a
new chapter for Jersey Electricity. Not only have we welcomed
a new Chairman and a new non-Executive Director to our
Board, we are entering a new phase in the Company’s
development. We have refocused our Vision to reflect a
greater sense of purpose and ambition to reduce Jersey’s
carbon levels in response to the climate emergency, changing
customer attitudes, the emergence of new technologies and
the digitalisation of power companies.

The impending and stark threats to the world due to climate
change and Jersey Government’s approval of proposition
P27/2019 to declare a climate emergency on 2 May 2019,
along with a Government commitment to explore how Jersey
could deliver carbon neutrality by 2030, present Jersey
Electricity with the opportunity to work with Islanders and the
Government to reduce Jersey’s carbon footprint.

As our investment in network assets continues to pay
dividends for customers in terms of supply reliability (just six
Customer Minutes Lost*), competitive pricing (around a third
cheaper than the UK price cap) and a virtually completely
decarbonised electricity supply (just 26g CO2e/kWh), Jersey
Electricity is now focused on ‘inspiring a zero-carbon future’;
working with partners to help facilitate the Island’s carbon
neutrality ambitions and giving the Island confidence that this
is within reach – arguably at a lower cost and in a shorter
timeframe than many other places.

Areas in which we are making progress include increasing
investment in electric transportation and renewables,
increasing our share of the domestic and commercial energy
market, and enhancing our focus on digital technology to
facilitate efficient operation of our business and create new,
innovative energy propositions for our customers.

This year we have invested in extending and enhancing
Jersey’s public electric vehicle (EV) charging network to 22
chargers and we aim to have 75 public chargers across
the Island by the end of the next financial year. Though the
introduction of solar photovoltaic (PV) will not result in further
carbon reductions in the electricity we supply, we installed
the largest PV array in the Island to date on the roofs of
La Collette Power Station in June, in response to growing

public demand for on-Island renewable generation and to
help diversify our energy sources and this is one of several we
have been exploring during the year.

Providing affordable electricity for everyone is one of our
core objectives and that means we must seek to make local
renewables economically viable without artificial subsidy.
We were encouraged by the conclusion of the Government
review into our Standby Charge for commercial embedded
generators published in February. This study, conducted by
independent advisers NERA, found that Jersey Electricity
was justified in recovering a fair contribution to the costs of
providing grid and backup power services to developers
benefiting from them. Not doing so, the report said, would
lead to price rises for other customers. The report found that if
anything, we erred on the side of caution in our calculations
and our proposed Standby Charge of £3.25 per kWp per
month, implemented on 1 May 2019 could, in fact, be much
higher.

We increased customer tariffs by a below-inflation 3.5% from
1 April 2019 following the fall in the value of Sterling and
other inflationary pressures. This was only our second price
rise in five years and still means that following the introduction
of the latest price cap introduced by UK energy regulator
Ofgem at the beginning of 2019, our standard domestic tariff
is one third cheaper than the equivalent standard capped
tariff in the UK. We also remain within our target of +/- 10%
of the EU15.

We understand that price and price stability are of utmost
importance to our customers but as we seek to improve the
customer experience across all business units, we this year
reviewed our customer research processes. As a member
of the Institute of Customer Service we took part in the UK’s
largest customer benchmarking study, the UK Customer
Satisfaction Index (UKCSI). This has enabled us to benchmark
ourselves against UK utilities and national leaders in other
sectors for the first time. I am therefore pleased that we scored
an excellent 78% in the Customer Satisfaction Index, well
above the 72% averaged by utilities in the UK and just above
the ‘all sector’ average of 77%.

Alongside price stability, supply reliability is also crucial to
maintaining our reputation, franchise and trust as a monopoly
provider. We have invested heavily in recent years in major
infrastructure projects to achieve this. We commissioned our
£17m new primary substation St Helier West in December
2018, bringing much needed relief to 80% of St Helier’s
network that had been under stress.

Though the final phase of our Smart Meter rollout,
SmartSwitch, to replace our 4,500 Pay As You Go key meters
with Smart Meters, met with delays from our vendor partner
Payzone this summer, the live roll-out is due to start early in
2020 and is expected to be completed by next summer.

Investment in staff and succession planning continued
with some key appointments, including a new Head of
Digital Technology and Head of Customer Engagement
and Communications, plus continued investment in training
and development; most notably our personal leadership
programme, Living Leader. We also conducted another
Employee Survey with an uptick in results and held our
Employee Conference using a new and successful format.

*Customer Minutes Lost (CMLs) represents the total supply interruption time in
minutes experienced by our customers averaged across all customers connected
to the network in a year.

GROUP PURPOSE

Serving our community sustainably with affordable, secure,
low carbon energy remains our core long-term objective. We
have reset our Vision to ‘enable life’s essentials and inspire
a zero carbon future’ which recognises the importance
of working with the community, customers and partners
now that the core electricity service is virtually completely
decarbonised. We created an employee consultation group,

comprising employees at all levels across the business to help
us test what this means and how we best engage our people.
In June, we held an Employee Conference – ‘Power Up’
– to communicate and explain this and give all employees
the opportunity to discuss what it means for them. This was
positively received with constructive feedback on how we
might accelerate progress.

There are seven key themes of our Vision that help to describe
what it means for stakeholders and what we are trying to
achieve:

Customers: We put customers at the heart of our business,
giving them choice, control and value for money in a
transparent and trusted way.

Lifestyle: We aim to enhance the lifestyle of Islanders and
power the economy by providing innovative, low carbon
energy services and solutions.

Environment: We support the Government’s carbon
neutrality objectives by growing electricity’s share of the
energy market, reducing carbon emissions, helping to
conserve resources and protect the environment.

Technology: We aim to be leaders in the application of
technology, enhancing efficiencies, unlocking new services
and digitally enabling our employees and our customers.

Partnerships: We aim to be the partner of choice for the
Government of Jersey and the Island’s parishes, supporting all
their energy needs.

Our People: We aim to be an employer of choice in Jersey,
where employees are engaged, supported and developed.

Investors: We provide fair returns to our investors
over the medium to long term.

We want to be seen as:

• Essential to delivering a decarbonised energy system
• The operator of a resilient network
• The preferred partner for Government and business
• A technology focused company
• A transparent and trusted service provider
• An employer of choice in Jersey
• Passionate about protecting the environment
• Progressive and innovative

We have established a number of workstreams to
operationalise our Vision and help us achieve it. Areas include
being a leader in renewables - by enabling more locally
generated renewable power to be introduced to Jersey’s
energy mix cost effectively either directly or by providing third
parties with Power Purchase Agreements (PPAs) that give
them confidence to invest. We will continue to encourage
electric transportation by investing in the latest public charging
infrastructure. In addition, we aim to be a leader in the
application of technology and digital for the benefit of our
customers and the business.

Our Values remain unchanged and are now embedded in
our culture:

• 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 people.

• 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 value diversity and 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 people.

• Excellence: We continuously strive to work in a way

that’s both innovative and simple to deliver cost effective
solutions.

• Reliability: We are trustworthy, dependable and

reliable, delivering on our commitments and always there
when our customers need us.

CLIMATE EMERGENCY

The report by UN’s Intergovernmental Panel on Climate
Change (IPCC), commissioned at the Paris climate talks in
2016 and published in October 2018, caused a seismic
shift in attitudes to climate change. An assessment of
more than 6,000 scientific studies, the report laid out two
scenarios: Earth’s average temperature increasing by a)
1.5oC since pre-industrial temperatures and b) an increase
of 2oC since pre-industrial temperatures.

It warned we have until 2030 to limit global warming to
a maximum of 1.5oC, beyond which even half a degree
will significantly worsen risks of drought, floods, extreme
heat and poverty for hundreds of millions of people. Sea-
level rise would affect 10 million more people by 2100 if
the half-degree extra warming brought a forecast 10cm
additional pressure on coastlines. But the greatest impact of
the difference would be on nature. Insects for example, vital
for pollination of crops, and plants are almost twice as likely
to lose half their habitat at 2oC. Many animal species would
become extinct and 99% of corals would be lost.

In this year’s Climate Action and Support Trends, Patricia
Espinosa, Executive Secretary of UN Climate Change
wrote: ‘Once a distant concern, climate change is now
an existential threat and the greatest challenge facing this
generation. It is abundantly clear that business as usual is
no longer good enough. Rapid, deep and transformative
change is needed throughout society – not only to reduce
emissions and stabilise global temperatures, but to build
a safer, healthier and more prosperous future for all. This
must be done urgently and cooperatively; a global project
requiring the best efforts from all nations, all businesses and
all people.’

Like any power utility, climate change poses risks and
opportunities for Jersey Electricity. Around the world, as
we have seen, storms, wildfires, droughts, heat waves and
rising seas, can directly lead to power outages, increased
electricity prices and increased maintenance and capital
costs. Evidence now suggests the energy supply chain,
particularly power generation, transmission and distribution,
is vulnerable to climate change and disaster events.

Acute physical risk to Jersey Electricity is mitigated by our
Security of Supply Standard, diversification of supply,
appropriate insurance and our Business Continuity Plan,
which is tested regularly under various scenarios. Chronic,
longer term physical risk from climate change is more likely
due to rising sea levels. The Government is already acting
by drafting a Shoreline Management Plan, which models the
impact of sea water flooding and sets a range of policies
to manage different parts of the Island’s coast over the next
100 years.

As a business, flooding has been a consideration in the
siting of our entire major infrastructure over the last two
decades. For example, the strategic hub of our 90kV network
and connection point for our Normandie 3 supply cable,
South Hill Switching Station, commissioned in 2011, is sited
high on Mount Bingham, clear of the flood zone, while in
reasonable proximity to La Collette Power Station. The site
of our latest primary substation, St Helier West, has been
carved out of a former quarry on Westmount, a considerable
height above St Aubin’s Bay. Western Primary is on high
ground by the airport in St Peter, while Rue des Pres Primary,
which serves the East of the Island, is a considerable
distance inland. Our Powerhouse headquarters and Queen’s
Road Primary that houses our emergency gas turbine
generators is also on an elevated part of St Helier with good
separation from other generators sited at La Collette Power
Station. Archirondel, termination point for both Normandie1
and Normandie 2, though right on the coast, is adequately
defended from the sea. A review is planned following long-
term flood risk assessments (50-year horizon) carried out by
the Government.

Disruption to supplies due to the extreme snow storms that
struck in March 2013 was caused by damage to overhead
lines and it has long been our policy to underground these
where practicable. Less than 20km of overheads remain
on the network and most of them serve sparsely populated,
remote rural areas.

Transition risks posed by climate change, whether regulatory
by Government climate strategies or technological, are
mitigated by close monitoring of future Government policy
and senior management co-operating in its formulation as
well as tracking market trends in emerging technologies and
deploying them where cost effective and practicable in a
small offshore jurisdiction.

Jersey Electricity is adopting aspects of the Financial Related
Disclosures to better inform our stakeholders on the actions
we are taking to plan for climate change.

For the near future, climate change presents more
opportunities for us as business than it does risks. The IPCC
climate change report was the last wake-up call in Jersey
and the Council of Ministers voted to approve a proposition
to declare a climate emergency on 2 May 2019. The elected
States Assembly have tasked Ministers with the need to
evaluate and report on what it will take to become carbon
neutral by 2030. Ministers are now drawing up an initial
high-level policy impact assessment of how to achieve this by
the end of 2019.

1.5oC2ooC * Building Bye-Laws (Jersey) Technical
Guidance Document 11.1B 2016

** Department for Business, Energy and
Industrial Strategy Greenhouse Gas
Reporting - Conversion Factors 2019

Jersey Electricity is passionate about the environment and
has long been committed to helping the Island reduce its
carbon emissions by providing our customers with low carbon
imported electricity and advising them how to use it efficiently.
We therefore welcome the Government’s response to last
year’s landmark report by the UN’s Intergovernmental Panel
on Climate Change (IPCC) which warned that the world
was on track to reach a rise of 1.5oC above pre-industrial
temperatures between 2030 and 2052 and that 2oC
warming would have catastrophic consequences for all life
on earth.

That response came in May with the declaration of a climate
emergency and the aim of exploring what it would take to
make Jersey carbon neutral by 2030 – a much more ambitious
carbon reduction target than the Government had set out in its
2014 plan, Pathway 2050 – an Energy Plan for Jersey, which
was to reduce emissions by 80% from 1990 levels by 2050.

Jersey Electricity has already helped the Island achieve a 48%
reduction in emissions between 1997 and 2017 which was
mainly due to the Company’s switch from local generation,
using heavy fuel oil, to importing low carbon supplies from
France. This year we delivered power to customers at a
carbon intensity of 26g CO2e/kWh. This is almost one tenth
of the emissions of the UK’s electricity system (calculated at
255g CO2e**), local gas (241g CO2e/kWh*), and local
heating oil (298g CO2e/kWh*). With a third of the Island’s
emissions arising from heating residential, commercial and
public sector buildings using fossil fuels, the main way the
Island can achieve its carbon-neutrality ambitions is to
replace fossil-fuel-fired heating and cooling systems with low
carbon electric solutions. Similarly, with road transport, which
accounts for another third of total emissions, we are investing
heavily to facilitate a transition to electric mobility.

In partnership with Jersey Water, we are funding the biggest
tree planting initiative the National Trust for Jersey has ever
undertaken, covering 20 acres with 6,000 trees at Mourier
Valley in the North of the Island. Working with the Trust and
Jersey Trees for Life we see this as a positive carbon reduction
initiative on the journey to deliver a zero-carbon future.

Energy efficiency also has a significant role in carbon
reduction. We have always offered free energy efficiency
advice and offer a service to visit customers in their homes to
help them better understand how to get the most from their
electric heating systems. Our investment in Smart Meters,
when combined with our online Smart Account, enables
customers to monitor their usage and change behaviours
to reduce consumption. In addition, we have enabled
customers to learn about the latest energy saving smart home
technologies and low carbon heating solutions in the ‘Smarter
Living’ area opened last year in our Powerhouse store.

Renewables
This year we installed the largest photovoltaic (PV) array
in Jersey on the roofs of La Collette Power Station and
have plans to install another on a specially built car port
on the car park we lease to B&Q. The 81kWp La Collette
installation went live in June generating local solar power
on to the grid and giving all Islanders a share of local
renewables.

We partnered local installer SunWorks to fit the array, which
was four times the size of the one we installed as a trial on
the Powerhouse roof in 2013. Consisting of 289 award-
winning Norwegian REC solar panels, it is expected to
generate over 90,000 kWhs a year. Data from the site is
being transmitted via GSM and is being remotely monitored
with information on each individual panel available for
ease of performance monitoring and maintenance. The
panels themselves have the lowest carbon footprint among
leading manufacturers because the energy used in the silicon
production process is low carbon as 96% of Norway’s
electricity is from hydro-electric sources.

Although introducing local solar will not result in further
carbon reductions in the electricity supplied in Jersey, a
third of which is already from renewable hydro-electric
sources in France, it sits comfortably as an additional
local source of energy alongside our existing imported
decarbonised power. We intend it to be the first of a series
that will diversify energy sources and have this year hired a
dedicated Solar Project Manager to identify and progress
potential sites.

We are also working with prospective partners on a larger
scale pilot, export-only, ground-mounted solar farm and we
remain committed to connecting smaller scale embedded
renewable generators to our network on terms that allow us
to fairly recover the costs of grid backup services using a
Standby Charge. An independent Government review into
these charges, concluded in February, confirmed that we
are justified in recovering our costs via such a charge. We
implemented the charge of £3.25 per kWp per month on
1 May for commercial embedded solar only and are
currently reviewing charges for technology specific
generation such as Combined Heat and Power (CHP)
among other generation types, as recommended by
the report.

We still believe large-scale renewables are not economically
viable without subsidy given the competitive price at
which we already source electricity, however we remain
committed to connecting private generators and are willing
to consider longer term Power Purchase Agreements to allow
commercial scale developers to raise financing.

total customers

customers on
discounted tariffs

5 1 1 0 3

1 89 1 0

UP 542
FROM LAST YEAR

UP 925
FROM LAST YEAR

ENERGY GROWTH

Units sales, at 627 million, were slightly down on last year
due to an exceptionally mild winter. This was also reflected
in the year’s peak demand, which at 150MW was well
below the previous year’s all-time record of 178MW. Despite
the vagaries of the weather, downward pressure on unit
sales remains through energy efficiency and, though minimal
at present, micro generation from domestic renewables.
While we advise customers how to be more energy efficient
and wish to encourage the deployment of local renewables
in our energy mix, we continue to develop propositions
and promote renewable technologies, such as heat pumps
and induction cooking, that encourage Islanders to fuel
switch from gas and oil to electricity in both domestic and
commercial markets. The Government’s declaration of a
climate emergency and revised carbon reduction ambition
to make Jersey carbon neutral by 2030 aligns with our own
strategy and presents an opportunity for future growth as we
help Jersey to further decarbonise.

Though we await the delivery of Jersey Government’s carbon
neutral strategy, the initial evaluation of which is to be
presented in December 2019, we have been encouraged
by the UK Government’s announcement in March 2019,
that gas boilers would be replaced by low-carbon heating
systems in all new homes built on the mainland after 2025
in an attempt to tackle the escalating climate crisis. This is
a clear acknowledgement of the need to find alternatives
to fossil fuel for mainstream domestic heating in a major
European country. Former Chancellor Philip Hammond said
in his spring statement that a so-called future homes standard
would be introduced ‘mandating the end of fossil fuel
heating systems’ in the UK.

Energy Solutions
We have expanded our Energy Solutions team that is
responsible for developing customer propositions and
delivering load growth through fuel switching. We are
streamlining the customer journey from initial enquiry to
installation to make it faster and smoother. The Energy
Solutions team has again met an increased internal target
this year by fuel switching 186 domestic homes in Jersey.
Aiding this important work is our ‘Smarter Living’ energy
hub and customer information centre, opened in July 2018,
within the Powerhouse retail area. ‘Smarter Living’ serves as
a one-stop energy hub, staffed by trained energy advisers,
promoting low carbon electric heating solutions and Smart
home technology in a real home environment so customers
can see how these technologies would look and feel in their
own homes.

After its first full year in operation ‘Smarter Living’ has
resulted in a 14% increase in fuel switching leads to the
Solutions team. The team has also hosted educational
and promotional events for architects, contractors and
associated tradesmen to encourage greater understanding
of our offering and increase the application of low carbon
electricity. ‘Smarter Living’ also aligns with our revised Vision
and strategic objectives of supporting the Government’s
environmental agenda and net zero-carbon future,
enhancing the lives of Islanders and encouraging the use of
digital technologies.

The Solutions team has also focused on the important
commercial sector. As well as converting hotel and restaurant
kitchens to all electric solutions that include energy efficient
induction cooking, heat pumps are now the generally
preferred choice for heating and cooling new office
buildings.

Electric transportation
We have long considered electric transportation to be a
signifcant area for emissions reduction and growth for the
business and we have done much to raise awareness of
the economic and environmental benefits while facilitating
its uptake. This year has seen the sharpest year-on-year
rise yet in all-electric and hybrid vehicles on Jersey’s roads
corresponding with our biggest investment in the Island’s
electric vehicle (EV) charging infrastructure, both public and
private.

The total number of pure EVs registered in Jersey at year
end was 572, an increase of 189 on last year. Significantly,
the number of commercial electric vans has more than
doubled in the past two years from 52 in 2017 to 111 as
more businesses and organisations realise the financial and
environmental benefits.*

With support from Jersey Electricity, Jersey Post led the way
and has continued the decarbonisation of its 110-vehicle
fleet it began in 2016. Jersey Post now boasts 69 EVs, with
a further 15-20 planned next year. We have also helped
Jersey Police electrify its fleet by providing three Mennekes
22kW chargers at Police HQ in May. The installation allows
for a further six chargers to be fitted as the Police plan to
add a further five EVs to the three BMW i3s it acquired in
February. The airport Fire and Rescue Service followed suit,
also taking delivery of an i3 this year.

Tool and plant hire company 4hire together with C.I. Hire
provide electric vans and plant for hire, while security and
facilities company G4S has introduced two EVs to its fleet
and has plans for more. Just under 1,000 hybrid vehicles are
also registered in the Island up from 271 last year.*

This upsurge in EVs is mirrored by our own increased
investment in infrastructure. In February, we completed the
upgrade of all the original public charge points installed in
multi-storey car parks in 2013 to smart Chargemaster units.
In partnership with the UK’s Charge-Your-Car public charging
network we have now enabled ‘pay-as-you-go’ payments via
an app or contactless card, while also giving drivers access
to over 2,200 chargers in the UK. We also installed Jersey’s
first free-to-access contactless payment system – via debit or
credit card – 50kW rapid charger at our Powerhouse HQ,
capable of fully charging the average EV in well under one
hour (and for many vehicles 80% of capacity in 25mins).

In June, the Government’s Infrastructure Minister switched on
an additional six charger bays we installed in the Pier Road
multi-story car park – bringing the Island’s overall number of
public charging bays to 22 at year end. At the same time
he opened a further four dedicated EV priority parking bays
which have proved extremely popular with EV owners who
do not need to charge. We have also reached agreement
to install more chargers in public car parks at First Tower, St
Aubin, Red Houses and St Brelade’s Bay, and we are in talks
with businesses across the Island to acquire further charge
point sites similar to the successful, customised, surfboard-
style installation at the El Tico Restaurant. Our aim is have
installed 75 public charging bays by the end of 2020.

*Figures supplied by DVS as of 7 October 2019

2050
90%

2030
30%

% NEW CARS
REGISTERED AS ULEVs
(ULTRA LOW EMISSION VEHICLES)
These figures are taken from
Government transport targets as set out in
the 2014 Energy Plan, Pathway 2050

2020
10%

2040
60%

If met, the
impact on CO2
would be savings of...
by 2020 · 5,579 tonnes
by 2030 · 16,738 tonnes
by 2040 · 33,465 tonnes
by 2050 · 50,213 tonnes

111

374

+ nearly 1,000 hybrids

“Our aim...
75 public charge points
by the end of 2020.”

572TOTALELECTRICVEHICLESON JERSEY REGISTER as at 7 October 2019MAINTAINING AFFORDABLE
ELECTRICITY AND PRICE STABILITY

We continue to focus on delivering secure, low carbon
electricity supplies and maintaining relative stability in
customer tariffs. Our below-inflation rise of 3.5% effective
from 1 April 2019 was only our second price rise in five
years following the 2% increase in June 2018. This more
recent rise was largely driven by a weakening of Sterling
relative to the Euro and other inflationary factors. Despite
this, the most recent ‘default maximum tariff’ introduced by
Ofgem, the UK electricity Regulator, to cap prices payable
in the UK, is set at a level that is more than 30% higher than
the average customer is paying in Jersey. Our domestic tariffs
also continue to benchmark well against other jurisdictions,
including the EU15, which is presently around 15%-20%
higher than Jersey tariffs.

We have a long-term rolling importation framework with EDF
which has been in place for 35 years since 1984 when we
installed our first subsea cable between Jersey and France.
We extended this by five years to 2027 in 2017 to help
maintain a stable importation regime over a potentially
uncertain Brexit period, with the intention that a similar
contractual arrangement would be put in place post 2027.
EDF has provided assurance that whatever the final terms of
the UK’s exit from the EU are, this will not affect our existing
supply agreement. This agreement combines a fixed price
component with a market related mechanism that allows us
to price lock in future prices over a rolling three-year period.
Our electricity purchases are materially, albeit not fully,
hedged for the period 2019-22.

This year we imported 94% of Jersey’s electricity requirements
from EDF. This represents a substantial portion of our cost
base and is contractually denominated in Euro. To reduce our
exposure to foreign exchange fluctuations and to aid tariff

planning, we also enter into forward currency contracts. Due to
this hedging, the average Euro/Sterling rate underpinning our
electricity purchases during this financial year was 1.19 €/£
against the average spot rate of 1.13 €/£ due to continuing
volatility on foreign exchange markets brought about by Brexit.
While our strategy provides us with some degree of protection
and forward stability, we expect further turbulence in energy
and foreign exchange markets going forward.

Though our Smart Meter installation programme SmartSwitch
met with unavoidable third party delays this summer, we
are pleased that the final phase to replace 4,500 Pay As
You Go (PAYG) key meters is set to go live early in the New
Year and is now expected to be completed by summer
2020. SmartSwitch has already brought efficiencies for the
business and benefits for customers, including our 24-hour
uninterrupted heating tariff Economy 20 Plus (E20+) that
supports our fuel switching strategy. Around 200 customers a
year are joining this tariff. This year, over 900 new domestic
customers joined our various discounted space and water
heating tariffs bringing the number of customers now on our
off-peak tariffs to 18,910.

An independent Jersey Government review into our Standby
Charge for commercial embedded generators published
its findings in February. It concluded that we are justified
in recovering our costs of providing grid and backup
power services to these customers via such a charge. We
implemented the charge of £3.25 per kWp per month
on 1 May for embedded commercial solar generating
facilities only and are currently reviewing charges for other
embedded generating technologies such as Combined Heat
and Power (CHP), as recommended by the report, to ensure
they are fully cost reflective.

ENSURING SECURITY
AND RELIABILITY OF SUPPLY

Jersey has an electricity system that many jurisdictions would
envy in terms of decarbonisation, affordable and stable
pricing and, importantly, its reliability.

As a provider of over a third of the Island’s energy needs,
security of supply is crucial to the day-to-day wellbeing
and comfort of Islanders and Jersey’s multi-billion pound
economy, especially the thriving financial services sector
and burgeoning digital economy. Supply reliability is also
important to our standing and reputation in the community
and with government. To achieve this we focus on ensuring
our infrastructure is securely designed, well maintained and
that our employees are trained to respond to adverse events if
they do occur.

Having enough capacity to meet demand (‘supply margin’)
is essential to supply security. With our three supply links
to France successfully operating now for three years, our
importation capacity is 202MW, well in excess of our record
peak demand of 178MW recorded in March 2018. We
also operate these links in the most secure configuration so
that if one were to develop a fault, the load would seamlessly
switch to the others. We also ensure our on-island distribution
network is well invested. This year is the first full year with
our newest primary substation St Helier West in operation.
This has relieved pressure on Queen’s Road and Esplanade
primaries and around 80% of customer supplies in St Helier.

We measure supply reliability in Customer Minutes Lost
(CMLs). This represents the total supply interruption time in
minutes experienced by each customer on average in a year.
This year our CMLs were just six, our joint lowest for 10 years,
and which continues to compare very favourably with the UK
where the distributers averaged 78 CMLs in 2017-18.*

We work to an ‘adapted N minus 1 standard’. This broadly
means we seek to maintain supplies to all customers during
the failure of the largest component in the system (see below)
and we strive to minimise the risk of such an asset failure.
When assets do fail, we seek to ensure we are well prepared
to deal with this by restoring supplies safely and quickly.

SUPPLY SECURITY STANDARD
Jersey Electricity’s system is designed to meet an

‘adapted N minus 1 security standard’ as follows:

• A one-in-eight year winter peak demand
• All normal load in the event of the loss on 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

JERSEY CUSTOMER
MINUTES LOST (CMLs)

78*

AVERAGE UK
ELECTRICITY DISTRIBUTER
CMLs IN 2017-2018

Generation
Imports from EDF account for 94% of our electricity
requirements, a third of which are from renewable hydro-
electric generation. We generated only 0.3% on-Island at La
Collette Power Station. The remaining 6% of supplies again
came from the Government-run Energy from Waste (EfW) Plant.
The mild winter saw peak demand down 15% at just 150MW,
recorded on 15 December 2018, well below our all-time
record of 178MW set in March 2018.

We continue to maintain La Collette Power Station, however,
for emergency back-up. Following Board approval for a
project to install a second 90/33kV transformer at the Station,
engineers have this year carried out detailed planning of the
works and begun the procurement of the principal plant and
equipment, including 90kV cabling and protection system.

Once completed in late 2020, the additional transformer
will provide greater resilience on our 33kV network, which
would otherwise require support from local generation should
the existing transformer on this site fail. It will also permit the
retirement of ageing cables between La Collette and Queen’s
Road. The unit will be supplied from our 90kV South Hill
Switching Station where provision has already been made to
connect into existing switchgear at the site.

The Energy team has also undertaken 90kV maintenance
work at Queen’s Road Primary Substation, where our two
emergency fast-start gas turbines, with a joint capacity of
47MW, are located together with a 90/33kV transformer.
Queen’s Road is also the connection point on our network for
the cable supplying Guernsey.

Transmission
Maintenance of our 90kV transmission network is vital for
supply security and to meet future demand as Jersey moves
from fossil fuels to low carbon electricity to meet its 2030
zero carbon ambitions. Last year, we reported the completion
of the final phase of the upgrade of the 2km French-side
land cable from the beach at Surville, Normandy, to the
substation at St Rémy des Landes. During this outage we also
took the opportunity to install beach stabilisation measures
(Facines) to maintain cover over the cable and this year we
can report that this has been extremely successful in not only
maintaining cover over the cable but also in halting the dune
erosion in the area. This project is an excellent example of
the close co-operation and support we enjoy from our French
partners and the community in Normandy.

With support from our own engineers, our partners in the
CIEG, Guernsey Electricity (GEL), have been preparing for
the emergency replacement of the GJ1 cable link between
Jersey and Guernsey throughout the summer. The new
60MW, 37.4km cable, manufactured by NKT in Sweden,
was installed between Grève de Lecq on Jersey’s north coast
and Guernsey’s Havelet Bay early in October and was
in service, with all site works and burial complete in both
Islands, in November.

2 GWh
JE LOCALLY GENERATED

37 GWh
GENERATED BY EFW PLANT

ELECTRICITY SOURCES
2018/2019 IN %

+0.1%

+0.7%

YEAR

2011-12

2012-13

2013-14

2014-15

2015-16

2016-17

2017-18

2018-19

2.5%

20.7%

14.9%

1.4%

2.9%

1.5%

0.2%

0.3%

EfW

5.2%

3.9%

4.9%

4.6%

5.5%

5.8%

4.9%

5.6%

Import

92.3%

75.4%

80.2%

94.0%

91.6%

92.0%

94.9%

94.1%

-0.8%

618 GWh
IMPORTED FROM EDF

HYDRO 38% NUCLEAR 62%

Distribution

Our biggest and most important on-Island infrastructure
project for five years, our £17m St Helier West Primary
Substation, was successfully commissioned and operational
on schedule by mid-December 2018. The facility, which has
been almost 10 years in the planning and building is the final
piece in the jigsaw of our robust 90kV Distribution Network
ring. It relieves pressure on supplies to 80% of St Helier
previously served by Esplanade and Queen’s Road primaries.
It further enhances supply security and substantially future
proofs the network to meet increasing demand.

By August 2018, all major items of plant and equipment
had been delivered and installed. Excavations for the 90kV
cabling started the following month and the cables were
installed, jointed and terminated into the substation and
existing network throughout the autumn. After extensive
commissioning and testing, including the crucial integration to
existing control systems, and the re-arrangement of adjacent
11kV network, customer load was transferred on to facility.
By Spring 2019, we had connected approximately 12MW
of load.

It has been one of the most challenging infrastructure builds
we have ever undertaken. The 10,000 sq ft steeply sloping
site at Westmount was a former coastal quarry requiring
extensive ground investigations throughout 2015 before
complex civils works could begin. These were completed in
September 2017 when French contractors Engie INEO took
over to begin the build.

The façade and retaining wall have been clad in granite to
blend into the surrounding landscape and all that remains
to be done is re-landscaping to include a public viewing
platform overlooking St Aubin’s Bay.

This year we installed around 28km of new cable, seven new
substations and 883 new services. We also refurbished
11 substations and maintained 184 substations and 18km
of overhead line. Substations on the network now number 787.

SMARTSWITCH

Safe, efficient, reliable and affordable power has long been a driver
of economic growth and rising living standards. Today, advances in
information technology on both sides of the meter are transforming how
energy companies distribute electricity and how their customers use it.
The digitalisation of power providers combined with smart, intelligent
controls and interactive appliances enables deeper, direct relationships with
customers and new, automated services – both pillars of our new vision for the
future. Smart Meter technology is the foundation of this transformation and a
precursor to Smart Grids that manage supply and demand through a variety of
generation sources, including renewables, and sometimes battery storage.

We are well ahead of the UK in the roll-out of Smart Meters. At year end we had
installed a total of 46,522 Smart Meters. We also managed to achieve our first
100% smart parish, in St John, by replacing 100% of our ‘dumb’ credit meters
at the beginning of September with a number of the other parishes down to
single digits. The final phase of this £11m, multi-year project is the replacement
of our 4,500 Pay As You Go (PAYG) key meters with smart-enabled PAYG
meters. Smart PAYG enables customers to ‘top up’ their meters remotely as
easily as they do a mobile phone. This means elderly or vulnerable customers,
who have difficulty getting out to top up their keys, will be able to allow a relative
or friend to credit their meters on their behalf without having to return to the
house with the key. There is also the added convenience of over 80
‘top-up’ locations to choose from compared with the current 22.

Though delayed beyond our control in the
summer by our vendor partner Payzone,
the PAYG roll-out is due to start in 2020
following a trial among 190 States-owned
Andium properties.

Once completed, we expect SmartSwitch
to accelerate our journey into a digital future,
with the second phase of the project scheduled
to encompass the creation of a PAYG app that
will enable customers to charge their meters
at anytime from anywhere.

Smart technology also aids our long-term
zero-carbon aims by enabling new tariffs
that encourage customers to move from fossil
fuels to low carbon electric heating. Already
almost 19,000 customers are on our heating
tariffs, aided by our first 24-hour uninterrupted
heating tariff, Economy 20 Plus (E20+) that
was made possible by Smart Metering.

Jersey’s Smart Meters work in tandem with Smart Account,
a secure online customer portal that stores bills and enables
customers to view their electricity consumption profile
in simple Beta version charts on their phone, tablet or PC.
With a lifespan of 10 to 15 years, this end-to-end metering
system has the flexibility to change to meet customers’ future
data viewing preferences as they too, embrace the digital age.
We expect to provide enhanced data services
as a next step in this process.

46,522

smart meters
INSTALLED TO DATE

CUSTOMER SERVICE STANDARDS

Customer Focus continues to be one of our six core Values
and is one of the pillars of our new strategy: ‘We put
customers at the heart of our business, giving them choice,
control and value for money in a trusted and transparent
way’. Concentrating attention further on the demand side
and deepening our relationships with customers ‘beyond
the meter’ requires commitment to improving the customer
experience across all business units.

This re-focused approach to Customer Care began last year
with the launch of our Smarter Living concept store and re-
organisation of our Energy Division to unite complementary
customer facing activities such as Metering, Distribution
Planning, Construction and Faults into one Service Delivery
function. It has continued this year with several initiatives.

customer facing staff successfully completed the Institute’s First
Impressions training programme. This teaches how to have
greater understanding and empathy surrounding customers’
needs while reflecting our caring and environmental ethos.

But crucially, for us, the Institute undertakes the UK’s largest
cross-section customer benchmarking study, the UK Customer
Satisfaction Index (UKCSI). This comprises 26 metrics of
customer experience, involves 10,000 customers overall,
45,000 responses, measures customer interaction channel
usage and satisfaction, complaint drivers and complaint
handling. The Institute publishes its findings in January and July.
Using participants from our own customer database, the UKCSI
has enabled us to benchmark ourselves against UK utilities and
national leaders in other sectors for the first time.

In September, we appointed a Head of Customer Experience
and Communications. This new ‘customer champion’ is
tasked with ensuring customer needs are understood and
reflected seamlessly across our service offerings through the
whole business and that efficiencies and improvements are
implemented through all customer journeys.

I am therefore very pleased to report that we achieved a
very good result, scoring 78% in the Customer Satisfaction
Index, well above the 72% averaged by utilities in the UK and
just above the ‘all sector’ average of 77%. Only the water
companies (Welsh, Northumbrian, Scottish) and one UK
electricity supply company (OVO) scored higher.

To gain enhanced insights into our customers’ needs and their
feelings about us as a monopoly essential service provider,
we reviewed and changed our annual customer research
provider. We have now become a member of The Institute
of Customer Service. This body provides organisations with
an understanding of their current level of customer service
via regular surveys and requires them to demonstrate a
commitment to improving it.

Among the benefits of membership are training programmes
to develop critical people skills and behaviours among
employees that drive a consistent approach to service
delivery and enhance the customer experience. Over 30

Importantly, the UKCSI is divided into four overarching
customer priorities:

• Experience: Measures the quality of customers’ experiences

with us

• Complaints: Extent to which customers perceive that we

genuinely care about them and build the experience and
customer journeys around customers’ needs

• Emotional Connection: Measures the extent to which we

engender feelings of trust and reassurance

• Ethics: Measures our reputation, openness and

transparency and the extent to which we are deemed to ‘do
the right thing’

“We scored well above UK utilities

in the Customer Satisfaction Index”

83%
JE

82%

84%
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JE - Jersey Electricity UK - average ‘all sector’

These are then broken down into further priority
elements such as:

• Ease of dealing with an issue
• Competence of staff
• Billing
• Helpfulness of staff
• Product/service reliability

Although this UKCSI assessment gives some
comfort that we benchmark well against the
UK utility sector, we are not complacent.
While we expect technological innovation and
digitalisation in the power sector to transform
how electricity is generated, used and paid
for in coming years, we intend to ensure our
customers reap the benefits of better services
enabled by new, smarter technology.

E
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S
S

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OLD FIGURES?

UK CUSTOMER SATISFACTION INDEX (UKCSI)

UK ALL-SECTOR AVERAGE

UTILITIES

JERSEY ELECTRICITY

77.1

72.1

78.0

Set against ALL UK UTILITIES, Jersey Electricty would sit in 5th position.

Jendev is our in-house software configuration
business that focuses on developing and
implementing solutions for the utility industry.
Established as a Microsoft Partner in 1998, Jendev
serves as an internal resource for Jersey Electricity
as well as delivering solutions to a number
of external clients in the utility industry.

Digital technology is at the heart of Jersey
Electricity and Jendev is focused on helping
to deliver simple, efficient solutions across the
business and beyond. The team supports the
implementation of business critical projects
such as the Smart Metering project, SmartSwitch.
Jendev also continues to implement and develop
their flagship billing product, Jenworks.

Whilst Jendev will continue to support a diverse
group of clients, which it has grown further over
the last two years, there will in the short term be an
increasing focus on internal projects given
the scale of opportunity within Jersey Electricity.
This will enable the team to develop further
capability and experience that can subsequently
be leveraged across third party clients.

Having this highly skilled team within the Group’s
portfolio allows Jersey Electricity to respond
quickly to new business challenges and
opportunities as they emerge. The Jendev
business unit has undergone continued renewal,
investing in new knowledge and skills to
ensure we are well placed to deliver the latest
technology in the utility industry space.

Turnover in the year at £1.3m was slightly
higher than 2018 and the business met its
profitability target for the year.

Our Powerhouse store and online retail
business powerhouse.je continued to
consolidate its position as the number
one electrical retailer in Jersey. This was
a particularly pleasing result given the
challenges being faced right across the
retail sector in Jersey and elsewhere.
Revenue rose 6% to £15.2m and
operating profit rose 10% to £0.9m.

All core products categories - TVs, white goods, computing
- grew year-on-year and newer categories such as smart
home technology, although still in an early adopter
stage of maturity, has the potential for significant growth in
the future.

The Powerhouse has an ambition to be recognised as one
of the best independent electrical retailers in the British
Isles. The team was rewarded this year by being ‘highly
commended’ in three separate UK industry awards: PC
Retail, Innovative Electrical Retail and Electrical Retail Times.

This year we made more inroads into the electric transport
category by taking on an exciting range of electric mopeds
and bicycles.

Training represents an important enabler of this and the
entire retail team undertook the Institute of Customer Service
First Impressions training course.

We have continued to work closely with our suppliers and
brands to enhance the shopping experience by upgrading
display fixtures and installing selected branded areas
around the store where they fit with our positioning.

The overall business has been excellent in 2019. However,
we should not be complacent. There are warning signs in
the UK retail sector, with several big-name brands exiting
the market or struggling to remain profitable.

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 that are rented on the open
market. 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.

Profits in our Property division,
excluding the impact of investment
property revaluation, at £1.7m,
were £0.1m lower than last year
due to higher maintenance costs
and increased depreciation charges,
following re-roofing works on the
Powerhouse and Medical Centre, and
replacement of the air conditioning
system on the ground floor of the
Powerhouse. Further works on the air
conditioning system for the remainder
of the Powerhouse building will be
carried out over the next year.

Our investment property portfolio was
revalued upwards this year by £0.7m
to £21.2m by the external chartered
surveyors who review the position
annually, primarily due to the growth in
the value of the residential properties.

Building Services (JEBS)

JEBS’ skilled technicians provide a wide range of building and
contracting services to domestic and commercial customers. This
year we have restructured and refocused this business out of the
highly competitive contracting services activities and into less
competitive activities that more closely support our Group Vision.
These include domestic and commercial electric heating and heat
pump installations, together with street lighting and electric vehicle
(EV) charging infrastructure.

Following the creation of our Smarter Living energy hub in the
Powerhouse, we have seen a significant increase in customers
enquiring about fuel switching to all-electric solutions and we are
now responding to this increasing demand by deploying JEBS
resources into these areas. In addition, the climate change agenda
has increased focus on the harmful effects of burning fossil fuels and
increased awareness among the general public of the need to fuel
switch to low carbon electricity.

This year the team in JEBS delivered its highest number of fuel
switches in any one year. Investment in specific training of our skilled
technicians continues with more recent training in the installation,
maintenance and commissioning of new heat pump services.

Revenue from JEBS fell £1.6m from 2018 levels to £3.3m as last
year was influenced by one particularly large contract.

As a leading pan-Channel Islands consultancy, Jersey
Energy and its Guernsey office, Channel Design Consultants,
provide premium environmental and building services
advisory, design and site administration services to end user
clients, architects, the Government of Jersey and States of
Guernsey, Parish Town Halls and developers.

Established 25 years ago to promote energy and
environmental solutions in building design and energy
related services, Jersey Energy has enjoyed a busy year with
a consistent, high quality work stream from repeat business
and new clients as buildings and their services become ever
more complex in this environmentally conscious age, and
energy efficiency and carbon reduction increasingly feature
in more stringent Building Regulations.

The six-strong highly skilled team collaborates with planners,
architects, builders and developers in the design process
that balances environmental and commercial considerations
to deliver high performance buildings, both in the domestic
and commercial market. The team this year was rewarded
with the Jersey Construction Council Award for Business of
the Year with under 10 Employees which is a significant
achievement amongst tough competition. This accolade
was followed by the award for Best Landscape Architecture

Project in relation to the built environment for the lighting on
the Pitt Street re-development, St Helier.

Jersey Energy completed its first full design project, Grainville
School Phase V, using the new AutoDesk Revit design
software. The whole project team, architectural, structural
and building services were involved with the integrated 3D
design tool that provides a completely fully co-ordinated
construction model for the proposed end product.

Working alongside Energy Solutions, Jersey Energy has also
been heavily involved with the roll out of electric vehicle (EV)
chargers at a number of locations around the Island.

Ongoing investment in training ensures the team maintains
the highest standards and its engineers are up to date with
the latest regulations and technical requirements.

Channel Design Consultants in Guernsey has continued to
maintain a good client base and has worked on a number
of challenging projects this year, including drafting in a
helicopter to install replacement chillers on an existing
building.

Turnover in the year at £0.6m was at a similar level to 2018
and the business met its profitability target for the year.

2016

2017
2015
2019
LOST TIME ACCIDENTS (RIDDOR)

2018

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 defined
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.

Safety is one of our six core
values: ‘We do everything
safely and responsibly or not at
all – nothing is more important
than the safety of the public, our
customers and our people’.

HEALTH AND SAFETY

Nothing is more important to us as a business than the
safety of our employees, contractors, customers and the
public at large - all our stakeholders - and it is an area in
which we invest much time and resource.

Electricity generation, transmission and distribution
can be extremely hazardous activities if not managed
properly. We therefore have a vigorous Occupational
Health and Safety Management System (OHSMS), in
place and a very constructive and open Health, Safety
and Environment (HSE) culture. This includes a forum for
direct communication between the Chief Executive, senior
management and Safety Representatives, who are largely
made up of frontline employees.

Our HSE performance and culture was recognised in
October by the award of the British Safety Council’s
prestigious Sword of Honour. This is the second time we
have been honoured following our success in 2013. The
award is only open to organisations from around the world
that have achieved the maximum Five Stars in the British
Safety Council Audit programme, as we did last year, and
is designed to celebrate and recognise health and safety
management excellence. Recipients must demonstrate to an
independent adjudication panel ‘a culture of best practice for
health, safety and welfare throughout the business from the
boardroom to the shop floor’.

Our approach to HSE follows a ‘risk-based’ process. We
seek to address new and revised legislation and adapt to
operational environments. We ensure all employees are fully
competent in the work we ask them to do and importantly
that 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.
Last year’s BSC Five Star Audit provided guidance for
continual improvement and our dedicated HSE Team has
built on the solid foundations we have in place by increasing
focus on proactive measures such as more detailed safety
planning, more site inspections and incident investigation
and reporting procedures. This is reflected in the Company
experiencing just one, minor Riddor Lost Time Accident this
year which although disappointing, was not serious.

Working in conjunction with Human Resources (HR), the HSE
Team has implemented mechanisms to aid the recognition
of and support for employees’ mental health and the
management of psychosocial hazards. A new stress policy
sets out the aims and objectives of JE’s approach and attitude
towards mental health. New processes are being established
as the business recognises the importance of good mental
health and wellbeing and strives to help and support
employees who may experience problems in this area.

We continue to work with the Health and Safety Inspectorate
(HSI) to reinforce key safety messages to the community
at large. This year initiatives have included another radio
campaign and bill mailings 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 held a Safety Seminar
with the Jersey Construction Council and updated and
published guidance for farmers and agricultural workers,
building contractors and scaffolders on working near
overhead power lines.

Although it is the vigilance of all our employees that
ensures we maintain such a good record on HSE, a special
thanks go to our dedicated HSE team and our Safety
Representatives who do so much to create a distinctive
culture for safe working among colleagues, contractors and
the public.

DAYS LOST (RIDDOR)

SUSTAINABILITY IN THE COMMUNITY

As an essential service provider with a natural monopoly, being
regarded by our customers as a trusted partner in our small
community is hugely important to us. We have incorporated
trust into our new Vision and aspire to be ‘the trusted partner for
all things energy’. However, with almost 100 years of history
and around 300 employees, we support our community in so
many ways that go beyond our normal business activities.

encourage children to reconnect with nature and understand
the causes and impacts of biodiversity loss and the steps to
protect habitats.

We also combined education and environment with
sponsorship for the second year of the Trust’s five-day Love
Nature Festival, which featured a packed calendar of events
set in and around St Ouen’s Bay in Jersey’s National Park.

Through corporate sponsorships, employee fundraising and
CSR activities, we help many charities and organisations.
We have a policy to focus our resources on charities and other
beneficiaries in Jersey, concentrating on health, education and
the environment - and the latter has dominated the community’s
conscience this year, particularly climate change.

As long-term partners of the National Trust for Jersey we have
supported many Trust initiatives that are aligned to our own
environmental and sustainability ethos. We will be deepening
our relationship with the Trust over the next three years, having
recently announced two significant sponsorships aimed at
protecting the environment and encouraging a zero carbon
Island.

In partnership with Jersey Water, we have agreed to re-forest
a large section of Mourier Valley in the North of the Island by
planting up to 6,000 trees. Working with the National Trust
and Jersey Trees for Life, we are very excited by this project.
This project will make a small but meaningful contribution to
carbon reduction, create a new habitat for wildlife and the
whole community to enjoy, and we hope helps our community
start the vital journey to deliver a zero-carbon future.

We will also be supporting the Trust’s Education Programme by
funding its two part-time Education Officers for the next three
years. The Programme’s aims are two-fold. Firstly, to develop
awareness of the causes and impacts of climate change
and the steps that can be taken to reduce these. Second, to

As Jersey’s leading low carbon energy supplier, it was entirely
appropriate that we partnered the Jersey Evening Post’s
EcoJersey environmental initiative. We also sponsored the
launch event itself, which brought together over 100 influential
Islanders, providing us with an ideal opportunity to convey an
ambition for the Island of inspiring a zero carbon future. We
built on the launch by supporting the EcoJersey Countryside
Clean-up at which employees volunteered to remove invasive
species and litter from one of the Island’s picturesque
headlands. A Coastal Clean-up followed in July.

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/s Award and Jersey Construction Council’s
(JeCC) Sustainability Award. The former was this year won by
SCOOP an organic food co-operative to promote sustainability
and reduce waste. The JeCC Sustainability Award went to the
Jersey Development Company for the International Finance
Centre 5 which showcases the latest sustainable materials and
energy saving technologies.

We brought together corporate sponsorship and CSR activity
at three events. Employees were in action in the dark, small
hours in April complementing our sponsorship of the second
Walk Into Light which raised £10,000 for the Sanctuary Trust.
Almost 300 people – twice as many as last year - formed a
‘candle-lit snake’ walking 5km from Corbière at 4.30am and

emerging into sunrise at St Aubin. Employees
also took part in the annual Family Nursing &
Homecare (FNHC) Colour Festival at which we
sponsored the colour green. We have supported
FNHC for many years, providing much needed
equipment every Christmas for nurses who work
in the community. The Colour Festival attracted
over 1,500 runners and raised funds for a
Paediatric Palliative Care Worker.

Child Accident Prevention Jersey (CAPJ) is another
branch of FNHC that we have long supported.
CAPJ’s Safety In Action sees over 1,000 Year 5
pupils receive safety training during eight days of
workshops at Highlands College. This year five
of our engineers carried out 32 talks on electrical
safety in the home.

A sponsored cycle challenge formed part of an
employee wellbeing event and raised funds for
Mind Jersey.

This is the third year we have sponsored Jersey
Rugby Club, seen here as very much a centre of
community and our long-standing support for

the Jersey stopover of the Tour des Ports Regatta
and Race Week continued. We also supported
the inaugural Inter-Parish Round-the-Island
Yacht Race.

As well as supporting charities at corporate level,
we also support staff in team and individual
charity fund raising events. Employees also raise
funds for their nominated charities through our
Monthly Staff Number Charity Draw. This year’s
nominated charities were: JSPCA, British Heart
Foundation Appeal, Jersey Arthritis Care, The
Antoine Trust, Cat Action Trust 1977 Jersey,
Multiple Sclerosis Society of Jersey, Jersey Action
Against Rape, Glanville Home for Infirm & Aged
Women, Driving for the Disabled, Holidays for
Heroes Jersey, Cry Jersey and Jersey Christmas
Appeal.

I am always grateful to community partners and
proud of colleagues who give their time and
effort in charity fund raising and community
work, while at the same time enhancing the
profile and reputation of Jersey Electricity within
the community we serve.

OUR PEOPLE

Our People is one of the key pillars of our revised Vision:
‘We aim to be an employer of choice’, that is positively
promoted within our community and attracts a highly
engaged workforce. Only by recruiting, engaging and
retaining the best can we deliver our Vision to ‘enable life’s
essentials and inspire a zero carbon future’.

To measure the effect of these actions, we conducted a
second employee engagement survey in August. The results
were encouraging, with 85% of the workforce responding to
show an overall increase in employee engagement from 7.6
to 7.8. Managers have now drawn up action lists to address
areas still requiring improvement. These include:

This means developing a customer-oriented, performance-
driven, commercial culture and instilling ‘one team’,
cross-departmental working practices. To achieve this and
progress our cultural change programme which we began
last year, we continue to invest in our ‘people agenda’ and
we are putting in place tools and technologies to enable
new, more effective and collaborative ways of working.

During the year we held an important employee conference
in June to highlight where we have come in our 95-year
history in business and where we hope our Vision will take
us. Entitled, ‘Power Up’, every employee attended in one of
two half-day sessions. Armed with iPads, employees were
able to pose questions to the Executive Leadership Team (ELT)
anonymously and vote for those they most wanted answered.
Feedback was positive, with requests for the event to be
held more frequently. Importantly, prior to the conference
itself, we held several workshops to gather feedback from a
broad range of colleagues on our revised Vision, how best to
present it at conference to gain maximum understanding and
allow discussion of changes needed for us to succeed.

Over 150 employees have now attended the Living Leader
programme aimed at helping employees develop personal
leadership skills that we would like to see widespread across
the organisation. We have also conducted department
specific training on providing energy advice to customers
and consultative selling techniques. Following last year’s
employee engagement survey results, other initiatives aimed
at improving employee engagement included training
on conversations about reward and compensation, our
first Wellness Week, Total Reward Statements and the
refurbishment of break facilities at the Powerhouse and La
Collette sites.

• Further review of reward practices and how
compensation is communicated to employees
• A review of wellbeing facilities for employees
• Initiatives to improve internal communication

frameworks and team briefings

A key driver of engagement evident in both surveys is
employee wellbeing in which we are also investing. A
Wellbeing Working Group has established a calendar
of events following the success of a pilot Wellness Week,
which included sessions on mental health awareness, lower
back pain, resilience, nutrition and fitness, and financial
wellbeing. A half-day Mental Health Awareness course
has been rolled out and three employees trained as Mental
Health First Aiders, with a further four employees selected to
complete the training in the near future.

We have improved the recruitment process for internal and
external applicants via an application called Pinpoint, which
we hope will become one of the main ‘routes to market’
for recruitment and careers campaigns. The introduction of
Textio analyses how appealing the tone of the language we
use in policies, HR documents and recruitment advertising is
to a diverse audience.

Five employees completed the INSEAD Gender Diversity
course to help promote diversity in the workplace and
establish inclusive people practices to attract a richer pool
of talent. We are now building out a Diversity plan to
complement activities aimed at making us an employer
of choice.

YEARS

AVERAGE EMPLOYEE AGE

4 AWARDS
FOR 40
YEARS OF
SERVICE

10 AWARDS
FOR 21+
YEARS OF
SERVICE

14.5
YEARS

AVERAGE LENGTH OF SERVICE

OUTLOOK

“To be successful, we will need to
be even more customer focused,
getting ‘beyond the meter’...”

On 2 May this year the States Assembly in Jersey declared
a climate emergency and made a commitment to examine
what it would take to deliver a carbon neutral Jersey by
2030. Jersey Electricity has been assisting these assessments
and it is clear that Jersey is well placed to follow the direction
of travel across the world to an electric future.

Jersey’s electricity grid, including its transmission and
distribution infrastructure, is well invested and entirely
compatible with – and supportive of – a zero-carbon
future. Jersey’s French imported power consists of two thirds
nuclear and one third renewable hydro-electric power.
Crucially, this power is available on demand, is competitively
priced and is substantially more reliable than our experience
of on-Island generation. In our view, therefore, Jersey faces
the potential of being able to deliver carbon neutrality earlier
and at a lower cost than many other jurisdictions if we work
together across the community.

Given that the electricity system in Jersey is substantially
decarbonised, it is now clear to most if not all stakeholders
that the main way Jersey can decarbonise is by displacing
fossil fuel use with decarbonised electricity. In addition, this
outcome could be facilitated by Jersey Electricity retaining
its current business model – meeting the needs of all
stakeholders, including delivering fair, risk-adjusted returns
for shareholders while maintaining competitive retail prices to
customers.

Over the last 12 months, Jersey Electricity has refreshed its
vision to ‘enable life’s essentials and inspire a zero carbon
future’ – our challenge, among others, is to work with our
customers and the community to create products, propositions
and solutions that facilitate carbon neutrality.

To be successful, we will need to be even more customer
focused, getting ‘beyond the meter’ and understanding
customers’ emerging needs better than ever before. We will
also need to innovate and embrace digital technology –
creating new products, propositions and services – offering
our network as an electrical testbed. We expect to focus
on e-mobility, home heating and local renewable solutions,
including a local green tariff.

Despite the prospect of more extensive use of electricity in
Jersey, the future is not without risk to the business. We have
a solid long-term supply contract, good risk management

frameworks and are well hedged in the short term but
there is continued volatility in energy markets and foreign
exchange markets, not helped by the continued uncertainty
of Brexit. Our competitors in oil and gas are unlikely to stand
by and are already looking at broadening their own offers.

Increased legislation or even regulation poses a threat to
the Company, as well as all our stakeholders (including
customers). As the Island becomes more dependent on
electricity, we expect greater scrutiny on supply security
and costs. We have already responded with increased
infrastructure investments and an increased focus on costs,
including better line of sight to efficiency and performance.

The natural retirement of employees is an opportunity
to broaden skillsets into new areas and to better deploy
technology to drive efficiency, productivity and new services
for customers. As our market share increases, we also look
to pursue alternative solutions that can give Islanders and the
authorities comfort over security of supply.

Our response to these risks and opportunities is clear. We
need to serve customers in a way that satisfies their emergent
needs in what we expect will be an increasingly competitive
marketplace. This means identifying customer trends, shifting
behaviours and changing preferences; keeping close to
technological developments including digital; developing
responses to changing markets and Government regulation;
and building capabilities for the next wave of Jersey
Electricity’s future. We are investing resources in all these
areas to take full advantage of what has the potential to be
an exciting future for the Company.

Chris Ambler
Chief Executive
19 December 2019

FINANCIAL REVIEW

Group Financial Results

to the quantum of such profit. In the 2014 financial year, a repair

was performed to the subsea cable between Jersey and Guernsey

Key Financial Information

2019

2018

and Jersey Electricity made a contribution of £1.8m towards the

£110.3m £106.6m

total cost. In March 2019 a cash payment of £0.8m was received

Revenue

Profit before tax

Earnings per share

£14.8m

£15.3m

38.42p

39.54p

Dividend paid per share

15.25p

14.50p

which in effect was a rebate towards the repair costs. A non-cash

pension cost of £1.1m was incurred in the year associated with the

granting of an ex-gratia rise in pensions in service. Further details

are provided in the section dealing with pension matters within this

Final proposed dividend per share

9.25p

8.80p

report.

Net debt

£5.1m

£14.3m

Group revenue for the year to 30 September 2019 at £110.3m
was 3% higher than in the previous financial year. Energy revenues
at £86.6m were 5% higher than the £82.3m achieved in 2018.
The sale of heavy fuel oil to Guernsey Electricity (amounting to
£2.7m) and a 3.5% rise in tariffs from 1 April 2019 were offset by
a 1% decrease in the unit sales volumes of electricity due to milder
weather. Revenue in the Powerhouse retail business increased by
6% from £14.3m to £15.2m. Revenue in the Property business at
£2.3m was at the same level as last year. Revenue from JEBS, our
contracting and building services business, fell £1.6m from levels
experienced in 2018 to £3.3m as the previous year was influenced
by one exceptionally large contract. Revenue in our other businesses
remained at £2.9m.

Cost of sales at £69.3m was £3.4m higher than last year with
an increase in imported cost of electricity, costs associated with
the sale of heavy fuel oil to Guernsey Electricity and higher sales
activity in the Powerhouse retail business being the main reasons.

Other Income was recognised during the year arising from the
receipt of a £0.8m rebate for a subsea cable repair in 2014.

Operating expenses at £26.4m were £2.0m higher than
2018 primarily due to a £1.1m increase in the IAS 19 pensions
cost as explained in more detail later in this report and an
increase of £0.6m in depreciation charges.

Profit before tax for the year to 30 September 2019, at
£14.8m, decreased by 3% from £15.3m in 2018 largely due to
lower profits in our Energy business. A £0.7m upward revaluation
of our investment property portfolio (against £0.3m in 2018) was
another material year-on-year movement.

Profits in our Energy business fell from £13.4m in 2018 to
£12.3m this year. Unit sales volumes decreased from 634m
to 627m kilowatt hours with a milder winter period being the
main reason. Adverse foreign exchange, and rising wholesale
prices, impacted the cost of imported electricity. Customer tariffs
rose by 3.5% in April 2019 yet remained competitive with other
jurisdictions. During the year we sold our remaining stock of heavy
fuel oil to Guernsey Electricity which produced a profit of around
£1.0m. The oil was no longer required post the decommissioning
of our legacy on-Island steam plant. We also impaired assets

associated with this change of operating regime at a cost similar

In the financial year we imported 94% of our requirements from

France (2018: 95%) and generated only 0.3% of our electricity on-

island at La Collette Power Station (2018: 0.2%). The remaining

6% (2018: 5%) of our electricity was purchased from the local

Energy from Waste plant.

The £1.7m profits in our Property division, excluding the impact
of investment property revaluation was £0.1m lower than last
year due to higher maintenance and depreciation costs. Our
investment property portfolio was revalued upwards this year by
£0.7m to £21.2m based on advice from our external consultants
who review the position annually, due primarily to the growth in
the value of the residential properties that we rent to tenants as
yields have increased in Jersey in the last year.

Our Powerhouse retail business saw continued strong growth in
sales with profits also improving by 10% to £0.9m in 2019.

JEBS, our contracting and business services unit had a challenging
year with a £0.1m loss, against a loss of £0.2m in 2018, and a
plan is underway to re-focus, and improve performance, in this
business unit.

Our other business units (Jersey Energy, Jendev, Jersey Deep
Freeze and fibre optic lease rentals) produced profits of £0.6m
being at a similar level to last year.

Net interest paid in 2019 was £0.1m lower than last year at
£1.3m due to interest received on higher cash balances. The
taxation charge at £3.0m was £0.2m lower than 2018 due to
the decrease in taxable profit.

Group basic and diluted earnings per share fell to 38.42p
compared to 39.54p in 2018 due mainly to reduced profitability.

Dividends paid in the year, net of tax, rose by 5%, from 14.50p
in 2018 to 15.25p in 2019. The proposed final dividend for this
year is 9.25p, a 5% rise on the previous year. Dividend cover, at

2.5 times, was lower than the comparable 2.7 times in 2018.

Ordinary Dividends

2019 2018

Dividend paid

- final for previous year

8.80p 8.40p

- interim for current year 6.45p 6.10p

Dividend proposed - final for current year

9.25p 8.80p

FINANCIAL REVIEW

Net cash inflow from operating activities at £27.7m
was £0.7m higher than in 2018 with the impact on working
capital from the sale of heavy fuel oil stock being a primary
driver. Capital expenditure, at £13.9m was £1.0m lower
than £14.9m last year with spend on the St Helier West primary
sub-station being the most material project in 2019. The resultant
position was that net debt at the year-end was £5.1m, being
£30.0m of borrowings less £24.9m of cash and cash equivalents,
which was £9.2m lower than last year.

Cash Flows

Summary cash flow data

2019

2018

Net cash inflow from
operating activities

Capital expenditure
and financial investment

£27.7m

£27.0m

£(13.9)m

£(14.9)m

Deposit interest received

£0.1m

Dividends

£(4.7)m

£(4.5)m

Decrease in net debt

£9.2m

£7.6m

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
programme, was 1.19 €/£. The average applicable spot rate
during this financial year was 1.13€/£ being at the same level
as that during our 2018 financial year. In addition, we also
materially hedge any foreign exchange exposure attributable to
capital expenditure once planning consent, and firm pricing, is
known and the commitment 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. We also employ a policy of
diversification through use of a number of counterparties.

In the 2019 financial year Jersey Electricity imported 94% 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
of decisions being made on customer tariffs. We have been

importing electricity from Europe since 1984 and our latest ten-
year power purchase agreement with EDF, which commenced
in 2013, was extended by a further five years during 2017 to
2027. 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,
consisting of members from Jersey Electricity, Guernsey Electricity
and an independent energy market adviser and follows
guidelines approved by the Board.

Defined benefit pension scheme
arrangements

As at 30 September 2019 the scheme surplus, under IAS 19
“Employee Benefits”, was £8.3m, net of deferred tax, compared
with a surplus of £3.8m at 30 September 2018. Assets rose 14%
from £136.2m to £154.7m in the same period. However liabilities
increased 10% from £131.4m to £144.2m since the last year
end with the discount rate assumption, which heavily influences
the calculation of liabilities, falling from 2.9% in 2018 to 1.9% in
2019 to reflect sentiments in prevailing financial markets.

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 0.5% lower
than the 1.9% assumed under IAS 19 for 2019, the net surplus of
£8.3m would have moved to a deficit of £2.7m. Alternatively if the
discount rate had been 0.5% higher the net surplus would have
increased to £17.9m. In a bid to mitigate the impact of movements
in interest rates and inflation the trustees of the scheme have
adopted a Liability Driven Investment (LDI) approach which seeks
to reduce the risk that asset and liability values change at different
rates, or move in different directions. The proportion of scheme
assets in LDI/UK Gilts products moved proportionately from 20% at
the last year end to 30% at 30 September 2019.

The most recent triennial actuarial valuation, as at 31 December
2018, was finalised during this financial year and showed a
surplus of £3.7m. Unlike most UK schemes, the Jersey Electricity
pension scheme is not funded to pay mandatory annual rises on
retirement. The Pension Scheme Trustees, and the Company, agreed
an ex-gratia award be made to pensioners in light of the surplus.
The capital cost of this agreed 2.25% rise to pensions in service
at 31 December 2018 was £1.1m and was paid by the scheme
but generated a £1.1m charge against the income statement of
the Company. The last ex-gratia award was granted in 2016. The
cash funding rate by Jersey Electricity for future service is 20.6% of
pensionable salaries and employees contribute an additional 6%
to the pension scheme. The actuarial valuation recommended an
increase to 25.4% but it was also agreed that around £1.2m of the
surplus be used to maintain the existing funding rate for the next 3
years until the next triennial valuation. The final salary scheme was
closed to new members in 2013, with new employees, since that
time, being offered defined contribution pension arrangements.
The next triennial actuarial valuation of the defined benefit scheme
will have an effective date of 31 December 2021.

Returns to shareholders

62% of the ordinary share capital of the Company is owned by
the Government 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 (45%) of our ‘A’ Ordinary shares representing 17%
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 14.50p net of tax to
15.25p. The proposed final dividend for 2019, at 9.25p, 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 the ordinary dividend payments over the last
15 years (excluding additional special dividends) that have risen
fourfold from 3.8p to 15.25p.

Dividend paid per ordinary share 2004-2019

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r
a
h
s

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n
e
p

Ordinary dividend

2019

2018

£2.9m

£2.7m

Goods and Services Tax (GST)

£4.5m

£4.7m

Corporation tax

£2.3m

£1.0m

Social Security - employers contribution

£0.9m

£10.6m

£9.3m

The Company regularly communicates with its largest shareholders
and details of discussions, including any concerns are reported to
the Board. The Chairman meets twice a year with the Government
of Jersey, and ensures there is a direct communication between the
non-Executives and our largest shareholder.

Group Risk Management
Our risks and uncertainties

Understanding and managing our risks is front of mind in
everything we do. The Group risk management system is designed
to ensure strategic and operational risks are identified, managed
and reported in a consistent manner. This system also helps us
make informed business decisions in the best interest of our
customers, the Group and our shareholders. It is an evolving
framework as we continue to improve and enhance our risk
management processes.

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Approach

The share price at 30 September 2019 was £4.45 against £4.66
at the 2018 year end. This gives a market capitalisation of
£136m as at 30 September 2019 compared with a balance sheet
net assets position of around £200m. However, the illiquidity of
our shares, due mainly to having one large majority shareholder,
combined with an overall small number in circulation, constrains
the ability of the management team to influence the share price.
We use Edison (an investment research firm) to produce regular
research on our performance to aid the understanding of our
value proposition to a wider body of potential investors in the
quest to improve our longer-term liquidity. The chart below shows
the trending of our listed share price over the last 15 years that
has risen from £1.95 to £4.45.

‘A’ Ordinary share price movements 2004-2019

e
r
a
h
s

r
e
p
£

5.0

4.5

4.0

3.5

3.0

2.5

2.0

1.5

1.0

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Our largest shareholder, the Government of Jersey, also owns
holdings in other utilities in Jersey. It holds 100% of JT Group,
Ports of Jersey, Andium Homes and Jersey Post, as well as
around 75% of Jersey Water. The total direct cash return to the
Government of Jersey from Jersey Electricity in the last year was
£10.6m (2018: £9.3m). The year-on-year increase is largely
down to an increase in the corporation tax paid which was lower
in previous recent years due to tax allowances for substantial
capital project spend on subsea cables in the period 2012-2016.

The Board is responsible for managing the principal risks faced by
the Group, maintaining a risk management and internal control
framework and setting the Group’s risk appetite when pursuing
its strategic objectives. The Board recognises that the system of
risk management is designed to manage, rather than eliminate,
the Group’s exposure to business risks, and can only provide
reasonable assurance and not absolute assurance against material
mistreatment or loss.

The Board has delegated responsibility for overseeing and
assessing the effectiveness of the Group’s system of internal
controls and risk management to the Audit and Risk Committee.
In support of this responsibility, the Audit and Risk Committee
receives regular updates on the risks management processes as
well as updates on the risk management activities undertaken
within the business.

Identifying our principal risks and uncertainties

Our risk management process incorporates both top down
and bottom up elements to the identification, evaluations and
management of risk. We begin with collating input from all
business units on their most significant risks, having regard
to their own priorities. This is consolidated into a Group view
which is presented to our senior leaders to add their own input
on strategic, functional and emerging risks. The proposed
principal risks, including mitigation strategies, are then reviewed
and agreed by the Executive Leadership Team, Audit and Risk
Committee and the Board.

In additional we have included a risk watchlist detailing the
emerging and developing risks which have the potential to impact
our business in the longer term.

FINANCIAL REVIEW

Watchlist

Climate change

UK’s departure from the EU (Brexit)

There is clear evidence that global temperatures are rising

We continue to maintain a watching brief on Brexit developments.

rapidly and is considered by many politicians and the general

Although Jersey is not in the EU, the UK decision to exit

has created uncertainty for the Island. The most material

individual trading relationship we have is our electricity

importation arrangements with EDF and RTE in France. We

public to be the biggest challenge facing society. Given the wide

range of outcomes, it is difficult to predict the exact impact of

global warming. We expect potential risks to be in the form

of both physical in nature (i.e. extreme weather events such

received confirmation in 2016, that our long- term contractual

as storms and heatwaves) and regulatory obligations (new or

agreements, which have been in place for 35 years, would not

strengthened carbon neutrality commitments). We continue to

be impacted and that is still our understanding having again

monitor political and legislative developments and assess the

received recent confirmations. Furthermore, we extended

opportunities and threats to enable us to respond effectively.

the current supply arrangements with EDF by a further five

years, during 2017, to the end of 2027. Foreign exchange

considerations are also a risk, but as referred to on page 38,

we continue to hedge on an on-going basis. In addition, we

have examined our supply chain, and existing contractual

arrangements, for all our business units and have proactively

engaged with the Jersey Government to ensure any concerns we

have are voiced and understood. Uncertainty remains on what

a ‘no deal’ situation might mean to supply chain arrangements

and as mitigation we now hold a higher stock level of items felt

essential to our business units.

Principal risks

Risk

Description and possible impact

Mitigation activities

Regulatory / Political or Legislative change

The table below summarises the Group’s principal risks and

how they are managed. The principal risks are considered by

the Board to be the most significant risks that could materially

affect the Group’s financial condition, ongoing performance

and future strategy. The risks listed do not comprise all risks

faced by the Group and are not set out in any order of priority.

Additional risks not presently known to management, or

currently deemed to be less material, may also have an adverse

effect on the business.

Regulatory

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).

Political

Unfavourable political and/or legislative
developments which cause a significant
change to the operation of, or prospects
for, the business.

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.

Monitor political and legislative developments (e.g. the Government’s Energy Plan) and analyse the
opportunities and threats to enable us to respond effectively.

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.

Reduction in unit sales of electricity
due to, for example, energy efficiency
and the corresponding impact on the
competitiveness of electricity in the
heating marketplace.

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.
Three subsea cables to France on two diverse routes provide resiliency along with a strong cable
repair capability.

The prime defence against falling volumes from the expected continued focus on energy efficien-
cy 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.

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.

The Board regularly monitors the latest position regarding the Scheme and the impact that it is
having on the Company. The Trustees 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.

Power and foreign exchange are hedged in accordance with the agreed strategies which are
reviewed and approved by the Board on a periodic basis.

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.

Financial

Pension
Liabilities

Volatility

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 EDF and RTE contracts are key to
the continuity of supply of electricity to
Jersey.

Asset & Plant
Management

Failure of ageing metering
infrastructure.

Health, Safety & Environment

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 exists 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.
The supply contract with EDF was extended by a further 5 years in 2017 to 2027. We have built a
strong relationship with EDF that has existed since 1984 and also with RTE (the network operator
in France). We maintain ongoing dialogue to ensure we understand any current or potential
future developments that might impact security of supply.
We are also exploring potential options in the renewables space that would result in less depen-
dence on importation.

The SmartSwitch project has resulted in a smarter more modern metering solution replacing
legacy systems. As at 30 September 2019 around 90% of our customers had such new meters in-
stalled and therefore this risk has reduced. The replacement of the current ‘Pay as you go’ system
in the coming year will complete the replacement of the legacy infrastructure.

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 sets standards and monitors 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. Performance measures are explicitly presented as a
separate agenda item at each Board meeting.
Use of British Safety Council for separate audits of both our safety and environmental
performance every 3 years.

People / Succession Planning

People

The Group’s strategy is largely dependent
on the skills, experience and knowledge
of its employees. The inability to retain
executives and other key employees,
or a failure to adequately plan for
succession, could negatively impact Group
performance (both operationally and
financially).

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.

Cyber Security

Catastrophic
breach of our
systems

Due to the nature of our business we
recognise that our critical infrastructure
systems may be a potential target for
cyber threats. We must protect our
business assets, infrastructure and
sensitive customer data and be prepared
for any malicious attack.

We continue to use industry best practices as part of our cyber security policies, processes and
technologies.
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 has been 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
Code, the Directors have assessed the prospect of the Company
over a longer period than the 12 months required by the ‘Going
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 presented to the Board in September 2019.

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. We have a strong balance sheet with
net assets of around £200m supported by £30m of long-term debt
funding which expires in 2034 and 2039.

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. A reduction in
the volume of unit sales of electricity through, for example, energy
efficiency is being mitigated by switching existing customers, who

use gas/oil as their primary heating source, to all-electric solutions.
A dedicated team work on initiatives in this area. However, as we
employ a ‘user pays’ model the Board has comfort on the longer
term consequences of a reduction in the volume of electricity sales,
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).

Based on the results of this analysis, and on the basis that the
fundamental regulatory and statutory framework of the market in
which the Company operates does not substantially change, the
Directors have a reasonable expectation that the Company will be
able to continue to operate, and meet its liabilities as they fall due,
over the five-year period of their assessment through to 2024.

In making this statement the Directors have considered the
resilience of the Company taking into account its current position,
its principal risks 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 will be available in most circumstances.

GOVERNANCE

Board of Directors

Martin Magee
Finance Director

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 a Director
of the Channel Islands
Electricity Grid Limited.
Externally, he is the non-
Executive Chairman of
Aberdeen Standard Capital
Offshore Strategy Fund
Limited and was recently
appointed the Audit
Committee Chairman for
Jersey Post International
Limited. He is a member of
the Institute of Chartered
Accountants of Scotland
having qualified in 1984.

Chris Ambler
Chief Executive

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 the 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

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.

Phil Austin MBE
Chairman

Phil was appointed to the
Board in May 2016 and
took over as Chairman in
February 2019. Most of
his career was in banking
with HSBC in London and,
ultimately, in 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, 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, 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 October 2015 he was
awarded an Honorary
Doctorate in Business from
the University of Plymouth
and in January 2016 an
MBE in the Queen’s New
Year’s Honours List. Phil
is currently also a non-
executive director of City
Merchants High Yield
Trust Ltd and Chairman
of Octopus Renewables
Infrastructure Investment
Trust plc, both publicly listed
companies.

Wendy Dorman
Non-Executive Director

Tony Taylor
Non-Executive Director

Peter Simon
Non-Executive Director

A/N

R/N

A/R

Alan Bryce
Non-Executive Director

A/N

Alan was appointed to the
Board as a non-Executive
Director in December
2015 and is currently a
non-Executive Director at
NIE Networks Ltd, and
an adviser in the utilities
industry. Until recently
he was Chairman of the
wind-farm developer Viking
Energy, and is a former
non-Executive Director of
Scottish Water, 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.

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.

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.

Peter was appointed to the
Board as a non-Executive
Director in February 2019.
Peter is currently Managing
Director, Centrica Home
Solutions, where he leads
their provision of home
energy management, remote
diagnostics and monitoring
solutions through the Hive
range of thermostats,
cameras and other connected
home services. Before this
he was Customer, Product
and Proposition Director for
Centrica’s UK Home business
where he is responsible for
a range of brands such as
British Gas, Local Heroes
and Dyno.
Prior to joining Centrica,
Peter worked at Barclays
in several roles across its
retail, corporate and wealth
businesses in strategy,
transformation and leading
the unsecured lending
business before becoming
Managing Director for
Marketing, Analytics and
Innovation. Prior to this he
spent 15 years in strategy
and M&A consulting, first
with Deloitte and latterly with
PwC Transaction Services.
Peter has an MA in Physics
and Philosophy from Oxford
University and an MBA
(distinction) from London
Business School. He is a
non-Executive Director for
SmartEnergy GB.

Key to membership of

committees

Chairmen of

committees

A Audit and Risk Committee – Wendy Dorman

R Remuneration Committee

– Aaron Le Cornu

N Nominations Committee

– Alan Bryce

GOVERNANCE

Directors’ Report
for the year ended 30 September 2019

The Directors present their annual report and the audited financial statements of Jersey Electricity plc (“the Company”) and Jersey Deep

Freeze Limited (together “the Group”) for the year ended 30 September 2019.

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 2019:

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

2019

5,200
3,773

8,973

2018

5,200
3,773

8,973

Interim paid at 6.45p net of tax for the year ended 30 September 2019 (2018: 6.10p net of tax)

Final proposed at 9.25p net of tax for the year ended 30 September 2019 (2018: 8.80p net of tax)

1,975,641

2,834,200

4,809,841

1,868,772

2,696,320

4,565,092

Re-election of directors
The Board made the decision in 2018 that all Directors will in future seek re-election annually at each AGM.

Directors’ and officers’ insurance
During the year the Company maintained liability insurance for its Directors and Officers.

Policy on payment of creditors
It is Group policy, in respect of all of its suppliers, to settle the terms of payment when agreeing each transaction, to ensure that suppliers are

made aware of the terms of payment and to abide by those terms. The number of creditor days in relation to trade creditors outstanding at

the year end was 9 days (2018: 8 days).

Directors’ Report
for the year ended 30 September 2019

Substantial shareholdings
As at 19 December 2019 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 Government 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 is the largest shareholder of our listed shares and hold 5,252,316 ‘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

19 December 2019

GOVERNANCE

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 Government 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.

The Directors are currently reviewing the latest UK Corporate Governance Code issued in July 2018, together with the supporting Guidance

on Board Effectiveness. The new code applied to accounting periods beginning on or after 1 January 2019 and and will therefore be

applicable in our next financial year and we are reviewing the changes against our existing governance arrangements to ensure that we meet

the expectations of the new Code.

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 2019 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 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 serving at the balance sheet date were Wendy Dorman, Aaron Le Cornu, Alan Bryce, Phil Austin, Tony Taylor

and Peter Simon and they were all considered independent. Geoffrey Grime retired from the Board in February but the Board determined he

remained independent, up until his departure, notwithstanding that he had served on the Board for more than fifteen 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 had also served less than nine years on the Board prior to his appointment as Chairman. 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 40 and 41), 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.

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. Taylor

P. Simon

* attendees by invitation

Performance Evaluation
The effectiveness of the Board is vital to the success of the Company. An external evaluation took place during 2018 using The Trusted

Advisors Partnership Ltd, an external recruitment consultancy firm which has no direct connection with the Company, the findings of which

were reviewed and actions implemented. During 2019 an internal evaluation was performed by the Chairman.

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.

• Approval of contracts

Major capital projects.

Major contracts.

Major investments.

GOVERNANCE

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 internal audit function 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 plans are discussed and

approved.

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 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 40 and 41). The Audit and Risk Committee also reviews and monitors the

independence of the external auditors and the non-audit services provided to the Group.

Stakeholder Engagement
The Company maintains an active dialogue with its largest shareholders and meetings between Government of Jersey (which owns 62% of

our Ordinary share capital) include both the non-Executive Chairman as well as the Chief Executive.

Nominations Committee Report

As Chair of the Nominations Committee (the Committee), I am grateful for the support of my fellow members Phil Austin, Wendy Dorman,
Tony Taylor and Chris Ambler, a majority of whom are independent non-Executive Directors. In February, Phil Austin replaced Geoffrey Grime
when he stepped down, and I would particularly like to thank Geoffrey for his work on the Committee.

During the last financial year the Committee formally met twice. Its principle responsibilities 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.

As planned, Geoffrey Grime retired from the Board at the AGM, and Phil Austin was appointed as Chair. As reported last year, the Board
engaged the Trusted Advisors’ Partnership (TAP) to support the recruitment of a new NED, and this was completed this year, leading to the
appointment of Peter Simon to the Board in February. Peter’s appointment followed an assessment by the Committee of how best to augment
the overall skills on the Board to deliver the Company’s strategy. The extensive open recruitment process focused on skills and experience of
energy markets, energy-related services and delivering these through multiple channels to a mass consumer market. Peter’s background in
energy services with the UK’s market leader, and in formulating strategy and delivering transformational change across energy and financial
services is an invaluable addition to the Board.

The Board is now well positioned in terms of best practice and corporate governance requirements on independence, and none of our non-
Executives has served for more than nine years. The Committee has reviewed its Terms of Reference and has made some minor changes to
take into account feedback from the Board Evaluation process.

In February, the opportunity was taken to review the membership of the other two Board Committees, resulting in Aaron Le Cornu moving
from Chair of the Audit and Risk Committee (ARC) to take over as Chair of the Remuneration Committee, and Wendy Dorman replacing him
as Chair of the ARC. Peter Simon was appointed both to the ARC and the Remuneration Committee.

Looking ahead, the Committee is starting a new open search process for a NED to join the Board as part of our on-going succession planning.

Succession planning for Executive Directors and the wider management team within Jersey Electricity was also considered in detail in a
presentation from the Chief Executive and HR Director to the Board. The Board continues to believe in the value of having a mixed resourcing
process, that offers opportunities to develop senior staff inside the Company, while enhancing Jersey Electricity as an Employer of Choice with
a strong employment proposition to attract external appointees where appropriate.

Taking into account that the Company requires a number of specialist skills that are in short supply on-island, the Committee nevertheless
believes that the Board and senior management team has an adequate pipeline in place to meet its needs.

The Board recognises the benefits to the Company of promoting diversity, based on attributes including gender, age, industry experience,
background and race. We will seek opportunities to improve diversity in the appointment of Executive and non-Executive Directors. The
current profile of the Board is as follows:

Gender

Male

Female

Tenure

0-4 years

5-9 years

>9 years*

Age

41-50

51-60

61-70

Sector

Utilities

Financial Services

Marketing

Taxation

*no non-Executive director has served more than 9 years on the Board

The Committee was updated on the Company’s refreshed Diversity and Inclusion Policy in July. This pursues a strategy of targeting improvement
in diversity through the six key areas of Recruitment, Apprenticeships, Employee Value Proposition, Flexible Working Policies, External
Benchmarking and Training in Diversity. It is not our policy to set measurable targets that involve diversity quotas, but we do measure our
performance in terms of initiatives specifically focused on improving diversity, and for example, all directors will be participating in company
diversity training. The Company participates in the Jersey Board Apprentice scheme, which offers candidates Boardroom experience, designed
to help equip them for a future non-Executive position on the Board of a company or other organisation. The Board has agreed to seek another
candidate when the current placement ends in December.

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
19 December 2019

GOVERNANCE

Audit and Risk Committee Report

Membership and meetings
I took on the role of Audit and Risk Committee Chair on 1 March 2019, replacing Aaron Le Cornu. Aaron remains on the Committee,

together with Alan Bryce and Peter Simon, who joined the Committee on 1 March. I would like to thank all Committee members for their

support over the year, and in particular Aaron Le Cornu for his time as Chair.

Both Aaron and I are Chartered Accountants with recent experience gained in commerce, private practice and other non-Executive roles.

Alan is a Chartered Engineer with extensive experience of the utility sector and experience of serving on Audit Committees elsewhere, and

Peter has extensive relevant commercial experience and an MBA. Full biographies of all members are provided on pages 42 and 43. 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 members are all non-Executive Directors.

The Committee met four times in the last financial year.

The role of the Committee
The key responsibilities of the Committee are to:

• Monitor the integrity of the financial statements and to report to the Board on key judgements and significant issues contained therein

• Oversee the independence, effectiveness and remuneration of the external auditor

• Review the effectiveness of the Company’s internal controls and risk management processes

• Monitor compliance with the UK Corporate Governance Code

• Ensure the effectiveness of the internal audit function

As part of the review of the annual and interim financial statements, the Committee reviews the likely significant issues 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 team 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, and assesses the impact of

any new accounting policies.

The Committee 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 stakeholders. The Committee considers

reports from the internal and external auditors and from management and provides comment on salient issues to the Board. During the

year several of the non-Executive Directors, with specific relevant experience, attended a number of risk workshops taking place across the

organisation including the Energy business and the HR function. 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).

Whistleblowing policy
The Committee is responsible for reviewing the Company’s Whistleblowing policy and management’s response to any concerns raised

through this channel. A revised policy was approved by the Committee in September 2019.

External auditors
A full tender process for the external audit was carried out in 2015 and Deloitte were successful in retaining the engagement. During the

year, a new audit partner, John Clacy, was appointed. John replaces Andy Isham who was appointed in 2015. The Committee will continue

to keep under review all aspects of the relationship with the external auditor and will initiate its next tender process at what is deemed an

appropriate time taking into consideration the period since the last tender. Non-audit services are reviewed on a case by case basis. As

disclosed in Note 6 to the Financial Statements, no non-audit services were provided by Deloitte in the year. The effectiveness of the external

auditor is considered on an ongoing basis driven primarily by discussions with Deloitte on the maintenance of audit quality.

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.

Audit and Risk Committee Report

Fair, balanced and understandable
On behalf of the Board, the Committee considered whether the 2019 annual report and financial statements taken as a whole are fair, balanced and

understandable, and whether the disclosures are appropriate. The Committee reviewed the Group’s procedures around the preparation, review and

challenge of the report and the consistency of the narrative sections with the financial statements and the use of alternative performance measures

and associated disclosures. The Committee also considers any potential inconsistencies raised by the external auditor.

Following its review, the Committee is satisfied that the annual report is fair, balanced and understandable, and provides the information necessary

for shareholders and other stakeholders to assess the Company’s position and performance, business model and strategy, and has advised the Board

accordingly.

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.

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. Throughout the year, certain internal audit reviews were undertaken by BDO on

an outsourced basis, directed by our in-house team. The review of reports provided by Internal Audit and the monitoring of action points relating to

findings provides the Committee and the Board with comfort over the functioning of internal controls. We have appointed a new Head of Internal

Audit who joined the Company in October 2019 and the Committee was actively involved in the recruitment process.

A triennial deep dive into the strategic risks facing our business is conducted, moderated by an external consultant, and the next review will be

undertaken in 2020. Due to the enhanced granularity that such exercises provide to the Committee, additional comfort is generated on the

effectiveness of risk management within the Company.

On behalf of the Committee

W. DORMAN

Chairman
19 December 2019

GOVERNANCE

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 65.

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

19 December 2019

M.P. MAGEE

Finance Director

19 December 2019

Remuneration Committee Report

Remuneration Committee
Having served on the Committee since 2011, I took over the Chair of the Remuneration Committee (the Committee) on 1 March 2019, post

the appointment of Phil Austin as Chairman of the Board. The other Committee members during the year were Phil Austin, Tony Taylor, Peter

Simon and Geoffrey Grime (prior to his retirement on 28 February). The Committee operates within Terms of Reference, agreed by the Board,

which are reviewed annually and available on the Company’s website (www.jec.co.uk). Four 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 reflect the market for similarly

sized roles and fairly reward them for their contribution to the overall performance of the Company. Remuneration packages comprise

basic salary and benefits together with a performance related annual bonus. Benefits for Executive Directors principally consist of a car or

car allowance, private health care and housing subsidy. The salary and benefits for the Executive team are reviewed by the Committee each

November to coincide with the applicable date for the rest of the Company. The Committee makes use of locally focussed benchmarking

data and assesses the remuneration of the Executive team using independent advisors by reference to comparable companies within the UK,

as this defines the relevant labour market for the skills required.

As indicated in this report last year, a change was made to the Executive bonus scheme, with effect from 2019, giving the Committee the

discretion to defer up to 50% of the award for a period of two years, with the ultimate pay-out linked to movements in the listed share price

in the period before vesting. The bonuses paid to the executive directors, as shown in the table below, exclude a 25% deferment of the total

bonus for two years until January 2021. The deferred amounts were £31,250 and £20,500 for C.J Ambler and M.P. Magee respectively

set when the share price was £4.57. The bonus payable to the Executive Directors is performance related, taking account of their individual

responsibilities within the business, together with the results of the Company as a whole, measured against a broad range of objectives. The

remuneration of Directors for the year ended 30 September 2019 was as follows:

EXECUTIVE DIRECTORS

C.J. Ambler

M.P. Magee

NON-EXECUTIVE DIRECTORS

P.J. Austin

A.A. Bryce

W.J. Dorman

G.J. Grime (retired 28 February 2019)

A.D. Le Cornu

P.M. Simon (appointed 28 February 2019)

A.H. Taylor

Total

* cash paid in the year

Basic

salary/fees

Bonus*

Benefits

in kind

Total

2019

Total

2018

242,665

193,077

93,750

61,500

15,327

11,074

351,742

265,651

330,007

259,198

35,600

30,000

26,758

17,797

27,414

15,311

23,000

1,745

1,410

1,745

1,045

1,745

37,345

26,728

31,745

31,728

28,503

26,728

19,207

46,456

29,159

29,728

16,356

24,745

25,400

611,622

155,250

37,581

804,453

775,973

GOVERNANCE

Remuneration Committee Report

Service Contracts
The Executive Directors’ service contracts provide for a notice period of six months and they are put forward for annual re-election at each

Annual General Meeting (AGM). The non-Executive Directors’ service contracts have no unexpired term at the time of election, or re-election,

at each AGM.

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
30.9.20192

Transfer

value at
30.9.20193

Transfer

value at
30.9.20183

C.J. Ambler
M.P. Magee5

£6,233

£6,904

£58,284

£94,683

£1,229,610

£2,325,393

£840,465

£1,814,462

£11,585

Directors’

Increase

contributions

in transfer value

during year

less Directors
contributions4

£389,145

£499,346

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. The employer cash

contributions during the year were £64,549 and £39,774 for C.J. Ambler and M.P. Magee respectively.

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.

Share Schemes
At the 2011 AGM approval was granted to launch an all-employee share scheme. During the 2016 financial year 100 ‘A’ Ordinary Shares

were issued to all staff (subject to Scheme Rules) including the Executive Directors and these shares vested in February 2019. There are no

other share-based incentives such as option schemes or long-term incentive plans operated by the Company. However the Committee has

the discretion to defer up to 50% of the performance bonus to Executive Directors for a period of two years with the ultimate pay-out linked to

movements in the listed share price in the period before vesting.

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 Director pay, Mercer were used to provide such advice. A small premium was paid in the financial year to those who

chaired Committees (Audit & Risk: £5,000; Nomination/Remuneration: £2,000) and to those who were members of the Audit & Risk

Committee (£2,000) for additional responsibility, and to Directors based off-Island (£3,000) for travelling time.

External Appointments
The Company encourages Executive Directors to broaden 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 £100,000 of which £80,000 was retained, and the remainder paid to the

Company, by the individual.

M.P. Magee

Aberdeen Standard Capital 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.

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:

C.J. Ambler

M.P. Magee

30.9.2019

£300,000

£79,071

30.9.2018

£343,949

£135,321

Directors’ Share Interests
The Directors’ beneficial interests in the shares of the Company at 30 September 2019 were:

5% and 3.5%

‘A’ Ordinary Shares

Preference Shares

2019

2018

2019

2018

7,620

13,800

5,000

4,500

3,500

5,000

2,210

7,520

13,700

5,000

4,500

960

41,630

30,720

960

C.J. Ambler*

M.P. Magee*

P.J. Austin

A.A. Bryce

W.J. Dorman

A.H. Taylor

P.M. Simon

*Both C.J. Ambler and M.P. Magee received 100 ‘A’ Ordinary Shares that vested from the all-employee share scheme in February 2019.

There have been no other changes in the interests set out above between 30 September 2019 and 19 December 2019.

On behalf of the Board

A. LE CORNU

Chairman

19 December 2019

GOVERNANCE

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 of Jersey Electricity plc (the ‘parent company’) and its subsidiary (together the ‘Group’):
• give a true and fair view of the state of the Group’s affairs as at 30 September 2019 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;
• have been properly prepared in accordance with Companies (Jersey) Law, 1991.

We have audited the financial statements which 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 Financial Reporting Council’s (the ‘FRC’s’) Ethical Standard as applied to listed 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.

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 key audit matters that we identified in the current year were:

Materiality

Scoping

Significant changes in our
approach

•

revenue recognition - the accrual for unbilled electricity units; and

accounting for revenue within Jersey Electricity Building Services (“JEBS”).

Within this report, any new key audit matters are identified with
are the same as the prior year are identified with

and any key audit matters which

The materiality that we used for the Group financial statements was £700,000 which was determined
on the basis of 5% of profit before tax.

The Group includes three separate legal entities – one subsidiary and one joint arrangement - of
which only Jersey Electricity plc was considered a significant component.

The key changes to our approach since the audit of prior year have been the change of focus of the
unbilled units risk to the accuracy of smart meters and the removal of one key audit matter relating
to the pension assumptions which was no longer considered to be a significant risk. This risk was no
longer considered significant following a detailed risk assessment of the balance.
We also identified that there is complexity involved in the method by which management determines
what level of revenue is attributable to each period and the estimation of the percentage of completion
of the contracts within the JEBs business and consequently this has been identified as a key audit
matter in the current year.

Independent Auditor’s Report
to the Shareholders of Jersey Electricity plc

Conclusions relating to going concern, principal risks and viability statement

Going concern
We have reviewed 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.

We confirm that we have nothing
material to report, add or draw
attention to in respect of these
matters.

We considered as part of our risk assessment the nature of the Group, its business model and related
risks including where relevant the impact of Brexit, the requirements of the applicable financial
reporting framework and the system of internal control. We evaluated the directors’ assessment of the
Group’s ability to continue as a going concern, including challenging the underlying data and key
assumptions used to make the assessment, and evaluated the directors’ plans for future actions in
relation to their going concern assessment.

We are required to state whether we have anything material to add or draw attention to in relation to
that statement required by Listing Rule 9.8.6R (3) and report if the statement is materially inconsistent
with our knowledge obtained in the audit.

Principal risks and viability statement
Based solely on reading the directors’ statements and considering whether they were consistent
with the knowledge we obtained in the course of the audit, including the knowledge obtained in the
evaluation of the directors’ assessment of the Group’s ability to continue as a going concern, we are
required to state whether we have anything material to add or draw attention to in relation to:
•

the disclosures on pages 40 – 41 that describe the principal risks and explain how they are being
managed or mitigated;
the directors’ confirmation on page 40 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; or
the directors’ explanation on page 41 as to how they have assessed the prospects of the Group,
over what period they have done so and why they consider that period to be appropriate,
and their statement as to whether they have a reasonable expectation that the Group will be
able to continue in operation and meet its liabilities as they fall due over the period of their
assessment, including any related disclosures drawing attention to any necessary qualifications or
assumptions.

•

We confirm that we have nothing
material to report, add or draw
attention to in respect of these
matters.

We are also required to report whether the directors’ statement relating to the prospects of the Group
required by Listing Rule 9.8.6R (3) is 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.

GOVERNANCE

Independent Auditor’s Report
to the Shareholders of Jersey Electricity plc

Revenue recognition - accrual for unbilled electricity units

Key audit matter
description

The year-end process of calculating the number of unbilled units of electricity and the value of these units
impacts total revenue for the Group. The value of the unbilled units at the year-end is £5.6 million (2018: £5.0
million) as disclosed in note 14 of the financial statements.

The unbilled units accrual at 30 September was primarily derived from smart meter readings. Approximately
95% (2018: 85%) of the customers are now on smart meters and therefore any issues with the completeness
and accuracy of the data would have a significant impact on the accuracy of the unbilled units accrual.

We changed our focus this year because a significant proportion of the accrual for unbilled electricity units is
determined from smart meters, significantly reducing the level of estimation required compared to previous
years as no judgement is required for the smart meter population of unbilled units.

How the scope of our
audit responded to the
key audit matter

We assessed the design, implementation and operating effectiveness of key controls relating to accuracy of
smart meters and how they link into the determination of the year end unbilled units accrual.

We engaged our specialists to review the general IT controls surrounding the smart meter, billing and
accounting systems and also the accuracy of the interface and calculations between the systems and calculation
of the revenue accrual associated with usage.

Key observations

As a result of our audit procedures, we concluded that the accrual for revenue was reasonable in relation to the
completeness and accuracy of the smart meter data.

Accounting for revenue within JEBS

Key audit matter
description

The Group applied IFRS 15 Revenue from contracts with customers for the first time in the current year. The
Group has a number of different revenue streams as set out in the accounting policies in note 1 to the financial
statements.

For the JEBS segment, a number of these customer contracts span the current and prior accounting year ends.
IFRS 15 states that revenue relevant to the accounting period in which the performance obligations are met
should be recognised. There is some complexity involved in the method by which management determines
what level of revenue is attributable to each period and the estimation of the percentage of completion of the
contracts, which is where the key audit matter was focused.

Revenue recognised in the year for JEBS was £3.3m (2018: £4.8m).

How the scope of our
audit responded to the
key audit matter

We obtained an understanding of the Group’s process for recognising revenue within JEBS, including the
different methods of revenue recognition applied to different types of contracts.

We used substantive analytical procedures to determine if revenue had been recognised in the correct
accounting period and to further assess if the percentage of completion of the customer contracts had been
accurately reflected in the revenue and costs recognised.

Key observations

As a result of our audit procedures, we concluded that the accounting for revenue within JEBS was reasonable.

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

£700,000 (2018: £1,000,000)

Basis for determining
materiality

Approximately 5.0% of pre-tax profit (2018: 7.5% of pre-tax profit).

This change in percentage applied to the benchmark in the current year is to further align the basis to the industry.

Rationale for the
benchmark applied

Given that JEC is a trading group, we have considered profit before tax to be the most suitable benchmark to
use, as it is the main driver of the key performance indicators used by investors.

Independent Auditor’s Report
to the Shareholders of Jersey Electricity plc

PBT £14.8m

Group materiality £0.7m

PBT

Group materiality

Audit Committee reporting threshold £0.035m

We agreed with the Committee that we would report to the Committee all audit differences in excess of £35,000 (2018: £50,000), 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

Revenue

Profit
before tax

Net assets

100%

99%

100%

Full audit scope

Review at Group level

Our Group audit was scoped by obtaining an understanding of the entity and it environment, including internal control, and assessing the risk
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.

The account balances and classes of transaction subject to full audit scope contribute approximately 99% (2018: 98%) of the revenue and 99%
(2018: 99%) of the profit before tax presented within the Consolidated Income Statement and 100% (2018: 100%) 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, which is not subject to a
separate audit.

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.

We have nothing to report
in respect of these matters.

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 position and 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 and Risk 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.

GOVERNANCE

Independent Auditor’s Report
to the Shareholders of Jersey Electricity plc

Responsibilities of directors
As explained more fully in the statement of directors’ responsibilities, 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.

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 FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

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 parent company financial statements are not in agreement with the accounting records and returns.

•

We have nothing to report
in respect of these matters.

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 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.

JOHN CLACY, FCA
for and on behalf of
Deloitte LLP
Recognized Auditor
St Helier, Jersey
19 December 2019

FINANCIAL STATEMENTS

Consolidated Income Statement
for the year ended 30 September 2019

A presentational change to the 2018 figures has arisen as a result of elements previously embedded within cost of sales (£767k rebates credit) being reclassified and shown in revenue.
Gross profit remains unchanged.

Consolidated Statement of Comprehensive Income
for the year ended 30 September 2019

All results in the year have been derived from continuing operations.
The notes on pages 65 to 91 form an integral part of these accounts. The independent auditor’s report is on pages 56 to 60.

Note 2019 2018 £000 £000Revenue 3 110,294 106,641Cost of sales (69,282) (65,877)Gross profit 41,012 40,764Other Income 750 -Revaluation of investment properties 11 689 310Operating expenses 4 (26,369) (24,380)Group operating profit 3 16,082 16,694Finance income 103 28Finance costs (1,365) (1,377)Profit from operations before taxation 14,820 15,345Taxation 7 (2,969) (3,152)Profit from operations after taxation 11,851 12,193Attributable to: Owners of the Company 11,773 12,115Non-controlling interests 19 78 78 11,851 12,193Earnings per share - basic and diluted 9 38.42p 39.54p Note 2019 2018 £000 £000Profit for the year 11,851 12,193Items that will not be reclassified subsequently to profit or loss: Actuarial gain on defined benefit scheme 17 7,643 10,166Income tax relating to items not reclassified 7 (1,529) (2,033) 6,114 8,133Items that may be reclassified subsequently to profit or loss: Fair value loss on cash flow hedges 22 (3,007) (4,261)Income tax relating to items that may be reclassified 7 601 852 (2,406) (3,409)Total comprehensive income for the year 15,559 16,917Attributable to: Owners of the Company 15,481 16,839Non-controlling interests 78 78 15,559 16,917FINANCIAL STATEMENTS

Consolidated Balance Sheet
as at 30 September 2019

Approved by the Board on 19 December 2019

P.J. AUSTIN

Director

M.P. MAGEE

Director

The notes on pages 65 to 91 form an integral part of these accounts. The independent auditor’s report is on pages 56 to 60.

Note 2019 2018 £000 £000Non-current assets Intangible assets 10 683 938Property, plant and equipment 11 217,046 215,153Investment properties 11 21,240 20,460Trade and other receivables 14 383 501Retirement benefit surplus 17 10,417 4,751Derivative financial instruments 22 208 682Investments 12 5 5Total non-current assets 249,982 242,490Current assets Inventories 13 6,018 7,092Trade and other receivables 14 17,995 15,202Derivative financial instruments 22 197 2,338Cash and cash equivalents 24,915 15,735Total current assets 49,125 40,367Total assets 299,107 282,857LiabilitiesTrade and other payables 15 17,320 15,284Current tax liabilities 7 2,714 2,299Derivative financial instruments 22 298 120Total current liabilities 20,332 17,703Net current assets 28,793 22,664Non-current liabilities Trade and other payables 15 21,757 20,348Derivative financial instruments 22 303 89Financial liabilities - preference shares 18 235 235Borrowings 16 30,000 30,000Deferred tax liabilities 7 26,936 25,753Total non-current liabilities 79,231 76,425Total liabilities 99,563 94,128Net assets 199,544 188,729EquityShare capital 18 1,532 1,532Revaluation reserve 5,270 5,270ESOP reserve (45) (41)Other reserves (157) 2,249Retained earnings 192,882 179,666Equity attributable to the owners of the Company 199,482 188,676Non-controlling interests 19 62 53Total equity 199,544 188,729

Consolidated Statement of Changes in Equity
for the year ended 30 September 2019

Note

Share Revaluation
reserve
capital

ESOP
reserve

*Other
reserves

Retained
earnings

Total

£000

At 1 October 2018

1,532

5,270

2,249

179,666

188,676

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)

Equity dividends

At 30 September 2019

At 1 October 2017

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)

Equity dividends

At 30 September 2018

*’Other reserves’ represents the foreign currency hedging reserve.

1,532

5,270

1,532

5,270

(41)

(20)

(45)

(84)

(9)

11,773

(2,406)

(3,409)

6,114

(4,671)

(157)

192,882

199,482

5,658

163,862

176,238

12,115

(20)

(2,406)

6,114

(4,671)

(9)

(3,409)

8,133

(4,444)

8,133

(4,444)

1,532

5,270

(41)

2,249

179,666

188,676

The notes on pages 65 to 91 form an integral part of these accounts. The independent auditor’s report is on pages 56 to 60.

FINANCIAL STATEMENTS

Consolidated Statement of Cash Flows
for the year ended 30 September 2019

IAS 7 ‘ Statement of Cash Flows’ requires the explanation of both cash and non-cash movements in assets and liabilities relating to financing activities. Note 16 shows there have been

no movements in borrowings during the year. Therefore no additional disclosure has been applied.

Of the £24.9m cash and cash equivalents at 30 September 2019, £21.0m (2018: £9.0m) is on fixed term deposits with an average of 66 days remaining (2018: 38 days).

The notes on pages 65 to 91 form an integral part of these accounts. The independent auditor’s report is on pages 56 to 60.

2019 2018 £000 £000Cash flows from operating activitiesOperating profit 16,082 16,694Depreciation and amortisation charges 11,604 11,242Share-based reward charges 16 52Gain on revaluation of investment property (689) (310)Pension operating charge less contributions paid 1,977 1,196Profit on sale of fixed assets (2) (1)Operating cash flows before movement in working capital 28,988 28,873Working capital adjustments: Decrease/(increase) in inventories 1,074 (267) (Increase)/decrease in trade and other receivables (2,675) 671 Increase in trade and other payables 4,023 125Net movement in working capital 2,422 529Interest paid (1,356) (1,368)Preference dividends paid (9) (9)Income taxes paid (2,300) (1,045)Net cash flows from operating activities 27,745 26,980Cash flows from investing activitiesPurchase of property, plant and equipment (13,850) (14,705)Investment in intangible assets (90) (168)Net proceeds from disposal of fixed assets 2 1Net cash flows used in investing activities (13,938) (14,872)Cash flows from financing activitiesEquity dividends paid (4,671) (4,444)Dividends paid to non-controlling interest (69) (51)Deposit interest received 103 28Net cash flows used in financing activities (4,637) (4,467)Net increase in cash and cash equivalents 9,170 7,641Cash and cash equivalents at beginning of year 15,735 8,076Effect of foreign exchange rate changes 10 18Cash and cash equivalents at end of year 24,915 15,735Notes to the Consolidated Financial Statements
for the year ended 30 September 2019

1 Accounting policies
Basis of preparation

The Group’s accounting policies as applied for the year ended 30 September 2019 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 2019 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 37 to 41). 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 41.

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

IFRS 15 has replaced IAS 11 “Construction contracts”, IAS 18 “Revenue” and IFRIC 18 “Transfers of Assets from Customers” as revenue

related interpretations previously adopted by the Group. The core principle of IFRS 15 is that an entity recognises revenue that reflects

the expected consideration for goods or services provided to a customer under contract, over the performance obligations they are being

provided. This has resulted in a review of all of the Group’s revenue streams to assess whether the obligations to the customers are to

be viewed as taking place over time or at a point in time and that values of revenue recognised by the Group is representative of the

consideration paid by customers.

FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements
for the year ended 30 September 2019

Revenue continued

i) Energy supply

Energy sales revenue is recognised on the basis of energy supplied during the period. Revenue for energy supply is therefore accounted
for on a “over time” basis and includes an estimated assessment of energy supplied to customers. For the majority of customers (90%)
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.

There is no impact on the recognition of energy sales as a result of the adoption of IFRS 15.

Service connections revenue is derived from the provision of a connection to an existing mains cable, laying required infrastructure to
the boundary of a customer’s property and connecting to their domestic supply. Management considers that the combination of these
activities comprise a distinct performance obligation to the customer. Service connection income is recognised in other operating income
at the point in time that the service is complete.

There is no impact on the recognition of income from service connections as a result of the adoption of IFRS 15.

Capital contributions arise where charges are made to a developer when the Group provides a first-time supply for a property/
properties. These charges cover the immediate infrastructure requirements as well as future investment needed to meet the extra
demands which new connections put on existing network infrastructure. Management considers that the obligation to invest in the
network is highly interrelated with the ongoing and future obligation to provide electricity supply services, particularly to maintain
continuous supplies into the future. The investment in the network from the infrastructure charges enables the Group to continue
providing value to the customer through the supply of electricity. The associated asset arises from the investment in the network and
therefore the Group recognises infrastructure charges against depreciation on a straight line basis over the life of the associated asset.
Deferred infrastructure charges are initially recorded within deferred income.

There is no impact on the recognition of income arising from capital contributions as a result of the adoption of IFRS 15.

ii) Retail

Revenue resulting from the sales of goods within our retail business is recognised on sale to the customer at that point in time,
as this is the point at which the company recognises the transfer of risks and rewards. Retail additionally sells service contracts
to customers where the obligations to the customer are recognised as revenue on a monthly basis for the duration of the service
contract.

The Group has applied the practical expedient available in IFRS 15 (paragraph 63) and has not made an adjustment for any
impacts of financing since this is not significant and the customer will typically pay for the goods within one year or less. As a result
there is no impact on the recognition of our retail sales as a result of the adoption of IFRS 15.

iii) Building Services

Revenue within JEBS, our contracting and building services business, is recognised as the service is provided. On smaller jobs
(typically those less than £10,000), revenue is recognised upon completion of works when the job is invoiced to the customer,
being the point in time when the obligations to smaller works customers is met. For larger jobs, JEBS is deemed to be creating or
enhancing an asset that the customer controls as the asset is being enhanced or created. As such JEBS recognises the revenue over
time as an appropriate amount each month end, driven by the stage of completion for each contract (usually assessed by reference
to costs incurred against budget to date).

There is no impact on the recognition of JEBS sales as a result of the adoption of IFRS 15.

iv) Property

Rental income is accrued on a monthly basis by reference to the agreements entered. Where applicable, contingent rental revenue
is also recognised based on historic levels and in accordance with IAS 17.

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.

Notes to the Consolidated Financial Statements
for the year ended 30 September 2019

Revenue continued

Income in Jendev accounts for 0.3% of group revenue (2018: 0.3%) and arises from both ongoing support contracts as well as

implementation contracts and small ad-hoc development. Across these revenue streams are elements that relate to both point in

time and over time delivery of service to customers. With ongoing support contracts the obligation is to provide user support for the

specified business systems for a time period and the transaction price is an annualised rate invoiced every six or 12 months. The

contract provided that Jendev be on call should support be required, therefore the performance obligation is the time period over

which this is provided. The revenue is recognised as the obligation is satisfied, each month recognising 1/12 of the annual rate as

we have provided support over that period. With implementation contracts Jendev is deemed to be creating or enhancing an asset

that the customer controls as the asset is being enhanced or created. As such revenue is recognised over time at an appropriate

amount each month end, driven by the stage of completion for each contract. This can be assessed by completions of milestone

obligations or by reference to development costs incurred.

Jersey Deep Freeze is a 51% (2018: 51%) controlled subsidiary. Revenues are derived from two workstreams. Firstly, service

contracts where the obligation is over time and the customer is invoiced and revenue recognised as such, on a monthly basis.

Secondly, provision of goods (refrigeration equipment) which is invoiced and revenue recognised at a point in time, upon delivery

of the equipment to the customer.

There is no material impact on the recognition of other revenue as a result of the adoption of IFRS 15.

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.

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 four years.

Property, plant and equipment

In accordance with IAS 16 costs are capitalised where it is probable that future economic benefits associated with the asset being

purchased or constructed will flow to the entity; and the cost of the asset can be measured reliably.

For assets under construction, all costs incurred which are directly attributable to bringing the asset to a point of commissionable

use, including direct materials and direct labour costs are capitalised once an executive decision has been taken to proceed with the

construction of the asset.

Property, plant and equipment excludes investment property and is stated at cost less accumulated depreciation and impairment losses,

if any. Assets are depreciated on the straight-line method to their expected residual values over their estimated useful lives 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.

FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements
for the year ended 30 September 2019

Property, plant and equipment continued

Depreciation is charged as follows:

Buildings

Interlinks

up to 50 years

up to 30 years

Plant, mains cables and services

up to 60 years

Fixtures and fittings

Computer equipment

Vehicles

up to 15 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.

Notes to the Consolidated Financial Statements
for the year ended 30 September 2019

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 reduced by appropriate allowances for

estimated irrecoverable amounts.

The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance

for all trade receivables, contract assets and intercompany loans receivable. The Group’s assessment for calculating expected credit

losses is made by reference to its historical collection experience, including comparisons of the relative age of the individual balance

and the consideration of the actual write-off history. The provisioning rates applied in the calculation are reviewed on an annual

basis to reflect the latest historical collection performance data and management’s expectation of future performance and industry

trends. Furthermore, where the Company has assessed a known risk of recoverability relating to known customers these balances are

provided for in full.

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.

Following the adoption of IFRS 9 and as permitted by this standard, the Group has elected to continue to apply the hedge accounting

requirements of IAS 39. This policy choice will be periodically reviewed to consider any changes in our risk management activities.

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.

FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements
for the year ended 30 September 2019

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.

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 disclosures 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:

IFRS 9 ‘Financial instruments’ was endorsed by the European Union (EU) and has been effective for periods on or after 1 January 2018

(1 October 2018 for the Group) and replaces IAS 39 ‘Financial Instruments: Recognition and Measurement’. The new standard sets out the

requirements for recognising and measuring financial assets, financial liabilities and some contracts to buy or sell non-financial items. The

impact of adopting this standard can be summarised with reference to the three project phases:

i) Classification and measurement

The standard adopts a principles-based approach to classify financial assets based on the business model within which they are held

and their contractual cash flow characteristics. Following this approach, financial assets will be classified as measured at amortised

cost, fair value through profit and loss or fair value through other comprehensive income. For financial liabilities, the classification and

measurement requirements under IAS 39 have been carried forward essentially unchanged, with the majority of financial liabilities being

classified as measured at amortised cost. Adoption has not resulted in changes to the carrying value of these, or any other, financial

instruments held by the Group. The Group will continue to measure equity instruments at fair value through other comprehensive income,

as an election on an instrument by instrument basis on initial recognition.

ii) Impairment

The Group applies the IFRS 9 simplified approach to measuring expected credit losses (see note 22) which uses a lifetime expected loss

allowance for all trade receivables, contract assets and intercompany loans receivable. The Group’s assessment for calculating expected

credit losses is made by reference to its historical collection experience, including comparisons of the relative age of the individual balance

and the consideration of the actual write-off history. The provisioning rates applied in the calculation are reviewed on an annual basis

to reflect the latest historical collection performance data and management’s expectation of future performance and industry trends.

Furthermore, where the Company has assessed a known risk of recoverability relating to known customers these balances are provided for.

Notes to the Consolidated Financial Statements
for the year ended 30 September 2019

iii) Hedge accounting

The standard does not materially change the amounts recognised in relation to existing hedging arrangements but does simplify the

requirements for measuring hedge effectiveness, and thus the eligibility conditions for hedge accounting. The new hedge accounting

model is intended to enable companies to reflect better their risk management activities in the financial statements. As previously noted in

the 2018 Annual Report, the Group’s review of the IFRS 9 hedge accounting model concluded that whilst adoption would not change the

treatment of existing hedging arrangements, the changes made would not result in any additional hedge designations either. As such, the

existing hedge accounting model under IAS 39 appropriately reflects our risk management activities in the financial statements. Therefore,

as permitted by IFRS 9, the Group has elected to continue to apply the hedge accounting requirements of IAS 39. This policy choice will

be periodically reviewed to consider any changes in our risk management activities.

The Group has applied the exemption from the requirement to restate comparative information about classification and measurement,

including impairment. The impact of adopting IFRS 9 on the Group’s Balance Sheet and Retained Earnings was deemed to be immaterial

and as such no adjustments have been recorded on transition.

IFRS 15 ‘Revenue from contracts with customers’ was endorsed by the EU and effective for periods on or after 1 January 2018 (1 October

2018 for the Group) and replaces IAS 11 ‘Construction contracts’, IAS 18 ‘Revenue’, IFRIC 18 ‘Transfers of Assets from Customers’ and

a number of other revenue related interpretations previously adopted by the Group. The impacts of the introduction of IFRS 15 have been

stated above in the section titled “revenue” above.

Clarifications to IFRS 15 ‘Revenue from contracts with customers’ was endorsed by the EU and effective for periods on or after 1 January 2018.

IFRIC 22 ‘Foreign currency transactions and advance consideration’ was endorsed by the EU and effective for periods on or after 1 January 2018.

Amendments to IFRS 2 ‘Classification and measurement of share based payment transactions’ was endorsed by the EU and effective for

periods on or after 1 January 2018.

Amendments to IFRS 4 ‘Applying IFRS 9 Financial instruments with IFRS 4 Insurance contracts’ was endorsed by the EU and effective for

periods on or after 1 January 2018.

Amendments to IAS 40 ‘Transfers of investment property’ was endorsed by the EU and effective for periods on or after 1 January 2018.

Annual improvements to IFRSs: 2014-2016 Cycle ‘Amendments to IFRS 1 and IAS 28’ was endorsed by the EU and effective for periods on or

after 1 January 2018.

Standards in issue not yet effective:

Amendments to IFRS 9 ‘Prepayment features with negative compensation’ was endorsed by the EU and effective for periods on or after 1

January 2019 (1 October 2019 for the Group).

Amendments to IAS 28 ‘Long-term interests in associates and joint ventures’ was endorsed by the EU and effective for periods on or after 1

January 2019 (1 October 2019 for the Group).

Annual improvements to IFRSs: 2015-2017 Cycle ‘Amendments to IFRS 3, IFRS 11, IAS 12 and IAS 23’ was endorsed by the EU and effective

for periods on or after 1 January 2019 (1 October 2019 for the Group).

Amendments to IAS 19 ‘Plan amendment, curtailment or settlement’ was endorsed by the EU and effective for periods on or after 1 January

2019 (1 October 2019 for the Group).

IFRS 17 Insurance Contracts, supersedes IFRS 4 Insurance Contracts as of 1 January 2021.

IFRIC 23 Uncertainty over Income Tax Treatments, which is effective for annual periods beginning on or after 1 January 2019.

Jersey Electricity plc is not permitted to adopt a standard until it has been adopted by the EU.

IFRS 16 ‘Leases’ has been endorsed by the EU and will be effective for periods commencing on or after 1 January 2019 (1 October

2019 for the Group) and replaces IAS 17 ‘Leases’ and sets out the principles for the recognition, measurement, presentation and

disclosure of leases. It is anticipated that where the Group is currently lessee, around £4.0m of additional “Right of Use” assets will be

capitalised with an initial corresponding and equal lease liability. These leases largely relate to land. As the year ended 30 September

2019 becomes the comparative year there will be some adjustments to the consolidated income statement when it is presented as the

prior year due to depreciation charges and implied interest charges replacing lease payments. Operating expenses are expected to be

around £130k lower, increasing operating profit by the same amount. However, interest charges will be around £180k more, reducing

profit before tax by a net £50k and reducing earnings per share from 38.42p to 38.26p.

The reclassification of costs between operating costs and interest costs will also impact Group profit from operations before taxation,

loading existing rental costs into both depreciation and interest charges. It is expected that Group profit from operations before

taxation for the year ended 30th September 2019 will increase from £27.6m to £27.8m.

The Group has two covenants with its lenders, neither of which will be materially impacted by IFRS 16.

IFRS 16 will have no accounting impact where the Group acts as a lessor (relevant to the Group’s property portfolio).

FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements
for the year ended 30 September 2019

2 Critical Accounting Judgements and key sources of estimation uncertainty

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

The key assumptions concerning the future, and other key sources of estimation and uncertainty at the reporting date that may have a

significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are disclosed

below.

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

2019 was 1.9% and in 2018 was 2.9%. If the discount rate applied to the liabilities had been either 0.5% higher or lower than the

1.9% applied for 2019, the net surplus of £8.3m would have risen to around £18m, or moved to a deficit of £3m, respectively.

Notes to the Consolidated Financial Statements
for the year ended 30 September 2019

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:

2019 2019 2019 2018 2018 2018 External Internal Total External Internal Total £000 £000 £000 £000 £000 £000RevenueEnergy - arising in the course of ordinary business 83,907 126 84,033 82,332 133 82,465 - arising from the sale of heavy fuel oil 2,723 - 2,723 - - -Building Services 3,286 809 4,095 4,841 876 5,717Retail 15,199 59 15,258 14,320 56 14,376Property 2,262 612 2,874 2,277 604 2,881Other* 2,917 898 3,815 2,871 909 3,780 110,294 2,504 112,798 106,641 2,578 109,219Intergroup elimination (2,504) (2,578)Revenue 110,294 106,641Operating profit Energy 12,281 13,418Building Services (79) (245)Retail 895 812Property 1,679 1,813Other 617 586 15,393 16,384Revaluation of investment properties 689 310Operating profit 16,082 16,694Finance income 103 28Finance costs (1,365) (1,377)Profit from operations before taxation 14,820 15,345Taxation (2,969) (3,152)Profit from operations after taxation 11,851 12,193Attributable to: Owners of the Company 11,773 12,115Non-controlling interests 78 78 11,851 12,193*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.Revaluation of investment properties is shown separately from Property operating profit as this income is reflected solely via reserves.A presentational change to the 2018 fisgures has arisen as a result of elements previously embedded within cost of sales (£767k rebates credit, of which £18k is related to building services and £749k to retail) being reclassified and shown in revenue. Gross profit remains unchanged.Revenues disclosed by the business segments above are recognised both on a point in time and over time basis. The treatment of revenue recognition in accordance with IFRS 15 is detailed for each of these business segments in note 1 to these financial statements.
FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements
for the year ended 30 September 2019

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 53 to 55. 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:

2019 2018 £000 £000Distribution costs 10,891 11,862Administration expenses 15,478 12,518 26,369 24,380 2019 2018 Number NumberEnergy 188 186Other businesses 94 102Trainees 11 14 293 302 2019 2018 £000 £000Wages and salaries 16,109 17,456Social security costs 914 913Pension (note 17)** 3,756 3,012 20,779 21,381Capitalised manpower costs* (1,911) (2,321) 18,868 19,060* Capitalised manpower costs are included in note 11 under categories ‘Mains cables and services’, ‘Fixtures, fittings, computer equipment and vehicles’ and ‘Interlinks’.** The pension costs above relate to the defined benefit pension scheme. The contributions recognised as an expense relating to the defined contribution scheme are included within wages and salaries and amount to £454,000 (2018: £259,000).Notes to the Consolidated Financial Statements
for the year ended 30 September 2019

6 Group operating profit
Operating profit is after charging/(crediting):

Fees payable to Group auditor

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

Net (gains)/losses in expected credit losses

7 Taxation

Current tax:

Jersey Income Tax - ordinary activities

Total current tax

Deferred tax:

Current year

Total tax on profit on ordinary activities

2019

£000

140

246

11,259

345

2,298

327

(72)

2018

£000

254

10,902

340

1,986

146

2019

£000

2,714

2018

£000

2,299

255

853

2,969

3,152

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% (2018: 20%)

Effects of:

Expenses not deductible for tax purposes

Income not taxable for tax purposes

Non-qualifying depreciation

Group current tax charge for year

2019

£000

14,820

2,964

(1)

(221)

227

2,969

2018

£000

15,345

3,069

(197)

273

3,152

FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements
for the year ended 30 September 2019

7 Taxation (continued)
Deferred Tax

The following outlines the major deferred tax assets/liabilities recognised by the Group and Company:

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% (2018: 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 Government of Jersey, the right to offset assets and liabilities allows

the balance sheet to show the net deferred tax liability position.

There is no tax impact on the Group arising from the proposed dividend shown in note 8.

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.

Per Share In Total 2019 2018 2019 2018 pence pence £000 £000Ordinary and ‘A’ Ordinary:Dividend paid final for previous year 8.80 8.40 2,695 2,575 interim for current year 6.45 6.10 1,976 1,869 15.25 14.50 4,671 4,444Dividend proposed final for current year 9.25 8.80 2,834 2,695 Group and Company 2019 2018 £000 £000Accelerated capital allowances 24,892 24,240Derivative financial instruments (39) 563Pensions 2,083 950Provisions for deferred tax 26,936 25,753 Group and Company 2019 2018 £000 £000At 1 October 25,753 23,719Charged to profit and loss account 255 853Charged to statement of comprehensive income 928 1,181At 30 September 26,936 25,753
Notes to the Consolidated Financial Statements
for the year ended 30 September 2019

9 Earnings per Ordinary share

Earnings per Ordinary and ‘A’ Ordinary share (basic and diluted) of 38.42p (2018: 39.54p) are calculated on the Group profit, after taxation, of

£11,773,000 (2018: £12,115,000), and on the 30,640,000 (2018: 30,640,000) Ordinary and ‘A’ Ordinary shares in issue during the financial

year and at 30 September 2019. 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 2018

Additions
At 30 September 2019

Amortisation

At 1 October 2018

Charge for the year

At 30 September 2019

Net book value

At 30 September 2019

Cost as at 1 October 2017

Additions

At 30 September 2018

Amortisation

At 1 October 2017

Charge for the year

At 30 September 2018

Net book value

At 30 September 2018

The above amortisation charges are included within operating expenses in the consolidated income statement.

Computer Software

£000

1,566

90
1,656

628

345

973

683

Computer Software

£000

1,398

168

1,566

288

340

628

938

FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements
for the year ended 30 September 2019

11 Property, plant, equipment and investment properties

Fixtures, fittings,

computer

Freehold land

Leasehold

Mains cables equipment and

Investment

and buildings

buildings

Plant

and services

£000

vehicles

£000

Interlinks

£000

Total

properties*

£000

30,998
3,535
(72)
-
-
34,461

9,568
514
10
-
10,092

17,048
-

-
(58)
16,990

105,173
3,101
303

-
108,577

6,934
407
-
(58)
7,283

62,244
4,011
98
-
66,353

91,369
3,142
(322)
-
-
94,189

31,730
1,309
(108)
-
32,931

22,014
2,676

97,218
789

-
(1,594)
23,096

-
-
98,007

363,820
13,243
(91)
-
(1,652)
375,320

20,460
-
91
689
-
21,240

11,205
1,792
-
(1,594)
11,403

26,986
3,226
-
-
30,212

148,667
11,259
-
(1,652)
158,274

-
-
-
-
-

24,369

9,707

42,224

61,258

11,693

67,795

217,046

21,240

Cost or valuation
At 1 October 2018
Expenditure
Reclassification**
Revaluation
Disposals/write offs
At 30 September 2019

Depreciation
At 1 October 2018
Charge for the year
Reclassification
Disposals
At 30 September 2019

Net book value at
30 September 2019

**Items reclassified relate to Land and Buildings elements of the new West of St Helier Substation. There was no depreciation charge
against these during the year as the assets were under construction.

Fixtures, fittings,

computer

Freehold land

Leasehold

Mains cables equipment and

Investment

and buildings

buildings

Plant

and services

£000

vehicles

£000

Interlinks

£000

Total

properties*

£000

25,141
-
5,857
-
-
30,998

9,030
538
-
9,568

17,048
-
-
-
-
17,048

105,630
5,406
(5,857)
-
(6)
105,173

6,565
369
-
6,934

59,585
2,659
-
62,244

85,684
5,685
-
-
-
91,369

29,773
1,957
-
31,730

19,746
2,940
-
-
(672)
22,014

10,333
1,544
(672)
11,205

97,109
109
-
-
-
97,218

350,358
14,140
-
-
(678)
363,820

20,150
-
-
310
-
20,460

23,151
3,835
-
26,986

138,437
10,902
(672)
148,667

-
-
-
-

21,430

10,114

42,929

59,639

10,809

70,232

215,153

20,460

Cost or valuation
At 1 October 2017
Expenditure
Reclassification**
Revaluation
Disposals/write offs
At 30 September 2018

Depreciation
At 1 October 2017
Charge for the year
Disposals
At 30 September 2018

Net book value at
30 September 2018

*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.

Notes to the Consolidated Financial Statements
for the year ended 30 September 2019

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 as at 30 September 2019 by qualified independent valuers Sarre and

Company who have extensive experience in the Jersey property market.

In terms of residential properties, the valuations are based on expectations driven by current market transactions whilst also assuming

vacant possession, that the properties would be sold on a freehold basis, the properties are free of any onerous conditions and there

are no other matters that might adversely affect the value that would be revealed by normal searches or enquiries.

The commercial properties are held for investment purposes in freehold ownership and the valuation is on the freehold interest based

on Market Value, as defined by the Royal Institution of Chartered Surveyors Valuation – Global Standards 2017. The valuations are

on the basis that each property possesses a good and marketable title, free of any unusually onerous restrictions, covenants or other

encumbrances.

Management consider the assumptions used to be reasonable and sensitivities in those assumptions would unlikely result in a material

difference in valuation.

Under the fair value hierarchy consideration (explained in more detail in note 22), investment properties are considered as using level

3 valuation techniques.

In accordance with IAS40 such properties are not depreciated.

The rental income arising from the properties during the year was £1,419k (2018: £1,428k) with maintenance and repair cost of

£81k (2018: £76k). 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 £39k (2018: £39k) at cost and a net

book value of zero (2018: £3k).

d The gross carrying amount of tangible assets at net book value of zero at 30 September 2019 was £58.3m (2018: £55.4m).

e £15.3m (2018: £12.8m) for St Helier Primary is classified in interlinks and plant and is an asset under construction.

f During the year £1.5m relating to plant (2018: £0.3m of interlinks) was fully written down due to the assets no longer being required

or used by the Group.

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 arrangement:

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

30 November

Subsidiary undertaking:

Jersey Deep Freeze Limited

Jersey

Sale and

51 Ordinary

30 September

Guernsey Electricity

Limited

maintenance

of refrigeration and

catering equipment

2019 2018 £000 £000Joint arrangement 5 5

FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements
for the year ended 30 September 2019

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 (EDF) 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 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’ and included in these

financial statements. CIEG has a reporting period end of 30 November based on the Company inception date.

Jersey Deep Freeze Limited

The Company owns 51% (2018: 51%) of the issued ordinary share capital of Jersey Deep Freeze Limited, a Jersey company whose principal
business is the sale and maintenance of refrigeration equipment to commercial businesses.

The results are consolidated into these Group financial statements, as the Group is considered to exert control under IFRS 10. Jersey Deep

Freeze Limited has a reporting period end of 30 September which had previously been 31 January.

13 Inventories

The amounts attributed to the different categories are as follows:

14 Trade and other receivables

Unbilled revenues included within trade and other receivables in the balance sheet relating to such customers at 30 September 2019

amounted to £5.6m (2018: £5.0m).

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 55 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.

2019 2018 £000 £000Fuel oil 2,378 3,800Commercial stocks and work in progress 2,818 2,486Generation, distribution spares and sundry 822 806 6,018 7,092During the year £12.5m (2018: £11.8m) was recognised directly in cost of sales in respect of inventories sold or used in operations or production. 2019 2018 £000 £000Amounts receivable within one year:Trade receivables (includes unbilled units) 15,865 13,601Prepayments and other receivables 2,130 1,601 17,995 15,202Amounts receivable after more than one year:Secured loan accounts 383 501
Notes to the Consolidated Financial Statements
for the year ended 30 September 2019

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%

This facility includes externally imposed capital requirements. The financial covenants require a net debt to regulated asset value ratio not

greater than 50% and an EBITDA to borrowings cost ratio not less than 4%, as defined in the loan agreement.

2019 2018 £000 £000Amounts falling due within one year:Trade payables 1,669 1,405Other payables including taxation and social security 8,028 6,991Accruals 7,039 5,988Deferred income 584 900 17,320 15,284Amounts falling due after more than one year:Accruals 209 246Deferred income 21,548 20,102 21,757 20,348The fair value of trade and other payables is considered by the Directors to be equivalent to its carrying value. 2019 2018 £000 £000Unsecured borrowing at amortised costLoan obtained from private placement 30,000 30,000In addition the above borrowings are supplemented by an unsecured five year £10m revolving credit facility (RCF) from the Royal Bank of Scotland International Limited (RBSI) which provides flexibility as the timing of further planned capital expenditure is variable. This was renewed for a further five year period in July 2019.This facility bears the same externally imposed capital requirements as detailed above. A one year £2m overdraft facility also exists with RBSI. Neither RBSI Facility was drawn at 30 September 2019.The fair value of the loan obtained from private placement at 30 September 2019 is considered to be £39.3m.

FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements
for the year ended 30 September 2019

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 50% of the liabilities are attributable to current employees, 10% to former employees and 40% 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 2018 and showed a surplus of £3.7m. 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 2021 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.

The actuaries had recommended that the Company contribution rate rise to 25.4% but it was agreed by the Trustees that around £1.2m of

the surplus as at 31 December 2018 be utilised to maintain the contribution rate at 20.6%. This will be reviewed again at the next triennial

valuation.

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 2019

The results of the latest funding valuation at 31 December 2018 have been adjusted to the balance sheet date taking account of

experience over the period since 31 December 2018, 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.

Notes to the Consolidated Financial Statements
for the year ended 30 September 2019

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 value:

Main financial assumptions: 2019 2018 % pa % paInflation 3.1 3.5Rate of general increase in salaries - short term (year 1) 3.8 4.2 - long term (year 2 onwards) 4.1 4.5Pension increases in payment - short term (year 1) 2.3 - - long term (year 2 onwards) - -Pension increases in payment for pensions purchased with AVCs 3.1 3.5Discount rate for scheme liabilities 1.9 2.9The financial assumptions reflect the nature and term of the Scheme’s liabilities. Value at 30 Value at 30 September September 2019 2018 £000 £000LDI/UK Gilts 46,088 26,622Equities 46,361 50,449Diversified Growth Funds 62,005 58,914Cash and Commitments 198 178 154,652 136,163 30 September 2019 30 September 2018Post-retirement mortality assumption - base tableSAPS “S2” tables with scaling factors of 90% for males and femalesSAPS ‘S2’ tables with CMI 2015 improvements to the calculations date with suitable scaling factors appliedPost-retirement mortality assumption - future improvementsCMI 2018 core projections with long-term improvement rate of 1.25% p.a. for males and femalesCMI 2015 core projections with long-term improvement rate of 1.25% p.a. for males and femalesLife expectancy for male currently aged 6026.928.0Life expectancy for female currently aged 6028.930.1Life expectancy at 60 for male currently aged 4028.429.9Life expectancy at 60 for female currently aged 4030.532.1Cash commutationMembers assumed to exchange 15% of their pension for a cash lump sum at retirementMembers assumed to exchange 15% of their pension for a cash lump sum at retirement.

FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements
for the year ended 30 September 2019

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
Past service cost (including curtailments)

Administration expenses

Financing cost

Interest on net defined benefit (asset)/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 losses/(gains) due to changes in financial assumptions

Actuarial gains due to changes in demographic assumptions

Actuarial (gains)/losses due to liability experience

Total gains recognised in OCI

Total credit recognised in profit and loss and OCI

Changes to the present value of the defined
benefit obligation during the year

Opening defined benefit obligation

Current service cost

Interest expense on scheme liabilities
Contributions by scheme participants

Actuarial losses/(gains) on scheme liabilities arising from changes in financial assumptions

Actuarial gains due to changes in demographic assumptions

Actuarial (gains)/losses on scheme liabilities arising from experience

Net benefits paid out

Past service costs (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

2019

£000

2018

£000

2,532

1,080

303

(159)

3,756

2,698

221

3,012

(18,449)

22,385

(6,428)

(5,151)

(7,643)

(5,907)

(4,274)

(10,166)

(3,887)

(7,154)

2019

£000

2018

£000

131,412

133,475

2,532

3,738
514

22,385

(6,428)

(5,151)

(5,847)

1,080

2,698

3,552
527

(4,274)

(4,581)

144,235

131,412

2019

£000

2018

£000

136,163

129,256

3,897

18,449

1,779

514

(5,847)

(303)

3,459

5,907

1,816

527

(4,581)

(221)

154,652

136,163

2019 2018 £000 £000Fair value of Scheme assets 154,652 136,163Present value of funded defined benefit obligations (144,235) (131,412)Funded Status and asset recognised on the balance sheet 10,417 4,751Related deferred tax liability (2,083) (950)Net pension asset 8,334 3,801

Notes to the Consolidated Financial Statements
for the year ended 30 September 2019

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)

2019

£000

3,897

18,449

22,346

2019

£000

2018

£000

3,459

5,907

9,366

2018

£000

Total remeasurement gains in other comprehensive income

7,643

10,166

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 £8.1m for next year.

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.

Discount rate sensitivity

To show sensitivity of the results to the choice of discount rate, we have set out below the balance sheet and profit and loss impact of

adopting a discount rate of 0.5% p.a. lower or higher than the current assumption.

Analysis of amount charged to income statement For year ending 30 September 2020 £000Current service cost 3,030Administration expenses 316Interest on net defined benefit asset (213)Total estimated pension expense 3,133 Following a 0.5% p.a. decrease in the discount rate Change New valuePension expense for the following year 780 4,164Assets of the Scheme at 30 September 2019 - 154,652DBO at 30 September 2019 13,749 (157,984)Surplus/(deficit) at 30 September 2019 (3,332) Following a 0.5% p.a. increase in the discount rate Change New valuePension expense for the following year (792) 2,592Assets of the Scheme at 30 September 2019 - 154,652DBO at 30 September 2019 (11,920) (132,315)Surplus/(deficit) at 30 September 2019 22,337

FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements
for the year ended 30 September 2019

18 Called up share capital

‘A’ Ordinary shares 5p each (2018: 5p each)

Ordinary shares 5p each (2018: 5p each)

5% Cumulative participating preference shares £1 each

3.5% Cumulative non-participating preference shares £1 each

Authorised Issued and fully paid
2019

2019

Authorised
2018

Issued and fully paid
2018

£000

1,250

1,500

2,750

100

150

250

£000

582

950

1,532

100

135

235

£000

1,250

1,500

2,750

100

150

250

£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 2019 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

(2018: £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. As at 30 September 2019, 72,700 shares have been

awarded to employees who met the three year vesting period requirements. The Trust currently holds 9,900 shares. 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

20 Financial commitments

2019 2018 £000 £000At 1 October 53 26Share of profit on ordinary activities after taxation 78 78Dividends paid (69) (51)At 30 September 62 53Non-controlling interests represent 49% (2018: 49%) ownership of the issued ordinary share capital of Jersey Deep Freeze Limited. 2019 2018 £000 £000a Five year capital expenditure approved by the directors:Contracted 1,485 4,315Not contracted* 67,790 60,461 69,275 64,776b Future minimum lease payments under non-cancellable operating leases are as follows:Lease payments under operating leases recognised as an expense in the year 246 254Payable within one year 235 246After one year but within five years 776 782 After five years 12,466 12,659 13,477 13,687 *Although this sum is approved it is still subject to formal business cases being reviewed in due course.

Notes to the Consolidated Financial Statements
for the year ended 30 September 2019

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
Categories of financial instruments

The carrying values of the financial assets and liabilities of the Group are as follows:

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 2019, taking into account the effect of forward contracts placed to manage such exposures,

was £2.5m (2018: £2.2m) 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); and

Level 3 financial instruments are shown at values that are determined by assumptions that are not based on observable market data

(unobservable inputs).

2019 2018 £000 £000Less than one year 1,755 1,766Greater than one year and less than five years 4,425 4,123More than five years 1,671 567 7,851 6,456 Financial assets 2019 2018 £000 £000Fair value through other comprehensive incomeDerivative financial instruments 405 7,244 405 7,244Amortised costSecured loan accounts 383 501Trade and other receivables (excluding prepayments) 15,865 13,601Cash and cash equivalents 24,915 15,735 41,163 29,837 Financial liabilities 2019 2018 £000 £000Fair value through other comprehensive incomeDerivative financial instruments 601 172 601 172Amortised costBorrowings 30,000 30,000Trade and other payables 9,697 8,396Preference shares 235 235 39,932 38,631

FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements
for the year ended 30 September 2019

22 Derivatives and financial instruments and their risk management (continued)

Categories of financial instruments continued

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.

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.

Due to the nature of the Euro denominated purchases being largely underpinned by contracted amounts the Group has accurate expectations of

the values and timings of future liabilities, reducing the risk of exposure to hedge ineffectiveness which could only arise if units imported were to

vary by more than 20% from established patterns.

Foreign exchange hedging instruments are contracted to mature as the liabilities fall due and so minimise any timing or other uncertainties of

future cash flows.

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 2019, the fair value of the Group’s currency derivatives is estimated to be a net liability of approximately £0.2m over the

next three years (2018: £2.8m asset). The fair value of currency derivatives that are designated and effective as cash flow hedges amount to a

liability of £0.2m (2018: £2.8m 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 (2018: £nil). In the current period

amounts of £3.0m were debited (2018: £4.3m) to equity and £3.0m credit (2018: £4.3m) 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 2019, the import prices, but not volumes, have
been substantially fixed for 2020. The Group entered into a 10 year framework agreement with EDF on 1 January 2013 which has
a commitment to procure around 30% of expected 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.

2019 2018 £000 £000Derivative assetsLess than one year 197 2,338Greater than one year 208 682Derivative liabilitiesLess than one year (298) (120)Greater than one year (303) (89)Total net (liabilities)/Assets (196) 2,811 2019 2018 £000 £000Less than one year - operational expenditure 32,295 35,625Less than one year - capital expenditure - -Greater than one year and less than three years 45,567 44,532 77,862 80,157 Notes to the Consolidated Financial Statements
for the year ended 30 September 2019

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
expected credit losses which are set out below. The trade and other receivables at 30 September 2019 outside agreed 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 £36.1m (2018: £34.5m).

Expected credit losses provision
The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for
all trade receivables and contract assets.

An explanation of the Group’s assessment for calculating expected credit losses and balance write-offs is detailed in note 1.

An expected credit losses provision is recorded against assets which are past due but for which no individual provision is made. This is
calculated based on historical experience of levels of recovery.

Movements in the expected credit losses were as follows:

*Ageing of impaired receivables is as follows:

2019 2018 £000 £000Less than 30 days 944 971Greater than 30 days 268 264Greater than 60 days 152 30Greater than 90 days 30 575 1,394 1,8402018 figures have been updated to enhance compatability. There is no impact on the primary statements. 2019 2018 £000 £000At 1 October 225 206Charge for expected credit losses - included within operating costs 72 30Amounts written back (175) (11)At 30 September 122 225 2019 £0000 - 30 days 9331 - 60 days 261 - 90 days 5Greater than 90 days 22 122*The Group has applied the exemption from the requirement to restate comparative information about classification and measurement, including impairment.FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements
for the year ended 30 September 2019

Capital management
Strong capital management is an integral part of the directors’ strategy to achieve the Group’s stated objectives. The capital managed
by the Group consists of borrowings, cash and cash equivalents and equity of the Group. 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
five year £10m 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

Financial liabilities shown above include interest payments due on the £30m private placement. This has resulted in a restatement of the
2018 figures.

Borrowing facilities
The Group had undrawn borrowing facilities at 30 September 2019 of £12.0m (2018: £12.0m) in respect of which all conditions
precedent had been met. The overdraft facility of £2.0m is annually renewable, and the Revolving Credit Facility was renewed in July
2019 for a further five years.

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.

2019 2018 £000 £000Less than 3 months: cash and cash equivalents and short-term investments 19,915 15,735Greater than 3 months: short-term investments 5,000 - 2019 2018 £000 £000Less than one year 18,958 16,744More than one year and less than five years 27,653 26,030More than five years 48,125 49,465 94,736 92,239Notes to the Consolidated Financial Statements
for the year ended 30 September 2019

23 Ultimate controlling party and related party transactions

a Trading transactions and balances arising in the normal course of business

Counterparty

Value of electricity
services supplied
by Jersey Electricity

Value of goods &
other services supplied
by Jersey Electricity

Value of goods &
services purchased
by Jersey Electricity

Amounts due to
Jersey Electricity

Amounts due by
Jersey Electricity

2019

£000

2018

£000

2019

£000

2018

£000

2019

£000

2018

£000

2019

2018

£000

2019

£000

2018

£000

The Government of Jersey
and related entities

9,683

9,472

1,823

1,831

1,790

1,584

656

766

The Government 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 Government of Jersey, which are all considered to be related parties. All transactions are
undertaken on an arms-length basis.

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 Government 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 £1.5m (2018: £1.1m) and the value of services provided to the plant was
£0.4m (2018: £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 53 to 55.

2019 2018 £000 £000Short-term employee benefits 617 589Post-employment benefits 177 148Non-Executive Director’s benefits 187 187 981 924

Five Year Group Summary (unaudited)

Financial Statements

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

2019

2018

2017

2016

2015

110.3

105.9

102.1

103.4

100.5

16.1

14.8

11.9

4.7

217.0

28.8

(79.2)

199.5

38.4

19.1

15.3

2.5

(5.1)

13.3

627

-1.1%

94.1%

0.3%

5.6%

150

16.7

15.3

12.2

4.4

215.2

22.7

(76.4)

188.7

39.5

18.1

14.5

2.7

(14.3)

14.3

634

2.1%

94.9%

0.2%

4.9%

178

14.7

13.5

10.6

4.2

211.9

18.2

(78.5)

176.3

34.6

17.3

13.8

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

37.7

33.3

16.4

13.1

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

10.4

(71.9)

147.7

35.0

32.9

15.6

12.5

2.8

2.6

(17.5)

13.2

627

0.9%

94.0%

1.4%

4.6%

148

51,103

50,561

49,894

49,532

49,320

13.3p

188

293

3,336

272

12.9p

186

102

302

3,411

272

12.9p

201

116

326

3,091

248

12.8p

203

114

327

3,079

244

12.8p

201

106

319

3,118

245

Financial Calendar

2 January 2020

Preference share dividend

21 February 2020

Record date for final dividend

5 March 2020

Annual General Meeting

26 March 2020

Final dividend for year ended 30 September 2019

14 May 2020

Interim Management Statement – six months to 31 March 2020

5 June 2020

Record date for interim ordinary dividend

26 June 2020

Interim dividend for year ending 30 September 2020

1 July 2020

Preference share dividend

17 December 2020

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 5 March 2020 at 12:30pm.

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).

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The Powerhouse, PO Box 45
Queens Road, St Helier JE4 8NY
Tel 01534 505460
Fax 01534 505565
email jec@jec.co.uk
www.jec.co.uk

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