Annual Report 2014-15 3
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2014-15 Jacana Energy Annual Report 2 Jacana Energy Annual Report 2014-15 3 Contents Purpose .......................................................................... 4 Directors’ Report ..................................18 Letter to the Shareholder .....................................5 Information about the Directors .................. 18 Chairman’s and CEO’s message .........................6 Executive Leadership Team .............................20 Profile .............................................................7 Company Secretary ..............................................22 Background ...................................................................8 Principal Activities ................................................22 The nature and scope of our activities .........8 Review of Operations and State of Affairs ......................................................... 22 Jacana Energy’s core values ................................9 Subsequent Events ................................................22 Performance & achievements ..... 10 Future Developments ..........................................23 Highlights 2014-15 ................................................ 11 Environmental regulations .............................23 Key achievements 2015....................................... 12 Dividends .....................................................................23 Improving the customer Indemnification of officers call centre experience..........................................12 and auditors ...............................................................23 Winning the Defence contract .......................13 Directors’ meetings ...............................................23 Switch to Six ..............................................................13 Financial Statements ........................ 24 2015/16 goals .............................................................14 Contents .......................................................................25 Performance targets ............................................15 Auditor’s Report ......................................................26 Governance ..............................................16 Directors’ Declaration ......................................... 27 Jacana Energy’s Governance Statement of Profit or Loss and Other Framework ................................................................. 17 Comprehensive Income ...............................................28 The Board ................................................................... 17 Statement of Financial Position ........................29 The Audit and Risk Committee ....................... 17 Statement of Changes in Equity .........................30 Executive Leadership Team ............................. 17 Statement of Cash Flows ............................................31 Risk Management ................................................... 17 Notes to the Financial Statements ..................32 4 Jacana Energy Annual Report 2014-15 5 Purpose Letter to the Shareholder Jacana Energy’s Annual Report 2014-15 includes a record of operations and achievements for the financial year. Pursuant to section 44 of the Government Owned Corporations Act, the report informs the Northern Hon David Tollner MLA Territory Parliament, Northern Territorians and other Treasurer stakeholders of: Northern Territory Government • Jacana Energy’s primary services and responsibilities. GPO Box 3146 • Significant activities of the year, highlighting major DARWIN 0801 projects, key achievements and outcomes. • Financial management and performance in compliance with the Government Owned Corporations Act. Dear Treasurer The annual report is tabled in the Northern Territory On behalf of Jacana Energy, it gives us great pleasure to present the Legislative Assembly as a reporting mechanism for Corporation’s first annual report for the year ended 30 June 2015, in accordance Jacana Energy’s Shareholding Minister and Northern with the provisions of section 44 of the Government Owned Corporations Act. Territory Parliament. It provides a statement of income and expenditure for the 2014-15 financial year. This report details the non-financial and financial performance of Jacana The annual report also includes information for others, Energy for the year ended 30 June 2015. including the wider public, who have an interest in the provision of electricity services in the Northern Territory. We are pleased to report that in our first year of operation, our key achievements included: • a profit before tax of $15.0M; • a significant improvement in service performance; • retention of commercial and industrial contracts; • recontracting previously lost customers; • introducing a time of use tariff to help domestic customers manage their energy costs. We would like to thank you for your support throughout our first year of operations and look forward to 2015-16. Yours sincerely, Noel Faulkner Stuart Pearce Chairman Chief Executive Officer 6 Jacana Energy Annual Report 2014-15 7 Chairman’s and CEO’s message In this, our first annual report, we are pleased to provide an overview of our performance to date and our plans for the future. Jacana Energy commenced operations on 1 July 2014 following structural separation from the Power and Water Corporation (PWC) and immediately faced a number of significant challenges. We started business with a small team, comprising a new Board of Directors, an acting Chief Executive Officer and only four staff with the majority of services provided by PWC under a services agreement. We had just over 80 000 customers and faced active competition from interstate retailers vying for our larger, profitable commercial and industrial customers. Noel Faulkner The customer call centre performance reflected a grade of service just under 25 per cent, compared to the Utilities Commission target of 63 per cent. That means less than one in four calls were answered within 30 seconds, and one in Profile 20 customers actually terminated their call before speaking to a staff member. Structural separation also occurred prior to financial separation with Jacana Energy receiving an opening balance sheet in April 2015. This provided enormous difficulties in managing the financial operations of the business for the first ten months. Despite these and other challenges, which start-up businesses typically face, we are pleased to report that we have achieved good results in our first year of business. These include the retention of key customers and the recontracting of previously Stuart Pearce lost customers, a significant improvement in service performance achieving a call centre grade of service of 70% and delivering a strong financial performance with a profit before tax of $15.0m. One of our greatest challenges has been to help customers understand and manage their energy consumption, which in turn will help them manage their power costs. Territorians have one of the lowest electricity prices in Australia however use more energy than most Australians and consequently average bills are high compared to other jurisdictions. Our first step to address this challenge has been to introduce a new ‘time of use’ domestic tariff. This is a first for the Territory. The theme of change, challenges and growth will continue next year. We look forward to competition in the wholesale energy sector with the introduction of the Interim Northern Territory Electricity Market (I-NTEM). Wholesale energy is the largest single component of our customers’ power bills. While we have been able to deliver a very favourable profit for the year, the lack of accurate financial information prior to financial separation in April 2015 presented some difficulties at year end. In particular management has identified some uncertainty in relation to the composition of an intercompany loan between Jacana Energy and Power and Water Corporation which is a direct result of the separation. We would like to thank Power and Water Corporation for the provision of services during the establishment of our new retail business and will continue to progress the transition of management control of those services to Jacana Energy. We would also like to thank our Shareholding Minister and other key stakeholders, especially our staff, who are working hard to forge an efficient customer focused organisation to take into our second year of operation. Noel Faulkner Stuart Pearce Chairman Chief Executive Officer 8 Jacana Energy Annual Report 2014-15 9 Background On 6 May 2014 the Northern Territory Parliament passed a Bill to separate Power and Water Corporation into three Jacana Energy’s core values Government Owned Corporations: 1. Jacana Energy – functions as the power ‘shop front’ for • WE OPERATE WITH • WE EMBRACE DIVERSITY the electricity supply chain. It looks after residential and INTEGRITY • WE DELIVER AS A TEAM business customers’ energy needs and is a first point of contact for electricity matters. • WE DRIVE INNOVATION • WE ARE PASSIONATE ABOUT FOR OUR BUSINESS 2. Territory Generation – a power generation corporation OUR EMPLOYEES’ WELL BEING that can be thought of as a power factory that provides wholesale electricity to energy retailers. 3. Power and Water Corporation – an electricity network manager and a water and sewerage provider. It maintains and operates the poles and wires which deliver the electricity to customers’ properties. It is responsible for resolving outages and faults and emergencies. See electricity supply chain graphic