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Annual Report and Financial Statements 2010 The Jersey New Waterworks Company Limited The Jersey New Waterworks Company Limited Contents Directors, Officers and Advisers Page 2 Board of Directors Page 3 Chairman’s Statement Page 4 Business Review Page 5 Corporate Governance Page 12 Directors’ Report Page 16 Independent Auditors’ Report Page 18 Balance Sheet Page 19 Profit and Loss Account Page 20 Statement of Total Recognised Gains and Losses Page 21 Cash Flow Statement Page 22 Notes to the Financial Statements Page 23 Five Year Summary Page 36 Annual Report and Financial Statements 2010 | 1 The Jersey New Waterworks Company Limited Directors, Officers and Advisers Directors Non Executive Kevin Keen MBA, FCCA, FCMA Chairman Carlyle Hinault Deputy Chairman Anthony Cooke BA(Hons) Econ, CEnv, FCIWEM, HIWater, FRSA Senior Independent Director Mary Curtis MA, Chartered FCIPD, MIoD Stephen Marie FICWCI, MBIFM, ACIOB Peter Yates BSc, FCA Executive Howard Snowden EurIng, BSc (Eng), MSc, CEng, FICE, FIMechE, FIET, MIWater Managing Director and Engineer Helier Smith BA(Hons), FCA, CDir, MIWater Finance Director Secretary Helier Smith BA(Hons), FCA, CDir, MIWater Independent Auditors PricewaterhouseCoopers CI LLP Twenty Two Colomberie St Helier Jersey JE1 4XA Registered Office Mulcaster House Westmount Road St Helier Jersey JE1 1DG 2 | Annual Report and Financial Statements 2010 The Jersey New Waterworks Company Limited Board of Directors Mary Curtis MA, Chartered FCIPD, MIoD Mary Curtis joined the Board as a Non-Executive Director on 12 June 2008. Mrs Curtis is a fellow of the Chartered Institute of Personnel & Development and is a Director of a privately owned consultancy business, Calmera Business Consultancy. She formerly worked in London before moving to Jersey in the roles of Offshore Island Regional Human Resources Manager at Deloitte & Touche and then Director of Human Resources at Mourant. Carl Hinault Carl Hinault joined the Board as a Non-Executive States of Jersey nominated Director in March 2000 and was re-elected to the Board in 2002 following the removal of the requirement for States of Jersey nominated Directors. Mr Hinault, a retired grower, was Connétable of the Parish of St John for six years From left to right: Carl Hinault, Tony Cooke, Helier Smith, Kevin Keen, until December 2000 and prior to that served as Deputy of Howard Snowden, Peter Yates, Stephen Marie, Mary Curtis. St John for 12 years; he was also a Procureur du Bien Public for the Parish of St John for a number of years. Kevin Keen MBA, FCCA, FCMA Stephen Marie FICWCI, MBIFM, ACIOB Kevin Keen was appointed to the Board in May 2007 as Stephen Marie became a Non-Executive Director of the a Non-Executive Director. He was previously Managing Company in 2002. Mr Marie is the Managing Director of Director of Jersey Dairy and prior to that a Divisional ComProp (CI) Ltd, a Channel Island commercial property Managing Director and Finance Director of Le Riche Group. development company and has previously been involved, Mr Keen is a fellow of both the Association of Chartered at both senior executive and director levels, in the property Certified Accountants and the Chartered Institute of industry for a number of years. He is a fellow of the Institute Management Accountants. of Clerks of Works and Construction Inspectorate of Great Britain Inc., a member of the Institute of Facilities Howard Snowden EurIng, BSc(Eng), MSc, CEng, FICE, Management and an associate of the Chartered Institute FIMechE, FIET, MIWater of Building. Howard Snowden joined the Company in 1992 as Senior Engineer and became Managing Director in May 2000. Helier Smith BA (Hons), FCA, CDir, MIWater Mr Snowden has worked in the water industry since 1970 for Helier Smith was appointed to the Board as Finance Director a number of companies including Yorkshire Water Authority in October 2003 after joining the Company in 2002. He was (the forerunner to Yorkshire Water Plc). He is a fellow of the previously employed by KPMG in the UK and Jersey where Institution of Civil Engineers, the Institution of Mechanical he worked for eleven years in the manufacturing, distribution Engineers, the Institution of Engineering and Technology and finance sectors. Mr Smith qualified as a Chartered and a member of the British Dam Society and is a Panel Director in 2010. Supervising Engineer under the Reservoir Act 1975. Peter Yates BSc, FCA Tony Cooke BA (Hons) Econ, CEnv, FCIWEM, Peter Yates was appointed to the Board in May 2009. HIWater, FRSA Mr Yates, a Chartered Accountant and former President of Tony Cooke became a Non-Executive Director of the the Jersey Society of Chartered and Certified Accountants, Company on 12 June 2008. Mr Cooke is an economist was previously a partner of PricewaterhouseCoopers by background and he is the former Managing Director working in the United Kingdom and Jersey for over 31 years. of Bournemouth & West Hampshire Water Plc. He has previously held a number of Chief Executive and senior management roles in the United Kingdom and internationally. He is a Trustee of Utilities and Service Industries Training Ltd. Annual Report and Financial Statements 2010 | 3 The Jersey New Waterworks Company Limited Chairman’s Statement I am pleased to report that your Company generated As part of our commitment to creating value for profits before tax of £4,151,000, which was just ahead of shareholders we introduced a dealing service for last year. Comparison with our performance in 2009 is not shareholders in 2010 which has improved liquidity in the straightforward due to a number of ‘one off’ costs and Company’s share capital and seen ordinary shares trading gains last year. When these are excluded our performance at up to £80 per share. To further improve liquidity and to was in line with our budget and reflected the benefits of increase the fixed capital of the Company it has been our efforts to reduce costs on a sustainable basis for the decided to propose a bonus issue of shares and a share benefit of customers and shareholders alike. split to shareholders at the forthcoming annual general meeting. If approved, a holder of one ordinary £1 share Turnover of £14,652,000 was slightly lower than 2009 would end up with 20 ordinary shares but with a reduced due to a reduced level of rechargeable works reflecting nominal value of 50p. lower levels of development in the Island. Our customers benefited from our decision to freeze tariffs for 2010, At the forthcoming Annual General Meeting, we will the 8th successive year price increases have been also be proposing that the Company adopts a new set maintained below inflation. of Memorandum and Articles of Association to bring these important documents completely up to date and Operating expenditure was reduced by some 5% to compliant with both the Companies (Jersey) Law 1991 £9,594,000, which was in part due to a one off impairment and best practice. charge of £422,000 last year although the successful execution of our decision to outsource our mains and Both Helier Smith and I are due to retire by rotation at the service laying operation is having a positive effect on coming Annual General Meeting and will be offering overall costs. ourselves for re-election. The Nomination Committee, which on this occasion was chaired by Tony Cooke, The Company continued to invest in its infrastructure our Senior Independent Director, has considered spending £3,460,000 on capital expenditure, including these re-elections carefully and recommends them £1,200,000 on the introduction and rollout of the universal to shareholders. metering scheme which we anticipate will take approximately five years and involve capital investment of approximately £6m. It is hoped that the reduced water consumption from universal metering will delay the need Your Company generated profits for further major investment, such as the extension of the before tax of £4,151,000 for the year. Val de La Mare Reservoir, for as long as possible and of course metering is the fairest way for consumers to pay for water. We also continued to invest in the renewal of our I am pleased to report that the water produced by the distribution network. Company continues to be of a very high standard with a compliance rate of 99.86%. This compliance level is During 2011 the Company will invest approximately slightly up on 2009 (99.84%). We remain concerned £1.6 million in extending the life of the Val de la Mare about the ongoing relatively high levels of nitrates in water Reservoir, which has historically suffered from the resources. When rainfall levels are above average in the effects of ‘alkali aggregate reaction’ (AAR). early months of the year, nitrate levels in all our surface Looking to the future, it is clear that the universal metering water resources are greater than 50 mg/l. Whilst the programme will change the nature of the Company’s Company has dispensations for 33% of samples taken income profile with a further transition away from fixed for nitrates, this is a short-term measure. We continue to income turnover, based on unmeasured charges, towards promote the need for the States Environment Department more variable demand driven income. To protect against to implement an appropriate, sustainable and long-term the effects of this variability, the Company will continue to solution to this ongoing diffuse pollution. work on improving efficiency and streamlining the business Finally it is traditional and entirely appropriate to pay so as to be able to maintain rates of capital investment and tribute to the efforts of the staff who have worked even continue to provide a suitable return to investors, whilst at harder this year to deliver these results.

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