Jersey Electricity: report and accounts 2011.

Clear investment. Pure energy.

REPORT AND ACCOUNTS 2011

RECORD DEMAND

Record afternoon demand of 148MW. Year peak of 154MW

just short of all-time record load of 158MW in January 2010.

AFFORDABILITY

Three consecutive winters without RECORD TURNOVERa price increase; standard tariffs

lower than EU average.

Broke £100m revenue for the

first time in our history and

generated the profit and cash

needed to support our

on-going investment.

OUR YEAR

KEY ACHIEVEMENTS

ENERGY GROWTH CONTINUES

Won almost 90% of

heating load for new SIGNED NEW  developments, helping to

1BILLION SUPPLYpush unit sales for year to CONTRACT650 million.

Delivered new

1billion, 10-year

supply agreement with

EDF, guaranteeing  POWER FROM WASTE Jersey access to low  BECOMES A REALITY

carbon nuclear and  Successful integration of

hydro power to 2023.  States of Jersey Energy  

from Waste (EfW) plant

into La Collette Power Station services and receipt of

around 8MW of power on continuous basis.

£9M SOUTH HILL PROJECT COMPLETED ON TIME AND BUDGET

State-of-the-art switching station forms strategically critical hub of transmission network and will be connection point for third undersea cable Normandie 3.

RELIABILITY KEEPING

THE LIGHTS ON

Successful restoration following French grid failure; network still twice as secure as

the UK electricity grid.

CLOSE WATCH ON PROGRESS ON  TIDAL TURBINE TEST RENEWABLES  Monitored installation of the first of EDF's STRATEGY .5MW tidal turbines off the Brittany coast Delivered wind study  at Paimpol - a precursor to first open water on the Channel  tidal farm in France.

Islands as part of  

on-going research

into viability of large

scale renewables

in local waters.

SUSTAINABILITY LESS CARBON, BETTER FUTURE

Carbon intensity of Jersey's electricity A rated; less than half carbon intensity of local fossil fuels and less than a quarter

of UK s electricity supply.

90,000-VOLT TRANSMISSION RING

Integral to South Hill was laying of final stages of cable that completed a 10-year project to lay a 90kV transmission ring around the Island.

FAREWELL TO OLD MIRRLEES

Completed strategic review of on- SMART METERS Island generation, decommissioned  GET GO-AHEAD

and dismantled the two remaining  Following a

230-tonne 5MW Mirrlees diesel  successful pilot, the engines in readiness for installation  Board approved

of two, more efficient, used 11MW  next stage of major

Sulzer, diesel engines. medium term project

to roll-out Smart

Meters.

AT THE FOREFRONT OF THE ELECTRIC CAR REVOLUTION

Launched next generation of the

Mercedes smart fortwo ed as part

of four-year trial, added all-electric

Peugeot iON and Nissan LEAF to

fleet, helped promote American

Tesla Roadster.  FUEL SWITCH SUCCESS

Completed a further 500 fuel switches from gas or oil to electric heating systems in States tenanted homes.

RETAIL OPERATIONS BEAT THE CHILL

Successful defence of Retail trading in difficult economic climate, consolidated brown goods and Beyond showrooms.

CONTENTS

CONTENTS  DIRECTORS, OFFICERS AND

PROFESSIONAL ADVISERS

 CHAIRMAN'S STATEMENT  2 NON-EXECUTIVE DIRECTORS

Geoffrey Grime FCA (Chairman)

 CHIEF EXECUTIVE'S REVIEW  4 Clive Chaplin  BA

Michael Liston OBE FREng, BSc, CEng, FIEE, CIMgt CORE ENERGY  5 John Stares  BSc, FCA

   MAINTAINING AFFORDABLE  Aaron Le Cornu  BSc, ACA

 ELECTRICITY AND PRICE STABILITY 10

NEW 1 BILLION SUPPLY CONTRACT 12 EXECUTIVE DIRECTORS

EDF ENERGY  13 Martin Magee  CA (FiBnAa, nMcEen)g , CDipAF, CEng, MIMechE, MBA  (Chief Executive)

Christopher Ambler

 ENSURING SECURITY AND David Padfield  BSc, CEng, FIEE, MCMI, CDir, MIOD  (Operations)

 RELIABILITY OF SUPPLY  14 Richard Plaster  FCIPD, CDir, MIOD (Commercial and Human Resources)

 PROTECTING THE ENVIRONMENT

 AND CONSERVING RESOURCES 24 SECRETARY

Peter Routier BSc, FCIS

RENEWABLE ENERGY  26

ELECTRIC TRANSPORTATION  28 REGISTERED OFFICE CUSTOMER SERVICE AND STANDARDS 30 Queens Road, St. Helier , Jersey

NON-CORE BUSINESS  32 PLACE OF INCORPORATION HEALTH AND SAFETY  36 Jersey

SUPPORTING THE COMMUNITY 38 AUDITORS

OUR PEOPLE  40 Deloitte LLP, 66-68 Esplanade, St. Helier , Jersey OUTLOOK  42 BANKERS

Royal Bank of Scotland International Limited,  FINANCIAL REVIEW  45 71 Bath Street, St. Helier , Jersey

 GOVERNANCE  48 BROKERS

Collins Stewart (CI) Limited, 38-39 Esplanade,  FINANCIAL STATEMENTS  60 St. Helier , Jersey

REGISTRAR

Computershare Investor Services (Jersey) Limited, Queensway House, Hilgrove Street, St Helier, Jersey

CHAIRMAN S STATEMENT

 CORE ENERGY CHIEF EXECUTIVE S REVIEW

GROU P PURPOSE

Energy is of critical importance to our Island community. Fundamentally, we have an enabling role. Energy sustains modern living, fulfilling the needs of heating, cooling, lighting, entertainment and transportation. Our challenge is to fulfil

these needs better than ever before. Our purpose is to provide energy affordably, securely and sustainably ... to enable life, growth and prosperity .

 Sustainability defines how we achieve our aims: We are a long-term, capital intensive business committed to the local community. Our planning horizons stretch to 40 years. Our role is to meet the energy demands of today and the future.

That means delivering the right service now while investing for the future. Making the right trade-offs between the short and long term is key.

We must understand our customers and deliver the service they need in the optimum way. Implicit in this is a need to manage the trade-off between affordability and security, risk and cost.

We take responsibility for our actions and,

within the constraints of being a publicly traded company and intensive competition between fuels, we do this in an open and transparent way. Our listed company status, with the incumbent timely disclosures and standards of governance, helps us demonstrate this.

We look after the environment and take care of the community. We also believe that, although the Island is a small community, it is a relatively wealthy one, and we have a duty to do our bit for the global environment.

Our Vision

In our Energy businesses, our vision remains to be

 the leading provider of sustainable energy and

related services . We believe that this is the best

way of achieving the triple goal of:

• Providing affordable and fairly priced energy

• Ensuring security and reliability of supply

• Protecting the environment and conserving

  resources

Our non-Energy businesses, indirectly or directly, support our Energy business and in this our vision

is to be the leading player in every market or category in which we choose to participate .

Our Key Imperatives

• Deliver capital projects on time, to budget,

  to specification

• Grow energy and related sales

• Manage risk on import costs (FX, power)

• Deliver Smart Metering

• Grow non-Energy business

• Continuously improve across all activities

• Enable' offshore wind and marine renewables

Unlike most UK energy suppliers, we are truly integrated across all activities in the energy delivery chain. Being an island, we face higher labour and service costs. We are also isolated and vulnerable to supply disruptions. Smaller scale, higher investment and higher operating costs mean we need to give extra attention to efficiency, flexibility and customer needs, and these are key areas of increasing focus.

GROUP PURPOSE CHIEF EXECUTIVE S REVIEW

JEBS Electrical Engineer Derek Moon completes another fuel switch.

ENERGY GROWTH

Although unit sales continued to grow, we

have observed a slower growth rate than that experienced historically. This is driven by a combination of weaker economic growth, lower population growth, milder weather and the increasing focus by consumers and businesses on energy conservation.

The total number of customers on supply at year end was 47,990 an increase of around 1%

on last year. This reflects good progress in fuel switching and our success at winning electric heating in almost 90% of new build.

Fuel of choice for developers

Electric heating remains the fuel of choice for developers. It is easy to install, clean, low carbon and relatively safe, with no flue or fuel storage requirements, making electric heating installation relatively low cost. Of significance to the householder, electricity remains very competitively and stably priced in Jersey compared with other jurisdictions and competing fuels.

After a particularly cold snap in November and December 2010, when demand peaked at 154MW, a relatively mild winter and remainder of financial year followed. Unit sales for the year were 650 million around 1% higher than the previous year. We expect continued pressure

on unit sales going forward as we continue

to observe reductions in average electricity consumption per customer.

Fuel of choice

for the States of Jersey

Last year, I reported on our successful campaign

to fuel switch a third of the 1,800 States of Jersey homes to electricity, homes which have this year had a full heating season impact on sales. I am pleased to report continuing progress this year, with a further 500 homes converted from fossil fuel heating to electricity and a further 250 now

in progress. We have also completed several infrastructure reinforcement projects to support this new load.

ENERGY GROWTH CHIEF EXECUTIVE S REVIEW

This programme is already delivering significant savings to households of on average of around 30% as well as reduced maintenance costs to the States of Jersey. The States no longer need to recover heating costs via rent, instead transferring responsibility for consumption to the householder and the credit risk to Jersey Electricity, an activity which we have a track record in managing.

As the price of fossil fuels continues to rise, we are constructing attractive propositions for private householders and businesses, generally built around cost savings coupled with environmental benefits of low carbon electric power. Our discounted tariffs such as Comfort Heat, Economy 7 and Economy 20 continue to be popular. Customers

on these off-peak tariffs increased to 14,372, an 8% rise.

+1% customers

+1% unit sales

+750 switch to electric

+8% discount tariffs

MAINTAINING AFFORDABLE ELEC AND PRICE STABILI

Our research confirms that our customers consider price and price stability more important than any other attribute of their service. Given that more than two thirds of our Energy Division costs are attributable to imported energy from France, cost and risk management around imported supplies consume a significant portion of management attention.

Of utmost importance this year has been a

key strategic project to re-tender for a new supplier and contract for the provision of power from France over the 10-year period to 2023. Such an agreement does not guarantee power prices going forward, but provides the essential mechanism by which power is bought forward indexed to the EEXmarket and the process by which risks are managed. We are therefore delighted to have signed up EDF after a competitive tendering process.

Energy market update

Despite our contract with a French supplier, we are far from immune to the vagaries of the global energy market. This financial year we have seen Brent Crude increase from around $80/ bbl to over $110/ bbl at year end, driven by civil unrest in the Middle East and the Fukushima nuclear plant disaster in Japan. In addition, flow of oil has been hampered by continuing aftermath of the BP Deepwater Horizon catastrophe in 2010.

Put these factors together, and we have observed a tightening of power prices in the French market by around 10%. Uncertainty remains on the demand side given the European debt crisis and expectations of a double dip recession but to protect ourselves and our customers we continue to adopt a policy of buying forward a little and often, around one to two years in advance, to secure volume and price certainty.

Higher than normal crude prices relative to electricity prices have meant that optimisation has been used less actively this year as there have been few occasions when it has been cheaper to generate locally instead of importing. Overall, we imported 96% of our annual energy requirement from France.

Foreign exchange  market update

Additional risk arises from the procurement of euro to meet our imported power costs. The average sterling-euro rate for the year has been 1.15 with a high of 1.20 and low of 1.10. With the present uncertainties in European economies, we have been strict in our discipline to adopt a tight hedging procedure. We monitor the markets closely and use various hedging tools given the volatility of the euro. Such products are designed to help us to achieve our tariff goals, while protecting against any downside and

also permitting an upside in the event there is a sterling recovery.

Impact on retail prices

Providing affordable electricity means not just competitive pricing but stable pricing. Risk management and hedging continue to be an essential activity and this year we have also refined our tariff setting process to allow for mid- year tariff changes and smoothing. We have held prices frozen over the 2011/12 winter, our third consecutive winter with no increase (excluding 2% GST increase applied by the States of Jersey mid-year).

Given increases in the underlying cost base of imported power, we expect to apply a small price increase in 2012 after the winter period, but this will be much smaller than the recent fossil fuel increases in Jersey and the double-digit rises that UK residents have experienced.

We are delighted that the power prices most of our customers enjoy compare very favourably with other island and EU benchmarks. We continue to meet our target of being within 10% of the European median price.

UK ENERGY PRICE RISES IN THE LAST YEAR

Supplier  Electricity Gas

% rise  % rise

Scott ishPower  19.8  21.4 Scott ish & Southern 11.0  29.1 British Gas  24.1  26.3 Npower  12.6  21.5 Eon  21.4  21.6 EDF  12.3  22.9 Average  16.9  23.8

The 15 June 2011 was a hugely significant  of our existing agreement at the end of 2012, date for Jersey Electricity and our partners in the  was one of our highest priorities of the year. Channel Islands Electricity Grid (CIEG), Guernsey  Putting this contract in place has enabled Jersey Electricity. After a competitive and European-wide  Electricity to start hedging power forward for tendering process, we were able to sign a new  delivery from 1 January 2013 in order to mitigate 10-year supply contract with our current suppliers  the risk to our future cost base.

EDF.

Worth in the region of 1billion, this second Completion of the final contract represented the  long-term supply agreement, which was signed in culmination of over a year s work for several  Paris, between EDF and the CIEG, is of immense senior staff and, given the impending expiry  importance in helping us achieve our primary

objective of maintaining reliable and affordable

supplies of low carbon electricity for

our customers well into the future.

The agreement is also pivotal to our long-

term commitment to sustainable energy by guaranteeing that we will be able to meet all Jersey s demand for electricity with certified low carbon supplies up to 2023. Crucially, it also enables us to access a mix of nuclear and hydro- electric sources of energy within EDF s fleet of generation plant.

With our ability to forward purchase power secure, we expect to be able to introduce new tariff options to give our customers greater choice without compromising value for money or our green credentials.

The agreement once again demonstrates how Jersey Electricity and Guernsey Electricity have successfully worked together as CIEG partners for the benefit of both islands.

EDF Energy

EDF is the world s leading nuclear energy company and at the forefront of renewable energy and efficiency development with a global turnover of 65billion and a worldwide workforce of 160,000.

The company supplies energy and services to more than 38 million customers around the world, including 5.5 million in the UK and more than

28 million in France where 95% of the electricity output produces no CO2 emissions.

In a typical year, EDF s nuclear stations avoid the emission of more than 30 million tonnes of CO2. The amount emitted during the entire lifecycle of a typical nuclear station is around 5g/kWh. This is comparable to onshore wind turbines and about 180 times less than a typical coal-fired station.

New Nuclear has a key role to play in the future as EDF meets the challenges of providing clean, secure and affordable energy. As the world s most experienced nuclear operator, safely running 58 reactors in France and 15

in the UK, EDF will play a leading role in new nuclear technology and renewables.

EDF Energy has formed a joint venture with EDF Energies Nouvelles called EDF Energy Renewables, for the operation, purchase and development of wind generation assets in the UK.

Jersey Electricity has a long and established relationship with EDF with its first cable supplying up to 55MW of power to the Island being

installed in 1984 and the second carrying up to 90MW commissioned in 2000. Plans to install a third submarine cable, Normandie 3,

are well underway.

SEABED SURVEY HELPS REVEAL JERSEY'S PREHISTORIC PAST:

Finding the best route for Normandie 3 along the seabed to minimise disruption to fishermen and other marine operators involved the drilling of over 50 cores of six metres and more deep into the seabed.

As well as providing us with the geophysical data necessary for our Environmental Impact Assessments, the cores are revealing the secrets of Jersey s pre-historic past. Jersey Electricity was

delighted to hand the cores to historians and scientists of the SociØtØ Jeriaise who

are now studying the microscopic fossils contained in more than 185 metres of

sediment. This is providing fascinating insight on the type of animals and plants in

and around Jersey before the last Ice Age.

ENSURING SECURIT RELIABILITY OF SU

Aprsi mthaer ysuep npelriegry ,oift aisr oeusns ednati athl itrhda toifntfhrae sIt srluacntudr es is   Owiuthr nUeKt  wEonr gk i  nise  ed reinsi gg nSetad n bdr aoradds,ly t oin b aec acobrled ato nce securely designed and reliable. Significant Group  continue to supply power in a scenario when

resources are directed towards maintaining  the largest capacity component is lost (a so electricity supplies over the long term; designing,  called N-1 standard). Given our dependence on building and maintaining our generation  imported power, Jersey Electricity also seeks to infrastructure and the network and preparing  maintain local fast-start generation plant capable for occasions when these fail. We also seek to  of meeting at least 75% of peak winter demand provide special priority restoration for customers  over a continuous 48-hour period, to cater for a such as the emergency services, hospital and  complete loss of French power.

airport, water treatment plant and the finance

sector. Our supply reliability has been good this year

despite the higher risk of fault due to increased

commissioning activity. Average Customer

Minutes Lost, the total length of time supplies

were interrupted during the year for the average

customer, was 45 minutes, around twice as

reliable as the UK network. Excluding the French SECURITY OF SUPPLY P E  RFgrOid failures in September, our supply reliability

would have been just 10 minutes, consistent with AVERAGE CUSTOMER MINUTES LOST last year.

82

80 76 * UK Source: Ofgem

Jersey Electricity inc luding

45 Sept French Grid failure

5 9 10 10 Jersey Electricity exc ludin 2008 2009 2010 2011 French Grid failure

*2011 figure not available at time of writing

Power cut

Two years ago we revised our business continuity arrangements to complement our emergency operational procedures and this year we used them. In September, while on full importation

and with no warning, the French grid failed, severing supplies to our main importation busbar at La Haye du Puits in France. The result was immediate loss of supply to both Jersey and Guernsey. This was the first Island-wide power cut for five years.

We were delighted with our staff response and restoration procedures which worked well. The last customer was restored after 45 minutes. In the second cut, we maintained supplies for most of the Island, losing around 8,000 customers for 13 minutes. We are constantly looking to learn from such events. We have reviewed our procedures and are examining ways to improve our response and that of our partners at Guernsey Electricity further.

Transmission

Gprereensehnutebd: tchheaSlleonugthe sH, iwll hsiitle e  South Hill Normandie 3 pulling the cables from La Collette

to the new switching station

through an old German tunnel

saved the costs of trenching            

around Mount Bingham.                

Joint venture: A team of experts from Indonesia was brought in to carry out the jointing of the 6km 90kV cable laid in the project.

90kV MAUFANT (future)

90kV

QUEEN S  90kV  NORMANDIE 1    

ROAD ARCHIRONDEL

NORMANDIE 2    

90kV

ST HELI ER WEST (future)

90kV  90kV  90kV WESTERN   RUE DES PRES PRIMARY

NORMANDIE 3      

The South Hill site was chosen

for this strategically critical

network hub to distance it

from La Collette hazards and

possible sea-front flooding.  Development Timeline Key Facts The build work took just five

months to complete.

Nov 2009:  Planning permission granted

Jan 2010:  Contracts awarded

Feb 2010:  Site clearance (spade in ground) Apr 2010:  Construction work starts

Sept 2010:  External build completed

Oct 2010:  Duct installation works starts

Mar 2011:  Cable installation and jointing starts June 2011: Internal fit out complete

July 2011:  Commissioning begins

Aug 2011:  Final commissioning

Apr 2012:  External works expected complete

• £9m total cost

• Three major contracts with INEO, Nexans

  and Alstom

• 3,800 cubic metres soil and rock removed

  from site excavations

• Dimensions: 39m long x 20m wide x 8m high

• 3km of trench excavated between South Hill

  and Victoria Avenue

• 6km of 90kV cable installed

• 24 individual 90kV cable joints

• 36km of duct installed, including provision

  for future11kV circuits

• 400sq m of dressed granite walling

  (80m x 5m high)

• 150 shrubs and trees planted

• Road access widened

• Two new driving instructors' reversing bays

 We are delighted to have completed the project on time,  on budget and to specification

SOUTH HILL CHIEF EXECUTIVE S REVIEW

Connecting South Hill to the existing network involved trenching, duct installation and the laying of 6km of 90kV cable before the final fit  out and commissioning. This was successfully carried out by a dedicated team, including (main picture L to R): Senior Project Engineer Jeremy Willis, Trainee Data Communications Engineer Dominic Warr en-Gash and Senior Maintenance Engineer Mark Wille, without any disruption to customer supplies.

 During the year the network delivered 650 million units of power to 48,000 customers.

Distribution

This year our peak load was 154MW in November down from the prior year s 158MW. Unit sales on the peak day were 2.7 million. During the year the network delivered 650 million units of power to 48,000 customers.

Workload in Distribution remained high, driven by new development, fuel switching States

of Jersey housing, reinforcement and asset replacement. Switching activity increased

by around 50%, reflecting the extensive commissioning activity relating to South Hill.

Overall we installed 18.50MVA of new transformer capacity, 33km of new cable, 26

new substations, 11 refurbished substations

and 843 new services. We maintained 179 substations and patrolled 11.4km of line. Substations under Jersey Electricity s control now number 732.

SmartSwitch

Having installed around 4,500 Smart Meters as a pilot, the Board agreed to progress the Smart Metering project, SmartSwitch. Smart Meters, a precursor to a Smart Grid, have the potential to bring about a huge revolution in the power sector.

Accurate and more frequent remote meter reading provides the most immediate benefits, effectively eliminating manual and estimated reads. Smart Metering enables remote configuration of tariffs, connection and disconnection, as well as better control over our load curve, leading to more efficient capital utilisation and price signalling for customers. The technology promises to combine various existing metering systems into one as well as providing enhanced information, services and enhancing our relationship with customers.

We are working with suppliers to develop meters for our twin element, multi-rate tariff and are already advancing the installation of the data collection system. Our engineers have installed data collectors in around 500 of our 732 substations. We have also completed a successful trial with Jersey Water to share a common metering infrastructure to gather readings.

Metering Technician Neil Schofield tests one of the new substation data collectors.

WIRELESS CONNECTION WITH JERSEY

WATER

SENDS 48 READS PER DAY    DATA DATA

ELECTRICITY SOURCES  ELECTRICITY 2010-2011  SOURCES IN %

656,233MWh  +1.7% +3.2% Imported from EDF Year  JE  EfW Import

17,467MWh  2008-09  6.6%  0.9%  92.5% Generated by EfW plant 2009-10  5.9%  0.6%  93.5%

12,887MWh  2010-11  1.8%  2.6%  95.6% JE locally generated -4.8%

ORIGINS OF IMPORTED ELECTRICITY FROM EDF Nuclear 81%

Hydro 7.9%

Coal 3.4%

Gas 3.0%

Renewables 2.8%

Fuel oil 1.6%

Other 0.3%

Generation

La Collette Power Station is equipped with a diverse range of generation equipment that includes a mix of diesel engines, boilers, steam and gas turbines. It is capable of meeting

the Island s full demand if called upon. Local generation has been lower this year given

high oil prices relative to the cost of European electricity and limited outages on our cable links.

La Collette provides an important insurance policy for the Island, as was demonstrated during the French power cuts in September. Local generation was used during network maintenance, commissioning of South Hill, the French grid outages and for a few occasions in support of the French and Guernsey grid.

Diesel project

Earlier this year, we completed a full strategic review of the role of La Collette and its implications on future generation. To continue to meet our declared security standards most cost efficiently, the Board approved a project to install two used 11MW Sulzer diesels to replace two 5MW

Mirrlees units which were no longer operational. The Sulzers are a similar specification to two existing units; fast start , flexible and relatively

low cost to install and operate.

The team has worked hard to secure the contracts needed for both the supply of the replacement engines as well as the dismantling and removal of the Mirrlees units. This has been difficult and hazardous, requiring close management of contractors and rigorous application of our safety standards. We expect to complete this project in 2012.

PROTECTING THE ENVIRONMENT AND CONSERVING RESOURCES

As Jersey s leading energy supplier, our responsibility to reduce our impact on the drivers of climate change is two-fold. We must act to reduce our carbon emissions and those of our customers. And we must act to help reduce the Island s consumption of energy resources.

We are proud of the action we have taken over the last 20 years. We have been instrumental

in reducing the Island s carbon emissions by replacing on-Island, oil-fired electricity generation with cleaner, low carbon, imported electricity from mainly nuclear and hydro sources in France. The result is a reduction in carbon emissions by

a third since 1992 despite a 40% increase in demand during that same period.

Electricity generation now comprises just 4%

of Island carbon emissions and our average emission level last year, the international measure of carbon content of supplied energy, was just 56g CO2/kWh or 98g on a five-year rolling average basis, both less than our self-imposed target of 100g CO2/kWh. Our goal is to reduce this further while continuing to explore other ways of reducing the environmental impact of our internal activities and the services we provide.

We aim to achieve Eco-Active Level 3 Certification and have committed to implementing an Environmental Management System. We have made good progress in establishing an initial baseline of Environmental Key Performance Indicators, including those measuring air and water based emissions, waste and recycling, water use and energy consumption. Next year we plan to conduct a full environmental impact audit and gap analysis.

We continue to lead the Network of Small Island Systems (NESIS), a sub-committee of Eurelectric, the EU electricity authority and have been particularly focused on the Industrial Emissions Directive (IED). We have made progress in representations via Eurelectric to European bodies to ensure that any emerging legislation is practical for small island communities.

Jersey has one of the cleanest forms of electricity in any island community and a huge opportunity exists to promote and develop a sustainable

and low carbon economy. To achieve this, the industry needs clarity on the government s Energy Policy and carbon reduction ambitions.

HOW JERSEY ELECTRICITY HAS HELPED REDUCE THE ISLAND S OVERALL CARBON EMISSIONS

1992

79

46

32

17

2001

After four years of effort on the part of States of  Many ask why Jersey Electricity does so much

Jersey officers, we were hopeful that the Energy  to promote energy efficiency that will result in

Policy would finally be debated by politicians  reduced energy sales. The answer is threefold.

this year but further changes to the Policy  First, we are passionate about protecting  75 document appear to have frustrated progress.  the environment and conserving resources.

Second, we have a duty to ensure that islanders

The Policy needs clear energy and carbon  get the best utility from their electricity supply.

reduction goals, and it needs to consider all  Finally, more efficient use of our core product  32 aspects of secure supply and investment needs,  means customers are likely to use it in other

not just a myopic view on short-term costs. It  applications, such as electric transportation and  19

also needs to set out clear and practical action  heating.

plans for how these goals are to be achieved.  We are delighted with the progress of the States  19

Trcehleneaerrew ciaosb nclseoenensntiidenerggr aya bn lde t ospu  apbsrsosiidcoeyne fdirna,   mtwheee w  In soe lare knd dt  ha afot r  pJerrivseayteEpleacr ttrnice ir tsyh fi up n s de iendge , d d  ewsii gth n £ed0 . t5 om h  eo lpf  the  2008

of Jersey Energy Efficiency Service, a public

provides the necessary incentives to catalyse the  vulnerable reduce their energy bills.

market. We believe there is an opportunity to  55 work with our EU neighbours but this requires  The Scheme has this year been extended by

close co-operation across all the Channel  broadening the measures funded, expansion of

Islands as an essential precursor to progress.  the target vulnerable group and application to

community buildings.  32

In addition, through our Building Services  18

team and our independent mechanical and

electrical services consultant Jersey Energy, we  4

are increasingly helping large organisations to

improve their energy efficiency. JERSEY'S CARBON EMISSIONS BY SOURCE:

(THOUSANDS OF TONNES)

DOMESTIC & COMMERCIAL TOTAL ROAD TRANSPORT ENERGY FROM WASTE PLANT

      ELECTRICITY GENERATION

Source: States of Jersey Statistics Unit, Jersey Energy Trends 2008

RENEWABLE

Our major investment in a new £60m submarine cable to France will help reduce the Island s carbon emissions further from 2015 by enabling Jersey Electricity to source the full Island s winter demand from cleaner, certified nuclear and hydro-electric power. The Island therefore already has access to low carbon power. The Island s major driver for renewables is therefore to enhance security of supply by reducing our long- term dependence on imported energy.

Last year we conducted a strategic review of utility scale renewables, exploring large scale offshore wind and tidal power. We believe we are well placed as an enabler, project partner

or equity participant in the industry and

we are preparing for this future, but we also acknowledge that these technologies are not presently economically viable without subsidy support and, unlike EU countries, Jersey does not offer this.

Our French supply partners EDF are currently trialling two tidal turbines at Paimpol on the nearby Brittany coast as a precursor to building the first tidal turbine farm in France. At 850 tons and with a total height of 22 metres, each turbine has the capacity to generate over .5MW of power. We are closely monitoring the progress of this trial while continuing to study tidal and wind power ourselves, so that when these become economically viable, Jersey Electricity will be ready to take advantage and ensure the people

of Jersey benefit from Jersey s natural resources.

Such projects are often highly risky, of long duration and highly capital intensive. We have progressed several actions during the year, including the completion of a Channel Islands offshore wind study to assess the resource potential and economic viability. We have also strengthened inter and intra-island relationships with the Jersey Renewable Energy Commission and are ready to assist.

RENEWABLE ENERGY CHIEF EXECUTIVE S REVIEW

ELECTRIC

ELECTRIC TRANSPORTATION CHIEF EXECUTIVE S REVIEW

Customer Care Advisers Donna Hughes (main picture), Christine Fletcher (top) and  Pat Bayley.

7.1 IN 2009/10

5.4 IN 200 9/10  

CUSTOMER SERVICE AND STANDARDS CHIEF EXECUTIVE S REVIEW

100% 100% 100%

           99.95

      %

                      100%

                              100%

              100%

                      100%

                    99.99%

                            99.93%

NON-CORE BUSINESS

Development of our non-Energy business enables the Group to reduce its dependence on the self- regulated Energy business, capturing value from competitive markets. Our vision is to selectively participate in markets in which we can truly win and build strong, sustainable businesses. This is

a challenging goal given the economic pressures on and off Island. With revenues of £26m, non-Energy has increased its share of the Group revenues from 25% last year to 26% this year.

Retail and day2dayshop

   The Retail business comprises our electrical store,

Beyond Computers and Imagination, our toy and     hobby shop, together with our online trading

     business day2dayshop.com. At £16.5m revenue,

     Retail is almost twice as large as our other non-

    Energy businesses combined. With an overall

     increase in revenue of 14% and operating profit

   of 2% compared with last year, Retail has had

    a good year considering the current economic

    climate.

   Consistent with trends in future home

     entertainment, we have consolidated our TV      and audio business into Beyond, leveraging

     the strength of this brand in the marketplace

  and enhancing layout and customer shopping

experience.

Beyond s exceptional performance is a credit

to staff. Beyond is now a clear market leader in Jersey, offering a wide range of products and services, while delivering the highest levels of customer service. This business continues to evolve though we expect margins to thin in this difficult economy.

Day2dayshop, our ecommerce venture retailing home consumables, also had a very good year achieving 126% revenue growth to around £3.6m and breaking into profit for the first time. With the recent UK Treasury decision to remove Low Value Consignment Relief, which allowed goods under £15 to be shipped into the UK

free of VAT, we expect trading next year to be especially difficult. To mitigate the effects of this, the business has started trading into Germany and has plans for diversification into Europe.

Our toy store Imagination has had a more difficult year than Beyond and day2dayshop. However,

it remains profitable and provides a valuable role in the portfolio by attracting footfall which has supported cross-sell.

The Powerhouse Retail Park has become a key destination for Island shoppers, with just over 280,000 customers choosing to shop with us

over 2011. However, retailing in the Island continues to be very difficult, with tough economic conditions and continuing pressure from internet stores and UK retailers entering the market.

Public Lighting Electricians Trevor Laffoley and Daniel Marriott enjoy a  bird s eye view of the  south coast.

Building Services (JEBS)

Building Services is our commercial contracting business serving mechanical and electrical maintenance clients, small works, air conditioning and public lighting.

With an increase in annual revenue to £4.7m, activity has been strong this year boosted by continuing works installing electric heating systems into States of Jersey homes. Overall small works, air conditioning and public lighting have traded well but revenues and margins have declined in maintenance as a result of the loss of several States of Jersey contracts. Many of these have been lost via competitive tender focused solely on price.

We continue to work with the States of Jersey to improve our performance in this area.

Profit is down 8% on last year but, overall, given the extremely price focused market and a collapse in maintenance work in the commercial sector, the business has held up well.

We expect next year to be more difficult as the economic recession bites harder. We have a broad skills mix and are hopeful that this strength, backed by the Jersey Electricity brand, will offer some resilience.

Property

The property business comprises commercial sites and legacy residential homes originally built to accommodate staff. With profit of £1.7m it is

our largest contributor to non-Energy profit. We continue to invest in our property portfolio in order to optimise yield and value over the long term. We expect development of the Medical Centre to be completed next year and are considering further enhancements at The Powerhouse.

HEALTH & SAFETY CHIEF EXECUTIVE S REVIEW

6

5

LOST TIME AC CIDE

(RIDDOR)

3 3 3

2 2 2 HEALTH 2004 2005 2006 2007 2008 2009 2010 2011

AND SAFE35 43 66 D2A1 YS LO22 ST9 45 134

(RIDDOR)

The health and safety of everyone involved in or impacted by our operations is a top priority. We understand that our activities potentially give rise to risk if not properly managed and could have severe consequences for employees, contractors and members of the general public. Under our staff contracts, we all have a duty to protect ourselves and others. By being clear about roles and responsibilities, proper processes, risk assessments and training, we can mitigate risks and eradicate injuries.

To further improve performance, last year I

invited the British Safety Council (BSC) to conduct a review of our activities and I was pleased

we achieved a four-star rating out of five. This

year we further analysed the gaps and have progressed work to close these. We will have our next BSC review in 2012.

Third party contractors damaging our services and putting their own safety at risk continues to be a concern. We have had several meetings with the Health and Safety Inspectorate and implemented a major programme of awareness raising. Last year s spring health and safety campaign targeted third party contractors and smaller developers to alert them to the dangers of working near customers electrical installations. Following the success of

that campaign our Health and Safety Team, in consultation with the Health and Safety Inspectorate, this year focused attention on domestic DIY.

The STOP, THINK, CALL campaign carried a very impactful message into the home of every customer, informing them what they should do before they start work on their home or garden. The leaflet campaign was backed by radio broadcasts and special pocket- sized cards distributed at appropriate retail outlets and States of Jersey offices.

RIDDOR is the acronym for Reporting of Injuries, Diseases and Dangerous Occurrence Regulations and is the UK standard used for the reporting of health and safety statistics.

A Lost Time Accident (LTA) is an accident that results in

the injured person being away from work or unable to do their normal work for more than three days (including any days they would not normally be expected to work such as weekends,

rest days or holidays) and not counting the day of the injury itself.

Despite a generally high standard and strong culture, I am disappointed to report an increase

in the number of Lost Time Accidents and number of days lost from these. However, none of

these accidents was serious and one individual comprised the majority of the days lost. We should also recognise a reduction in the number

of other accidents and road traffic collisions year-on-year. We have been extremely busy

across all areas of the business but despite this,

we want to see improvement. Jersey Electricity has a reputation for high standards and an intrinsic desire to be not just good but world class.

In-house, we focused on Distribution Safety Rules with all Distribution first-line managers completing Refresher Managing Safely. Key training was also completed on Asbestos Awareness, Risk Assessment, Induction and First Aid among many others.

Although disappointed with our results this year, it

is certainly not through lack of effort from the Safety Representatives. Their commitment to site inspections, reporting deficiencies and communicating

awareness among our frontline staff is exceptionally important. I meet these staff members directly twice yearly to discuss issues and improvements, and

I am immensely grateful to them for their central contribution in helping Jersey Electricity create a positive health and safety culture at all levels.

SUPPORTING THE COMMUNITY

Jersey Electricity is not just a neighbour to the community, we are part of it. Our customers are our family, friends, acquaintances, members of the general public as well as the many businesses in which they work. We focus on sustainability

in the community and support areas that are

close to our values; typically on-Island charities of an environmental, healthcare and educational nature. We like to see our customers benefit from our support which may be in the form of resources and expertise as well as funding.

We started what we hope will be a fruitful relationship with the National Trust for Jersey in this its 75th anniversary year and in its year-long Green House Project. We were pleased to present the Trust with one of the most eco-friendly 4x4 pickup trucks to help rangers manage the natural environment. We have also supported the Trust with low energy lighting throughout its properties and installed several energy efficient heating systems in some properties at reduced cost.

We have given major support to Jersey Hospice Care and we continue to help Family Nursing and Home Care to buy vital equipment with money we save by not sending Christmas cards. We also donated the use of one of our new electric Smart cars to Macmillan Cancer Trust for six months.

Our continued sponsorship of the Jersey Enterprise Environmental Award and the Jersey Construction Council Sustainability Award recognises and rewards the fantastic progress that organisations of all shapes and sizes have made to help

preserve and conserve our remarkable Island. Both awards attracted inspiring and innovative entries evidencing best practice in sustainable

and environmentally friendly business and helped to reinforce Jersey Electricity s alignment with sustainability and clean energy.

We support schools with environmental and energy efficiency projects and we have introduced a special schools category for the 2011 Environmental Award.

As a significant corporate employer within the community, we support Project Trident, IOD Work Shadow, Undergraduate Work Experience and Advance to Work training as well as running our own apprenticeship scheme.

I am frequently asked by our staff for corporate sponsorship for their own charities which, in many cases, are a central focus in their non-work life. I am always impressed by the meaningful impact that our staff have made in helping external charities and in these cases, Jersey Electricity is delighted to have matched their funding.

As part of our drive to switch to more environmentally acceptable electronic statements and email communication, we have created a

fund in the name of Jersey Trees for Life which has accumulated contributions for each customer who has switched from paper statements and we plan

to present the funds raised to JTL next year.

SUPPORTING THE COMMUNITY CHIEF EXECUTIVE S REVIEW

OUR PEOPLE

EMPLOYEE FACTFILE:Although we are a capital intensive business,

people are at the core of our success it is our staff that analyse, plan, do and communicate the work to help the organisation achieve its goals.

At the end of the year, we employed 337 people

across the Group of which 301 were full time

and 36 part time. With pressure on finances, we

tightly control numbers and all new appointments

are approved by the Chief Executive. We focus

on quality and development not just quantity.

We are deploying more rigour in our recruitment

decisions not just covering skills and capabilities

but also behaviours and attitude attributes which  In a small power utility located offshore, we are are hard to train . We also focus increasingly  highly dependent on the flexible skills, diverse

on how we create the conditions where staff can  capabilities and above all, the commitment of our simultaneously be successful in their roles as well  staff. Nowhere was this more strongly illustrated as fulfilled in their work.  than in the response staff showed to the failure

of the French power grid in September, which I Staff turnover levels remain at 4% and we also  experienced first hand for the first time in my role. enjoy a low sickness rate of 3%. Average length  Such was this commitment to Jersey Electricity that of service is 15 years and average age is 43. no fewer than 38 off-duty individuals arrived at

As we say farewell to retiring colleagues, we also,  work unprompted within minutes of the outage

of course, lose the benefit of much experience.  ready for action. Staff were represented by

This presents an opportunity to reshape our staff  several areas of the business including Customer skill set for a more technologically-driven world,  Care, IT, Generation and Distribution, among

but it presents a threat of thinning experience in  others and we were able to present a seamless

our ranks. We must, and do, continue to invest  team response that restored power within the

in staff in the form of apprenticeships, trainee  hour.

graduate engineers and other professionals as

well as commit to training and development. As a  I am immensely proud of the dedication,

business, we have a long planning horizon we  commitment, loyalty and professionalism of all must ensure we are fully equipped for the future in  our staff. My sincere thanks go to them.

both the breadth and nature of skills.

OUR PEOPLE CHIEF EXECUTIVE S REVIEW

OUTLOOK CHIEF EXECUTIVE S REVIEW

Jersey Electricity is well invested today, and has made continued progress this year in preparing for the future. We are a very long-term business. Of course, we need to deliver value and contain costs today, but it can t be at the expense of

the future.

Our investment horizon is up to 40 years but

it is pleasing that advancing our longer-term strategic projects has not come at the expense of a solid operational performance. This has led to power distributed in Jersey today being very competitively priced, extremely reliable, and significantly cleaner than alternatives.

We are confident that our strategy to focus on energy and related services, while strengthening our position in Building Services, Retail and our other non-Energy markets, is a sound one.

This will give us a low-risk platform for growth and diversification without straying too far from our heritage and our capabilities.

Challenges remain in both our Core Energy business and in our non-Energy businesses.

We are living in a troubled economy with weak growth, high inflation, high unemployment

and ever more intensive competition. We are committed to driving improvements across all our businesses and delivering our programme of essential investment. In addition, we continue to work with the States of Jersey and other external authorities in demonstrating our commitment

to efficiency, flexibility and service that is so important to our Island s future.

We are hopeful that the States of Jersey will finally make progress with its Energy Policy and provide the policy guidance that all the energy market participants seek. In the absence of this, we declare in this report what we think is in the best possible interests of our customers, shareholders, businesses and the community at large and seek to deliver this.

We hold a privileged position in the Jersey energy market which puts us at the forefront

of an exciting future a future that promises

our customers, employees and shareholders that we will do our bit for a sustainable island and that will underpin economic prosperity for many years to come.

Chris Ambler Chief Executive 14 December 2011

FINANCIAL REVIEW

Group Financial Results

Key Financial Information  2011  2010  %

movement

Turnover  £100.49m  £98.89m  2% Profit before tax  £11.07m £14.56m   (24)% Profit in Energy business  £7.68m  £7.74m   (1)% Earnings per share  28.05p  40.20p*  (30)% Dividend paid per share  10.45p   9.95p*  5% Special dividend paid per share  3.25p*  -  -

*Earnings and dividends per share have been re-stated to reflect the 20 for 1 share split approved at the 2011 AGM

Group turnover for the year to 30 September 2011 at £100.5m was 2% higher than in the year ended 30 September 2010. Unit sales volumes were 1% higher than last year but revenues in our Energy business remained at the same level

as 2010, at £74.5m, as a result of the 5% decrease in prices

to our customers from January 2010. The turnover in our

Retail business increased by 14% to £16.5m. Lower sales in

our traditional white/brown goods offering were more than compensated by gains in our computer retailing, toy/hobbies and e-retailing internet businesses within the Retail portfolio. Turnover in the Property business, excluding internal revenues, fell from £2.6m to £2.2m as the 2010 figures included back- dated profit from the resolution of an outstanding rent review. Turnover in Building Services rose 10% from levels experienced in 2010 to £4.7m. Turnover in our Other Businesses fell from £3.1m to £2.6m with the difference being attributable to largely non-recurring revenues received in the prior year from our ex-associate Newtel.

Cost of sales rose £0.9m to £70.0m mainly associated

with the rise in revenues in our non-Energy business units. Operating expenses, at £19.6m, were £1.6m higher than in 2010 being a mix of increased maintenance and repair costs, depreciation, salaries, advertising and bad debt provisioning.

Profit before tax for the year to 30 September 2011 fell to £11.1m from £14.6m but £2.5m of the movement from 2010 was attributable to the revaluation of our investment property portfolio and £0.8m from the distribution of proceeds by our ex-associate Newtel from the sale of assets. Profits in our Energy business remained at £7.7m being at the same level as last

year. Tariffs to our customers were reduced by 5% in January 2010 and remained frozen throughout this full financial year. We have publicly indicated that tariffs will remain at current levels until at least April 2012 and have hedged around 90% and 60% of both power and foreign exchange for 2012 and 2013 respectively. We again imported most of our power requirements from France (96% against 93% in the previous year). Profits in our Property division, excluding the impact of investment property revaluation, fell to £1.7m from £1.9m last

year primarily as a result of a back-dated rent review settlement that crystallised in the last financial year. Our investment property portfolio was revalued downwards marginally by £0.1m to £14.9m this year due mainly to movements in stamp duty in Jersey being reflected in the external assessment. Despite the tough trading conditions currently prevailing in markets the Retailing business saw profits remain at £0.5m with turnover up 14% to £16.5m. The Building Services business produced a £0.2m profit, being on a par with last

year, even though pressure on margins continued to exist in a very competitive marketplace. In addition our other business units - Jersey Energy, Jendev and Jersey Deep Freeze all had a profitable year. We also received £0.2m in proceeds from the sale of our remaining shares/loans in our ex-associate Newtel. Foreshore, our data centre joint venture, had a turnover of £4.9m being £0.1m less than in 2010 with profitability moving from a small profit last year to a £0.1m loss in 2011.

Interest received on deposits in 2011 was £0.3m being at the same level as in the previous year.

The taxation charge at £2.4m was higher than in 2010 because although profits last year were higher, much of the year-on-year difference was due to non-taxable items such as upside from revaluation of investment properties.

Group earnings per share fell 30% to 28.05p compared

to 40.20p in 2010 (re-stated to reflect the 20 for 1 share split approved at the 2011 AGM) due to lower profits associated with a sizeable element of the profits in the previous year being due to non-recurring windfall revenues and a material upside from the revaluation of the investment property portfolio.

Ordinary Dividends per share

2011  2010

*dividends have been re-stated due to the 20 for 1 share split in March 2011

Dividends paid, net of tax, rose by 38%, from 9.95p in 2010 to 13.70p in 2011. However the underlying increase was 5% as a special dividend of 3.25p per share which was proposed last year was paid in the year. Dividends declared last year have been re- stated due to the aforementioned share split. The proposed final dividend for this year is 6.50p, being a 5% rise on the previous year. Dividend cover fell from 4.0 times in 2010 to 2.1 times due primarily to a lower level of profits and the payment of the special dividend noted above.

FINANCIAL REVIEW

Cash Flows

Summary cash flow data  2011   2010

Net cash inflow from operating activities at £20.8m was £3.6m higher than 2010. Capital expenditure, at £15.0m rose from £8.7m last year with the completion of the £9.3m South Hill switching station capital project, including associated cabling works, to reinforce the electricity network in Jersey being the primary reason. Cash at bank, including short-term investments, at the year end was £24.5m being £1.8m higher than last year.

Treasury Policy

Operating within policies approved by the Board and overseen by the Group 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 is the importation of power from Europe, which is contractually denominated in the Euro, the Company enters into forward currency contracts to eliminate a large percentage of currency exposure as a tool to aid tariff planning.

The average Euro/Sterling rate underpinning our power purchases during the financial year, as a result of the hedging program, was 1.15 /£. The average applicable spot rate during the last financial year was also 1.15 /£.

The Company does not manage interest rate exposure as it has maintained cash in bank in the full period since the last year end. The average rate of interest received in the financial year was 1.4%.

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 non-performance is not anticipated given the high credit ratings (investment grade and above) of the established financial institutions with which we transact.

Power purchasing policy

The Company imports over 90% of the electricity requirements of Jersey from Europe. It jointly purchases this power, with Guernsey Electricity, from EDF in France based on a market related mechanism linked to the EEX European Futures Exchange. This allows power prices to be fixed in advance of decisions being made on customer tariffs.

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. The aim of Jersey Electricity is to hedge future purchases for one to two years ahead on a rolling basis to provide our customers with a market based price but with a degree of certainty in a very volatile energy marketplace.

Defined benefit pension scheme arrangements

As at 30 September 2011 the scheme deficit, under IAS 19 Employee Benefits rules, was £3.5m, net of deferred tax compared with a surplus of £1.4m at 30 September 2010.

This movement was due mainly to an actuarial loss of £6.6m associated largely with a decrease in scheme assets. Scheme assets fell 5% from £80.2m to £76.5m since the last year end and liabilities increased 3% from £78.4m to £80.9m. The discount rate, which heavily influences the scheme liabilities rose from 5.0% in 2010 to 5.1% in 2011 to reflect sentiments in 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, for example, the discount rate applied to the liabilities had been 4.6% rather than the 5.1% advised by our actuaries under IAS 19 for 2011, the net deficit of £3.5m would rise to a net deficit of £8.7m.

The triennial actuarial valuation was carried out as at 31 December 2009 and resulted in a surplus of £6.5m. The contribution rate by Jersey Electricity was reduced to 14.2%

of pensionable salaries from January 2010 (down from the previous level of 19.2%). Employees continue to contribute an additional 6% to the pension scheme. Unlike the UK, the Jersey Electricity pension scheme is not funded to pay mandatory annual rises in pensions. However an ex-gratia award was

made to pensioners this year in light of the scheme being in surplus in early 2011 at a capital cost of £0.7m which is paid by the pension scheme but generated a £0.7m charge against the income statement of the Company. The next triennial

actuarial valuation of the defined benefit scheme is at

31 December 2012.

Accounting policy confirmation - customer contributions

When Jersey Electricity provide a new electrical connection to customers a charge is made based on a defined methodology. The costs of these new connections are capitalised within the Energy Division asset base and the customer contributions are treated as deferred income. The assets are depreciated over their expected useful life (as an annual cost against profit) and the deferred income is released over the same period. This is consistent with the practice employed by UK electricity utilities.

The International Financial Reporting Interpretations Committee (IFRIC) review the application of International Financial Reporting Standards (IFRSs) and were concerned that inconsistent practices existed across the EU and that uniformity should be a goal. IFRIC 18 Transfers of Assets from Customers, was endorsed by the EU on 1 December 2009 and is applicable for all customer contributions received post 1 July 2009 but for accounting periods beginning on or after 1 November 2009. At the last year end it was felt that our policy might require to be revised but following advice and monitoring the actions of other UK utilities we are comfortable that our existing policy is retained.

The share price at 30 September 2011, at £3.45, was marginally above the level of £3.38 at the 2010 year end (re-stated to reflect the 20 for 1 share issue). This gives a market capitalisation of £106m as at 30 September 2011. However the illiquidity of our shares, due mainly to having two large shareholders combined with an overall small number

in circulation, limits the management team from having the ability to influence the share price. At the last Annual General Meeting an all-employee share scheme, to more closely align the interests of both employees and shareholders was approved and such shares are likely to be issued in the coming financial year. In addition, a 20 for 1 share split to increase the number of ordinary shares in circulation and reduce the high market value attributable to each listed ordinary share was approved. Such initiatives seek to improve our longer-term liquidity.

Our largest shareholder, the States of Jersey also owns holdings in other utilities in Jersey. It owns 100% of JT Group and Jersey Post, as well as around 75% of Jersey Water. The total direct cash return to the States of Jersey from Jersey Electricity in the last year was £8.1m (2010: £6.8m).

2011   2010

The total return to States of Jersey rose 19% this year due primarily to an increase in tax paid on profits and the special dividend declared in 2010 but paid in 2011.

Returns to shareholders

62% of the ordinary share capital of the Company is owned by the States of Jersey with the remaining 38% held by around 300 shareholders via a full listing on the London Stock Exchange. Of the holders of listed shares there is one large institution, Utilico Ltd, which owns 16% of the total ordinary share capital.

During the year the ordinary dividend paid was increased

by 38% from 9.95p net of tax to 13.70p. The core dividend increase was 5% but the total included a special dividend of 3.25p declared in the last financial year. The proposed final dividend for 2011 at 6.50p is a 5% increase on last year and consistent with the underlying dividend growth pattern in recent years.

Board of Directors

Geoffrey Grime Chairman (64) R/N

Geoffrey joined the Board in 2003. He retired in

1999 as Chairman of Abacus Financial Services, a leading offshore trust company in which he played an instrumental role as one of its founders. A Chartered Accountant, his career in Jersey commenced in 1969 with Cooper Brothers & Co. and progressed to his appointment as Channel Islands Senior Partner

of Coopers & Lybrand

in 1990. He is currently the Chairman of EFG Offshore Limited and also holds many professional appointments as both director and trustee. In November 2002 he was elected as a Deputy in the States of Jersey and he retired from that position in December 2005.

Chris Ambler Chief Executive (42) N

Chris was appointed

to the Board as Chief Executive on 1st 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 Chairman of Foreshore Limited and Chairman of Channel Islands Electricity Grid Limited. Chris is

a Chartered Engineer

with the Institution of Mechanical Engineers and has a First Class Honours Degree from Queens College, Cambridge and a MBA from INSEAD.

Mike Liston Non-Executive Director (60) N/R

Having previously held a number of senior posts

in the United Kingdom s Electricity Supply Industry, Mike joined Jersey Electricity in 1986 as Chief Engineer and was Chief Executive

for 15 years before retiring

in 2008 to focus on his non-executive directorships. He is Chairman of AIM listed, Renewable Energy Generation Limited, and Chairman of the postal utility, Jersey Post. He

also sits on the boards of private equity and venture capital companies in the international solar energy sector. Mike is a Fellow

of the Royal Academy

of Engineering and a

Fellow of the Institution of Engineering and Technology where he has served on

its Council, Audit and Disciplinary Committees.

He is a Companion of the Chartered Management Institute and past Chairman of its Jersey Branch. He

was until 2010, Chairman

of the Jersey Appointments Commission, which was established by government

to ensure probity in public sector appointments.

He is Chairman of the Nominations Committee. Mike was awarded an OBE in 2007.

Clive Chaplin Non-Executive Director (60) A/N/R

Clive joined the board

in 2003. He trained as

a solicitor in London qualifying in 1977 and moved to Jersey in 1979. He was admitted as a solicitor of the Royal Court, Jersey, in 1985 and since 1994 has been a partner

of Ogier. He retires as a partner in the firm with effect from 31st January 2012 but he will remain

a consultant to the Ogier Group and Chairman

of its Fiduciary Holding Company. He is a director of a number of other companies operating in

the financial services sector and is also Chairman of the Jersey Law Commission. He is Chairman of the Remuneration Committee.

Martin Magee Finance Director (51)

Martin joined the Board as Finance Director in May 2002. He moved from Scott ish 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 also Chairman

of Jersey Deep Freeze Limited and a Director

of the Channel Islands Electricity Grid Limited and Foreshore Holdings Limited. Externally, he is a non-executive director of the Newton Offshore Strategy Fund Limited. He is also a member of the Jersey Public Accounts Committee. He is a member of the Institute of Chartered Accountants of Scotland having qualified in 1984.

David Padfield Richard Plaster  John Stares  Aaron Le Cornu

Operations Director  Commercial and Human  Non-Executive Director  Non-Executive Director  Directors

(57) Resources Director (50) N (60) A/R (41) A/R All non-executive directors are David joined Jersey  Richard joined the HR  John joined the Board in  Aaron was appointed to  viewed as being independent

Electricity in 1987 as  function in Jersey Electricity  2009. He is the Managing  the Board as Non-Executive  with the exception of Mike Senior Planning &  in 1987 following a retail  Director of Guernsey  Director in January 2011  Liston who was formerly the Construction Engineer  management career with  Enterprise Agency  and is currently the Group  Company s Chief Executive. after 14 years with South  Woolworths and joined the  and a non-Executive  Finance Director for Ogier,  Clive Chaplin is still regarded as Western Electricity Board  Board in 2004. He is now  Director/Advisor to three  a Legal and Fiduciary  independent even though

and was appointed as  responsible for Human  other Channel Island  Firm with headquarters  he is now in his 9th year Operations Director in  Resources, Customer Care,  headquartered groups of  in Jersey and operations  as director.

2004, following several  Procurement, Marketing  companies. He is a Fellow  in 10 countries. Prior to

Key to membership

years as Energy Division  and the Retail businesses.  of the Institute of Chartered  that appointment, Aaron

of committees

Manager. He is responsible  He chairs the management  Accountants of England and  held a number of senior

for the management of  board of the Building  Wales, and a Member of  positions within HSBC,  A  Audit Committee

the Company s Energy  Services business and was  the Worshipful Company of  latterly as the Deputy CEO  N  Nominations Committee businesses of electricity  appointed as a director of  Management Consultants.  of HSBC International.  R  Remuneration Committee transmission, distribution,  Jersey Deep Freeze Limited  Prior to moving to Guernsey  During his 10 years with

generation and supply,  in October 2004. Externally,  in 2001, John was with  HSBC, he held a number of

which also incorporates  he is former Chairman of  Accenture for 23 years.  Board positions for HSBC

corporate health and  the Employment Forum  During that period, he  subsidiaries and was also

safety. He is also a director  in Jersey and the current  worked as a strategic,  involved in acquisitions

of the Channel Islands  Chair of the Skills Jersey  financial, change and IT  (such as the purchase of

Electricity Grid Limited.  Board He is a Chartered  consultant with major clients  Marks & Spencer Money)

He graduated from Bath  Fellow of the Chartered  in most industry sectors and  and setting up Greenfield

University in 1976 with  Institute of Personnel and  held a variety of leadership  retail banking operations in

an Honours Degree in  Development, and a  roles in Accenture s  Central Europe. Aaron is a

Electrical and Electronic  Chartered Director. Canadian, European  Chartered Accountant. He

Engineering. He is a  & Global consulting  qualified with and worked

Chartered Engineer, a  businesses. for Andersen for eight

Fellow of the Institution  years, including two years

of Engineering and  in Australia. He also has a

Technology, a Chartered  First Class Honours Degree

Director, a Member of the  in European Management

Institute of Directors and  Science from Swansea

also past Chairman of the  University.

Small Islands System group

at Eurelectric in Brussels.

Director s Report

for the year ended 30 September 2011

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 internet data hosting.

Dividends

The directors have declared and now recommend the following dividends in respect of the year ended 30 September 2011:

2011  2010 Preference dividends  £  £

5% Cumulative Participating Preference Shares at 6.5%  5,200  5,200 3.5% Cumulative Non-Participating Preference Shares at 3.5%  3,773  3,773

Ordinary dividends

Ordinary and A Ordinary Shares

Interim paid at 4.25p net of tax for the year ended 30 September 2011 (2010 - 4.05p net of tax)  1,302,200  1,240,920 Final proposed at 6.50p net of tax for the year ended 30 September 2011 (2010 - 6.20p net of tax)  1,991,600  1,899,680 Special proposed dividend of nil (2010 - 3.25p net of tax)  -  995,800

3,302,773  4,145,373

Re-election of directors

In accordance with Article 127 of the memorandum of the Company, Geoffrey Grime and John Stares retire by rotation and, being eligible, offer themselves for re-election.

Directors and officers insurance

During the year the Company maintained liability insurance for its directors and officers.

Policy on payment of creditors

It is Group policy, in respect of all of its suppliers, to settle the terms of payment when agreeing each transaction, to ensure that suppliers are made aware of the terms of payment and to abide by those terms. The number of creditor days in relation to trade creditors outstanding at the year end was 16 days (2010 - 19 days).

Director s Report

for the year ended 30 September 2011

Substantial shareholdings

As at 14 December 2011 the Company has been notified of the following holdings of voting rights of 4% or more in its issued share capital:

Equity

Ordinary Shares

The States of Jersey hold all of the Ordinary shares which 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 each share held.

Utilico Limited hold 5,000,000 A Ordinary shares which represent 4.5% of the total voting rights.

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. ROUTIER Secretary

14 December 2011

Corporate Governance

Corporate Governance

The directors are committed to maintaining a high standard of Corporate Governance in accordance with The UK Corporate Governance Code the code as incorporated within The Listing Rules issued by the Financial Services Authority. The Board is of the opinion that it has complied with the Provisions of the Code throughout the year except for non-compliance detailed in performance evaluation below.

The Board

The Board currently comprises five non-executive and four executive directors. The Chairman is appointed by the directors from amongst their number. Clive Chaplin is the Senior Independent Director.

During the last year Aaron Le Cornu was appointed as a non-executive director following a recent recruitment process for the appointment of another non-executive director. Although the post was not externally advertised his application was considered alongside candidates in a recent non-executive directors search process.

The executive directors are not subject to retirement by rotation but they are subject to the same periods of notice of termination of employment as are other members of the Company s senior management.

The Board is responsible to the Company s shareholders for the proper management of the Company. It meets regularly, approximately five times a year, setting and monitoring strategy, reviewing trading performance and risk management, examining business plans and capital and revenue budgets, formulating policy on key issues and reporting to shareholders. Board papers are circulated 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.

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  Remuneration  Nominations No of meetings  8  4  4  1

* attendees by invitation

**  retired 31st December 2010 #  appointed 1st January 2011

Performance Evaluation

The effectiveness of the Board is vital to the success of the Company. Due to the stability and size of the Company a self assessment review was not undertaken to assess the performance of the Board and its committees, but it is anticipated that such a review will be performed in the coming year. Included in such a review will be consideration of the training and development of non-executive directors.

Nominations Committee

The Nominations Committee is chaired by Mike Liston, who is not viewed as being an independent director as he previously held a position as an executive director. It has a remit 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; and

• make recommendations to the Board concerning the reappointment of any non-executive director following conclusion of his or her specified term of office.

Audit Committee

The Audit Committee s members are John Stares (Chairman), Clive Chaplin and Aaron Le Cornu. The meetings provide a forum for discussions with the external auditor. Meetings are also attended, by invitation, by the Chief Executive, the Finance Director, the Company Secretary, external auditor and internal auditors.

The Audit Committee is responsible for reviewing the annual and interim management statements and accompanying reports before their submission to the Board for approval. It meets at least three times a year and is also responsible for monitoring the controls which are in force, (including financial, operational and compliance controls and risk management procedures) to ensure the integrity of the financial information reported to the shareholders. It also considers reports from the internal and external auditor and from management. It reports and makes recommendations to the Board. The Audit Committee also advises the Board on the appointment of an external auditor and on their remuneration, including monitoring any issues that could impact auditor independence. In addition, the Audit 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 Committee are available on request.

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 ended 30 September 2011 and is in accordance with The UK Corporate Governance Code.

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. 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 material changes to them.

• Changes in structure and capital of the Company

• Financial reporting and controls including:

Approval of the annual report and accounts.

Declaration of the interim dividend and recommendation of the final dividend.

• Internal controls

Monitoring the effectiveness of the Company s risk management and control processes.

Corporate Governance

• Contracts approval of Major capital projects. Major contracts.

Major investments.

• Board membership and other appointments

Approval of changes to the structure, size and composition of the Board and key committees, following recommendations from the Nominations Committee.

• Remuneration

Determining the remuneration policy for the directors and other senior management, following recommendations from the Remuneration Committee.

• Corporate governance matters

Undertaking a formal and rigorous review annually of its own performance, that of its committees and individual directors. Review of the Company s overall corporate governance arrangements.

• Approval of key Company policies

Internal Audit/Risk Management

There is a permanent team of internal audit staff involved in a continuous structured review of all 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 team routinely reports directly to the Company Secretary and attends Audit Committee meetings, at which its 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 Committee

The Audit Committee reviews the effectiveness of the internal control process as outlined above.

The Board has overall responsibility for reviewing the effectiveness of the established system. Its effectiveness is kept under review on a continual basis throughout the year through the work of the Audit Committee on the Board s behalf. The system of internal control is designed to manage rather than eliminate risk. In pursuing these objectives, internal control can only provide reasonable and not absolute assurance against material misstatement or loss.

Statement of Directors Responsibilities

Directors Responsibilities for the Accounts

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 and have also elected to prepare the parent company s financial statements in accordance with IFRS as adopted by the European Union. The financial statements are also required by law to be properly prepared in accordance with the Companies (Jersey) Law 1991.

International Accounting Standard 1 requires that financial statements present fairly for each financial year the Company s financial position, financial performance and cash flows. This requires the faithful representation of the effects of transactions, other events and conditions in accordance with the definitions and recognition criteria for assets, liabilities, income and expenses set out in the International Accounting Standards Board s Framework for the preparation and presentation of financial statements . In virtually all circumstances, a fair presentation will be achieved by compliance with all applicable IFRS. However, directors are also required to:

• properly select and apply accounting policies;

• present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable

information;

• provide additional disclosures when compliance with the specific requirements in IFRS are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity s financial position and financial performance; and

• make an assessment of the Company's ability to continue as a going concern.

The directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies (Jersey) Law 1991. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company s website. Legislation in Jersey and in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Responsibility Statement

We confirm that to the best of our knowledge:

• the financial statements, prepared in accordance with International Financial Reporting Standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the company and the undertakings included in the consolidation taken as a whole; and

• the management report includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

By order of the Board

C. AMBLER  M. MAGEE Chief Executive Officer  Finance Director 14 December 2011  14 December 2011

Remuneration Report

Remuneration Committee

The Remuneration Committee (the Committee) is chaired by Clive Chaplin and its membership includes all non-executive directors. The Committee operates within terms of reference agreed by the Board and such terms are regularly reviewed.

Remuneration Policy

The policy of the Committee is to ensure the provision of remuneration packages for the executive directors that fairly reward them for their contribution to the overall performance of the Group. Remuneration packages comprise basic salary and benefits together with a performance related annual bonus. Benefits for executive directors principally comprise a car or car allowance, private health care and housing subsidy.

The salary and benefits of the executive team are reviewed by the Committee annually and any adjustments take effect on 1st April. The Committee make use of a locally focussed benchmarking report as well as assessing the remuneration of the executive team by reference to comparable companies within the United Kingdom. The Committee seeks to ensure that, excluding any share based remuneration (of which there is none), the overall value of the remuneration package of the executive team members including bonus and other benefits matches, in broadest terms, relevant comparative benchmarks for executive director remuneration. The bonus payable to the executive directors is performance related taking account of their individual responsibilities within the Company and is dependent on the results of the Group against expectations but is deliberately not profit related.

The remuneration of individual directors for the year ended 30 September 2011 was as follows:

Basic  Benefits  Total  Total salary/fees  Bonuses  in kind  2011  2010

£ £  £  £  £

EXECUTIVE DIRECTORS

100. Ambler  187,408  35,360  11,733  234,501  222,424
101. Magee  157,148  29,443  10,661  197,252  187,186
102. Padfield  156,148  29,443  10,885  196,476  184,523

R. Plaster  148,850  27,943  10,809  187,602  178,048 NON-EXECUTIVE DIRECTORS

G. Grime  30,000  -  1,025  31,025  31,000

J. Arnold*1 (retired 31 December 2010)  5,000  -  -  5,000  22,400

C. Evans (retired 5 March 2010)  -  -  -  -  7,700

M. Liston*2 17,000  -  1,025  18,025  18,000

C. Chaplin*3 19,000  -  1,010  20,010  20,000

J. Stares*4 18,492  -  1,025  19,517  16,650

A. Le Cornu*5 (appointed 1 January 2011)  12,417  -  760  13,177  - Total  751,463  122,189  48,933  922,585  887,931

*1  Includes fees as Chairman of the Audit Committee - £1,250.

*2  Includes fees as Chairman of the Nominations Committee - £2,000.

*3  Includes fees as Member of the Audit Committee - £2,000 and as Chairman of the Remuneration Committee - £2,000. *4  Includes fees as Chairman and Member of the Audit Committee - £3,542.

*5  Includes fees as Member of the Audit Committee - £1,167.

 The total fees for C. Chaplin were paid directly to his firm.

Service Contracts

The executive directors service contracts provide for a notice period of six months.

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  Accrued  Transfer  Transfer  Directors  Increase in in accrued  pension at  value at  value at  contributions  transfer

pension  30.9.20112 30.9.20113 30.9.20103 plus transfers-in  value4 during the year1  during the year

100. Ambler  £5,911  £13,192  £138,972  £65,926  -  £73,046
101. Magee5 £4,392  £55,754  £782,677  £639,192  £9,363  £134,122
102. Padfield  £6,552  £97,168  £1,552,746  £1,303,653  £9,363  £239,730

R. Plaster  £4,517  £63,185  £819,635  £669,681  £8,886  £141,068

Notes

1. The increase in accrued pension during the year represents the additional accrued pension entitlement at the year end compared with the previous year end.
2. The pension entitlement shown is that which would be paid annually on retirement at age 65, based on service at the year end. A director who leaves early with a deferred pension entitlement has the right to receive his pension from age 60. In transfer value calculations it is assumed that the deferred pension commences at age 60.
3. The transfer values have been calculated using the basis and method appropriate at each accounting date.
4. The increase in transfer value over the year is after deduction of contributions made by the director during the year.
5. In common with all other Scheme members, directors have the option to pay Additional Voluntary Contributions (AVCs) to the Scheme to purchase additional final salary benefits. The AVCs paid by the director as indicated and the resulting benefits are included in the

above table.

Share Option Scheme / Long-Term Incentive Plan

There are no share option schemes, other share-based schemes nor a long-term incentive plan operated by the Company.

External Appointments

The Company encourages executive directors to diversify their experience by accepting non-executive or other external appointments to companies or other organisations unconnected with the Group. Such appointments are subject to the approval by the Board, which also determines the extent to which any fees may be retained by the director. At the balance sheet date unconnected appointments held by executive directors were as follows:-

M. Magee

Newton Offshore Strategy Fund Limited : Non-Executive Director Fees £3,708 (£2,967 retained) R. Plaster

Jersey Skills Board : Non-Executive Chairman Fees £15,000 (£12,000 retained)

Remuneration Report

Non-Executive Directors Remuneration

The remuneration of the non-executive directors is determined by the Board with the assistance, if required, of independent advice concerning comparable organisations and appointments. The non-executive directors who Chair the Audit, Nominations and Remuneration Committees, and those directors who are members of the Audit Committee, receive an additional fee due to the additional time involved.

Directors Loans

The Company provides secured loans to a number of executive directors which bear interest at base rate. The balances on such loans were:

Balance at 30.9.2011  Balance at 30.9.2010

£ £

100. Ambler  500,000  500,000
101. Magee  485,821  527,821
102. Padfield  65,000  65,000

During the 2010 financial year the Company also provided a bridging loan to the value of £300,000, bearing interest at base rate, to C. Ambler following his relocation to Jersey from the UK, pending the sale of his UK property. The balance on this loan was as follows:

Balance at 30.9.2011 Balance at 30.9.2010

£ £

C. Ambler  170,112  298,400

Directors Share Interests

The directors beneficial interests in the shares of the Company at 30 September 2011, are shown below:

A Ordinary Shares   5% and 3.5%

Preference Shares

2011  2010*  2011  2010

G. Grime  7,000  7,000  -  -

M. Liston  2,000  2,000  -  -

M. Magee  -  -  960  960

100. Chaplin  6,000  6,000  -  -
101. Padfield  -  -  260  260

R. Plaster  -  -  700  700

15,000  15,000  1,920  1,920

*re-stated to reflect the 20 for 1 share split approved at the 2011 AGM.

There have been no other changes in the interests set out above between 30 September 2011 and 14 December 2011.

On behalf of the Board

C. CHAPLIN Chairman

14 December 2011

Independent Auditor s Report

to the Shareholders of Jersey Electricity plc

We have audited the Group financial statements (the financial statements ) of Jersey Electricity plc for the year ended 30 September 2011 which comprise the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated and Individual Balance Sheets, the Consolidated and Individual Cash Flow Statements, the Consolidated Statement of Changes in Equity and the related notes 1 to 22. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

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.

Respective responsibilities of directors and auditors

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. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board s (APB s) Ethical Standards for Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Group s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the annual report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Opinion on financial statements

In our opinion the financial statements:

• givea true and fair view of the state of the Group's and the parent company's affairs as at 30 September 2011 and of the Group's profit for the year then ended;