Jersey Post: Annual Report and Accounts 2014.

Jersey Post Annual Report and Accounts 2014

www.jerseypost.com

R.82/2015

Contents

Directors, O icers and Advisors Board of Directors

3

4

Chairman s Statement Strategic Report

6

8 16 20 22 23 24 25 26 27

40

Directors, Officers and Advisors

DIRECTORS OF JERSEY POST INTERNATIONAL LIMITED*

Jurat Mike Liston OBE FREng BSc CEng FIEE Non-Executive Chairman

Tim Brown FIoD FCILT CPFA

Non-Executive Deputy Chairman and Senior Independent Director (resigned 30 June 2014) Chief Executive O icer (appointed with effect from 1 July 2014)

Kevin Keen MBA FCCA FCMA C.D ir Chief Executive O icer (resigned 31 July 2014)

Liz Vince BA (Hons) CPFA MICA Dip IoD Finance Director

Clive Barton MBE FCA FIMgt TEP FInstD Non-Executive Director and Senior Independent Director (appointed 1 September 2014; resigned 24 April 2015)

Chris Evans Non-Executive

Donal Duff BAAF FCA AMCT Non-Executive

Gary Carroll Dip IoD Commercial Director

COMPANY SECRETARY

Liz Vince BA (Hons) CPFA MICA Dip IoD INDEPENDENT AUDITOR

Price waterhouseCoopers CI LLP

37 Esplanade, St. Helier, Jersey, JE1 4XA

BANKERS

HSBC Bank plc

PO Box 14, St. Helier, Jersey, JE4 8NJ

REGISTERED OFFICE

Postal Headquarters

La Rue Grellier, La Rue des Pres Trading Estate, St. Saviour, Jersey, JE2 7QS

*Directors during the inancial year.

Board of Directors 1

Jurat Mike Liston OBE FREng BSc CEng FIEE / Chairman

Non-Executive Chairman, Mike Liston has wide experience of the public and private sectors. Previously Chief Executive of Jersey Electricity PLC, he now holds a wide range of non-executive Board positions internationally, including Chairmanships with public and private operating companies, private equity and venture capital houses, in the Energy and Fiduciary Services sectors. He is a lay Judge in the Royal Court of Jersey.

Mike was founding Chairman of the Jersey Appointments Commission, which was established by government to ensure probity in public appointments. He served for many years on the governing Council and Audit Committees of Europe s largest professional engineering body, the Institution of Engineering and Technology. He is a Fellow of the Royal Academy of Engineering.

Tim Brown FIoD FCILT CPFA / Chief Executive Officer

Tim Brown has over 20 years experience in the post, parcel and distribution industry. He has worked in senior positions in Royal Mail and DHL Express, was CEO of Postcomm (the UK s postal regulator), provided advice to government and was vice-chair of the European Regulators Group for Post. Tim joined the Board irstly as a Non-Executive Director on 1 September 2011 and he was the Senior Independent Director and Deputy Chairman until he took over as Chief Executive O icer from Kevin Keen on 1 July 2014.

Liz Vince BA (Hons) CPFA MICA Dip IoD / Finance Director

Liz Vince joined Jersey Post in 2006. In January 2008 she took over the role of Company Secretary and in September 2011 she became the Finance Director when this was combined with the post of Company Secretary. Prior to joining Jersey Post, Liz was the Chief Internal Auditor for the States of Jersey for 10 years. Liz quali ied as a Chartered Public Finance Accountant in 1992 with the National Audit O ice in London. On 1 January 2015 Liz was appointed as a Non-Executive Director to the Board of Jersey Water where she chairs the Audit Committee.

Donal Duff BAAF FCA AMCT / Non-Executive Director

Non-Executive, Donal Duff quali ied as a Chartered Accountant with Coopers & Lybrand in Ireland in 1991 and subsequently transferred to its Jersey o ice in 1993 to work on a wide range of audit and corporate inance assignments. In 1996, he joined Le Riche Group Limited, a listed company, as Group Financial Controller, where he performed a variety of roles until such time as it was acquired by C.I. Traders Limited, an AIM-listed company, in 2002. Donal was Director of Finance and Company Secretary of this company (the largest private sector employer in the Channel Islands) until its acquisition by a private equity consortium in 2007, and he continued to work with the new owners until 2008. Donal is Chief Finance O icer of The Stanley Gibbons Group plc, an AIM-listed Jersey registered company.

1 Directors at the time the Board approved the inancial statements.

Chris Evans / Non-Executive Director

Non-Executive, Chris Evans has worked in the information technology services sector for 30 years and has been involved in the formation and running of a number of IT businesses. Until July 2014 Chris was the Chief Executive of Foreshore, an Internet services business, promoting Jersey-based digital business to a global customer base. Chris has served as a Non-Executive Director on a number of boards and has been a member of States of Jersey committees speci ically tasked with examining diversi ication opportunities for the Island.

Gary Carroll Dip IoD / Commercial Director

Gary Carroll joined Jersey Post in October 2009, as the Service Delivery Director, with responsibility for the Logistics, Postal and Print  Business units of the Group. Prior to joining Jersey Post, Gary worked for 28 years with Royal Mail Group, with the last 11 years as a regional director for Royal Mail International, where he successfully negotiated bilateral agreements and inancial settlements with the world s major postal organisations.

Gary spent 5 years working for Royal Mail s International consultancy business, leading on postal development programmes in the Middle East and Far East, the Americas and Caribbean. Prior to this Gary worked for the Parcels business in the Royal Mail Group, as part of the National Sales team where Gary s responsibilities included the training and development of the sales and customer teams.

Chairman s Statement

As it nears the end of its first decade as an incorporated company and my final year as Chairman, Jersey Post is entering a new era of opportunity as it seeks growth in overseas territories to rebuild revenues lost suddenly a couple of years ago when UK tax policy changes decimated the e-commerce fulfilment industry in Jersey.

With a painful period of deep cost-cutting behind it, the Company is able now to leverage its demonstrated logistics capabilities in the rapidly growing market for cross-border trade in consumer goods.

The Strategic Report, which follows my statement, highlights our performance in the past year and our aims for the future. Strategic planning has its limitations in a dynamic industry such as post, not least because of rapid developments in the technology of logistics in global e-commerce and so my focus here is on the more fundamental qualities of the Company, on which its prospects for the future may be better judged. That is, its corporate culture and competencies.

Liberated  by  incorporation  in  2006,  Jersey  Post s  journey  from the cocoon of a trading department of the government, through the jungle of experimental regulation and onto the battle ield of

the  marketplace  has  changed  it  profoundly.  Its  experience  may be relevant to future incorporations in Jersey, if not to the wider mission of reform in Jersey s public sector. Its transformation to an agile, adaptable and energetic company illustrates the merits of  incorporation  when  married  with  responsible  regulation  and pragmatic competition policy. Above all it highlights the nuances between  public  sector  and  private  enterprise  cultures  and  the importance of both in any business if it is to be valued by the community it serves.

It  is  this  Board s  experience  that  sustainable  change  in  an organisation can only begin when provoked by a real and tangible imperative and a clear picture of the consequences if change is not  achieved.  For  Jersey  Post  this  imperative  began  to  emerge immediately upon incorporation, with the imposed E iciency Review and Price Control regimes of the then new Jersey Competition and Regulatory Authority (JCRA). This in addition immediately opened 20%  of  the  postal  market  to  competition  and  soon  afterwards the  JCRA  announced  its  intention  to  allow  all-comers  from  the World s largest postal operators to compete in Jersey Post s entire market: most notably the booming ful ilment business, save for the  loss-making  Universal  Service  Obligation  (USO),  which  compels Jersey Post to provide community-wide core services at uniform prices regardless of cost.

The imperative for change was intensi ied soon afterwards when, having equipped itself to manage the doubling of postal volumes

in the irst ive years of dramatic growth in the Island s ful ilment industry, Jersey Post saw that industry collapse almost instantly as Low Value Consignment Relief (LVCR) was summarily withdrawn by the UK government in 2012.

Managers  can  be  as  ill-equipped  to  cope  with  cultural  and organisational change as those whom they are expected to lead through it, and this can worsen the impact of such change. Many managers were amongst the victims of the cost-cutting program and, as it neared completion, the Board appointed Kevin Keen as Chief Executive on a three-year, results-based contract to repair the damage to some of the Company s vital business functions and its industrial and public relations, caused by the urgency with which the program had to be executed. His success delivered a transformed company  which  has  maintained  peer-comparable  pro itability despite a 50% fall in annual revenues, with no real-terms increase in prices to customers and the resumption of healthy dividends paid to the States of Jersey, its shareholder. Con idence in the sustainability of this performance is supported by the fundamentals of the culture now embedded throughout the business. It has the positive social values  of  a  public  sector  organisation  alongside  the  distinctive

attributes of a private sector enterprise risk tolerance, speedy and devolved  decision-making,  personal  accountability,  pragmatism  and adaptability.

Forward-looking once more, the Company is ready for the challenges of growth. In this digital age the problem of declining letter mail is compounded  by  the  relentless  pace  of  customer  demands  for innovation  in  the  speed  and  variety  of  delivery  and  collection options in cross-border ecommerce. Despite the Island of Jersey being an enthusiastic adopter of online shopping, the packets and parcels market here is too small to support the high infrastructure costs of the Island-wide letters service which Jersey Post is required to provide and the imperative now is to ind pro itable opportunities beyond our shores. Good leadership for this next chapter of Jersey Post s life is as important as the last and the Board was delighted when Tim Brown agreed to succeed Kevin Keen as Chief Executive.

Tim  brings  wide  experience  of  the  global  postal  industry  and proven abilities in strategic business development. His focus is to build a pro itable role for Jersey Post in the booming cross-border e-commerce market. The Company s pre-crisis dependency on the UK parcels and packets market has been substantially reduced and now two-thirds of our logistics postings are to non-UK destinations. Direct  relationships  forged  between  our  Logistics  business  and almost 200 other operators around the globe mean we can now deliver goods from anywhere, to anywhere. This will bene it not only  the  whole-chain,  indigenous  ful ilment  businesses  which

remain  in  Jersey,  but  more  so,  Jersey  Post s  earnings  overseas. Having achieved the coveted status of being recognised by the Universal Postal Union as the designated operator of Jersey, we now have access to the competitive trading terms shared between national postal champions and with this, opportunities to act as integrators for postal operators globally. A tiny share of the annual  £2billion international parcel market would be transformational.

Alongside the opportunities there are threats. As in other utility industries, the special relationships between historically government- owned postal operators is being eroded by privatisation and our relationship with Royal Mail is changing following its move from public  to  private  ownership.  However,  alternative  partnership opportunities are emerging amongst their competitors.

One of the biggest threats we face arises from the increasing liabilities being accepted by PECRS, the States of Jersey s pension scheme,  in which half of our employees retain rights to de ined bene its, granted at incorporation. The escalating cost to Jersey Post now threatens to wipe out all its pro its, and with them the capacity to pay dividends. Discussions continue with the States Treasury Department on mitigation of this uncontrollable cost, which remains for me the most worrying issue for the business.

Jurat Mike Liston OBE Chairman

29 April 2015

Strategic Report

Introduction

The last few years for Jersey Post have been a period of survival and stabilisation with the Company needing to respond to the introduction of competition, the decline

of traditional mail and the loss of UK Low Value Consignment Relief (LVCR).

Much  has  been  done  to  restore  service  and  con idence  in  the business. 2014 has been a year of transition, capitalising on the growth in e-commerce and cross border trade, whilst at the same time beginning to re-invest in the service offered in Jersey.

Trading results have remained strong for 2014, with revenue growth  themselves that today they do not even get mail every day. In the for the irst time in a number of years, and an operating margin  back of a typical delivery van today you will see three or four small before the FRS 17 pension charge that compares well with many  trays of letters and a van full of parcels and packets. A survey by other postal authorities. This was all achieved despite continued  Island Analysis in March 2014 found:

decline in our traditional mail volumes and it is only the growth in

2 out of 3 respondents indicated that their expenditure

our Direct2Home service that has helped to sustain overall volumes.

via online shopping had increased or increased a lot Excluding Direct2Home, our local mail volumes were 11% lower in

over the last year compared to the previous year.

2014 compared to 2013. Outbound mail showed a year on year

decline of 7%, and inbound mail a decline of 4%. Inbound parcels  The average annual online household spend was just

grew by 35%, partly by winning local delivery for new UK-based parcel  over £7,000.

companies. However, Jersey Post has lost parcel volume following

Around half of all household goods (furniture,

the announcement on 24 December 2014 that City Link had gone

furnishings etc.) are now bought online in Jersey.

into  administration.  In  our  Logistics  business  over  two  thirds  of

The UK igure is 43%.

revenue is now connected with international, non-UK, destinations.

Around half of the overall clothing and footwear sales in It is not that long ago, at the height of mail volumes, that it was often

Jersey are now carried out online. The igure in the UK quoted that the average number of mail pieces received each day

stands at 47%.

by households was two and a half. Customers will have seen for

Inbound

parcels grew by

35%

In terms of the impact on Jersey Post this is huge. We are fast becoming a parcel and distribution company that also happens to deliver letters. It is also why Jersey Post continues to look at improving the delivery experience for packets and parcels. In addition to SecureDrop and Text & Collect we installed our new parcel locker at Broad Street Post O ice as the irst step in an island-wide roll out of this new facility.

2014 also saw the start of our international growth. We became the  designated  operator  of  Jersey  recognised  by  the  Universal Postal Union, a body under the auspices of the United Nations.  As a result we now have direct connections with approximately  200 postal authorities across the world that means we are able

to  move  items  for  our  customers  from,  and  to,  any  worldwide destination. This enables Jersey Post to compete in the multi-billion pound cross border e-ful ilment market; the biggest growing area in retail and e-tail.

With these changes in the market and the move away from the traditional mail business, the market in which Jersey Post operates is more competitive and less easy to predict. Without embracing this by investing in the systems and technology to compete, Jersey Post runs the risk of being in managed decline with a smaller and smaller market, putting at threat the Universal Postal Service in Jersey.

Whilst  trading  results  remain  strong  in  2014  despite  declines  in traditional mail, the bottom line result has been hit by the ongoing issues with the Company s part of the Public Employees Contributory Retirement Scheme (PECRS). Since May 2010 new employees at Jersey Post have joined the Company s de ined contribution scheme, but over half of our staff still enjoy the bene its of the PECRS de ined bene its inal salary pension. In 2014 there has been a net charge of £1.2m to our Pro it & Loss Account as a result of lengthening life expectancy, the restoration by the States of Jersey of pension increases in line with in lation and changes in investment valuations: all of these factors being completely outside the control of Jersey Post. The business continues to work with the States on addressing the pension issues, but such signi icant charges impact not just on Jersey Post s reported pro itability, but on our competitiveness and ability to continue to fund dividend payments to our shareholder, the  States  of  Jersey.  A  sign  of  our  improving  trading  position  (prior to the pension cost) is illustrated by the fact that we will be paying corporation tax for the irst time since we were incorporated as a company.

It is important to recognise that Jersey Post not only competes in the local market but is impacted by events in the UK and around the world. Decisions by the UK regulator Ofcom and changes in Royal Mail s approach to the island could lead to a signi icant decline in mail coming to the Island, and a change in the traditional relationships between Jersey Post and Royal Mail.

Jersey  itself  operates  in  a  competitive  market  as  it  becomes increasingly  easy  for  companies  to  locate  their  operations throughout the world. Jersey Post therefore works hard to ensure the competitiveness of operating in and from Jersey, but also to be in a position where we can be the distribution partner of these companies wherever they are in the world.

Jersey Post continues to manage these challenges and seeks new opportunities to exploit and develop so it can continue to serve its customers in Jersey by:

Delivering a sustainable, thriving postal service for Jersey that is trusted by

and relevant to our customers both now and in the future.

Customer service

Jersey Post is committed first and foremost to providing a service to the people and businesses of Jersey.

Therefore delivering a high quality service with high levels of customer satisfaction, together with looking to provide improved services, is an important part of what Jersey Post does.

We are proud of the work carried out by our post men and women in delivering an excellent service, going the extra mile and, when things do go wrong, putting them right as quickly and easily as possible. We accept we are not perfect and are always keen to hear the views of customers.

We look at the service we provide in three ways:

WHAT OUR CUSTOMERS TELL US

At the end of February 2015 we sent out our fourth all-island customer survey. The table below shows the results and how these have improved over the last two years.

PERCENTAGE OF 2015 SURVEY RESPONDENTS THAT ANSWERED VERY GOOD OR GOOD

92% 92% 90%

82% 84% 80% 81% 86% 81%

71% 71% 70%

How do you rate your postman? How do you rate the overall

delivery service?

How do you rate the network?

2015 2014 2013 2012

Once again the survey attracted a large response from the public of the Island, with 97% or higher of respondents answering the above questions as satisfactory or better. Whilst we take note of the scores, we are also keen to learn what our customers in Jersey want to see in the service we provide and do our best to incorporate feedback into our future plans.

WHAT OUR MEASUREMENT TELLS US

We measure the Quality of Service we provide i.e. the time it takes to get items of mail to and from certain destinations.

2014 QUALITY OF SERVICE JERSEY, GUERNSEY, UK AND ISLE OF MAN

97.5% 96% 99.9% 99% 99.1% 97% 99.4% 97% 99.4% 97% 99.4% 97%

82% 85.3% 82% 82.7% 82% 85.4% 82%

69%

Total J+1 Target J+1 Total J+3 Target J+3

Posted JE /  Posted UK or IOM /  Posted JE /  Posted GY /  Posted JE / Delivered JE Delivered JE Delivered UK or IOM Delivered JE Delivered GY

In nearly all cases we have beaten our target except for those items coming to us from the UK. This result of 69% delivered next day is very disappointing and worse than the 73.2% we achieved last year. The reason for the deterioration is due to light delays/cancellations due to bad weather, technical failures or short loads2 (which were 29 in 2013 but 57 in 2014). Until the mail arrives in Jersey, the items are outside our control and are handled by Royal Mail. Despite the poor performance of next day delivery from the UK, the tail of the mail performs strongly, above 99% in all cases. We continue to work with Royal Mail to improve our performance for mail coming from the UK.

WHAT ISSUES OUR CUSTOMERS HAVE HAD DURING THE YEAR

We are proud of our high quality standards and whilst every effort is made to safeguard our customers mail, occasionally things can go wrong. All enquiries and complaints are treated as time critical and the overriding principle is to resolve them as quickly as possible. All feedback whether good or bad, is reviewed by management and communicated to the staff on an individual basis. In addition, we have created feedback boards so that our customers comments, both positive and negative, can be displayed.

We measure the number of complaints per 50,000 items of mail. In 2014 the igure was 1.73, compared to 4.49 in 2013, an improvement of over 60%. The top ive areas of complaints were:

Issues with delivery procedures;

Securedrop failures;

Misdelivery of mail;

Loss of a customer item;

Redirection failures.

Therefore our focus in 2015 is to address these areas to further improve our performance.

Number of complaints

per 50,000 items of mail  dropped by over 60%

4.49 1.73

2013 2014

2 Short loads are where Royal Mail has sent more mail than the aircraft has capacity for.

The community

Over the last few years, Jersey Post has asked its workforce to select a charity with whom we partner for a year. For 2014 we selected Macmillan and managed to generate a fundraising total in excess of £20,000.

If this is added to the money raised by the Venice to Genoa Cycle Challenge, where we contributed to the running costs and provided a vehicle for transport, our contribution increases to almost £100,000.

In addition, as a business owned by the people of Jersey, we aim to support our community wherever we can and select a charity each month for a free Direct2Home mailing. Over the course of 2014 we helped seven organisations in this way.

In November 2014 we announced our sponsorship of Team Jersey for the next two Island Games; 2015 here in Jersey and 2017 in Gotland.  

We see this as a long term commitment and relationship with the Island Games Association of Jersey, their participants and supporters. Like the post, sport plays a very important part in Island life and we hope that our partnership with Team Jersey will deliver for both parties.

In recognition of our continued work in the community, the public of Jersey voted for Jersey Post as winner of the inaugural Community Enterprise Award at the 2014 Jersey Awards for Enterprise.

Our employees

Our post men and women are Jersey Post s biggest asset. Our business is based on trust and integrity and our people display this every day.

During  2014  we  put  all  our  staff  through  World  Host  customer service training. The same training that the Games Makers at the 2012 London Olympics went through, and that the Waitrose Games Makers at this year s Island Games are also following.

As reported last year, our investment in our workforce has been recognised by the results of our annual inspection from Investors in People (IIP) in February 2014 when we were accredited as a silver status employer. For 2015 we are looking to improve this even further. We were also recognised for our work by CIPD Jersey, winning the Most Successful Change Management Programme; recognition for the changes made by the business in recent years.

We also continue to look at how we reward and recognise our staff as well as ways we can add value for our employees through our employee benefits scheme.

Towards the end of 2014 we were able to launch a Pay Advance scheme whereby our staff can borrow up to one month s pay for up to a year at a low interest rate, with no upfront fees and no  penalty for early repayment. For 2015 we are looking at health and saving schemes.

We continue to encourage employees at all levels to contribute to improving Jersey Post, both as a place for them to work but also as an organisation which delivers quality customer service. In 2013 Joe Dickinson, one of our employees within our Logistics business, came up with the idea for Call & Check and has led its development. In 2014 we rolled out a pilot scheme to three parishes, and thanks to Joe s work, Jersey Post won the 2014 World Mail Award - Corporate Social Responsibility which is voted for by World Postal Operators.

Jersey Post was selected from a short list which included United States Postal Services and DHL. Joe himself was selected as the Winner of The Sunday Times Change Maker Award - UK Social Innovator of the Year 2014 for his work on Call & Check. Joe s story was pro iled in The Sunday Times, as well as in 40 other major newspapers around the world.

One signi icant change during 2014 was the stepping down by Kevin Keen as CEO and my appointment. Jersey Post owes a lot to Kevin s leadership over the previous three years which has restored Jersey Post as a stable and successful company.

Tim Brown CEO

29 April 2015

Statement of Corporate Governance

Introduction

Jersey Post International Limited is committed to maintaining a high standard of Corporate Governance and follows the best practice principles of the UK Corporate Governance Code issued by the Financial Reporting Council ( the Code ) where it is appropriate and practical to do so.

The Board

At the time of signing the inancial statements the Board comprised of three Non-Executive and three Executive Directors. Mike Liston is  the  Chairman  and  the  Board  currently  has  not  appointed  a Non-Executive to carry out the role of Senior Independent Director (this role being carried out by Clive Barton up to his resignation on 24 April 2015).

In  accordance  with  the  Company s  Articles  of  Association,  one  Non-Executive Director is required to retire by rotation. Mike Liston has served on the Board for a period of nine years, since the Company was incorporated in 2006, and will retire by rotation at the AGM on  9 June 2015. A resolution will be made at the AGM to re-appoint

Mike Liston as Chairman for a further one year term. Due to the length of his service, a successor to take over from Mr Liston as Chairman from the 2016 AGM will now be sought. It is likely that this individual will be appointed as the Senior Independent Director prior to their appointment as Chairman.

The Executive Directors are not subject to retirement by rotation but they are subject to 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 shareholder, the States of  Jersey  Investments  Limited,  for  the  proper  management  of the  Company.  It  meets  regularly,  normally  ive  to  six  times  per year, to agree and monitor strategy, review trading performance, the management of key risks and business plans, which include revenue  and  capital  budgets  for  the  next  three  years.  Board papers are circulated prior to each meeting in order to facilitate  informed discussion.

The  Chairman,  Chief  Executive  and  Finance  Director  meet  with the shareholder representative, the Treasury & Resources Minister,  at least twice each year.

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:

NUMBER OF MEETINGS ATTENDED

Remuneration  Nomination Board Audit Committee

Committee Committee Number of meetings

5 4 2 1 held during 2014

Mike Liston 5 (Chairman) 4 2 1 Tim Brown 5 2/2 - - Clive Barton 2/2 1/1 - - Donal Duff 5 4 (Chairman) 2 1 Chris Evans 5 - 2 (Chairman) 0 Kevin Keen 2/2 - - - Liz Vince 4 - - - Gary Carroll 5 - - -

These were:

Performance Evaluation The disclosure of and accounting for the Public Employees

Contributory Retirement Scheme (PECRS) sub-fund, including The effectiveness of the Board is vital to the success of the Company.  the assumptions used for the valuation of the de icit under

A self-assessment of the Board and its Committees was undertaken  FRS 17;

at the Board meeting held on 27 February 2015.

Taxation disclosures and the non-recognition of deferred

tax assets relating to PECRS;

Audit Committee

The Audit Committee is charged by the Board with responsibility  for reviewing the annual report and inancial statements and the strategic processes for risk, control and governance throughout the Company. The Committee also advises the Board on the appointment

of  the  external  auditor  and  on  the  auditor s  remuneration  and monitors auditor independence. The Company does not currently have an internal audit function, but at each meeting of the Audit Committee the need for internal audit is considered and individual reviews are commissioned from time to time.

The  Audit  Committee  is  chaired  by  Donal  Duff.  Members  are  Mike Liston, Tim Brown (until his appointment as Chief Executive on 1 July 2014) and Clive Barton, who replaced Tim Brown with effect from 1 September 2014 up until Mr Barton s resignation from the Board on 24 April 2015. The meetings are attended by invitation by the external auditor, the Finance Director, the Financial Controller and, from time to time, other senior executives.

At its meeting on 23 April 2015 the Committee received and reviewed the Company s 2014 annual report and inancial statements. At this meeting the Committee also received a report from the external auditors  summarising  the  results  of  their  audit  of  the  inancial statements.

The Committee reviewed, in particular the material accounting and audit judgements which had been made in the inancial statements.

Provisions in relation to building dilapidations and an onerous lease;

Recoverability of loans to third parties; Stamps in circulation; and

The Going Concern principle.

The Audit Committee considered whether the 2014 annual report was fair, balanced and understandable and whether it provided the necessary information for the shareholder to assess the Company s performance, business model and strategy. The Committee was satis ied that, taken as a whole, the Annual Report is fair, balanced and understandable.

The Audit Committee recommended the annual report and inancial statements to the Board for approval at its meeting on 29 April 2015.

Nomination Committee

The  Nomination  Committee  is  responsible  for  overseeing  the selection and appointment process of Directors to the Board and making recommendations to the Board thereon. When considering future Board appointments the Nomination Committee pays due regard to issues of diversity, including gender.

Statement of Corporate Governance

Remuneration Committee

The Remuneration Committee has responsibility for setting remuneration for the Executive Directors of the Company which is su icient to attract, retain and motivate people of the quality required. No Director plays any role in the determination of his/her own remuneration. The Memorandum of Understanding with the Treasury and Resources Minister requires any changes to the level of remuneration paid to Non-Executive Directors to be agreed, in advance, by the Minister. The Committee also monitors the levels of remuneration for members of the Executive Management Team of the Company.

The remuneration of the Directors of the Group for the inancial year ended 31 December 2014 is set out below, together with comparatives for 2013:

*As reported in previous years annual reports, Chief Executive Kevin Keen was appointed under a three year contract which featured a reduced real terms salary compared with his predecessors, but with the potential to earn up to an additional one-third as bonus each year, subject to the achievement of business turn-around objectives. Any bonuses were not payable until the end of tenure, when the sustainability of business performance improvements could be better assessed. Following his completion of the contract, the Remuneration Committee assessed that he had fully met all the bonus award criteria in each of his three years and duly approved a terminal bonus equivalent to a full year salary of £150k to Mr Keen. He donated £25k of his terminal bonus to a fund to provide inancial assistance to staff in the Company who wished to pursue a business course or quali ication outside of their normal area of work in Jersey Post. The fund is called Keen to Develop and to date three staff have been approved to receive funding totalling £2,566. As the bonus related to a three year period, amounts had been accrued in our 2012 and 2013 accounts. The amount charged to the 2014 Pro it and Loss Account in respect to Kevin Keen s total bonus is £90k.

3 The bene it in kind received by the Executive Directors comprises the contribution payable into pension schemes and health insurance.

The Company offers an annual bonus scheme to all staff. There are three schemes:

Staff who are covered under Collective Bargaining;

Members of the Executive Team (including the three Executive Directors in the above table);

All other staff.

The total amount paid out in bonuses relating to 2014 for the above three schemes was £693,481.

During 2014 the Company provided £25k to the Sports and Social Club who organise events for staff and the Company also funded the CWU s local branch secretary post at a total cost of £41,509.

Internal Control

The Board is responsible for ensuring that there are effective systems of internal control in place to reduce the risk of misstatement or loss and to ensure

that business objectives are met.

These systems are designed to manage, rather than to eliminate, the  risk  of  failure  to  achieve  business  objectives,  and  can  only provide reasonable and not absolute assurance against material misstatement or loss.

The key procedures which the Board has established to provide effective control are:

BOARD REPORTS

Key strategic decisions are taken at Board meetings following due debate and with the bene it of Board papers circulated in advance. The risks associated with decisions are a primary consideration in the information presented and discussed by the Board. The Board discusses  and  approves  the  Group s  strategic  direction,  plans, objectives, annual budgets and inancial forecasts and the associated risks to achieving these.

MANAGEMENT STRUCTURE

Responsibility  for  operating  the  systems  of  internal  control  is delegated  to  management  and  directed  and  overseen  by  the Executive Team, chaired by the Chief Executive. This Team meets weekly. There are speci ic matters reserved for decision by the Board and these have been formally documented.

RISK MANAGEMENT

Management is responsible for identifying the key risks to achieving their  business  objectives  and  ensuring  that  there  are  adequate controls in place to manage these in line with the risk appetite set by the Board and contained in the Company s Risk Management Policy. Senior managers are invited to attend the Audit Committee s meetings to provide presentations on the key risks within their area of the business and how these are managed. Key strategic risks are identi ied as part of the annual budget process and reported to the Board and the shareholder.

BUDGETARY CONTROL

Detailed phased budgets are prepared at pro it centre level and the Board  receives  monthly  management  accounts  showing  actual performance  against  these  budgets,  with  explanations  of  any material variances.

HUMAN RESOURCES

The Company endeavours to ensure that its employees are able to carry out their duties in a competent and professional manner through its commitment to staff training and development, including performance appraisal.

Liz Vince Company Secretary 29 April 2015

Directors Report

The Board of Directors of Jersey Post International Limited ( JPIL   or the Company ) present their report on the affairs of JPIL and its  Shareholdings

subsidiaries ( the Group ), together with the audited consolidated

 inancial statements for the year ended 31 December 2014. The 5 million £1 ordinary shares of JPIL are 100% owned by the States

of Jersey who is the ultimate controlling party of the Company.

Principal Activity

The principal activity of the Group is that of providing postal services to the Island of Jersey.

Going Concern

The  Directors  have  produced  forecasts  for  the  next  12  months following the date of signing these inancial statements which have satis ied them that the Group will continue to be a going concern and be able to meet its liabilities as they fall due. In making this assessment the Directors have considered the effect of the de icit on the Company s sub fund of the Public Employees Contributory Retirement Scheme (PECRS).

The Directors are also mindful of Article 8(2)(e) of the Postal Services (Jersey) Law 2004 which states in so far as it is consistent with paragraph (1), the Economic Development Minister and the Jersey Competition Regulatory Authority [JCRA] shall each have a duty in performing its functions under the Law, to have regard to the need

to ensure that persons engaged in commercial activities connected with postal services in Jersey, have su icient inancial and other resources  to  conduct  those  activities .  Accordingly  the  Directors have adopted the going concern basis in preparing the inancial statements.

Dividends

An  ordinary  dividend  of  £177,000  will  be  recommended  by the  Directors  for  2014  at  the  AGM  to  be  held  on  9  June  2015  (2013: £390,000).

Employee Involvement

During the year, the policy of providing employees with information about the Group was continued using a variety of media through which employees were encouraged to present their suggestions and views on the Group s performance.

Disabled Employees

The Group gives full consideration to applications for employment from disabled persons where the requirements of the job can be adequately ful illed by a handicapped or disabled person. Where existing employees become disabled, it is the Group s policy, wherever practicable, to provide continuing employment under normal terms and conditions and to provide training, career development and promotion to disabled employees wherever appropriate.

Results

Details of the results for the year are set out in the Group consolidated pro it and loss account on page 23. A review of the Group s business during the year and an indication of the likely future development of the business are provided in the Chairman s Statement and the Strategic Report on pages 6 15.

Board Remuneration

Details of Directors remuneration are set out in the Remuneration Committee Report on page 18.

Statement of Directors Responsibilities

The Directors are responsible for preparing the inancial statements in accordance with applicable law and United Kingdom Accounting Standards.

The Companies (Jersey) Law 1991 requires the Directors to prepare inancial  statements  for  each  inancial  year.  Under  that  law  the Directors  have  elected  to  prepare  the  inancial  statements  in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). The inancial statements are required by law to give a true and fair view of the state of affairs of the Group as at the end of the year and of the pro it or loss of the Group for the year. In preparing these inancial statements, the Directors are required to:

Select suitable accounting policies and then apply them consistently;

Make judgements and estimates that are reasonable and prudent;

State whether applicable UK Accounting Standards have been followed; and

Prepare the inancial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business.

The  Directors  con irm  that  they  have  complied  with  the  above requirements in preparing the inancial statements.

The Directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the inancial position of the Group and enable them to ensure that the inancial statements comply with the Companies (Jersey) Law 1991. They are also responsible for safeguarding the assets of the Group 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 inancial information included on the Group s website.  Legislation  in  Jersey  governing  the  preparation  and dissemination of the inancial statements may differ from legislation in other jurisdictions.

So  far  as  the  Directors  are  aware,  there  is  no  relevant  audit information of which the Group s auditors are unaware, and each Director has taken all the steps that he or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the Group s auditors are aware of that information.

Annual General Meeting

The AGM will be held at the States Treasury, Cyril le Marquand House, St. Helier on 9 June 2015.

Directors

The Directors of the Company are listed on page 3.

Auditors

Price waterhouseCoopers  CI  LLP  were  appointed  and  acted  as  auditors  for  the  year  ended  31  December  2014.  A  resolution  to  appoint   Price waterhouseCoopers  CI  LLP  as  auditors  for  the  year ending 31 December 2015 will be proposed at the AGM on  9 June 2015.

This statement was approved by the Board of Directors of Jersey Post International Limited on 29 April 2015 and was signed on their behalf by:

Liz Vince Company Secretary 29 April 2015

Independent Auditors Report

to the members of Jersey Post International Limited

Report on the financial statements

We  have  audited  the  accompanying  consolidated  inancial statements (the inancial statements ) of Jersey Post International Limited  ( the  Group )  which  comprise  the  consolidated  balance sheet as of 31 December 2014 and the consolidated pro it and loss account,  consolidated  statement  of  total  recognised  gains  and losses and the consolidated cash low statement for the year then ended and a summary of signi icant accounting policies and other explanatory information.

Directors responsibility for the financial statements

The  Directors  are  responsible  for  the  preparation  of  inancial statements that give a true and fair view in accordance with United Kingdom Accounting Standards and with the requirements of Jersey law. The Directors are also responsible for such internal control as they determine is necessary to enable the preparation of inancial statements that are free from material misstatement, whether due to fraud or error.

Auditors responsibility

Our  responsibility  is  to  express  an  opinion  on  these  inancial statements  based  on  our  audit.  We  conducted  our  audit  in accordance  with  International  Standards  on  Auditing.  Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the inancial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the inancial statements. The procedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement of the inancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the inancial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes

evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the inancial statements.

We believe that the audit evidence we have obtained is su icient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the inancial statements give a true and fair view of the inancial position of the Group as of 31 December 2014, and of its inancial performance and its cash lows for the year then ended in accordance with United Kingdom Accounting Standards and have been properly prepared in accordance with the requirements of the Companies (Jersey) Law 1991.

Report on other legal and regulatory requirements

We read the other information contained in the Annual Report and consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the inancial statements. The other information comprises the Directors, O icers and Advisors, Board of Directors, Chairman s Statement, Strategic Report, Statement of Corporate Governance, Directors Report and Five Year Summary.

In  our  opinion  the  information  given  in  the  Directors  Report  is consistent with the inancial statements.

This report, including the opinion, has been prepared for and only for the Company s members as a body in accordance with Article 113A of the Companies (Jersey) Law 1991 and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whom this report

is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Mark James

For and on behalf of Price waterhouseCoopers CI LLP Chartered Accountants

Jersey, Channel Islands

29 April 2015

Consolidated Profit and Loss Account Year Ended 31 December 2014

The basis of preparation of these inancial statements is set out on page 27, and the notes on page 27 39 form part of these inancial statements.

The above results are derived from continuing activities.

Consolidated Statement of Total Recognised Gains and Losses Year Ended 31 December 2014

The basis of preparation of these inancial statements is set out on page 27, and the notes on page 27 39 form part of these inancial statements.

Consolidated Balance Sheet Year Ended 31 December 2014

The inancial statements were approved by the Board of Directors of Jersey Post International Limited on 29 April 2015 and were signed on their behalf by:

Tim Brown  Liz Vince

Chief Executive O icer Finance Director

The basis of preparation of these inancial statements is set out on page 27, and the notes on pages 27 39 form part of these inancial statements.

Consolidated Cash Flow Statement Year Ended 31 December 2014

The basis of preparation of these inancial statements is set out on page 27, and the notes on pages 27 39 form part of these inancial statements.

Notes to the Financial Statements

1. ACCOUNTING POLICIES

The principal accounting policies are summarised below. They have all been applied consistently throughout the year and preceding year.

1. BASIS OF PREPARATION

The  inancial  statements  are  prepared  under  the  historical  cost convention and in accordance with United Kingdom Accounting Standards (UK GAAP).

2. GOING CONCERN

The  Directors  have  produced  forecasts  for  the  next  12  months following the date of signing of these inancial statements which have satis ied them that the Group will continue to be a going concern and be able to meet its liabilities as they fall due. In making this assessment the Directors have considered the effect of the de icit on the Company s sub fund of the Public Employees Contributory Retirement Scheme (PECRS).

The Directors are also mindful of Article 8(2)(e) of the Postal Services (Jersey) Law 2004 which states in so far as it is consistent with paragraph (1), the Economic Development Minister and the Jersey Competition Regulatory Authority [JCRA] shall each have a duty in performing its functions under the Law, to have regard to the  need  to  ensure  that  persons  engaged  in  commercial  activities connected with postal services in Jersey, have su icient inancial and other resources to conduct those activities . Accordingly the Directors have adopted the going concern basis in preparing the

 inancial statements.

3. BASIS OF CONSOLIDATION

The  consolidated  inancial  statements  include  Jersey  Post International Limited and its subsidiaries ( the Group ) drawn up to 31 December each year. Intra-Group sales and pro its are eliminated on consolidation.

4. TANGIBLE FIXED ASSETS

On a continuing use basis within the business, tangible ixed assets are stated at cost less depreciation.

In accordance with the Postal Services (Transfer) (Jersey) Regulations 2006 which regulated the transfer of the assets, liabilities and rights of Jersey Post to Jersey Post International Limited at 30 June 2006, the freehold land and buildings were re-valued on an existing use basis prior to their purchase by the Group.

The cost of all other tangible ixed assets is their purchase cost, together  with  any  incidental  costs  on  acquisition.  Tangible  ixed assets with a cost of less than £1,000 are not capitalised.

Depreciation is calculated so as to write off the cost of tangible ixed assets on a straight-line basis over the expected useful economic lives of the assets concerned. Tangible ixed assets are not depreciated until they are available for use.

The lives assigned to major categories of tangible ixed assets are:

Land

Not depreciated

Freehold buildings 15 - 30 years

Computer hardware and software 1 - 5 years

Plant, vehicles and equipment 3 - 10 years

Improvements to leasehold property Remaining length of the lease

The carrying value of tangible ixed assets is reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.

5. INTANGIBLE ASSETS

Intangible  assets  acquired  separately  from  the  business  are capitalised at cost. Assets are amortised on a straight line basis over their estimated useful life.

The  carrying  value  of  intangible  ixed  assets  is  reviewed  for impairment when events or circumstances indicate that the carrying value may not be recoverable.

Website development costs are capitalised when they meet the criteria set out in UITF 29 Website Development Costs and are capitalised along with the computer hardware and software with which they are associated.

6. CASH AT BANK AND IN HAND AND CASH DEPOSITS

Cash at bank and cash deposits includes cash, deposits and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insigni icant risk of changes in value.

7. DEBTORS

Debtors are measured at cost which is deemed to be approximate fair value.

8. STOCKS

Stocks  are  stated  at  the  lower  of  cost  and  net  realisable  value. Provisions are made where necessary for obsolete, slow-moving and defective stocks.

9. INVESTMENTS

Investments are held at the lower of cost and market value. Dividends received are reinvested back into the cost of the investment.

Realised gains and losses arising on disposal of investments are calculated by reference to the proceeds received on disposal and the cost attributable to those investments, and are recognised in the Pro it and Loss Account.

10. CREDITORS

Creditors are measured at cost which is deemed to be approximate fair value.

11. PROVISION FOR LIABILITIES

Provisions are recognised when the Group has an obligation (legal or constructive) arising from a past event and the costs to settle the obligation are both probable and able to be reliably measured.

12. FOREIGN CURRENCIES

Transactions  in  foreign  currencies  are  translated  into  sterling  at the exchange rate ruling when the transaction was entered into. Monetary assets and liabilities expressed in foreign currencies are translated to sterling at the exchange rates ruling at the balance sheet date. Foreign currency gains and losses are taken to the pro it and loss account.

13. TURNOVER

Turnover  represents  the  invoiced  value  of  goods  and  services supplied less post o ice boxes and business reply licences invoiced in advance and unexpended credit on franking meters. The sale of stamps is based on the cash received and no provision is made for services to be provided in respect of stamps in circulation as the Directors consider this to be immaterial. Included within Turnover and  Cost  of  Sales  are  customs  clearance  charges  incurred  and recharged to customers of Jersey Post.

14. OTHER INCOME

Other income represents the value of rental income received and receivable from the lease of a property and other income received from insurance claims.

15. ADMINISTRATIVE EXPENSES

Included within overhead expenses is, amongst other costs, the GST  expense,  support  services  staff  costs  and  marketing  and distribution costs.

16. TAXATION

Current tax is provided at amounts expected to be paid (or recovered) using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred at the balance sheet date. Timing differences are differences between the Group s taxable pro its and its results as stated in the inancial statements  that  arise  from  the  inclusion  of  gains  and  losses  in tax assessments in periods different from those in which they are recognised in the inancial statements.

A net deferred tax asset is regarded as recoverable and therefore recognised only when, on the basis of all available evidence, it can be regarded as more likely than not that there will be suitable taxable pro its  from  which  the  future  reversal  of  the  underlying  timing differences can be deducted. Deferred tax is measured at the average tax rates that are expected to apply in the periods in which the timing differences are expected to reverse based on tax rates and laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax is measured on a non-discounted basis.

17. PENSION COSTS

The Group operates both de ined bene it and de ined contribution schemes.

De ined Bene it

Prior  to  incorporation  the  Group  operated  two  de ined  bene it schemes, the Jersey Post O ice Pension Fund (JPOPF), a closed occupational  scheme,  and  the  Public  Employees  Contributory Retirement  Scheme  (PECRS),  an  open  multi-employer  scheme, both  of  which  required  contributions  to  be  made  to  separately administered funds. Upon incorporation the States of Jersey retained responsibility for the fully funded JPOPF. For the purpose of the Group JPOPF is treated as a de ined contribution scheme.

Operating  pro it  is  charged  with  the  cost  of  providing  pension bene its earned during the year. The expected return on pension scheme  assets  less  the  interest  on  pension  scheme  liabilities  is shown as a inance cost within the pro it and loss account.

Actuarial gains and losses arising in the year from the difference between the actual and expected returns on pension scheme assets, experienced gains and losses on pension scheme liabilities and the effects of changes in demographics and inancial assumptions are included in the consolidated statement of total recognised gains and losses ( STRGL ).

Pension scheme liabilities are measured using the projected unit credit method, discounted at the current rate of return on a high quality  corporate  bond  of  equivalent  term  and  currency  to  the liability. Recoverable pension scheme surpluses and pension scheme de icits are recognised in the balance sheet.

De ined Contribution

Both  the  Company  and  employees  pay  contributions  into  an independently  administered  fund.  The  cost  of  providing  these bene its,  recognised  in  the  pro it  &  loss  account,  comprises  the amount of contributions payable to the scheme in respect of the year.

18. OPERATING LEASES

Rentals receivable and payable under operating leases are charged

in  the  pro it  and  loss  account  on  a  straight  line  basis  over  the  lease term.

19. RESEARCH AND DEVELOPMENT

Expenditure on research and development is written off in the period in which it is incurred.

20. RELATED PARTIES

The  Group  has  taken  advantage  of  the  exemption  in  Financial Reporting Standard 8 Related Party Disclosures from disclosing transactions with related parties that are members of the Group on the basis that all subsidiaries are wholly owned.

2. OPERATING PROFIT FOR THE YEAR

Operating pro it for the year is stated after charging the following:

3. STAFF COSTS

4. EXCEPTIONAL ITEMS

Operating exceptional costs relate to non-recurring redundancy costs of £137,000 (2013: £65,000), the gain on the sale of assets during the year of £35,000 (2013: £38,000) and an onerous lease provision in relation to a leased warehouse unit which is now vacant £0k (2013: £493,000).

5. INTEREST AND DIVIDENDS RECEIVABLE

6. NET (LOSS)/GAIN ON INVESTMENTS

The net (loss)/gain on investments disposed of during the year comprises:

7. NET FINANCE INCOME

8. TAXATION

Jersey Post International Limited is subject to Jersey income tax at the standard rate of 0% (2013: 0%). Jersey Post Limited, a subsidiary of Jersey Post International Limited, is subject to Jersey income tax at the rate of 20% (2013: 20%). All other companies in the Group are subject to Jersey income tax at the standard rate of 0% (2013: 0%).

A deferred tax asset has not been recognised in respect of the de ined bene it pension scheme de icit. The estimated value of the net deferred tax asset not recognised, measured at the standard rate of 20% is £1,113,000 (2013: £1,053,000).

9. FIXED ASSETS

10. DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

11. EQUITY INVESTMENTS

At the balance sheet date the cumulative market value of investments was in excess of cost.

12. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

Deferred income relates to prepaid post o ice boxes, business reply licences, and unexpended credit on franking meters.

Included within 2014 Other Creditors is £669,481 (2013: £317,178) of VAT due to HMRC as a result of customer postings above the HMRC de minimis level. The customers pay the amounts due to Jersey Post who then pay these to HMRC. The amounts received from customers

but not paid over to HMRC at the Balance Sheet date are recorded within cash.

Included within Accruals and Deferred income is a provision against property related matters.

13. OPERATING LEASE COMMITMENTS

At 31 December 2014, the group has lease agreements in respect of properties for which the payments extend over a number of years.

14. PENSION COSTS DEFINED BENEFIT

The Group had one de ined bene it pension scheme at 31 December 2014, which is open to certain employees of Jersey Post - the Public Employees Contributory Retirement Scheme (PECRS) ( the scheme ). Prior to incorporation Jersey Post had a second de ined pension scheme (JPOPF). The responsibility for JPOPF remains with the States of Jersey as from 30 June 2006.

PECRS is a multi-employer de ined bene it scheme operated by the States of Jersey, funded in accordance with the recommendations of an actuary, which currently provides bene its based on inal pensionable pay. The assets of the fund are held separately from those of the States of Jersey.

Salaries and emoluments include pension contributions of £494,000 for the year ended 31 December 2014 (2013: £495,000) for staff who are members of PECRS. The current employer contribution rate is 8.27% of members salaries as set by the Scheme Actuary.

The latest full actuarial valuation of PECRS was carried out by the PECRS s independent actuary as at 31 December 2013. The valuation of PECRS has been updated by the actuary to 31 December 2014 in accordance with FRS 17.

Actuarial gains and losses have been recognised in the period in which they occur, (but outside the pro it and loss account), through the Statement of Recognised Gains and Losses ( STRGL ).

The principal assumptions used by the independent quali ied actuaries to calculate the liabilities under FRS 17 are set out below:

*In addition, allowance has been made for the same age related promotional salary scales as used at the previous actuarial valuation of the scheme.

*JPIL employs a building block approach in determining the long-term rate of return on scheme assets. Historical markets are studied and assets with higher volatility are assumed to generate higher returns consistent with widely accepted capital market principles. The assumed long-term rate of return on assets is then derived by aggregating the expected return for each asset class over the actual asset allocation for the scheme.

15. PENSIONS DEFINED CONTRIBUTION

The  pension  cost  represents  contributions  payable  by  the  Group  to  the  de ined  contribution  scheme  and  amounted  to  £391,385 (2013: £138,064). No contributions (2013: £0) were payable to the scheme at 31 December 2014.

16. ORDINARY SHARE CAPITAL

17. DIVIDENDS PAID AND PAYABLE

During the year, £390,000 (2013: £1,882,000) dividends were paid to the shareholder.

18. ULTIMATE AND IMMEDIATE CONTROLLING PARTY

The ultimate and immediate controlling party is the States of Jersey, which owns 100% of the ordinary share capital.

19. DERIVATIVES

The Group purchases forward foreign currency contracts to hedge currency exposure on irm future commitments. The fair values of the derivatives held at the balance sheet date, determined by reference to their market values, are as follows:

20. RELATED PARTY TRANSACTIONS

The Group provides multi-channel services to a number of different departments of the States of Jersey. Sales of £1,152,000 (2013: £1,106,000) and purchases of £427,000 (2013: £177,000) were made to departments in 2014. As at 31 December 2014, the amount owing to the States of Jersey was £20,000 and the amount owed from the States of Jersey was £113,129 (31 December 2013: £399,000 and £117,000 respectively). All services provided by the Group to the States of Jersey are provided on an arm s length basis.

31 December 2014

Director Relationship Interest Service Purchases Sales/Income Debtor Creditor Gary  £10,950  £734,562