Ports of Jersey: Annual Report 2017

ANNUAL REPORT 2017

R.78/2018

Annual Report 2017

Contents

Overview

Chairman's Statement  page 02 Keeping Jersey Connected  page 04

Strategic Reports

Chief Executive's Review  page 11 2017 in Numbers  page 19 Financial Review  page 20 Corporate Social Responsibility  page 24 Jersey International Air Display  page 28 Barclays Jersey Boat Show  page 29 Environmental Report  page 30 Risk Management Statement  page 34

Governance

Board of Directors  page 40 Corporate Governance Report  page 44 Compliance and Assurance Statement  page 48 Audit Committee Report  page 49 Risk Committee Report  page 52 Nominations Committee Report  page 53 Directors' Remuneration Report  page 54 Directors' Report  page 57 Statement of Directors' Responsibilities  page 58

Financials

Independent Auditor's Report  page 59 Financial Statements  page 62

Corporate Information

Directors, secretary,

registered office and advisers  page 84

Chairman's  Statement

Ports of Jersey Ltd has continued to provide quality services and  facilities during our second trading year as an incorporated entity.

The Company has made progress on all of its strategic  As a part of our Board Succession Plan, we appointed  objectives, and advanced key commercial initiatives towards  Jeff Hume to the Board on 01 January 2017. Jeff brings  becoming financially self sustainable over the long term – the  relevant Ports, Island and Infrastructure experience  

key aim of incorporation. and he has taken up the role of Chairman of our Audit  

Committee. On 01 November 2017 Mark Chown was  

Our second Annual Report provides an update on our  appointed to our Board, delivering both aviation and  activities, and presents our financial and operating  investment capability to our governance team. He now  performance during the year. Whilst delivering our mission is  chairs our Risk Committee.

a long process, it is pleasing to establish some early traction  

on our objectives in the medium term. Success for the Ports of Jersey is important to the Island, as  

we manage the gateways to Jersey. Additionally, we fulfil  An important measure of an infrastructure business's  essential public services in the form of our Coastguard and  

performance lies in the cash generation capability to enable  maintenance of historic harbours and territorial navigation  forward funding of its Long Term Capital Programme. The  aids. All of our activities are designed to provide quality, safe  internationally recognised measure is Earnings before interest,  and reliable services for Island benefit, whilst reinvesting all  tax, depreciation and amortisation (EBITDA), where Ports of  of our profits into Island infrastructure.

Jersey has managed to improve EBITDA by 7.1% to £11.5 million  

over an equivalent period from 2016. We have set a high ambition for ourselves, and I remain  

confident that our determined progress will ultimately  

This is a notable achievement, however we still have a long way  deliver the benefits identified at the time of Incorporation. to go before we are generating the required profit that will allow  

Ports of Jersey to fund our capital investments as envisaged at  

the time of incorporation. Our Case for Incorporation described  

what we would need to achieve in returns from our commercial  

projects without having to resort to above RPI price increases for  

our services. Despite considerable effort, we have not yet found  

the right mechanism to enable our economic regulator, the  

Jersey Competition and Regulatory Authority (JCRA), to approve  

a modest price increase. This means that we have significantly  Charles Clarke

higher funding constraints than identified in our Case for  Chairman  

Incorporation. 03 May 2018

We hope progress on an appropriate model will deliver  positive outcomes for 2018.

2017 saw the departure of three long standing Non-Executive  Directors, Frank Walker and Michael Collett, with Margaret  Llewellyn retiring 20 April 2018. Frank, Michael and Margaret  were originally appointed to the Ports Shadow Board in 2010  and have made substantial contributions to our success to  date, and I would like to thank them for their determined  work towards this success.

Keeping Jersey  Connected

Almost 2.3 million passengers travelled through our gateways  in 2017.  

70% of these passed through the Airport, with the vast majority of these travelling to and from the UK. At the Harbour the  majority of travelling passengers (65% of total harbour passengers) were connecting to and from France, with the remaining  linking to the UK or inter-island. This highlights the complementary nature of the Airport and Harbour, with only inter-island  travel being reasonably well balanced in respect of passenger numbers.

Passenger Movements Inter-Island

90,111

95,406

UK & Ireland

1,485,414 133,839

Continental Europe

40,519

430,235 TOTAL PASSENGER MOVEMENT

1,616,044

659,480

Jersey Airport

2017 was the busiest year for 17 years, with 1.6m passengers having travelled through the Airport. This was an increase

of 25,253 over 2016, equating to a 1.6% uplift. The majority of this additional volume was derived from routes such

as Glasgow, Liverpool, London Luton and East Midlands, however this was offset by the Guernsey, Manchester and Bristol routes, which did not perform as well.

Over 80% of the market was shared between Jersey's three largest airlines: easyJet, British Airways and Flybe. During 2017 there has been some minor shifts in the market share; easyJet grew by 4% whilst British Airways and Flybe dropped by 1% and 2% respectively. easyJet's growth has been across all of its Jersey routes, British Airways as a result of a reduction in London Gatwick frequency and Flybe as a result of route competition with its franchise partners as well as its own route to Manchester.

Jersey Harbours

The 2017 volumes show that ferry passenger numbers have fallen by a further 8,158 to 659,480. In addition to the decrease in 2016 of 104,807, this represented a fall in passenger numbers of 15% over the two year period, with the majority of the decline on the St Malo route.

Vehicle volumes at the Harbour broadly follow the profile

of the passenger volumes and despite the overall decline of 1,512 vehicles the St Malo route has seen a small increase of less than 2%

Airport Passenger Numbers 2,000,000

1,500,000 1,000,000 500,000 0

2015  2016 2017

Harbour Passenger Numbers

800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0

2015 2016 2017

More than 95% of freight movements occurred through the harbour, amounting to in excess of 500,000 tonnes. More than 80% of this represented imports to the island, which provides a challenge to delivering efficient operations for the business and to those of our business partners.

The majority 62% of freight movements passed through the port via the linkspans situated at Elizabeth Terminal, however a significant amount of freight also made use of the cranes available on North New Quay. The majority of fuel imports utilised the fuel jetty at La Collette, however we have seen the adoption of an alternate methodology to bring fuel into the island utilising ISO containers.

Freight and Fuel (Tonnes)

600,000 500,000 400,000 300,000

200,000 100,000 0

2015 2016 2017

Freight (Tonnes)

Crane

Import: 112,130 Export: 6,200

Ramp

Import: 226,823 Export: 83,758

Fuel Jetty

Import: 72,511

IMPORT: EXPORT: 411,464 89,958

Where we fly to:

Aberdeen Bristol East Midlands Hamburg London Gatwick Newcastle Basel Cardiff Edinburgh Humberside London Luton Norwich

Belfast Intl Doncaster Sheffield Exeter Inverness London Southend Palma (Majorca) Berlin Dublin Funchal (Madeira) Leeds Bradford Malaga Southampton Bern Durham Tees-Valley Glasgow Liverpool Manchester Tenerife Birmingham Düsseldorf Guernsey London City Munich

Routes

New Routes 2018

Where we sail to:

France UK & Channel Islands

Carteret Guernsey Dielette Poole Granville Portsmouth St Malo Sark

Please note: Routes listed are as of May 2018, routes change frequently and customers should check with carrier for their travel planning.

CEO's  Review

We have made very good progress on improving our organisation and operational capability whilst advancing commercial and capital projects.

Our business has developed well during 2017 as Ports of Jersey Limited (PoJL) continues the comprehensive transformation required for us to deliver the primary aim of Incorporation – which is to be financially self-sustainable over the long term whilst carrying out an ambitious programme to develop our facilities and services.

Mission and Strategic Objectives

Our mission at PoJL is to enhance our Island as a great place to live, visit and do business, through keeping us reliably, safely and well connected. By focusing on this mission, we are pushing ourselves to consider the benefits for the Island in our activities. Underpinning this mission are four strategic objectives, where we have made demonstrable progress in the year.

Enhance Jersey  Core Business

Improving the operations and service Developing our core business, passenger and freight volumes

Objective: To develop our facilities, services and  Objective: To grow our core business volumes connectivity with an aim of ensuring open, safe  sustainably and profitably through developing our asset and secure operations; raising our standards and  base, identifying new opportunities and working with safeguarding our assets. the right partners.

Improving operational resilience: We commissioned an Air  Increasing passenger numbers: 2.3 million passengers Traffic Control (ATC) contingency suite, enabling us to keep  through our gateways, 1.6 million through the airport the Channel Islands Control Area operational in the event of  alone making it the busiest year since 2000. Sea

failure in our primary ATC centre. Additionally, we completed  passengers continued to decline in the year largely

our replacement of the Les Platons radar that provides  driven by weather, rather than technical issues. We have resilience in our airspace surveillance and navigation.  also developed deeper collaboration with Visit Jersey

to target markets with the best prospects of increasing Investing in our maritime assets: We have commenced  visitor numbers.

a significant redevelopment of our facilities for the

commercial fishing industry, replacing time expired assets  Providing new routes and improved frequencies for

and reconfiguring for increased capacity. Further, our 30  residents and visitors: During 2017, we welcomed three year old marina gates in St Helier were fully replaced and we  new routes (Luton, Billund and Vienna), which have been delivered upgrades to our Elizabeth Marina gates. well received. We continue to work with carriers to identify

new opportunities, as well as targeting marketing efforts Improving passenger experience: Last summer we adjusted  jointly with Visit Jersey.

the configuration and process for security at the Airport,

which dramatically reduced queueing times. To better  Securing an Air Navigation Service contract: We understand passenger flows through our terminal, we  renegotiated our Channel Islands Control Area contract with invested in new technology that not only tracks volumes and  UK and French Authorities for PoJL to provide ATC services, timing of passengers, but also forecasts peak times that will  securing a significant revenue stream for the medium term. enable improved manpower planning and create efficiencies.

People and Capability Developing our organisation

Objective: To develop the organisation, workplace and culture; ensuring our talented people have the opportunity to develop in a great, vibrant environment.

Investing in modern IT platforms: We have embarked

on a complete IT System upgrade since leaving States of Jersey (SoJ), which is seeing a modern, secure and resilient platform implemented. Additionally, we have a new business intelligence system, new HR and payroll system, and are acquiring a new finance and asset system.

Restructuring and rewarding our organisation: We have restructured several of our operating units, such as Group Engineering, Airport Fire Service and Marine Operations

to improve their effectiveness and efficiency. This included insourcing Harbours Engineering services from the Department for Infrastructure, as well as meteorological observations from Jersey Met. We have further developed a modern reward structure; ensuring a consistent, fair and motivational approach that rewards people across the organisation for their efforts, which was positively approved by our trade union members.

Continuing professional development: We have progressed the pursuit of operational excellence through our Acceleration Programme, whereby over 40% of PoJL have been trained and we have completed 127 projects with a total savings of nearly £0.4m. We have also implemented new on-line training system, Skillsoft, to enable all of our people to develop their skills.

New Business

Increasing and diversifying our revenue base

Objective: To deliver a pipeline of opportunities for new business – growing our revenue and developing our capability and partners.

Developing new business activities: The renegotiation of our concession agreements at the Airport, for both Food and Beverage and Retail, has improved both services for

our passengers and revenue for PoJL. Additionally, we have grown our Marine Services business during the year, winning lucrative contracts. We have also taken on the Jersey Ship's Registry from SoJ, and it has seen its busiest year in 2017. Finally, we are investing in new corporate aviation hangars and facilities at the Airport which will provide attractive facilities and long term income for PoJL.

Developing our assets and facilities: We concluded negotiation on two of our commercial properties at the Airport, including bringing a new Roberts Garages facility

to the west of the Island. These will be subject to planning approval and will generate significant additional revenue for PoJL. We have also progressed plans for the redevelopment of the Airport, and long term plans for St Helier Harbour.

Exploring emerging technologies: As we progress our investment in new technologies for improving operational resilience and efficiency in both our aviation and maritime sectors, we are developing commercialisation cases to turn these investments into new business opportunities. Examples include Remote/Digital ATC Tower technologies, multi-beam sonar capabilities in Marine Services and security monitoring at the Airport.

Business Model

PoJL, is a wholly SoJ owned entity which was created upon the incorporation of the Airport and Harbour departments in October 2015. Whilst we operate as a limited company, with the governance and decision making of a private company, all of our profits are reinvested into the Island rather than transferred to private investors.

We are a large infrastructure business required to continually invest in and maintain our asset base in order to ensure our gateways are open, safe and secure. The funding for this is solely generated from our company operations as we do not receive any government or tax payers funding for our capital requirements.

In order to effectively fund this investment we review our long term capital programme, develop master plans to guide investments and continually seek new revenue growth to create the necessary cash to invest in our core infrastructure.

Our positioning in the Island is to continue to develop our facilities, services and products for the benefit of residents, visitors and businesses. This will primarily be achieved through developing our assets and pursuing projects to grow our income.

We ensure our activities are performed with the optimal safety and security standards, which are routinely independently audited by competent authorities. We continue to improve our operational resilience, which is crucial for the Island's sole gateways maintaining connectivity. Finally we must provide essential public services such as support for our Coastguard service and custodianship of the Island's Historic Harbours.

All of these activities are funded from the commercial profits of our operations, as we do not receive any government grants for these essential requirements.

Regulation

PoJL continues to perform our regulatory functions as the Harbour Authority and Airport Authority, as appointed in Jersey pursuant to the Harbours (Administration) (Jersey) Law 1961 and the Aerodromes (Administration) (Jersey) Law 1952 respectively.

We follow international standards for port operations, and are routinely audited on our performance. These standards include the UK's Port Marine Safety Code, International Civil Aviation Organisation (ICAO), UK Civil Aviation Authority (CAA), the French Civil Aviation Authority (DGSA), and the European Aviation Safety Agency (EASA). Audits pursuant to these standards ensure we can continue to operate to the highest standards of operational compliance, safety and security to keep people safe when using our facilities. Audits passed during the year include:

• Air Navigation Service Provider (ANSP) certification directly from EASA

• CAA Aerodrome Audit in Oct 2017

• Aerodrome Licence/Permit authorised by the Director of Civil Aviation (DCA)

• ATC approved as an Air Traffic Control Officer Training Organisation by EASA

• Coastguard/Vessel Traffic Services (VTS) successfully reviewed by UK Maritime and Coastguard Agency (MCA)

Whilst we have not yet forged as strong a relationship with our economic regulator as we have with our operational regulators, we continue to work with the Jersey Competition and Regulatory Authority (JCRA) to develop a better mutual understanding and during the period we participated in a consultation in respect of Quality of Service. We also sought a tariff increase of 2% in 2017 however were unable to reach a satisfactory conclusion with the JCRA on this point. It had been a core assumption within the Case for Incorporation that RPI price increases would be necessary to achieve the aim of financial self sustainability whist providing continuing service levels. The failure to achieve any price increase will inevitably lead to a diminution of the level of investment and/ or customer service that can be provided by PoJL.

Business Performance

Our core business continues to improve, with air passengers growing by 1.6% to over 1.6 million – making 2017 the

busiest year through our airport in the last 17 years despite the significant reduction in German capacity following the collapse of Air Berlin. We have achieved this growth through our ongoing route development programme in collaboration with our customers, the carriers. Further, we continue to develop solid plans with Visit Jersey to grow our visitor volumes targeted at those regions with the best prospects for growth.

Combined freight and fuel volumes through the harbour was consistent with last year totalling c.500,000 tonnes, offsetting some of the lost revenues from the continued lower volumes of passengers arriving by sea.

PoJL renegotiated our contracts with our major airline customers during the year, improving yields and incentivising growth in passenger numbers. As highlighted in our strategic objective review for core and new business page 11, we are making very good progress in commercialising and growing our business.

Delivering new revenue streams is critical to provide the funding for our capital investments, as we cannot rely

solely on our core business to provide this funding. New commercial development during the year has been profound. As we embed our commercial culture across the business, all of our teams are joining in – with our IT department bringing in over £0.5m of 3rd party revenue and our Airport Fire and Rescue Service developing new training and teambuilding programmes.

We are continuing to develop our digital transformation, where PoJL are industry leading in our application of new technology particularly in ATC Services.

Customer Experience

PoJL gathers feedback on our service levels from our customers, the carriers, as well as passengers and users of our facilities. Overall passenger satisfaction at the Airport is 86%, and our annual review of our boat owner community achieved an overall satisfaction of 75%, with availability of car parking their primary concern. Further, we have been awarded the prestigious Coastal Marina of the Year over 250 berths' by the UK Yacht Harbour Association (YHA); as well as the biennial Aircraft Owners and Pilots Association (AOPA) award for best General Aviation Airfield. We are delighted to be recognised by these groups for the service levels we provide.

Improving our services for the benefit of passengers is a key component of our mission to enhance Jersey as a great place to live, visit and do business. Despite efficiencies delivered through our Acceleration Programme, net yields have decreased due to rising costs, which is impairing our ability to continue to deliver improvements in our services.

We have delivered improvements across our business in the  following areas:

• We invested in new trolleys for the Airport and Harbour  in time for the summer season, replacing very old  equipment following considerable feedback  

• We have dramatically improved our Airport security  process, enabling passengers to transit security  significantly quicker than they did before. Further,  

we invested in Crowdvision which is an advanced  technology for monitoring and predicting passenger  flows through our terminal

• We invested in a new car parking system at the Airport,  replacing the obsolete and inflexible system. In time this  will allow us to offer new car parking products, such as  on line booking and long stay rates

• We introduced the Passeporte Escales product for our  local boat owners, with 145 berth holders now members  and getting the benefits of this wide offering of marinas  around Europe

Finally, we participated in a Quality of Service consultation  conducted by the JCRA. In addition to PoJL's response, there  were only two other responses who highlighted elements of  the service that matter to them. The focus groups paid for  by JCRA produced results consistent with our own customer  satisfaction surveys and general customer feedback to PoJL.

Principal Risks and Uncertainties

The aim of risk management is to provide ongoing assurance  that key risks, which could prevent PoJL from achieving its  objectives, are being effectively managed. The PoJL Board,  Executive and Senior Management Teams are committed to  adopting policies and activities that minimise risk where PoJL  has facilities, employees or contractors.  

We, like many businesses, have a primary uncertainty in the  future relationship with the European Union and the United  Kingdom. We continue to engage, together with colleagues  from Guernsey, with the Department for Transport in the  UK to assist them in understanding issues pertinent to our  operations in the Channel Islands.  

The nature of our business, which involves large public  infrastructure, alongside heavy industrial activity combined  with compliance to international standards means that  inherently we operate in a risk filled environment. As such,  we are very alert to the protection of public safety. To  mitigate risk, PoJL has risk management processes, safety  and security regimes, and safety and quality management  systems in place to analyse and manage any risk, or  potential risk, to our operations. These are routinely  audited by our regulators to ensure that all processes  function to their satisfaction. Operational and corporate  risks are reviewed on pages 34 to 38.

Investment Projects

In addition to investments made to improve our customer experience, we have made a number of significant investments in our operational and organisational capability.

Projects concluded

We completed our £1.9m investment in our replacement radar at our Les Platons site, ensuring operational resilience in our aviation navigation surveillance services.

We acquired a new Airport Fire tender for £0.4m, replacing an over 20 year old piece of equipment. The procurement process, redesigned requirements and choice of suppliers enabled us to replace this unit at a cost of 30% less than previously.

When faced with new aerodrome security requirements, which would have increased PoJL's annual operating costs

by £0.2m, we invested £0.3m in new technology using radar, CCTV and sophisticated software in monitoring certain critical parts of the Airport.

Ongoing projects

Improving operational resilience for our airport ATC services through the installation of a contingency digital tower is on track to complete during 2018. As with other operational investments PoJL has made, we are now building a business plan to commercialise these projects and generate incremental third party revenue.

We applied for planning permission for constructing three new corporate aviation hangars at the airport. This project will enable PoJL to provide 60,000 square feet more capacity to satisfy market demand for hangarage in Jersey.

Projects Initiated

Integrated Terminal Project: We announced our most significant transformation project to date, namely our Integrated Terminal Project for the Airport Master Plan.

This £42m programme of work will not only enable PoJL to ensure compliance with today's regulatory regime through the removal of a number of buildings which encroach on the exclusion areas adjacent to the runway, but also:

• Improves the operating efficiency of our terminal building

• Creates more useable operational and commercial space

• Improves passenger experience, and expands our retail and food and beverage offerings

We have involved a wide range of interested parties, business partners and the public at large in a series of design workshops which aim to capture all of the Island's good ideas prior to us concluding the final designs. This process has delivered some excellent feedback which we are now building into our plans. Having received Planning Permission, the project is on track to begin construction work in Q4 2018.

IT Platforms: PoJL are upgrading our IT Platforms, improving our protection from cyber security threats, and implementing new business intelligence, finance, HR and payroll systems.

In total, starting in 2017, we will be investing £3.4m in these projects over a 3 year period.

Community

PoJL undertakes a central role in the community, economy and society of the Island through the operations of the Island's strategic transport gateways. However, in addition to this and delivering on our mission of enhancing Jersey, we also provide substantial community benefit to island residents through our management, internal resources and financial contribution.

We continue to deliver two of the Island's largest community events, the Barclays Jersey Boat Show and, together with the Air Display organiser, the International Air Display. The Boat Show is in its 11th year and we consistently welcome over 30,000 visitors to the show each year. The Boat Show receives no grants from SoJ, and therefore it is funded by PoJL, our sponsorship partners and the participants. In respect to the Air Display, we work closely with the Air Display organiser

to bring this one day event to the Island every September. The Air Display benefits from a SoJ grant, totalling £90k in 2017. In 2017 PoJL contributed over £0.25m to deliver these community events for the Island.

In 2017 PoJL also hosted the inaugural world Super League Triathlon event at the Elizabeth Marina whereby 40 of the world's leading triathletes, including 25 Olympians, participated over two days of racing. All of these events are important to the Island community, and provide excellent opportunities for charities to fund raise.

I am particularly proud that our own staff's charitable activities, matched by the company, raised over £25k for our nominated charities in 2017, Philip's Footprints, Jersey Cancer Relief, Holidays 4 Heroes Jersey and Jersey Children's Charity.

Island resilience in emergency situations is critical to the well- being of Jersey. It is important that the various emergency service entities regularly exercise responses to emergencies that the Island may face. During 2017, PoJL played a central role in the largest emergency exercise the Island has ever undertaken, which provides residents with comfort that an emergency can be professionally handled should it arise.

People

During 2017 PoJL employed on average 259 full time equivalents. During the summer months, our workforce grows with seasonal workers servicing our Airport and Harbour terminals and marina customers.

Each year we undertake an Employee Engagement Survey, whereby we obtain valuable feedback about what is working for our people and what we should improve. As a direct result of these surveys, we implement various corporate and team level improvements.

During the year we conducted our Reward Project which has seen company-wide engagement through the focus groups helping to design a new reward structure for the entire company. The level of engagement across the company

has been impressive, and ultimately we have implemented a structure which provides for a fairer distribution of our annual pay bill and aligns various inherited, and disparate, structures into one common set of terms and conditions.

It is also pleasing to note that all of the roles within PoJL

are compensated to the level of Jersey's Living Wage, with the exception of a single trainee undergoing a capability development programme. Once completed, this role will also be above the Jersey Living Wage.

We have also reviewed our gender pay distribution, applying the UK Equalities and Human Rights Commission (EHRC) guidelines to our pay-scales following the introduction of our Reward Project. We now have 7 Pay Bands; in four of these women are paid more than men on average, in two men are paid more, and in one there is no difference. However, we are very pleased that there are no significant gender pay gaps in any of the new bands, and no overall pattern of gender discrimination across the organisation.

Work in Progress

Even though PoJL have delivered continued success in 2017, not everything has gone according to plan:

Jersey Competition Regulatory Authority: Regrettably

we have as yet been unable to reach an agreement with

our economic regulator in respect of a proposed modest price increase for 2017 or a framework for future annual inflationary increases – as had been the case before incorporation – and upon which we can build with efficiency gains and new commercial ventures. Against rising costs, despite efficiency improvements and an asset base requiring considerable investment, such a situation is unsustainable

if we are to maintain and enhance our assets so that the people using them can continue to enjoy the use of modern and efficient services from PoJL. Discussions with the JCRA continue, where our hope is that we can develop a workable regulatory model for the long term.

Elizabeth Terminal Café: To our great disappointment

we were not able to conclude acceptable commercial arrangements with the intended operator of the facility. PoJL has now appointed a new operator to the kiosk facility, which will see an expanded offering for the summer season whilst we develop the much needed main facility.

Outlook

We expect our aggregated freight & fuel volumes through St Helier Harbour to remain consistent with 2017 performance. In 2017 we saw virtually all of our flight services to Germany removed with the collapse of Air Berlin, where for 2018 we have replaced that capacity with other carriers. With new and expanded routes, we expect slight growth in our aviation passengers. Sea passengers have declined in recent years, but we anticipate ferry operators will take steps to halt the decline during this year.

Growth of our commercial agenda will continue, where we will be pursuing new business opportunities in ATC services, marine services, support services and property development.

Brexit will be featuring high on our agenda, as the date of the UK's withdrawal from the European Union approaches. While there have been few tangible decisions in our sectors, our hope is that we will retain an environment which encourages travel and transportation between Jersey, the UK and the Continent.

During 2018 we will commence significant capital investment programmes such as our £42 million Airport Terminal redevelopment, projects around the Harbour and investment in corporate aviation facilities. These projects will be undertaken without funds from SoJ and will be sourced from PoJL's own resources or commercial vehicles. These projects are transformative for the Island, and hallmark our mission to enhance Jersey as a great place to live, visit and do business.

Doug Bannister

Chief Executive Officer 03 May 2018

2017 in Numbers

2.3 million passengers through our gateways, 1.6 million through the airport alone, making it the busiest year since 2000.

2.3M PEOPLE THROUGH

OUR GATEWAYS

£46.2M REVENUE £11.5M EBITDA (EARNINGS

BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION)

2AWARDS BEST GENERAL AVIATION

AIRFIELD & BEST MARINA OVER 250 BERTHS

Financial  Review

The audited financial statements for the year to 31 December 2017 show a Turnover of £46.2m, an EBITDA (Earnings before Interest, Tax Depreciation and Amortisation) of £11.5m and a Profit before Tax of £13.9m.

I am pleased to report that, in comparison to the previous calendar year, our 2017 turnover increased by 6.6% to £46.2m and Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) by 7.1% to £11.5m.

EBITDA is internationally recognised as an indicator of the capability to fund investment from current cashflows. It is therefore particularly relevant for infrastructure businesses such as PoJL which is tasked with funding a substantial long term capital investment programme without recourse to SoJ, the shareholder.

Comparative financial performance

As I explained in the 2015/16 Annual Report' our inaugural trading period, post incorporation, was for 15 months and the Income Statement in our Statutory Accounts therefore contains those audited figures. However I have, for better comparability, split out the results for the 12 months to December 2016 and used these for reference throughout this report.

Audited Unaudited Unaudited Audited

Year ended  12 months ended  3 months ended  15 months ended 31 December  31 December  31 December  31 December 2017 2016 2015 2016

£'000 £'000 £'000 £'000 Turnover  46,247 43,393 10,716 54,109 Operating Costs (excluding depreciation) (34,698) (32,608) (9,701) (40,777)

Eaanrdnainmgso rbtiesfaotireo nin(tEeBreITstD, Ata)x, depreciation  11,549 10,785 1,015 13,332

The following review compares trading in the 2017 (audited) calendar year to the 2016 (unaudited) calendar year.

Turnover

POJL (£'000)

2016 2017 Variance % 43,393 46,247 2,854 6.6%

Airport (£'000)

2016 2017 Variance % 27,417 30,211 2,794 10.2%

Harbour (£'000)

2016 2017 Variance % 15,976 16,036 60 0.4%

At the Airport overall turnover has grown by 10.2% which is largely attributable to improved concession income and growth in airline passenger numbers. The Airport concession contracts went to formal tender and the renegotiated agreements became effective in March 2017. In addition growth based incentives have been effective in sustaining increased year on year passenger numbers which have also supported income generation. The major airline contracts have been renegotiated during 2017 although yields continue to be challenging.

At the Harbour steady freight and fuel revenues have been more than offset by the continued decline in passenger and associated vehicle numbers. Passenger numbers have reduced form 772,445 in 2015 to 659,480 in 2017 representing a fall in excess of £0.2m in revenues.

Turnover growth across the business has been adversely affected due to tariff prices not having been increased due to an inability to reach agreement with Jersey Competition and Regulatory Authority (JCRA) for a modest, below RPI, price increase. This has had a disproportionate effect on Harbours as a result of the higher proportion of Harbours income deemed within the remit of the JCRA regulatory regime.

Income Split

150%

100%

21% 41%

50% 79% 59%

0%

Harbour Airport

Regulated  Non-Regulated

Operating Costs

POJL (£'000)

2016 2017 Variance % (32,608) (34,698) (2,090) (6.4%)

Airport (£'000)

2016 2017 Variance % (20,605) (21,504) (899) (4.4%)

Harbour (£'000)

2016 2017 Variance % (12,004) (13,194) (1,190) (9.9%)

Overall costs to the business grew proportionately to the increase in Turnover at 6.4%. Airport costs have increased

by 4.4%, whereas at the Harbours the increase was 9.9% compared to 2016. These increases are due to cost inflation in existing contracts such as security, and need for increased capability within PoJL's workforce, following the split from

SoJ on incorporation. Recruitment in 2017 reflects the organisation's need to grow its commercial activities so as

to diversify its income streams and reduce reliance on core regulated income to meet long term investment requirements.

During 2017 the organisation continued to progress a number of transition arrangements with SoJ. An agreement to resolve certain legacy issues was signed in March 2018.

At the Harbours, additional investment has been made to facilitate the transfer of Harbour Engineering services from SoJ to PoJL. It is anticipated that a material amount of these transition costs will not recur going forwards. Costs have also increased as a result of rising insurance premiums, bad debts and maintenance obligations.

Operating Costs

10% 49% Security Costs Staff

6%

Utilities 18% General

Expenses

15% 2% Maintenance Public Service

Obligations (PSO)

EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation)

POJL (£'000)

2016 2017 Variance % 10,785 11,549 764 7.1%

Airport (£'000)

2016 2017 Variance % 6,813 8,707 1,894 27.8%

Harbour (£'000)

2016 2017 Variance % 3,972 2,842 (1,130) (28.5%)

EBITDA has improved by 7.1% for the business as a whole, however this has been primarily driven by the performance at the Airport as a result of improved returns on concessions from contract renegotiations.

Unfortunately the Airport yield improvement is significantly offset due to the erosion of the Harbour EBITDA, down 28.5%. This is the result of increased costs as well as an erosion in yield due to our inability to implement price increases in line with cost inflation.

Other Profit Movements

Beyond EBITDA, the Income Statement recognises a

number of other items which, although they do not have an immediate cash effect, are included in the Profit before Tax of £13.9m. As these items can introduce volatility in published results they are separately shown in accordance with applicable accounting standards.

The value of our investment properties grew by £6.2m. This increase reflects an increased focus on improving the returns from PoJL's property portfolio following several negotiations with lessees. Whilst this does not provide an immediate cash benefit to the business, it demonstrates the value added to the asset base through a commercial approach.

A review of our operational property assets concluded that it was appropriate to impair the value of the Arrivals 1937 Building due to the initial demolition works having been undertaken, and a significant element of the building no longer being available for occupation.

Depreciation has increased as a result of the completion and capitalisation of projects which include the Air Navigation Service Provider Contingency site, Automated Weather Observing System and Marine Operations Centre at Maritime House.

Our finance lease income relates to finance leases, where we act as the lessor.

The Company was not party to any debt financing at December 2017.

Taxation

Upon incorporation, the Company was designated a utility company pursuant to Article 123C of the Income Tax (Jersey) Law 1961 and is therefore liable to Jersey income tax at the rate of 20% on its trading income. Jersey rental income is also taxed at 20%.

The tax charge for 2017 is £1.3m, made up of current tax charges and release of a deferred tax asset that was set up at incorporation arising from the settlement of its pre 1987 debt to the Public Employees Contributory Retirement Scheme (PECRS).

Cashflow

During 2017 the Company's operations generated a deficit in free cash flow of £2.8m (this includes £2.0m moved into investments), leaving it with £31.4m in cash and money market investments (2016: £32.2m). The reduction in free cash flow reflects PoJL's continued transition

away from SoJ with the adoption of arms-length trading arrangements, resulting in a more rapid settlement of creditors. This trend will continue as payroll has been insourced in 2018. The cash surplus being maintained

in the balance sheet is being accumulated to contribute to the major funding gap on future capital expenditure identified by SoJ prior to incorporation.

The free cash flow from operations funded the purchase of £5.5m of tangible assets in the year. The level of investment was below the long term trend in anticipation of significant capital investment programmes such as our £42 million Airport integrated terminal redevelopment, projects around the Harbour and investment in corporate aviation facilities.

Capital Expenditure

The principal items of capital expenditure during the year were:

Integrated Terminal Development 908 IT Systems Infrastructure 903 Les Platons Radar 562 Airport Projects <£500K 2,370 Harbour Project <£500K 747 Purchases re Tangible Assets 5,490

Tangible Fixed Assets

At 31 December 2017, the Company held tangible fixed assets with a net book value of £70.0m. Of this amount £4.3m is attributable to assets currently in the course of construction.

Investment Property

At 31 December 2017, the Company held investment properties with a net book value of £58.3m, including car parks and the Airport fuel farm. The portfolio was revalued internally by a RICs qualified Chartered Surveyor at the end of 2017 based upon an assessment of passing rents and prevailing market conditions and the fair value was increased by £6.2m as a result.

Pensions

The Company continues to participate in PECRS, and the Public Employees Pension Scheme (PEPS). During 2017 the Company contributed £1.7m to these schemes.

Andrew Boustouler Chief Financial Officer 03 May 2017

Corporate Social  Responsibility  

Our Island, Our Ports, Our Responsibility

Community and Social  

We recognise that our operations touch almost everybody in the Island at some  time during the year - whether it's as a boat or aircraft owner, running your  business, travelling to and from the Island or simply dropping relatives off at the  airport – we believe that we have a prominent role in the community and are  committed to using our resources to enhance Jersey as a great place to live, visit  and do business.  

Our Corporate Social Responsibility programme has continued to build momentum  since our incorporation in late 2015 and has now become an integral part of our  business. Our employees frequently amaze us with their ideas and with the energy  they put into supporting a wide range of people across the Island.  

Our team get involved in a number of events throughout the year and we  actively encourage them to raise funds to support our chosen charities which  we then match fund whatever amount they are successful in raising so the  charities get a double benefit. In 2017 this raised a fantastic £25,000 for our four  nominated charities

• Holiday for Heroes Jersey  

• Jersey Cancer Relief  

• Jersey Children's Charity  

• Philip's Footprints  

Our charity partners tell us these funds will make a huge difference to their  worthwhile causes.  

"You have been just amazing. The support all four charities have been shown has

just been phenomenal, the staff have given their all in every way to make this

as successful a partnership as it could be. The donations have been amazing, but for Philip's Footprints, as a very small charity, the means to raise awareness of our charity, and support Jersey families further,

has been priceless."

- Philips Footprints

"Holidays for Heroes Jersey is honoured

to have been one of the Ports of Jersey's chosen charities. It has been hugely beneficial both financially and practically as the "Welcome banners to H4HJ" at

the Airport and Harbour really do have

a positive impact on our arriving guests, with 70% of our heroes suffering from PTSD their travel can be traumatic and the Welcome signs are really noticed. With the opportunities to fund raise and matching grants from Ports of Jersey, they have

funded an amazing sixteen holidays"

- Holidays for Heroes Jersey

In addition to fundraising, we sponsored events such as Jersey Children's Charity's Robin Ball and their refurbishment and decoration of a treatment room on the Robin Children's Ward at the General Hospital. We also supported Jersey Children's Charity's Parent Packs, which are overnight bags of essentials given to parents whose children are admitted to hospital unexpectedly. For Philip's Footprints we sponsored their Christmas Service and the production of their Wellbeing Wallets that are given to all Jersey pregnant women.

Our people also took part in a range of colourful and whacky activities to raise nearly £5,000 for Children In Need and, working with our business partners, we also supported the Brig-y-don charity's initiative to purchase and wrap Christmas gifts for Jersey children in care at Christmas, donating over 100 gifts worth in excess of £2,000.

Just some of the other charities, associations and events that have benefited from the support of Ports of Jersey

in 2017 include Helping Wings', Royal British Legion

Poppy Appeal, British Red Cross, Teenage Cancer Trust, Donna Annand Melanoma Trust, Acorn Enterprises, MIND Jersey, The Durrell Challenge, The Love Hearts Appeal, International Air Display, Battle of Flowers, Standard Chartered Jersey Marathon, the Jersey Hospice Dragon Boat race and UBS Jersey Sailing Regatta.

In 2018, we will continue to work with the four charities selected by our staff to benefit from our fund-raising activities; Philip's Footprints, Jersey Cancer Relief, Jersey Children's Charity and Holidays for Heroes Jersey. Our staff are already involved in planning which charities we will support in 2019.

Community Involvement - Working with Young People

Alongside our fund-raising activities, PoJL supports and facilitates a number of community initiatives, in particular ones involving the Island's young people. Through our educational and awareness programmes we have engaged with more than 2,000 young people, during 2017.

Initiatives have included behind the scenes' visits for primary and secondary school students to our Airport Fire Service, Air Traffic Control Tower and Harbour Operations facility

at Maritime House. As part of our annual Safety @ Sea' Campaign, officers from Jersey Coastguard visit local schools to educate and inform children on water safety and how to act appropriately around our water and coastline.

PoJL has worked closely with The Prince's Trust and several secondary schools with the aim of helping develop young people's confidence and improving their employability. Our Airport Fire Service has developed a 6-week programme as part of this initiative focusing on team work and personal skills, which continues to be a great success.

Clubs and Associations

PoJL supports many clubs, associations and societies, all of which are connected in some way to maritime and aviation activities. We strongly believe vibrant and growing clubs and associations are important for providing a valuable pipeline of interest into these sectors, creating our customers and employees of the future, as well as providing important training and education.

Our goal is to further enhance these relationships, allowing us to develop the Island's community by supporting and working with these societies and clubs to ensure they are able to maintain and develop the services and support they offer to the community. The value of this support is over £500,000 per year and it can take many forms; it may be through reduced property rentals, free use of Ports facilities or property, the use of Ports of Jersey assets to support events or by providing direct support to the many fund- raising activities that these groups stage throughout the year.

Staff Health and Wellbeing

At PoJL, we don't just ensure that the Island's community and charities benefit from our business, we are also committed to supporting the people that make our business run with

a range of employee health and well-being initiatives. Initiatives include the promotion of healthier lifestyles and subsidised health-care charges for employees.

PoJL is committed to being a responsible business and making a positive difference in the Island. We are looking forward to growing our Corporate Social Responsibility programme with new ventures and working with other local business. With the help of our employees we will continue to work closely with local charities and aspire to build lasting relationships within the Island community.

Our employees frequently amaze us with their ideas and with the energy they put into supporting a wide range of people across the Island.

Through our educational and awareness programmes we have engaged with more than 2,000 young people.

Jersey International Air Display

The Jersey International Air Display is one of the Island's most popular events and has been delighting visitors and residents since 1952.

With an aviation event of this type it is inevitable that over the  

years Jersey Airport has been actively involved in helping to stage  

the display by utilising the skills of its aviation personnel and  APPROX.

18,000 facilities of Jersey Airport, often on a voluntary and no fee basis.

In 2016 a more formal business arrangement was established

between SoJ* and PoJL, whereby our business has taken on a  AIR DISPLAY SPECTATORS greater responsibility for the overall organisation, governance

and sponsorship of the event. Once again, the majority of the  

services and facilities provided by its staff and the organisation  

itself is on a voluntary basis but an agreed criteria is followed by  

£21 PoJL, working alongside the event organiser and committee.

An agreed budget is set whereby all parties must work within  K a business plan. A post-event report is compiled, including

financials, which are submitted to Economic Development  EVENT INCOME prior to any monies being released and

future grants approved.

£90K £14K

SPONSORSHIP & GRANT INCOME DONATIONS

(£254K)

EVENT EXPENSE

(£129K) *States of Jersey, (Economic Development, Sports and Culture)  NET COST TO POJL

is one of the largest financial supporters of the event.

Barclays Jersey Boat Show

The annual Barclays Jersey Boat Show took place in and around St Helier Marina, adjacent Weighbridge Place and Marina Gardens between Saturday 29 April and Monday 01 May 2017.

First staged in 2008 as an opportunity to showcase Jersey's

marine leisure industry to a wider audience, the event

continues to grow in both size and reputation. Regularly  APPROX. While the essence of the show remains firmly focused on  33,000

attracting in excess of 30,000 visitors over the three days it

remains the largest free-entry event in the Channel Islands.

maritime based activities, its continuing success has been  VISITORS OVER 3 DAYS helped by the participation of many other local and visiting

individuals and businesses promoting their lifestyle products.

The event attracts an increasing number of visitors to share

and discover the Island's maritime culture as well as creating

£63K community spirit.

The Boat Show is organised by Ports of Jersey with the

operational support of local specialists, 3D Events. The event,  EVENT INCOME which receives no financial investment from SoJ, is funded

entirely by sponsorship and revenue from exhibitor fees. The

future of the Jersey Boat Show is guaranteed until at least

as well as additional sponsorship from other commercial  £41 2019 due to the continuing commercial support of its title

sponsor, Barclays. This financial commitment from Barclays,  K contributors, including Solent Stevedores, Condor Ferries and  SPONSORSHIP &

Flybe ensures that the show can remain a free-entry event,  DONATIONS something that PoJL has strived to offer since it was first  

staged in 2008.

(£237K)

EVENT EXPENSE

(£133K)

NET COST TO POJL

Environmental  Report

As the only aviation and maritime ports operator in Jersey our  activities inevitably have an impact on the environment.  

In 2011, the Airport became a member of the States of  Vision

Jersey Eco-Active scheme and began the implementation  

of environmental management measures to help run our  We shall ensure the health, safety and security of all people  business in an increasingly sustainable manner. During 2017  in our care whilst at and in the vicinity of PoJL property. We  PoJL reviewed its Environmental Policy encompassing the  shall conduct our business in an environmentally responsible  entire business and set itself actions to ensure improving  manner.

performance.

Key deliverables:

PStoHJLelleiears etos aanll dthoewhnisstporroicpheartryb oaull rasraosuwnde ltlhaes itshlaenAdi rfproomrt.  •  Comply with relevant legislation and regulations that  Some of these areas of land are open to the public or used  aim to protect the environment.

by local clubs and associations for special events such as  •  Co-operate with the local community, relevant  

Dragon Boat racing at the Harbour and Runway charitable  authorities and the commercial sector to ensure that  events at the Airport. any development is undertaken in an environmentally  

sensitive manner.

The PoJL Board, Executive and Senior Management Teams  

are committed to adopting policies and activities that  •  Through the effective management of noise, air  minimise our impacts on the environment and have agreed  emissions and water discharges ensure that all PoJL  

to recruit an Environmental Manager' to drive improvement  operations and activities are conducted in such a way  throughout the business. that will, wherever possible, minimise the impact on our  

neighbours and the wider environment.

As PoJL develops we will endeavour to conduct our business  

by using all reasonably practicable means to mitigate  •  Use resources as effectively as possible, and where  

the impact of our operations on the environment, and  reasonably practicable use materials and sources of  

by working with our business partners, suppliers and  energy that have the least impact on the environment. contractors. •  Strive for a year on year improvement of the  

environmental impacts of our operations.

We will take all reasonable steps to prevent any adverse  

effects occurring and to protect the environment, ensuring  •  The detailed policy will be used as a framework for  

as far as possible, that both present and future activities are  setting objectives and targets.

conducted to address the concerns of the local community  •  All contractors and third parties are to conform to this  and the wider environment. policy.

• The PoJL will keep up to date on Industry best practice.

• This policy will be reviewed annually.

Sustainable Design

Strive to achieve designs that are in harmony with the

local environment, that are efficient in materials used, and minimise any adverse effects operations could have socially and culturally.

Partnership for Sustainable Development

Foster links with all PoJL stakeholders to ensure operations contribute to long-term sustainability for the island.

Community Relations

Be aware of the concerns and improve contact with local people and community groups.

Noise Management

Minimise as far as reasonably practicable the effects and disturbance of noise from PoJL operations.

Air Quality

Monitor and seek to improve air quality from PoJL operations and that of its business partners.

Waste Water Quality

Investigate, monitor and determine the most appropriate strategy for minimising the generation and impact of wastewater on the environment.

Ecology

Consider the effects of operations on the landscape and make every effort to conserve local ecology, whilst taking into account operational requirements.

Transport

Continue to develop, promote and encourage the use of more sustainable means of travel to and from the harbours and airport, in accordance with the Island Plan.

Hazardous Substances

Ensure that the use, storage and disposal of all hazardous substances are managed in a manner to minimise risk to the environment.

Energy Management

Promote the efficient use of energy and reduce its consumption where practicable. Where reasonably practicable use sources of energy that have the least effect on the environment.

Fresh Water Management

Promote the efficient use of water throughout PoJL, and reduce its consumption where reasonably practicable.

Waste Management

Ensure waste disposal is kept to a minimum, and promote a policy of re-use and recycling where possible.

Purchasing

Specify only those materials that are environmentally benign and sustainable, where a reasonably practicable alternative is available.

Environmental Management

Implement and maintain an environmental management system that facilitates the achievement of our publicly declared strategy.

Environmental Auditing

Maintain and improve environmental standards by auditing and monitoring procedures and practices.

Employee Awareness

Promote sustainable working practices and develop employee awareness by ensuring that all employees take into account environmental consequences of their work.

This Policy is a commitment to a non-compromising approach to environmental matters, in line with overall PoJL objectives.

2017 Achievements

• Agreed the role of an Environmental Manager

• Created an Environmental Team formed from existing employees

• Agreed a list of 50 actions for 2018 and beyond

• Use of LED lighting technology in public areas expanding at both Airport and Harbours

• Increasing use of LEDs for aviation lighting systems

• Separation of passenger waste at source commenced in passenger terminals

• Cardboard, metal, glass and paper separation expanded

• Replacement vehicle fleet underway to improve performance

PoJL will keep up to date on industry best practice.

• Limit airport operating hours to ensure a quiet period' between 00:00 and 06:00hrs  

(Except for MEDVACs, SARs, or major disruption)

We will strive for year on year improvement of the environment impacts of our operations.

Risk Management Statement

The Company's approach to risk is defined in its risk management policy, which outlines the roles and responsibilities for the identification, evaluation and management of risks throughout the business.

These risks are categorised under the following areas:

• Operational Resilience

• Financial

• Regulatory, Reputational and Political

• Major Capital Project Management

• Health and Safety

• People / Succession Planning

• Information Technology (including cyber security)

The primary features of our risk management process are the use of agreed, defined matrices, which allow a business wide systematic approach to the evaluation, scoring and escalation of identified risks. This provides the Board and Risk Committee with assurance that they may compare all assessed risks, knowing that they have been evaluated against the same set of perspectives and associated severity ratings.

This assurance can help to ensure that efforts and expenditure to reduce, eliminate or transfer risks are being targeted to the appropriate areas.

Over the year, we have continued rationalising the risk process throughout all parts of the business. As the process continues to mature we will see the benefit of a system that is working for us to improve resilience in our core functions.

The following table summarises the principal risks to the organisation and the mitigation measures to manage them, which are either in place or planned.

This list is not exhaustive and is not set out in any order of priority.

Operational Resilience

Risk Description  Mitigation Activities

and Possible

Impact

Operational  Failure to  Key areas of the

Safety and  ensure safe,  operation are audited on Security -  secure and  a regular basis to ensure Aviation and  compliant  compliance and these are Maritime operating  detailed on page 48.

environment

for aviation  Tinodgeipvee nfudrethntera ssurance and maritime  a separate Designated

activities. Person (DP) report by

the Compliance Team is delivered to both Harbours and Airport Authorities annually to confirm progress and ensure that a culture of continual improvement exists.

Business  Failure and/or  Business continuity plans Continuity/ unavailability  which are currently in Asset  of significant  development for each Management infrastructure  department will highlight

and/or facilities  existing contingencies, which has  and assist in identification potential to  of further measures, to cause serious  mitigate against loss of disruption/ infrastructure, resources closure of our  and staffing.

operations. The Planned Preventative

Maintenance Programme (PPM) at the Harbours and Airport provides assurance that plant/infrastructure is managed pro-actively.

Financial

Asset Failure Financial implications associated with the  •  Regular review of the Long Term Capital Plan (LTCP) to ensure

loss of significant plant or infrastructure. asset life cycles are captured in replacement programmes.

• Utilisation of PPM schedules to ensure assets are appropriately maintained.

Liquidity Inability to access adequate funds to meet  The following mitigations are in place:

the obligations of the organisation •  Use of a financial model for budgets, forecasts and actuals;

• Regular review of the LTCP ;

• Diversification of "on call" deposits;

• Governance framework with monetary approval limits.

Regulatory, Reputational and Political

Regulatory Non-compliance with the required  PoJL has a dedicated team, independent of the operation,

regulations, leading to restriction,  checking compliance with relevant regulations, monitoring for suspension or revocation of operating  changes through a range of activities. These include regular and licence/s; resulting in a loss of income and  open communication with Regulators as well as an effective and incurring additional expenditure in order to  mature incident, together with accident investigations, process return to full operational functionality. supported by a good reporting culture.

Reputational/  Failure to meet expected standards Public  of customer service or breakdown of Relations relationship with major stakeholders

resulting in negative PR impacting on PoJL reputation.

Customer Service delivered by dedicated teams working with business partners. The Key Accounts Director monitors and manages the relationships with PoJL key/major stakeholders to prevent reactive reputational protection' measures having to be taken supported by a marketing and communications team working positively and proactively with media agencies to source PR opportunities that celebrate our success and strengthen our reputation.

Foreign  External interference or inadequately  Liaison with overseas counterparts, promoting open dialogue. Relations maintained relationships which could cause  Development of dedicated team for negotiation of the Channel

an adverse impact on the operation and  Islands Control Area (CICA) 3 year contract and establishment of revenue generation. robust SLA with SoJ to clearly delineate responsibilities.

Micro- Political and/or legislative developments  A continual process of engagement with appropriate officers and Political which cause adverse impact on the  Ministers to seek to ensure minimal impact on the commercial

operation of the business. business. Separate focus on enforcement legislation led by the Harbour Master and Airport Director to ensure flexibility and pro-

active approach.

Macro- Macro political and/or legislative  Pro-active engagement with relevant specialists to ensure emerging Political developments which cause adverse impact  risks are considered and mitigated. For example, engagement with

on the operation of the business. investment advisors in respect of Brexit implications and how best to diversify the investment portfolio.

Major Capital Project Management

Project Management

Unsuccessful delivery of major projects resulting in inability to achieve overall project objectives.

• Governance for projects is clear with sponsor, budget holder and project management roles well defined;

• Monthly meetings to discuss progress, budget and scope combined with project support team provide visibility to the Executive. Project Boards are held regularly to discuss cost plans, progress, scope, schedules and risk and identify early warnings of deviations.

Health and Safety

Health  Failure to comply with relevant legislation,  The organisation employs a Ports Health and Safety Manager and Safety regulation and accepted codes of practice  who is responsible for monitoring, investigating and advising

resulting in unnecessary exposure to  on all matters of health and safety, as well as maintaining the danger for our staff, customers and  implemented health and safety management system, which is

members of the general public. based upon British Standard BS OHSAS: 18001 - an internationally recognised health and safety management standard.

People/ Succession Planning

People The failure to retain key employees, or

adequately plan for succession could negatively impact group performance.

PoJL has instigated a process of identifying the areas and

roles across the business that are deemed to be critical.

Active succession plans are in place in identified key areas, with cadet/ apprenticeship schemes either in place or in development. In addition, a project to review the approach

to reward is underway to ensure we have the right tools and structures in place to attract, reward and retain key skills across the business.

Information Technology

Cyber Risk The failure of Information systems and/

or loss of information required to run the Ports operations through malicious intent or system fault leading to operational difficulties, financial loss and reputational damage.

Mitigating actions include back up facilities should a failure occur to critical hardware or application software. Data and application backups are taken to ensure a reversion to a known safe installation can take place and anti-virus and other protection systems are in place to address known threats. System access

is controlled both physically and through password access to prevent unwarranted access to most systems are installed in dual data centres with diverse cable routes and UPS supplies. During 2017 a major programme was initiated to establish our own independent IT infrastructure and to transfer all systems and applications from SoJ in 2018. A key element of this programme was to implement an organisation wide programme to educate staff, including the Board, on the nature of the risks and the steps that they should take to reduce the risk of possible cyber attack.

Data Security A data breach through malicious or  Staff awareness sessions have been held to increase the accidental means resulting in a failure to  awareness of cyber-attacks through malicious software or

comply with legislation, regulatory and  use of inappropriate hardware. A Cyber Security awareness

accepted codes of practice leading to  programme is being created to increase the awareness of cyber financial loss and reputational damage. threats and provide guidance on how to recognise such threats.

A Cyber Maturity Assessment has been commissioned to provide details of the current level of security which will provide

recommendations for improvement.

Secure IT systems are available to all staff requiring mobile solutions and secure memory devices with encryption are supplied, which are the only ones approved for use in PoJL.

Corporate Risks

Shareholder  Inability to reach conclusion on matters  •  Both PoJL and SoJ to deliver the agreed actions in the  and Legacy  that affect the financial or operational  settlement of the Legacy Issues'

Items performance of the business. •  Periodic Shareholder meetings to ensure regular  

discussion of matters that may affect each other (ie no  surprises)

• Improved partnership working through new SoJ structure

Commercial  Inability to deliver commercial projects  •  Regular review of the Commercial Projects Pipeline Projects that provide cashflow for funding  •  Secure a Chief Commercial Officer (CCO) to drive  

infrastructure investments. commercial developments

• Improve project governance and reporting to the  Executive

• Review LTCP and funding requirements

Unsustainable  Whilst PoJL have made solid efficiency  •  Development of a long term price control model with  pricing levels improvements, we are still faced with a  the JCRA

rising cost base, particularly as over 70%  •  Improve the business understanding of PoJL by CICRA of our cost base is fixed in the medium  

term due to regulatory and operational  •  Improve PoJL's regulatory approval understanding and  requirements. A continuing failure to  process

secure agreement to our modest below  •  Continue to deliver efficiencies in the operation

RPI price increases from the JCRA is  

impacting service and investment levels in  

the medium term.

Large scale  Significant reduction in economic activity  •  Continue the diversification of the business activities, to  economic  in Jersey, potentially through the impact in  reduce reliance on core income

impact as  Financial Services, reducing harbour and  •  Continue the development of Best Prospects' with Visit  a result of  airport business volumes. Jersey to attract more visitors to the Island

Brexit

• Work with government and agencies to identify areas of  risk to Jersey

Board of Directors

Charles Clarke

Chairman

Charles Clarke Chairman

Appointed: October 2015

Charles Clarke is a Chartered Accountant who spent some 30 years with KPMG in London, Malaysia and Jersey, mainly as an Audit Partner. Latterly he was Senior Partner of the Channel Islands Firm and chaired the grouping of KPMG member firms in offshore jurisdictions. Since retiring from KPMG in 2005 he has focused on a portfolio of Non-Executive Directorships, including listed and regulated UK and Jersey companies. He has also established an offshore corporate governance consultancy.

He has been involved with Jersey Airport since late 2006, initially chairing a taskforce established by the previous Airport Director, and with Harbours since mid-2010, originally chairing the Jersey Harbours Advisory Group. His community roles have included Chairman and President of the Jersey Branch of the Institute of Directors, Chair of the States of Jersey Statistics Users' Group, Governor of Victoria College and independent member of Durrell Wildlife Conservation Trust's Governance Committee.

John Mills CBE Deputy Chairman and Senior Independent Director

John Mills CBE

Deputy Chairman and Senior Independent Director Appointed: October 2015

John Mills had an extensive public sector career in London, in Hong Kong, in a large English local authority as Chief Executive and in Jersey, where for four years he was Chief Executive of the former Policy and Resources Department and the Island's senior civil servant. His roles in London included several years as a member of the Prime Minister's Policy Unit.

Since 2007 he has held a range of non-executive roles in the statutory sector, including as a board member of the Jersey Financial Services Commission and the Port of London Authority. Since 2014 he has been the Jersey-based director on the board of the Channel Islands Financial Ombudsman.

John initiated the States' work on the incorporations of Jersey Telecom and Jersey Post, as well as the creation of the JCRA and the Island's competition policy regime. In this he drew on experience of working on the BT privatisation in 1984 and the subsequent liberalisation of the EU telecoms market.

John chairs the Airport Authority and the Harbours Authority, the structures through which PoJL board members and senior executives govern much of the non-commercial operations of the company under the Incorporation Law. He is also Chair of the Board's Remuneration Committee.

Mark Chown Non-Executive Director

Mark Chown Non-Executive Director

Appointed: November 2017

Mark Chown has extensive business experience in the private equity, leisure, property and aviation sectors. He held senior executive and non-executive positions with Flybe Group plc over 18 years, until 2014, including Deputy Chairman. During this time Flybe quadrupled in size, to become Europe's largest regional airline. Mark led the successful acquisition of BA Connect, the IPO on the London Stock Exchange and other significant corporate transactions. Mark has held Non-Executive Director and Chairman roles in substantial businesses in the leisure, property and IT sectors. Mark has a BA (Econ) from Manchester University and a post graduate qualification from the Manchester School of Management. He trained as Chartered Accountant with what is now PWC, before moving into the private equity sector with 3i plc, prior to becoming a partner in an independent private equity firm. Mark is a member of both the Audit Committee and Risk Committee at PoJL and will chair the Risk Committee upon Margaret Llewellyn's retirement.

Jeff Hume Non-Executive Director

Jeff Hume Non-Executive Director

Appointed: January 2017

Jeff Hume is the Senior Independent Director of Manx Telecom plc, an AIM listed company, and is a member of the London Stock Exchange's Primary Markets Group.

He was the Deputy Chairman of the Dover Harbour Board, a major Trust

Port, until December 2016 and the Senior Independent Director of the social housing association Moat Homes Ltd until September 2016. He was the Senior Independent Director and latterly the Chairman of Hyder Consulting plc (the multinational Consulting Engineer) until 2014. He was earlier an Independent Director of Heath Lambert Insurance Brokers.

In his executive career he was the Finance Director of TDG plc (Logistics), AWG plc (Anglian Water and Morrison), Alfred McAlpine plc (Housebuilding and Construction) and Howden Group plc (Mechanical Engineering). He previously held senior management and financial positions in the FTSE100 Hawker Siddeley Group plc.

He is a Fellow of both the Institute of Chartered Accountants and the Association of Corporate Treasurers. He is the Chair of the Board's Audit Committee.

Margaret Llewellyn OBE Non-Executive Director

Margaret Llewellyn OBE Non-Executive Director

Appointed: October 2015

Margaret Llewellyn has been in the shipping and port industry for over 30 years during which time she was Deputy Chairman of the Port of Dover, as well as its Senior Independent Director and Chair of the Pension Fund.

She was a ship owner and operator of an integrated container shipping line on the Irish Sea and Managing Director of two container terminals in Ireland and Wales. She is also a former Vice Chairman of the Welsh Development Agency (WDA); she is presently a Ministerial Advisor to the Welsh Government and holds a number of Directorships of their wholly owned subsidiaries.

She is a former Chair of the WDA Audit Committee and Chair of the Governance committee of The Department of Economy and Transport of the Welsh Government.

Margaret Chairs the Board's Risk Committee as well as being a member of the Marina Development Group and the Marketing Sub Group. Margaret retired from the Board 30 April 2018.

Allan Smith MBE Non-Executive Director

Allan Smith MBE Non-Executive Director

Appointed: October 2015

Allan Smith is a professional manager and has held a number of senior management positions, including being the General Manager/Chief Executive of The Channel Islands Co-operative Society for over 27 years.

He was also a Director of the Co-operative Group in Manchester from 2003 to 2010 becoming Deputy Chairman prior to his term of office expiring. He is a Director and Chair of the Audit Committee of Community Savings Limited.

Allan has a passion for ethical management and uses this when bringing his business experience to the Board.

He has also been appointed an Honorary Master for Arts for services to education and training in Jersey. He is the Chair of the Marina Development Group.

Doug Bannister Chief Executive

Doug Bannister Chief Executive

Appointed: October 2015

Doug Bannister became Chief Executive Officer for Jersey Airport and Jersey Harbours in July 2011 - a role with responsibility for the future strategic and financial structure of the businesses. In 2015, these previous governments departments were incorporated into PoJL.

With over 25 years' experience in international business, holding senior executive positions with leading sea transportation company P&O Nedlloyd in North America, Europe, Asia, India and New Zealand, Doug was also Managing Director with Maersk Line UK and Ireland, the largest shipping company in the UK. Doug is skilled at turnaround, restructuring and transformation of capital intensive transportation businesses.

He holds an MBA in International Marketing (Seton Hall University, New Jersey 1997) and a B.A in Economics (St Lawrence University, New York 1988). In 2016 Doug was awarded the Institute of Directors Jersey Director of the Year for large businesses.

Born in Summit, New Jersey, USA, Doug holds dual British and American citizenship.

Andrew Boustouler Chief Financial Officer and Deputy Chief Executive

Andrew Boustouler

Chief Financial Officer and Deputy Chief Executive Appointed: October 2015

Andrew Boustouler has fulfilled a number of key roles at both Jersey Airport and Jersey Harbours over the past 15 years and was appointed by the SoJ as Deputy Chief Executive Officer in November 2011 following the establishment of the combined Ports of Jersey.

He undertook a central role in the incorporation process and was appointed to his current role as Chief Financial Officer on its fruition. He has direct responsibility for Finance, Property and Compliance.

Immediately prior to joining the SoJ he was employed by a local law firm where he specialised in structured finance transactions as well as providing general banking and commercial advice.

He was born in Jersey and qualified as a Chartered Certified Accountant in 2001 after having been called to the Bar in 1998 and is a member of the Honourable Society of Lincoln's Inn.

Mike Collett and Frank Walker OBE, served as non-executive directors for PoJL from incorporation, retiring on 31 October 2017.

Corporate Governance Report

Dear Shareholder

Principles of Corporate Governance

As a Board, we recognise that applying sound governance principles in running the Company is essential to provide a solid platform for growth and to maintain the trust of all our stakeholders.

The Company has also entered into a Memorandum of Understanding with its Shareholder which embraces a

no surprises' culture and specifies those strategic and other issues for which the agreement of the Shareholder's representative should be sought. The efficiency of that interaction and the level of support and encouragement received from the Shareholder is vital in order that we can meet the challenge of the commercial and social objectives of incorporation.

Customer engagement remains high on our agenda. We discuss service issues and costs with individual major carriers and marine traders through a combination of scheduled and ad-hoc meetings. We also inform and take the views

of our many Harbour stakeholders through our Marina Development Group meetings and our participation in a range of group and club meetings. Furthermore we are accountable to the JCRA for pricing decisions and the avoidance of anti-competitive behaviour.

The Board

The Board has arranged a schedule of meetings to consider strategy, performance and the framework of internal controls. We have a Board that has and will support and constructively challenge management to deliver the Board's objectives. We have established Audit, Remuneration, Risk and Nomination Committees of the Board with formally delegated duties and responsibilities.

To enable the Board and its Committees to discharge their duties, all Directors receive appropriate and timely information. Briefing papers are distributed to all Directors in advance of Board meetings. All Directors have access

to the advice and services of the Company Secretary, who is responsible for ensuring that the Board procedures are followed and that applicable rules and regulations are complied with.

As Chairman, I would like to reiterate my personal commitment to maintaining high standards of corporate governance and to us being transparent about our arrangements.

Charles Clarke Chairman

03 May 2018

Operation of the Board and its Committees

The role of the Board

The Board is collectively responsible for promoting the success of the Company. Its role can be summarised as:

1  to provide supervision and entrepreneurial leadership

to the Company within a framework of prudent and effective controls which enable risk to be assessed and managed;

2  to develop and approve the strategic aims of the

Company and to ensure that the necessary financial and human resources are in place for the Company to meet the objectives, and

3  to set the Company's values and standards and ensure

that its obligations to its stakeholders are understood and met.

Whilst the Board has delegated the normal operational management to the Chief Executive, there are a number of matters where the Board formally reserves the decision making authority. These include:

A  Responsibility and approval of overall direction, long

term objectives and strategy

B  Extension of Company's activities into new business

areas

C  Decisions to cease operating all or a material part of the

Company's business

D  Major changes to corporate, management or control

structure

E  Approval of all documents and plans required by the

Shareholder

F  Approval of dividend policy and distribution

G  Risk management – appropriate level of risk exposure H  Setting of financial and treasury policies

I  Decisions that do not adhere to policy

J  Board appointment and removals (including Company

Secretary)

K  External auditor appointment and removal

L  Board remuneration policy

M  Introduction and material changes to incentive schemes N  Approval of terms of reference for board committees

O  Retained authority over major financial or property

matters (defined in a tiered delegations scheme)

Composition of the Board

The Board normally comprises eight Directors, two of whom are Executive Directors, and six of whom are Non-Executive Directors, reflecting a blend of different experience and backgrounds. Appointments to the Board require the approval of the Shareholder and most of the Directors are resident on Jersey. Notwithstanding any prior service on

the Shadow Board, each Non-Executive Director is deemed independent for the purposes of the Code. Details of each of the Directors' experience and background are given in their biographies on pages 40 to 43.

Division of responsibilities

Chairman and Chief Executive Officer

The division of responsibilities between the Chairman and Chief Executive Officer has been agreed by the Board.

Senior Independent Director

The Senior Independent Director is John Mills who is available to the Shareholder as an alternative communication channel if required.

Non-Executive Directors

The Non-Executive Directors' letters of appointment set out the duties of the Director and commitment expected. They are expected to commit at least 24 days per annum to their role plus the necessary time to prepare and consider all relevant papers in advance of each meeting.

The Chairman has established a programme of progressively refreshing the Board. The tenures of new Non-Executive Directors will extend to no more than three terms each of three-years and the recent appointment of Mark Chown is accordingly for an initial three-year term.

Key elements of the Non-Executive Director's role are:

A  Strategy – Constructively challenge and develop

proposals.

B  Performance – Scrutinise the performance of

management in meeting agreed goals and objectives and monitor reporting of performance.

C  Risk – Non-Executive Directors should satisfy themselves

on the integrity of financial information and that financial controls and systems of risk management are robust.

D  People – Determine appropriate levels of remuneration

of Executive Directors and prime role in appointing Executive Directors and succession planning.

Development, information and support  

The Directors are encouraged to attend training and continuing professional development courses as required.

The Chief Financial Officer, Andrew Boustouler, is also the Company Secretary and, together with his deputy, supports the  Chairman in ensuring that Board members receive the information and support they need in order to carry out their roles.

Conflicts of interest  

A process has been developed to identify any of the Directors' potential or actual conflicts of interest. This includes declaring  any new conflicts before the start of each Board meeting.

Performance evaluation  

An externally led performance evaluation of the Board and its Committees was carried out by Satori Associates in 2016 and  the results were analysed in order to identify areas for improvement. The outcome of these reviews indicated that the Board  and its Committees were effective in carrying out their duties. The Board has continued to monitor its effectiveness during  2017, with an external review planned for 2018.

Board and committee attendance

The number of formal scheduled Board and committee meetings held and attended (in person or by telephone conference)  by Directors during the year to 31 December 2017 was as follows:

Board Audit Nomination Remuneration Risk

*Mark Chown was not appointed to the Board until 01 November 2017  **Michael Collett and Frank Walker retired from the Board 31 October 2017

Audit, Risk, Remuneration and Nomination Committees  

Membership of all four Board Committees is composed solely of Non-Executive Directors. These Committee members are  authorised to obtain, at the Company's expense, professional advice on any matter within their terms of reference and to have  access to sufficient resources in order to carry out their duties. A report of the Audit Committee is provided on pages 49 to  50, the Directors' Remuneration Report on pages 54 to 55, the report of the Risk Committee is provided on page 52 and the  Nominations Committee Report on page 53.

Insurance

The company maintains an appropriate level of directors and officers insurance in respect of legal actions against those  individuals.  

Other authorities

PoJL has been appointed by the Minister for Economic Development as both the Harbour Authority and the Airport Authority  for Jersey, each of which hold separate meetings and have different responsibilities under law.

Compliance and Assurance Statement

Open, Safe and Secure.

PoJL places the safety and security of its passengers, employees and business partners at the heart of everything we do. As one of our strategic objectives, the continuous improvement of safety and security standards and compliance with regulatory requirements and industry best- practice are core elements of business as usual.

The transport industry is one of the most intensely regulated sectors of business globally, particularly in relation to Aviation. PoJL is subject to external audits of its various operational management systems annually conducted by a diverse range of authorities. These include UK CAA, Department of Transport and European Aviation Safety Agency (EASA).

A dedicated team at PoJL is tasked with ensuring compliance with regulation, and providing independent assurance to the Board on all of the main operational management systems. The team provides expertise on a range of compliance disciplines including Data Protection, Insurance, Business Continuity, Risk Management, as well as core compliance relating to Aviation and Maritime Safety (SMS), Aviation and Maritime Security and Occupational Health and Safety.

Compliance and assurance evidence is compiled from a numbers of sources, including external (agency) audit, incident and accident investigation, peer-review and industry benchmarking, regular risk assessment and review, event and occurrence trending and internal audit.

2017 was a significant year for PoJL as the first Air Navigation Service Provider in a third country' to be directly audited by EASA and awarded an operating certificate.

In 2017, Ports of Jersey was subject to the following external audits, as part of its compliance obligations:

Maritime  DfT Harbours 26 July Security 2017

Aviation  CAA Security Airport 20 - 22 Security Sept

2017

Aviation  CAA Security Airport 21 - 23 Security Feb 2017

Aerodrome  CAA SRG Airport  2 - 05 Oct Certification (Aerodrome) 2017

Air Navigation  CAA SRG/EASA Airport  27 Feb - Service  (ANSP) 03 Mar (ANS)  2017 Certification

Air Traffic Unit  CAA SRG/EASA Airport  6 - 07 Competency (ANSP) June

2017

Habitat  BSM Airport  20 - 21 Management (Aerodrome) July 2017

QMS ISO 9001  TUV Nord Airport ATS 24 - 26 April

2017

Statutory  Ernst Young Group 1 Jan - 31 Financial Audit May 2017

All audits in 2017 were completed without significant non-conformities.

It is the assessment of the Group Safety, Security and Compliance Manager that PoJL complies with the requirements of regulations associated with systems (as tabulated), and with its own policies for those systems. In addition, the management of Occupational Health and Safety at PoJL has been assessed as effective, and management arrangements are sufficient and competent to ensure compliance with the published PoJL Health and Safety policy and Health and Safety at Work (Jersey) Law 1989.

Annual Report 2017

Audit Committee Report

Dear Shareholder

As Chairman of the Audit Committee, I am pleased to report below on its work for the year ended 31st December 2017 and the publication of this Annual Report.

The primary responsibilities of the Audit Committee are to provide effective governance over the appropriateness of the Company's financial reporting including the adequacy of related disclosures, the performance of the audit function and the management of the Company's systems of internal control and financial risks. The Company has a separate Risk Committee and the Chairs of these Committees co-ordinate their activities and share information.

I am satisfied that the Committee received sufficient, reliable and timely information from management to enable it to fulfil its responsibilities.

Since my last report to you the Committee has concentrated on ensuring that the founding principles and processes established in relation to PoJL's first financial reporting period have been embedded and have been followed in relation to the 2017 Annual Report, with earlier communication and consideration of key issues. We observed that the control environment in the Finance function had improved.

Further, the Committee has monitored the organisation in addressing points noted in the auditors' management letter and by Internal Audit, providing advice on resolution where required.

In the year ahead the Committee will look to continue developing PoJL's internal audit function to strengthen the control environment, supporting the application of and adherence to established financial policies.

Jeffrey Hume

Chairman, Audit Committee 03 May 2018

Role of the Audit Committee

The Committee's full terms of reference were approved on 01 October 2015. They are available on request to the Company Secretary.

Membership and expertise

During the year to 31 December 2017 the Audit Committee comprised of Jeffrey Hume, Frank Walker , Allan Smith and Mark Chown. Mark Chown joined the Board on 01 November 2017 and was appointed to the Committee, filling the vacancy created when Frank Walker retired from the PoJL Board on 31 October 2017.

All members of the Committee are considered to be independent and, as can be seen from the biographies on pages 40 to 43, have considerable financial and commercial experience gained through a variety of corporate and professional appointments.

In particular, the Board considers that Jeffrey Hume has the recent and relevant financial experience required by the UK Corporate Governance Code. The Chief Financial Officer is routinely invited to attend meetings and the Deputy Director of Business Resources, who is secretary to the Committee, is also a qualified accountant.

External Audit

During this time the Company was advised by its independent External Auditors Ernst and Young LLP. They have a world renowned Infrastructure and Logistics Industry group and bring a large knowledge resource directly applicable to PoJL. The Committee has been pleased to recommend to the Board that they be reappointed as auditors for the 2018 financial year.

Meetings held

The Committee held four meetings during the year ended 31 December 2017. The Audit Committee has also formally met twice so far in 2018, the second of which was to review and recommend approval to the full Board the Annual Report and statutory accounts for the year to 31 December 2017. The Committee then met with EY without management being present. I have also met with the EY Audit Partner independently.

At the board meeting following each committee  

meeting, Directors receive a report on the work of the  Committee, outlining key matters and making appropriate  recommendations.

Financial reporting – significant issues

The main issues and judgements in relation to the published  financial statements to 31 December 2017 were:

A  Revenue recognition – Assurance that the revenue had  

been properly recorded.  

B  Investment properties –Their fair value at 31 December  

2017, as assessed internally, and the tax treatment of  the revaluation surplus.

C  Provisions for claims – The adequacy of provisions in  

relation to the legacy fire-fighting foam contamination  of ground water.

D  The resolution with the States of Jersey of a number of  

legacy items not adequately settled on incorporation.  

E  The impairment of the 1937 Arrivals building.  

F  Classification of the Public Employees Pension Scheme  

(PEPS) – Classification of the scheme as a defined  benefit or defined contribution scheme.

G  Alternative Profit Measure – The definition of the non  

GAAP measure EBITDA (Earnings before Interest, Tax,  Depreciation and Amortisation) and, in response to the  UK Financial Reporting Council's circulars, the reason for  PoJL giving it prominence.

Other work of the Committee

2017 has been a year of implementing policy appropriate for  an incorporated PoJL. The Chief Executive and Chairman have  attended meetings. In addition the Committee members met  with operational and finance team members.

The Audit Committee has overseen the engagement of BDO to  provide financial internal audit services, with their first findings  in respect of self-declared income received in 2017. An internal  audit plan for 2018 has been endorsed by the Committee.

Risk Committee Report

Dear Shareholder

The Board is responsible for overseeing the management of risk by approving the risk management policy and governing its implementation. It ensures that risks are managed in an appropriate way by approving risk management procedures, reviewing risk reports and monitoring metrics.

The Board is supported by the Risk Committee, which is appointed to monitor the organisation's current risk profile and provide assurance that there are robust structures, processes and accountabilities for risk management within the organisation.

The identification, evaluation, review and management of risks is the responsibility of Executives, Senior Management and departmental teams who have the appropriate expertise within their areas of operations.

The Committee met 4 times during the year and its members are the following independent Non-Executive Directors:

Margaret Llewellyn (Chairwoman, retired April 30 2018) Mark Chown (Chairman, appointed 01 May 2018)

John Mills

Michael Collett (retired 31 October 2017)

The Committee's principal activities were as follows: Review of terms of reference

The Committee, along with the Audit Committee undertook collaborative work to more clearly define the segregation of responsibilities in terms of operational and financial risks.

Review of adequacy of insurance cover

The Committee, along with the Executive reviewed the organisation's insurance cover and endorsed changes to coverage as required.

Review of specific risks and incidents

Several risks and incidents that had been identified in the organisation as undesirable, were reviewed in detail with the relevant senior managers to provide the Committee with comfort as to the mitigations and ongoing strategy.

Review of hazard and incident reports

These reports are reviewed at every meeting, along with the Chief Operations Officer and Business Continuity Manager. Specific items are questioned and reviewed as required.

Margaret Llewellyn Committee Chairwoman (To 30 April 2018)

03 May 2018

Mark Chown Committee Chairman (From 01 May 2018) 03 May 2018

Nominations Committee Report

Dear Shareholder

The Nominations Committee is responsible for (i) reviewing the structure, size and composition of the Board, (ii) leading the process for potential appointments, and (iii) overseeing succession planning in respect of the Directors and senior executives. The Committee meets at least once a year and its members are the following independent Non-Executive Directors:

Charles Clarke (Chair)

Jeffrey Hume (appointed 05 July 2017) Michael Collett (retired 31 October 2017) Margaret Llewellyn (retired 30 April 2018)

The Committee met once during 2017 and its principal activities were as follows:

Succession Planning Non-Executive:

Acknowledging the Board's wish to comply with the provisions of the UK Corporate Governance code in respect of tenure, the Committee has continued to facilitate an orderly succession plan, as was approved in 2016. During the year the Committee monitored Board effectiveness in particular ensuring an appropriate balance of experience and skills amongst the Non-Executives, to best serve the developing governance needs of the business.

As the first stage of the plan's implementation, a new Audit Committee Chair, Jeffrey Hume, was appointed from 01 January 2017. Following the retirement of Mike Collett on 31 October 2017, Mark Chown was appointed from

01 November 2017, this appointment in part was to ensure appropriate aviation knowledge was maintained at Board level. Mark Chown also took over the Chair of the Risk Committee on the retirement of Margaret Llewellyn on 30 April 2018. Recruitment of both Jeffrey Hume and Mark Chown followed a competitive process run by specialist recruitment consultants.

Executive:

The business depends heavily on a number of key individuals, at both Board and senior executive level. Accordingly, the Committee has worked with the CEO to develop a senior executive succession plan.

Senior Executive Recruitment

The Committee oversaw the process by which a Chief Commercial Officer, a newly-created role, was sought, using specialist recruitment consultants. The organisation appointed this position in June 2017.

External Appointments

During 2017, as part of the 2016 Annual Report the Committee developed a policy in respect of Board members holding external appointments.

The Board acknowledges that it can be not only appropriate, but also beneficial to the Company for Directors to hold external appointments. Directors must declare any potential conflicts of interest that might arise as soon as they become aware of them and specifically, Executive Directors must consult with the Chairman before seeking or accepting any external directorships.

Charles Clarke Committee Chairman 03 May 2018

Directors' Remuneration Report

The Remuneration Committee

The Remuneration Committee sets the remuneration policy, pension rights and any compensation payments for Executive Directors and the Company's Chairman. Additionally, the Committee recommends and monitors the level and structure of remuneration for senior management and oversee any major change in employee benefit structure, keeping the company's remuneration policies under review.

The Remuneration Committee members are John Mills (Chairman), Allan Smith and Jeffrey Hume, each of whom are independent Non-Executive Directors.

Remuneration Policy

The Remuneration Committee is responsible for ensuring that remuneration is set at a level that is appropriate for the accountabilities associated with the overall management and leadership of the company and, that the Company is able to attract, retain and motivate executive management of the quality necessary to deliver the Company's Strategic Business Plan. The Committee is responsible for approving the design of any performance related schemes for Executive Directors, including any related targets, and the total annual payments under such schemes.

The Board's decisions on Directors' remuneration are subject to the agreement of the Minister for Treasury and Resources in her or his capacity as shareholder of the company on behalf of SoJ.

Directors' Remuneration

The total remuneration of the Directors for the year ended 31 December 2017 is set out below:

Basic Salary/ Performance- Pension  Total  15 Months to  Notes Fees 2017 related  Contribution Remuneration  31 December

Payment 2017 2016

£'000 £'000 £'000 £'000 £'000

Non- Executive Directors

C Clarke (Chairman) 52 -  -  52 50 JInMdeilplseCnBdEe n(SteDniiroerctor) 25 -  -  25 31

M Chown 4 -  -  4 -  3 M Collett 21 -  -  21 31 2 J Hume 35 -  -  35 -  3 M Llewellyn OBE 25 -  -  25 31

A Smith MBE 25 -  -  25 31

F Walker OBE 21 -  -  21 31 2 Executive Directors

D Bannister (Executive) 220 28 30 278 323

A Boustouler (Executive) 156 15 20 191 213 1

Total for 2017

calendar year 584 43 50 677 741

Non-Executive Directors receive no other payments and are reimbursed for travel and other out of pocket expenses in accordance with Company policy.

Incentive scheme for Executive Directors

A non-pensionable short-term incentive scheme has been in place throughout the period. This provides for maximum payment of 45% of base salary for the Chief Executive and 30% for the Chief Financial Officer. Awards under the scheme are assessed by the Committee and agreed by the Board against performance criteria directly linked to the objectives of the Strategic Business Plan, which has been agreed with the Shareholder. 60% of the potential is determined against the Company's financial performance and the remaining 40% against a range of agreed strategic objectives.

Notice Period and other benefits

The service contracts of Executive Directors contain a mutual notice period of six months or compensation for loss of office. Both Executive Directors are members of the Jersey Public Employees' Contributory Retirement Scheme (PECRS). They do not have either Company cars or an allowance, nor do they receive any other financial benefits from the Company such as private health cover or permanent health insurance.

John Mills

Deputy Chairman and Senior Independent Director 03 May 2018

Notes:

1. Includes £11,000 in Duty Executive standby payments.
2. Both Michael Collett and Frank Walker stood down as Non-Executive Directors on 31 October 2017.
3. Jeffrey Hume joined as a Non-Executive Director on 01 January 2017.
4. Mark Chown joined as a Non-Executive Director on 01 November 2017.

Directors' Report

Introduction

The Directors of the Company present their report and the audited financial statements of the Company for the period ended 31 December 2017.

Directors of the Company

The Directors of the Company during 2017 were:

Charles Clarke (Chair)

John Mills CBE (Non-Executive Deputy Chair and Senior Independent Director) Mark Chown (appointed 01 November 2017)

Michael Collett (resigned 31 October 2017)

Jeffrey Hume (appointed 01 January 2017)

Margaret Llewellyn OBE (resigned 30 April 2018)

Allan Smith MBE

Frank Walker OBE (resigned 31 October 2017)

J Douglas Bannister (Chief Executive)

Andrew Boustouler (Chief Financial Officer)

Future developments

An analysis of future developments are described in the CEO's Review on page 17. Post balance sheet date events

In March 2018 an agreement was reached with the States of Jersey (States') on certain legacy items. In particular, the rent free occupation by States of two Ports of Jersey properties. It has been agreed to transfer those properties to States for nil consideration in exchange for the transfer of three sites from States to Ports of Jersey for nil consideration. The two Ports of Jersey properties were valued at £1.6m at 31 December 2017. These transactions will be accounted for in the 31 December 2018 financial statements.

Re-appointment of auditors

The auditors, Ernst & Young LLP, who were appointed during the period, have indicated their willingness to continue in office. A resolution is to be proposed at the Annual General Meeting for their reappointment as auditor of the Company.

Charles Clarke  Andrew Boustouler Chair  Chief Financial Officer 03 May 2018 03 May 2018

Governance | Financials

Statement of Directors' Responsibility

The Directors are responsible for preparing the financial statements in accordance with applicable law and regulations.

Jersey Company law requires the Directors to prepare financial statements for each financial period in accordance with any generally accepted accounting principles. The financial statements of the Company are required by law to give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing these financial statements, the directors should:

• select suitable accounting policies and then apply them consistently;

• make judgements and estimates that are reasonable and prudent;

• specify which generally accepted accounting principles have been adopted in their preparation; and

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors have elected to prepare the financial statements in accordance with Financial Reporting Standard 102 ("FRS 102") the Financial Reporting Standard applicable in the UK and Republic of Ireland, issued by the Financial Reporting Council.

The Directors are responsible for keeping accounting records which are sufficient to show and explain its transactions and are such as to disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements prepared by the Company comply with the requirements of 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.

Andrew Boustouler Chief Financial Officer 03 May 2018

Independent Auditor's Report

to the Members of Ports of Jersey Limited

Opinion

We have audited the financial statements of Ports of Jersey Limited (the "company") for the year ended 31 December 2017 which comprise the Income Statement, the Statement of Financial Position, the Statement of Changes in Equity, the Statement of Cash Flows, and the related notes 1 to 26, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards including FRS 102 "The Financial Reporting Standard applicable in the UK and Ireland".

In our opinion, the financial statements:

• give a true and fair view of the state of the company's affairs as at 31 December 2017 and of its profit for the year then ended;

• have been properly prepared in accordance with United Kingdom Accounting Standards including FRS 102 "The Financial Reporting Standard applicable in the UK and Ireland"; and

• have been properly prepared in accordance with the requirements of the Companies (Jersey) Law 1991. Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report below. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of

the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Use of our report

This report is made solely to the company's members, as a body, in accordance with Article 113A of the Companies (Jersey) Law 1991. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Conclusions relating to going concern

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:

• the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

• the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

Other information

The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. The directors are responsible for the other information.

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in this report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of the other information, we are required to report that fact.

We have nothing to report in this regard.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters in relation to which the Companies (Jersey) Law 1991 requires us to report to you if, in our opinion:

• proper accounting records have not been kept by the company, or proper returns adequate for our audit have not been received from branches not visited by us; or

• the financial statements are not in agreement with the company's accounting records and returns; or

• we have not received all the information and explanations we require for our audit.

Responsibilities of directors

As explained more fully in the directors' responsibilities statement set out on page 58, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a

high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Matthew Williams

For and on behalf of Ernst & Young LLP, Statutory Auditor London 03 May 2018

Notes:

1. The maintenance and integrity of the Ports of Jersey Limited web site is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the web site.
2. Legislation in Jersey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Income Statement

for the Year Ended 31 December 2017

Note Year ended  15 month period ended

31 December 2017 31 December 2016

£'000 £'000 Turnover 4 46,247  54,109 Operating costs (excluding depreciation) 6 (34,698) (40,777)

Profit for the financial period 12,560 10,965 Total comprehensive income was the same as the profit for the financial period.

Statement of Financial Position as at 31 December 2017

Note As at  As at 31 December 2017 31 December 2016

 £'000  £'000

Assets

Non-current assets

Tangible assets 11 69,970  68,489 Investment property 12 58,335  52,328 Finance lease receivable 13 2,459  2,476 Investments 14 6,007  4,004

Approved and authorised by the Board and signed on its behalf on 03 May 2018

Charles Clarke  James D Bannister Chairman  Group Chief Executive 03 May 2018 03 May 2018

Statement of Changes in Equity

for the Period Ended 31 December 2017

Note Called up  Incorporation  Profit and  Total

share capital reserve loss reserve

2017 £'000  £'000  £'000  £'000

At 01 January 2017 1  137,350  10,965  148,316 Issue of shares -  -  -  - Transferred in from States of Jersey -  -  -  -

Total comprehensive income for the period -  -  12,560 12,560

Statement of Cash Flows

for the Year Ended 31 December 2017

Note Year ended  15 month period ended 31 December 2017 31 December 2016

£'000

Cash flows from operating activities

EBITDA a 11,549  13,332 (Increase)/decrease in inventories (54) 11 (Increase)/decrease in debtors (1,216) 4,423 (Decrease)/increase in creditors (5,390) 7,012

Tax payment (486) (80)

*The comparatives have been adjusted to reflect the presentation of the below items as financing, rather than investing.

Notes to the Statement of Cash Flows

a) Reconciliation of operating profit to net cash inflow from operating activities

Note Year ended  15 month period ended 31 December 2017 31 December 2016

£'000 £'000 Operating profit 13,547 9,783 Adjustments for:

Depreciation 11 3,591  3,341 Impairment of operational assets 11 658  - Revaluation of investment property 12 (6,247) 208

EBITDA 11,549 13,332

Notes to the Financial Statements

1. Basis of Preparation

The Company and its dormant subsidiary are private companies limited by shares and incorporated in Jersey, Channel Islands.

The address of its registered office: Jersey Airport

St Peter

Jersey JE1 1BY

The Company was incorporated on 16th September 2015 and assets were transferred from the States of Jersey on 1st October 2015. These financial statements are the financial statements of Ports of Jersey Limited ("the Company") for the year to 31 December 2017. These financial statements have been prepared in accordance with United Kingdom Accounting Standards ("UK GAAP") and Financial Reporting Standard 102 ("FRS 102").

The Company is a wholly-owned subsidiary of the States of Jersey and is included in the consolidated financial statements of the States of Jersey, which are publicly available.

The financial statements were approved by the Directors on 03 May 2018.

The principal accounting policies, which have been applied consistently throughout the period, are set out below. Going concern

The Directors have prepared the financial statements on a going concern basis, which requires the Directors to have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future.

The Company has no borrowings and a stable demand for core services provided, which generate a consistent operating profit; the Company has no debt and sufficient cash reserves. As a result the Directors have a reasonable expectation that sufficient funds are available to meet the Company's liabilities as they fall due over a period of at least 12 months from the date of approval of the financial statements. Accordingly the financial statements have been prepared on that basis.

2. Summary of Significant Accounting Policies

1. Businesses transferred from the States of Jersey

The States of Jersey approved the Air and Sea Ports (Incorporation) (Jersey) Law 2015 (the "Incorporation Law") on 02 June 2015. The Incorporation Law came into force on 01 October 2015 (with limited provisions having effect from 08 September 2015). The objective of the Incorporation Law was to enable the Ports of Jersey to continue to provide essential public services to the Island in a sustainable manner and avoid a significant capital shortfall requiring tax payer funding.

The Air and Sea Ports Incorporation (Transfer) (Jersey) Regulations 2015 (the "Transfer Regulations") came into force on 01 October 2015 and were registered in the Jersey Public Registry on 01 October 2015, having the effect of transferring the ownership of key assets (including the Airport and associated lands) to Ports of Jersey Limited. St Helier Harbour and other outlying harbours were not included within the assets transferred pursuant to the Transfer Regulations, but were subsequently leased to Ports of Jersey Limited by contract lease registered before the Royal Court on 06 November 2015 (with an effective commencement date of 01 October 2015).

On the transfer date, the assets, rights and liabilities of States of Jersey that are specified in the Regulations were transferred to the Company. The assets primarily consisted of operational properties, investment properties, finance leases, cash and cash equivalents and other working capital balances.

As the transfer was between entities under common control, the transfer did not qualify to be accounted for as a business combination. Rather, the assets acquired are initially recorded at their relative fair value via a capital contribution. No goodwill or deferred tax was provided.

2. Turnover

Turnover represents the amounts derived from the provision of goods and services which fall within the Company's principal activity of the operation and management of the Ports of Jersey, and comprises:

3. Government Grants

Government grants are recognised when it is reasonable to expect that the grants will be received and that all related conditions are met. Grants are revenue in nature and are credited to the income statement so as to match them with the expenditure to which they relate.

4. Tangible Assets

Terminal complexes, airfield assets, maritime infrastructure, plant and equipment and Company occupied properties are stated

at cost less accumulated depreciation. Assets in the course of construction are stated at cost less provision for impairment (if any). Assets in the course of construction are transferred to tangible assets when substantially all the activities necessary to get the asset ready for use are complete. Where appropriate, cost includes relevant borrowing costs, own labour costs of construction and related project management costs, and directly attributable overheads. Costs that are associated with projects that are in the early stages of planning are capitalised where the Directors are satisfied that it is probable the necessary consents will be received and the resources will be available to achieve a successful delivery of an asset such that future commercial returns will flow to the Company.

Depreciation is provided on tangible assets, other than land, and assets in the course of construction, to write off the costs of the assets, less estimated residual value, on a straight-line basis over their expected useful life as follows:

Asset Type  Depreciation rate Terminal buildings and satellite structures  20-50 years Runway surfaces  20-30 years Runway bases  20-50 years Maritime piers and quays  20-50 years Taxiways and aprons  20-50 years Baggage systems  10 years Security equipment  10 years

Other plant and equipment including runway lighting,

buoys and beacons, cranes and building plant  10-15 years Motor vehicles  10 years Marine vehicles  10 -20 years Office equipment  10 years Computer equipment  10 years Computer software  5-10 years

The Company assesses, at each balance sheet date, whether there is an indication that an asset's residual value and/or useful life may not be appropriate. If such indication exists, the useful lives and residual values are reviewed, and adjusted if appropriate.

The Company assesses, at each balance sheet date, whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Company makes an estimate of the asset's recoverable amount. Where the asset does not generate cash flows that are independent of other assets, the recoverable amount of the income-generating unit to which the asset belongs is estimated. Recoverable amount is the higher of an asset's net realisable value and its value in use. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to it's recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses of continuing operations are recognised in the profit and loss account in those expense categories consistent with the function of the impaired asset.

5. Investment properties

Property (including land held for development) is classified as investment property if:

• It is not occupied by the company or used by the company for the provision of operational ports services that are material in nature (e.g. stevedoring);

• It is a defined area (land, buildings, jetties, and other fixed structures) and one or more users pay an amount, whether rental or commercial revenue for use of that area for a period of one or more years; and

• Any "ancillary services" provided by the company at the property are insignificant to the arrangements as a whole. Ancillary services are deemed to be significant when they take place within the property, the value of the services exceeds one quarter of the estimated rental value of the property and they are provided under a non-cancellable contract.

Completed investment property is measured at fair value. Investment property in the course of construction is measured at cost (including interest and other appropriate net outgoings) until such time as it is possible to determine fair value, consistent with the criteria in measuring completed investment property, with the exception of underlying land, which is included at carrying value before construction commenced.

Valuations are conducted annually. Surpluses or deficits arising on the revaluation of investment property are recognised in the income statement.

6. Leases

Operating Leases

1. Company as lessor

Leases where the Company retains substantially all the risks and rewards of ownership are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying value of the leased asset and recognised over the lease term on a straight line basis as with income.

2. Company as lessee

Rental costs under operating leases are charged to the profit and loss account in equal instalments over the period of the lease. Finance Leases

1. Company as lessor

Amounts due from lessees under financial leases are recorded as receivables at the amount of the Company's net investment in the lease. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate on the Company's net investment outstanding in respect of the leases.

2. Company as lessee

Assets held under finance leases are recognised as assets of the Company at their fair value or, if lower, at the present value of the minimum lease payments, each determined at the inception of the lease obligation. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation. Lease payments are apportioned between finance charges and reduction in the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged to the profit and loss account, unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance with the Company's policy on borrowing costs.

7. Inventories

Consumables consist of engineering spares and other consumable stores and are valued at the lower of costs and net realisable value.

8. Debtors

Trade debtors are initially measured at the transaction price. Trade debtors are subsequently measured at amortised cost, being the transaction price less any amounts settled and any impairment losses.

A provision for the impairment of trade debtors is established when there is objective evidence that the amounts due will not be collected according to the original terms of the contract.

9. Creditors

Trade creditors are initially measured at the transaction price and subsequently measured at amortised cost, being the transaction price less any amounts settled.

10. Borrowings

Borrowings are initially recognised at the transaction price, including transaction costs, and subsequently measured at amortised cost using the effective interest method. Interest expense is recognised on the basis of the effective interest method and is included in interest payable and other similar charges.

11. Employee Benefits

i)  Short term benefits

Short term benefits, including holiday pay and other similar non-monetary benefits are recognised as an expense in the period in which the service is received.

i) Defined contribution pension scheme

The Company participates in multi-employer pension schemes operated by the States of Jersey. See note 23.

12. Current and Deferred Taxation

Taxation expense/credit for the period comprises current and deferred tax recognised in the reporting period. Tax is recognised in the income statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case tax is also recognised in other comprehensive income or directly in equity respectively. Tax is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the period end.

Current or deferred taxation assets and liabilities are not discounted.

1. Current tax

Current tax is the amount of income tax payable in respect of the taxable profit for the year or prior years.

2. Deferred tax

Deferred tax arises from timing differences that are the difference between taxable profits and total comprehensive income as stated in the financial statements. These timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in the financial statements.

Deferred tax is recognised on all timing differences at the reporting date except that deferred tax assets are only recognised when it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

13. Provisions

Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probably that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are measured at the best estimate of the expenditure required to settle the obligation at the balance sheet date and are discounted to present value where the effect is material.

14. Dividend Distribution

A dividend distribution to the Company's shareholder is recognised as a liability in the Company's financial statements in the year in which the shareholder's right to receive payment of the dividend is established by approval of the dividend by the Board.

15. Cash and Liquid Resources

Cash, for the purpose of the cash flow statement, comprises cash in hand and deposits repayable on demand, less overdrafts payable on demand.

16. Disclosure Exemptions

The Company qualifies as a "qualifying entity" in terms of FRS102 as the Company is included in the consolidated financial statements of the States of Jersey.

The Company has taken advantage of the following exemptions:

FRS 102.33.11 - Exemption from related party disclosure requirements 33.9 in relation to a state that has control, joint control or significant influence over the reporting entity.

3. Significant Accounting Judgements and Estimates

In applying the Company's accounting policies, management have made estimates and judgements. Actual results may, however, differ from the estimates calculated and management believes that the following are the more significant judgements impacting these financial statements.

Estimates:

1. Investment properties

Investment properties were valued at fair value at 31 December 2017 internally by a qualified Chartered Surveyor. The valuations were prepared in accordance with the appraisal and valuation manual issued by the Royal Institute of Chartered Surveyors. Valuations were carried out having regard to comparable market evidence. In assessing fair value, current and potential future income (after deduction of non-recoverable outgoings) has been capitalised using yields derived from market evidence. See note 12 for the significant methods and assumptions used.

2. Useful lives of tangible fixed assets

Tangible fixed assets are depreciated on a systematic basis based on management's best estimates of the asset's useful life. This estimate is based on a variety of factors such as the expected use, any legal, regulatory or contractual provisions that can limit useful life and assumptions that market participants would consider in respect of similar businesses.

Judgements:

3. Classification of investment property

Property has been classified as investment property, according to the criteria in note 2.5, in accordance with the principles set out in FRS 102. That is, properties where their cash flows (from rental or sale) are largely independent of those from other assets held by the entity.

4. Classification of finance lease receivables

Property has been classified as a finance lease, where the Company retains the legal title to an asset but passes substantially all the risks and rewards of ownership to the lessee in return for a stream of rentals. The Company considers any leases with over 30 years outstanding at inception when considering the classification.

4. Turnover

 Year ended  15 month period ended 31 December 2017 31 December 2016

Turnover is analysed as follows: £'000  £'000

Airport and Harbour charges 22,327  26,196 Channel Islands control area 5,257  6,579 Marina charges 3,399  4,056 PSO income 348  445 Sale of services 1,254  1,772 Concessions 5,602  5,413 Car parking 1,661  2,106 Property income due under operating leases 3,971 4,856 Recharges 1,614  1,469 Ships Registry 148  130 Grants 90  145

Other Income 576  942 46,247 54,109

Grants relate to monies received from the States of Jersey in respect to the Jersey International Air Display. The grant is provided to offset the expenditure incurred by the Company in organising the air display. The Company provides an assurance statement to the States of Jersey at the end of the year to confirm that all terms and conditions have been adhered to and that the grant has been fully utilised.

5. Property Income Due Under Operating Leases

Future minimum lease payments Year ended  15 month period ended 31 December 2017 31 December 2016

 £'000  £'000

Not later than one year 3,797  3,768 Later than one year and not later than 5 years 26,466  22,380 Later than five years 18,333  14,931

 48,596  41,079

Operating leases relate to property leases on buildings and land. Rentals are reviewed periodically every 1-5 years (dependent on specific lease) and increased in accordance with prevailing Jersey RPI or market value. No contingent rental has been recognised in the income statement.

6. Operating Costs (excluding depreciation)

 Year ended  15 month period ended 31 December 2017 31 December 2016

 £'000  £'000 Wages and salaries 14,574  15,936 Social security costs 796  915 Pension costs 1,717  1,948 Other staff related costs - 489

7. Directors' Emoluments

 Year ended  15 month period ended 31 December 2017 31 December 2016

 £'000  £'000

Directors' emoluments

Non-Executive Directors 208 205 Executive Directors 469 536

8.

9. Taxation on Profit

 Year ended  15 month period ended 31 December 2017 31 December 2016

 £'000  £'000

Current tax

Total current tax charge 695  587 Prior year adjustment (19) -

676  587

Deferred tax

Deferred tax on timing differences 619  (1,996)

619  (1,996) Total tax charge for the period 1,295  (1,409)

Reconciliation of tax charge

The Company is taxed as a utility company under Article 123C(3) of the Income Tax (Jersey) Law 1961. Accordingly, the company is liable to Jersey income tax at the standard rate of 20% on its trading income. Jersey rental income is also taxed at the rate of 20%. Jersey capital gains are taxed at a rate of 0%.

 Year ended  15 month period ended 31 December 2017 31 December 2016

 £'000  £'000

Profit before tax 13,855  9,556 Tax on profit at 20% 2,771  1,911

Effect of:

Permanent differences (1,406) 831 Prior year adjustment (19) - Timing differences (51)

Pension contributions -  (4,151) Total tax charge for the period 1,295  (1,409)

Non-taxable revaluation gains make up (£1.2m) of the permanent differences (2016: £0.04m).

10. Investments in Subsidiaries

At 31st December 2017, as in 2016, the Company had an investment in the following subsidiary undertaking:

Subsidiary Undertakings Principal activity Holding % PFD Limited Dormant company Ordinary Shares 100

At 31st December 2017, PFD Limited did not hold any net assets and as such has no carrying value. The subsidiary is incorporated in Jersey, Channel Islands.

11. Tangible Assets

Operational  Buildings Structures Plant and  Assets in the  Total

Land equipment course of

construction

 £'000  £'000  £'000  £'000  £'000  £'000

Cost

At 01 January 2017 9,944  23,077  24,114  11,251  3,444  71,830 Additions -  -  -  23  5,934  5,957 Transfers 96  569  688  3,421  (4,774) - Reclassified between asset classes (25) 37  (12) - Reclassified from  80  160  -  -  -  240 investment property

Write off of assets -  (26) -  (165) (276) (467)

The 2017 impairment of £.658m is in relation to 1937 Arrivals Building which is due to be demolished as part of the Airport Masterplan development over the next 2-4 years.

12. Investment Property

Completed investment property

2017 £'000

Valuation

At 01 January 2017 52,328 Reclassified to operational assets (240)

Assets in the course  Total

of construction

 £'000  £'000

- 52,328

- (240)

The fair value of the Company's investment property at 31 December 2017 has been arrived at on the basis of a valuation carried out at that date internally, by a chartered surveyor, in accordance with the RICS Valuation Standards 6th Edition ("the Red Book"). The valuation was arrived at by reference to market evidence of transaction prices for similar properties, land valuations and discounted cash flow methods. Where there were outstanding or forecoming reviews, rental value has been assessed in accordance with the terms of occupational lease review provisions. Otherwise, rental values have been assessed on the basis of market rent, assuming a new lease drawn on terms appropriate to current practice in the relevant market.

The key unobservable inputs are the yields and or discount rates. The %'s used were in the ranges:

2017 2016 Commercial property: 7%-10% (yield) 7%-10% (yield) Car parks: 10% (discount rate) 10% (discount rate)

13. Finance Lease Receivables

2017 2016 £'000  £'000

At 01 January 2017/on incorporation 2,685 - Transfer from States of Jersey -  2,685 Repayment (1) -

These finance lease receivables represent three properties which are held by tenants under long leases and where substantially all the risks and rewards of ownership have been passed to those tenants in exchange for lease payments to the Company.

14. Investments

2017 2016 £'000  £'000

At 01 January 4,004  - Additions 2,000  4,000 Unrealised gain 3 4

At 31 December 2017 6,007  4,004

The Company holds a portfolio of three funds, with a valuation of £6.0 million, invested in bonds. Details of the funds are disclosed below, further information is available at the fund manager's respective websites. The investments can be realised at any time, but the Company has no intention of realising them in the next 12 months.

Insight Investment Management (Global) Ltd - IIFIG Bonds Plus 400 fund (£2.0 million) Goldman Sachs Asset Management – Global Strategic Income Bond (£2.0 million) Wellington Management Funds – Global Total Return (£2.0 million)

The value of these holdings will vary subject to market fluctuations. Investments are valued at the market prices and exchange rates prevailing at the balance sheet date.

15. Stocks

2017 2016 £'000  £'000

Raw material and consumables 393  340

The replacement cost of raw materials and consumables at 31 December 2017 was not materially different to the amount at which they are included in the financial statements.

16. Trade and Other Receivables

2017 2016 £'000  £'000

Due within one year:

Trade debtors 3,962  3,537 Other debtors 1,495  962 Prepayments and accrued income 426  168

5,883  4,667

17. Deferred Tax Asset

2017 2016 £'000  £'000

Accelerated capital allowances (1,113) (1,325) Pension deductions in future periods 2,490 3,321

1,377 1,996

18. Cash and Cash Equivalents

2017 2016 £'000  £'000

Cash at bank 25,413  28,195

Cash at bank represents amounts held on operating bank accounts which generally earn interest at floating rates based on the prevailing bank base rate and are subject to interest rate risk.

19. Creditors: Amounts Falling Due within One Year

2017 2016 £'000  £'000

Trade creditors 1,065  1,041 Accruals and deferred income 2,437 1,683 Capital creditors 1,075  570 Due to parent undertaking 3,043  5,686 Corporation tax 695  507

Other creditors 171  3,901 8,486 13,388

20. Provisions for Liabilities

2017 2016 Other provisions Other provisions

£'000  £'000

At 01 January 1,000  1,000 Amounts paid (104) (215) Charged/(credited) to profit and loss account (196) 215

At 31 December 2017 700  1,000

Other provisions relates to a number of claims and ongoing costs that have been assessed in conjunction with the relevant legal advisors. A discount rate of 2% is applied to expected cash outflows.

21. Called Up Share Capital

2017 2016 £'000  £'000

Called up, allotted and fully paid

1,000 ordinary shares of £1.00 each 1 1

22. Commitments

Capital £'000  £'000 Capital expenditure that has been contracted for but  2,671  2,303

has not been provided for in the financial statements

23. Pension Costs

During the period, the Company principally participated in the Public Employees Contributory Retirement Scheme (PECRS) operated by the States of Jersey. The scheme is accounted for as a defined contribution scheme as the employer is not responsible for meeting any deficiency in the scheme, rather only a fixed amount is payable by the employer.

The Company also participates in the Public Employees Pension Scheme (PEPS). PEPS is also a multi-employer scheme operated by the States of Jersey. The retirement benefits of PEPS are calculated with reference to the retiring employee's average salary and length of service. However, the benefits are subject to a cap on the employers contributions of 16.5% of salaries. In the event that the costs of the scheme's retirement benefits are such that the cap would be exceeded, the employer has the right to unilaterally reduce the benefits. Ports of Jersey currently contribute 16% of employees' salaries to the scheme.

The cumulative contributions of employers and employees to the scheme as at 31 December 2017 was £0.5m (2016: £0.1m). The directors consider that no significant actuarial surplus or deficit attributable to the Ports of Jersey exists in PEPS at 31 December 2017

Further information on these schemes can be found in the financial statements of The States of Jersey.

Post incorporation a sum of £20.7M was paid in respect to pension liabilities for a pre-1987 pension scheme. This was part of the terms of incorporation for the transfer of the Company's employees' benefits to the newly formed entity. The Company does not have any liability as at the period 31 December 2017 for the pre-1987 scheme.

Copies of the latest Annual Accounts of the schemes, and of the States of Jersey, may be obtained from States Treasury, Cyril Le Marquand House, The Parade, St Helier, JE4 8UL.

24. Ultimate Parent Undertaking

The immediate parent undertaking is States of Jersey Investments Limited. The ultimate parent undertaking and controlling party is States of Jersey.

25. Contingent Liabilities

As at 31 December 2017, there were no contingent liabilities.

26. Post Balance Sheet Events

In March 2018 an agreement was reached with the States of Jersey (States') on certain legacy items. In particular, the rent free occupation by States of two Ports of Jersey properties. It was agreed to transfer those properties to States for nil consideration in exchange for the transfer of three sites from States to Ports of Jersey for nil consideration. The two Ports of Jersey properties were valued at £1.6m at 31 December 2017. These transactions will be accounted for in the 31 December 2018 financial statements.

Corporate Information

Corporate Information

Directors

Charles Clarke  Non-Executive Chair John Mills CBE  Non-Executive Deputy Chair and Senior Independent Director Mark Chown  Non-Executive Director Jeffrey Hume  Non-Executive Director Margaret Llewellyn OBE (retired 30 April 2018)  Non-Executive Director Allan Smith MBE  Non-Executive Director J Douglas Bannister  Group Chief Executive Andrew Boustouler  Chief Financial Officer

Company Secretary Registered Office Auditors

Andrew Boustouler Jersey Airport  Ernst & Young LLP

St Peter  London Place Jersey JE1 1BY London SW1 2AF

Bankers Solicitors

HSBC  Carey Olsen Halkett Street  47 Esplanade St Helier  St Helier Jersey JE4 8NJ Jersey JE1 0BD