Chair's Statement

3 Highlights

• First block of Horizon residential apartments almost completed by year end

• On target progress for IFC 6 construction

• Board approval of our ESG Strategy

Jersey Development Company fulfils a critical role in the development of the built environment in the island. Our vision is ‘To build a better Jersey’ and, in achieving this, our Mission includes delivering sustainable financial, social and environmental contributions to Jersey and to its people. The Company made demonstrable and substantial progress towards these objectives in the year.

Owned by the Government of Jersey, JDC operates as an independent company, acting as the Government’s partner for regeneration of land and property and supporting the Government in the delivery of its strategic objectives. In this critical role, JDC holds itself responsible and accountable to multiple stakeholders and, ultimately, to the public of Jersey. In developing our strategies and plans, we actively seek input from all stakeholders and consider this as an essential factor in our decision making. JDC’s strategic planning process reflects the long-term nature of property development with the Company following a 10-year strategic plan, agreed with the Government. This plan established long term aims and key milestones in the mid-term and an annual operating plan, with annual targets and key performance indicators. Our performance against these objectives is detailed in this report.

In our property portfolio substantial progress was made in key areas, most critically with the South West St Helier Waterfront development which is underpinned by significant and ongoing consultation with the public and key stakeholders. Encompassing what is arguably the most valuable real estate in the island, effective engagement and public input is vital to the long-term success and delivery of the project. Spanning a 10-year construction period, the outline design is being undertaken by Gillespies, who bring extensive experience in ‘place making’ and sustainability to the project. The plans, which have been developed through a landscape focus, include major public realm, facilities for sports and social activities, sea defence investment and 984 homes, which will play a major role in addressing the Island’s housing crisis.

The next stage in this vital project for the island is for a public inquiry, an essential step in the planning process for a development of this scale. Regrettably and for reasons outside of the Company’s control, this process has been delayed by 12 months and the inquiry is now scheduled to open on 15th May 2023.

The International Finance Centre, the island’s premier business district, saw further progress with the ‘topping out’ ceremony for IFC 6, which is on schedule for the Aztec Group to move into their new headquarters in December 2023. Similar success was also achieved with the progress of the Horizon development, with the first building completing and purchasers moving in from mid-January 2023. This is the first of three apartment buildings providing 280 units in total, of which 86 are being purchased by first time buyers, facilitated by JDC’s deposit scheme. This allows first time buyers to secure an apartment with a payment of £2,000, and then paying the balance of the deposit during the construction period.

It was disappointing that we did not secure planning consent for South Hill on the first application. While the plans were supported by the Planning Department, the Planning Committee expressed concerns regarding height and massing, leading to a rejection of the proposal and a significant delay in delivering 153 new homes that would have helped to address the island’s housing crisis, including opportunities for new buyers to get onto the property ladder. Revised plans were prepared and submitted to address the Committee’s objections, though this resulted in a reduced number of units. The Planning Committee recently refused this scheme also, citing new concerns. The future of this project is to be determined.

In addition to our property strategy, JDC heightened its focus on how the Company is performing, seeking operational efficiencies to improve management of risk, more effective engagement with stakeholders, strengthening corporate governance and organisational development of the executive and broader team. Additionally, the Board and the Executive invested significant time and resources in developing an effective ESG strategy for the business.

The 2022 operating environment was highly challenging. With the world and Jersey economies beginning the recovery from the pandemic, further negative impacts arrived with the energy crisis, the related cost of living crisis, rampant inflation, interest rate hikes and the war in Ukraine. The combination of economic and geopolitical forces impacted at all levels of society and will continue to do so for the foreseeable future.

For JDC in 2022 this meant we were operating in a far riskier environment, seeing impacts on construction costs, dependability of our supply chain, availability of labour and the cost of debt financing.

In response to this increase in operating risk the Company intensified its oversight of our risk register processes with actions taken to address and minimise risks wherever possible. We performed detailed stress testing of our live projects, thought and acted creatively around supply chain issues by forward buying and storing materials in advance of requirement on both our current developments, to ensure material supply and worked closely with our contractors to ensure additional labour was secured in order to meet our completion targets.

During this period the Company has benefitted from our position in the development cycle. Those projects underway at IFC 6 and Horizon are being constructed under fixed price contracts and, for Horizon, only 4 units out of 280 remain unsold. This is a beneficial position to be in. Looking towards future projects it is probable that the level of risk and uncertainty will have abated to some degree, however the Board will be mindful of the increased level of risk before commencing construction.

Financially, JDC continues to create significant value and return on investment for our Shareholder. This value is returned to Jersey as a dividend to Government, through investment in public infrastructure and to support future development. Since inception in 2012, the organisation has delivered a total cumulative return of £53.7m representing a 126% return on opening equity, equivalent to a 11.5% annual return. This compares to the FTSE100 average annual return of 7.38% for the last ten years.