Corporate governance

Corporate Governance

The Directors are committed to maintaining a high standard of Corporate Governance in accordance with The UK Corporate Governance Code 2018 (“the Code”), as incorporated within The Listing Rules, issued by the Financial Conduct Authority. The Listing Rules require the Company to set out how it has applied the main principles of the Code and to explain any instances of noncompliance. In accordance with Listing Rule (“LR”) 9.8.4 R, the agreement related to ‘Independent business’ required by LR 9.2.2A (2) (a) R has been entered into with theGovernmentofJersey,witheffect from 17 November 2014. The Company has complied with the independence provisions included in the agreement duringthisfinancialyearandbelievesthe majority shareholder is also compliant. The other applicable information required by LR 9.8.4 R (5)/(6) is disclosed in external appointments. The Directors have reviewed, and applied, the latest UK Corporate Governance Code applicable to accounting periods beginning on or after 1 January 2019, together with the supporting Guidance onBoardEffectivenesswithinthese financialstatements. The Code is available at www.frc.org.uk.

Statement of Compliance

Atthetimeofsigningoffthe2022 Annual Report the Board considers that it has complied with the Code, except for Provision 38 (executive pensions aligned with the workforce) and this is explained in the Remuneration Report.

The Board

TheBoardprovideseffectiveleadership and currently comprises six nonExecutive and two Executive Directors. They are collectively responsible for the long-term success of the Company and bring together a balance of skills, experience, independence and knowledge. The Chairman and the Chief Executive Officerrolesaredividedwiththeformer being appointed by the Directors from amongst their number. Alan Bryce is the Senior Independent Director.

Independence

The non-Executive Directors serving at the balance sheet date were Wendy Dorman, Amanda Iceton, Kayte O’Neill, Alan Bryce, Phil Austin and Tony Taylor and they were all considered independent. On appointment to the Board the required time commitment is establishedandanysignificantchanges totimecommitmentsarenotifiedto the Board. An induction process is in place for all newly appointed Directors. The Board is responsible to the Company’s shareholders for the proper management of the Company. It meets regularly to set and monitor strategy, review trading performance, perform a robust assessment of the principal risks that could threaten the business model, future performance, solvency or liquidity (see Principal Risks section on pages 60 to 64), examine business plans and capital and revenue budgets, formulate policy on key issues and review the reporting to shareholders. Board papers are circulated, with reasonable notice, prior to each meeting in order to facilitate informed discussion of the matters at hand. Members of the Board hold meetings with major shareholders to develop an understanding of the views they have about Jersey Electricity. Table A below sets out the number of meetings (including Committee meetings) held during the year under review and the number of meetings attended by each Director.

Performance Evaluation

TheeffectivenessoftheBoardisvital to the success of the Company. An external evaluation took place during 2021 using Boardroom Dialogue Group Ltd, an external consultancy in Board matters which has no connection with theCompany,thefindingsofwhich were reviewed and actions implemented inthisfinancialyear.Duringthisyear, this was supplemented by internal evaluations, including those of Board sub-Committees, co-ordinated by the Chairman. As the policy is to have an external review every 3 years, the next one will take place in 2024. In addition, the non-Executive Directors meet at least twice a year, without the Executive Directors being present, with an explicit topic being the performance of the Executive Directors. Finally, the Senior Independent Director meets the other non-Executive Directors once a year to discuss the performance of the Chairman (without his presence).

Table A

Board Audit and Risk Remuneration Nominations

No of meetings 6 4 9 2

Chris Ambler 6 1* 5* 2 Phil Austin 6 2* 9 2 Alan Bryce 6 4 - 2 Wendy Dorman 6 4 - 2 Amanda Iceton 6 4 9 Martin Magee 6 4* 5* Kayte O’Neill** 4 3 8 Tony Taylor 6 - 9 2

Corporate Governance continued

Workforce Engagement

During 2020, a workforce Culture and Engagement Forum was established with representatives from across the Company. At least one non-Executive Director attends each meeting of this forum which provides an opportunity togainfirst-handfeedbackfromthe workforce.

In addition, the maintenance of the right culture within Jersey Electricity remains apriority.Theuseofstaffsurveysto collect data, the promotion of people development (through our ‘Living Leader’ and ‘How To’ programs) and a continued focusonthesafetyofbothourstaffand customers are key tools in the delivery of this objective. The key procedures which the Board has establishedtoprovideeffectivecontrols are:

Board Reports

Key strategic decisions are taken at Board meetings following due debate andwiththebenefitofBoardpapers circulated beforehand. The risks associated with such decisions are a primary consideration in the information presented and discussed by the Board who are responsible for determining the nature and extent of the risk it is willing to take to achieve the strategic objectives.Priortosignificantinvestment decisions being taken, due diligence investigations include the review of business plans by the Board.

Management Structure

Responsibility for operating the systems of internal control is delegated to management. Therearealsospecificmattersreserved for decision by the Board; and these have been formally documented and a summary of the key types of decision made by the Board is as follows: • Strategy and Managementincluding:

Approval of the Company’s long-term objectives and commercial strategy.

Approval of the annual operating and capital expenditure budgets and any subsequent material changes to them. • Changes in structure and capital of the Company • Financial reporting and controls including: Approval of the Annual Report and

Financial Statements.

Declaration of the interim dividend and recommendationofthefinaldividend. • Internal controls/Risk Management Reviewingtheeffectivenessofthe internal control and risk management systems. An external review of the risk management process is conducted every three years. • Approval of contracts

Including material contracts, investments, capital expenditure and bank borrowings. • Board membership and other appointments

Approval of changes to the structure, size and composition of the Board and key Committees, following recommendations from the

Nominations Committee. A Board

Charter detailing the matters reserved and the roles and responsibilities of theofficersoftheCompanyisavailable on our website (www.jec.co.uk). • Remuneration

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

Remuneration Committee. • Corporate governance matters

Undertaking a formal and rigorous annual evaluation of its own performance, that of its Committees and individual Directors. Review of the Company’s overall corporate governance arrangements. • Approval of key Company policies

These include policies on health and safety, share dealing and diversity.

Internal Audit/Risk Management

There is a permanent internal audit function involved in a continuous structured review of the Company’s systemsandprocesses,bothfinancial andnon-financial.InternalAuditmanage the process of strategic and operational risk reviews and facilitate risk review workshops with departmental managers. The Head of Internal Audit has direct access to the Audit and Risk Committee Chairman and also attends ARC meetings, at which risk based internal audit plans are discussed and approved.

Personnel

The Company ensures that personnel are able to execute their duties in a competent and professional manner throughitscommitmenttostaff training,regularstaffappraisalsand organisational structure.

Budgetary Control

Detailed phased budgets are prepared atprofitcentrelevel.Thesebudgets are approved by the Board, which receivessufficientlydetailedfinancial data to monitor the performance of the Company with explanations of any material variances.

Audit and Risk Committee

The Audit and Risk Committee (ARC) reviewstheeffectivenessofthe internal control and risk management processes throughout the accounting period as outlined above. In addition, it conducts“deepdive”reviewsonspecific identifiedriskstotestassumptionson the substance of such risks and their mitigation. More detail on the Group’s principal risks, and how they are managed, is provided in the Financial Review within this Annual Report (see the Principal Risks section on pages 60-64). The ARC also reviews and monitors the independence of the external auditors and the non-audit services provided to the Group.

Stakeholder Engagement

The Company maintains an active dialogue with its largest shareholders and meetings with Government of Jersey (which owns 62% of our Ordinary share capital) include both the nonExecutive Chairman as well as the ChiefExecutiveOfficer.Theprimary responsibility for relationship matters with listed shareholders lies with the Finance Director who reports to each Board meeting on investor relations. Jersey Electricity also has a number of other important stakeholders including Government, the local Parishes, suppliers, customers and employees, and regular presentations are provided to the Board on how such relationships are managed and can be improved.