JT Annual Review 2018/19 by JTsocial

Connecting our customers to their future JT Annual Review 2018/2019

JT Annual Review 2018/19

Becky Houzé Smart Farmer “At Lodge Farm technology and reliable broadband are an essential part of everyday life.” Watch Becky’s story

Contents

Chairman’s Foreword

CEO’s Business Review

Our business

Fibre Island

Full-fibre enabling future generations

5G : unlocking the future

Our tech predictions

Investing today for the world of tomorrow

Global futures

Our people and our customers

Together we are JT

JT in our communities

Customers at the heart

Performance Review

Board of Directors

Corporate Governance

Directors’ Report

Financial Summary

Notes to the Financial Summary

JT Annual Review 2018/19

Chairman’s Foreword Whilst I have been on the Board of JT for eight years, 2018 was my first year as Chairman. It was a year that saw JT enter the record books. We received international acclaim for completion of the full-fibre network in Jersey, supported by the success of many of our teams from right across the business.

Best Customer Experience Team Bronze Award 2018. CXA UK Customer Experience Awards

Solid performance This achievement was delivered alongside another strong financial performance from the JT team. It was a year of strategic investment in our growing International business and our software development capabilities, alongside a solid performance from our Channel Islands home market especially in areas like Managed Services. Thanks to this balanced portfolio, JT continues to deliver a substantial and valued dividend to the States of Jersey every year and in 2018 we paid £17m back to our islands in employee related taxes, corporate tax, GST and dividends.

Fibre island Many areas of JT’s business excelled this year, however I want to acknowledge the significant role that the completion of the Gigabit Jersey project played in 2018. The importance of a full-fibre network for Jersey is not to be underestimated – it’s a social and economic enabler, in a world that is only becoming more digital. Social inclusion was always at the heart of our thinking and JT’s ambition was to deliver world-class connectivity to every Jersey address, becoming the world’s first full-fibre Island. We wanted high-speed access to the Internet to be as available and advantageous for our residential customers, as it is for the whole business community. On all these fronts the fullfibre project has been an outstanding success, attracting new people and new businesses alike, to an island where worldclass connectivity is available to everyone. Phil Male Chairman

2018 was another strong year with gross profit increases in the Channel Islands and internationally largely driven by IoT and Managed Services.

I am proud of the impressive well-deserved international recognition this project is receiving and the profile it has also given Jersey, or as the BBC team from the UK referred to us on their recent visit; ‘Fibre island’. Receiving world wide recognition, like being awarded the Fibre Connectivity Award at the Connected Britain Awards in June and short listed again for 2019, is down to JT’s dedicated team. When this project was first envisaged it needed foresight, from both political and industry champions to see the opportunity to place Jersey in the leading ranks of global communications. 2012 was not an easy time to make such a large investment, but having done so, Jersey can now reap the rewards not only of the high-speed Internet now available to all, but from the five or six year lead over the rest of the world that this infrastructure now gives our island in the digital revolution.

Growing international operation Alongside this massive programme of work, JT’s diverse and busy teams have also continued to grow, expand their customer base

and win their own accolades. JT’s relatively new International team has worked hard in 2018 to build on its already solid foundations especially in the fast-moving areas of IoT, Fraud Protection Services and Messaging. They have enhanced our reputation as a company to watch and established us as one of the world’s most connected operators. Our team has fostered international partnerships using our unique ‘Roaming as a Service’ product with JT’s direct bilateral roaming agreements now reaching over 700 other networks around the world.

Island Broadband speeds are among fastest in the world. Front page JEP 10th July 2018.

Customers first, supported by our people JT has never forgotten that customers’ needs are at the heart of everything we do and serving their needs and connecting them to their futures is what we are all about. Whether those customers are our global partners, our local business customers or the thousands of Channel Island residents who rely on our services. The teams providing that support gained well deserved recognition for their commitment during 2018. JT Guernsey were named Best Communication Solutions Company in the Channel Islands at the 2018 UK Enterprise Awards for the SME sector. And the Customer Experience team were short-listed for Best International Business Team and awarded the Bronze prize for Customer Experience Team of the Year at the highly competitive UK Customer Experience Awards in a field of global brands and operators. These awards and the success JT enjoys, only spur on its people to better service our customers’ needs across the business, both on, and off, the Channel Islands. Our Board, Executive and Leadership teams have a big role to play in defining the direction we take, and listening to, supporting and encouraging our people will ensure we continue to evolve and improve. As I close my first year as Chairman, I’d like to take this opportunity to say it has been a genuine privilege to have oversight of the breadth and strength of this organisation, its people, its pride in its communities and its global vision. I’m looking forward to what 2019 holds for JT and the Channel Islands.

Phil speaking at IoD Guernsey and Digital Jersey events during 2018

“The white heat of technology, it may be a buzzword, but it sums up Phil Male. The Chairman of telecoms company JT is a technologist, with the experience, technical know-how and vision to boot.” Will Green, Editor, Business Brief Guernsey March 2018.

Phil Male Chairman, 29th April 2019

JT Annual Review 2018/19

CEO’s Business Review

The groundwork for the global success JT achieved during 2018 has been laid over many years. Against a backdrop of rapidly evolving technology, one thing has remained constant; our investment in our people, our networks and our islands. Our purpose is to ensure our customers can lead connected lives and take full advantage of all the opportunities technology enables. Our customer base is diverse, but our people’s commitment is what supports them. Fibre island The most high-profile example of that is the successful conclusion of the Gigabit Jersey project, which has played an enormous part in delivering the world-class connectivity now available to our customers. We can all be proud of the fact that in Jersey we can now access broadband speeds which are amongst, if not THE fastest in the world today.

Graeme Millar Chief Executive Officer

Providing this network was only the first step. Our focus now is on supporting and enabling our customers to unlock the potential and power this technology offers our homes, our businesses and the way we live our day to day lives. We have dedicated teams whose sole focus is researching the latest developments in technology; from AI through to augmented and mixed reality with the single purpose of helping our customers better enjoy their connected lives. Every day customers tell us about the diversity of applications and business sectors that our full-fibre network is enabling. Be that supporting the dairy industry in Jersey through ‘connected cows’ or working with our governments on digital progress in critical areas like e-health and e-education.

We’re seeing daily the diversity of applications and business sectors this full-fibre network can now enable.

Paul Madden, Fibre Engineer

Beaulieu School 07

Fibre is a vital economic enabler that is transforming how we live, work and play. For example, Beaulieu school in Jersey is already leading the way for a new future of e-education and has become the world’s first ‘Gigabit School’ attracting world wide praise and attention for their progressive teaching methods that are powered by JT’s fibre network. We will carry the knowledge and learnings we’ve gained during this project for generations to come, taking both our successes and failures through everything we do over the coming years, as we continue to build for, and invest in the future. In Guernsey, we’re also continuing our fibre to business and new residential developments programme where it is commercially viable. And many local businesses are already reporting the benefits of this technology. Jersey has also attracted world wide acclaim from the project and we are humbled to have played our part in assuring our island’s digital future. This year we have seen our annual subscribers increasing for domestic broadband services at the fastest rate in years which shows that our customers appreciate it too.

Our people: investing for the future Our people are the backbone who support and drive these achievements. As our business grows and develops, so too do the demands on their skills and knowledge. Wherever we can, our policy is to develop our talent from within, to help our people grow, learn and develop. 2018 was an especially active year as we made a strategic decision to invest in IoT: our International business and our software capabilities. Be it in developing stateof-the-art apps in-house via our new software team, building and growing relationships with global roaming partners through our enhanced International workforce, or servicing our customers here in the Channel Islands on a daily basis. All our successes are grounded in the people that make up JT and we will continue to nurture, invest in and help them develop. They are what define and drive us through their commitment and loyalty, together. *Fastest mobile network claims based on Ookla speed test results Q2-Q3 2018 www.speedtest.net/awards/mobile

JT Annual Review 2018/19

Super League Triathalon

JT Beach clean

Active in our communities

International reach: home benefits

Alongside our people, it is vital to us as a business to contribute and be active within the communities in which we live and work. Our goal is to become an employer-of-choice, supplier-of-choice and the neighbour-of-choice, wherever we are in the world. We strive to do this by being a responsible and considerate contributor to our islands.

While JT may be best known in our home islands for providing broadband, landline and mobile services, what is less wellknown is the increasingly influential role that we play in the global marketplace. Now a distinct business unit operating within the JT structure, we are investing in the future. This International team has established JT as one of the most connected operators in the intensely competitive roaming market – no mean feat given the size and strength of many of our competitors. They have also powered ahead in establishing JT’s voice within the highly competitive IoT, Messaging and FPS business sectors which have also seen positive growth, albeit from a relatively low-margin, highvolume market model. As this business builds, so too does our knowledge base and capability, in turn supporting our home markets.

Our people support and share their time for our chosen causes, and we have a long track record of committing financial and human investments to events and causes which are important for our islands and people. In Jersey, that support meant providing the technology and on-the-ground support for the Super League Triathlon for a second successful event in 2018. Through this support as the official technology partner we facilitated a seamless broadcast of this major sporting event to millions of people worldwide. It also showed our teams’ community spirit through our staffing of the free fan zone, as well as events we created like the pre-event beach clean alongside our chosen charities and a number of participating triathletes. In Guernsey, we were equally active for our community through our long-standing support of popular free events like The Cobo Bay Balcony Gigs, our work with Digital Greenhouse Guernsey in their Digital Bursary scheme and our support for our local chosen charity: La Société Guernesiaise.

We often talk proudly about the sectors in which the Channel Islands punch above their weight, and this is certainly the case here. This increasing international reach has a direct benefit to our home islands, not only in terms of enabling continued re-investment in our local infrastructure, but also in building on our islands’ reputations as centres of excellence. JT provides a platform for businesses to conduct their own operations with superb connectivity as a trusted service partner. But there is also a growing awareness of ‘digitisation’ of all industries, which we will support as we develop our International work in parallel. Wherever our customers need to connect to their future, JT will be there.

9 JT’s global exposure soars following BBC’s coverage of Jersey, Fibre Island.

Full-fibre broadband for everyone - right to the door. “That was the new standard set by the UK government back in the summer. Just 5% of homes can get that right now, so making it available nationwide will take years of work and billions of pounds of investment. But in Jersey, the largest of the Channel Islands, things look very different. It has just completed the rollout of its full-fibre network to 40,000 homes and business premises. It is the first jurisdiction in the world to make fibre-to-the-home available to 100% of broadband users.” Rory Cellan-Jones, BBC Technology Correspondent, 10th October 2018

The need for speed As a closing point it is important to mark our view on the evolution of mobile services in our islands. There is no predicted lull in the pace of digital advance, and 5G is now firmly on the horizon as our ‘where next’ for mobile. As you may have seen in the media, JT is already working on an advanced new network for our islands that will provide download speeds up to ten times faster than currently possible, allowing islanders to take advantage of improved bandwidth and connectivity. 2019 will be the year the 5G journey properly begins, and JT has already positioned itself to launch trial services, having recently gained our first test licences. This pace of change presents challenges, something that we as a team are not unused to. It is those challenges that drive us and keep our people motivated. This industry is a truly exciting one for us, our customers and future generations and I’m looking forward to seeing how we can harness it, progress and move forward, together.

Graeme Millar Chief Executive Officer, 29th April 2019

Need image

“Jersey has a strategic vision to be an internationally recognised digital centre of excellence and JT’s Island-wide fullfibre network is an essential component of that. Already, digital businesses and entrepreneurs are choosing to base themselves in Jersey because of the quality of its world-class infrastructure. The significance of Gigabit Jersey’s completion should not be underestimate.” Tony Moretta, Chief Executive Officer of Digital Jersey, March 2019

JT Annual Review 2018/19

Our business

Tim & Becky, JT Finance Team

JT Annual Review 2018/19

Fibre Island: from vision to delivery 2018

Ten years ago, the maximum broadband speed customers in the Channel Islands could get was around 2Mb/s. Back then, it was enough for basic tasks, but looking forward, it was never going to be sufficient to cope with expected demands and trends for a connected future. We watched the market and more importantly, we listened to feedback from our customers and tracked increasing use to be at the forefront of what we were seeing across the world. In Jersey, the solution was the Gigabit Jersey project, which began in 2012 and was completed in 2018. It has opened the door on a new world of digital possibilities with a ‘socially inclusive’ vision that every household, and every business, should have access to hyperfast connectivity offered by a fullfibre network. That vision is now reality.

2019 JT has been shortlisted for the Connected Britain 2019 Awards in both the ‘Fibre Connectivity’ and ‘Superfast’ Award categories.

By any benchmark, Gigabit Jersey has created new opportunities for businesses, and residential customers. The growing influence of the Internet of Things (IoT), FinTech, Cloud computing, Artificial Intelligence, chatbots and blockchain – which are all predicted to have a profound impact on our key industries and our homes – all rely on fast and reliable connection and fibre has provided that and more.

Elizabeth Castle 13

“100% of broadband customers are now connected to full-fibre. Elizabeth Castle was the Island’s final landmark connected to the fibre network.” Daragh McDermott Corporate Affairs Director and Fibre Programme Executive Sponsor

It has also provided a robust base for economic growth, increasing the possibilities for digital services which complement financial services. Jersey can talk confidently to fund managers and highnet-worth individuals about its world-class infrastructure and the development of a FinTech industry, knowing that we now have the capability and capacity to support it. Over the course of 2018, this pioneering project, and our people who brought it to fruition won several prestigious awards, and were nominated for many others, including the World Communication Awards, Connected Britain and Jersey’s inaugural Tech Awards, gaining global recognition and industry followers in the process. Now in 2019, the completed project is still being recognised by our industry peers with the recent announcement that JT has been shortlisted for Connected Britain 2019 in the Fibre Connectivity and Superfast Award categories; a testament to the great work from our teams, helping secure Jersey’s digital future.

We are also now working hard to remove the original copper network, which had reliably served us for over a century but is now superseded by full-fibre. By the end of 2019, Jersey will also be 100% copper-free which will, once again, be a world first. In Guernsey, we are also extending our fibre broadband network wherever we can, with new customers being connected every month. The island is also focussing on the development of 5G (see pages 16 & 17) to provide the connectivity which Islanders need, and JT will launch a trial network over the summer. Technology is a fundamental part of all our futures and our commitment to the Channel Islands is to always keep our customers connected to their future.

JT Annual Review 2018/19

Next generation eSports

Full-fibre enabling future generations Reliable and hyperfast broadband, provides effortless connectivity. Our aim is for our customers to be able to live their digital lives as they choose to. Working wherever is convenient, sharing stories, enjoying content and staying in touch with friends and loved ones – our pride comes from making these things happen. A full-fibre network enables our island businesses to achieve things that help them engage, thrive and prosper. Here are some of their stories:

Tim McGuinness Tim McGuinness, is the founder of Team Gravity and Virtex Studios, a company which is the leading provider of Virtual and Augmented Reality services in the Channel Islands. Team Gravity competes in global eSports tournaments around the round to audiences of tens of thousands. “eGaming and eSports have been around for some time, but the addition of Virtual Reality takes it to a new level and is a growing global phenomenon. With VR, it is much more akin to playing a sport than a game; you need to train, and you need to have the right mentality as you can play for up to three hours non-stop – it is a full body workout requiring great fitness, dexterity and skill. We rely on having a super-fast Internet connection and, with JT’s full-fibre network in Jersey, I know I have the ultimate bandwidth to compete at the highest level.”

eClassroom comes to life

Farming of the future

Rory Steel IT teacher and Assistant Headteacher at Beaulieu School, Rory Steel, is determined to make full use of full-fibre to benefit the school and its students. Beaulieu has given all of its students connected devices such as Chromebooks and put all of its lessons in the cloud, so that teaching material and homework can be accessed as easily at home as in the classroom.

Becky Houzé Dairy Farmer Becky Houzé was one of the Islanders highlighted in a national BBC technology feature about the roll-out of full-fibre. In the film, Becky explains how increased speed and better connectivity has benefited her business, increasing its productivity and profitability. Each of her 200-head of cattle is hooked up to a monitoring system by a chip in one ear. The information uploaded provides data on each cow and the milking process. The farm’s Wi-Fi network beams the data to Becky’s own computers and across to the UK, where it is monitored by the milking equipment manufacturer. “Everything that happens on Lodge Farm is recorded through our apps and databases so without reliable broadband, we would find it very difficult to keep track.”

“Everything is faster, simpler and cheaper. For me, fibre has changed what is possible in education and I, for one, tip my hat to JT. It can help Jersey in every industry if we can think a little differently.”

JT Annual Review 2018/19

IS COMING

Find out more >

5G: unlocking the future 2019 will be the year that our 5G journey begins in earnest in the Channel Islands. JT will soon be launching test services having already signed the necessary contracts with our supplier. We will offer a Channel Island wide 5G service in 2020.

From infrastructure to farming and from healthcare to leisure, there is no doubt that 5G – with download speeds up to ten times faster than today’s speeds - will have an impact on almost every area of Island life. Our Channel Island 4G network – launched only four years ago – will continue to serve the Islands well for many years to come. Our network speeds are already amongst the fastest in the world and independent analysis by Ookla* has confirmed that JT customers have enjoyed the fastest mobile data speeds in both Guernsey and Jersey, since 2016. When 4G first launched, we couldn’t have anticipated just how much it would change our lives. News, music, videos, video calls, maps and so much more became instantly accessible. Understanding the potential for 5G is easier when we consider the technology that comes with it. Reducing the time it takes the Internet to recognise a command from 60 milliseconds to one millisecond might not mean much now, but that’s because we haven’t needed it yet. So, while we continue to enjoy the benefits of our current network, JT’s teams will also be exploring the exciting new future that 5G will bring with it. 5G – with its backdrop of low latency and high bandwidth – will again push the boundaries of what is possible, opening the door even wider on a wealth of advances, including robotics and self-drive cars. In this way, it will not only transform the experience of how our customers use our mobile network today but will also unlock a range of completely new services, making our customers lives more connected, easier and enjoyable.

5G facts • Up to 10x faster downloads. • T est licences have been issued to Channel Island telecom providers. • JT will launch a trial network in 2019. • 5G is expected to hit the global market in 2020. • A Channel Island wide service is expected in 2020. • F orecast that by 2023 10% of islanders will have 5G enabled devices.

JT Annual Review 2018/19

Our tech predictions We are always asking ‘Where next?’ Having seen technology shift on its axis, and continue to advance into the future at an astounding rate, let’s go there together. With all this happening around us, it raises the question, what can we expect to see in the year ahead? Whilst we don’t have a crystal ball, we do have the advantage of an increasingly global footprint meaning JT are now active all over the world, seeing the latest technologies, meeting the businesses and partners driving these changes. Then seeing how we can bring those back to our islands and out to our customers to help their businesses thrive, grow and stay ahead; wherever they are.

Gill Knights, Head of Legal and Regulatory Affairs

GDPR & data security Today we are all far more aware of GDPR, both personally and professionally, about the handling and processing of our data, and what that means for us. Many companies are now investigating their systems to see whether their processes really are up to scratch. As a result of this analysis there is likely to be a continued trend towards an understanding that companies are accountable for the data they hold, and for how much value they place on your privacy. Increasingly, consumers will be able to see and to question which companies and sites are really making data security a priority.

Our hearts and many of our people are right here on the Channel Islands, our ambitions are everywhere. We’ve tasked some of JT’s Technologists to give a round-up of hot topics they see changing businesses and their views on the future of technology and some of 2019’s key trends.

Andy Parkin, Head of Software Services

Artificial intelligence and robotic automation Just as the adoption of the IoT (Internet of Things) gathered pace in 2018, we should expect a real rise in the application of AI and machine-learning as we head through 2019. The application of AI in organisations is multiplying as the areas in which it can add value to business expands. One of the current concerns around the rise of AI and robotics is that jobs will be on the line as machines take on automated processes. The most likely scenario is that as aspects of AI embed, companies will change their structure rather than replace teams. In 2019 and beyond, we will all be part of reshaping this new business landscape.

Read more > Roboy Junior, as seen at MWC19

Tamara O’Brien, Head of Customer Experience

Katie Corbett, Director of Enterprise and Business Services

Customer experience evolution

Cyber Security — Keeping a step ahead

There will be any number of digital trends that will be drawn into the delivery of customer service over the coming year, but the constant which never goes out of fashion is listening to customers. Of course, automation will allow companies to enable their customers to perform more tasks themselves, while also speeding up (and hopefully smoothing out) retail transactions. Chat-bots will pop up on local websites giving us the ability to get help immediately from a virtual assistant. But no matter what affordable innovations arrive to make our interactions quicker and more effective, the voice of the customer will remain at the heart of all that we do. So, the key focus for JT will be using customer service technology to bring us closer to our customers, not to get in the way. The technology may change, but the basics of great customer service will always remain the same.

One thing we can expect is an increase in both the number and the sophistication of cyber-attacks. Because of this people will need help and training to understand how to spot the scams and protect themselves from attacks, at work and at home. Many businesses will need support via trusted tech partners who can demonstrate that they have a sound Cyber Security strategy in place and are compliant with the likes of Cyber Essentials or ISO27001. Good corporate security solutions will continue to blend threat intelligence, resilience, recovery and training – the latter to make sure, that threats don’t rise internally through an employee lack of understanding and awareness.

Jon Collinson, Head of Product Services

Sally Russell, Head of Service Design

Smart home reality

Communication and automation

The idea that there are key tasks that can be performed around the home without you even needing to be there, let alone get out of your chair, is now increasingly mainstream, affordable and less outlandish than it has ever been. What makes increasing sense for householders is for systems which integrate all the devices available together, from turning on your lights and heating, to checking who is at your front door. The good news for the household budget is that this increased control can lead to lower utility costs, as well as improved energy efficiency and remote management that means more time enjoying, and less time planning. With the Channel Islands having both Fibre and 4G networks it means that we’re well ahead of the curve leading to many new possibilities.

Automation of simple or repetitive tasks is not a new phenomenon but in 2018 there was a significant increase in general and corporate awareness of RPA (robotic process automation). We have been used to thinking about robotics in a manufacturing or industrial setting and although it still has a long way to go, the focus has now shifted to office-based tasks and the many benefits that can bring to all manner of workplaces. Tasks that free up employee time for more complex matters are the most obvious use. Automation and software changes which adapt processes, from training to security, in ways which streamline productivity and effectiveness will continue to increase through 2019.

JT Annual Review 2018/19

Where next? Pioneering new tech with eSIM “JT Group joined forces with 1oT to launch an innovative eSIM solution. This eSIM solution is set to open up a new level of global connectivity for IoT service providers and is an exciting next step in SIM technology which provides vastly improved convenience for customers. This partnership of JT’s innovation and flexibility in working with different partners and our expertise will together deliver connectivity products for IoT which greatly improve customers experience and take the market forward.” Märt Kroodo, Founder and CEO of 1oT

As a Channel Islands based company, we now have a global network of some 3,000 businesses serviced by over 600 JT people working in 7 locations, including the UK, Denmark, Australia and the USA.

Investing today for the world of tomorrow The importance and strength of JT’s International services has been growing for some time; so much so that in 2017 we established ‘JT International’ as a distinct division of the company. In 2018, that division built on its already solid foundations to expand our offering in several areas and jurisdictions, providing innovative – and sometimes unique to market – services and platforms which place JT alongside many large global operators. We are now recognised among the global leaders in IoT connectivity, with an enviable and increasing network of over 700 international partners using our roaming network, robust security and fraud protection services and a range of messaging solutions. Our innovations are far ranging. In IoT connectivity we have invested in the NOMAD IoT platform which gives customers full control over their IoT management. Meanwhile, our roaming experts have developed a unique roaming as a service product; a fully managed service, which uses direct relationships, eliminating the use of hubs and ensuring that a quality service is delivered to the end user.

Tom’s tech prediction

Tom Noel, Managing Director, JT International

Digital transformation of health care There is far more to VR, AR and MR (mixed reality) than entertainment, they also offer new therapies and ways to treat patients, becoming more frequently used with patients that have conditions as diverse as ADHD, stroke, dementia or physical immobility. There is also a growing body of Internet of Medical Things (IoMT) allowing medical experts to bring together developments in tele-medicine and wearable technology to better track illnesses. It is estimated that by 2020 there will be an extraordinary 20 billion IoMT devices in use, from glucose level monitors to ECGs. The possibilities for assisting professionals and patients are life changing as we progress into 2019.

International growth driving success in the Channel Islands

As a Channel Islands based company, we now have a global network of some 3,000 businesses serviced by over 600 JT people working in 7 locations, including the UK, Denmark, Australia and the USA. The innovative work of our International teams enables us to increase resources and to re-invest in our home, the Channel Islands. It’s true to say that our local networks wouldn’t be as extensive or of such high quality without the work we do abroad.

Graham Hart-Ives IoT

Or to put it another way, the fact that JT now provides the SIM cards for heart monitors in Canada, or vehicle tracking in Central America, directly supports the delivery of high-speed broadband in St Helier, or 4G in Torteval. These, and many other developments and innovations, mean that our International division is doing for International customers what we have always done for our Channel Island ones – connect them reliably, constantly and seamlessly.

Kuba Rusztowicz Messaging & Roaming Services

Claire Messenger Fraud Protection Services

JT Annual Review 2018/19

Global futures While we are homegrown and our heart beats firmly in the Channel Islands, we are also ambitious, curious and highly innovative across the world and our international activities fuel growth that benefits the entire JT Group, our customers, and our ultimate shareholder the people of Jersey. Here are some of our International leaders giving their views on the latest innovations and leading edge technology helping shape and drive our connected futures.

Full-Fibre Future

Pervasive Data Connectivity

“I work to build strategic longterm relationships around the world, increasing JT’s positive profile and helping establish vital connections for our partners.”

With over 700 roaming partners in 198 countries and territories, JT connects over 3.8 million devices across the globe every day. From asset trackers to AI Robots performing all manner of functions across all industries – JT’s clients are benefitting from our resilient network coverage, rapid innovation and Industry expertise. Craig Samuel Senior Vice President of Americas

In 2018 Jersey became the world’s first-fibre jurisdiction thanks to the completion of JT’s ambitious 10-year plan. We’re excited to be pioneering this journey into a copper-free world of telecommunications and paving the way for a smart community of the future. Barna Kutvolgyi CEO of ekit and Managing Director of JT in the Channel Islands “I’m helping us achieve our next world first by becoming copper free.”

Revolutionary Uniformity One key trend is the expected exponential growth of data use - 75 billion connected devices by 2025, with data usage on track to grow 400% in the same period (whilst data revenue grows by just 1%). 5G is on everyone’s agenda and rightly so, and whilst all operators showcase the tech gadgets that excite and lure the masses, the truth is these user cases are still ideas for the future – but we do see Holograms, AR, VR, 4K/8K and new B2B services leading the next era of mobile technology. Thierry Berthouloux CTIO

Digital Identity Services Protecting Customers With data breaches and online fraud on the increase world wide, there is an greater global interest in m-commerce fraud. “I help our business understand this emerging market sector and bring knowledge and global connections to our strategy.”

In particular, the imminent arrival of PSD2 regulation; the new recommendations from the gambling commission to protect children. Industries everywhere are coming under pressure to provide strong and reliable identity services that can assist with payment authorisation; proving identity and reducing fraud. John Diamond Senior Vice President of JT Asia Pacific

IoE — The Internet of Everything

“My focus is on helping JT leverage our expertise in IoT to widen our global footprint as the partner of choice for IoT.”

The IoT revolution, once a ‘trend’ is very much now positively embedded into society. Conversations around IoT have been much more widely accepted and changes within the market have already been seen. Much like JT, tech companies are joining up to create IoT ecosystems with other partners and businesses to deliver superior products and services in the IoT space. Paul Taylor Managing Director, JT Guernsey and SVP, JT EMEA

JT Annual Review 2018/19

Our people and our customers

Digital Customer Care Team

JT Annual Review 2018/19

Together we are JT How we serve our customers, keep them connected and enable them comes from one place; OUR PEOPLE. Every day we work with a single purpose; to keep our customers connected and to help them enjoy their connected lives, whatever form that takes. Our people are innovative, talented, loyal and above all committed to improving our customers’ experience. Every day, they ask ‘Where next?’ Our teams span the globe but they all share a passion for keeping our customers connected to their future. Here are just a few of them; from Finance to Fraud Protection, from Contact Centre to Credit Control, Engineering to eSIM software, they share one common goal. Read what drives them here. Together we are JT.

First major company to sign up to the living wage in the Channel Islands.

“…I love the company and the people that work here…”

“…I am part of a great team…”

“…My manager has encouraged me to study and gain a qualification - and I have a leadership mentor…” “…Great place to work, offers flexibility of working hours, good employee package and great people….”

“…JT is a great place to work and has lots of opportunity to grow and move between departments….”

“…Everyone is really lovely, and my manager cares a lot about my well being…” “My team are like a family to me which makes my job much easier.”

“Everyday is different and technology excites me, I can’t wait to see what’s next.”

“…I work flexible hours to suit my family life, which is a massive benefit to me. My manager has always been flexible and understanding when it comes to family life…”

“I was given the opportunity to become a field supervisor at the age of 23 because of my knowledge, drive and ambition. A lot of companies would look past an individual so young for a manager/ supervisor role because of their age, but I felt very supported and encouraged…”

Jersey Autism Golf Day Winners 28

JT Annual Review 2018/19

JT in our communities We’re proud to have our heart in the Channel Islands and we strive to make a contribution to our local communities. Be it working with our chosen charities, helping sponsor free music events, reducing our environmental impact, or powering world-class sporting events from JT’s network; we share a common goal, to make a meaningful contribution to the communities in which we live, work and bring up our families. During 2018 our teams raised more than £21,000 for JT’s chosen charities through a combination of Group events and individual challenges across our offices. Together we work to support local businesses, schools, charities and environmental initiatives with the same enthusiasm we’ve had for decades. For us, it’s a great way to come together as a team, educate, have fun, raise money and create change, here’s a small selection of how we’ve helped, in the words of those we’ve worked with...

Cobo Bay Balcony Gigs David Nussbaumer, organiser of The Cobo Bay Balcony Gigs, Guernsey “Our thanks go to JT for their on-going support, which help us to secure the best tribute acts on the scene year after year.” Sponsored by JT for over seven years these gigs are enjoyed by thousands of visitors and Islanders every year.

Autism Jersey Golf Day Nick Winsor, Chairman of Autism Jersey: “The 2018 Autism Jersey Golf Day was a great community event which raised a record breaking £28,000 pounds, a massive contribution to a new permanent home for Autism Jersey to provide much valued community-based services. I would like to make a special mention of our sponsor, JT, whose continuous contribution is having a positive impact on the lives of autistic Islanders.” Sponsored by JT for over five years now raising vital funds for local charity Autism Jersey.

Little Feet Environmental, Jersey Marine Conservation and Société Guernesiaise Courtney Huisman, a volunteer at Littlefeet Environmental: “We may be a small charity, but we have big plans. Last year, we collected over 140 bags of rubbish and 380 plastic bottles from island beaches and, with JT’s help, we expect to pick up a lot more. I would like to thank JT for choosing to support Little Feet Environmental but, more importantly, for choosing to support the local environment.” The environmental movement gathered pace and energy in 2018 and become our chosen cause for the year, stimulating initiatives across our locations to help protect our islands and reduce our impact.

Cobo Bay Balcony Gigs

Super League Triathlon 29

Bosdet End of Year Wish

Books for tablets

Marine Oliveira, Domestic Abuse Prevention Advocate at the Jersey Women’s Refuge: “We were incredibly surprised and grateful to hear that JT was going to consider our wish. We would like to thank the Bosdet Foundation and JT for answering our wish for 2018. And for not just reviewing but upgrading our system.” We supported their End of Year Wish campaign as well as also providing equipment for the St Lawrence Youth Project.

“On last count, our School Eco Team gave me a total of 611 directories. Thank you and we look forward to supporting you again next year. Your campaign gave a massive boost to our own school recycling area.” Andrea Christopher, JC Prep School. The annual Books-for-Tablets campaign was another resounding success for our island working together to help recycle and encourage Jersey families to work together with schools to collect old telephone directories and recycle them in exchange for free tablets for their childrens’ class. Over 8,000 books were collected and then 50 tablets donated back to schools this year.

Super League Triathlon Michael D’Hulst, Super League Triathlon CEO and Co-founder: “Last year was a great success so we’re delighted to be returning to Jersey. I’m thrilled that JT is making the weekend even more of an event for everyone. The vision of Super League Triathlon is to provide fans with a world-class event experience. This VR immersion at JT’s exciting new Fan Zone will give the fans in Jersey the opportunity to get closer to the real action than ever before.” Powering the technology for the second year we were proud to enable world-class connectivity for a world-class event as official technology partner ensuring seamless reach to their global TV and online audience.

Les Quennevais transition days Headteacher, Sarah Hague: “Our new partnership with JT is an exciting development as we work together to nurture, inspire and develop next year’s intake into what will become, the class of 2023! Feedback from parents was that they found the talks on e-safety particularly useful in a world where technology now plays such a pivotal role within our schools.” JT formed a new partnership with Les Quennevais School in 2018 by sponsoring the transition days attended by pupils.

National Coding Week Jonathan Channing organiser of National Coding Week: “NCW is centred around the concept of accessible technology and helping people in our communities to adapt to and understand changes in today’s digital world. NCW events are inclusive and open, showing us first-hand, the benefits of helping people of all ages grow in confidence and benefit from digital.” Sponsored by JT for five years since its inception in 2014.

Les Quennevais transition days

Recycling campaign

JT Annual Review 2018/19

Jess â&#x20AC;&#x201C; Business Solutions

Our customers are at the heart of everything we do Customer experience is a crucial central factor for our business and we are always working hard to ensure we provide the best service and overall experience that we possibly can, over channels that are right for our customers.

Toby â&#x20AC;&#x201C; Marketing

Whether we are talking to our Channel Island-based consumers or our International partners, we want to provide the highest level of service, both by pioneering the digital technology appropriate to them, and by supporting this with first-class customer service. JT has introduced innovative and far-reaching standards for its customer experience, and we have a specially trained, committed and focused crosscompany team who have led the way in increasing levels of customer, client and employee satisfaction. During 2018 our Customer Experience Team and the Customer Service Centre were short-listed for both National and Europewide awards. However, the most important validation we can receive is from our customers themselves, who consistently tell us that our people are polite, knowledgeable and helpful. Our teams have worked hard to maintain this reputation, and will continue to do so.

over

240,000

customer visits to our Channel Island retail stores

156,000 calls

63,600 emails

18,000 social interactions

Customer service in numbers The JT Customer Service Centre alone services over 50,000 residential and business customers across the Channel Islands, as well as managed services for JTâ&#x20AC;&#x2122;s international customers. This relatively small, dedicated team received over 156,000 calls, 63,600 emails and 18,000 social interactions and live chats during 2018. They also respond to 999 emergency calls and provide a 24/7 service to 500 people who carry emergency call system alarms, so it is exciting to see this busy team recognised for their hard work and extremely high standards.

Here for our customers

“Thanks to JT’s high speed broadband my students enjoy digitally composing their own tracks & then sharing for the world to hear.” Leigh Saunter Musician

“My technology begins and ends with my iPhone and JT always keep me connected even in the most remote places.”

“As we expand into more markets, instant and fast communication with our customers is absolutely vital.”

Roley McMichael CI Surf Team Coach

Matt Polli Artisan Gin Distiller

All our people who interact with customers; from engineers to sales teams, have received special training to ensure that our customers’ experience is consistently high across every ‘touch point’ within the business, whether that is in person, over the phone, through social media or via Livechat using the free JT app or website.

But no matter what innovations arrive to make our interactions quicker and more effective, we will continue to apply a personal approach for each and every transaction. We will be using technology to bring us closer to our customers, not to get in the way.

Automation will allow companies to enable their customers to perform more tasks themselves and chat-bots may well pop up on websites giving us the ability to seek guidance immediately from a virtual assistant.

Listening to our customers During 2018 we launched ‘JT Voice’ a new online customer insight panel which our customers have been encouraged to join and make their voice heard. Customers participating are able to share their views on everything from products and services, shop, call centre or engineer experiences through to overall customer experience.

JT Voice We’re better with your voice

The central Customer Experience then use this direct customer feedback and insight to make sure our customers views and voice are heard throughout our business. By hearing their voices and using their views we meet our aim to continuously improve. Meet the Central CX Team:

Find out more > Tamara

Liz

Pippa

JT Annual Review 2018/19

Performance Review

JT Annual Review 2018/19

Performance Review How are we doing? Revenue is obtained through providing telecommunication services to consumer, enterprise and wholesale customers. Services include fixed line, mobile, broadband, messaging and data services, private circuits and data centre rentals, interconnection and roaming usage, equipment sales, managed services of hardware and software and sales through International’s fraud prevention and IoT business. Revenue reduced by 4% to £250.5m mainly due to the reduction in low margin off-island wholesale voice revenues -6% (2017: 137%), partly off-set by an increase in revenue from our growth business lines within International including fraud prevention services 26% (2017: 55%), messaging and routing services 14% (2017:13%) and IoT 34% (2017: 46%). Gross profit rose by 3% to £94.5m mainly due to growth in our international lines of business including fraud prevention services 26% (2017: 98%), messaging and routing services 12% (2017:23%) and IoT business 29% (2017: 41%) Strategic investment in our International lines of business, especially in IoT, and the underpinning software development capability to enable future growth led to an increase in operating expenses. Along with an increase in depreciation and amortisation charges (excluding goodwill) from £19.1m to £20.3m, arising from JT’s continued investment in its network, operating expenses rose by £6.3m (2017: £1.9m). Operating profit was £7.4m (2017: £11.1m), reflecting this increase in operating expenses, partly offset by the increase in gross profit. Profit on ordinary activities after taxation was £2.2m (2017: £4.8m). The decrease reflects the strategic investment, partly offset by the reduction in tax due to a one-off revaluation of US deferred tax assets in 2017. Capital expenditure during the year was £31.3m (2017: £22.0m). £8.9m (of which £6.1m was paid in 2018) relates to the purchase of the NOMAD IoT platform acquired through NeoConsult Aps and Nomad IP Aps (Danish Subsidiaries), also part of the strategic investment in the International business. The Gigabit Jersey project made up 48% of the remaining capital expenditure in 2018.

Headline results

JT Group Limited 2017 (£’m) 2018 (£’m) Revenue 260.7 250.5 Gross profit Operating profit

92.0 11.1

94.5 7.4

Profit on ordinary activities before taxation

9.0

5.3

Profit on ordinary activities after taxation

4.8

2.2

Revenue (£’m) 300 250 200 150

70%

69%

30%

31%

2017

2018

100 50 0

Jersey (£’m)

Rest of the World (£’m)

Gross Profit (£’m) 100 80 60 40 20 0 2017 Gross Profit (£’m)

2018

Dividends paid (£’m) 5.0 4.5 4.0 3.5 3.0

“A Milestone year for Fibre island, alongside strategic investments for future growth.”

2.5 2.0 1.5 1.0

Ordinary dividends paid during the year rose from £4.7m to £4.8m. Cash flow from operating activities decreased by 14% to £32.4m. Also, proceeds of £4.3m (2017: nil) were received for the sale of the entire share investment in Energous Corporation. Of this cash generated:

• £21.9m (2017: £21.8m) was used on capital expenditure, equivalent to 9% (2017: 8%) of revenue

• £6.1m (2017: nil) was the first instalment payment to acquire a further 80% of NeoConsult Aps and Nomad IP Aps

• £7.4m (2017: £6.9m) was paid to States of Jersey as corporate tax, preference interest and dividends

• £2.2m (2017: 1.8m) was paid as pension contributions and other non-Jersey taxes

• £2.0m (2017: £2.2m) was for net interest on borrowings

0.5 0 2017 Ordinary dividend (£’m) Cash at Bank (£’m) 25 20 15 10 5 0 2017

Leaving £16.9m (2017: £19.8m) in cash at bank at year end. Cash at Bank (£’m)

Cash outflow from investing and financing activities (£’m) £2.4m

Jersey income tax

£5.0m

Dividends and preference share interest

£2.2m

Pension contributions and other non-Jersey taxes

£6.1m

Acquisition of subsidiaries

£2.0m

Net interest paid

£0.8m

Capital expenditure Rest of world

£1.4m

Capital expenditure Guernsey

£19.6m

Capital expenditure Jersey

2018

JT Annual Review 2018/19

Board of Directors

Phil Male

Sean Collins

After obtaining a computer science degree at Imperial College, Phil was a founding director of Computer Newspaper Services and became involved in the start-up of Demon Internet (one of the worldâ&#x20AC;&#x2122;s first commercial Internet Service Providers), ultimately becoming the Technical Director with responsibility for all operational and development activity. The company was acquired by Scottish Telecom in 1998 and Phil was one of the three founding Directors that floated the combined business on the London Stock Exchange as THUS Plc in 1999. Phil became Chief Operating Officer in 2002, and when THUS was acquired by Cable & Wireless Worldwide in 2008, Phil became Group Operations Director, then Chief Strategy Officer and served on the Executive Board, leading the demerger and listing of Cable & Wireless Worldwide Plc in 2010. Phil left Cable & Wireless in 2010 and today serves as a Non-Executive Director on a number of boards, actively investing in new technology businesses, and works in an advisory capacity with a number of institutions in the City.

A chartered accountant and a graduate in Classics from Cambridge University, Sean was formerly a senior audit and advisory partner at KPMG, where he had worked since 1972. From 2009 to 2012, Sean was Head of Markets, Asia Pacific, responsible for the firmâ&#x20AC;&#x2122;s business development in the Asia Pacific region. He also led the Global Communications and Media practice for over a decade. Sean has deep and extensive experience of corporate governance, financial reporting and other corporate disciplines, gained during many years as lead partner for a large number of major international clients. He was the Senior Independent Non-Executive Director and Chairman of the Audit Committee of Millennium & Copthorne Hotels Plc until December 2014. Other appointments include member of the Conduct Committee and Case Management Committee of the Financial Reporting Council, former trustee of the Royal Society for Asian Affairs, Trustee and Finance Chairman at Cystic Fibrosis Trust, and Governor and Chairman of More House School in Surrey, England. Sean is also a Crown Representative at the Cabinet Office, overseeing the provision of telecommunication services by major suppliers to UK Government.

Chairman (with effect from 1 April 2018)

Non-Executive Director, Chairman of Audit and Risk Committee

Joe Moynihan

Non-Executive Director (appointed with effect from 1 May 2018), Chairman of the Remuneration Committee (with effect from 8 September 2018) Joe is an experienced international financial services executive with senior level commercial and public sector experience. He has held a wide range of board level positions in Jersey and international businesses during a career that has spanned over 30 years. This includes being President of the Jersey Bankers Association, Chief Officer/ Director of Financial Services for the States of Jersey, and consultant to a number of financial services projects. Joe has an MBA from the CASS Business School, University of London, is a fellow of the Association of Chartered Certified Accountants and a graduate of the Irish Institute of Bankers.

Graeme Millar

John Kent

Graeme was appointed JT CEO in January 2010. A Cambridge science graduate with a postgraduate engineering qualification, Graeme has over 25 years of telecoms experience. Graeme has worked in countries as diverse as the USA, Russia, Hungary and the Netherlands for companies such as Vodafone and Motorola. Immediately prior to taking up his role at JT Group, Graeme was the Chief Commercial Officer Russia for MTS, Russiaâ&#x20AC;&#x2122;s largest mobile telephone operator. In addition to his role at JT, Graeme is also a NonExecutive Director of Wellington Partners Management Limited and is a Fellow of the Institute of Directors.

John joined JT as CFO of the JT Group in February 2012. He is a highly commercial CFO who has spent a major part of his career working for two large FTSE companies in the utilities sector, Vodafone and British Gas, in financial and commercial leadership roles. Prior to joining JT, John was the CFO for Vodafone Ireland, the â&#x201A;Ź1 billion turnover Vodafone operating company based in Dublin. John has a Mathematics degree from Cambridge.

Colin Tucker

John Stares

Chief Executive Officer

Meriel Lenfestey

Non-Executive Director, Senior Independent Director (with effect from 8 September 2018) Meriel has experience driving and enabling a shift to customer centricity with forward looking companies across a wide range of business sectors. After receiving her MA from the Royal College of Art, and after spells working at Microsoft in Seattle and the BBC in London, in 1997 she founded a London-based customer experience company and grew it to become the UK market leader and highly respected globally. Her work has included tactical and strategic engagements with clients embracing digital transformation across many sectors including financial services, consumer electronics & software, telecoms, media, retail, transport, energy and public sector. She Chairs Gemserv in London and is a Non-Executive Director for several companies including Aurigny locally. She holds voluntary board roles with the IoD Guernsey, Arts for Impact and Startup Guernsey.

(Resigned as Senior Independent Director and Non-Executive Director with effect from 15 June 2018)

Chief Financial Officer

(Resigned as Chairman with effect from 31 March 2018)

JT Annual Review 2018/19

Corporate Governance Compliance with the UK Corporate Governance Code (the ‘Code’). The Company adheres to the principles of good corporate governance and best practice set out in the Code and, in particular, has in place a sound system of internal controls to safeguard its shareholder’s investment and its assets.

Directors and the Board The Board During the financial year the Board consisted of eight Directors, two of whom are Executive Directors and six of whom are NonExecutive Directors, (refer to page 43 for changes during the year). The Board has a schedule of regular meetings, normally between six and eight per year, with any additional meetings convened as and when required. The Board is collectively responsible for the long-term success of the Company. This is achieved by setting the overall operating strategy, approving detailed business plans and overseeing delivery of objectives by continually monitoring performance against those plans. The Board establishes the culture, standards and values of the Company. The Board oversees the management of risk, monitors financial performance and reporting and ensures that appropriate and effective succession planning and remuneration policies are in place. Whilst maintaining oversight at regular meetings of the Board, the day to day operation of the Company has been delegated to the Executive Directors. The Board is supplied with a sufficient level of regular, detailed and timely management information to allow it to discharge its functions efficiently.

Meetings and Committee membership During the year, the Board met ten times. Details of attendance at Board meetings are as follows:

Number of Board meetings in 2018

Sean Collins

Joe Moynihan

John Kent

Meriel Lenfestey

Phil Male

Graeme Millar

John Stares

Colin Tucker

Director independence The Board considers all of the Non-Executive Directors to be independent in character and judgement. In determining independence, the Board considers the specific circumstances of each Director The Board has concluded that Sean Collins, Joe Moynihan and Meriel Lenfestey shall be deemed independent, with Meriel Lenfestey adopting the role of Senior Independent Director. Phil Male, as Chairman of the Company for the year ended 31 December 2018, was considered independent on appointment and, in accordance with the Code, is not subject to the independence test thereafter.

Performance evaluation In order to ensure that the Board continues to operate effectively, the Board and its Committees carry out an assessment of performance across key areas. The results of the performance assessments and appraisals are fed back to the Board as a whole (as appropriate) and action taken accordingly.

Other significant commitments Under the terms of engagement for each Non-Executive Director, an indication of required hours is agreed that should enable the Non-Executive Directors to discharge their duties to the Company. The level of commitment to the Company has not been impinged by other significant commitments for any of the Non-Executive Directors.

Reappointment The Executive Directors are not subject to retirement by rotation but they are subject to periods of notice related to the termination of employment, as are other members of the Company’s Senior Management. The Company has adopted a policy of requiring Non-Executive Directors to seek re-election after having served a three-year term. Non-Executive Directors who have served on the Board for nine years or more are required to retire from the Board and seek re-election on an annual basis. Directors appointed to fill a casual vacancy must seek formal appointment by the shareholders at the next Annual General Meeting (“AGM”).

Relations with the shareholder

Audit Committee

While the Company is wholly owned by the States of Jersey, under the terms of Article 32(6) of the Telecommunications (Jersey) Law 2002, the Minister for Treasury & Resources (the “Minister”) is charged as its representative in matters related to its shareholding in the Company. Limitations on the powers of the Minister, which relate principally to share ownership matters, are set out in that same article. In order to ensure an appropriate accountability framework, a Memorandum of Understanding exists between the Company and the Minister, and that Memorandum of Understanding recognises the obligation that the Directors have in regard to cooperating at all times in the best interests of the Company.

During the year ended 31 December 2018, the Audit Committee comprised Sean Collins (Chairman), Phil Male (up to 8 September 2018) and Joe Moynihan (from 8 September 2018). The auditors, KPMG LLP, and the Executive Directors also attend the meetings by invitation. There were four meetings of the Audit Committee during 2018, with full attendance at each of those meetings. The terms of reference of the Audit Committee require it to meet at least twice per annum. Additional meetings may be called where deemed necessary. The Committee is charged by the Board with the following main responsibilities:

Internal Controls The Board is responsible for ensuring that there are effective systems of internal control in place to reduce the risk of misstatement or loss and to ensure that business objectives are met. These systems are designed to manage and mitigate (rather than to eliminate) the risk of failure to achieve business objectives and can only provide reasonable and not absolute assurance against material misstatement or loss. The Company has developed and adopted corporate and operational risk registers detailing and risk grading the significant risks faced by the Company. Alongside the register is a process through which the significant risks faced by the business are identified and evaluated on a regular basis and the controls operating over those risks are assessed to ensure that they are adequate.

To monitor the integrity of the financial statements of the Company and any formal announcements relating to the Company’s financial performance. To provide advice, when requested by the Board, on whether the annual report, taken as a whole, is fair, balanced and understandable and provides the information necessary for the shareholder to assess performance, the business model and strategy. To ensure that arrangements are in place for the proportionate and independent investigation of concerns raised confidentially by whistle-blowers about possible improprieties in matters of financial reporting or any other matters.

The process of risk assessment and reviewing the effectiveness of the systems of internal control is regularly reviewed by the Audit Committee, accords with Turnbull guidance and has been in place for the whole of the year, up to and including the date on which the financial statements were approved.

To review and monitor the adequacy, operation and effectiveness of the Company’s internal financial and other controls and make recommendations for improvement where necessary.

Controls adopted by the Board (or its Committees) to ensure the effectiveness of the systems of internal control include the following:

To oversee the external audit process and manage the relationship with the external auditors.

The review of the corporate and operational risk and control registers maintained and updated by the Company and of the status of any actions arising from their regular review. The receipt of confirmation from Senior Management of the proper operation of controls throughout the period of the review. The review and approval during the year of the schedule of matters specifically reserved for its attention. The review of reports received from the Audit Committee concerning the findings of the external auditors on the financial statements of the Company and the systems of internal control.

To make recommendations to the Board as to the re-election and remuneration of the auditors at the Annual General Meetings based upon its assessment of the performance of the auditors and giving due regard to their continued independence and any other regulatory or professional requirements. During the year ended 31 December 2018, the Audit Committee formed the view that there is a continuing need for an internal audit function and has assigned accountability for this to a senior accountant reporting to the CFO.

JT Annual Review 2018/19

Corporate Governance (cont.) Review of Financial Statements

Remuneration Committee

To enable the Audit Committee to discharge its responsibilities effectively in respect of the financial statements, a number of processes are in place.

During the year ended 31 December 2018, the Remuneration Committee comprised Joe Moynihan (Chairman from 8 September 2018), Sean Collins, Meriel Lenfestey (Chairman up to 8 September 2018), Phil Male, John Stares (up to 31 March 2018) and Colin Tucker (up to 15 June 2018). The Executive Directors, Graeme Millar and John Kent, may also attend the meeting by invitation. No Director is allowed to be party to discussions regarding, or play any role in, the determination of their own remuneration. There were two formal meetings of the Remuneration Committee during 2018, with full attendance at each of those meetings. The terms of reference of the Remuneration Committee allow it to meet as and when necessary to:

The Audit Committee is briefed by the Chief Financial Officer in advance of the year end on the significant issues pertaining to the financial statements and how they will be dealt with. These issues are generally focused on the areas of subjectivity in the financial statements, changes in accounting or disclosure requirements and the accounting or disclosure implications of one-off events occurring in the year. Where necessary, the Audit Committee considers evidence and independent third-party advice on the key matters for consideration. At the year end, the Audit Committee reviews the financial statements and related announcements and considers them in the context of the significant issues identified, the suitability of any key assumptions and the extent that they have been disclosed. The whole process is completed in consultation with the auditors, whose view is sought by the Audit Committee. The Audit Committee also consider, based on their knowledge of the business and issues arising, whether they can advise the Board that the annual report, taken as a whole, is fair, balanced and understandable and provides the information necessary for the shareholder to assess the Companyâ&#x20AC;&#x2122;s position and performance, the business model and strategy.

Review and determine the level of remuneration of Executive Directors. Review and determine the level of remuneration of the Senior Management Team. Review periodically the terms and conditions of employment of the Executive Directors and Senior Management Team. Make recommendations to the Board on the Companyâ&#x20AC;&#x2122;s overall framework of salaried staff remuneration and costs.

Auditor appointment and additional services The performance and effectiveness of the external auditors is monitored continually and formally considered by the Audit Committee before a recommendation is made to the Board regarding their reappointment. Length of service of the incumbent audit firm, effectiveness of the audit process, the independence and objectivity of the team, the depth and breadth of the audit approach, the level of fees and the quality of the service provided are all taken into account. The current auditor is KPMG LLP who were appointed in 2016. The Audit Committee considers the impact of the provision of any non-audit services by the external auditor on the objectivity and independence of the audit. The consideration has regard to the nature of the non-audit work, size of the fee relative to any audit, any potential involvement of the audit team in the work and the longer-term effect of the non-audit services on the relationship with the audit firm, including an assessment of their continuing objectivity and independence.

Review and make recommendations to the Board concerning the remuneration of the Chairman.

Nomination Committee During the financial year ended 31 December 2018, the Nomination Committee comprised Phil Male (Chairman), Sean Collins, Meriel Lenfestey, John Stares (up to 31 March 2018), Colin Tucker (up to 15 June 2018), Joe Moynihan (from 1 May 2018) and Graeme Millar. Executive Director John Kent may also attend the meeting by invitation. There were two formal meetings of the Nomination Committee during 2018, with full attendance at that meeting. The Nomination Committee is primarily responsible for the selection and appointment of the Company’s Executive and Non-Executive Directors, as and when required. The other duties of the Nomination Committee include: Making recommendations to the Board as to the re-election of Directors under the ‘retirement by rotation’ provisions in the Company’s Articles of Association whilst giving due regard to their performance and ability to continue to contribute to the Board in light of the knowledge, skills and experience required. Reviewing and making recommendations to the Board as to the succession planning for Executive and Non-Executive Directors. Regularly reviewing the structure, size and composition, including the balance of skills and attributes required of the Board, compared to its current position and making recommendations to the Board with regard to any changes. Keeping under review the leadership needs of the organisation, both Executive and Non-Executive, including succession plans, with a view to ensuring the continued ability of the organisation to operate effectively. When selecting candidates for potential appointment as a Non-Executive Director, the Nomination Committee evaluates the needs of the Company and identifies the necessary skills and experience required by candidates for consideration. The Nomination Committee makes recommendations to the Board taking into account the performance of the candidates at interview, their skills and experience and their ability to meet the specific needs of the Company. Consideration is given to the use of external recruitment consultants and open advertising in the recruitment process. However, this is weighed against the cost of doing so and the specialist needs of the Company as a Jersey based telecom provider.

It is the policy of the Board to populate itself with Directors who have a diverse range of skills, attributes and backgrounds, so that collectively the Board is appropriately resourced to discharge its duties effectively and meet the changing needs of the business. A wide range of factors are considered in determining the appropriate composition of the Board including but not limited to technical expertise, local market knowledge and experience, independence, length of service on the Board and diversity.

JT Annual Review 2018/19

Directors’ Report Incorporation

Going concern

JT Group Limited (the “Company”) was incorporated in Jersey, Channel Islands on 22 October 2002.

The Group’s business activities, together with the factors likely to affect its future development, its financial position, financial risk management objectives, details of its financial instruments and derivative activities, and its exposures to price, credit, liquidity and cash flow risk are described in the notes of the consolidated financial statements.

Principal activities The principal activity of the Company and its subsidiaries (the “Group”) is the supply of telecommunication services and equipment. The principal place of business is Jersey, Channel Islands.

Results Revenue has reduced to £250.5m (2017: £260.7m) due to a reduction in low margin off-island wholesale voice revenues, partly off-set by an increase in revenue from higher margin growth business lines within International, leading to an increase in Gross Profit of £2.5m to £94.5m (2017: £92.0). The Group’s strategic investment in the International lines of business, particularly in IoT and the underpinning expenditure in software development capability led to an increase in operating expenses and an increase in depreciation and amortisation charges. The Group made an operating profit of £7.4m (2017: £11.1m), reflecting this increase in operating expenses, partly offset by the increase in gross profit. The Group’s profit on ordinary activities after taxation was £2.2m (2017: £4.8m) and net assets were £90.1m (2017: £91.8m). The 2017 final and 2018 interim ordinary dividends of £4.8m were paid during 2018 (2017: £4.7m).

The Group has considerable financial resources together with long-term contracts with customers and suppliers. Therefore, the Directors and management believe that the Group has sufficient resources and capacity to manage its business risks successfully in the current operating environment. Management have prepared a budget for 2019, projecting cash flows and results for the year based on the strategies being followed by the Group and have concluded that there is a reasonable expectation that the Company and the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the annual report and the consolidated financial statements. A portion of the Group’s borrowing, £31m is falling due in September 2019. In addition to cash from operations, the Group entered into new revolving credit facilities to provide funding to settle the obligation.

Directors The Executive and Non-Executive Directors of the Group who served during the year and subsequently are:

Non-Executive John Stares (resigned with effect from 31 March 2018)

The Directors have approved the payment of a final ordinary dividend for 2018 of £2.5m (2017: final dividend for 2017 of £2.4m).

Phil Male Colin Tucker (resigned with effect from 15 June 2018) Sean Collins Meriel Lenfestey Joe Moynihan (appointed with effect from 1 May 2018)

Executive Graeme Millar John Kent

Changes in Directors and membership of the Board Committees The Directors of the Company for the financial year ended 31 December 2018 are detailed in the above section titled “Directors”. During the financial year ended 31 December 2018 the following changes to the Directors and Board Committees of the Company have occurred:

Directors’ interests The Directors of the Group had no interests, beneficial or otherwise, in the shares of the Group.

Insurance of Directors and officers The Group maintains an insurance policy on behalf of all Directors and officers of the Group against liability arising from neglect, breach of duty and breach of trust in relation to their activities as Directors and officers of the Group.

John Stares resigned as Chairman of the Board and a Director of the Company with effect from 31 March 2018. The Board appointed Phil Male as Chairman of the Board to replace John Stares;

Independent auditor

Joe Moynihan was appointed to the Board as a NonExecutive Director with effect from 1 May 2018, his appointment subsequently being confirmed by the shareholders in the AGM held on 11 May 2018;

By order of the Board.

Colin Tucker resigned as Senior Independent Director and a Director of the Company with effect from 15 June 2018;

Daragh J McDermott Company Secretary

Phil Male retired as a member of the Audit Committee with effect from 8 September 2018. Joe Moynihan was appointed as a member of the Audit Committee to replace Phil Male; Meriel Lenfestey retired as the Chairman of the Remuneration Committee with effect from 8 September 2018. Joe Moynihan was appointed as Chairman of the Remuneration Committee to replace Meriel Lenfestey; Meriel Lenfestey was appointed as the Senior Independent Director with effect from 8 September 2018 to replace Colin Tucker. Meriel Lenfestey is due to retire by rotation at the forthcoming AGM and is seeking re-election.

KPMG LLP have indicated their willingness to continue in office as auditor.

JT Annual Review 2018/19

Financial Summary The financial summary presents the main highlights from the 2018 consolidated financial statements prepared under accounting standards currently applicable in the United Kingdom and in accordance with Jersey Company law. A copy of the detailed audited consolidated financial statements may be obtained via www.jtglobal.com

The Group financial statements consolidate the financial statements of the Company, its subsidiary undertakings and associates as at 31 December each year. The results of subsidiary undertakings acquired or disposed of during the year are consolidated for the periods from or to the date on which control passed.

Consolidated income statement for the year ended 31 December 2018

2018 2017 £’000 £’000

Continuing operations Revenue 250,494 260,660 Cost of sales (155,982) (168,633) Gross profit Operating expenses Other income

94,512 (87,253) 106

92,027 (80,949) -

Operating profit Share of results of associated undertakings Gain on financial assets at fair value through profit or loss

7,365 - 105

11,078 (2) 210

Profit before interest and taxation Finance income and similar income Finance costs and similar charges

7,470 72 (2,211)

11,286 6 (2,328)

Profit on ordinary activities before taxation Tax on profit on ordinary activities

5,331 (3,089)

8,964 (4,147)

Profit on ordinary activities after taxation

2,242

4,817

Consolidated statement of comprehensive income for the year ended 31 December 2018

2018 2017 £’000 £’000

Profit for the financial year 2,242 4,817 Currency translation difference Cash flow hedge movement Remeasurement of net defined benefit obligations Total tax on components of other comprehensive income

890 - 8 (2)

(704) 171 55 (11)

Other comprehensive income/(loss) for the year, net of tax

896

(489)

Total comprehensive income for the year

3,138

4,328

Profits for the year attributable to Owners of the parent 2,242 4,817 Non-controlling interest - 2,242 4,817 Total comprehensive income attributable to Owners of the parent 3,138 4,328 Non-controlling interest - 3,138 4,328

JT Annual Review 2018/19

Financial Summary (cont.) Consolidated statement of financial position as at 31 December 2018

2018 2017 £’000 £’000

Fixed assets Intangible assets and goodwill 23,735 Tangible assets 115,184 Investment in associate - Other investments - Deferred tax asset 947

20,156 112,468 611 4,209 941

139,866 138,385 Current assets Inventories 3,180 3,355 Receivables due within one year 40,416 38,969 Receivables due after one year 4,047 3,013 Cash at bank and in hand 16,930 19,781 64,573 65,118 Payables: amounts falling due within one year

(38,768) (38,548)

Net current assets

25,805

26,570

Total assets less current liabilities

165,671

164,955

Payables: amounts falling due after more than one year Deferred tax liability Provisions for other liabilities Post-employment benefits 2.5% Redeemable preference shares

(52,494) (9,726) (2,691) (708) (10,000)

(51,000) (9,238) (2,205) (725) (10,000)

Total non-current liabilities

(75,619)

(73,168)

Net assets

90,052

91,787

Capital and reserves Called-up share capital 20,000 Currency translation reserve (116) Equity reserve 70,168

20,000 2 71,785

Equity attributable to owners of the parent

90,052

91,787

Consolidated statement of changes in equity Called up Equity Hedging Currency for the year ended 31 December 2018 share capital reserve reserve translation reserve £’000 £’000 £’000 £’000 Balance at 1 January 2017 20,000 72,320 (171) 297 Profit for the year Other comprehensive loss for the year

- -

4,817 (660)

- 171

Total comprehensive income for the year

4,157

171

Currency retranslation on foreign operations - - - (295) Dividends - (4,692) -

- (535)

171 (295)

Balance as at 31 December 2017

20,000

71,785

Balance at 1 January 2018

20,000

71,785

Profit for the year Other comprehensive income for the year

- -

2,242 896

- -

Total comprehensive income for the year

3,138

Currency retranslation on foreign operations - 35 - (118) Dividends - (4,790) - - (1,617) - (118) Balance as at 31 December 2018

20,000

70,168

(116)

JT Annual Review 2018/19

Financial Summary (cont.) Consolidated cash flow statement for the year ended 31 December 2018

2018 2017 £’000 £’000

Profit for the financial year

2,242

4,817

Adjustment for: Tax on profit on ordinary activities 3,089 Finance income and similar income (72) Finance costs and similar charges 2,211 Share of results in associate - Fair value movements on financial assets at fair value through profit or loss -

4,147 (6) 2,328 2 (210)

Operating profit

7,470

11,078

Amortisation of goodwill and intangible assets Depreciation of tangible assets Amortisation of goodwill in associate Loss on disposal of intangible assets Loss on disposal of tangible assets Provision for bad debts and bad debt write off Inventory impairment Currency translation difference

7,429 17,221 78 99 7 759 159 932

7,986 15,945 115 162 228 313 240 300

Operating cash flow before movement in working capital 34,154 36,367 Net charge on provisions 485 356 Decrease in inventories 16 2,838 Increase in receivables (2,184) (3,443) (Decrease)/increase in payables (84) 1,428 Cash flow generated from operating activities Taxation paid Pension contributions

32,387 (2,692) (1,904)

37,546 (1,950) (1,805)

Net cash flow generated from operating activities 27,791 33,791

Consolidated cash flow statement (Continued) for the year ended 31 December 2018

2018 2017 £’000 £’000

Cash flow from investing activities Purchase of intangible assets (2,013) Purchase of tangible assets (19,849) Purchase of subsidiaries (6,070) Disposal of tangible/intangible assets 10 Disposal of equity investment 4,314 Finance income and similar income 72

(2,202) (19,606) 367 6

Net cash used in investing activities (23,536) (21,435) Cash flow from financing activities Dividends paid (4,790) (4,692) Interest paid (2,113) (2,174) Preference dividend paid (200) (200) Net cash used in financing activities

(7,103)

(7,066)

Net (decrease)/increase in cash and cash equivalents

(2,848)

5,290

Cash at bank and in hand at beginning of the year Effect of foreign exchange rate changes

19,781 (3)

14,786 (295)

Cash at bank and in hand at end of year

16,930

19,781

JT Annual Review 2018/19

Notes to the Financial Summary General information

Tangible Assets

JT Group Limited (the “Company”) and its subsidiaries (together the “Group”) has its principal operations in Jersey. The Group also has operations in UK, Australia, Denmark and USA. The principal activity of the Company and its subsidiaries is the supply of telecommunication services and equipment.

Tangible assets are stated at cost net of depreciation and any impairment. Cost includes the original purchase price, costs directly attributable to bringing the asset to its working condition for its intended use.

The Company was incorporated in Jersey, Channel Islands on 22 October 2002 and the address of its registered office is No 1 The Forum, Grenville Street, St Helier, Jersey, Channel Islands, JE4 8PB.

Jersey Taxation Current tax, including income tax in Jersey and foreign tax, is provided at amounts expected to be paid (or recovered) using the tax rates and laws that have been enacted or substantively enacted by the statement of financial position date. Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the time of the statement of financial position date, where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred at the statement of financial position date. Deferred tax is measured on a non-discounted basis. Deferred tax assets are recognised to the extent that they are regarded as recoverable and that on the basis of available evidence, it can be regarded as more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted.

Buildings include freehold and leasehold retail outlets and offices. Buildings are stated at cost less accumulated depreciation and accumulated impairment losses Network equipment, fixtures and fittings and motor vehicles are stated at cost less accumulated depreciation and accumulated impairment losses. The cost of network equipment includes all cable, ducting and transmission equipment extending from the main switching systems to the customers’ premises. Capital work in progress comprises capital projects which are under construction. Once completed, projects are capitalised as separately identifiable assets and depreciated over their estimated useful economic lives. The costs of tangible assets, less estimated residual value, are written off over their estimated useful economic lives on a straight-line basis as follows: Freehold buildings Leasehold buildings

50 years the term of the lease

Motor vehicles

7 years

Equipment, fixtures and fittings: Network infrastructure

3-25 years

Other*

5-10 years

*This includes freehold and leasehold fixtures and fittings.

Intangible assets (excluding goodwill)

Other Provisions or liabilities and charges

Intangible assets (excluding goodwill) are stated at cost less accumulated amortisation and accumulated impairment losses. These intangible assets consist of internally and externally developed assets. Other intangible assets, including intellectual property (IP) and IP rights are recorded at fair value at the date of acquisition. Amortisation is calculated, using the straight-line method, to allocate the amortisable amount of the intangible assets to their residual values over their estimated useful lives as follows:

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Asset retirement obligations and dilapidations are recognised as provisions as a result of the legal obligation for decommissioning costs on mobile site and property leases. These provisions are recognised through the statement of financial position.

Websites and website development

3–5 years

Software, software development and software applications

3–5 years

Intellectual property rights

5-8 years

Software licences

the term of the licence

Business combinations and goodwill Business combinations are accounted for by applying the purchase method. The cost of a business combination is the fair value of the consideration given, liabilities incurred or assumed and of equity instruments issued plus the costs directly attributable to the business combination. Where control is achieved in stages the cost is the consideration at the date of each transaction.

Associates Investments in associates are accounted for using the equity method. Investments in associates are initially recognised at the transaction price (including transaction costs) and are subsequently adjusted to reflect the Group’s share of the profit or loss and other comprehensive income of the associate.

Financial assets - Investments Investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price.

Pension and employee benefits For defined benefit plans, the amounts charged to operating profit are the current service costs and gains and losses on settlements and curtailments, they are included as part of the staff costs. Past service costs are recognised immediately in the income statement. The Group has two defined benefit schemes of the Public Employees Contributory Retirement Scheme (“PECRS”) and the Telecommunications Board Pension Scheme (“TBPS”). On 1 October 2015, JT (Jersey) Limited’s pension assets and liabilities were moved out of the sub-fund and into the main scheme, administered by States of Jersey. This is considered to be a multi-employer (benefit) plan as defined by FRS 102. Under the revised Terms of Admission there is insufficient information available to use defined benefit accounting and, with effect from 1 October 2015, JT (Jersey) Limited has accounted for the scheme as if it was a defined contribution scheme. However, the scheme continues to be a defined benefit scheme. This change resulted in the release of the defined benefit liability, held by the Group on the statement of financial position from its previous accounting basis, down to nil as at 31 December 2015. The deficit in the defined benefit plan for TBPS, being the difference between the value of the scheme assets and the present value of the scheme liabilities, is recognised in the statement of financial position. 194 employees of the Company are members of PECRS. This has been closed to new joiners since 2011. TBPS has 2 members.

Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.

The Company also offers employees the JT Group Limited Pension Plan, which is a defined contribution scheme.

Inventories

The States of Jersey have been issued with 20m ordinary shares at £1 each, authorised and fully paid up. The shares carry a voting right of one vote for each share held. Dividends of £4.8m (2017: £4.7m) were paid during 2018 to the States of Jersey.

Inventories are valued at the lower of cost and net realisable value and accounted for on a weighted average cost basis.

Share capital, dividends and redeemable preference shares

JT Group Limited also has 10m 2.5% preference shares at £1 each in issue to the States of Jersey Currency Fund, with interest payable twice yearly.

Stay in Touch JTsocial JTHelp JT Group Limited JTsocial JTHelp JT_Business JTsocial PO Box 53, No1 The Forum, Grenville Street, St Helier, Jersey, JE4 8PB

www.jtglobal.com Facts and figures correct at time of publication. April 2019.