JT Annual Review and Financial Statement 2022

Chair’s Foreword

Welcome to JT’s Annual Report for 2022.

Meriel Lenfesty Chair

It is a really exciting time to be taking the helm at JT. We’ve set out a very clear 5-year strategy as we focus on transforming the business into a sustainable communication provider of the future.

My background is in customer experience, and I want to continue making sure that the relationship we have with our customers is as strong as it could possibly be. Delighting our customers by delivering the connectivity they need, in the way that they need it is what makes JT. As a provider of critical national infrastructure, our business touches everyone, so it is vital that we get it right.

A period of strong growth and value realisation in our international business has given us the platform to re-invest in our core activities at home. That means upgrading the equipment which runs our network and, subject to regulatory approval, to begin building the eagerly anticipated 5G network.

JT provides the connectivity which enables businesses, governments and communities to thrive. Our networks are amongst the best networks in the world, and my challenge to our customers is to use them to their full capabilities – in that sense, 5G will be a perfect partner to our world leading fibre network, I’m really excited about the opportunities they provide. There are many applications from health care to sustainability that will see the real potential of these next generations of technology, and JT is here to enable them. We’re keen to work with our islands’ leaders to identify ways to deliver positive outcomes for our communities.

A key focus in the 5 year plan is around sustainability in all senses of the word. We are focusing our efforts on delivering the best for all our stakeholders including our customers, our people, our shareholder, our island and the planet. We no longer measure success based purely on financial results, we now monitor progress and reward against the experience of all these stakeholders.

I would like to congratulate Daragh McDermott on his appointment as CEO. He combines strong leadership skills with an exceptional first-hand knowledge of JT, its people and its customers. He has made a number of structural changes to the senior leadership team to drive the delivery of our strategy. I’m pleased to welcome Louise Easterbrook to the JT Board as a Non-executive Director and I’d like to thank all the JT staff for their dedication and loyalty through a time of change.

I would particularly like to thank my predecessor, Phil Male, for the excellent job that he did as Chair where he led a period of huge change and significant developments. I am proud to now have the opportunity to build on our previous successes and lead JT through the major transformation ahead.

I am looking forward to the next decade which will see an even faster rate of change thanks to the investments we have made, and the new technology that’s emerging. JT, and the Channel Islands, will be right at the centre of that.

Chair 29 March 2023

CEO’s Review and Strategy Update

Daragh

When I joined JT more than 20 years ago, it was a very different business to the one we see today. The full-fibre broadband we take for granted in Jersey, was only a concept as little as 13 years ago; but now we have a fully deployed network and we’re enjoying some of the fastest speeds in world.

Gigabit Fibre was a major island-wide project that took us several years to complete whilst, in parallel, we were also upgrading our mobile network to 4G. That 4G mobile network remains in good health today but such is the rate of change, we are soon to start replacing it with 5G, as technology continues to move on at a pace.

5G encompasses the whole spectrum of new technology, infrastructure and mobile connectivity and plays a very important role in all of our futures. It will touch every sector in every industry – supporting advances in eHealth, helping businesses of every size to become more energy efficient, delivering improved bandwidth and enhanced security features and it will serve as a technology gateway for a number of emerging businesses – an exciting prospect for our

islands. And, much like JT fibre in the early days, it is almost impossible to comprehend the breadth of capabilities it will bring to the Islands long into the future. 5G forms only part of an entirely new network modernisation programme, meaning that our customers won’t just realise the benefits of 5G, but the benefits of the entire suite of product and services that sit, or will sit on top of the network.

With the recent approval of our licence by the JCRA, I am delighted to announce that work will begin in 2023 on the enhanced network.

This is the forward-thinking nature of telecoms and I feel very privileged to see and experience first-hand how, as a provider of critical national infrastructure, we can play a fundamental role in the economic and social development of our communities.

With full-fibre in the ground and 5G in the air, we are building the digital infrastructure of the future, for everyone.

It is a considerable honour to be writing this, as CEO of what I believe is a truly remarkable company.

McDermott Chief Executive Officer

Joining Together

When we talk about the importance of our Islands’ infrastructure, We must also note the significant roles the other utilities play in making the Channel Islands such a great place to work, live and play.

JT has long been a believer that we must work together in partnership with our fellow utilities to make the lives of our customers better, this has been demonstrated most acutely during the recent times of COVID and continues today as we all navigate our way through the current cost of living crisis. We are working with Jersey Water and Jersey Electricity to support the National Trust for Jersey’s ‘green grid’ initiative, where our teams will come together to plant a further 5 miles of hedgerows to protect our Island’s wildlife and encourage biodiversity to flourish.

JT’s new Community Giving is here to help not-for-profit organisations, with donations and support for local community projects. We want to offer the incredible charities and groups who do so much for our island, an extra helping hand. Who can apply?

Also, this year we are very proud to have launched JT Community Giving –a funding and support scheme, whereby any charity or not-for-profit can apply for help with a project that gives back to the people of the Channel Islands. Our first round of applications closed in December 2022 with 49 requests for support, and I’m delighted to say that we’ve already helped 28 charities in vital ways, such as providing Wi-Fi support for a new Mental Health drop in centre in Jersey and supplying technical devices needed to run vital 24/7 online counselling lines for some of our most vulnerable Islanders.

Fibre in Guernsey

With the exciting news that every home in Guernsey is due to be connected to full fibre by 2026, I’m proud to say that JT have already connected over 700 customers to fibre in Guernsey. We’re proud of the role we’ll play in opening up the opportunities that we know will follow once we give the community access to super-fast fibre speeds.

JT Community Giving aims to help community projects, that support one of more of the below;

• Local charity project that results in meaningful ‘give-back’ to our community.

• Events that support free digital skills progression and opportunities for all.

• Initiatives that promote and support the importance of mental and physical health and well-being of our islanders.

• Projects that protect or enhance our islands environment and heritage.

Together we can make a difference.

An Update on JT’s Strategy

Our 5-year strategy was approved by the Board of JT following the sale of the IoT business in late 2021. At its core, our strategic aim is to digitise and simplify our business so that we become an efficient and modern telecommunications operator. Doing this will enable JT to be in an even stronger position going forward to support our customers and to deliver the islands’ digital future.

Delight our Customers

We are continually striving for ways to ensure that our customers find JT a great company to deal with and, as such, our strategy focuses on delighting our customers in 3 keys areas:

Be a Great Network

The reliability of our network is our ultimate priority and while there is no such thing as a zero fault network, we work hard to ensure upgrades, planned works and security changes are executed in an effective and efficient manner with limited or zero impact on customer services. We are acutely aware that even minor incidents can have an impact on customers including their ability to call emergency services and our objective is to ensure that where these occur that we recover as quickly as possible.

To this end, 2022 saw us embark on a programme of work to significantly strengthen our network reliability and we carried out over 4,000 planned works to improve network stability. Amongst many other initiatives, the work we’re doing to secure a world-class vendor to replace our current mobile network provider, which will include the launch of 5G, will improve our long-term performance, resilience and latency.

Simplification

To simplify the experience for our customers, we’re working hard to reduce the legacy products and services we offer, whilst also investing in great new future-proof technology and products. Much of 2022 has been spent reviewing our portfolio and our back-office systems and setting the groundwork for 2023 and beyond. We have already retired over 30% of services in order to make it simpler for customers to choose the best offer and for us to be able to support you. In addition, we also brought to market new products such as JT Total Wi-Fi, which not only improves Wi-Fi speed and reach in the home, but also provides improved security and resilience to cyber-attacks.

Customer Experience

Customer Service is everything to us here at JT, and that’s why we have increased the number of ways in which our customers can communicate with us – extending support hours and providing channels such as online chat. But we also know that customers want to be able to do more for themselves. In 2022, we made 59 new enhancements to our JT apps, improving automation and

• Delight our customers

• Be a great place to work

• Grow the business

• Build a sustainable future

allowing customers to self-serve in a number of ways such as adding on bolt-ons for discounted roaming. We will continue to invest in our online tools and apps and you will see some exciting developments in the coming months when we extend services further such that customers will be able to manage the majority of changes to their account at any time of the day or night, wherever they are in the world.

Be a Great Place to Work

Recruiting and retaining talent is both our greatest asset and, at the same time, one of our biggest challenges. Like most local businesses, finding and keeping high-performing people is critical to our success. I’m immensely proud of the team at JT, our culture of celebrating each other’s accomplishments, continuous learning and our commitment to inclusion and diversity means we are able to attract staff with world-class expertise. It is not only the skills of our people but also their positive engagement that will be vital as we look for ways to modernise the business for the future. We work very hard to make JT an employer of choice and to ensure that our people are fully engaged in our vision. In 2022, we achieved an end of year employee Net Promoter Score (eNPS) that secures our place in the top 5% of telecoms companies globally. Remarkable in itself, but even more so given the recent years of substantial change. I’m absolutely thrilled that our loyal people remain with us and that we continue to attract new talent to come with us on this exciting journey.

JT’s purpose is simple, to Connect People Together and to deliver on that purpose the Strategic Compass has 4 main priorities:

1. With our network and service.

2. On the Channel Islands and Internationally.

3. The triple bottom line of People, Planet and Profit.

Grow the Business

JT’s home has always been the Channel Islands, but in order to further invest in our world-class networks locally, we must continue to grow our business internationally to raise the money for these investments. In order to provide the best in class capabilities to our Channel Islands’ customers, we have deliberately invested in the highest levels of networking technology but, in doing so, our networks have far greater capacity and capability than the population of the Channel Islands requires. So, in order to maximise their potential and value, JT continues to expand into international markets by selling and exporting innovative SIM and roaming services to a growing global market.

JT Fraud Protection Services (FPS) is just one of the unique products and services we offer to customers globally. FPS delivers a range of specialist solutions to banks, financial services, and payment solution providers around the world, providing expert intelligence to help indicate, flag and block fraudulent mobile activity. A service that is reliant on the broadest global coverage possible which JT is able to service through our agreements with over 500 roaming partners. JT are also working on a number of new innovative FPS products to launch in 2023, and we also see continued International growth in areas such as messaging and sponsored roaming which we will continue to grow through innovative solutions to strategically identified global markets.

In addition to this, JT continues to be well placed to deliver future-focus technological solutions and we are committed to being at the forefront of digital innovation. On-island, we have a network that is perfectly placed to act as a test bed for new technologies through our diverse partner relationships and globally, JT’s roaming operator footprint presents some further exciting opportunities for future innovative solutions and growth.

Building a Sustainable Future

As well as JT’s planet commitment to be carbon neutral by 2030 in our scope 1 + 2 carbon emissions, we also focus on the broader spectrum of sustainability which extends far beyond that of just carbon emissions. For our people, we know that simply providing great rewards and benefits is no longer the key factor for retention, research tells us that other factors are far more important. As a result, we constantly seek to find more and more ways to meet the values of our people. These include providing an environment where they can enhance their skills and education, ensuring we provide a diverse and equitable workplace and demonstrating that we are a company with a strong sustainability compass. We were one of the first Jersey businesses to be accredited as a living wage employer in 2019 and we continue to review all aspects of well-being to see how we can support our people in as many ways as possible.

In closing, it has been a year of huge change at JT, both structurally and operationally, but it has also been a year of setting the solid foundations for the exciting journey ahead.

Whilst challenging, 2022 has also see a number of great successes. We met our margin targets in both the Channel Islands and International, despite challenging trading conditions; and increased our subscriber base, group revenue, gross and operating profits year-on-year. We’ve connected over 700 of our Guernsey customers to Fibre broadband, reduced our overall carbon footprint by 38%, helped to raise over £40,000 for Autism

charities and continue to make significant changes to the way we do things with the customer at the core of every decision we make.

I am delighted that we continue to serve our longstanding loyal customer base but that we also continue to attract new subscribers to our network, this is testament to the value of the service, the products and the experience we work so hard to give our customers.

The roll-out of full-fibre, plus the growth and subsequent sale of our IoT business, were all-consuming projects; but with both projects now successfully complete, the time is right to focus on JT’s operational efficiency as we transform the business into a modern and effective communication provider.

We have a lot of work to do, but I’m confident that we have an exceptional team in place to deliver on our objectives and I very much look forward to working with them on creating a new and exciting JT for our customers.

Thanks Daragh

Hélène Narcy Chief Financial Officer

Performance Update

Over the last 18-months, we’ve worked hard to set out our strategy and clearly define our 5-year plan. JT’s Balanced Scorecard was created and launched at the end of 2021 to outline JT’s long-term vision. The 5-year plan contains a roadmap of annual targets and performance measures.

The below table outlines JT’s Balanced Scorecard in more detail, and provides a RAG performance update for JT’s 2022 targets, measured against an annual KPI set for each key objective.

Provide an excellent network

Objective

Strategic Priorities

Description

Do Good for Jersey

We take great pride in the infrastructure we have invested in for the people of the Channel Islands, and we want to ensure

“Do good” for Jersey Transform and Grow

Build a Sustainable Telco

Provide an excellent network

Positive & proactive shareholder engagement

Provide excellent customer experience

• Ensure JT’s network is resilient and delivers the latest technology for our customers

• Comply with local regulations

• Maintain excellent relationship and transparent communication with our shareholder

• Listen to customer feedback and act upon it

• Improve JT’s overall customer experience by improving the way they can interact and do business with us

RAG Performance vs 2022 target

Grow CI business

• Remain competitive within the Channel Islands with our products and services, resulting in a growth in margin

• Simplify legacy product portfolio, to allow for future product investments

Grow International business

Sustainable people

Sustainable planet

Sustainable profit

• Identify International growth opportunities, which allow us to further leverage our existing services

• Invest in new products and services, relevant to our International customer base

• Maintain an engaged team, with a supported and diverse culture

• Become Carbon Neutral by 2030 in our scope 1+2 emissions

• Generate return from our large-scale investment programme

• Improve JT’s overall efficiency by simplifying and digitising the business, in line with customer needs

Do Good for Jersey Provide an Excellent Network

We take great pride in the infrastructure we have invested in for the people of the Channel Islands, and we want to ensure we do all we can to provide a truly resilient network. To do so, requires a great deal of maintenance work and in 2022 JT’s engineers conducted over 4,000 planned works, to maintain a secure and robust network. However, we still saw a number of Service Incidents that impacted some of our customers. Advances have been made as part of our service assurance framework and further improvements will be made through our network replacement and transformational programmes.

Read more on our Operations Update Page >

Positive & Proactive Shareholder Engagement

As a States of Jersey-owned entity, the relationship we maintain with our shareholder is crucial. Our ‘no surprises’ commitment and continuous improvement around transparent two-way communications, is core to our success and we maintain a very strong line of engagement and relationship with the Minister for Treasury and Council of Ministers.

Provide Excellent Customer Experience

Delighting our customers has always been very important to us, be that by providing a great network, personal service or product range and value. We continuously listen to feedback to improve the products and services that we offer, and we continue to invest in the digital channels that our customers want to use. Our Net Promoter Score delivered a 2.13 rolling average for the year, which whilst short of the high target we set ourselves, is significantly ahead of the UK Telco average of -20 *

Transform and Grow Grow CI Business

Growing the Channel Islands’ profit margin is challenging due to increasing costs, plus the challenge added by growing competitors from outside of the Channel Islands. However, in 2022 we grew our local consumer subscriber base by over 3,000 users, and saw growth in both our Data Centre business and business customer base, all contributing to our 2022 revenue targets. Further margin growth is expected as a result of our business focus on simplicity and efficiency. As we reduce the complexity within our portfolio, we can begin to offer our customers what they want in a more efficient and quicker way. In 2022, we reduced legacy products and services by over 30%. Read more on our Operations Update Page >

Grow International Business

Growth outside the Channel Islands is a key element of our strategy. Following the successful sale of our IoT business in 2021, we have focused on the growth of our other International business lines, in particular our Fraud Protection Service (FPS) product. We exceeded our margin target for FPS in 2022 and believe there are opportunities for future growth as the market matures. 2022 was also a good year for our Messaging services, which grew over 40% year-on-year. In 2022, we also started the development of new products and services for International customers, which we plan to launch in 2023.

Read more on our Financial Performance Page >

Build a Sustainable Telco Sustainable People

Having an engaged workforce is core to JT’s success. Our key KPI which sits behind the engagement of our people comes from JT’s monthly Peakon employee engagement survey (eNPS). We ended 2022 on eNPS of 67, against a target of 50 - Putting us in the top 5% of telcos globally.** The rolling average for the full year was 60.

Read more on our People Page >

Sustainable Planet

Our sustainable planet KPI is aligned to the Government of Jersey’s plans to be carbon neutral in their scope 1+2 emissions by 2030 and we have a roadmap in place to reduce our carbon footprint over that period. In 2022, whilst our Scope 2 emissions have reduced, we have seen an increase in our Scope 1 emissions from cooling equipment and increasing generator testing back to pre-Covid levels. We continue to monitor data in order to improve all aspects of our business.

Read more on our Sustainability Update Page >

Sustainable Profit

Our sustainable profit KPIs are set to ensure we return profits on continued large-scale investments. In 2022 we have not quite met our profit target for the year, due to high investment and transformation expenses and continued regulatory pressures. Whilst we expect to see lower profitability in the short-term as we focus on simplifying and transforming the business so it operates more efficiently, we do see it increasing as we progress through our simplification programme and 5-year plan.

Read more on our Financial Performance Page >

Looking Ahead –Strategic Challenges

JT is a sub-scale telecommunications company in a scale-rewarding industry. The key strategic challenge for JT is to ensure it generates sufficient returns, to allow us to invest in the large network investments that our stakeholders expect.

These returns are difficult to achieve in the Channel Islands alone, so we continue to develop off-Island products and services that utilise some of the spare capacity that we inevitably obtain when moving to, for example, 5G.

International business presents a different set of challenges: there is more competition, we are relatively small compared to some of our competitors and we encounter diverse legal, regulatory and currency related risks. However, the potential for growth far exceeds what we could achieve locally.

Our strategic challenge is a fine balance of International growth, alongside our primary focus - transforming the business to meet the future needs of our customers, whilst providing them with exceptional customer service. This is why we are investing significantly in both simplifying and digitising our product offerings and our back-office operations to improve efficiencies, customer interactions and overall customer experience.

Financial Performance Update

Performance

2022 was the first full year of our 5-year strategy to transform the business following the sale of the IoT business. The focus being to ensure that the Channel Islands business is resilient and sustainable in the medium-term whilst we grow our International product lines to help fund future network investments, products and services.

Work began on 3 main strategic programmes in 2022:

• Refine our product portfolio and our operational processes to simplify and improve resilience

• Procurement for our planned 5G network and replacement of High Risk vendor (HRV) equipment was initiated

• Digitisation plan to improve and future-proof our customer and back-office systems

As shown in our balanced scorecard on p8, JT did not quite achieve its financial targets for 2022 but nevertheless improved the bottom-line profitability of the business year-on-year.

Revenue from Continuing Operations

Group revenue increased by £20.2m year-on-year to reach £147.7m in 2022. Most of the revenue increase came from our International division. The sale of connectivity services to Velos IOT, post the sale of our IOT business was a main contributor. Most other product lines including Fraud Protection Services (FPS), Sponsored Roaming and Messaging also did well. Channel Islands revenue remained broadly flat year-on-year. The good performance of our Consumer division was somewhat offset by lower revenue from our Enterprise division, mainly due to lengthy supply chain delays, impacting equipment and associated professional services sales.

Gross Profit

Gross profit increased by £3.2m year-on-year to £83.3m in 2022. Similar to revenue, most product lines from the International division generated increased margins in 2022. Ongoing market and regulatory pressures in the Channel Islands continue to impact and challenge margin growth.

Operating Profit/(Loss)

The majority of JT’s margin increase continued through to the operating profit, which grew £1.2m year-on-year to £3.2m. The work undertaken on our 3 strategic programmes as well as regulatory remediation initiatives understandably generated some incremental expense.

Profit/(Loss) After Tax from Continuing Operations

JT recognised a loss of £4.3m in 2022 (versus a £0.1m profit in 2021). This is mainly driven by non-realised losses on our long-term financial investments. 2022 saw extreme market volatility that hit all asset classes. The expectation is that the investment will recover over time and that it will be reflected in JT’s profit and loss of future years.

Moving Forward

JT will continue to focus on its transformation programme in line with its strategy. In doing so, we acknowledge the need for further significant investment, and that this will lower profitability and cash generation in the short term, but will provide efficient and sustainable operations in the long term. A key part of JT’s strategy is to continue to identify and target opportunities to leverage JT’s infrastructure, and develop new products and services across our international and home markets.

• Equity: JT’s financial robustness is demonstrated by continued strong equity value which is mostly made of retained profits.

• Contributions to GoJ: JT recorded its highest return to its shareholder in 2021, paying out a dividend of £42m mainly from the proceeds of the IOT sale and redeeming £10m of preference shares. Post 31st December 2022, the directors have approved the payment of a final ordinary dividend for 2022 of £5m that will be executed in 2023.

Operational Update

Our Customers

JT is a full-service, global connectivity and business solutions provider. Headquartered in Jersey, we support residential customers across the Channel Islands with broadband, mobile and landline services across our award winning full-fibre and 4G networks.

We also provide large enterprises and SMEs with a full-range of communication services, including Cloud, Cybersecurity, Data Centre and a full-suite of Managed Services. Being based in a financial hub, we provide services to many of the world’s leading banks, Trust, Legal and fiduciary companies.

We employ over 500 people globally, and have a thriving international business, providing global customers with services such as critical fraud protection, SIM swap

prevention, mobile number portability, enterprise messaging and sponsored roaming.

We have a history of developing innovative products and, following on from the sale of our IoT division, we now also provide critical infrastructure platforms and services to Velos IoT, our largest International customer, with over 12 million connected SIMs in the global market. As its primary connectivity partner, JT remains committed to supporting the International growth of Velos’ global IoT business.

Structural changes to improve the way we serve our customers

In late 2021, we conducted a major restructure of our business, driven by our overall company objective to increase efficiency and improve the way we service and support our customers. JT’s new

Stood left - right

Tom Noel - Chief Product Officer

Thomas Helbo - Chief Operations Officer

Sat left - right

Nicola Reeves - Group HR Director

Katie Corbett - Chief Commercial Officer

JT’s Executive Committee

Daragh McDermott - Chief Executive Officer

Hélène Narcy - Chief Financial Officer

Operations structure united our engineering, technical and customer support teams as one team with responsibility for the entire JT Group and all our customers. This enabled us to tackle some of the historical barriers to JT’s operational effectiveness and means we can now centrally review all customer projects, policies and processes, ultimately improving Service Level Agreements and overall customer experience.

Our new structure

In mid-2022, using the same principles, JT Group went through a further organisation restructure, which first saw a restructure of its Executive Committee (ExCo), shortly followed by organisational change under each executive pillar. The objective was simple – to reshape the way we do things to better serve our customers. The main changes being the creation of two new Group divisions; Product - to focus on product simplification and innovation to meet the current and future needs of our customers, and Commercial – to centralise all sales functions to further improve our global customer experience.

By the end of 2022, JT’s restructure was complete, with a new Executive Committee, collectively focused on the delivery of JT’s strategy, with our customers at the very heart of the organisational changes.

Improving our Customer Interactions

Our customer operations and the way we service our customers is very important to us. In 2022, we launched an internal Quality of Experience (QoE) team to provide centralised and simple reporting on all of our customer interactions across the whole business, with the aim of monitoring and showing continuous improvements against a clear set of customer KPIs. One key improvement that came from the monitoring of our customer data was the launch of the JT Technical Centre, put in place to resolve more customer faults remotely via a team of first line in-house engineers. The enhancements we’ve made to our operational ways of working throughout 2022 have improved our efficiency at resolving customer problems. For example, through our frontline and JT Technical Centre teams troubleshooting and resolving fault queries remotely we have reduced the number of faults requiring an engineer visit by 19%; meaning an improved service experience for our customers and fewer vans on the road.

Our Customer Channels

2022 has been a very busy year across the majority of our customer channels. We’ve taken over 60,000 customer calls, handled and actioned over 55,000 emails and had over 18,000 live chats across our social media and online shop channels.

Our Customer Interactions in Numbers

Number of JT App Users

We continue to see huge growth across our digital channels and currently have over 16,000 residential customers using our pre and postpaid apps – a 19% increase on 2021 users.

JT Voice

As well as usage statistics, we also actively seek customer feedback through JT Voice – an online feedback forum where we ask customers for their opinion on our products and services, but also to tell us more about their needs. Membership has grown to over 2,500 in 2022, and through that invaluable insight we have made many changes to the way we do things and to the products we offer. This feedback will also become crucial in 2023 and beyond as we review and build the customer experience design at various stages of our digitisation journey.

Simplicity – The future of JT

Our customers are telling us that the experience they want from us as a provider is digital, simple and, where possible, automated. They want to do more for themselves, be that via the JT app, online shop or speaking to an advisor quickly through our online chat. They want to see less complexity in our processes and to make changes to their account at the touch of a button.

Simplicity is key to the future of JT and integral to our 5-year plan. We have also created a company-wide simplicity portfolio, focusing on 3 key programmes.

of JT’s tariffs and services, including the removal of legacy out-dated products. Already in 2022, our teams have worked hard to reduce the number of products by over 30% and we’re also making significant changes to our own Internal processes and systems to make it easier for us to service our customers.

Autonomous Networks encompasses the network replacement programme, removal of High-Risk Vendors to comply with regulations and the future arrival of 5G. Our overall network strategy will ensure that our new network is fit for the future and provides network automation for added security, resilience and latency. It will also improve software configuration and the advanced automation will improve performance, but also reduce costs, providing the perfect testbed for future innovations. 2022 has been spent selecting the best vendor for the job and achieving the regulatory approval to do so.

Digitisation focuses on investing in the digital and IT technologies of the future. These initiatives will use data to improve decision making and optimise our networks. They will improve customer processes and provide a flawless customer journey and exceptional customer experience, transforming JT into a modern communication provider of the future.

As a business, our objective is to be an exemplar of the way that these 3 programmes and innovation through technology can simplify and improve all of our lives, whether that is at work, at home or on the move. We want to keep our customers connected and allow them to do more, any time day or night, from any device and from any location in the world.

Our People

Making JT a progressive company and great place to work is one of our four strategic priorities. We continue to develop and invest in the future of our people, their development and well-being. We strive for an inclusive people culture where everybody feels valued, empowered and inspired to grow and develop. Our hybrid working, teamed with our world-class technology means that a large percentage of our people can now work flexibly, promoting a sense of work-life balance, well-being and engagement.

Culture and Engagement

We use a monthly Employee Engagement Survey to give us a real-time ‘temperature check’ of how everyone in the company is feeling. The survey gives everyone the opportunity to have a voice and raise feedback anonymously should they wish. The results then allow us to monitor trends and build real-time action plans so we can make a difference quickly and effectively.

In 2022, our employee Net Promotor Score (eNPS) reached an all-time high of 67, placing us in the top 5% of all telcos globally*. These results are based on an above average participation score for 2022 of 60%, but we are committed to growing the response rate even further in 2023.

Developing our People

Embedding a culture of learning and ensuring people have the capabilities they need to succeed is another key area of focus for us, together with ensuring our people have the skills for the future. In 2022, we launched a new mentoring scheme and a new people management programme accredited by the Institute of Leadership and Management.

We also participated in learning at work week, with a variety of technical and specialist workshops delivered across our global business for all of our employees.

As a result we saw a 57% increase in employees learning and developing new skills throughout 2022.

We continually review and update our succession plans to ensure we are developing our people whilst maintaining business resilience.

Reward and Recognition

At the beginning of 2022, we invested in and launched a new app-based reward and recognition platform called ‘JT All-Stars’ to give our people a public platform to congratulate and celebrate each other’s successes. In its first year, the platform has seen an adoption rate of 96% and over 5,000 peer recognitions. Achievers benchmark for adoption is 93%. Since the launch of this, our employee recognition score has increased from 46 to 66.

Remuneration

Our remuneration philosophy is to pay people fairly and within market range. In 2019, JT became Jersey’s first large-scale commercial organisation to become an accredited living wage employer.

Salaries are reviewed annually and pay increases are considered in line with various factors including inflation, market-range and personal performance. Every 2-3 year’s, a comprehensive review is carried out with external benchmarking companies in the UK and Jersey, taking into consideration the skills required and the Company’s government ownership. This was applied in 2022 to ensure that in most circumstances we aim to maintain base pay within 90-110% of the benchmark midpoint range for all roles.

JT has a bonus scheme for all permanent employees in noncommission roles. An employee’s bonus is made up of two elements – personal and business performance. 2022 was the first year that the company performance element was measured on more than just our financial success, but instead on the annual KPIs set out in the company’s balanced score card (as outlined on p8).

We provide an environment that encourages long-term retention, in addition to offering a variety of employee benefits. These include flexible working, private health and dental care, pension contributions, cycle subsidy schemes and much more.

Further details of Directors’ remuneration can be found in the notes to the Financial Statements on p92.

Nicola Reeves Group HR Director

Our People in Numbers

Our People Policies

We have over 100 people policies and in 2022 we launched a £4£ matching and volunteer day policy, allowing our people to give back to our local community by supporting a charity of their own choice. 2022 also saw the launch of a JT menopause policy to help support women in our workplace.

Sickness and Absence Data

JT saw an average of 3.4 days lost per employee in 2022, which is 26% lower than the UK national average.

Well-being

Supporting the well-being of our employees has always been a big focus of ours and we continue to introduce and invest in new initiatives and awareness tools to assist and support our people through mental, physical, financial and social well-being. The below chart provides some examples of how we do this.

Mental – mental health first aider training, bi-weekly mental health coffee mornings, free AXA mental health coach sessions, employee assistance support line.

Physical – Provide our people with free health checks, free flu jabs, cycle to work scheme, plus information and support around areas such as sleep, nutrition, physical activity, smoking, alcohol and drinking enough water.

Financial – Provide advice and guidance around budgeting, saving and pensions and provide financial support through times of hardship.

Social – encourage an environment of positive reinforcement and peer recognition as well as social events.

Diversity, Inclusion and Belonging (DI&B)

DI&B has been a growing area of focus for JT and one in which we made significant progress in 2022.

We increased our Tide (Talent Inclusion and Diversity Evaluation) score from 37% to 61% against a target of 44%, resulting in winning a bronze award from the Employers Network for Equality and Inclusion (ENEI).

We also increased our internal score measured through our employee engagement survey from 52 (December 2021) to 67 (December 2022) and continuously seek feedback to ensure JT is a diverse and inclusive great place to work.

Attracting and Retaining Talent

The recruitment and retention of our people is paramount to the success of our strategy and 5-year plan, but also presents us with some of the biggest challenges (see Risk Management section on page 16).

Our hybrid working approach has helped with our talent attraction and retention. We continue to face challenges in recruiting technology talent due to limited local resources, and skills shortage. A key focus for us in 2023 will be our talent attraction messaging and attractiveness to this population.

Future Talent

We know our industry has historically been a male-dominated environment and whilst our overall gender split has room for improvement, we are working hard to ‘break the bias’ as we continue promoting STEM (Science, Technology, Engineering, Maths) roles, working with every school locally.

Promoting career opportunities at JT to all demographics of society remains a key focus for us throughout 2023 and beyond.

No on JT’s Board – 7 (43% are female) (see p22 for the full list of JT Board Members)

No on JT’s Executive Committee – 6 (50% are female)

Total No of employees - 513 (28% are female)

Total number of nationalities – 25 4 3 2

4.6 2022 Days lost JT average days lost National average

Risk Management

Managing risks and uncertainties is a fundamental part of successfully delivering our strategic objectives. Our enterprise risk team governs and implements a risk management framework using the three lines of defence model. This framework enables a consistent approach to how we identify, assess, manage and monitor the risks and uncertainties to the successful delivery of our strategic objectives.

The business provides the first line of defence, leading and directing actions and application of resources to achieve objectives. Appropriate structures and processes for the management of operations, risk and internal control are established and maintained. The first line also ensures compliance with legal and regulatory expectations.

Business lines are supported by a network of risk champions and the second line.

Risk oversight is provided by the risk team, who sets policy, detailed risk reviews and provides guidance and support to risk owners and champions.

The risk team reports quarterly to JT’s Executive Committee, who are responsible for setting risk appetite and direction of strategy as it relates to principal risk. Further reporting to the audit and Risk Committee is provided on a quarterly basis.

Assurance is provided by JT’s internal audit team, who communicate independent and objective assurance and advice to management on the adequacy and effectiveness of governance, risk management and internal control to support the achievement of JT’s objectives.

Risk Matrix

JT’s current portfolio of identified risks is reflected in the heatmap to the left. Each risk is positioned against their current impact and likelihood score.

The scoring methodology, review, and management processes for these risks are aligned to ISO31000:2018.

A summary of the key risks that have the potential to threaten the delivery of JT’s objectives – ‘JT’s Principle Risks’are provided within the table to the right. The Principle Risks highlighted, show eight of JT’s key risks out of the overall Risk Matrix, to demonstrate their direct relationships to JT’s strategic objectives. 1

Key for risk table (p17)

Principal Risks and Uncertainties

The most significant risks – those which could affect our strategic objectives, future performance, viability, and/or reputation –form our principal risks. Principal risks draw upon the significant corporate risks recorded in each business line with ongoing input from our senior leaders and respective oversight committees. These risks are reviewed by the Audit & Risk Committee and the Board quarterly. Each principal risk aligns to one of our four key strategic priorities covered on p6.

Principal Risk Areas of Focus for 2023 Key Controls and Mitigating Factors

Network stability and reliability

Risk: that we are unable to maintain a stable and secure network that meets the expectations of our stakeholders

• Significant investment in JT’s infrastructure and systems, to improve network resilience, security and further ensure the reliability of calls to emergency services. The investment includes a multi-year programme for the delivery of 5G and replacement of our existing mobile network provider

• Continued implementation of a Security Operations Centre

• JT continues to invest in the quality, resilience, security and monitoring of its networks, which included in 2022 the formation of a new Network Operations Centre providing 24/7 monitoring, alerting and incident response capabilities

Regulatory framework: increased complexity

Risk: that the evolving regulatory landscape will increase complexity across both Islands

• Manage the programme needed to deliver the Telecom Security Act and code of practice, including removal of High Risk Vendors from JT’s network

• Enhance compliance and reporting to provide assurance to Regulators and our Shareholder

• Proactive engagement with regulators ensures that we can act quickly to any changes in the regulatory landscape

• A governance framework and mechanisms are in place for timely escalation and action

Events impacting customer experience

Risk: that our customers have a poor experience when using our products and services

• Continue to develop and enhance measurement and solutions that improve our customer experience

• Monitor customer impact of our product simplification programme

• Addressing customer feedback, proactive monitoring of SLAs and KPIs through regular dedicated forums

• Proactive communication on product migration

Ability to secure growth through the innovation of new products

Risk: associated with the need to simplify and manage the product portfolio whilst securing future growth through innovation and new product development

Change delivery

Risk: that JT does not deliver the transformation strategy

• Dedicated product function with focus on simplification, lifecycle and innovation

• Disciplined product roadmap prioritisation and governance

• Strengthen and build partnerships with existing and new partners

• Delivery on 2023 milestones for JT’s key strategic programmes of product simplification, digital transformation and autonomous networks

• Alignment of business prioritisation to improve throughput of effort and improved resource management

• Alignment on Product Strategy

• KPIs to track progression on product simplification targets

• Set of financial KPIs to track new revenue generation

• Executive oversight and response to KPIs, status and risk reporting

• Enhanced resource management

JT’s ability to attract and retain talent

Risk: that JT is unable to attract or retain sufficient people with the skills needed to deliver on its longer term ambitions

• Work with business to document and align strategic workforce plan and identify gaps

• JT undertakes demand and capacity assessments to identify and manage resource and change requirements

• Smart ways of working allow us to expand our talent reach through our flexible location working

• Monthly employee engagement surveys provide feedback to management for rapid action

Environmental, social and governance risks

Risk: that JT does not deliver on sustainability ambitions and fails to manage its appetite for ESG risks

Enterprise-wide process governance and control framework

Risk: that JT does not have an effective and efficient governance process and control framework

• Run material impact assessment on business activities to feed into JT’s sustainability reporting

• Continue to drive carbon reduction in line with science based targets

• 10-year sustainability strategy in place

• Proactive engagement with the Government of Jersey, suppliers and partners

• Enhance controls and processes with integration of JT’s Enterprise Resource Platform (ERP) solution during 2023

• Formalise and document process and control framework and embed within business processes

• Newly formed Corporate Services division brings together governance, risk & compliance roles to enable more focus on enhancement of JT’s control environment

• Internal audit and compliance checks of controls and assurance reporting to JT’s Audit & Risk Committee

• Executive oversight and response to audit actions and opinions

Sustainability Update

JT publicly launched its 10-year Sustainability Strategy in 2021, focusing on two main ambitions centred around Planet and People - reducing our environmental impact and promoting key social priorities that bring our community together. We are also committed to the aim of achieving carbon neutrality for Scope 1+2 * emissions, halving supply chain emissions by 2030 (Scope 3) and managing all Environmental, Social and Governance (ESG) risks as part of our overall Risk Management process.

In 2022, we have been focused on improving our data collection and reporting in order to meet that Strategy and prepare ourselves to move towards best practice sustainability reporting. We have set a Science Based Target* to reduce our greenhouse gas emissions, enabling us to identify key areas of focus within the business.

Our Planet Commitments

JT’s Planet ambition currently sets out four key pillars of focus: Power Consumption & Energy Efficiencies, Travel to and at Work, Value Chain and an improved Circular Business Model. In 2022, we have seen an increase in our Scope 1 emissions due to higher levels of refrigerant gas leakages from the use and recovery of cooling equipment and testing activity on our diesel generators reverting to pre-covid levels. We have however, also seen a significant decrease in our Scope 3 emissions, resulting in a total footprint reduction of 38%. Our focus now continues to be on monitoring the data, highlighting efficiencies and developing our pathway to achieve further reductions.

Some of our key achievements in these areas include:

Power Consumption & Energy Efficiencies

The use of solar power has contributed to a reduction of 3 tC02e at our West Exchange and Little Sark sites.**

We’ve replaced a generator at West Exchange from diesel to HVO biofuel, as well as replacing some of our air conditioning units across our buildings.

Travel to and at Work

2022 saw a further 19 JT employees purchase bikes through the bike subsidy scheme (a total of 99 subsidies have been granted since the scheme was launched in 2020) and through our corporate partner scheme with EVie, we provided employee discounts for 276 bike hires. A commuting habits survey of employees was carried out by the JT Aspire team (an internal Leadership training scheme), who found that 61% of our employees would consider using an Electric Vehicle and 65% of respondents made meaningful suggestions for changing commuting habits. We have also reduced our JT van fleet by 8% in 2022, with electric vehicles now making up 34% of the remaining fleet.

Value Chain

Our value chain encompasses all our activities to bring our products and services from conception to end use and beyond. Further understanding and reducing environmental and social impacts created within our value chain is a core focus for 2023. We continue to engage with our suppliers to collaborate, share our climate ambitions, and improve on the quality of sustainability data that we collect from them. We recognise that impact in this area can only be achieved through strong collaboration and we have a lot more to do.

Gill Knights JT Group General Counsel & Head of Sustainability

Circular Business Model

A number of the original ambitions in this pillar of the Strategy were delivered on throughout the year, including 100% recyclable packaging in all stores and introducing new eco lines. In October 2022, JT’s retail offering included a ‘like new’ range, promoting and selling refurbished devices alongside the Fairphone and solar headphones.

2022 Carbon Footprint

Scope 1+2

2022 saw an 12% increase in our Scope 1+2 verified footprint to 1,430 tCO2e, compared to 1,281 tCO2e in 2021 and 1,384 tC02e in 2020 (but a 51% reduction over 2 years since 2,923 tCO2e in 2019).

Key areas of reduction over the last 12 months specifically have been from reduced electricity consumption and company vehicle fuel usage, whilst the recovery of refrigerant gases from air conditioning units has caused the biggest increase.

Our People Commitments

JT’s People ambition also sets out two key pillars of focus: Community and Diversity Inclusion and Belonging. 2022 saw a number of key achievements:

Community

• Launched JT Community Giving

• Launched JT £4£ Matching and Volunteer Day policies to all employees globally

• Helped to raise over £40,000 for chosen charities through the organising and sponsoring of fundraising events (see more on p20 JT in the Community page).

Diversity, Inclusion and Belonging (D&I)

• 100% employee completion of ESG and Inclusion e-learning certification

• Launched an Accelerate management development programme with unconscious bias and inclusion modules

• Delivered ‘I am, I can, I belong’ workshops

• Introduced pronouns and pronunciations on email signatures

• Increased ENEI score from 37% to 61% against a target of 44% (See our People page for more detail on p14.)

Scope 3

Our Scope 3 footprint has seen a 43% reduction with a total of 8,197 tC02e. This is due to improved granularity in data collection, and lower spend in some categories. The JT Sustainability Strategy is currently under review and will be re-evaluated to include a deeper focus on Scope 3 emissions in 2023 onwards to meet the challenge of halving our supply chain emissions by 2030. We will engage with JT suppliers to ensure their carbon footprint is reported on and we reduce our footprint together.

Carbon Emission Offsetting

Whilst we’re doing what we can to proactively reduce our carbon footprint year-on-year, we continue to offset the carbon we currently cannot avoid generating.

JT continues to offset its Scope 1+2 carbon emissions for 2022 at a cost of £39,996 via the Durrell Rewild Carbon offset scheme.

Sharing Best Practice Locally

We continue to drive sustainability to the top of all our agendas and make room for change. As well as the work we do internally, we also want to inspire and support other businesses and individuals in their sustainability journeys. In 2022, as a business, we have been involved with a number of ESG events. I personally gave a talk at LEAP 2022, was a panelist at the IOD “ESG – Measures that Matter” event, presented at Guernsey Chamber of Commerce Lunch and Learn to share JT’s sustainability journey so far, and also shared our story at the Counsel & Co session held by Carey Olsen. It is only by working together, that we will protect our Islands and planet for the many generations to come.

2023 – Looking Forward

Whilst we report transparently on our Sustainability progress and have a robust roadmap of reductions and activities taking us to 2030, we know we still have a way to go. 2023 will be focused on continuing to gather the data which will prepare us for future reporting requirements, increase our accountability and enhance transparency on our contribution to sustainable development, supporting the shared goals for our Island.

JT in the Community

Community is so important to us at JT. We’ve been serving the people of the Channel Islands for over 130 years and in that time we’ve been involved in some incredible community and charity events and projects and, we hope, have built up a reputation for supporting many good causes.

Our Chosen Charities 2022

Every year we have asked our people to vote for a charity to support as our ‘JT chosen charity of the year’. In 2022, our people voted to support Autism charities and as such our chosen charities for 2022 were Autism Jersey, Autism Guernsey and Amaze Australia

We also continue to work closely with several local stakeholders, including, the Government of Jersey, Digital Jersey and The Institute of Directors to identify and support digital and connectivity initiatives for the benefit of our Islanders and business community.

We’re also a big supporter of local initiatives that support digital innovation and in 2022 we supported a series of local Tekex events, the ‘LEAP’ programme in schools and Digital Jersey’s ‘Digital Bootcamp’.

As a team we worked with each of these organisations on a full calendar of fundraising and volunteering events to support the incredible work they do and in total we helped to raise over £40,000.

Autism Jersey

In 2022, we were proud to support Autism Jersey as one of our chosen charities.

Click here to watch their story and discover how Lesley, Head of Charitable Services at Autism Jersey, uses JT’s connectivity to help spread awareness of their vital support services.

Community Giving

Coming out of the COVID-19 pandemic and into a period of unprecedented high inflation, we knew the challenges that so many charities have faced with fundraising and support, and in direct response, in November 2022, we launched JT Community Giving, a funding and support partnership for good causes across the Channel Islands.

The idea is to make a real difference to our local communities, so successful applications will show how their project provides meaningful ‘give-back’ to the people of the Channel Islands.

Our first application period closed on the 31st December 2022 and we received 49 applications for support, ranging from laptops for Beresford Street Kitchen in Jersey to run a ‘learning for life’ education programme to funding digital health screens in Guernsey to better support the elderly.

We’re pleased to say there was a 57% success rate for applications and as a result, in January 2023, we confirmed our support for a further 28 charities.

How and Where do you Apply?

If you work for a local charity or not-for-profit group, then when you’re ready to apply, we can’t wait to hear from you. Applications are welcome all year round, but will only be reviewed and funds given every 3 months.

Our third application period is open now and will close on the 30th June 2023, with all applications being contacted in July.

For more information and some helpful FAQs, you can visit: www.jtglobal.com/community

The Green Grid Project

In November 2022, we also announced a new sponsorship with the National Trust for Jersey. Teams from JT, Jersey Water and Jersey Electricity came together to support The Green Grid Project.

“These are tough times for many charities, and they’re constantly seeking new sources of support and ways of giving. ‘JT Community Giving’ is a much-welcomed and vital community initiative. Targeted support like this, across so many avenues, will really help a huge number of worthwhile charities, individuals, and organisations.”

Kevin Keen, Chair of the Association of Jersey Charities

Employees from the three entities volunteered their time to create the largest continuous grid of hedge corridors in Jersey by planting and maintaining an additional five miles around the island, which commenced in early November and by the time the planting season finished in February, we had collectively achieved over 1,500 new whips planted measuring 1.17km & involving over 100 employees.

“The ‘Green Grid’ project provides natural corridors for wildlife, enhancing biodiversity and helping to trap carbon. It’s such an important project for the Island’s environment and we are so grateful for the support of these large Island employers and are looking forward to working with their teams over the winter, as together we provide a much needed resource to make this happen. Without these teams the scale of the project really wouldn’t be possible.”

Charles Alluto, Chief Executive of the National Trust for Jersey

As a government-owned business and one of the Island’s largest employers, we take our role in the community very seriously. Our community is what makes us, it unites us all and we continue to support Islanders through times of hardship and grief. Together, we can make a difference.

Board of Directors

Meriel Lenfestey Chair

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.

Other Business Interests:

• Non-Executive Director for Aurigny Air Services (resigned 2 March 2023) (Transport)

• Chair of Gemserv Ltd (resigned 24 January 2023) (Low carbon energy)

• Non-Executive Director of the Bluefield Solar Income Fund (Renewables)

• Non-Executive Director of International Public Partnerships Ltd (Infrastructure)

• Non-Executive Director of Ikigai (ESG)

• Non-Executive Director of Boku (Global digital payments)

• Member of IoD Guernsey Committee

• Non-Executive Director of Art for Guernsey (Charity)

Joe Moynihan

Non-Executive Director, Senior Independent Director, Chair of the Remuneration Committee

Joe Moynihan 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 in Jersey and internationally. 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.

Other Business Interests:

• Executive Director and Chief Executive Officer of Jersey Finance Limited

Mark Shuttleworth

Non-Executive Director, Chair of the Audit & Risk Committee

Mark, a Chartered Accountant and certified INSEAD Director, is an experienced Non-Executive Director and has held various Non-Executive positions focusing on Chairing of the Audit and Risk Committees. Prior to this, Mark’s executive experience included extensive public limited company exposure within the international TMT sector, including telecommunications and technology manufacturing with scale. He finished his executive career as CFO of FTSE 250 company Pace Plc. Prior to that, Mark was the CFO of Emirates Integrated Telecommunication Company PJSC (“du”), based in the UAE, and the former Group CFO of Qatar Telecom plc (“Qtel” now known as “Ooredoo”).

Other Business Interests:

• None

Angus Flett

Non-Executive Director

Angus has been the CEO of Smart Data Communications Company (DCC) since 2017. He has an extensive telecoms background, including roles in product management, marketing and service operations. As a Managing Director at BT, he was instrumental in the company achieving a world number one ranking for agent technical expertise and number two for agent responsiveness. He was also responsible for BT’s ISPco division, the fifth biggest white-label Internet Service Provider in the UK, running end-to-end services for EE, Vodafone, Post Office and SSE. As Senior Vice President of Vodafone’s Global Enterprise Products, Angus developed the company’s enterprise connectivity strategy and launched its global connectivity portfolio targeting SME and corporates, achieving revenue growth of 6% above market rates. Angus has a master’s degree in Business Management from the Henley Management College at the University of Reading and is a fellow of the Chartered Institute of Marketing.

Other Business Interests:

• Chief Executive Officer of Smart DCC Limited

Louise Easterbrook Non-Executive Director

Louise is a senior financial professional with over 25 years’ experience in the telecoms industry, including board roles in both commercial and not-for-profit organisations. She has been the Chief Financial Officer of GSMA since 2014, where she is responsible for the business and financial performance of the Association, which represents mobile network operators globally and hosts the world’s largest and most influential connectivity event, MWC. Louise is also the Treasurer of GSMA’s Mobile for Development Foundation Board, set up to oversee a wide range of activities where mobile technology can provide solutions to development challenges for underserved communities.

Her career has included several senior roles at Vodafone and Cable & Wireless, including Regional Financial Controller, Africa at Vodafone and Group Director, Investor Relations at Cable & Wireless. Louise is a qualified Chartered Accountant and has a Bachelor of Commerce (Honours) degree from the University of Birmingham.

Other Business Interests:

• Chief Financial Officer of GSMA

Daragh McDermott

Chief Executive Officer

(appointed 20 April 2022)

Daragh joined JT from PwC Consulting’s London office, where he specialised in the provision of strategic, economic and regulatory policy advice to clients in the telecommunications sector. Prior to that, Daragh spent 5 years with KPMG’s Dublin office, working in its technology, media and telecommunications division.

Daragh is a Fellow of the Institute of Chartered Accountants (“FCA”), a Fellow of the Institute of Chartered Secretaries and Administrators (“FCIS”), a Fellow of the Institute of Directors (“FIoD”) and a Chartered Director (“CDir”). He holds an honours degree in Business Studies from Dublin City University, a Diploma in Company Direction from the Institute of Directors, and a Graduate Diploma in Law from the College of Law, Guildford.

Outside of his role in JT, Daragh is a Non-Executive Director of Jersey Water and Chair of La Moye Golf Club in Jersey.

Other Business Interests:

• Non-executive director of Jersey Water

• Chair of La Moye Golf Club

• Trustee of Autism Jersey (resigned 31 December 2022)

Hélène Narcy Chief Financial Officer and Director of Corporate Services

Having joined JT in July 2019, Hélène was appointed as Chief Financial Officer in April 2020 and, more recently, as Director of Corporate Services. A graduate of the French business school ESCP, she also holds the French accounting diploma DECF. Hélène brings more than 25 years’ experience, having held various senior finance positions across different industry types. She started her career with Gemalto (now part of Thales Group) and, more recently, spent ten years with UBS. Hélène has worked in different countries including the UAE, France, Jersey and the USA. Representing Finance in senior management committees, she led a number of finance transformation projects with a positive impact to the business.

Other Business Interests:

• None

Phil Male Chair

(resigned on 1 October 2022)

John Diamond Interim CEO

(resigned on 20 April 2022)

Board Effectiveness

Annual Report Statement

This year, the Board undertook an external effectiveness review. The review was undertaken between February & April 2022, with questionnaires and interviews, independent observations made at Board meetings, the Board materials, and ongoing evaluation of Hogan personality assessments for all Board members both individually and collectively as a Board. It was followed up with further interviews and discussions. As well as the Board members themselves, it also involved the Group Company Secretary, the Executive Committee and senior leadership team members who have significant exposure to the Board, along with several key external stakeholders. To ensure consistency with the 2021 process, it was based on the Institute of Directors (IoD) Competency Framework and the process was independently run by Darren Briggs from Flametree Communication Ltd. A report into the findings of the Board Effectiveness review was provided to the Board as part of the Board retreat held in May 2022.

The JT Board and its committees were found to be broadly effective across all categories; however, due to the pandemic, it was evident that the Board had weakened on several dimensions from the IoD framework, specifically sustaining effective intraBoard relationships. Despite this, the breadth of expertise on the Board brings a healthy challenge to Board discussions and drives confident decision making; the Board continues to pay sufficient attention to strategic issues around changing technologies, customer expectations, competitive landscape, political and regulatory developments, resource availability and value generation.

However, the Board recognises the need to constantly monitor and improve. In particular, the Board has addressed and will continue to address the following areas in 2023:

• With the appointments of a new Chief Executive and Chair, 2022 was a year of significant transition at JT. The Board recognises that it needs to be conscious of the changed dynamics and maintain particular attention on the succession planning process for key Executive and Board appointments to ensure that this transition is effective.

• While there continues to be significant improvements in governance and process in recent years, the Board acknowledges that it would benefit from re-establishing a more structured and disciplined approach to board meeting protocols; including structure, decision making and participations (both with and without ExCo participation).

Corporate Governance

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. 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 corporate 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. The Chair is responsible for leadership of the Board and ensuring its effectiveness in all aspects of its role. The Non-Executive Directors constructively challenge and help develop proposals on strategy, bringing strong independent judgement, knowledge and experience to the Board’s deliberations. The Board has Audit and Risk, Nomination and Remuneration Committees in place; the terms of reference of the Committees are available on request from the Company Secretary. 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

The table below sets out the number of Board and Board Committee meetings held and attended during the financial year:

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 Joe Moynihan, Mark Shuttleworth, Angus Flett and Louise Easterbrook shall be deemed independent, with Joe Moynihan adopting the role of Senior Independent Director with effect from 6 October 2022. Meriel Lenfestey, as Chair of the Company for the year ended 31 December 2022, was considered independent on appointment and, 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. Please see the Board Effectiveness section of this annual report for further details.

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 Company has adopted a policy of requiring all Directors to 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”).

Stakeholder Engagement

The long-term sustainable success of the Company’s business is dependent on its engagement and the support it receives from key stakeholders. Building positive relationships with stakeholders that share the Company’s purpose and values is important and working towards shared goals assists the Company in delivering long-term sustainable success.

The Board considers the following factors when dealing with matters at Board meetings:

• The likely consequences of any decision in the long term for JT;

• The interests of JT’s employees;

• The need to foster business relationships with suppliers, customers and other parties connected with JT;

• The impact of JT’s operations on the community and the environment; and

• The desirability of JT maintaining a reputation for high standards of business conduct.

As part of the Board appraisal process, JT reaches out to key stakeholders.

Workforce Engagement

The Board has regular contact with its workforce. The adopted approach to workforce engagement is on an informal basis, with round-table style meetings taking place on an ad-hoc basis, when the need to consult on specific topics arises. Output from such meetings is reported back to the Board as necessary. All Board members have attended at least one all hands briefing.

Relations with the Shareholder

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. A new Memorandum of Understanding was agreed and signed during the financial year.

The Company is in regular contact with its shareholder with whom the company meets at least four times a year. The Company uses events such as the Annual General Meeting to interact with and hear the views of the shareholder. Due notice of the AGM stating the business of the meeting is circulated to the shareholder in advance of the meeting in accordance with Companies (Jersey) Law, 1991, as amended.

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 the Company is operationally and financially resilient, with the Company’s strategic business objectives 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 identified the principal risks that could impact on its objectives, and the areas of focus to manage these risks along with key controls and mitigating factors. The Company’s principal risks are set out on p16.

The Company has developed and adopted corporate and operational risk registers detailing and 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.

The process of risk assessment and reviewing the effectiveness of the systems of internal control is regularly reviewed by the Audit & Risk Committee, in accordance with FRC’s ‘Guidance on Risk Management, Internal Control and Related Financial and Business Reporting’ and has been in place for the whole of the year, up to and including the date on which the financial statements were approved.

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

• 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.

• Review and approve the terms of reference of committees.

• 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 & Risk Committee concerning the findings of the external auditors on the financial statements of the Company and the systems of internal control.

• Agreeing the internal audit plan with management and the internal auditors (PwC) as well as reviewing the outputs from internal audits carried out by PwC.

Corporate Governance

Audit and Risk Committee

Over the course of 2022, the Committee has continued to build on the strong foundations set in 2021 to ensure that it continues to provide the support to the Board that is required, and to also ensure that the Committee is fulfilling its role in the review of the integrity of the Group’s financial reporting, monitoring the effectiveness of the Group’s risk management and internal controls framework, and its effective oversight of the Group’s outsourced internal audit function and its external auditor. As normal, the composition of the Committee has been reviewed to ensure that its skill sets are appropriate to the Group. In order to ensure a smooth transition of the Chair of the Audit & Risk Committee on Mark’s retirement, we have appointed Louise Easterbrook to the Committee during 2022, who will take over the Chair position for the Committee with effect from the AGM, which is due to be held on 25 April 2023. This year, the Committee has focused on improving the qualitative reporting into the Committee to enhancing regular monitoring of the Group’s transformation of its IT infrastructure and applications and associated risks, with a special focus over the course of 2022 of monitoring the implementation of an ERP system. The Committee has also strengthened the Group’s internal audit function through outsourcing the core competencies to PwC, the benefits of which have already been seen by the Committee and the Group.

The assurance framework required by the Committee is provided by complementary contributions from management reports, internal and external audit reports and risk management and compliance reports. However, as chair of the Committee, Mark has also held regular meetings with the Company’s internal and external auditors, the chief financial officer, senior members of the Group finance department, and other senior executives to ensure an understanding of key issues relevant to the Group.

That said, during the year, the Committee continued its key financial oversight role for the Board, outlined in its terms of reference, to reassure the shareholder that its interests are properly protected in respect of the Group’s financial management and reporting.

During 2022, the Committee has:

• continued to scrutinise the activities, performance, independence and effectiveness of the external auditors;

• supported the Board with its ongoing monitoring and evaluation of the effectiveness of the Group’s risk management and internal controls systems;

• in consultation with the Group’s internal auditors (an outsourced function provided by PwC), determined the focus of the Group’s internal audit activity, monitored its effectiveness, reviewed its findings and verified that recommendations were being appropriately implemented. Over the course of 2022, internal audits were carried out into the ERP implementation programme, the Group’s purchasing cards and on-island billing.

All of these audits detailed areas for improvement and work has either already been completed or is in progress to make the suggested improvement.

The fact that three audits were completed over the course of 2022, which have already led to improvements to internal controls, clearly shows that the decision to outsource the internal audit function to PwC has been extremely beneficial. It has provided the Group with access to resources at PwC, which have a large range of skillsets and expertise to enable the audits to be carried out in good time;

• continued to monitor the integrity of the Group’s financial statements and satisfy itself that any significant financial judgements made by management are sound. Our report details the significant financial judgements on p61.

Mark will be available at the Annual General Meeting to answer any questions about the work of the Committee during the year and its focus going forward.

Committee Composition

The membership of the Committee, together with appointment date, is set out below:

Member Audit and Risk Committee member since

Mark Shuttleworth (Chair)

Joe Moynihan

Angus Flett

Louise Easterbrook

1 September 2020

7 September 2018

26 April 2021

1 November 2022

As mentioned previously, the composition of the Committee changed during the period with the appointment of Louise Easterbrook to the Committee.

The Committee members were selected for their range of financial and commercial expertise, necessary to fulfil the Committee’s duties. The Board considers that as a chartered accountant, the Committee Chair, Mark Shuttleworth, has recent and relevant financial experience. Attendance by members at the Committee meetings is shown on page 26. Meetings are attended, by invitation, by the chief financial officer, the Head of Risk, the company secretary, the deputy company secretary, and the Group’s external auditors. In addition, the Group’s internal auditors are invited to attend appropriate sections of the meetings. At the end of each meeting, a private session is held by the Committee with representatives of both the external and internal auditors, which is not attended by management.

The Committee’s Work

The Committee works to a structured programme of activities, developed from its terms of reference, with agendas for the four scheduled meetings of the Committee during 2022 organised to coincide with key events in the annual reporting cycle. The Chair of the Committee reports, at each subsequent Board meeting, on the business of the Committee meeting and recommendations made by the Committee. The main matters that the Committee considered during the year are described on the next page.

Financial Reporting and Significant Judgements

The Committee monitors the integrity of the financial statements of the Company and reports to the Board on significant financial reporting issues and judgements. Throughout the year, the Committee reviews and challenges the application of significant accounting policies, the methods used to account for significant or unusual transactions and whether the Company has adopted appropriate accounting policies and made appropriate estimates and judgements, taking into account the views of the external auditors. At the end of the reporting year, the Committee reviews the financial statements and the completeness of its disclosures, going concern assumption and the suitability of any key assumption. In consultation with the external auditors, the Committee considers whether they can advise the Board that the financial statements give a true and fair view of the Company’s position and financial performance.

Risk Management and Internal Control

The Board recognises that the successful management of risk as part of our everyday activities is essential to support the achievement of our strategic objectives. Through delegation by the Board, the Committee is responsible for reviewing and monitoring the effectiveness of the Group’s risk management systems and internal control. Operation of the Group’s Risk Management Framework, which is designed to support consistent and effective management of risk throughout the Group, is overseen by an oversight structure which includes the Committee. During 2022, the Committee made improvements to the risk reporting provided by management, so that the Committee’s oversight of risk was improved. This included asking for the report to show accountability in terms of risk ownership and clear target dates to bring risks within appetite.

The Board has an ongoing process to identify, evaluate and manage the significant risks faced by the Group. This was in place throughout the year and up to the date of the approval of the annual report. This process is regularly reviewed by the Board. Management is responsible for the identification, evaluation and management of these risks together with the design, operation and monitoring of associated controls to manage risks to an acceptable level.

The Committee considered, discussed and made decisions in relation to a range of risk and internal control-related matters during the course of the year, the most significant of which are outlined below:

• reviewed, and recommended to the Board for approval, changes to the Committee’s terms of reference and calendar of duties;

• reviewed the quarterly Group Risk Report on the ‘top risks’ facing the Group, the relative assessment of impact and likelihood, actions underway or taken to deliver target risk ratings and escalating to the Board for discussion as a whole where appropriate;

• approved the annual internal audit plan, outlining those areas to be covered by the work of internal audit during 2022/2023 and monitored the progress against the plan at each meeting. This included updates on progress to deliver management

actions relating to internal audit actions. The Committee also received and approved changes to the plan during the year;

• monitored the risks and associated controls over the financial reporting processes, including the process by which the Group’s financial statements are prepared for publication;

• reviewed reports from the external auditors on any issues identified during the course of its work, including a report on control weaknesses identified; and

• reviewed, and recommended for approval, the Group’s risk management disclosures for inclusion within the annual report and accounts.

Oversight of the External Audit

The Committee’s oversight of the external auditors includes reviewing and approving the annual audit plan. In reviewing the plan, the Committee discusses and challenges the auditors’ assessment of materiality and financial reporting risk areas most likely to give rise to material error.

KPMG reported to the Board and confirmed its independence in accordance with ethical standards and that it had maintained appropriate internal safeguards to ensure its independence and objectivity. Assignments awarded to KPMG have been, and are, subject to controls by management that have been agreed by the Committee to monitor and maintain the objectivity and independence of the external auditors.

To further safeguard the objectivity and independence of the external auditors, the Committee has a formal policy governing the engagement of the external auditors to provide non-audit services, providing details of prohibited, audit-related and permitted services. The policy requires approval by the chief financial officer of any work undertaken by KPMG and mandates Committee approval, prior to the commencement of work, of all non-audit assignments.

The total audit fees paid to KPMG for the year relating to the Group audit was £311,735.

Amounts paid to KPMG were reported to and considered by the Committee.

The assessment of the effectiveness and performance of our external auditors is continually and formally considered by the Committee. Feedback was sought from other members of the Group finance team, divisional management and the Group chief risk and compliance officer. The feedback from this process was considered by the Committee. Following robust debate and challenge, action plans were developed in relation to better communication during the audit cycle between KPMG and the Group’s divisional teams. In its evaluation of the external audit function, the Committee concluded that it was satisfied with the work of KPMG and that KPMG continued to be effective, objective, and independent.

External Audit Partner Rotation

During 2022 KPMG Channel Islands Limited replaced KPMG LLP as auditor. As a result of this change a new audit partner was appointed for the 2022 financial year.

Corporate Governance

Annual Evaluation of Committee Performance

The Committee’s activities formed part of the evaluation of Board effectiveness performed in the year.

Remuneration Committee

The aim of the Remuneration Committee is to attract, retain and motivate executive management of the quality required to run the Company successfully without paying more than is necessary, having regard to the views of the shareholder and other stakeholders. The terms of reference of the Remuneration Committee allow it to meet as and when necessary to:

• Review and determine the level of remuneration of the Executive Committee.

• Receive notification of staff remuneration over £150k.

• Review periodically the terms and conditions of employment of the Executive Directors and Senior Management Team.

• Make recommendations to the Board on the Company’s overall framework of salaried staff remuneration and costs.

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

Only members of the Committee have the right to attend Committee meetings. However, other individuals, such as the Chief Executive, Chief Financial Officer and Human Resources Director, plus any external advisers, may be invited to attend for all or part of any meeting, as and when appropriate. No director is allowed to determine their own remuneration.

During the year ended 31 December 2022, there were six formal meetings of the Remuneration Committee, with full attendance at three of those meetings. The Remuneration Committee comprised of Joe Moynihan (Chair), Meriel Lenfestey, Mark Shuttleworth, Angus Flett, Louise Easterbrook (appointed 1 November 2022) and Phil Male (resigned 1 October 2022).

Nomination Committee

During the financial year ended 31 December 2022, the Nomination Committee comprised Meriel Lenfestey (appointed as Chair 1 October 2022), Mark Shuttleworth, Angus Flett, Joe Moynihan, Louise Easterbrook (appointed 1 November 2022) and Phil Male (resigned 1 October 2022). Executive Directors may also attend the meeting by invitation.

There were six formal meetings of the Nomination Committee during 2022, with full attendance at four of those meetings.

The Nomination Committee is primarily responsible for the selection and recommendation to the Board for the appointment of the Company’s Executive and Non-Executive Directors, as

and when required. During the year, the Nomination Committee worked closely with the Jersey Appointments Commission to recruit for and appoint a new Chief Executive Officer and a new Chair, which is reflected in the number of meetings held during the year being higher when compared to previous years.

Following rigorous external recruitment processes led by the Jersey Appointments Commission, Daragh McDermott was appointed as Chief Executive Officer with effect from 20 April 2022, and Meriel Lenfestey was appointed as Chair with effect from 1 October 2022.

The other duties of the Nomination Committee include:

• Making recommendations to the Board as to the annual re-election of Directors, 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. As a matter of policy, the Chair of the Board is not permitted to chair the Committee when it is dealing with the matter of succession to the Chair. 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 Jerseybased 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, including age and gender balance.

The Committee recognises the important contribution the Board makes to the long-term sustainable success of the Company. At least annually, the Committee formally considers the structure, size and composition required of the Board in order to meet the current and future needs of the Company. At each Annual General Meeting all of the directors in office retire by rotation and seek re-election.

A rigorous recruitment process is in place for the appointment of Non-Executive Directors to ensure that the policy of the Board to populate itself with directors who have a diverse range of skills and attributes is achieved.

JT Group Limited Directors' report For the year ended 31 December 2022

The Directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the "Group") consisting of JT Group Limited (referred to hereafter as the "Company") and the entities it controlled at the end of, or during, the year ended 31 December 2022.

Incorporation

The Company was incorporated in Jersey, Channel Islands on 22 October 2002.

Principal activities

The principal activity of the Company and its subsidiaries is the supply of telecommunications services and equipment.

The principal place of the Company’s business is Jersey, Channel Islands.

Going Concern

The Group’s business activities, together with the factors likely to affect its future development, performance and financial position are described in the notes to the consolidated financial statements. Note 30 describes the Group’s policies and processes on financial risk management objectives and capital, provides details of financial instruments and Group’s exposures to risks.

Management has assessed the Group’s financial stability and liquidity over the next 18 months from the reporting year end. The investment in 5G and expected dividend payments have been considered. In addition to the existing £50 million Revolving Credit Facility, the Group has a strong recurring revenue stream and expects inbound and outbound roaming to continue to recover to normal levels following the pandemic. The decrease in cash held as at year end is as a result of the Group investing in a portfolio of securities during the year. The loss making position for the year is due to the fair value adjustment of these investments as a result of market movements and the Group is profit making before these adjustments. A reasonably plausible downside scenario to 31 December 2024 has been modelled and applies a reduction in revenue based on a risk assessment of revenue segments and an increased trade receivables impairment loss. The outcome of the downside scenario provides sufficient headroom between forecasted net borrowing requirements and available funding.

Consequently, the Directors are confident that the Group and Company will have sufficient funds to continue to meet its liabilities as they fall due for at least 12 months from the date of approval of the financial statements and therefore have prepared the financial statements on a going concern basis.

Directors and membership of the Board Committees

The executive and non-executive Directors of the Group who served during the year and subsequently are:

Non-executive

Angus Flett

Joe Moynihan

Mark Shuttleworth

Meriel Lenfestey

Phil Male resigned on 1 October 2022

Louise Easterbrook appointed on 1 November 2022

Executive

Daragh McDermott (CEO) appointed on 20 April 2022

Hélène Narcy (CFO)

John Diamond resigned on 20 April 2022

Dividends

There were no dividends paid, recommended or declared during the year.

Since year end the Directors have proposed the payment of a final dividend of £0.25 per fully paid ordinary share. The aggregate amount of the proposed dividend expected to be paid by 31 July 2023 out of retained earnings at 31 December 2022 is £5m (2021: £nil)

Matters subsequent to the end of the financial year

A dividend for the year was approved for recommendation to the shareholders, refer to note 29.

JT Group Limited Directors' report For the year ended 31 December 2022

Other than as disclosed above, no matter or circumstance has arisen since 31 December 2022 that has significantly affected, or may significantly affect the Group's operations, the results of those operations, or the Group's state of affairs in future financial years.

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.

Independent auditor

KPMG Channels Islands Limited replaced KPMG LLP as auditors on 12 October 2022. KPMG Channel Islands Limited have indicated their willingness to continue in office as auditor.

This report is made in accordance with a resolution of Directors.

On behalf of the Directors

H Narcy Director

29 March 2023

JT Group Limited Directors' report

For the year ended 31 December 2022

Directors' responsibilities statement

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

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the financial statements in accordance with International Financial Reporting Standards ("IFRS"). Under Jersey company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the profit or loss of the Group for that year.

In preparing these financial statements, the Directors are required to:

● select suitable accounting policies and then apply them consistently;

● make judgements and accounting estimates that are reasonable and prudent;

● state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements;

● assess the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and

● use the going concern basis of accounting unless they either intend to liquidate the Company or to cease operations or have no realistic alternative but to do so.

The Directors confirm they have complied with all the above requirements in preparing the financial statements.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group's transactions and disclose with reasonable accuracy at any time the financial position of the Group and enable them to ensure that the financial statements comply with the Companies (Jersey) Law 1991. They are responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included in the Group’s website. Legislation in Jersey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Responsibility statement of the Directors in respect of the annual financial report

We confirm that, having taken into account all of the matters considered by the Board and those brought to its attention during the year; to the best of our knowledge, the annual report and financial statements taken as a whole are fair, balanced and understandable and provide the information necessary for our shareholder to assess the Group position and performance, business model and strategy.

Review of risk management and internal control systems

We confirm that we have carried out a review of the Group’s risk management and internal control systems. We are satisfied that the systems are aligned with our strategic objectives.

the Members of JT Group Limited

Directors' responsibilities statement

JT Group Limited Directors' report

JT Group Limited

Independent auditor's report to the Members of JT Group Limited For the year ended 31 December 2021

For the year ended 31 December 2022

We have nothing to report on other matters on which we are required to report by exception

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

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

Our opinion is unmodified

• adequate accounting records have not been kept by the Company; or

• the Company's consolidated financial statements are not in agreement with the accounting records; or

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

We have audited the consolidated financial statements of JT Group Limited (the “Company”) and its subsidiaries (together, the "Group"), which comprise the consolidated balance sheet as at 31 December 2021, the consolidated statements of profit or loss and other comprehensive income, changes in equity and cash flows for the year then ended, and notes, comprising significant accounting policies and other explanatory information.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the financial statements in accordance with International Financial Reporting Standards ("IFRS"). Under Jersey company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the profit or loss of the Group for that year.

Respective responsibilities

In our opinion, the accompanying consolidated financial statements:

In preparing these financial statements, the Directors are required to:

Directors’ responsibilities

● select suitable accounting policies and then apply them consistently;

● make judgements and accounting estimates that are reasonable and prudent;

• give a true and fair view of the financial position of the Group as at 31 December 2021, and of the Group’s financial performance and cash flows for the year then ended;

• are prepared in accordance with International Financial Reporting Standards; and

● state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements;

• have been properly prepared in accordance with the Companies (Jersey) Law, 1991.

● assess the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and

Basis for opinion

● use the going concern basis of accounting unless they either intend to liquidate the Company or to cease operations or have no realistic alternative but to do so.

As explained more fully in their statement set out on page 36, the directors are responsible for: the preparation of the consolidated financial statements including being satisfied that they give a true and fair view; such internal control as they determine is necessar y to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error; assessing the Group and Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and using the going concern basis of accounting unless they either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities

The Directors confirm they have complied with all the above requirements in preparing the financial statements.

We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities are described below. We have fulfilled our ethical responsibilities under, and are independent of the Company and Group in accordance with, UK ethical requirements including FRC Ethical Standards. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for our opinion.

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue our opinion in an auditor’s report. Reasonable assurance is a high level of assurance, but does not guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the consolidated financial statements.

Going concern

The directors have prepared the consolidated financial statements on the going concern basis as they do not intend to liquidate the Group or the Company or to cease their operations, and as they have concluded that the Group and the Company's financial position means that this is realistic. They have also concluded that there are no material uncertainties that could have cast significant doubt over their ability to continue as a going concern for at least a year from the date of approval of the consolidated financial statements (the “going concern period").

A fuller description of our responsibilities is provided on the FRC’s website at www.frc.org.uk/auditorsresponsibilities

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group's transactions and disclose with reasonable accuracy at any time the financial position of the Group and enable them to ensure that the financial statements comply with the Companies (Jersey) Law 1991. They are responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

The purpose of this report and restrictions on its use by persons other than the Company’s members, as a body

In our evaluation of the directors' conclusions, we considered the inherent risks to the Group and the Company's business model and analysed how those risks might affect the Group and the Company's financial resources or ability to continue operations over the going concern period.

Our conclusions based on this work:

The Directors are responsible for the maintenance and integrity of the corporate and financial information included in the Group’s website. Legislation in Jersey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

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

• we consider that the directors' use of the going concern basis of accounting in the preparation of the consolidated financial statements is appropriate; and

Responsibility statement of the Directors in respect of the annual financial report

• we have not identified, and concur with the directors' assessment that there is not, a material uncertainty related to events or conditions that, individually or collectively, may cast significant doubt on the Group and the Company's ability to continue as a going concern for the going concern period.

We confirm that, having taken into account all of the matters considered by the Board and those brought to its attention during the year; to the best of our knowledge, the annual report and financial statements taken as a whole are fair, balanced and understandable and provide the information necessary for our shareholder to assess the Group position and performance, business model and strategy.

However, as we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgements that were reasonable at the time they were made, the above conclusions are not a guarantee that the Group and the Company will continue in operation.

Review of risk management and internal control systems

Andrew Quinn

Fraud and breaches of laws and regulations – ability to detect

We confirm that we have carried out a review of the Group’s risk management and internal control systems. We are satisfied that the systems are aligned with our strategic objectives.

For and on behalf of KPMG Channel Islands Limited

Identifying and responding to risks of material misstatement due to fraud

Chartered Accountants

To identify risks of material misstatement due to fraud (“fraud risks”) we assessed events or conditions that could indicate an incentive or pressure to commit fraud or provide an opportunity to commit fraud. Our risk assessment procedures included:

Jersey

• enquiring of management as to the Group’s policies and procedures to prevent and detect fraud as well as enquiring whether management have knowledge of any actual, suspected or alleged fraud;

• reading minutes of meetings of those charged with governance; and

• using analytical procedures to identify any unusual or unexpected relationships.

29 March 2023

As required by auditing standards, we perform procedures to address the risk of management override of controls, in particular the risk that management may be in a position to make inappropriate accounting entries. On this audit we do not believe there is a fraud risk related to revenue recognition because the Group’s revenue streams are simple in nature with respect to accounting policy choice, and are easily verifiable to external data sources or agreements with little or no requirement for estimation from management. We did not identify any additional fraud risks.

JT Group Limited

Consolidated statement of profit or loss For the year ended 31 December 2022

The Annual Report and Consolidated Financial Statements were approved and authorised for issue by the Board of Directors on 29 March 2023 and was signed on its behalf by:

H Narcy Chief Financial Officer

29 March 2023

JT Group Limited

Consolidated statement of changes in equity For the year ended 31 December 2022

JT Group Limited

Consolidated statement of cash flows For the year ended 31 December 2022

JT Group Limited

Notes to the consolidated financial statements For the year ended 31 December 2022

1. General information

The consolidated financial statements of JT Group Limited (the "Company") and its subsidiaries (the “Group”) for the year ended 31 December 2022 were authorised for issue in accordance with a resolution of the Directors on 29 March 2023.

The Group has its principal operations in Jersey. The Group also has operations in Australia, Guernsey, the UK, and the USA. A list of major subsidiaries is included in note 34.

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.

Going concern

The Group’s business activities, together with the factors likely to affect its future development, performance and financial position are described in the notes to the consolidated financial statements. Note 30 describes the Group’s policies and processes on financial risk management objectives and capital, provides details of financial instruments and Group’s exposures to risks.

Management has assessed the Group’s financial stability and liquidity over the next 18 months from the reporting year end. The investment in 5G and expected dividend payments have been considered. In addition to the existing £50 million Revolving Credit Facility, the Group has a strong recurring revenue stream and expects inbound and outbound roaming to continue to recover to normal levels following the pandemic. The decrease in cash held as at year end is as a result of the Group investing in a portfolio of securities during the year. The loss making position for the year is due to the fair value adjustment of these investments as a result of market movements and the Group is profit making before these adjustments. A reasonably plausible downside scenario to 31 December 2024 has been modelled and applies a reduction in revenue based on a risk assessment of revenue segments and an increased trade receivables impairment loss. The outcome of the downside scenario provides sufficient headroom between forecasted net borrowing requirements and available funding.

Consequently, the Directors are confident that the Group and Company will have sufficient funds to continue to meet its liabilities as they fall due for at least 12 months from the date of approval of the financial statements and therefore have prepared the financial statements on a going concern basis.

2. Summary of significant accounting policies

This note provides a summary of the significant accounting policies adopted in the preparation of these consolidated financial statements. These policies have been consistently applied to all the years presented, unless otherwise stated.

New or amended Accounting Standards and Interpretations adopted

(i) New standards, amendments and interpretations issued effective as of 1 January 2022:

Description Effective Date

Amendments to IFRS 3 Business Combinations

2018-2022 Annual Improvements and Onerous Contracts

IAS 16: Property Plant and Equipment: Proceeds before Intended Use

1 January 2022

1 January 2022

1 January 2022

The Directors have considered the impact of the new standards, amendments and interpretations and do not consider there to be a significant impact from these newly effective standards, amendments and interpretations.

(ii) Standards not yet effective, but available for early adoption

Description Effective date

Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors

1 January 2023

Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement

2: Disclosure of Accounting policies

Amendments to IAS 12 Income Taxes

Amendments to IFRS 17 Insurance contracts

Amendments to IFRS 4 Insurance Contracts

Amendments to IAS 1 Presentation of Financial Statements: Amendments regarding the classification of liabilities

1 January 2023

1 January 2023

1 January 2023

1 January 2023

1 January 2024

JT Group Limited

Notes to the consolidated financial statements

For the year ended 31 December 2022

2. Summary of significant accounting policies (continued)

The Directors have considered the new standards, amendments and interpretations as detailed in the above table and do not plan to early adopt these standards. The Directors anticipate that the adoption of these standards or interpretations will have no material impact on the financial statements of the Group.

Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.

Basis of preparation

Statement of compliance

The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the IASB and have been properly prepared in accordance with the Companies (Jersey) Law 1991.

Historical cost convention

The financial statements have been prepared on a historical cost basis net of expected credit losses or impairment (as applicable), except for the revaluation of certain financial instruments and defined benefit pension plans – plan assets that are measured at fair value at the end of each reporting period, and inventory that is held at the lower of historical cost and net realisable value, as explained in the accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.

Critical accounting estimates

The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 3.

Principles of consolidation and equity accounting

The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of JT Group Limited as at 31 December 2022 and the results of all subsidiaries for the year then ended.

Subsidiaries

Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

The acquisition method of accounting is used to account for business combinations by the Group.

Intercompany transactions, balances and unrealised gains on transactions between entities in the Group are eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statement of profit or loss, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated balance sheet respectively.

Changes in ownership interests

When the Group ceases to consolidate an investment because of a loss of control, joint control or significant influence, any retained interest in the entity is measured to its fair value, with the change in carrying amount recognised in profit or loss. This fair value becomes the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.

If the ownership interest in a joint venture or an associate is reduced but joint control or significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income are reclassified to profit or loss where appropriate.

JT Group Limited

Notes to the consolidated financial statements

For the year ended 31 December 2022

2. Summary of significant accounting policies (continued)

Foreign currency translation

Functional and presentation currency

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in Pounds sterling (GBP), which is the Group’s functional and presentation currency.

Translation and accounting of transactions and balances in a foreign currency

Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions.

At each period end, foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.

Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the consolidated statement of profit and loss.

Group companies

The results and financial position of foreign operations that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

● assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet,

● income and expenses for each statement of profit or loss and statement of comprehensive income are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions), and

● all resulting exchange differences are recognised in other income.

On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of borrowings are recognised in other comprehensive income. When a foreign operation is sold or any borrowings forming part of the net investment are repaid, the associated exchange differences are reclassified to profit or loss, as part of the gain or loss on sale.

Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate.

Revenue recognition

Revenue from contracts with customers falls under the scope of IFRS 15.

At contract inception, the Group identifies “performance obligations”, being distinct goods and services promised to the customer. Consideration is allocated to each performance obligation in a contract based on their relative standalone selling price, and revenue is recognised as performance obligations are satisfied, net of returns, discounts and rebates allowed by the Group and sales taxes.

JT Group Limited

Notes to the consolidated financial statements

For the year ended 31 December 2022

2. Summary of significant accounting policies (continued)

The Group derives revenue from:

Network services – fixed line, broadband, mobile and private circuit services to residential and corporate customers. Revenue from:

● Fixed line, broadband and mobile subscription fees and network usage (including revenues from interconnect traffic), is recognised over the period in which the service is provided. Any upfront installation services are treated as deferred income and recognised on a straight-line basis over the period of the contract and any future expected renewals. Network usage is recognised using a measure of progress that appropriately reflects satisfaction of the performance obligation, normally based on usage (i.e. minutes or bytes of data), or by time (i.e. monthly);

● Provision of private circuits is recognised evenly over the period to which the charge relates;

Equipment sales - sale rental and support of equipment such as handsets, corporate phone systems and data network equipment:

○ Revenue from retail equipment sales, is recognised at the point of sale;

○ Corporate equipment sales, net of rebates, discounts and similar commissions, is recognised at the point of sale;

○ The rental and support contracts of corporate equipment sales, is recognised evenly over the periods in which the service is provided to the customer;

Managed services – provision and management of data centres, hosted, cloud and WAN.

○ Revenue from the managed service, maintenance and support contracts of the data centres, hosted, cloud and WAN services is recognised evenly over the periods in which the service is provided to the customer.

On-Island Wholesale – fixed line, broadband and private circuit services to wholesale customers. Revenue from:

● The provision of fixed line, broadband services and private circuits on-island at wholesale rate to other operators (including revenues from network usage), is recognised over the period through which the service is provided and in line with the recognition of the same services described in network services above; and

● Network usage from inbound roaming customers, is recognised as the service is provided to the customer.

International wholesale – Internet of Things (“IoT”) services, Fraud Protection Services ("FPS"), bulk messaging and network sharing for international customers. Revenue from:

● The provision of SIMs to resellers to provide IoT SIM and data usage, is deferred and recognised on a straight-line basis over the period of the contract and any future expected renewals. Revenue from data usage through the use of IoT sims, is recognised i n the period that usage occurs and in line with measure of progress, usually bytes of data;

● The use of data lookups using application programming interfaces (“API”) used for FPS, is recognised evenly over the period through which the service is provided to the customer. Customers are provided a fixed number of data look-ups within a specific month with no rollover’s into the following month;

● The delivery of bulk messaging to international customers, is recognised when the individual message is delivered to the end customer; and

● Mobile number portability (routing) look-up services to international customers, is recognised as an when the individual look-up is delivered to the customer.

Other – other minor revenue streams, including digital & advertising services, is recognised over the period the service is provided.

Products and services may be sold individually or as bundled packages. In these cases, the Group identifies the separate performance obligations and applies the corresponding revenue recognition policy as described above to each one. The total transaction price is then allocated to each distinct performance obligation based on their respective stand-alone selling prices.

JT Group Limited

Notes to the consolidated financial statements

For the year ended 31 December 2022

2. Summary of significant accounting policies (continued)

Some of the Group’s contracts include multiple deliverables, such as the sale of hardware and related installation and professional services. If the installation and professional services are not complex, could be performed by another party and does not include an integration service they are accounted for as separate performance obligations. Where the contracts include multiple performance obligations, the transaction price will be allocated to each performance obligation based on the relative stand-alone selling prices. Where these are not directly observable, they are estimated based on expected cost plus margin. If contracts include the installation of hardware, revenue for the hardware is recognised at a point in time when the hardware is delivered, the legal title has passed, and the customer has accepted the hardware.

Contract assets are recognised where control of goods and services has transferred to the customer before consideration is due, such as where handsets are provided at the beginning of a contract but paid for over the contract period, or where upfront installation charges are deemed to be a distinct performance obligation. Contract assets are reclassified to trade receivables when Group obtains a right to receive payment for the asset, i.e. once the customer is billed.

Contract liabilities are recognised where payment has been received in respect of goods and services that has not yet been delivered to the customer, such as for equipment or connection services received at the start of a contract that are not deemed to be separate performance obligation.

In certain contracts, the Group incurs costs to obtain a contract with a customer such as selling and marketing costs, bid and proposal costs, sales commissions, and legal fees. Only incremental costs are recognised as assets. The Group recognises incremental costs to obtain a contract if the Group expects these costs to be recoverable. Incremental costs of obtaining a contract are those costs that the Group would not have incurred if the contract had not been obtained (for example, sales commissions).

The Group assesses the recoverability of the assets on a contract-by-contract basis and includes estimates of expected consideration from potential reviews and extensions. Costs of obtaining a contract that is not incremental are expensed in the period that the costs are incurred.

The Group often incur costs to fulfil its obligations under a contract once it is obtained, but before transferring goods or services to its customers. These costs are recognised as assets when they relate directly to a contract (and can be specifically identified), the costs generate or enhance resources of the Group that will be used in satisfying performance obligations in the future and the costs are expected to be recovered. Examples of direct costs include direct labour and materials and other costs that are specifically charged to the customer under the contract. General and administrative cost are not capitalised and are expensed in the period that the costs are incurred.

Interest income

Interest income is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset.

The ‘effective interest rate’ is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to:

● the gross carrying amount of the financial asset; or

● the amortised cost of the financial liability

In calculating interest income and expense, the effective interest rate is applied to the gross carrying amount of the asset (when the asset is not credit-impaired) or to the amortised cost of the liability. However, for financial assets that have become creditimpaired subsequent to initial recognition, interest income is calculated by applying the effective interest rate to the amortised cost of the financial asset. If the asset is no longer credit-impaired, then the calculation of interest income reverts to the gross basis.

Notes to the consolidated financial statements

For the year ended 31 December 2022

2. Summary of significant accounting policies (continued)

Income tax

The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the Company and its subsidiaries and associates operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions, where appropriate, on the basis of amounts expected to be paid to the tax authorities.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that, at the time of the transaction, affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred tax assets are recognised only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in subsidiaries where the Company is not able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.

Deferred tax assets and liabilities are offset where there is a legally enforceable right to offset current tax assets and li abilities and where the deferred tax balances relate to the same taxation authority.

Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

Discontinued operations

A discontinued operation is a component of the Group that has been disposed of or is classified as held for sale and that represents a separate major line of business or geographical area of operations, is part of a single co-ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented separately on the face of the consolidated statement of profit or loss.

Current and non-current classification

Assets and liabilities are presented in the balance sheet based on current and non-current classification.

An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the Group's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the reporting period; in the case of quoted investments which are liquid in nature and can be disposed of in less than 1 year; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are classified as non-current.

A liability is classified as current when: it is either expected to be settled in the Group's normal operating cycle; it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities are classified as non-current.

Deferred tax assets and liabilities are always classified as non-current.

JT Group Limited

Notes to the consolidated financial statements

For the year ended 31 December 2022

2. Summary of significant accounting policies (continued)

Cash and cash equivalents

Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturity of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

Trade and other receivables

Trade receivables are recognised initially at the amount of consideration that is unconditional, unless they contain significant financing components when they are recognised at fair value. They are subsequently measured at amortised cost using the effective interest method, less expected credit loss allowance.

Contract assets

Contract assets are recognised when the Group has transferred goods or services to the customer but where the Group is yet to establish an unconditional right to consideration. Contract assets are treated as financial assets for impairment purposes.

Inventories

Inventories are stated at the lower of cost and net realisable value. Direct costs are assigned to individual items of inventory on the basis of weighted average costs. Costs of purchased inventory are determined after deducting rebates and discounts. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

Investments

Investments are initially measured at fair value. Transaction costs are included as part of the initial measurement, except for financial assets at fair value through profit or loss. Investments are subsequently measured at either amortised cost or fair value depending on their classification. Classification is determined based on both the business model within whi ch such assets are held and the contractual cash flow characteristics of the financial asset unless an accounting mismatch is being avoided.

Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership. When there is no reasonable expectation of recovering part or all of a financial asset, it's carrying value is written off.

Financial assets at amortised cost

A financial asset is measured at amortised cost only if both of the following conditions are met: (i) it is held within a business model whose objective is to hold assets in order to collect contractual cash flows; and (ii) the contractual terms of the financial asset represent contractual cash flows that are solely payments of principal and interest.

Financial assets at fair value through other comprehensive income ("FVTOCI")

Financial assets at FVTOCI include equity investments which the Group intends to hold for the foreseeable future and has irrevocably elected to classify them as such upon initial recognition.

Financial assets at fair value through profit or loss ("FVTPL")

Financial assets not measured at amortised cost or at FVTOCI are classified as financial assets at FVTPL. Typically, such financial assets will be either: (i) held for trading, where they are acquired for the purpose of selling in the short-term with an intention of making a profit, or a derivative; or (ii) designated as such upon initial recognition where permitted. Fair value movements are recognised in profit or loss.

Purchases and sales of investments are recognised on a trade date basis. Proceeds are measured at fair value, which is regarded as the proceeds of sale less any transaction costs.

The fair value of the financial assets is based on their quoted mid price at the reporting date, without deduction for any estimated future selling costs.

Changes in the value of investments held at fair value through profit or loss and gains and losses on disposal are recognised in the Statement of Comprehensive Income as “Gains/(losses) on investments held at fair value through profit or loss” on an average cost basis. Also included within this caption are transaction costs in relation to the purchase or sale of investments.

JT Group Limited

Notes to the consolidated financial statements

For the year ended 31 December 2022

2. Summary of significant accounting policies (continued)

Impairment of financial assets

The Group recognises a loss allowance for expected credit losses on financial assets which are either measured at amortised cost or FVTOCI. The measurement of the loss allowance depends upon the Group's assessment at the end of each reporting period as to whether the financial instrument's credit risk has increased significantly since initial recognition, based on reasonable and supportable information that is available, without undue cost or effort to obtain.

Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month expected credit loss allowance is estimated. This represents a portion of the asset's lifetime expected credit losses that is attributable to a default event that is possible within the next 12 months. Where a financial asset has become credit impaired or where it is determined that credit risk has increased significantly, the loss allowance is based on the asset's lifetime expected credit losses. The amount of expected credit loss recognised is measured on the basis of the probability weighted present value of anticipated cash shortfalls over the life of the instrument discounted at the original effective interest rate.

For financial assets mandatorily measured at FVTOCI, the loss allowance is recognised in other comprehensive income with a corresponding expense through profit or loss. In all other cases, the loss allowance reduces the asset's carrying value with a corresponding expense through profit or loss.

Property, plant and equipment

Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maint enance are charged to profit or loss during the reporting period in which they are incurred.

Depreciation is calculated using the straight-line method to allocate the cost of the assets, net of their residual values, over their estimated useful lives or, in the case of leasehold improvements and certain leased plant and equipment, the shorter of the lease term and estimated useful life as follows:

*This includes freehold and leasehold fixtures and fittings

Depreciation is recognised in the consolidated statement of profit and loss.

An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the Group. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.

Land and buildings

Land and buildings include freehold and leasehold retail outlets and offices and corresponding land. Buildings are stated at cost less accumulated depreciation and accumulated impairment losses.

Network equipment, fixtures and fittings and motor vehicles

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 ma in switching systems to the customers’ premises.

JT Group Limited

Notes to the consolidated financial statements

For the year ended 31 December 2022

2. Summary of significant accounting policies (continued)

Work in progress

Work in progress comprises capital projects which are under construction. Accrued and expended project labour and material costs are accounted for as capital work in progress. Internal labour costs that are necessary and arising directly from construction or acquisition of the asset are capitalised as part of the project or asset to which they relate. Once completed, projects are capitalised as separately identifiable assets and depreciated over their estimated useful economic lives.

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount

Leases

The Group leases various offices, retail stores, network assets and technical sites for masts, service distribution rooms and data centres. Rental contracts are typically made for fixed periods of 5-25 years but may have extension options as described below.

Contracts may contain both lease and non-lease components. For leases of all asset classes for which the Group is a lessee, it has elected not to separate lease and non-lease components and instead accounts for these as a single lease component.

Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agree ments do not impose any covenants other than the security interests in the leased assets that are held by the lessor. Leased assets may not be used as security for borrowing purposes.

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:

● fixed payments (including in-substance fixed payments), less any lease incentives receivable

● variable lease payment that are based on an index or a rate, initially measured using the index or rate as at the commencement date

● amounts expected to be payable by the Group under residual value guarantees

● the exercise price of a purchase option if the Group is reasonably certain to exercise that option, and payments of penalties for terminating the lease, if the lease term reflects the Group exercising that option.

Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability. The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for leases in the Group, the lessee’s incremental borrowing rate ("IBR") is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions.

The IBR depends on the term, currency and start date of the lease and is determined based on a series of inputs including: the risk-free rate based on government bond rates; a country-specific risk adjustment; a credit risk adjustment based on bond yields; and an entityspecific adjustment when the risk profile of the entity that enters into the lease is different to that of the Group and the lease does not benefit from a guarantee from the Group.

The Group is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use asset.

Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

JT Group Limited

Notes to the consolidated financial statements

For the year ended 31 December 2022

2. Summary of significant accounting policies (continued)

Right-of-use assets

A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the commencement date net of any lease incentives received, any initial direct costs incurred, and, except where included in the cost of inventories, an estimate of costs expected to be incurred for dismantling and removing the underlying asset, and restoring the site or asset.

Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful life of the asset, whichever is the shorter. Where the Group expects to obtain ownership of the leased asset at the end of the lease term, the depreciation is over its estimated useful life. Right-of-use assets are subject to impairment or adjusted for any remeasurement of lease liabilities.

The Group has elected not to recognise a right-of-use asset and corresponding lease liability for short-term leases with terms of 12 months or less and leases of low-value assets. Lease payments on these assets are expensed to profit or loss as incurred. Low-value assets comprise IT equipment and small items of office furniture.

Extension and termination options

Extension and termination options are included in a number of leases for properties and technical sites across the Group. These are used to maximise operational flexibility in terms of managing the assets used in the Group’s operations. The majority of extension and termination options held are exercisable only by both the Group and the respective lessor. See note 3 for the critical judgements which management has made in determining lease terms.

Intangible assets

Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair value at the date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Indefinite life intangible assets are not amortised and are subsequently measured at cost less any impairment. Finite life intangible assets are subsequently measured at cost less amortisation and any impairment. The gains or losses recognised in profit or loss arising from the derecognition of intangible assets are measured as the difference between net disposal proceeds and the carrying amount of the intangible asset. The method and useful lives of finite life intangible assets are reviewed annually. Changes in the expected pattern of consumption or useful life are accounted for prospectively by changing the amortisation method or period.

Goodwill

Goodwill arises on the acquisition of a business. Goodwill is not amortised. Instead, goodwill is tested annually for impairment, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Impairment losses on goodwill are taken to profit or loss and are not subsequently reversed.

Goodwill is allocated to cash-generating units ("CGU") for the purpose of impairment testing. The allocation is made to those CGUs or groups of CGUs that are expected to benefit from the business combination in which the goodwill arose. The units or groups of units are identified at the lowest level at which goodwill is monitored for internal management purposes, being the operating segments. On disposal of a CGU, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

Website

Significant costs associated with the development of the revenue generating aspects of the website, including the capacity of placing orders, are deferred and amortised on a straight-line basis over the period of their expected benefit, being their finite life of 10 years.

Intellectual property

Significant costs associated with intellectual property are deferred and amortised on a straight-line basis over the period of their expected benefit, being their finite life of 10 years.

Software

Costs associated with maintaining software programmes are recognised as an expense as incurred. Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the Group are recognised as intangible assets where the following criteria are met:

JT Group Limited

Notes to the consolidated financial statements

For the year ended 31 December 2022

2. Summary of significant accounting policies (continued)

● it is technically feasible to complete the software so that it will be available for use,

● management intends to complete the software and use or sell it,

● there is an ability to use or sell the software,

● it can be demonstrated how the software will generate probable future economic benefits,

● adequate technical, financial and other resources to complete the development and to use or sell the software are available, and

● the expenditure attributable to the software during its development can be reliably measured.

Directly attributable costs that are capitalised as part of the software include internal labour costs.

Capitalised development costs are recorded as intangible assets and amortised from the point at which the asset is ready for use.

Research and development

Research expenditure and development expenditure that do not meet the criteria above are recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period.

Investment income earned on the temporary investment of specific borrowings, pending their expenditure on qualifying assets, is deducted from the borrowing costs eligible for capitalisation.

Other borrowing costs are expensed in the period in which they are incurred.

Amortisation methods and periods

The Group amortises intangible assets with a limited useful life, using the straight-line method over the following periods:

The amortisation basis adopted for each class of intangible assets above reflects the Group’s expected pattern of consumption of the economic benefit from those assets.

Impairment of non-financial assets

Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recovera ble. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount.

Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is the present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or CGU to which the asset belongs. Assets that do not have independent cash flows are grouped together to form a CGU.

Trade and other payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. The amounts are unsecured and are usually paid within 30 to 60 days of recognition. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.

Contract liabilities

Contract liabilities represent the Group's obligation to transfer goods or services to a customer and are recognised when a customer pays consideration, or when the Group recognises a receivable to reflect its unconditional right to consideration (whichever is earlier) before the Group has transferred the goods or services to the customer.

JT Group Limited

Notes to the consolidated financial statements

For the year ended 31 December 2022

2. Summary of significant accounting policies (continued)

Borrowings

Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They are subsequently measured at amortised cost using the effective interest method. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective intere st method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates.

Preference shares, which are mandatorily redeemable on a specific date, are classified as liabilities. The dividends on these preference shares are recognised in profit or loss as finance costs.

Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non- cash assets transferred or liabilities assumed, is recognised in profit or loss as other income or finance costs. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period.

Borrowing costs

General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale.

Other borrowing costs are expensed in the period in which they are incurred.

Finance costs

Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in the period in which they are incurred.

Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and the amount can be reliably estimated. Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense.

Refer to note 23 for more information on examples of specific provisions recognised by the Group.

Employee benefits

Short-term employee benefits

Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised in respect of employees’ services up to the end of the reporting period and are measured at the amounts expected to be paid when the lia bilities are settled. The liabilities are presented as provisions within current liabilities in the balance sheet.

JT Group Limited

Notes to the consolidated financial statements

For the year ended 31 December 2022

2. Summary of significant accounting policies (continued)

Other long-term employee benefits

The Group also has liabilities for long-term employee benefits that are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. These obligations are therefore measured as the present value of expected future payments to be made in respect of the number of service years provided by employees up to the end of the reporting period.

The obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer settlement for at least 12 months after the reporting period, regardless of when the actual settlement is expected to occur.

Termination benefits

Termination benefits are payable when employment is terminated by the Group before the normal retirement date, or when an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits at the earlier of the following dates:

(a) when the Group can no longer withdraw the offer of those benefits; and

(b) when the entity recognises costs for a restructuring that is within the scope of IAS 37 Provisions, Contingent Liabilities and Contingent Assets (“IAS 37”) and involves the payment of terminations benefits. In the case of an offer made to encourage voluntary redundancy, the termination benefits are measured based on the number of employees expected to accept the offer. Benefits falling due more than 12 months after the end of the reporting period are discounted to present value.

Retirement benefit obligations

All employees of the Group are entitled to benefits from the Group's superannuation plan on retirement, disability or death. The Group has a defined benefit section and a defined contribution section within its plan. The defined benefit section provides defined lump sum benefits based on years of service and final average salary. The defined contribution section receives fixed contributions from entities in the Group and the Group's legal or constructive obligation is limited to these contributions.

A liability or asset in respect of defined benefit superannuation plans is recognised in the Balance Sheet, and is measured at the present value of the defined benefit obligation at the reporting date less the fair value of the superannuation fund's assets at that date and any unrecognised past service cost. The present value of the defined benefit obligation is based on expected future payments which arise from membership of the fund to the reporting date, calculated annually by independent actuaries using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service.

Expected future payments are discounted using market yields at the reporting date on high quality corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised, in the period in which they occur, in other comprehensive income.

Past service costs are recognised immediately in profit or loss, unless the changes to the superannuation fund are conditional on the employees remaining in service for a specified period of time ('the vesting period'). In this case, the past service costs are amortised on a straight-line basis over the vesting period.

Post-employment obligations

The Group operates various post-employment schemes, including both defined benefit and defined contribution pension plans and post-employment medical plans.

Treatment of Public Employees Contributory Retirement Scheme (PECRS) from 1 October 2015

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 IFRS. Under the revised Terms of Admission there is insufficient information available to use defined benefit accounting and, with effect from 1 October 2015, Group has accounted for the scheme as if it was a defined contribution scheme. However, the scheme continues to be a defined benefit scheme.

Notes to the consolidated financial statements

For the year ended 31 December 2022

2. Summary of significant accounting policies (continued)

Fair value measurement

When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; and assumes that the transaction will take place either: in the principal market; or in the absence of a principal market, in the most advantageous market.

Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming they act in their best economic interests. For non-financial assets, the fair value measurement is based on its highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, are u sed, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

Assets and liabilities measured at fair value are classified into three levels, using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. Classifications are reviewed at each reporting date and transfers between levels are determined based on a reassessment of the lowest level of input that is significant to the fair value measurement.

When measuring the fair value of an asset or a liability, the Group uses observable market data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.

● Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

● Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

● Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

Issued capital

Ordinary shares are classified as equity. Mandatorily redeemable preference shares are classified as liabilities.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

Dividends

Dividends are recognised when declared during the financial year and no longer at the discretion of the Company.

Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the Company, on or before the end of the financial year but not distributed at the reporting date.

Goods and Services Tax ("GST") and other similar taxes

Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of the expense.

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the tax authority is included in other receivables or other payables in the balance sheet.

Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.

JT Group Limited

Notes to the consolidated financial statements

For the year ended 31 December 2022

2. Summary of significant accounting policies (continued)

Rounding of amounts

Amounts in this report have been rounded off to the nearest thousand currency units unless otherwise stated.

3. Critical accounting judgements, estimates and assumptions

The preparation of the Group's consolidated financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities.

Accounting estimates and assumptions

The assumptions concerning the future and other sources of estimation uncertainty at the reporting date are described below. The Group based its assumptions and estimates on information available when the consolidated financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Group. Such changes are reflected in the assumptions when they occur.

Measurement of fair values

A number of the Group's accounting policies and disclosures require the measurement of fair values.

When one is available, the Group measures the fair value of an instrument using the quoted price in an active market for that instrument. A market is regarded as 'active' if transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis.

If there is no quoted price in an active market, then the Group uses valuations techniques that maximise the use of relevant observable inputs and minimise the use of unobservable inputs. The chosen valuation technique incorporates all of the factors that market participants would take into account in pricing a transaction.

The Group is required to classify all assets and liabilities, measured at fair value, using a three level hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date; Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and Level 3: Unobservable inputs for the asset or liability. Considerable judgement is required to determine what is significant to fair value and therefore which category the asset or liability is placed in can be subjective.

The fair value of assets and liabilities classified as level 3 is determined by the use of valuation models, which are usually based on valuation methods and techniques generally recognised as standard within the industry. The models used for private equity sec urities are based mainly on earnings multiples of comparable listed securities, adjusted as appropriate for liquidity and market risk factors.

Models use observable data, to the extent practicable. However, areas such as volatilities and correlations require management to make estimates. Changes in assumptions about these factors could affect the reported fair value of financial instruments.

The determination of what constitutes 'observable' required significant judgement by the Group. The Group considers observable data to be market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.

Impairment of intangible assets

Impairment exists when the carrying value of an asset or CGU exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at arm’s length, for similar assets or observable market prices less incremental costs of disposing of the asset. The value in use calculation is based on a discounted cash flow ("DCF") model. The cash flows are derived from the budget for the next five years and do not include restructuring activities that the Group is not yet committed to or significant future investments that will enhance the performance of the assets of the CGU being tested. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes. These estimates are most relevant to goodwill and other intangibles with indefinite useful lives recognised by the Group.

JT Group Limited

Notes to the consolidated financial statements For the year ended 31 December 2022

3. Critical accounting judgements, estimates and assumptions (continued)

The key assumptions used to determine the recoverable amount for the different CGUs, including a sensitivity analysis, are disclosed and further explained in note 12.

Estimation of useful lives of assets

The annual depreciation and amortisation charges for property, plant and equipment and intangible assets are sensitive to the estimated lives allocated to each type of asset. Lives are assessed annually and changed when necessary to reflect expected impact from changes in technology, network investment plans and physical condition of the assets.

The carrying value of intangible assets and property, plant and equipment are disclosed in notes 10 and 12 and the useful liv es applied to the principal categories are disclosed in note 2 for property, plant and equipment and intangible assets respectively.

Provisions

Provision for expected credit losses ("ECLs") of trade receivables and contract assets

The Group uses a provision matrix to calculate ECLs for trade receivables and contract assets. The provision rates are based on days past due for groupings of various customer segments that have similar loss patterns (i.e., by geography, product type, and customer type).

The provision matrix is initially based on the Group’s historical observed default rates. The Group will calibrate the matrix to adjust the historical credit loss experience with forward-looking information. For instance, if forecast economic conditions (i.e. economic growth outlook and unemployment rate) are expected to deteriorate over the next year which can lead to an increased number of defaults, the historical default rates are adjusted. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed.

The assessment of the correlation between historical observed default rates, forecast economic conditions and ECLs is a significant estimate. The amount of ECLs is sensitive to changes in circumstances and of forecast economic conditions. The Group’s historical credit loss experience and forecast of economic conditions may also not be representative of customer’s actual default in the future. The information about the ECLs on the Group’s trade receivables and contract assets is disclosed in notes 17 and 30.

Other provisions

Provisions are also made for asset retirement obligations, dilapidations and contingencies. These provisions require management’s best estimate of the costs that will be incurred based on legislative and contractual requirements. In addition, the timing of the cash flows and the discount rates used to establish net present value of the obligations require management’s judgement.

In respect of claims, litigation, disputes and regulatory matters the Group provides for anticipated costs where the outflow of resources is considered probable, and a reasonable estimate can be made on the likely outcome. The ultimate liability may vary from the amounts provided and will be dependent upon the eventual outcome of any settlement. The carrying value of provisions is disclosed in note 23.

Current and deferred income tax

The actual tax the Group paid on profits is determined according to complex tax laws and regulations. Where the effect of these laws is unclear, estimates are used in determining the liability for the tax to be paid on past profits which is recognised in the financial statements. The Directors believe the estimates, assumptions and judgements are reasonable, but this can involve complex issues which may take a number of years to resolve. The final determination of prior year liabilities could be different from the estimates reflected in the financial statements and may result in the recognition of an additional tax expense or tax credit in the income statement.

Deferred tax assets and liabilities require management judgement in determining the amounts to be recognised. The Group uses management’s expectations of future revenue growth, operating costs and profit margins to determine the extent to which future taxable profits will be generated against which to consume the deferred tax assets.

The value of the Group's income tax assets and liabilities is disclosed on the statement of financial position. The carrying value of the Group’s deferred tax assets and liabilities is disclosed in notes 13 and 21.

JT Group Limited

Notes to the consolidated financial statements

For the year ended 31 December 2022

3. Critical accounting judgements, estimates and assumptions (continued)

Revenue recognition – Estimating stand-alone selling price

Bundled products

Bundled products that combine different goods and services are assessed to determine whether there are different distinct performance obligations and hence necessary to separate the different identifiable components and apply the corresponding revenue recognition policy to each element. Total bundled revenues, i.e. the total transaction price, are allocated among the identified elements based on their respective standalone selling prices.

Determining standalone selling prices for each identified component requires estimates that are complex due to the nature of the business. A change in estimates of standalone selling prices could affect the apportionment of revenue among the elements and, as a result, the timing of recognition of revenues.

Leases - Estimating the IBR

The Group cannot readily determine the interest rate implicit in the lease, therefore, it uses its IBR to measure lease liabilities. The IBR is the rate of interest that the Group would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. The IBR therefore reflects what the Group ‘would have to pay’, which requires estimation when no observable rates are available (such as for subsidiaries that do not enter into financing transactions) or when they need to be adjusted to reflect the terms and conditions of the lease (for exampl e, when leases are not in the subsidiary’s functional currency). The Group estimates the IBR using observable inputs (such as market interest rates) when available and is required to make certain entity-specific estimates (such as the subsidiary’s stand-alone credit rating).

Key judgements

In the process of applying the Group’s accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the consolidated financial statements:

Determining the lease term of contracts with renewal and termination options

The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised.

In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated).

For leases of buildings and technical sites, the following factors are normally the most relevant:

● If there are significant penalties to terminate (or not extend), the Group is typically reasonably certain to extend (or not terminate)

● If any leasehold improvements are expected to have a significant remaining value, the Group is typically reasonably certain to extend (or not terminate)

● Otherwise, the Group considers other factors including historical lease durations and the costs and business disruption required to replace the leased asset.

The lease term is reassessed if an option is actually exercised (or not exercised) or the Group becomes obliged to exercise (or not exercise) it. The assessment of reasonable certainty is only revised if a significant event or a significant change in circumstances occurs, which affects this assessment, and that is within the control of the lessee.

Long-term multi-service agreements

Where the outcome of long-term multi-service agreements can be estimated reliably, revenue and costs are recognised by reference to the stage of completion of the contract activity at the reporting date. This is normally measured by the proportion that contract costs incurred for work performed to date bear to the estimated total contract costs, except where this would not be representative of the stage of completion. Estimation of the contract stage of completion requires management judgement.

Estimates and judgements are continually evaluated. They are based on historical experience and other factors, including expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances.

JT Group Limited

Notes to the consolidated financial statements For the year ended 31 December 2022

3. Critical accounting judgements, estimates and assumptions (continued)

Gross versus net presentation

When the Group sells goods or services as a principal, income and payments to suppliers are reported on a gross basis in revenue and cost of sales. If the Group sells goods or services as an agent, revenue and payments to suppliers are recorded in revenue on a net basis, representing the margin earned. Whether the Group is considered to be the principal or an agent in the transaction depends on analysis by management of both the legal form and substance of the agreement between the Group and its business partners; such judgements impact the amount of reported revenue and operating expenses but do not impact reported assets, liabilities or cash flows.

4. Revenue

Disaggregation of revenue from contracts with customers

The presentation of revenue is disaggregated by segment. The Group derives revenue from the transfer of goods and services in the following major product lines:

● Network services – fixed line, broadband, mobile and private circuit services to residential and corporate customers

● Equipment sales – sale, rental and support of equipment such as handsets, corporate phone systems and data network equipment

● Managed services – fixed line, broadband and private circuit services to wholesale customers

● On-island wholesale – roaming revenue from customers of other networks and from network sharing

● International wholesale - IoT services, FPS, bulk messaging and network sharing for international customers

● Other – other minor revenue streams, including digital advertising services

Management have considered the disclosure requirements of IFRS 15 and deems the below revenue segments appropriate:

● Channel Islands (being the Group’s predominantly core telecommunications business lines such as network services, equipment sales and on-island wholesale provided to local consumer and enterprise customers); and

● International (being predominantly made up of our non-core telecommunications business lines such as international wholesale, the majority of which is provided to customers outside of the Channel Islands).

JT Group Limited

Notes to the consolidated financial statements For the year ended 31 December 2022

4. Revenue (continued)

Assets

and

liabilities related to contracts with customers

The Group has recognised the following assets and liabilities related to contracts with customers:

The following table shows how much of the revenue recognised in the current reporting period relates to carried-forward

liabilities and how much relates to performance obligations that were satisfied in a prior year:

Contract assets recognised from contracts with customers

The table below provides a breakdown of the Group’s contract assets at the end of each reporting period as well as the amortisation relating to these balances during the reporting periods respectively:

Assets recognised from costs to obtain and fulfil a contract

In addition to the contract balances disclosed above, the Group has also recognised assets in relation to costs to fulfil a long-term contract and costs to obtain contracts. This is presented as contract cost assets on the balance sheet.

Costs to obtain contract assets relate to commission fees paid to the Group’s sale staff under a commission policy that was terminated effective 31 December 2019. No additional costs have been recognised since the termination date of the policy. The Group’s current commission policies do not meet the capitalisation requirements under IFRS 15 and are expensed in the period incurred.

In addition to the above capitalised costs, the Group also capitalised setup costs related to its JT IoT business as costs to fulfil its customer contracts. The costs relate directly to the customer contracts, generate resources that will be used in satisfying the contracts and are expected to be recovered and were therefore recognised as costs to fulfil a contract. All costs capitalised in 2021 relate to the JT IoT setup costs.

4.

Notes to the consolidated financial statements For the year ended 31 December 2022

as cost of providing services during the year

5.

(Loss)/profit before income tax from continuing operations includes the following specific expenses:

During 2018, the Group sold its supply of its directory services business line to a 3rd party through a licensing arrangement and continues to support this business through billing and other related services. The proceeds from this transaction and its ongoing support services are recognised as other income.

(Loss)/profit before income tax from continuing operations includes the following specific expenses:

JT Group Limited

Notes to the consolidated financial statements

For the year ended 31 December 2022

7.

Finance Cost (continued)

Capitalised borrowing costs

No borrowing costs were capitalised during 2022 and 2021.

8. Income tax

This note provides an analysis of the Group’s income tax expense, and shows what amounts are recognised directly in equity and how the tax expense is affected by non-assessable and non- deductible items.

The main uncertainty is whether the Group's intra-group trading model would be accepted by a particular tax authority. Management consider the probability of an outflow is low and as such no provision has been made.

Deciding whether to recognise deferred tax assets is judgemental. The Group only recognise a deferred tax asset when we consider it is probable that they can be recovered. In making this judgement the Group consider evidence such as historical performance, financial forecasts and future activities.

JT Group Limited

Notes to the consolidated financial statements For the year ended 31 December 2022

9. Discontinued operations

During 2021 the Group sold its shareholding in JT IOT Limited and its associated subsidiaries (“JT IoT”). The entities were s old on 20 July 2021 and were reported as a discontinued operation in the 2021 financial statements.

9. Discontinued operations (continued)

JT Group Limited

Notes to the consolidated financial statements For the year ended 31 December 2022

Reconciliations

Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:

* Depreciation expense includes £151,000 in respect of discontinued operations.

11. Right-of-use assets

Reconciliations

Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:

10. Property, plant and equipment

11. Right-of-use assets (continued)

JT Group Limited

Notes to the consolidated financial statements For the year ended 31 December 2022

Amounts recognised in the statement of profit or loss

The statement of profit or loss includes the following amounts relating to leases:

The total cash outflow for leases in 2022 was £2,144,000 (2021: 2,303,000).

12. Intangible assets

Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:

* Amortisation expense includes £942,000 in respect of discontinued operations.

12. Intangible assets (continued)

Impairment tests for goodwill

Goodwill is monitored by management at the following CGU level:

JT Group Limited

Notes to the consolidated financial statements For the year ended 31 December 2022

Significant estimate: key assumptions used for value-in-use calculations

The Group tests whether goodwill has suffered any impairment on an annual basis. For the 2022 and 2021 reporting periods, the recoverable amount of the CGUs were determined based on calculations to assume an equity value which require the use of assumptions. The calculations use cash flow projections based on financial budgets approved by management covering a five-year period. Cash flows beyond the five-year period are determined through the use of a terminal multiple and discounted to their present value.

Assumption Approach to determining values

EBITDA

Annual capital expenditure

Terminal multiple

Pre-tax discount rate

Forecasted EBITDA takes into account expected growth/decline in revenues, cost of sales and operating expenses based on past performance and management's expectations for the future. Operating expenditures are forecasted based on the current structure of the business.

Expected cash costs in the CGUs. This is based on the historical experience of management.

This is the terminal value used to extrapolate cash flows beyond the forecasted 5 year period. The multiples are consistent with a telecommunications industry.

A Weighted Average Cost of Capital (WACC) is used to discount the future cash flow to assume a present value, or an alternative rate considered appropriate for the business and the environment and market in which it operates.

Significant estimate: impact of possible changes in key assumptions

An impairment would occur if EBITDA were to fall by more than 13% over the forecasted period in the valuation of the CGU. No impairment has been recognised against the goodwill carried in 2022 or 2021.

13. Deferred tax asset

JT Group Limited

Notes to the consolidated financial statements For the year ended 31 December 2022

13. Deferred tax asset (continued)

A deferred tax asset of £41,000 (2021: £36,000) has been recognised in respect of losses arising in JT Australasia Pty Ltd (the “Australian Company”), as we conclude that it is probable that the Australian Company will generate taxable profits against which the losses can be utilised. The Australian Company’s income is derived from Australian Fraud Protection customers which commenced in November 2020 and from acting as a cost centre for services supplied by Australian employees on an arm’s length basis to other members of the Group.

A deferred tax asset of £135,000 (2021: £nil) has been recognised in respect of losses arising in Jersey Telecom (UK) Ltd (the “UK Company”), as we conclude that it is probable that the UK Company will generate taxable profits against which the losses can be utilised. The UK company's income is derived from acting as a cost centre for services supplied by UK employees on an arm's length basis to other members of the group.

14. Financial assets at FVTOCI

Reconciliation of the fair values at the beginning and end of the current and previous financial year are set out below:

Financial assets at FVTOCI

Financial assets at FVTOCI represent an investment in Jaguar Topco Limited, comprising both equity and preference shares. The Directors do not consider that the Group is able to exercise significant influence over Jaguar Topco Limited. The investment is not held for trading. Instead, it is held for medium to long-term strategic purposes. Accordingly, the Directors have elected to designate the investment as at FVTOCI as they believe that recognising short-term fluctuations in the investments’ fair value in profit or loss would not be consistent with the Group’s strategy of holding the investment for long-term purposes and realising the potential in the long run. Accordingly, the Group made the irrevocable election to account for it at FVOCI.

The fair value of the unlisted investment is determined applying the market comparison technique using comparable trading multiples for EBITDA. The valuation model is based on market multiples derived from quoted prices of companies comparable to the investee and the expected EBITDA of the investee.

15. Financial assets at amortised cost

JT Group Limited

Notes to the consolidated financial statements For the year ended 31 December 2022

15. Financial assets at amortised cost (continued)

Financial assets at amortised cost represents unsecured loan notes which earns fixed interest rate of 8% with a maturity date in July 2028. These loan notes are held by the Group within a business model whose objective is to collect their contractual cash flows which are solely payments of principal and interest on the principal amount outstanding. Hence, these financial assets are classified as at amortised cost. During the year, the interest accrued was converted into loan notes. In the opinion of the Directors, there is no material difference between the carrying value of this investment and its fair value.

16. Inventories

Inventories have been reduced by £167,000 (2021: £139,000) as a result of a write-down to net realisable value. This write-down was recognised as an expense during the year and included in cost of sales in the consolidated statement of profit or loss.

Amounts recognised in profit or loss

Inventories recognised as cost of sales and expenses during the year ended 31 December 2022 amounted to £10,049,000 (2021: £9,935,000).

17. Trade and other receivables

Classification as trade receivables

Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. They are generally due for settlement within 1 year and are therefore all classified as current. Trade receivables are recognised initially at the amount of consideration that is unconditional, unless they contain significant financing components, when they are recognised at fair value. The Group holds the trade receivables with the objective of collecting the contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest method.

Details about the Group’s impairment policies and the calculation of the loss allowance are provided in note 30.

Notes to the consolidated financial statements

For the year ended 31 December 2022

17.

Trade and other receivables (continued)

Fair values of trade receivables

Due to the short-term nature of the current receivables, their carrying amount is the same as their fair value.

Impairment and risk exposure

Information about the impairment of trade receivables and the Group’s exposure to credit risk and foreign currency risk can be found in note 30.

18. Financial assets at fair value through profit or loss

Reconciliation of the fair values at the beginning and end of the current and previous financial year are set out below:

Financial assets at FVTPL represents the investment portfolio held with UBS in Jersey, and invested in quoted equities, bond funds and cash. The Group has designated this investment portfolio as held at FVTPL, and fair value movements are recognised in pro fit or loss. Certain amounts are held as cash by UBS as part of its mandate. All financial instruments in the portfolio are level one financial instruments, and as such, the investment portfolio is classified as level one.

Amounts recognised in the statement of profit or loss

The statement of profit or loss includes the following amounts relating to the investment portfolio:

* Included in the investment manager expenses is an accrual of £83k (2021: £nil), which has not been included in the valuation of the investment at year-end, as it had not been paid.

Refer to note 30 for further information on risk assessment in relation to the investment portfolio.

19. Cash and cash equivalents

JT Group Limited

Notes to the consolidated financial statements For the year ended 31 December 2022

The cash on deposit as at 31 December 2021 was placed with a financial institution on 22 February 2022 (see note 18) to manage it long-term, with the objective of protecting capital and hedging against inflation.

20. Borrowings

Total secured liabilities

The total secured liabilities (current and non-current) are as follows:

Refer to note 30 for further information on financial instruments.

Assets pledged as security

The loans were secured by first mortgages over the Group's land and buildings.

(i) Private placement

JT Group Limited received £51m under a private placement facility during August of 2012, of which £31m was repaid during 2019 , and £20m was repaid during 2022. The facility accrued interest at a rate of 4.48%.

(ii) Revolving Credit Facility

On 06 December 2018, the Group entered into a multicurrency Revolving Credit Facility (“RCF”) with HSBC Bank Plc, Jersey Branch (“HSBC”) and The Royal Bank of Scotland International Limited (“RBSI”) with both providing access to a facility of £15m each.

Additional funding through the accordion clause within the RCF, was secured in May 2020, which provides access to an additional £20m from RBSI. The now £50m facility is interest-bearing and is redeemable 5 years from the facility agreement date or, earlier in the event of default or non-compliance with specific terms and conditions as prescribed in the facility agreement. The Group repaid the RCF during 2022. There is no balance outstanding at 31 December 2022.

JT Group Limited

Notes to the consolidated financial statements For the year ended 31 December 2022

20. Borrowings (continued)

Fair value

For the majority of the borrowings, the fair values are not materially different from their carrying amounts, since the interest payable on those borrowings is close to current market rates.

Risk exposures

Details of the Group’s exposure to risks arising from current and non-current borrowings are set out in note 30.

21. Deferred tax liabilities

Deferred tax liability comprises temporary differences attributable to:

22. Employee benefit obligations

Defined contribution pension plans

Most employees are members of the JT Group Limited Pension Plan, a defined contribution scheme administered by Alexander Forbes. The plan receives fixed contributions from Group companies up to 10% of members’ salaries. The Group’s legal or constructive obligation for these plans is limited to the contributions. The expense recognised in the current period in relation to these contributions was £1,059,000 (2021: £1,090,000).

Defined benefit pension plans

The Group operates two defined benefit pension plans, the Public Employees Contributory Retirement Scheme (“PECRS”) and Telecommunications Board Pension Scheme (“TBPS”).

These plans are final salary pension plans, which provide benefits to members in the form of a guaranteed level of pension payable for life. The level of benefits provided depends on members’ length of service and their salary in the final years leading up to retirement. Pensions in payment are generally updated in line with the retail price index.

PECRS and PEPS

The PECRS is a defined benefit pension plan, providing retirement benefits based on final salary.

JT (Jersey) Limited participates in the PECRS as an Admitted Body under a Terms of Admission Document which sets out how the contributions to and assets of the Company’s notional Sub-Fund are to be determined.

JT Group Limited

Notes to the consolidated financial statements

For the year ended 31 December 2022

22. Employee benefit obligations (continued)

With effect from 1 October 2015 the Terms of Admission were amended to remove the requirement for the Scheme’s Actuary to monitor a ring-fenced Sub-Fund for the purpose of setting the Group’s contributions to the Scheme. Under the amended terms the Group’s contributions increased over a period to 2020 in accordance with a fixed schedule. Thereafter, contribution rates will be set in accordance with Jersey Law insofar as it applies to Admitted Bodies in the Scheme. Under the revised Terms of Admission there is insufficient information available to use defined benefit accounting and, with effect from 1 October 2015, the Group has accounted for the Scheme as if it was a defined contribution scheme.

From 1st January 2019 most employees on the PECRS scheme moved to the Public Employees’ Pension Scheme ("PEPS") which is a defined benefit pension plan, providing retirement benefits based on career average salary. There is insufficient information available to use defined benefit accounting and the Group has accounted for the Scheme as if it was a defined contribution scheme

TBPS

TBPS is an unfunded plan where the Group meets the benefit payment obligation as it falls due. The scheme holds a small cash reserve but is otherwise unfunded with pensions payable on a pay as you go basis.

Responsibility for governance of the plans – including investment decisions and contributions schedules – lies jointly with the Group and the board of trustees. The board of trustees must be composed of representatives of the group and plan participants in accordance with the plan’s regulations.

The TBPS is an unfunded scheme under which a defined benefit pension is payable to current pensioners.

The IFRS disclosure of the TBPS has been based on a valuation of the liabilities of the scheme as at 31 December 2022 and 31 December 2021 using the membership data at the accounting date. The present values of the defined benefit obligation and the related current service cost were measured using the projected unit method. Employer contributions in 2023 are expected to be nil to provide for the payment of benefits to pensioners.

Actuarial gains and losses have been recognised in the period in which they occur, (but outside the income statement), through other comprehensive income.

The principal assumptions used by the independent qualified actuaries to calculate the liabilities under IFRS are set out below:

The amounts recognised in the balance sheet are determined as follows:

22. Employee benefit obligations (continued)

of the present value of the defined benefit obligation, which is partly funded:

in the statement of profit or loss and other comprehensive income

statement of profit or loss and other comprehensive income are as follows:

Assumptions regarding future mortality are set based on actuarial advice in accordance with published statistics and experience in each territory. These assumptions translate into an average life expectancy in years for a pensioner retiring at age 75:

22. Employee benefit obligations (continued)

The sensitivity of the defined benefit obligation to changes in the weighted principal assumptions is:

*A rating of +1 year means that members are assured to follow the mortality pattern of the base table for an individual that is 1 year older than them.

The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognised in the balance sheet.

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.

Risk exposure

Through its defined benefit pension plans the Group is exposed to a number of risks, the most significant of which are detailed below:

Changes in bond yields

Inflation risks

Life expectancy

A decrease in corporate bond yields will increase the value placed on the defined benefit obligation for accounting purposes.

Pension liabilities are linked to price inflation. Higher inflation, or higher expectations of future inflation, will lead to a higher defined benefit obligation.

The Scheme’s obligations are to provide benefits for the life of the beneficiaries following retirement, so increases in life expectancy will result in an increase in the defined benefit obligation.

Notes to the consolidated financial statements For the year ended 31 December 2022

22. Employee benefit obligations (continued)

LTIP

The Group operates an LTIP scheme for its members of the Executive Committee and certain key employees, where the benefits are subject to (among other things) employees’ continued service. Rewards are based on achieving certain financial and non-financial goals over a period of three years and are calculated using the average annualised salary of each participant over relevant cycle. Each cycle runs over a three year period and is assessed by the Remuneration Committee at the end of the period. Any payments are subsequently made in tranches. Movement during the year, in accrual for LTIP scheme is disclosed in the table below:

The charge for the year is included in payroll benefits disclosed in note 5. The amounts relating to the Directors and key management personnel are disclosed in note 31.

The long-term portion of LTIP obligation has been discounted using a discount rate of 4.9%, which has been derived on the basis as defined in note 3.

23. Provisions

Asset retirement obligations and dilapidations

Asset retirement obligations involve an estimate of the cost to dismantle equipment and restore network sites upon vacation and the timing of the event.

Dilapidations involves an estimate of the cost to restore leased premises to their original condition at the end of the lease under terms of the lease.

Other provisions

Other provisions consist of the Group’s best estimate of the cost to settle litigation, disputes and regulatory matters across a range of issues, including price, service, regulatory and contractual issues. When estimating the likely value of the provision, management make key judgements, including in regard to interpreting local and UK regulations and past and current claims. The charge/credit for the year represents the outcome of management’s reassessment of the estimates.

JT Group Limited

Notes to the consolidated financial statements For the year ended 31 December 2022

23. Provisions (continued)

Movements in provisions

Movements in each class of provision, other than employee benefits, are set out below:

On 17 August 2018, the Group completed the acquisition of NeoConsult ApS and Nomad IP ApS ("Denmark operations"). The consideration for Denmark operations was made up of a cash and a guaranteed and performance related deferred consideration component, payable over 3 years. The Group sold the Denmark operations during 2021, as part of JT-IoT business. However, as part of the deal, the Group continued to be liable for deferred consideration. Included in the other non-current liabilities in 2021 is an amount of deferred consideration for Denmark operations, and is now included in current liabilities, as it will be settled in 2023.

During 2018, the Group sold the supply of its directory services business line to a third party through a licensing arrangeme nt and continues to support this business through billing and other related services. The proceeds from this transaction and its ongoing support services are recognised as deferred income and a portion was included in other non-current liabilities. The balance is now included in current liabilities, as it will be recognised during 2023.

25. Trade and other payables

Notes to the consolidated financial statements For the year ended 31 December 2022

Refer to note 30 for further information on financial instruments.

26. Issued capital

Ordinary shares

Ordinary shares have a par value of £1. They entitle the holder to participate in dividends, and to share in the proceeds of winding up the Company in proportion to the number of and amounts paid on the shares held. The Company does not have a limited amount of authorised capital.

Capital risk management

The Group's objectives when managing capital is to maintain sufficient equity to ensure stability and provide a return for our shareholder, the Government of Jersey, while allowing access to necessary funding when required.

Under the terms of the borrowing facilities of the Group’s RCF and private placements as described in note 20, the Group is required to meet certain financial covenants which impose capital requirements. The Group has complied with these requirements throughout the year, and continues to meet its requirements on all covenants.

27. Reserves

Foreign

currency translation reserve

Exchange differences arising on translation of the long-term foreign intercompany balances, including the results and financial position of foreign operations, are recognised in other comprehensive income and accumulated in a separate component of equity. The cumulative amount is reclassified to profit or loss when the net investment in the subsidiary is disposed.

JT Group Limited

Notes to the consolidated financial statements For the year ended 31 December 2022

Since year end the Directors have proposed the payment of a final dividend of £0.25 per fully paid ordinary share. The aggregate amount of the proposed dividend expected to be paid by 31 July 2023 out of retained earnings at 31 December 2022, is £5m.

30. Financial instruments

Financial risk management objectives

The Group's activities expose it to a variety of financial risks: market risk (including foreign currency risk, price risk and interest rate risk), credit risk and liquidity risk. The Group's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group. The Group uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate, foreign exchange and other price risks, and ageing analysis for credit risk.

The Group’s financial risk management is predominantly controlled by a central treasury department under policies approved by the board of Directors. Group treasury identifies, evaluates and hedges financial risks in close co-operation with the Group’s operating units. The board provides written principles for overall risk management.

Market risk

Foreign currency risk

The Group operates internationally and is exposed to foreign exchange risk, the US dollar, Euro, and Australian dollar.

The Group’s treasury department is responsible for reviewing, monitoring and management of the Group’s risk management policies in response to foreign currency exposure. The Group’s overall strategy is to reduce, eliminate or mitigate foreign exchange risk and related uncertainties. This is achieved through an ultimate objective to natural hedge exposures in payables against receivables insofar as possible, and limit exposure by maintaining balances in currency to cover short-term net payable demands in each currency.

The Group measures its risk exposures by maintaining a 2 year rolling cash forecast and performs monthly reviews and reforecasting of foreign currency cash flows. Where material committed exposures are identified, the risk and certainty around the cashflows are assessed and appropriate actions taken to reduce risk in line with the foreign exchange policy.

JT Group Limited

Notes to the consolidated financial statements For the year ended 31 December 2022

30. Financial instruments (continued)

The carrying amount of the Group's foreign currency denominated financial assets and financial liabilities at the reporting date were as follows:

Based on this exposure, had the Pounds sterling weakened by 10%/strengthened by 10% (2021: weakened by 10%/strengthened by 10%) against these foreign currencies with all other variables held constant, the Group's profit before tax for the year would have been £440,000 lower/£538,000 higher (2021: £299,000 lower/£366,000 higher) and equity would have been £440,000 lower/£538,000 higher ( 2021 : £299,000 lower/£366,000 higher). The percentage change is the expected overall volatility of the significant currencies, which is based on management's assessment of reasonable possible fluctuations.

Price risk

Price risk is the risk that changes in market prices of quoted equities and bond funds will affect the Group's income, expenses, and financial assets designated at fair value through profit or loss. The Group's assets are exposed to the market prices of the quoted equities and bond funds.

Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The maximum exposure to credit risk at the reporting date to recognised financial assets is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the balance sheet and notes to the financial statements.

The main exposure to credit risk is represented by the carrying amounts of cash, investments at FVTPL, contracting assets and outstanding receivables.

The credit risk from cash is managed by transacting only with large reputable companies. As at 31 December 2022, HSBC Bank Plc holds the majority of the Group's cash. UBS A G Wealth Management holds the Group's investment portfolio, including cash.

The credit risk is considered low, since UBS A.G. as parent to the custodian is a reputable bank with a Fitch rating of AA- (2021: Fitch rating of AA-), and HSBC Bank plc is a reputable banking with a Fitch rating of AA- (2021: Fitch rating of AA-).

The vast majority of our retail customers pay through direct debit. Credit risk for enterprise and non-retail customers is managed for the Group through a ‘Know Your Customer’ (“KYC”) process which includes a credit check performed using independent 3rd parties to ensure customer risks are understood and appropriate action taken before the customer is on-boarded. Credit limits are applied in accordance with the assessed risk and where necessary deposits held on account until such time as considered necessary to reduce an assumed assessed risk e.g. businesses with little or no payment or credit history.

Impairment of financial assets

The Group has two types of financial assets that are subject to the expected credit loss model:

JT Group Limited

Notes to the consolidated financial statements For the year ended 31 December 2022

30. Financial instruments (continued)

● Trade receivables for sales of inventory and from the provision of telecommunication services

● Contract assets relating to contracts with customers

While cash and cash equivalents are also subject to the impairment requirements of IFRS 9, any potential impairment losses are deemed immaterial.

Trade receivables and contract assets

The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables and contract assets.

To measure the expected credit losses, trade receivables and contract assets have been grouped based on shared credit risk characteristics and the days past due. The contract assets relate to unbilled work in progress and have substantially the same risk characteristics as the trade receivables for the same types of contracts. The Group has therefore concluded that the expected loss rates for trade receivables are a reasonable approximation of the loss rates for the contract assets.

The expected loss rates are based on the payment profiles of sales over a period of 24 months before 31 December 2021 and the corresponding historical credit losses experienced within this period. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of the customers to settle their receivables. The Group ha s identified the GDP and the unemployment rate of the countries in which it sells its goods and services to be the most relevant factors, and accordingly adjusts the historical loss rates based on expected changes in these factors. In addition, reviews are performed with the Group’s debt collection team and management to ensure a reasonable loss rate is applied.

On that basis, the loss allowance was determined as follows for both trade receivables and contract assets:

The loss allowances for trade receivables and contract assets as at 31 December reconcile to the opening loss allowances as follows:

Trade receivables and contract assets are written off where there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan with the Group, and a failure to make contractual payments for a period of greater than 120 days past due.

JT Group Limited

Notes to the consolidated financial statements For the year ended 31 December 2022

30. Financial instruments (continued)

Impairment losses on trade receivables and contract assets are presented as provision for and write-off of bad debts within operating profit. Subsequent recoveries of amounts previously written off are credited against the same line item.

The loss allowances for financial assets are based on assumptions about risk of default and expected loss rates. The Group uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on the Group’s past history and existing market conditions, as well as forward-looking estimates at the end of each reporting period. Details of the key assumptions and inputs used are disclosed in the tables above.

Liquidity risk

Vigilant liquidity risk management requires the Group to maintain sufficient liquid assets (mainly cash and cash equivalents) and available borrowing facilities to be able to pay debts as and when they become due and payable.

Management monitors rolling forecasts of the Group’s liquidity reserve (comprising the undrawn borrowing facilities disclosed below) and cash and cash equivalents on the basis of expected cash flows.

This is generally carried out at group level. In addition, the Group’s liquidity management policy involves projecting cash flows in major currencies and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios and managing current and planned debt financing.

Financing arrangements

The Group had access to the following undrawn borrowing facilities at the end of the reporting period:

Refer to note 20 for more information relating to the above financial liabilities.

Remaining contractual maturities

The tables below analyse the Group’s financial liabilities into relevant maturity groupings based on their contractual maturities for all non-derivative financial liabilities.

The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.

30. Financial instruments (continued)

JT Group Limited

Notes to the consolidated financial statements For the year ended 31 December 2022

Fair value of financial instruments

The Group has classified fair value measurements using a hierarchy that reflects the significance of the inputs used in makin g the measurements. The fair value hierarchy has the following levels:

● Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).

● Inputs other than quoted market prices included within Level 1 that are observable for the asset or liability, either directly or indirectly (level 2).

● Inputs for assets or liabilities that are not based on observable market data (that is, unobservable inputs) (level 3).

The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a level 3 measurement. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgement, considering factors specific to the asset or liability.

The determination of what constitutes ‘observable’ requires significant judgement by the Group, which considers observable data to be market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary and provided by independent sources that are actively involved in the relevant market.

The following table analyses within the fair value hierarchy the Group's financial assets that are measured at fair value (by class):

Investments whose values are based simply on quoted market prices in active markets would be classified within level 1. Details of these investments are disclosed in note 18.

JT Group Limited

Notes to the consolidated financial statements For the year ended 31 December 2022

30. Financial instruments (continued)

Financial instruments that trade in markets that are not considered to be active but are valued based on quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs are classified within level 2. As level 2 investments include positions that are not traded in active markets and / or are subject to transfer restrictions, valuations are discounted to reflect illiquidity and / or non-transferability, which are generally based on available market information. The Group does not classify any investments as level 2.

Investments classified within level 3 have significant unobservable inputs as they trade infrequently. As observable prices are not available for these securities the Group has used valuation techniques to derive the fair value, as disclosed in note 14.

Due to the fact that there is significant estimation uncertainty in determining the fair value of these assets, a relatively small increase/decrease in the unobservable inputs may result in a significant variance in the fair value of the investment and consequently impact the financial statements as a whole. As a result, the amounts recorded in the financial statements may therefore differ significantly to their future realised amounts and such a difference could be material.

Net debt reconciliation

This section sets out an analysis of net debt and the movements in net debt for each of the periods presented.

JT Group Limited

Notes to the consolidated financial statements

For the year ended 31 December 2022

30. Financial instruments (continued)

Movements in borrowings are the aggregate movement of draw downs and repayments as disclosed in the cash flow statement.

31. Key management personnel disclosures

Compensation

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the ac tivities of the Group, directly or indirectly. Key management includes the Directors and members of the Executive Committee. The compensation paid or payable to key management for employee services is shown below:

31. Key management personnel disclosures (continued)

Notes to the consolidated financial statements

For the year ended 31 December 2022

The amounts disclosed reflect emoluments paid for period individuals were directors of the Group.

32. Contingent liabilities

The Group has no contingent liabilities as at 31 December 2022 and 31 December 2021.

33. Related party transactions

Subsidiaries

Interests in subsidiaries are set out in note 34.

Key management personnel

Disclosures relating to key management personnel are set out in note 31.

Transactions with related parties

The following transactions and balances relating to the Government of Jersey departments are reflected in the financial statements.

Receivable from and payable to related parties

The following balances are outstanding at the end of the reporting period in relation to transactions with the States of Jersey departments:

JT Group Limited

Notes to the consolidated financial statements

For the year ended 31 December 2022

33. Related party transactions (continued)

Loans to/from related parties

Loans to related parties was comprised of the preference shares issued by the  Group’s shareholder. Refer to note 20 for more information on the terms and conditions relating to the preference shares.

34. Interests in subsidiaries

The Group’s subsidiaries at 31 December 2022 are set out below. Unless otherwise stated, they have share capital consisting solely of ordinary shares that are held directly by the Group, and the proportion of ownership interests held equals the voting rights held by the Group. The country of incorporation or registration is also their principal place of business.

The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described in note 2:

As at 31 December 2022 and 31 December 2021, the Group held no interest in associates or joint ventures.

35. Events after the reporting period

A dividend for the year was approved for recommendation to the shareholders, refer to note 29.

Other than as disclosed above, no matter or circumstance has arisen since 31 December 2022 that has significantly affected, or may significantly affect the Group's operations, the results of those operations, or the Group's state of affairs in future financial years.