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.