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Directors’ report The Directors present their report and consolidated financial statements for the year ended 31 December 2020.
Incorporation
JT Group Limited (the “company”) was incorporated in Jersey, Channel Islands on 22 October 2002.
Principal activities
The principal activity of the company and its subsidiaries (the “group”) is the supply of telecommunications services and equipment. The principal place of the company’s business is Jersey, Channel Islands.
Results
The group is presenting its annual report which includes the group’s first set of financial statements reported under International Financial Reporting Standards (IFRS). The effective transition date to IFRS was 1 January 2018. Refer to note 2 for more information on the financial impact resulting from the adoption on the group’s consolidated financial statements. The results are set out on pages 10 to 13. 2020 was a challenging year for JT Group, some of the group’s business lines suffered due to COVID-19 whilst others proved robust and, in some cases, significantly exceeded expectations. The group’s core business, which includes the Channel Islands and International IoT businesses, have shown strong resilience as telecommunication services have been in high demand during the pandemic. Revenue and margin for these business areas have grown despite a significant decrease in roaming revenue from reduced travel. Relying on its full-fibre broadband network in Jersey, JT was able to further support the community during the ‘Stay at Home’ policy issued by the Government of Jersey by doubling the minimum available speed for all Jersey broadband customers from 500Mb/s to 1Gb/s, at no cost. JT also provided free local landline calls to its customers during this period and supported its more vulnerable customers by not charging overages and suspending late payment charges. In response to the Covid-19 outbreak, the group put in place immediate measures to preserve cash, enhancing cost control and debt collection, focusing on priority projects and exiting businesses that were higher risk and not expected to drive significant value to the group in the current economic climate. This led to the sale of the Corporate Communications Holdings (CCH) Group (“Worldstone Group” or “Worldstone”) and the termination of the Voice Trading business. As a result of these measures the group was able to improve its net cash position whilst maintaining dividend payments to the Shareholder. Despite the measures put in place and the improved net cash position, the group suffered net losses for the year, mainly caused by losses in Worldstone and the trade receivables
impairment loss recognised against the Voice Trading customer receivables recognised in the balance sheet of ekit.com Inc., which could not be entirely offset by the good performance of the group’s core businesses.
Revenue
Revenue reduced by 13% (£25.0m) to £170.0m in 2020 compared to 2019. The ceased Voice Trading business reduced revenues in 2020 by £40.8m. This was partially offset by strong growth in International and more moderate growth in the Channel Islands, despite reduced roaming revenues in all markets.
Gross Profit
Gross Profit increased by 8% (£7.2m) to £98.6m in 2020 compared to 2019 due to growth in higher margin products in International and Channel Islands markets and partially offset due to a reduction in low margin Voice Trading products.
Operating Profit
Operating Profit decreased by £0.1m to a profit of £6.4m in 2020 compared to 2019. The increase in Gross Profit was offset by an increase in operating expenses, mainly driven by additional allowance for the Voice Trading receivables impairment loss.
Profit from continuing operations
Profit from continuing operations decreased by £1.3m to a profit of £0.9m in 2020 compared to 2019. Income tax expense increased by £1.9m, driven by strong profits in the Channel Islands and an impairment of deferred tax assets previously recognised in the balance sheet of ekit.com Inc.
Profit/(loss) for the year
The profit/(loss) for the year decreased by £5.6m to a loss of £4.1m in 2020 compared to a profit of £1.5m in 2019. The increase in gross profit was more than offset by the Voice Trading receivables impairment loss included in operating expenses and the loss from discontinued operations from Worldstone’s operational losses as well as the loss on its disposal.
Net Cashflow for the year
Net cash inflow from operating activities increased by £9.9m to £39.0m in 2020 compared to 2019, underscoring the strong performance of the group’s core activities. £13.3m was spent in investing activities (net of £2.6m proceeds from disposal of Worldstone), a reduction of £6.9m compared to 2019. This strong net cash inflow allowed the group to pay the 2019 final and 2020 interim ordinary dividends of £4.1m (2019: £4.8m) and reduce borrowings by £12m, whilst maintaining available cash at £10.6m as at 31 December 2020. The Directors have approved the payment of a final ordinary dividend for 2020 of £2.0m (2019: £2.2m). Further details on dividends are included in note 17.
