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Corporate Governance
Board Effectiveness
Annual Report Statement
This year the Board undertook an external effectiveness review as part of our commitment to the 2018 UK Corporate Governance Code. The review was undertaken in May 2020 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 in September 2020. As well as the Board members themselves, it also involved the Group Company Secretary and the Executive Committee. To ensure consistency with the 2019 process, it was based on the Institute of Directors Competency Framework and the process was independently run by Darren Briggs from Flametree Communication Ltd.
The JT Board and its committees were found to be effective across all categories. The range of expertise that has been enhanced through the appointment of a new Chief Financial Officer, Non-Executive Directors and a new Company Secretary, 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; and there have been significant improvements in governance and process in recent years. Together, with the ongoing focus on improving Board effectiveness by the current Chair in response to the 2018 UK Corporate Governance Code, these have proven to be a good platform on which to build a robust and effective Board culture. However, the Board recognises the need to constantly monitor and improve, in particular, the following areas for attention were identified, which the Board began addressing during the year and will continue through 2021:
The range of knowledge, skills and behaviours must be maintained through Executive succession and Non-Executive rotation.
There continues to be room for further improvement in Board processes and materials.
Communication in general and in particular ensuring a common language.
Increased frequency of Board members to connect and meet outside of the normal Board timetable.
The Board has implemented the following actions:
Nominations Committee development of a detailed rolling Board succession plan with attention to specific Hogan profiling and the Institute of Directors competency framework for Directors as part of the selection process.
Personal development opportunities around both knowledge and skills based on Hogan assessments and individual feedback from this study.
An education programme for all Non-Executive Directors to have a deeper understanding of JT’s technology, products and services.
An improved induction process for new Board members customised to their role on the Board and based on their personal Hogan assessments strategy. This includes creating a more formal standardised framework for the onboarding and induction of new Board members. Adding the factors listed In S.172(1) of the Companies Act 2006 to the standard Board paper cover sheet so that the Board can make reference to this when considering the relevant Board paper/making decisions.
Deepening relationships between Executive and Non-Executive members to further build trust and respect through externally facilitated sessions.
Continual improvements in Board procedure and materials.
The Board this year will welcome a new Chair and will undertake the selection of new NonExecutive Directors in accordance with the detailed Board succession plan. These processes have been significantly improved as a result of this year’s Board Effectiveness Review.
Corporate Governance
Compliance with the UK Corporate Governance Code (the ‘Code’).
The Company adheres to the principles of good corporate governance and best practice set out in the Code and, in particular, has in place a sound system of internal controls to safeguard its shareholder’s investment and its assets.
Directors and the Board
The Board
During the financial year the Board consisted of eight Directors, two of whom are Executive Directors and six of whom are Non-Executive 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 operating strategy, approving detailed business plans and overseeing delivery of objectives by continually monitoring performance against those plans. The Board establishes the culture, standards and values of the Company. The Board oversees the management of risk, monitors financial performance and reporting and ensures that appropriate and effective succession planning and remuneration policies are in place. Whilst maintaining oversight at regular meetings of the Board, the day to day operation of the Company has been delegated to the Executive Directors. The Board is supplied with a sufficient level of regular, detailed and timely management information to allow it to discharge its functions efficiently.
Meetings and Committee membership
During the year, the Board met 13 times. Details of attendance at Board meetings are as follows:
Number of Board meetings in 2020 13
Sean Collins (retired 26 April 2021)
Joe Moynihan
Hélène Narcy (appointed as CFO on 27 April 2020 and as statutory director on 14 May 2020)
Meriel Lenfestey
Phil Male
Graeme Millar
Angus Flett (appointed 1 December 2020)
Mark Shuttleworth (appointed 1 September 2020)
John Kent (retired as CFO on 27 April 2020 and as statutory director on 14 May 2020) 12
12
13
13
13
13
2
7
6
Director independence
The Board considers all of the Non-Executive Directors to be independent in character and judgement. In determining independence, the Board considers the specific circumstances of each Director. The Board has concluded that Sean Collins, Joe Moynihan, Mark Shuttleworth, Angus Flett and Meriel Lenfestey shall be deemed independent, with Meriel Lenfestey adopting the role of Senior Independent Director. Phil Male, as Chairman of the Company for the year ended 31 December 2020, was considered independent on appointment and, in accordance with the Code, is not subject to the independence test thereafter.
Performance evaluation
In order to ensure that the Board continues to operate effectively, the Board and its Committees carry out an assessment of performance across key areas. The results of the performance assessments and appraisals are fed back to the Board as a whole (as appropriate) and action taken accordingly.
Other significant commitments
Under the terms of engagement for each Non-Executive Director, an indication of required hours is agreed that should enable the Non-Executive Directors to discharge their duties to the Company. The level of commitment to the Company has not been impinged by other significant commitments for any of the Non-Executive Directors.
Reappointment
The Company has adopted a policy of requiring all Directors to seek re-election on an annual basis in line with the Code. Directors appointed to fill a casual vacancy must seek formal appointment by the shareholders at the next Annual General Meeting (“AGM”).
Relations with the shareholder
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.
Internal Controls
The Board is responsible for ensuring that there are effective systems of internal control in place to reduce the risk of misstatement or loss and to ensure that business objectives are met. These systems are designed to manage and mitigate (rather than to eliminate) the risk of failure to achieve business objectives and can only provide reasonable and not absolute assurance against material misstatement or loss.
The Company has developed and adopted corporate and operational risk registers detailing and 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 Committee, accords with Turnbull guidance and has been in place for the whole of the year, up to and including the date on which the financial statements were approved.
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.
The review and approval during the year of the schedule of matters specifically reserved for its attention. The review of reports received from the Audit Committee concerning the findings of the external auditors on the financial statements of the Company and the systems of internal control.
Audit Committee
During the year ended 31 December 2020, the Audit Committee comprised Sean Collins (Chairman), Joe Moynihan and Mark Shuttleworth (with effect from 10 September 2020).
The auditors, KPMG LLP, and the Executive Directors also attend the meetings by invitation.
There were five meetings of the Audit Committee during 2020, with full attendance at all of those meetings.
The terms of reference of the Audit Committee require it to meet at least twice per annum. Additional meetings may be called where deemed necessary. The Committee is charged by the Board with the following main responsibilities:
To monitor the integrity of the financial statements of the Company and any formal announcements relating to the Company’s financial performance.
To provide advice, when requested by the Board, on whether the annual report, taken as a whole, is fair, balanced and understandable and provides the information necessary for the Shareholder to assess performance, the business model and strategy.
To ensure that arrangements are in place for the proportionate and independent investigation of concerns raised confidentially by whistle-blowers about possible improprieties in matters of financial reporting or any other matters.
To review and monitor the adequacy, operation and effectiveness of the Company’s internal financial and other controls and make recommendations for improvement where necessary.
To oversee the external audit process and manage the relationship with the external auditors.
To make recommendations to the Board as to the re-election and remuneration of the auditors at the Annual General Meeting based upon its assessment of the performance of the auditors and giving due regard to their continued independence and any other regulatory or professional requirements.
During the year ended 31 December 2020 the Audit Committee formed the view that there is a continuing need for an internal audit function and has assigned accountability for this to a senior accountant reporting to the CFO.
