JT Group Limited: Annual Review 2016/17 and Annual Report and Audited Consolidated Financial Statements 31st December 2016

LIVING &  WORKING  WITH  TECHNOLOGY

JT's Annual Review  2016/17

  JT 2016/17 ANNUAL REVIEW 3

Thanks to all of our local customers that gave words and appeared in photos for this review.

Contents

04 Chairman's Foreword

06 CEO's Business Review

10 How You Communicated in 2016

12. The Channel Islands' Top 10 Digital stats of 2016

WINNER IN JERSEY AND GUERNSEY

13. A Day in the Life of You
14. 2016. What we left behind and What we're looking forward to

Confirmed by the Speedtest Awards from Ookla, the world's

No. 1 Internet test. 16 Where We Are and Who We Look After

Switch to the Islands' FASTEST networks today. 18 How We Got Involved

20 Our People, Their Customers

22 Performance Review

Officially the Islands  24 Board of Directors

26 Corporate Governance

30 Directors' Report

 Ookla verified 32 Financial Summary

Speedtest by

38 Notes to the Financial Summary

2016 was remarkable in many ways. Significant political, cultural and economic upheaval felt potentially confusing and disorientating at times and it is still not

clear how major changes like Brexit will affect us all over the long-term. As we all come to grips with these changes on a personal and a business level, we at JT set ourselves the goal of quietly getting on with our jobs. We aimed to make sure that our customers can communicate with the minimum amount of fuss or expense, with reliability, during less certain times.

In ways this means we try to see ourselves as a means to

an end; an enabler for individuals to live their lives however they choose to, and as a partner to help businesses to grow and prosper. Occasionally, that seamless behind-the-scenes connectivity is challenged, such as last November when in an unprecedented event, three out of our four undersea cables linking the Channel Islands to the outside world were cut by

a ship's anchor. We immediately informed our customers that there could be disruption to services at peak times. It was certainly a testing period, but the resilience built in our network proved to be a sound investment and any actual impact for customers was kept to a minimum.

I use that example to introduce our review of 2016, as for me, it encapsulates exactly what JT has been doing in serving the Islands for more than 120 years and keeping us connected – internally we describe this and our role as to be; always there, always on, always enabling.

It's also the reason why this Annual Review is a little different to those we have produced before. In this document, we have tried to look at 2016 not from JT's perspective, but through the eyes of our customers. Be it the schools accessing innovative learning resources through the network we provide to them;

the grandparents connecting with families overseas thanks

to the advanced fibre broadband, the millennials posting

photos and videos on social media at an exponential rate; the professionals gaining access to emails and files on the move

seamlessly; and the businesses that need to share data quickly, "Over 1.2 million  reliably and securely. JT is always here, always working, 24 hours

a day, seven days a week, 365 days a year, behind the scenes,

JT SIMs  serving our community and keeping them connected. What we do is provide services. How our customers use them is what

drives us forward.

JT 2016/17 ANNUAL REVIEW 5

"Always there,

always on, always enabling".

Truly connected Islands

The digital economy is powering up at pace and JT is proud  JT's international growth is impressive but it in no way means to see that large numbers of new and innovative enterprises,  that the company is less committed to our Channel Islands digital providers and connected workers are now able to live  home. On the contrary, growing revenues internationally not and work from the Channel Islands thanks to our superior  only means that we can invest more in our local network, it also connectivity. We see how our customers use our technology  means that our shareholder has extra funds to invest in other and this drives and inspires us to keep progressing and keep  essential infrastructure and services.

investing, ensuring that they have the services they need to

stay ahead, both now and in the future.

A global reach

As well as our Channel Island customers, we also now serve  

an increasing number whom are based beyond our shores,  

in fact globally. There are now over 1.2 million JT SIM cards  

connecting devices from heart monitors in Canada to  

payment systems in East Africa. The Internet of Things' (IoT),  

which allows machines to inter-connect with minimal human  John Stares

involvement, is an exciting growth area for JT and one in which  Chairman, 12th May 2017

we are already flourishing: as the year closed, we launched the

Channel Islands' first Long-Range (LoRa) network. This Annual

Review helps demonstrate the relevance and importance of

our off-island growth, both in generating new revenues and in

bringing new technology to our Islands.  £5.5m

A strong year £4.1m

Turning to our financial performance (the details follow later

in the report), 2016 was a strong year with gross profit rising

by 1% to 90.7m, mainly generated by JT's highly successful

international machine-to-machine (M2M) business, enabling 2015 2016

JT to deliver a substantial dividend back to our ultimate owners,

the people of Jersey. The dividend paid to the States of Jersey

increased from £4.1m to £5.5m. I would like to thank the team  DIVIDEND PAID TO for their hard work in delivering this solid set of results for 2016,  STATES OF JERSEY which means we have returned another healthy dividend to our

shareholder.

As we get close to completing our fibre network in Jersey,

   fibre – offers greater bandwidth, speed, security and reliability.

we also near the end of copper's significant contribution to  Once all the telephony in the Island. Copper wires have reliably transported

our voices, and latterly data, for over a century, but the sun is  copper is

now setting on this dependable technology. Its replacement –

rit wecoilvl bere ed from And a fibred future will provide even more opportunities for our

customers to lead connected lives; in connected homes. the ground,

IoInsul aGrnfuidbe,rraennsndeey1t,w2wo0er'ksrei. t Ieansl s2 to0o l1ia n5  kM, iwnP geL  Shc ooWmmidepesle aAtenrded aab Nuthesritneweeo-syrskee.a sIr n dp 2irro0ejc1et6clyt, ttoo  recycled.

connect 46 government buildings to our 50km fibre ring in the

As we look back on another successful  two residential schemes – Royal Terrace and One St Julian's

Avenue – were among the first to connect to our network,

year for JT, it's worth reflecting on our role  delivering super-fast speeds of 50Mb, 100Mb and 1Gb fibre-

in the communities in which we operate.  broadband services. Over £11m has been spent locally in this

ambitious project so far with the roll-out continuing today.      

Our activities are wide-ranging and

complex – however, collectively they

all in some way enable', by helping

our customers to achieve things more    

efficiently, more cheaply and more quickly.

Essentially, that's what the digital revolution  With every year, developments in technology – and in customer is all about, and JT aims to be at the  bfaesht afivbioreu rc o–ncnoencfitrivmit yo. uTroddeacy,i seioancht oh osiugsneifih coaldn tinly tihnve e Csht ainn sn ue pl  er-

heart of that by enabling our customers  Islands has, on average 15+ devices connected to the Internet. to engage with the world around them,  Malsoos tealercetsrimcaal rittpemhosn; efrs o, mco fmridp gu ete s r as n a dn sd o t ua nb dle sts y  sb tuet m insc tr oe aws aintcg hlye  s

however they choose to do so. and games consoles, all now requiring a fast and reliable Internet

connection.

To meet this growing demand, we recently doubled download speeds and significantly increased upload speeds for many of our fibre customers. When we first launched our Gigabit project, lots of people told me that we didn't need it; today, the most common complaint I hear is that we're not rolling out our fibre network quickly enough!

In Jersdigital smore than 70% ofeyer, one ofvices is the principle wvia our broadband cust fibre networkays that Islanders can access omers wer – by the end ofe connect 2016 ed to  2JERSEYND      

this super-fast and reliable infrastructure. To put that in context,

earlier this year I read an article in a national newspaper

critical of the fact that just 2% of UK families have a fibre-optic  IN THE

connection dirnetwork puts Jersectlyey to their in second place in the whole world in t home. By contrast our new fibre erms  WORLD  

of the extent of its fibre connectivity. Alongside developing our fixed networks, 2016 was also a significant  the Islands

year for our award-winning 4G mobile networks. In the first half of the  Officially

year, we invited all Islanders in Jersey, Guernsey and Alderney to test

the speed of their mobile network (JT or otherwise) using Speedtest by

   period. Our network superiority was further confirmed later in the year

for percentage  Ookla, the world's most popular Internet performance testing service.

The results showed that JT's 4G network was the fastest in all three

of households  islands, compared with other network speeds logged during the testing  Ookla verified of broadband customers are  with a broadband  when independent testing by Ookla also proved beyond doubt that JT's  Speedtest by

average network speeds are the fastest in the Channel Islands, both for

directly connected to our  connection  mobile and broadband. We're proud of this achievement.

super-fast fibre network connected to fibre As well as allowing ournetworks are also allowing JT t customers to continuallyo think and act diff improve the werentlyay, thes we meet e

our customers' needs.

Facts and figures correct at the time of publication.

[h]8 JT 2016/17 ANNUAL REVIEW

We all hear a lot about the cloud these days. During 2016 JT made significant progress in launching and developing a range of cloud-based services. All made possible by our advanced networks.

During 2016 we launched an innovative 'Cloud PBX' service for small and medium size businesses which essentially replaces the traditional office phone system.

We also launched cloud-based video conferencing solutions; now offering a real alternative to local travel frustrations.

Whilst further developing our eGaming services, again hosted in our cloud, we enabled local and global customers opportunities to grow and develop their services. In recognition of this JT's eGaming Cloud platform won 2 major UK awards during 2016.

  rd-winning eGaming Cloud Platform.

That intWholesale division in 2016 ternational success is a good eo grow beyxample ofond our the work own shor done bes, so that we y JT's  devices connected can incards now powervest these r oevvenues backer 1.2 million devices, acr into our home Islands. Foss the world. or example, JT SIM  by JT SIM cards

That area of JT grew by 29% over the period. A particular focus for  worldwide

this team is the Internet of Things (IoT), which is not only an exciting,

emerging global technology, but also allows JT to utilise the 600+ roaming

agreements we have with other operators around the world.

Aofasoonnnrfdeotgwtoilhnoafevbroereauswltrttheaekadyelet yw icnesoenDtmardaabestnlleeiiinvsgs enh icurocs ivpnoatrtmoiteoi  roporninafftai.nee't yIisr no ,JNnt2Toea0 olsb1geCe6rrocov, onwi wcmseteuhes l s t ,i gisgwlonbh tbyeohadp esl l uapyps.neaBhcraiyti ngancgrl eieosrfeemoomribfwnecinaInhoirntodTgicwei th  wholesale business

growth of our

JpaTmro'soc eucosnsntsensoeccf tatiivnmitneyo awwni  tdb h emtheo eanis rei l iyy n.  na ou vto amtiva et e Nd O, s Ma Avi Dn g p  lb au tfs oin rmes , s ce os m s pig lin caifi tc ea dn [i]  in 2016

JT 2016/17 ANNUAL REVIEW 9

Round-up

JT is owned by the people of Jersey, and that really means  Our work at home and abroad during 2016 enabled Channel something to us. For example, the issues we had a few years ago  Island businesses and residents to remain engaged, informed, with our new billing system are very well documented – but what  competitive and, above all, connected. It was also a year of sometimes goes unnoticed is that we now get fewer queries  investment in our people and our systems, diversification, from our customers about their bills than at any point since we  relationship-building and substantial development for JT. have been measuring that statistic.  None of this would have been possible without the dedicated

team here – which I'm very proud to be a part of.

One of the main reasons we have been able to achieve this,

is the feedback we received from customers about what they  wanted to see – we listened carefully to those comments, and  

  2016/17 ANNUAL REVIEW 11

Here are four JT customers telling THEIR story; these are the people who we support, they are the reason we strive to better our network.

This is what drives our people.

  DOMESTIC FIBRE BROADBAND &  "JT'speeds and rconnections means I can s super-fast fibreliable e    LANDLINEDavcusthim te Cromero be able tock since 2000, is a er, JT o edit and  upload pictsfsamilyeamlesslyame time." are all online at the , whilst mure galleries y

keen photographer. Fibre  

broadband is essential for  

upload his photography.  

4G MOBILE  "JT's super-fast 4G is SERVICES actually faster than my

office broadband, which JT is proud to have put Jersey and the  Danielle Barnett, a mobile  makes working outside an easy choice!"

Channel Islands on the digital map and  small business owner has

Jersey now sits second in the world when  been a custsince 2016.omer of JT's

it comes to the percentage of households

with fixed broadband connected to fibre.

9 out of 10  [1]

Islanders have access  Accoraccess tding to the Into Staternet and ofes statistics thos , nine out ofe that do, almost 70% of ten Islanders hav us e

to the Internet.

access it via a smartphone, a 10% increase compared to 2013.

Our use of social media is also on the rise – 20% of people in  PROFESSIONAL  "As an IT developer, I need

Jersey now use Twitter, for example. to have access to high

BROADBAND quality broadband at all

Jersey is, of course, part of a global movement that won't stop  times. At C5 Alliance, I rely

and won't be slowing down. A recently published review of  Anna Philpot, a JT customer  on JT Broadband to access

worldwide trends[2] found Internet penetration increased by 10%  since 2010, is a Senior  software in the cloud and

over 2016 to hit 3.8 billion, or 50% of the world's population.  Consultant at C5 Alliance  to remote access clients'

Global social media use increased by 21% in just ONE year,  using JT's network both in  systems. When I can't

reaching 2.8 billion users globally, while mobile social media use  the office and on the go.  access Wi-Fi on a client

increased by 30% to surpass 2.5 billion users globally, with 91%  site, I can use my 4G

of social media users accessing it from their smartphones. handset as a hotspot for

70% access  my other devices."

the Internet via   Of course those statistics translate into massive and growing  

a smartphone. volume for the Islands providers to carry and support. This is why  FIBRED Rachel Huelin, a pupil

it is pleasing when the industry and other professional bodies  benefiting from these

tell us JT's 4G networks are officially the fastest in both Islands,  SCHOOLS services, said:

giving customers super-fast download and upload speeds on

the move to do all this. And now we're ranked second for global  Rory Steel, Assistant  "I love being able to work fibre connectivity in official ranking tables; but that only matters  Headteacher at Beaulieu  anywhere, any time.

to us when it enables our customers to connect faster and more  Convent School,  I've been able to take reliably. So those are some of the facts/trends, what are the real  has overseen the  advantage of the weather stories behind this? implementation of campus  when it's nice or find a

wide Wi-Fi and JT Fibre  quiet spot when I need to Broadband, both of which  concentrate. It has really have transformed the  helped my studies."

way that teachers deliver

20% of people  content to their pupils.

[1] States of Jersey Opinions and Lifestyle Survey 2016

in Jersey now use Twitter [2] Hootsuite / We Are Social Digital in 2017

THE CHANNEL ISLANDS'  A DAY IN THE LIFE OF YOU TOP 10 DIGITAL STATS OF 2016 The Internet of Things and constant access to smart devices means technology

touches more areas of our lives than we might think. It's amazing to see just how See how vital being connected has become to Channel Islanders with this round-up  many parts of an average person's day could rely on our access to the Internet.

of the ten biggest tech trends of last year.

The most downloaded programme in Jersey was: The most read online  The most sindividual wearas:ched for  6.30AM  7AM 8AM newspaper was:  Woken by my trusty Smartphone  Weather app says sunny.  Early morning Bieber sing-a-

THE GREAT  DAILY MAIL DAVID BOWIE sort that hair out. phone to car connectivity. alarm, giving me plenty of time to  Now where did I leave my shades? long thanks to Spotify and

BRITISH  

BAKE-OFF

The most popular app  downloaded was:

SNAPCHAT 9AM  12.30PM Sweet! Work research project done  WhatsApp the gang,

at superfast speed thanks to fibre  meet at Oyster Box for In 2016 the average  broadband. Now time to update my  lunch, Snapchat our

The Channel Islands' tech  Islander spent  LinkedIn profile. Tick. salads #foodenvy device of choice was the 303 HRS #healthygirls iPHONE, #hiddenfromshot

ON FACEBOOK  chocbrownies

with more units per head

than any other country.

Our FitBit

wearers took around  

697,880,000 5PM  6PM

steps in 2016. Late leaving work.  YESSSSS! Fitbit tells

Thankfully with my  me 14,567 steps taken

Nest app I can put the  = equivalent of climbing

lights on ready for  the Eiffel Tower, twice.

when my girlfriend  Best not share  I was awesome gets home. yesterday's couch day! today!

The most popularonline shopping on the JT day for 15

network was:  that's the average number

18TH  We use a whopping  of devices per household

in Jersey connected to the

DECEMBER +31,000,000 MB  Internet.  7PM  8PM  10.30PM Google brings up  Mountain of  Smart Home security

of data a week on JT's  a cracker of a fish  popcorn, yay.   set. Snuggling in 4G network. That's the  pie recipe for dinner.  Downloaded 4K  for the night.

DECEMBER equivalent of streaming  Think I'll Skype  version of Kung Fu

Netflix for 30,000 hours  the kids in  Panda double yay!  

18 a week! Melbourne and  #Kungfoodeating

share it.

AND HAVE PROUDLY POWERED ALL OF THIS

2016 With Brbe rememberexit and a surprised more for e win f political or Donald Trather than rump, 2016 maytechnological  World Wide Web out : Internet of Things in WHAT WE LEFT BEHIND  change; howevland backEurope, and dr on its platfones became afer we still sorm, the Amazaw the first rfordable and ubiquiton Eeuscho launching in able rocket ous.  Gcoanrtnneecrt eGdro t uo p thaere Inptreerdniectt!i nJ gT thhaast obvye 2r 062000 trhoearme iwngill abger 5ee0mbeilln iot ns,   tw hh inic gh s  

AND WHAT WE'RE  Wand here read much about driv clones. So here's ourerless cars and a lot about Siri top 6 movers and shakers in  aal lroewla toivuerl yc ussmtoamll oenrse ,t owahcicc he sms e o at nh se r t  hn ee st ew ao grkrse.e Wmee natrse caagnl opbroavl oidpeeurast osrpbauret'

LOOKING FORWARD TO the ttech tech world and how JT is working today's reality in the Channel Islands.o make tomorrow's  c(tOyIaopppTeea)sncwi-tR heyo.i. cgUah.mtciilseiisnleligunslgCsa erto.hnInoitsniTaec l ilcasytp i advaneict vyeiti'cxyaepwlsllooetwdaaislnkr egcin uamgsb tatlooermk et eoeat rc fbash uct ooitl it otahanletwleyr a utJyhsTsein'shIg nsatovvealeurr ntcioieooutnnson bfce aToc shnt eiinvndietgyocs t n iv ity wherever they are. A real-life example is Wiltshire-based Tarrant Refrigeration,

which develops and deploys remote wireless sensors for cooling tanks and vats in the dairy industry. These sensors use JT SIMs to transmit mission-critical data

Bye bye copper  related to the temperature, volume and chemical health of the contents of the vat to a cloud-based application that is accessible by Tarrant's customers.

As new technologies arrive, so old ones are left behind. In

2016, we continued to replace the miles of underground  The real-time data transmission is important in complying with the regulatory requirements associated with dairy production. copper wires, which have reliably carried our voices for  Tarrant currently uses this technology in New Zealand and the UK, and it is scheduled to launch in the USA this year. The over a century, with fibre-optic cables. It also means that  firm's Managing Director, Andy Tarrant, says: "The JT solution is a vital component of our offering. In addition to their SIM the digital transmission of voice, video, data and other  management platform, JT offers global connectivity which simplifies our business development and distribution strategy."

network services over the copper-based circuits of our

public switched telephone network is also coming to  IoT is exploding. With over 1.2 million JT SIM cards connecting devices worldwide, from heart monitors in Canada to an end. The ISDN standard will soon be phased out in  payment systems in West Africa, JT are a global leader.

Jersey and our accumulated knowledge and experience

in achieving this is already being extended to our UK  

business, which is years behind Jersey in this respect.

Jersey Royals to smart cows:  How LoRa will change the world

Desk phones out : Apps in  Early in 2017, JT launched the FIRST LoRa (Long-Range) network in the Channel

Islands, in partnership with Digital Jersey. This is a low frequency Wide Area Network,

which carries very low amounts of data but it is particularly useful for things like smart We are also seeing traditional on-site private branch  agriculture. Take cows, for example. You can put a SIM collar around a cow, which will be

exchanges being replaced by cloud-based services,  connected back to JT or the farmer. From that, you can tell whether the cow is in oestrus particularly in the SME sector. Up to now, businesses  or not, where the cow is, whether it's grazing or sitting down. WOW just think of the

have usually hosted their own telephone exchange and  possibilities this e-cow' will give us in making production more efficient.

had an agreement with a service provider, such as JT,

who would dispatch an engineer to make changes and  Jersey and Guernsey are already famous for their cows but it would be great if we became fix problems. The introduction of fibre, however, brings  famous for our technological innovation too. Utilising Digital Jersey's network of contacts and with it new possibilities, particularly services hosted and  marketing expertise, we also expect that Jersey's LoRa network will be used by other operators managed in the cloud. In 2016, JT launched its own  to test their own IoT technology. Meaning that Islander's will be among the first people in the Cloud PBX system to offer an affordable and efficient  world to experience – and benefit from - the next generation of Internet technology. alternative to the bulky on-site exchange.

AI / AR / VR / VC : If you can shorten it,

you'll be hearing about it.

Paper out : eBills in

Augmented reality reached global prominence in 2016 when Pokémon Go In 2017, we also updated the way that our customers  was launched with much fanfare – we even saw our beaches littered with blank receive and pay bills, to make sure that billing reflects  expressions from gripped Pokémon hunters. AR, a sibling to virtual reality, is changing behaviour. The majority of JT customers  technology that overlays images or information onto the real world through a now pay their bills via Direct Debit and customers are  camera lens or a headset. Many technology leaders, including Apple CEO Tim increasingly opting to save paper and sign up to receiving  Cook, see huge potential for AR, predicting that many of us will eventually have AR their bill online or via email. This is straight forward, cost- experiences on a daily basis. It is anticipated that AR will be primarily mobile and effective and environmentally friendly.  have a significant impact on marketing. Retail AR marketing is already happening As numbers choosing this free option have grown,  and can involve anything from virtually trying on clothes, to seeing what furniture the cost of sending paper bills to a diminishing minority  looks like in your home before you buy it. It can even be as simple as a consumer has increased, so - following most telecoms providers  walking down an aisle with their phone and scanning products to learn more and utilities in the British Isles – JT has introduced a small  about them. Ditto VC; video conferencing has been a nice-to-have feature for most charge for all new customers or those changing services  businesses, but not essential. However with the significant developments in video for paper bills and non Direct Debit payments. equipment, a day's meeting can now be held seamlessly over real-time video, both

from the office and remotely. JT is actively saving businesses time and money.

WHERE WE ARE AND WHO WE LOOK AFTER

In 2016, JT continued to grow outside of the Channel Islands by expanding our business  During 2016 we were proud to see these achievements recognised by being awarded a number reach and portfolio and growing our international customer base. By working with our existing,  of leading industry awards. And more importantly through feedback and positive testimonials world-leading, global partners and providers, and our new strategic partnerships in niche and  from our customers. This effort and progress on our international growth all has one purpose; innovative services, we have both the scope and reach to deliver truly world-class solutions  to allow JT to reinvest back in our Islands, our home. Both in providing our people with across the globe. employment, but also providing the opportunity to deliver world-class infrastructure

like our 4G network and the Gigabit Islands project now nearing completion.

m-HEALTH TELCO CLOUD FORUM  WORLD  

Sandy Schwenger, CEO: "The main attraction for  AWARDS NEOCONSULT COMMUNICATION  us in contron offer. Typicallyacting with JT w, global telecommunications firms as the personal service  JT picked up the Best Go-to-Market Cloud  NeoConsult is at the leading edge of  par2016 new tnership AWARD

are very large companies, and so it can be more  Strategy Award' in the inaugural Telco Cloud  developing telecommunications software

difficult to build a strong relationship with someone  Forum Awards in May. Proving the strength of the  systems and provides us with a wealth of  JT were short-listed, against

who will always be available to look after you. In our  JT Cloud against other big players in the field.  expertise in our growing IoT business.  global tin what is the world'elecommunication giants, s largest

business, that sort of personal care is essential." communications awards. Our IoT proposition was highly regarded and

recognised as one of the best in the business.

ENERGOUS

Energous Corporation is  

a forward-thinking global

innovator enabling wireless  2016 new  OOKLA

charging for electrical  partnership

devices world-wide.  JT's mobile and broadband network was recognised by Ookla  the Islands

as the fastest in the Channel Islands. Officially

verified Speedtest by Ookla

TANGO NETWORKS

Tango Networks and JT are working in conjunction to  

launch JT Mobile Bridge – a forward-thinking mobile  KARL TAYLOR PHOTOGRAPHY communication solution to help

Karl Taylor , MD: "Right from the start JT's customer service

large multinational  

was exceptional. They kept us in the loop of what would be

enterprises with full  

required, how it would be installed and it was all done in a quick  policy control across  RESOLUTION IT

time scale. Our new live educational platform has opened up a  their mobile estate.

completely new revenue stream that will allow us to grow, and  Olly Duquemin, MD: "The move to JT for our  that wouldn't have been possible without JT."

business mobile contract has enabled us to better

par2016 new tnership manage our mobile costs. We have been really

impressed with the speed, reliability and coverage

of JT's network which is enabling our team to stay

connected and conduct their work from wherever

they are."

KRAFT HEINZ

Francesco Tinto, Global CIO: "We were very attracted  M2M

to the truly unique and industry-leading solutions that  JT M2M are working with

JT offers and it was evident that their approach to tailor  partners to provide African

solutions to meet our business needs would enable us  Enterprises connectivity across  Our long-standing global partners: to achieve our objective of consolidating our systems  a whole range of devices.

and improving connectivity for our staff."

HOW WE GOT INVOLVED

SUPPORTING  In 2016 we raised over £25,000 for our chosen charities, Friends of  "We would like to express a MASSIVE thanks to all of the

SCBU in Jersey and PPBF in Guernsey. We also worked with local  people and companies that have been involved from the start OUR  primary schools to recycle 8,312 telephone directories, collected  and have shown great support in helping Jersey Live become

COMMUNITIES oNvaetiro5n0a lbCooxedsin fgo rWtheee kh foomr tehlees tsh  ia rdt C yheari rs , t hmealps e,  dp r Ao uu td isly m s p Joenrss eo yr e rad i  se  the Island's signature music festival over the past 13   Warr y en Le Sueur ears." £15,000 from their charity golf day, welcomed celebrities to Herm for  

the Lord's Taverners annual Summer Celebrity Cricket weekend and  

sponsored IoD seminars in both Jersey and Guernsey.  

The Lord's Taverners annual Summer Celebrity  

Cricket weekend, held on Herm, raises funds for  Unforgettable performances from Richard Ashcroft, Madness,  worthy sporting projects in the local community.   Disclosure and many more attracted record numbers once again to

Jersey Live.

JT employees adding items to the collection box for the homeless,  with over 50 boxes being delivered across the Islands to local  shelters in time for Christmas.

The JT sponsored Autism Jersey  Charity Golf Day, held at La Moye Golf  Club, raised £15,000 for the charity.

JT proudly supported the Cobo Bay Balcony Gigs once again in  2016, providing free music events throughout the entire summer.

JT extended its commitment

to bringing live music events

Pupils from St Luke's who, with the  to Guernsey by supporting The

support from parents, teachers and  Friends of SCBU and staff from Jersey's General Hospital  Gathering, a three-day festival

others in the community, collected  with the state-of-art portable heart rate monitor to be  showcasing local musicians.

2,250 directories, the most  used in antenatal to monitor the fetal heart rate, which

collected this year by any school.  was bought with the funds raised by JT.

THANK YOU JT was proud to provide Islanders with a full FOR THE  Slivuemmmuesri co feMveunstisc sinp a2n0n1i6n,g c tohnes eisntit nirge   osuf 4m2m er,

MUSIC  icnucslutodminegr so.v  er 1,500 free tickets given to our

  JT 2016/17 ANNU

"Jersey has one of the

OUR PEOPLE, THEIR CUSTOMERS certainly something

fastest fibre networks

in the world which is

worth shouting about

We now employ over 600 people around the world, with a shared goal; to support our  as a business."

customers' needs to the very best of our ability. Some of our people and their customers  Alex Belcher, Managing

best explain what this means and what 'delighting our customers' really means to them. Director of No 3 Forum.  Paul Sharkey

A JT customer

for 3 years.  Paul Sharkey, is one of our Account

Managers who works with a variety of small and medium sized businesses in Jersey.

"Being a small business  Jarrod Guilliou "JT is a forward thinking, dynamic owner I need a reliable

company with a tradition for providing broadband connection,  Jarrod Guilliou is based in our Guernsey

great customer service. Having been which works seamlessly  shop and is a Senior Sales Advisor.

with JT for ten years now, I believe we which is why I choose JT.  He works daily being the face of JT and

make a difference to our customers by I don't have an in house IT  works with our customers, making sure

providing expert advice and delivering team so that reliability is key  their wants and needs are fulfilled, and their

true value."

for my business's success."  questions are answered.

Jay Biswajit is the owner of  "Working with local businesses like Jay's  

Eyecare Opticians and has  is rewarding because I can see the real  THE BUSINESS been a JT customer for  difference that JT makes to his business  ACCOUNT

nine years. and his own personal connectivity needs" MANAGER

THE RETAIL STORE EXPERT

THE STAFF  ENGAGEMENT  CHAMPION

THE BILLING EXPERT

"The JT app has made

keeping on top of my bill simple, it's clear to use and helps me keep track of my usage."

Christophe Chateau  James Linder, a user of

the JT My Account App Christophe Chateau is JT's Head of Staff  and customer of JT's Engagement, he works energetically to  since he moved back to help encourage the whole company's  Jersey, 2 years ago.

fundraising efforts each year in support of  Monzoor Ullah

our chosen charity.

Monzoor started life at JT working within our retail "Every year I am bowled over by the

team. It is this experience that has given him the massive efforts of JT people to support

passion for exceptional customer service. He has now our partner charities. Striving to make a

progressed to become a billing specialist working to positive difference is part of JT's culture  

improve the billing process for our customers.

and this extends to the enthusiasm  "JT's fantastic

my colleagues show in their energy for  contribution will  "We strive to listen to our customers to be able fundraising." help make our plans  to make their billing as clear and informative as

a reality." possible. It's great to be a part of the team that

makes positive changes, with the customer in mind. Andy and Jo Priaulx,  We've introduced multiple billing and Direct Debit founders of the Priaulx  dates and new ways of managing bills such as the Premature Baby  FREE JT My Account App, meaning that customers Foundation (PPBF) can be in control and keep track of their usage

and spend".

PERFORMANCE

REVIEW 5Cash fr0 om operating activities

Net cash flow from operating activities increased by 11%  45

How are we doing? to £43.3m

40

Headline results

Revenue is obtained through providing telecommunication  •  £22.8m (2015: £24.0m) was used on capital expenditure,  35

services to consumer, enterprise and wholesale customers:  equivalent to 12.3% (2015: 12.5%) of revenue. This

fixed access charges and network usage, mobile airtime  JT Group Limited  includes expenditure on Gigabit Jersey and JT's purchase of  30

usroaming rage, messevenue, braging and data soadband rerentals and usvices, interconnection and age, private circuit  20£1'm5  2£01'm6 25

its No. 1 The Forum office building.

rentals, equipment and M2M sales and maintenance, support  Revenue  191.6  185.0  •  £4.7m ( 2015: nil ) was used towards the investment  20

and managed services of hardware and software. in shares in Energous Limited, a US listed company

specialising in wire-free charging, and a 20% shareholding

Gross profit  90.1  90.7 15

As planned, we have generated more margin from our  in Nomad IP ApS and Neoconsult ApS, a Danish based

wholesale off-island M2M business, offsetting declines in local  Operating profit  10.2*  11.7 software development company.  10

fixed and low margin wholesale off-island voice business. This

has led to a rise in gross profit by 1% to £90.7m, with a 3% fall  Profit on ordinary   •  £7.6m (2015: £6.1 m) was paid to States of Jersey as  5

in revenue due to the reduction in off-island voice business. activities after taxation  3.6*  6.0 corporate tax, preference interest and dividends. The

current year dividend payment of £5.5m (2015: £4.1m)  0

* Results adjusted to exclude an exceptional item explained in note 1 included a special dividend.

2015 2016

• £0.7m (2015: £3.6m) was used to repay short term  

borrowings, leaving £14.8m (2015: £10.8m) in cash at bank  Cash from operating activities (£'m) at year end, £4.0m up year on year.

Operating profit before an exceptional item (note 1) was £11.7m (2015 £10.2m). This increase was mainly due to improved margin, a reduction in bad debt and depreciation charges offset by negative foreign exchange losses following the Brexit referendum.

Profit on ordinary activities after taxation was £6.0m. This is an increase versus 2015 after adjusting for an exceptional item (note 1).

Note 1: 2015 operating profit includes an exceptional item, which was the result of the change to the arrangements

of the Public Employees Contributory Retirement Scheme ("PECRS") whereby the group's pension assets and liabilities were transferred out of the sub-fund to the main scheme, administered by the States of Jersey, with effect from

1 October 2015. From this date the scheme has been accounted for as a defined contribution scheme. The accounting impact of this change was a net increase to 2015 profit on ordinary activities before taxation of £10.9m, with associated deferred tax of £2.1m.

Operating profit before an exceptional item

15 10 5 0

2015 2016

Operating profit before an exceptional item (£'m)

"JT's global success fuels valuable return for Jersey shareholder" Cash flow

£1.0m  Capital expenditure Guernsey £0.5m  Capital expenditure RoW

£4.7m  Investments and acquisitions £0.7m  Reduction in short term borrowing

£28.9m reinvested into £5.5m  Dividend paid

the Jersey economy £1.9m  Jersey tax paid

£21.5m  Capital expenditure Jersey

ca"insP'tmielicvye ei Powhf ittoehncoeh u"t.I  "NPiiegNchee tthloiGvaf eewt eawkcri(h tRRhI 9)oc0uXa t01n i00'st  ca"nP'tiise l icmve esyyowSsf itttoehencomoh us"t.I

Smart WiFi Router".

COLIN TUCKER  MERIEL LENFESTEY Senior Independent  PHIL MALE  Non-Executive Dire

Director Chairman of Nomination  Meriel joined JT's Group Board as a

Dr Colin Tucker trained as an Electrical  Committee Non-Executive Director in 2016. She has

experience driving and enabling a shift Engineer at UMIST achieving a BSc, MSc

After obtaining a computer science  to customer centricity with forward

and ultimately a PhD. He has spent over

degree at Imperial College, Phil Male  looking companies across a wide range

25 years in the telecommunications

was a founding director of Computer  of business sectors. After receiving her industry in a number of senior roles. The

Newspaper Services and became  MA in Computer Related Design from

last two positions were as main board

"Piece of tech I  "Piece of tech I  "Piece of tech I  involved in the start-up of Demon  the Royal College of Art, spells working

director and COO of Orange Plc and

can't live without  can't live without  can't live without  Internet (one of the world's first  at Microsoft in the US and the BBC in

Managing Director and Deputy Chairman

is my Apple  is my iPad". is Twitter". commercial Internet Service Providers),  London, in 1997 she founded a London-

of 3. Colin has also served as a Non-

Watch". ultimately becoming the Technical  based User Experience Company and

Executive Director for Sarantel, TTP,

Director with responsibility for all  grew it to become the UK market leader Morse, and Monitise and as Chairman of

JOHN STARES  SEAN COLLINS  KEVIN KEEN  operational and development activity.  and globally highly respected. Her work

UIQ Technologies. In addition to his

The company was acquired by Scott ish  has included tactical and strategic industrial experience Colin has acted as

Chairman  Chairman of Audit and Chairman of Remu  Telecom in 1998 and Phil was one of  engagements with clients embracing

Industrial Professor at Loughborough

Risk Committee Committee the three founding directors that floated  digital transformation across many

University and continues to assist in the

John Stares joined JT in 2008 as a  the combined business on the London  sectors including Financial Services,

academic world with management and

Non-Executive Director. Before moving  A chartered accountant and a graduate  Kevin Keen has held a wide range  Stock Exchange as THUS Plc in 1999.  Consumer Electronics & Software,

mentoring of spin-out companies coming

to Guernsey in 2001 John was with  in Classics from Cambridge University,  of board level positions in Jersey  Phil became Chief Operating Officer in  Telecoms, Media, Retail, Transport and

from Edinburgh University.

Accenture for 23 years. During that  businesses during a career spanning  2002, and when THUS was acquired by  Public Sector. She is also a Non-

financial, change and IT consultant with  Sadeavins owrays pfoarrtmneerr laty a KsPeMniGo ,r wauhdereit a hned  ospveerc i4a0lis yeeda irns .a Sdinvicsein2g0 o0r3 le Kaedvining hloacs a  l  Phil became Group Operations Director,  companies including Aurigny locally.  period, he worked as a strategic,  Cable & Wireless Worldwide in 2008,  Executive Director for several

major clients in most industry sectors  h2a0d1 2w, oMrkr eCdo sillinn sc ew1a9s 7H2 ea. Fdro omf M 2 a0 r0 k9 e  tt so ,   organisations during periods of change.  then Chief Strategy Officer and served  She holds voluntary roles with the

and during his 15-year tenure as a  Asia Pacific, responsible for the firm's  He is currently Non-Executive Chairman  on the Executive Board, leading the  Institute of Directors and Startup

partner held a wide variety of leadership  business development in the Asia  of Visit Jersey and is Non-Executive  demerger and listing of Cable & Wireless  Guernsey.

roles in Accenture's Canadian, European  Worldwide Plc in 2010. Phil left Cable &  

and Global consulting businesses. John  Pacific region. He also led the Global  Dbairseecdto cro omf ap annui mes b.  eKre ovfinoitshae rCJhearrsteeyr ed  Wireless in 2010 and today serves as  

is also a Non-Executive Director of INPP  Covoemr ma duencicaatdeio. n Ms ra Cndo lMlinesd hiaa sp rdaecetpic ea nfodr  Director, Fellow of the Association of  "Piece of tech I  a Non-Executive Director on a number  

Firma. Since moving to Guernsey he  extensive experience of corporate  CthheaCrthearertde rCeedr tInifisetdituAt ce c oofu Mnatannatgseamndent  cisa nm'tyli vTeo mwiTthoomu"t.  technology businesses, and works in  

and the main Guernsey entities of Terra  of boards, actively investing in new  

has also completed a 10-year term as  governance, financial reporting and  Accountants and holds an MBA from  an advisory capacity with a number of  

the Managing Director of Guernsey  odtuhreinrg c morapnoyrayteae drsis acsiplleainedsp, gaartinneedr for a  the University of Stirling. He is also a  institutions in the City.

as a Non-Executive Consultant to the  lcaliregnet sn.u Hmeb wera osf tmhea jSoer ninioter rInnatdeiopneanldent  Commerce. GRAEME MILLAR  "Piece of tech I Ogier Group and a Non-Executive    can't live without

Enterprise Agency and 5/6-year terms  past president of the Jersey Chamber of  

Non-Executive Director and Chairman of  is Alexa". Director of Jersey Electricity and

the Audit Committee of Millennium &

Aurigny Airlines. John is Deputy  Graeme was appointed JT CEO in

Copthorne Hotels Plc until December

Chairman of Governors of More House  January 2010. A Cambridge science

School, a Trustee of NPC and a former  graduate with a postgraduate  JOHN KENT

2014. Other appointments include

member of the Conduct Committee and

President of Rotary Guernesiais. He is a  engineering qualification, Graeme has  

Case Management Committee of the

graduate of Imperial College London, a  over 25 years of telecoms experience.

Financial Reporting Council, Council

Fellow of the Institute of Chartered  Graeme has worked in countries as  

Accountants of England & Wales and a  diverse as the USA, Russia, Hungary  Jino Fhenb joruinaeryd 2J0T1a2s. CHFeOis oaf hthigehJlyT Group

Member of the Royal Society for Asian

Affairs, Governor and Chairman of More

Member of the Worshipful Company of  and the Netherlands for companies  commercial CFO who has spent a major

House School in Surrey, England. Sean is

Management Consultants. such as Vodafone and Motorola.  part of his career working for two large

also a Crown Representative at the  Immediately prior to taking up his role

Cabinet Office, overseeing the provision  at JT Group, Graeme was the Chief  FTSE companies in the utilities sector,

of telecommunication services by major  Commercial Officer Russia for MTS,  Vodafone and British Gas, in financial suppliers to UK Government. Russia's largest mobile telephone  and commercial leadership roles. Prior

to joining JT, John was the CFO for operator. In addition to his role at JT,

Vodafone Ireland, the 1 billion turnover Graeme is also a Non-Executive

Vodafone operating company based in Director of Wellington Partners

Dublin. John has a Mathematics degree Management Limited and is a Fellow of

from Cambridge.

the Institute of Directors.

CORPORATE GOVERNANCE

COMPLIANCE WITH THE UK CORPORATE  Meetings and Committee membership – GOVERNANCE CODE During the year, the Board formally met six times. Details of

The Company adheres to the principles of good corporate  attendance at Board meetings are as follows:

governance and best practice set out in the UK Corporate  Number of Board meetings in 2016 6 Governance Code 2014 (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

The Board comprises eight Directors, two of whom are Executive 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.

Director independence

The Board is collectively responsible for the long term success

of the Company. This is achieved by setting the overall  The Board considers all of the Non-Executive Directors to be operating strategy, approving detailed business plans and  independent in character and judgement. In determining overseeing delivery of objectives by continually monitoring  independence, the Board considers the specific circumstances performance against those plans. The Board establishes the  of each Director. The Board has concluded that Sean Collins, culture, standards and values of the Company. The Board  Kevin Keen, Meriel Lenfestey, Phil Male and Colin Tucker shall oversees the management of risk, monitors financial  be deemed independent, with Colin Tucker adopting the role of performance and reporting and ensures that appropriate and  Senior Independent Director.

effective succession planning and remuneration policies are in  John Stares, as Chairman of the Company, was considered place. independent on appointment and, in accordance with the

Whilst maintaining oversight at regular meetings of the Board,  Code, is not subject to the independence test thereafter.

the day to day operation of the Company has been delegated  Performance evaluation

to the Executive Directors. The Board is supplied with a

sufficient level of regular, detailed and timely management  In order to ensure that the Board continues to operate information to allow it to discharge its functions efficiently. effectively, the Board and its Committees carry out an

assessment of performance across key areas. The results of the performance assessments and appraisals are fed back to the Board as a whole (as appropriate) and action taken accordingly.

Other significant commitments

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

Reappointment

The Executive Directors are not subject to retirement by rotation but they are subject to periods of notice related to the termination of employment, as are other members of the company's Senior Management.

The Company has adopted a policy of requiring Non-Executive Directors to seek re-election after having served a three year term. Non-Executive Directors who have served on the Board for nine years or more are required to retire from the Board and seek re-election on an annual basis.

Directors appointed to fill a casual vacancy must seek formal appointment by the shareholders at the next Annual General Meeting.

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 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 operating 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 risk grading the significant risks faced by the Company. Alongside the register is a process through which the significant risks faced by the business are identified and evaluated on a regular basis and the controls operating over those risks are assessed to ensure that they are adequate.

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:

Audit Committee

The Audit Committee currently comprises Sean Collins (Chairman), Phil Male and Kevin Keen. The auditors, Deloitte LLP, and the Executive Directors may also attend the meetings by invitation.

There were four formal meetings of the Audit Committee during 2016, with full attendance at each of those meetings.

The terms of reference of the Audit Committee require it to meet at least twice per annum. Additional meetings may be called where deemed necessary. The Committee is charged by the Board with the following main responsibilities:

Review of Financial Statements

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

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

Auditor appointment and additional services

The performance and effectiveness of the external auditors is monitored continually and formally considered by the Audit Committee before a recommendation is made to the Board regarding their reappointment. Length of service of the incumbent audit firm, effectiveness of the audit process, the independence and objectivity of the team, the depth and breadth of the audit approach, the level of fees and the quality of the service provided are all taken into account.

Remuneration Committee

The Remuneration Committee currently comprises Kevin Keen (Chairman), Sean Collins, Meriel Lenfestey, Phil Male, John Stares and Colin Tucker. The Executive Directors, Graeme Millar and John Kent, may also attend the meeting by invitation.

No director is allowed to be party to discussions regarding, or play any role in, the determination of their own remuneration.

There were two formal meetings of the Remuneration Committee during 2016, with full attendance at each of those meetings.

The terms of reference of the Remuneration Committee allow it to meet as and when necessary to:

Nomination Committee

The Nomination Committee currently comprises Phil Male (Chairman), Sean Collins, Kevin Keen, Meriel Lenfestey, John Stares and Colin Tucker. The Executive Directors, Graeme Millar and John Kent, may also attend the meeting by invitation.

There was one formal meeting of the Nomination Committee during 2016, with full attendance at that meeting.

The Committee is primarily responsible for the selection and appointment of the Company's Executive and Non-Executive Directors, as and when required.

The other duties of the Committee include:

When selecting candidates for potential appointment as a Non-Executive Director, the Committee evaluates the needs of the Company and identifies the necessary skills and experience required by candidates for consideration. The Nomination Committee makes recommendations to the Board taking into account the performance of the candidates at interview, their skills and experience and their ability to meet the specific needs of the Company. Consideration is given to the use of external recruitment consultants and open advertising in the recruitment process. However, this is weighed against the cost of doing so and the specialist needs of the Company as a Jersey-based telecom provider.

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

The current auditor is Deloitte LLP and following a competitive tender for audit services for the year ending 31 December 2017, the Audit Committee's recommendation that the Board appoint KPMG LLP as the Company's auditors was approved.

The Audit Committee considers the impact of the provision of any non-audit services by the external auditor on the objectivity and independence of the audit. The consideration has regard to the nature of the non-audit work, size of the fee relative to any audit, any potential involvement of the audit team in the work and the longer term effect of the non-audit services on the relationship with the audit firm, including an  assessment of their continuing objectivity and independence.  

DIRECTORS'  REPORT

Incorporation Management have prepared a budget for 2017, projecting  Directors

JT Group Limited (the "company") was incorporated in  cash flows and results for the year based on the strategies  The Executive and Non-Executive Directors of the group who  Jersey, Channel Islands on 22 October 2002. being followed by the group and have concluded that there  served during the year and subsequently are:

is a reasonable expectation that the company and the group

Principal activities has adequate resources to continue in operational existence

The principal activity of the company and its subsidiaries  for the foreseeable future. Accordingly, they continue to adopt

(the "group") is the supply of telecommunication services  the going concern basis in preparing the annual report and the

and equipment. consolidated financial statements.

The principal place of business is Jersey, Channel Islands. *Exceptional item - Pension scheme reorganisation

During 2015 a change to the arrangements under the Public Employees Contributory Retirement Scheme ("PECRS") was agreed with the States of Jersey. The group's pension assets and liabilities were transferred out of the sub-fund into the main scheme, administered by the States of Jersey, with effect from 1 October 2015. As the group was no longer able to identify its share of the underlying position and performance of the plan with sufficient reliability to measure its share of assets and liabilities of the scheme, the change in the arrangement constituted a "change in accounting estimate". The impact

Results

The results are set out on pages 33 to 38.

The group made an operating profit of £11.7m (2015: £10.2m before an exceptional item*). This increase is mainly due to a decrease in bad debts and depreciation charges totalling £3.9m. Revenue has decreased to £185.0m (2015: £191.6m). At the year end the group's net assets were £92.4m (2015: £90.6m).

of the change resulted in a write down of the deficit held at  the date of change to nil, resulting in a net increase to profit  on ordinary activities before taxation of £10.94m. This was  presented as a pension scheme reorganisation within the  consolidated income statement.

The 2015 final and 2016 interim dividends of £3.1m were  paid during 2016 (2015: £1.7m). A special dividend of £2.4m  (2015: £2.4m) was also paid.  

The directors have approved the payment of a final dividend  Directors' interests

for 2016 of £1.2m (2015: final dividend for 2015 of £1.0m). The directors of the group had no interests, beneficial or  

otherwise, in the shares of the group.

Going concern

The group's business activities, together with the factors  Insurance of directors and officers  

likely to affect its future development, its financial position,  The group maintains an insurance policy on behalf of all  financial risk management objectives, details of its financial  directors and officers of the group against liability arising from  instruments and derivative activities, and its exposures  neglect, breach of duty and breach of trust in relation to their  to price, credit, liquidity and cash flow risk are described  activities as directors and officers of the group.

in note 3 of the consolidated financial statements.

The group has considerable financial resources together with long-term contracts with customers and suppliers. As a consequence, the directors believe that the group is well placed to manage its business risks successfully in the current operating environment.

Independent auditor

During the year the company undertook an audit tender exercise. Following the tender the directors determined to appoint KPMG LLP as auditors for the year ending

31 December 2017 and a proposal for their appointment  will be made at the following AGM.

By order of the board

Daragh J McDermott Company Secretary 12th May 2017

FINANCIAL  SUMMARY

The financial summary presents the main highlights from  The group financial statements consolidate the  the 2016 financial statements the group has prepared under  financial statements of the company and its subsidiary  accounting standards currently applicable in the United  and associate undertakings as at 31 December  Kingdom and in accordance with Jersey company law. A copy  each year. The results of subsidiary or associate  

of the detailed audited consolidated financial statements may  undertakings acquired or disposed of during the year  be obtained via www.jtglobal.com  are consolidated for the periods from or to the date on  

which control passed.

Consolidated income statement 2016  2015 for the year ended 31 December 2016 £'000 £'000

Revenue 184,968 191,647 Cost of sales (94,275) (101,583)

Gross profit 90,693 90,064 Operating expenses (79,008) (79,860)

Operating profit before an exceptional item 11,685 10,204 Exceptional item - Pension scheme reorganisation - 10,937

Operating profit after an exceptional item 11,685 21,141 Share of results of associated undertakings (2) - Loss on financial assets at fair value through profit or loss (8) -

Profit before interest and taxation 11,675 21,141 Finance income and similar income 9 16 Finance costs and similar charges (2,636) (3,113)

Profit on ordinary activities before taxation 9,048 18,044 Tax on profit on ordinary activities (3,020) (5,648)

Profit on ordinary activities after taxation 6,028 12,396

Consolidated statement of comprehensive income 2016  2015 for the year ended 31 December 2016 £'000 £'000

Profit for the financial year 6,028 12,396 Currency translation difference 768 528

Loss on cash flow hedge instrument (171) - Remeasurements of net defined benefit obligation (42) 151 Total tax on components of other comprehensive income  8 (30)

Other comprehensive income for the year, net of tax 563 649 Total comprehensive income for the year 6,591 13,045

Profit for the year attributable to

– Owners of the parent 6,028 12,396

– Non-controlling interest - - 6,028 12,396 Total comprehensive income attributable to

– Owners of the parent 6,591 13,045

– Non-controlling interest - - 6,591 13,045

FINANCIAL  SUMMARY

Consolidated statement of financial position 2016  2015  Consolidated statement of changes in equity At 31 December 2016 £'000 £'000  for the year ended 31 December 2016

Currency Called up  Equity Hedging

translation share capital reserve reserve

Fixed assets reserve Intangible assets and goodwill 26,645 25,201 £'000 £'000 £'000 £'000 Tangible assets  109,224 108,977

Associated undertaking 728 - Balance at 1 January 2015 20,000 62,119 - (389) Other investments 3,999 -

Deferred tax asset 1,769 1,672 Profit for the year - 12,396 - - Other comprehensive income for the year - 649 - - 142,365 135,850

Total comprehensive income for the year - 13,045 - - Current assets Currency retranslation on foreign operations  - - - (33)

Inventories 6,433 8,536 Dividends - (4,110) - - Receivables due within one year 36,333 36,753

Receivables due after one year 2,519 949 - 8,935 - (33) Cash at bank and in hand 14,786 10,756

Balance as at 31 December 2015 20,000 71,054  -  (422) 60,071 56,994

Balance at 1 January 2016  20,000 71,054  -  (422)

Payables: amounts falling due within one year (38,169) (31,319)

Profit for the year  - 6,028 -  - Net current assets 21,902 25,675 Other comprehensive income for the year - 734 (171) -

Total assets less current liabilities 164,267 161,525 Total comprehensive income for the year  - 6,762 (171) -

Currency retranslation on foreign operations - - - 719

Dividends - (5,496) - - Payables: amounts falling due after more than one year (51,000) (51,000)

Deferred tax liability  (8,169) (7,442)

Provision for other liabilities (1,849) (1,678)

Post-employment benefits (803) (773)

2.5% Redeemable preference shares (10,000) (10,000)

FINANCIAL  SUMMARY

Consolidated cash flow statement 2016  2015 for the year ended 31 December 2016 £'000 £'000

Profit for the financial year 6,028 12,396

Adjustment for:

Tax on profit on ordinary activities 3,020 5,648 Finance income and similar income (9) (16) Finance costs and similar charges 2,636 3,113

Operating profit  11,675 21,141

Amortisation of goodwill and intangible assets 6,323 4,858 Depreciation of tangible assets 15,104 18,193 Share of loss and goodwill amortisation in associate  24 - Loss on disposal of tangible assets 244 153 Provision for bad debts and bad debt write off 519 1,360 Inventory impairment 133 86 Profit on sale of investments - (57) Gain on pension scheme reorganisation - (10,937) Currency translation difference 205 631

Net cash used in investing activities (27,473) (24,019)

Consolidated cash flow statement (continued) 2016  2015 for the year ended 31 December 2016 £'000 £'000

Cash flow from financing activities  

Dividends paid (5,496) (4,110) Borrowings  (665) (3,642) Interest paid (2,200) (2,214) Preference dividend paid (200) (200)

Net cash used in financing activities (8,561) (10,166)

NOTES TO THE  FINANCIAL  SUMMARY

The consolidated financial statements are prepared under the historical cost convention and in accordance with Jersey company law and accounting standards currently applicable in the United Kingdom.

The ultimate controlling party of JT Group Limited is the States of Jersey.

Transition to FRS 102

The date of transition to FRS 102 was 1 January 2014, effective 1 January 2015.

Jersey taxation

The tax charge included in the consolidated financial statements is based on a rate of 20%.

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the time of the statement of financial position, where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred at the statement of financial position date. Deferred tax is measured on a non-discounted basis.

Deferred tax assets are recognised to the extent that they are regarded as recoverable and that on the basis of available evidence, it can be regarded as more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted.

Tangible assets

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

Buildings include freehold and leasehold retail outlets and offices.

The cost of network equipment includes all cable, ducting and transmission equipment extending from the main switching systems to the customers' premises.

Capital work in progress comprises capital projects which are under construction. Once completed, projects are capitalised as separately identifiable assets and depreciated over their estimated useful economic lives.

The costs of tangible assets, less estimated residual value, are written off over their estimated useful economic lives on a straight-line basis as follows:

*This includes freehold and leasehold fixtures and fittings. Intangible assets (excluding goodwill)

Intangible assets (excluding goodwill) are stated at cost less accumulated amortisation and accumulated impairment losses. These intangible assets consist of internally and externally developed assets. Amortisation is calculated, using the straight-line method, to allocate the depreciable amount of the assets to their residual values over their estimated useful lives as follows:

Business combinations and goodwill

Business combinations are accounted for by applying the purchase method.

The cost of a business combination is the fair value of the consideration given, liabilities incurred or assumed and of equity instruments issued plus the costs directly attributable to the business combination.

Goodwill is amortised on a straight line basis over its expected useful life which varies from 5 to 10 years.

Associates Under the revised Terms of Admission there is insufficient

information available to use defined benefit accounting and, Investments in associates are accounted for using the equity  with effect from 1 October 2015, JT (Jersey) Limited has

method. Investments in associates are initially recognised at  accounted for the scheme as if it was a defined contribution the transaction price (including transaction costs) and are  scheme.

subsequently adjusted to reflect the group's share of the profit

or loss and other comprehensive income of the associate.  This change resulted in the release of the defined benefit Goodwill arising on the acquisition of associates is accounted  liability, held by the group on the statement of financial

for in accordance with the policy set out above.  position from its previous accounting basis, down to nil as at

31 December 2015.

Financial assets - Investments

The deficit in the defined benefit plan for TBPS, being the Investments in equity instruments which are not subsidiaries,  difference between the value of the scheme assets and the

associates or joint ventures, are initially measured at fair value,  present value of the scheme liabilities, is recognised in the which is normally the transaction price. statement of financial position.

Such assets are subsequently carried at fair value and the

changes in fair value are recognised in profit or loss, except  2h1a5s beemepnl ocyloeseesdotfot hnee wcojmoinpearnsysainrec em2e0m1b1e. TrsBoPfS P hEaCsR3S. This that investments in equity instruments that are not publically  members.

traded and whose fair values cannot be measured reliably are

measured at cost less impairment. The company also offers employees the JT Group Limited

Pension Plan, which is a defined contribution scheme. Inventories

Share capital, dividends and redeemable preference shares Inventories are valued at the lower of cost and net realisable

value, and accounted for on a weighted average cost basis.  The States of Jersey have been issued with 20m ordinary Inventories of finished goods includes an amount of £3.3m  shares at £1 each, authorised and fully paid up. The shares (2015: £4.5m) held to be used in capital work in progress on  carry a voting right of one vote for each share held.

tangible fixed assets.

Dividends of £5.5m (2015: £4.1m) were paid during 2016 to the Other provisions for liabilities and charges States of Jersey.

Provisions are recognised when the company has a present  In 2012, JT Group Limited issued 10m 2.5% preference shares legal or constructive obligation as a result of past events.  at £1 each to the States of Jersey Currency Fund, with interest Asset retirement obligations and dilapidations are recognised  payable twice yearly.

as provisions as a result of the legal obligation for

decommissioning costs on mobile site and property leases.

These provisions are recognised through the statement of

financial position.

Pension and employee benefits

For defined benefit plans, the amounts charged to operating profit are the current service costs and gains and losses on settlements and curtailments. They are included as part of the staff costs. Past service costs are recognised immediately in the income statement.

The company has two defined benefit schemes – the Public Employees Contributory Retirement Scheme ("PECRS") and the Telecommunications Board Pension Scheme ("TBPS").

On 1 October 2015, JT (Jersey) Limited's pension assets

and liabilities were moved out of the PECRS sub-fund and into the main scheme, administered by States of Jersey. This is considered to be a multi-employer (benefit) plan as defined by FRS 102.

JT Group Limited

2 Annual Report and Consolidated Financial Statements 3ements 31 December1 December 2016 2016

Contents

01 Directors' Report

02 Statement of Directors' Responsibilities

03 Independent Auditor's Report to the Members of JT Group Limited 04 Consolidated Income Statement

04 Consolidated Statement 2 of Comprehensive Income

05 Consolidated Statement of Financial Position

06 Consolidated Statement of Changes in Equity

07 Consolidated Cash Flow Statement

08 Notes to the Consolidated Financial Statements

1

Directors' Report

The directors present their report and audited financial statements.

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 telecommunication services and equipment.

The principal place of business is Jersey, Channel Islands. Results

The results are set out on page 4 to 5.

The group made an operating profit of £11.7m (2015: £10.2m before an exceptional item*). This increase is mainly due to a decrease in bad debts and depreciation charges totalling £3.9m. Revenue has decreased to £185.0m (2015: £191.6m). At the year end the group's net assets were £92.4m (2015: £90.6m).

The 2015 final and 2016 interim dividends of £3.1m were paid during 2016 (2015: £1.7m). A special dividend of £2.4m (2015: £2.4m) was also paid. Further details are included in note 9.

The directors have approved the payment of a final dividend for 2016 of £1.2m (2015: final dividend for 2015 of £1.0m).

Going concern

The group's business activities, together with the factors likely to affect its future development, its financial position, financial risk management objectives, details of its financial instruments and derivative activities, and its exposures to price, credit, liquidity and cash flow risk are described in note 3 to these consolidated financial statements.

The group has considerable financial resources together with long-term contracts with customers and suppliers.

As a consequence, the directors believe that the group is well placed to manage its business risks successfully in the current operating environment.

Management have prepared a budget for 2017, projecting cash flows and results for the year based on the strategies being followed by the group and have concluded that there is a reasonable expectation that the company and the group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the annual report and the consolidated financial statements.

*Exceptional item - Pension scheme reorganisation

During 2015 a change to the arrangements under the Public Employees Contributory Retirement Scheme ("PECRS") was agreed with the States of Jersey. The group's pension assets and liabilities were transferred out of the sub-fund into the

main scheme, administered by the States of Jersey, with effect from 1 October 2015. As the group was no longer able to identify its share of the underlying position and performance of the plan with sufficient reliability to measure its share of assets and liabilities of the scheme, the change in the arrangement constituted a "change in accounting estimate". The impact of the change resulted in a write down of the deficit held at the date of change to nil, resulting in a net increase to profit on ordinary activities before taxation

of £10.94m. This was presented as a pension scheme reorganisation within the consolidated income statement.

Directors

The executive and non-executive directors of the group who served during the year and subsequently are:

Non-executive

John Stares

Phil Male

Colin Tucker

Sean Collins

Kevin Keen

Meriel Lenfestey (appointed 3 March 2016)

Executive

Graeme Millar John Kent

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

During the year the company undertook an audit tender exercise. Following the tender the directors determined to appoint KPMG LLP as auditors for the year ending 31 December 2017 and a proposal for their appointment will be made at the following AGM.

By order of the board Daragh J McDermott

Company Secretary Date: 12 May 2017

Statement of Directors' Responsibilities

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 period. Under that law the directors have elected to prepare the financial statements

in accordance with United Kingdom Generally Accepted Accounting Practice, (United Kingdom Accounting Standards and applicable law), including FRS 102 "The Financial Reporting Standards applicable in the UK and Republic of Ireland". The financial statements are required by law to give a true and fair view of the state of affairs of the group and of the profit of the group for that period. In preparing these financial statements, the directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgements and estimates that are reasonable and prudent;

• state whether applicable UK Accounting Standards have been followed, subject to any material departures  disclosed and explained in the financial statements; and

• prepare the financial statements on a going concern basis unless it is inappropriate to presume that the group will continue in business.

The directors are responsible for keeping proper accounting records that 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 also responsible for safeguarding the assets of the group and hence for taking reasonable steps for the prevention and detection of 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.

Independent

Auditor's Report   Consolidated  Consolidated  Notes to the

Statement of  to the members  Consolidated  Statement of  Consolidated  Statement of  Consolidated   Consolidated

Directors'  of JT Group  Income  Comprehensive  Statement of  Changes in  Cash Flow  Financial

Directors' Report Responsibilities Limited Statement Income Financial Position Equity Statement Statements 3

Independent Auditor's Report to the Members of JT Group Limited

We have audited the consolidated financial statements of JT Group Limited for the year ended 31 December 2016, which comprise the consolidated Income Statement, the consolidated Statement of Comprehensive Income, the consolidated Statement of Financial Position, the consolidated Statement of Changes in Equity, the consolidated Cash Flow Statement and the related notes 1 to 29. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including FRS 102 "The Financial Reporting Standards applicable in the UK and Republic of Ireland".

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.

Respective responsibilities of directors and auditor

As explained more fully in the statement of directors' responsibilities, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

Opinion on financial statements

In our opinion the financial statements:

• give a true and fair view of the state of the group's affairs as at 31 December 2016 and of the group's profit for the year then ended;

• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

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

Matters on which we are required to report by exception

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:

• proper accounting records have not been kept by the parent company; or

• the financial statements are not in agreement with the accounting records and returns; or

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

Andrew Isham FCA

for and on behalf of Deloitte LLP Chartered Accountants

St Helier

Jersey

19 May 2017

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or

error. This includes an assessment of: whether the accounting policies are appropriate to the group's circumstances and

have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non- financial information in the annual report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Consolidated Income Statement

for the year ended 31 December 2016

2016 2015 Note £'000 £'000

Continuing operations

Revenue 184,968  191,647 Cost of sales (94,275) (101,583)

Gross profit 90,693 90,064 Operating expenses (79,008) (79,860)

Operating profit before an exceptional item 11,685 10,204 Exceptional item - Pension scheme reorganisation 22 – 10,937

Operating profit after an exceptional item 11,685 21,141 Share of results of associated undertakings 23 (2) – Loss on financial assets at fair value through profit or loss 18 (8) –

Profit before interest and taxation 11,675 21,141 Finance income and similar income 6 9 16

Finance costs and similar charges 7 (2,636) (3,113)

Profit on ordinary activities before taxation  9,048 18,044 Tax on profit on ordinary activities 8 (3,020) (5,648)

Profit on ordinary activities after taxation 6,028 12,396

Consolidated Statement of Comprehensive Income

for the year ended 31 December 2016

Note

Profit for the financial year  

Currency translation difference

Loss on cash flow hedge instrument 19 Remeasurement of net defined benefit obligations 22 Total tax on components of other comprehensive income

Other comprehensive income for the year, net of tax

Total comprehensive income for the year

Profits for the year attributable to

– Owners of the parent

– Non-controlling interest

Total comprehensive income attributable to

– Owners of the parent

– Non-controlling interest

2016 2015 £'000 £'000

6,028 12,396 768 528 (171) –

(42) 151 8 (30) 563 649 6,591 13,045

6,028 12,396

– –

6,028 12,396 6,591 13,045

– –

6,591 13,045

Auditor's Report   Consolidated  Consolidated  Notes to the

Statement of  to the members  Consolidated  Statement of  Consolidated  Statement of  Consolidated   Consolidated

Directors'  of JT Group  ConsolidatIncome ed  Comprehensive  Statement of  Changes in  Cash Flow  Financial

Directors' Report Responsibilities Limited Income StatStatementement Income Financial Position Equiry Statement Statements 5

Consolidated Statement of Financial Position

at 31 December 2016

2016 2015 Note £'000 £'000

Fixed assets

Intangible assets and goodwill 10 26,645 25,201 Tangible assets 11 109,224 108,977 Associated undertaking 23 728 – Other investments 18 3,999 – Deferred tax asset 8(c) 1,769 1,672

142,365 135,850

Current assets

Inventories 12 6,433 8,536 Receivables due within one year 13 36,333 36,753 Receivables due after one year 13 2,519 949 Cash at bank and in hand 14,786 10,756

60,071 56,994 Payables: amounts falling due within one year 14 (38,169) (31,319) Net current assets 21,902 25,675

Total assets less current liabilities 164,267 161,525 Payables: amounts falling due after more than one year 15 (51,000) (51,000) Deferred tax liability 8(c) (8,169) (7,442)

Provisions for other liabilities 17 (1,849) (1,678) Post-employment benefits 22 (803) (773) 2.5% Redeemable preference shares 16 (10,000) (10,000)

Total non-current liabilities (71,821) (70,893) Net assets 92,446 90,632

Capital and reserves

Called up Share capital 21 20,000 20,000 Currency translation reserve 297 (422) Hedging reserve (171) – Equity reserve  72,320 71,054

Equity attributable to owners of the parent 92,446 90,632

The consolidated financial statements were approved by the board of directors on the 8th of May 2017 and were signed on its behalf by:

G Millar  J Kent

Chief Executive Officer  Chief Financial Officer on 12 May 2017 on 12 May 2017

Consolidated Statement of Changes in Equity

at 31 December 2016

Called up  Currency share Equity  Hedging  translation

capital reserve reserve reserve Note £'000 £'000 £'000 £'000

Balance at 1 January 2015 20,000 62,119 – (389) Profit for the year – 12,396 – – Other comprehensive income for the year – 649 – – Total comprehensive income for the year – 13,045 – – Currency retranslation on foreign operations – – – (33) Dividends 9 – (4,110) – –

– 8,935 – (33)

Balance as at 31 December 2015 20,000 71,054  – (422) Balance at 1 January 2016 20,000 71,054  – (422) Profit for the year – 6,028  – – Other comprehensive income for the year – 734 (171) – Total comprehensive income for the year – 6,762 (171) – Currency retranslation on foreign operations – – – 719 Dividends 9 – (5,496) – –

– 1,266 (171) 719

Balance as at 31 December 2016 20,000 72,320 (171) 297

Auditor's Report   Consolidated  ConsConsolidatolidated ed  Notes to the

Statement of  to the members  Consolidated  Statement of  Consolidated  StatStatement ofement of  ConsConsolidatolidated ed   Consolidated

Directors'  of JT Group  Income  Comprehensive  Statement of  Changes in Changes in  Cash Flow Cash Flow  Financial

Directors' Report Responsibilities Limited Statement Income Financial Position EEquirquityy StatStatementement Statements 7

Consolidated Cash Flow Statement

for the year ended 31 December 2016

2016 2015 Note £'000 £'000

Profit for the financial year 6,028 12,396

Adjustment for:

Tax on profit on ordinary activities 3,020 5,648 Finance income and similar income (9) (16) Finance costs and similar charges 2,636 3,113

Operating profit 11,675 21,141

Amortisation of goodwill and intangible assets 10 6,323 4,858 Depreciation of tangible assets 11 15,104 18,193 Share of loss and goodwill amortisation in associate 23 24 – Loss on disposal of tangible assets  244 153 Provision for bad debts and bad debt write off 519 1,360 Inventory impairment 133 86 Profit on sale of investments – (57) Gain on pension scheme reorganisation – (10,937) Currency translation difference 205 631

Operating cash flow before movement in working capital 34,227 35,428

Net charge/(utilisation) for provisions 171 (279) Decrease in inventories 1,970 3,851 (Increase)/Decrease in receivables (1,669) 1,700 Increase/(Decrease) in payables 8,576 (1,705) Cash flow generated from operating activities 43,275 38,995 Taxation paid (2,311) (2,129) Pension contributions (1,619) (633)

Net cash flow generated from operating activities 39,345 36,233

Cash flow from investing activities

Purchases of intangible assets 10 (3,674) (145) Purchase of tangible assets 11 (19,149) (23,936) Purchase of associate (652) – Purchase of equity investment  18 (4,007) – Finance income and similar income  6 9 16 Return on investments – 46

Net cash used in investing activities (27,473) (24,019)

Cash flow from financing activities

Dividends paid 9 (5,496) (4,110) Borrowings  (665) (3,642) Interest paid (2,200) (2,214) Preference dividend paid (200) (200)

Net cash used in financing activities (8,561) (10,166)

Net increase in cash and cash equivalents 3,311 2,048 Cash at bank and in hand at beginning of the year 10,756 8,741 Effect of foreign exchange rate changes 719 (33)

Cash at bank and in hand at end of year 14,786 10,756

Notes to the Consolidated Financial Statements

1. General information

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

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 8P.

2. Statement of compliance

The group financial statements of JT Group Limited have been prepared in compliance with United Kingdom Accounting Standards, including Financial Reporting Standard 102, The Financial Reporting Standard applicable in the United Kingdom and the Republic of Ireland'' (FRS 102'') and also in compliance with the Companies (Jersey) Law 1991.

3. Summary of significant accounting policies

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented unless otherwise stated.

1. Basis of preparation

These consolidated financial statements are prepared on a going concern basis, under the historical cost convention, as modified by the recognition of certain financial assets and liabilities measured at fair value.

The preparation of 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 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 4.

Under Article 105 (11) of the Companies (Jersey) Law 1991 the directors of a holding company need not prepare separate accounts (i.e. company only accounts) if consolidated accounts for the company are prepared, unless required to do so by the members of the company by ordinary resolution. The members of the company have not passed a resolution requiring separate accounts and, in the directors' opinion, the company meets the definition of a holding company. As permitted by the law, the directors have elected not to prepare separate accounts.

2. Going concern

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

The group has considerable financial resources together with long-term contracts with customers and suppliers. As a consequence, the directors believe that the group is well placed to manage its business risks successfully in the current operating environment.

Management have prepared a budget for 2017, projecting cash flows and results for the year based on the strategies being followed by the group and have concluded that there is a reasonable expectation that the company and the group has adequate resources to continue in operational existence for the foreseeable future and to meet its obligations as they fall due. Accordingly, they continue to adopt the going concern basis in preparing the annual report and the consolidated financial statements.

3. Basis of consolidation

The group financial statements consolidate the financial statements of the company and its subsidiary undertakings together with the group's share of the results of associates made up to 31 December each year. Any subsidiary undertakings or associates sold or acquired during the year are included up to, or from, the dates of change of control or change of significant influence respectively. Control comprises the power to govern the financial and operating policies of the investee so as to obtain benefit from its activities.