JT Group Limited: Annual Review 2017/18 – Connecting our Islands – and Annual Report and Audited Consolidated Financial Statements 31st December 2017

Chairman's Foreword Connecting the Channel Islands

JT is proud to be the largest locally-owned telecoms operator in the

Channel Islands. Ultimately, we are owned by the people of Jersey,

but our focus is truly pan-Island. Having guardianship of the Jersey Since I joined the JT board as a non-executive director seven years ago, it has  network has allowed us to run fibre directly to every broadband

home. In Guernsey, we have also invested many millions of pounds been immensely satisfying to see the company evolve from a locally focused  linking homes, businesses, schools and States offices in and around

telecoms operator into a global business. JT SIMs now power more than St Peter Port to a smaller fibre network. In addition, we operate

award-winning mobile networks in both islands which have won

1.6 million devices worldwide and we have recently signed strategic  Ookla's Speedtest Awards for 2 years running.

partnerships with a number of leading multinationals, including Inmarsat  Connecting the world

and Sony. We are living through a period of huge technological change, and  2017 was a particularly successful year for JT International – our

I am privileged to now be Chairman of an innovative business that is well  ntheewClyh barnannedl eIsdla dnivdiss.i oItnhtaassklaeudnwchitehd d aevraenlogpei nogf ibnunsoinvaetsisv eopurtosidduecot f positioned to grasp the opportunities that this presents. and services which primarily take advantage of JT's 750+ roaming

agreements with other mobile network operators – a figure which

compares favourably with some of the world's largest telcos. Our Starting with our financial performance (the details follow later  Internet of Things' SIM card, which can be found on an eclectic

in the report), 2017 was another strong year, with International  range of devices from heart monitors to smart' traffic lights, is business increasing JT's gross profit, whilst investing heavily for particularly attractive because it will use whichever network is the the future. JT continues to deliver a substantial dividend back to the  strongest – and is therefore ideally suited to customers that need States of Jersey on an annual basis and paid £4.7m during the year. ultimate' connectivity. We are also developing low frequency, long

range networks which allow machines to send simple data to each I feel honoured to have taken on the Chairmanship when the  other frequently, such as temperature, location and air quality.

most ambitious initiative that JT has ever undertaken is nearing  Due to its manageable' size, existing mast network and diversity its successful completion. When I first joined the Board, we  of terrain, Jersey is an ideal sandbox' for such innovation, and were just setting out on our Gigabit Jersey journey – a visionary  global giant Sony has already chosen the island and JT to test project to connect every broadband customer in the island  its technology.

to a full-fibre network, which guarantees high-speed access

to the internet. We were challenged at the time on its value  Customer focus

and necessity, understandably, as the Digital Revolution' was  Even though our global success is increasing, our Channel Island still in its infancy; but for most of us, using the internet almost  customers remain our first priority. Listening to and servicing continuously has become an everyday part of our lives. Speedy  their needs is at the heart of everything we do. We run a complex and reliable access is now taken for granted. business and we can always improve, but I'm confident that our

level of service, and the products we offer, are unrivalled. Our

Phil Male We reached our original target of connected households  MyAccount app has proved hugely successful across the Islands Chairman and businesses last November, and we're now very close to  and our customer service teams are constantly finding new ways

connecting those final properties which have been built since the  to engage with a technology-savvy audience, such as through our project began in 2012. Our purpose is to be always there, always  recently launched Live Chat service.

on and always enabling for our customers, and our full-fibre

2017 was another strong  network provides the foundations for new products, services and  Finally I would like to thank two departing Board members. Firstly, year with revenue and gross  innovative ideas to be built on. Kevin Keen who has served for 3 years on the JT Board and

profit increases. In a sense, JT has already moved on to our next project:  wmaysptrheed eCcheasirsmoraJno ohfn J STt'sa r Re es m, f uo nr  ep ra as tsioinng C moem t mhe it  th ee elm. S  eo cf  osuncdhly  , removing the old copper network that fibre has replaced. That  a strong, focused and well-led company. John's eleven years on

will continue throughout 2018 as old wires and cabinets are  the JT Board, the last five as Chairman, have been accompanied decommissioned. At that point, Jersey will become the world's  by a paradigm shift in the way we communicate, and, under his first full-fibre Island, putting us leaps and bounds' ahead of other,  stewardship. My thanks to them both. JT has embraced the many much larger, jurisdictions. opportunities that the Digital Revolution presents and I'm looking forward to an exciting future.

Phil Male

Chairman, 11th May 2018

La Pulente, Jersey

The JT My Account App

With 37,000 active subscribers, JT is the only Channel

Island provider to have exclusively developed a FREE app for its customers, enabling them to control and manage their services on the go

JT SIMs now power more than 1.6 million devices worldwide.

CEO's Business Review

It is often tempting in an annual review to focus on the new': the new technology, the new products, new services, and the new milestones passed. However, I want to begin by recognising two crucial constants which make JT what it is and drive us forward: our customers and our people. Without either, we would not have been able to grow and develop into the global telecoms operator we are today. Their continued support for us and our desire to meet their needs and aspirations drives us forward, whether that be through better services, faster and more resilient networks, or more employment opportunities. Collectively, they challenge us to ask: Where Next? So, I begin with a sincere thank you to our customers and the team that I am privileged to lead for their trust, commitment and loyalty.

07

s Officially the Island

fi verified Speedtestfi by Ookla

La Collette Flats became

the first part of the Island

to become completely Removal of copper infrastructure, La Collette Flats, Jersey copper-free'.

Graeme Millar

Chief Executive Officer

Running fibre in and around a 137-year-old building was a technical challenge.

The world's first full-fibre island

Last year, I reported that more than 84% of broadband

customers were connected to our full-fibre network. In November 2017, we reached 100% of the target we set at the very start

of the project but, since 2012, thousands more properties have been built and we expect to connect the final one before this summer. Upon completion, Jersey will become the first full-

fibre jurisdiction in the world, meaning unrivalled upload and download speeds for households and businesses. One recent fibre installation which I'm particularly proud of is the Central Market in Jersey. Running fibre in and around a 137-year-old building was a technical challenge but the result means traders can now offer new online services to their customers, bringing our historic market into the modern, digital world of commerce.

The Central Market, Jersey

As one project ends, another begins

With the Gigabit project nearing completion, our attention has already turned to removing the old copper network, which has served Jersey well for over a century but has now reached the end of its useful life. Towards the end of last year, Andium Homes approached us to ask if we could remove the copper lines and telephone cabinets around La Collette Flats, as they were demolishing 59 older homes to build 147 apartments that meet the highest standards of build quality and thermal efficiency. We grasped the opportunity to replace the old copper network with fibre in full, and La Collette Flats became the first part of the Island to become completely copper-free'. Over the next 12 months, we will repeat that process across the Island, and all the recovered copper will be recycled.

Still the fastest networks in the Channel Islands

For the second year running, JT was confirmed as the fastest mobile carrier in the Channel Islands, and broadband provider

in Jersey during 2017, by Ookla – the globally recognised leader in internet performance testing and metrics for broadband and mobile networks. Results from all networks across the Islands were analysed by Ookla, which runs Speedtest, the world's most popular internet performance testing service. Consumer-initiated test results confirmed that JT had faster speed scores than any

of its competitors.

"It has been fantastic to work with JT on

this project. The demolition and rebuild is all about giving our residents homes that are fit for the future, which is exactly what JT is doing in communications. The arrival of fibre is great news for our own residents as well as the wider community."

Mike Porter, Andium Homes Head of Operations.

Roam like home

Last year, we also were the first operator in the Channel Islands to cut our data roaming rates by 95% after negotiations with more than 150 operators across Europe and beyond. This was in response to an EU-wide directive ending roaming charges and even though our Islands are outside of the European Union, we were determined that our customers shouldn't be disadvantaged. By putting our customers' needs first, more people enjoyed dramatically reduced roaming bills over the key summer period and could travel with confidence.

Leading the market, JT were the first to dramatically

reduce data roaming rates.

A major new sporting event held on the

St Helier Waterfront which was broadcast to millions.

Super league triathalon, Jersey

JT Market Rocks, Guernsey

International growth; enabling local  prosperity

Almost three-quarters of our total revenue last year came from  our International business, which reflects our expanding work  and influence globally. You can read more about this later in this  review, however, from a strategic perspective, it's important to  explain why we are increasingly working beyond our shores.  

The Channel Islands have a technologically-savvy population  

and a dominant financial services industry dependent on  Pixie Lott, Herm

the speedy and safe processing of huge volumes of digital

data. Yet we remain just 165,000 people with a competitive

telecoms market, so we cannot rely on local revenue alone

to pay for the infrastructure that our islanders rightly expect.  Supporting our local community Round-up

To allow us to provide this, our partners and customers  As well as working to provide the products and services our  As well as our International expansion, JT's true success is built everywhere from Kenya to Canada all play their part helping us  customers require, we have a similar emphasis on ensuring we  on the loyalty and support from Channel Island customers and generate revenues to reinvest back in our islands.  play our part in supporting and making an active contribution to  we will continue to listen to them, through the many channels

the communities in which we live and work. There is a section

that people now choose to communicate. We're committed to Utilising the 750+ roaming agreements that we have signed  on our community involvement later in this Annual Review,

continually learning, adapting and improving and can only do so with other operators, we've built a number of innovative  however two events in 2017 really stand out for me. In Guernsey,

if our customers keep giving us feedback and we keep listening. products. In particular, we have developed world-leading  we helped to organise a free open-air concert in Market Square,

Thankfully, through our mobile and full-fibre networks, as well as expertise in managed connectivity, SMS message routing,  as part of The Lord's Taverners Summer Celebrity Cricket

at our shops and through our contact centres and social media, fraud protection services and the Internet of Things (IoT). More  Weekend, which we have supported for the past seven years

customers have every opportunity to get in touch – and I'm

than 1.6 million JT IoT SIM cards are now in devices worldwide  raising vital funds for this local charity. Whilst in Jersey, we were

grateful that they do.

and we have partnered with some leading global businesses,  the official Technology Partner for Super League Triathlon, a

such as Inmarsat, who have identified JT as the ideal operator  major new sporting event held on the St Helier Waterfront which

to give their technology uninterrupted connectivity. was broadcast to millions of people around the world bringing  Ian cll oof onculusr sitoan 2keh0o1l7 wderas a gs for threeair st yeupa pr foortr J, oT aur cn usd I stoimnceerrs feloy tr thhaenik r

massive attention to Jersey.

loyalty and our people for their dedication. As we enter the

In December, we also signed an agreement with Andorra  full-fibre age in 2018, I'm really looking forward to seeing what, Telecom to work together in areas such as IoT and Information  together, we can achieve.

Security. The cooperation programme will also promote the

professional development of our people through secondments  

and knowledge-sharing. From our apprenticeship, bursary  

and graduate programmes to technical qualifications and  

management training, JT is a business built on progression and  Graeme Millar  committed to opportunity. CEO, 11th May 2018

St Ouens Bay, Jersey

FIXED BROADBAND GLOBAL AVERAGE Download Mb/s  Upload Mb/s

42.71  20.39

Rank  Country  Download Mb/s

1  Jersey  250.00

2  Singapore  161.53

3  Iceland  157.73

4  Hong Kong (SAR)  129.64

5  South Korea  117.49 6  Romania  105.74

7  Sweden  93.24

8  Hungary  90.94  

9  Macau (SAR)  87.92 10  United States  84.66

Jersey will rank FIRST at the top of the global leader board with A full-fibre future to a full-fibre network.

speeds of up to 250Mb/s. It will also be the first place in the world to have every residential property and business directly connected

A little over 34,000 services were listed to be connected when the  FULL-FIBRE IN FIGURES This year, Jersey will become the world's first full-fibre' island, with every  first property was equipped with JT Fibre in May 2012.

household and business directly connected to JT's ground-breaking fibre  We reached that original target last November, but more homes  150: number of people

and offices have been built since then and the extra 5,000+  on JT's fibre team

network. Fibre means that data speeds are guaranteed to the front door  connections will be completed by the middle of this year.

without any loss of signal strength along the way.

The JT Fibre project has provided hundreds of jobs in the Island, with the majority being local contracted staff supported by around 20 permanent JT staff. Other parts of the JT business have also contributed significantly to the project. JT has invested in staff and contractors by putting many through the City & Guilds Fibre Optic Cabling qualifications and a number have gone on to become full members of the Fibre-optic Industry Association.

When JT embarked on the Gigabit Jersey project in 2012, there was some doubt that the internet would become as important

and widespread as we were predicting. Now, few would doubt the significance of that investment in light of all the digital services that we take for granted, from catch-up television and smart homes to storing music collections in the Cloud. And that's not to mention the crucial role that technology plays in health, education, business and commerce.

Of course, fibre is not an end in itself; it is an enabler which helps From May 2018  other technologies to be deployed. We hope that the Island – with

our data speeds will  its new robust, speedy and scalable communications infrastructure

– takes full advantage of the digital revolution to develop new

more than double. services, find new efficiencies, identify new USPs and add new

economic strings to its bow.

From May 2018, JT Fibre Broadband customers will begin to enjoy the fastest data download speeds in the world, when we more than double download speeds from 100 Mb/s to 250 Mb/s and increase upload speeds from 10 Mb/s to 50 Mb/s on our entry level plans.

With JT Fibre and the growing influence of Internet of Things (IoT);   emerging industries like Fintech, Cloud computing, AI, Chatbots and

Blockchain all become very real possibilities for our Islands, enabled

  by JT.

According to the Speedtest Global Index, which compares internet

  speed data from around the world on a monthly basis, the country  Becoming the world's first full-fibre island has undoubtedly been

  with the fastest download speed in January 2018 was Singapore,  a challenge but thanks to the work of an incredibly dedicated

with an average of 161.53 Mb/s, followed by Iceland, at 157.73 Mb/s.  and resourceful team and the backing of our shareholder, JT has The UK was in 29th position, with an average of 50.45 Mb/s. delivered a world-first and as such Jersey now has the foundations

for many years of prosperity and economic development.

14 JT Annual Review 2017/18 15

Our position (and responsibility) as the largest telecoms operator  We are also long standing supporters of National Coding

in the Channel Islands means that we have the resources,  Week, an international effort to teach coding skills to children expertise and experience to provide world-class infrastructure and  and adults. In 2017, the fourth NCW, more than 100 people customer service. It means we have the skills to provide both the  attended events at the Digital Greenhouse, including 50 trying fastest mobile network in Guernsey*, and to install a full fibre-optic  coding for the first time.

network ring' in and around St Peter Port. An £11m investment  

that was initially planned to link schools and States buildings,

this is now also being rolled out to residential properties and  businesses as quickly as we are practically able to do so.

With guaranteed download speeds of 1Gb and upload speeds  of 100Mb/s, fibre technology has allowed Guernsey businesses  to flourish.  

Our continued investment and genuine passion for Guernsey extends beyond our award-winning mobile and fibre networks. JT's two data centres provide a range of diverse co-location and  hosting services, which are highly secure and resilient. We are also  a hosting and network partner of the Alderney Gambling Control

Commission, meaning we are licensed to support the Island's

growing e-Gaming sector. We also provide tailored private circuits

to Guernsey businesses, guaranteeing secure, dedicated internet

connections for high speed voice, video and data transfer.

In the business arena, JT has a long-standing relationship with

the Institute of Directors in Guernsey which saw us sponsor

their Seminar series for the 4th year. Bringing together key

business leaders, stakeholders and influencers these seminars

cover thought provoking topics throughout the year which we

activGreenhousely pare Guernsticipate in. Wey's inaugure were alsal digital appro heavily inventiceship solved in the Digital cheme

helping young talent gain valuable work experience in the digital   Our thanks go to JT  and technical space over the summer. This 8 week programme  

for their on-going support,  creates valuable opportunities for young talent to gain real life  

which has helped us to  experiences in the workplace.

secure some of the best

 tribute acts on the scene. As proud as we are of our achievements in Guernsey, we love nothing more than giving back to the wider community in which

David Nussbaumer we live and work in. We're a huge supporter of local music

talent and helping to bring other acts to the Island. The free JT-sponsored Cobo Bay Balcony Gigs have been running for

over five years and are attended by thousands of islanders and visitors each year and in 2017, we introduced a new concert to Guernsey's social calendar – JT's Celebrity Market Rocks, in aid of the Lord's Taveners. With top local act Buffalo Huddlestone headlining, the free gig included appearances by celebrities

    House on Herm and Sunset on Herm are two other very popular

visiting for the Lord's Taverners annual Summer Celebrity Cricket Weekend, which JT has sponsored for the past seven years.

events which JT is honoured to support.

JT's second Channel Island home in Guernsey is growing from strength to

strength and we're really proud to be the only locally owned Telco in the  JT is fullywant to continue t committed to givo continuing te our customers the best deals and the o invest in Guernsey and we

best networks to enable them to take full advantage of what Channel Islands. From our early days as Wave Telecom, JT has fought for a       we have to offer. The States of Guernsey is in the process of

fair deal for islanders, providing fast, reliable and affordable communications   developing a digital strategy with a vision to make the island one to an ever-growing base of loyal residential and business customers, in an  offull par the most connectt in turning that ed places on the planet. JT is rvision into a reality, and we'readye really to play excit a  ed

island with a strong digital agenda and future. for the digital future.

* As verified for two years running by Ookla, the world's leading speed-test application.

JT is a global leader in IoT connectivity. Other

mobile operators may steer customers onto

a particular network but JT's IoT SIM simply

The Internet of Things roams onto whatever network is strongest.

Having a strong and consistent internet  connection is vital; if the SIM card is in a heart  monitor, for example, that is very important.

JT is making fantastic strides in the IoT space and is expanding  rapidly on a global scale. In 2017, for example, we added the

ability to change a SIM card's IMSI (its unique identifier) over the

air. If a customer approached to us and said: "We want to use JT's  

IMSI, but we've negotiated a fantastic rate with an operator in a

particular country", we can put multiple IMSIs on each device with

relative ease. That is a significant technological development.

We have big ambitions when it comes to managed connectivity

as well. The IoT market is exploding and technology companies

are keen to create IoT solutions – and JT wants to power those  Away from cellular networks, IoT devices can also communicate solutions. We want to take responsibility for connectivity, leaving  over Low-Power, Wide-Area-Networks', which use a different the technology companies free to concentrate on the functionality  part of the radio spectrum. This is useful for transmitting small

of their applications. Connectivity might be the boring' bit, but it's  packets of information over long distances. Sensors transmitting the bit JT does very well.  information over this type of network could, for example, monitor

air quality, charge drivers when they park in a space, or tell refuse Already, JT IoT SIMS are used extensively by logistics businesses  collectors when a bin needs emptying.

tracking vehicles or assets and healthcare firms, where ultimate

connectivity is hugely important, such as in devices that monitor  Jersey is a perfect environment to test LPWAN' technology blood pressure. They are also used in agriculture to track and  because it is small, has a varied terrain and has world-leading monitor livestock, banking payment systems and many,  infrastructure, including a full-fibre network, already in place. In many others. partnership with Digital Jersey, JT is creating an IoT Laboratory

in the island. By the middle of 2018, we will have a laboratory IoT already powering smart farming in Jersey  built in one of our exchanges and we will be stocking it with our

partners' solutions and devices to showcase what IoT can be used

for, using all types of connectivity networks. There are different

types of low-power networks and Jersey already has two: a

Long-Range, Low-Power' (or LoRa) network and another variant

built and tested by Japanese tech giant Sony.

To demonstrate the potential of this latter network, JT deployed receivers in the centre and south of the island. Extensive drive and walk tests were undertaken by Sony Europe's engineers to confirm the extent of the coverage offered and therefore the potential low cost of operating a network using this innovative technology.

Commenting on the trial, Steve Beck, General Manager of Telecoms Research and Development at Sony Europe, said: "JT's

assistance during the trial was excellent and we really appreciated their support. While it wasn't possible to drive down every road in

  the time available, we covered a large number of routes and were   pleased to confirm such wide coverage using just two receivers."

With so many different networks, we expect more technology

businesses will want to come to Jersey to test their networks and devices. We plan to introduce more low-frequency technologies

  later this year. With its full-fibre, mobile and innovative radio

networks, Jersey is quickly becoming one of the most connected places on earth.

Homegrown innovation on an International stage

Our JT International division is driven by innovation and over the past

five years has grown from strength to strength. Led by Managing  

Director Tom Noel, the division (previously JT Wholesale) has  With the popularitytechnologists were ofpre such platfdicting theorms as WhatsApp, s death ofMessaging,  ome but with the  developed four principal products, which now contribute almost one  growth of such services as two-factor authentication and chatbots',  

quarter of JT Group's EBITDA.  ibt riesauknindge rfgoouirnbgi lalio rne nma oisbs ialen ctre a. n J sTa, cfotiro innss tiann 2c0e 1, c7o.mpleted a record-

Once again, JT has found an opportunity to save customers time  

JT International's success is primarily built on making use of the  and money. JT manages a great deal of routing information for  

capacity in JT's well established, world-class infrastructure and our  messaging aggregators' who want to better understand their  

expertise in managed connectivity. Its aim is to create fast, original  customers. In the UK, for example, the aggregator - who typically  

and agile solutions to ensure JT maximises the use of its network  sits between a business, such as clothing brand targeting a  

capacity and passes on the cost benefits to our customers. particular customer, and a mobile network provider - can use JT's  

service to instantly identify what network that customer belongs  

Increasing international revenues not only means that more  to. The fewer routes the message has to travel, the more efficient  

money can be reinvested into our Channel Island networks; it also  and cheaper it is for everyone. Contrary to market

means that Jersey and Guernsey businesses can benefit from

ground-breaking technology, such as taxi firms that can track  We all recognise that fraud is a very real danger, particularly  predictions, we don't expect their fleets around the islands to reduce journey time and fuel  when we are overseas. JT International has developed a Fraud  the messaging demand to

consumption, banks that can better protect their customers from  Protection Service, which uses mobile operator data to provide

fraud, or States departments that can more accurately monitor  real-time information to companies to help them prevent fraud  slow down anytime soon.

our environment. and protect their customers. For example, in order to know if a

cash withdrawal is legitimate, a bank can check if the customer's

JT International has built a suite of products that meet increasing  mobile phone is next to the ATM by monitoring its location. Or

demand for guaranteed connectivity, seamless and affordable  online gambling companies can check if a customer is above the

roaming, and secure communications. Our latest is called Inbound  legal age limit by cross-referencing their details with the billing  Network Extension (INE). With INE, JT's roaming agreements sit  data in a mobile network operator's system, which will include  

on top of other operators' networks, which allows them to capture  their date of birth.

inbound roaming traffic. These operators typically don't have their  

own roaming agreements, or have far fewer than JT. The final focus and largest growth area of JT International is the  Internet of Things, which is featured in full on page 16. Together,  

JT maximises the use of our  Take Telkom South Africa (TSA), for example. Before they  these products meet global demand, they raise significant  

revenue to reinvest in local networks, and they have established  network capacity, passing on the  parwith othertnered with JT operators. With INE, they, they had just under now hav 100 roaming agre more than 300 eements  JT and the Channel Islands as a centre of digital innovation, which  

cost benefits to our customers. using JT's existing agreements. Behind the scenes, our team  will be recognised for many years to come.

handles the business-to-business billing, as well as the data  

and financial clearing on behalf of TSA, providing a seamless  

experience for the customer.

Meet some of our business  leaders who coordinate JT's  global operations.

Globally present Barna KIslands. As parutvolgyi is the CEt of the JT GrO ofoup, ekit ekit and  Managing Director of JT in the Channel

supports and operates its own global

infrastructure with points of presence

With more than 750 roaming partners and more than 1.6 million global  in Melbourne, Boston, London and  connections, it is not surprising that JT has a growing international  Jersey. JT's ekit team manage global

presence. We have more than 600 global employees, across 11 locations  operations, software development

and are a trusted provider to some of

and are proud to service over 2,200 business customers globally. the travel industry's most influential

organisations. Roam the world

Our first roaming agreement was signed 25 years ago, While our heart beats firmly in the Channels Islands, our and we now have a portfolio of 750 operator partnerships

international activities fuel growth that benefits the whole group, globally. Every year, our roaming team, based in Jersey, has

to renegotiate all agreements to secure the best possible our customers and our shareholder. Crleads ouraig Samuel, who is bas American activities, helping ed in Arizona,  rates for customers. We work to constantly upgrade our

US and international customers enable  agreements and connectivity to the latest technologies, and connect their IoT (and other)  which requires testing with each network, taking our team solutions with JT across the world.  to all parts of the globe. It is no easy feat, but it's important JT also has a team based in Chicago  for our customers to have access to every network in the who look after large enterprises, such  world when on business or leisure travel. These agreements as Kraft Heinz who, with JT's help,  also support JT International products, particularly in the rolled out a new telephone system and  IoT space.

infrastructure to their offices last year.

The global journey of e-Gaming

e-Gaming companies are understandably keen to grow market

share by sharing their gaming content across networks and Based in Melbourne, John Diamond  platforms globally so, in 2017, we made it possible for our

is our Australian and Asian senior  customers to expand across multiple jurisdictions using JT as

Vice-President. In 2018, JT Australasia  a single service provider.

Pty. Ltd. was formed to promote the

upcoming Fraud Protection Services  Changes in gambling regulation now mean that gaming

business. operators are likely to require separate licences from different

regulators in each country they expand into. Dealing with a

different service provider in each jurisdiction would make this

journey even more time and resource consuming so, at JT, we

responded to this demand by signing data centre partnerships Paul D Taylor , who is Managing

across the globe. We will soon have partner centres available

Director of JT in Guernsey also has

in Canada, Hong Kong, USA, Gibraltar, Malta and Australia.

responsibilities across Europe, the

Middle East and Africa, supporting

As with all our global relationships with trusted providers, it

"We were very attracted to the truly unique  business and international customers

means we can pass these time and cost benefits onto our

and industry-leading solutions that JT  and seeking new opportunities for the

customers, while reinvesting into our Channel Island networks.

offers. It was evident that their approach to  group.

tailor solutions to meet our business needs

would enable us to achieve our objective of  

consolidating our systems and improving  

connectivity for our staff. In 2017, we appointas CEO of our London-based Elliott Muellered JT Global  

Enterprise division. A niche player in a  

large field, JT Global Enterprise is able  

Francesco Tinto, Global CIO of Kraft Heinz to provide some of the UK's leading  

companies with innovative and agile   solutions that other larger providers  are unable to support.

    PCAonUs Lum Re Er  NEn Ag Uin Le Ter

Why JT? For me, it's meeting the

Our customers are a big part of what makes JT. The other important part  customers and working on solutions

of our DNA is our people. Our people drive this business forward every  that benefit them.

day; they are innovative and passionate and most importantly they strive  Tdo woodworkell us something about  in my spare time.you: I like to to give our customers the best experience they can. Customer compliment:

Here we meet some of our customer facing people and hear what their  "I would like to commend the excellent

service and extensive advice given by customers have to say Paul Renault; I would readily recommend

him to anyone. Massive thanks to Paul

Renault for sorting out an issue brought

on by a UK company. Cheers Paul!"

DOM BARNES

Retail Sales Advisor

DAVID KITTOW LEON BOUHAIRE LAUREN DE SOUSA

Why JT? I started working at JT

after finishing college and have done Why JT? I love the diversity of the job  Why JT? The products and services we  Why JT? JT is made up of many  since. I enjoy working at JT because

as one day I could be up a telephone  provide are world-class and I work with  talented and passionate individuals  everyone shares the same vision and

pole and the next I could be installing  such a great team. My days are varied,  and I feel part of an organisation  is dedicated to the cause. That being

the latest smart home products. challenging and exciting. with customers at the heart of  to enable, acknowledge and act as the

decision making.  top telecommunication company on Piece of tech you can't live without: Interesting Fact: My father worked at

the island! This truly is a great family My iPhone – I use it for all my general  JT for 38 years before retiring and my  Tell us something about you: I was

environment where everyone is there for work and emails, but additionally its  wife joined 6 months ago so JT is a very  the manageress of a local patisserie

each other, and never hesitates to help now become one of my main tools for  big part of the Bouhaire family.  for 6 years before joining JT.

one another. I look forward to staying with faulting routers, Wi-Fi issues, IP issues.

Customer compliment: Customer compliment:  JT and moving on up as the years go on. Customer compliment: "I just wanted to say that I was very

"I just wanted to say a huge thank  impressed with Leon. He came up  Intabout meresting Fyself is anact: I supposything with more a weire than d fact you to David, who helped connect my  with a quick and easy solution to

90-year-old Mum to Wi-Fi! A fabulous  fix a problem cable that had been  four legs creeps me out.

job and loads of patience with her.  uncovered by the removal of a carpet  Customer compliment:

Thanks a million! Dave has been  during renovation work in my house.  "Amazing – JT – Dominic Barnes. I was extremely helpful in resolving the issue  The alternative would have involved  having a few issues in store at JT this and has provided us some very useful  chasing a concrete wall, more work,  afternoon and Dom saved me! His

asset Dave is to your team." He was both friendly and professional". custthe patience ofomer service w a saint, I would highlyas fantastic! He has

and valuable advice. What an absolute  more expense for me and a LOT of dust.

recommend him if you are having any problems. Really lovely genuine guy JT are very lucky to have him. Thank you Dom!!"

DARREN KENNY

Customer Solutions Engineer  

Why JT? I enjoy that each and every  job can be so different. I also get a lot of

satisfaction after resolving a technical  STEPHEN PAGE fault for our customers.    

Piece of tech you can't live without:  Why JT? I enjoy the large network My iPhone would be one of the top 5  projects I am involved in (particularly tools that I use on a daily basis to do  LAN & WAN) and I enjoy working my job, emails, scheduled work and the  with our business customers

apps that I found invaluable like the  to make their life easier and their spirit level!  business more efficient.

Customer compliment: Piece of Tech you can't live

"I wish to compliment JT on the excellent  without: My fibre level loss meter – assistance I have received from Darren, I  used to measure the given light found him a very pleasant, knowledgeable,  level loss of a fibre.

and experienced person, who fitted a new

Customer compliment:

modem, tested the system and ensured

that there were no more problems. He is a

real asset to Telecoms, well done!"

PIPPA DONOVAN

Digital Customer Experience Co-ordinator

Why JT? It's a local company who cares about our customers, our Islands, and

its employees. There are great career development and training prospects in JT and I've learned such a lot in the time that I've been here.

Tell us something about you: I was part of the England rounders team for 6 years! (Yes, rounders is a sport! And yes, there is a national team!).

Customer compliment:

"From start to finish she was extremely knowledgeable, helpful, polite and patient and I really felt she went the extra mile. Pippa's friendly personality definitely came across online. Her knowledge was second to none. An excellent all-round employee!"

At JT, we're proud of our Channel Island  

roots and the contribution we make in

our local communities. We're also lucky to  Autism Jersey Golf Day have people who champion and volunteer  We sponsored and supported the annual Autism Jersey

for community involvement Golf day, which raised over £20,000.

in their own time. Super League Triathlon

JT Daredevils Jersey hosted the Super League Triathlon with JT as the official  

Every year, we ask our people to vote for a chosen charity

Technology Partner. The weekend of sporting action in September  

and 2017 was dedicated to the hard work of Alzheimer's Our JT Daredevils' – ten intrepid JTers who volunteered to freefall  brought some of the sport's biggest names to Jersey for plenty  

charities across the islands, where our teams raised over from 10,000 feet above St Aubin's Bay before parachuting down to  of high-adrenaline action that reached a worldwide television and  

£10,000 for Jersey Alzheimer's Association and Guernsey  land on the beach to raise money for charity. online audience.  

Alzheimer's Association.

We also support many other events and community activities, all with the aim of giving something back to the people of our  Islands: both residents and businesses.  

There were many highlights for us, here are but a few  

Summer of Music

JT provided over 25 FREE music events showcasing local and International talent in Guernsey through our sponsorship of

Celebrity Market Rocks in aid of The Lord's Taverners, The Cobo Bay Balcony Gigs, the House on Herm and Sunset on Herm festivals.

Let s Get Recycling Free Code Workshop

We worked with local primary schools across Jersey  2017 was the 4th year for National Coding Week, which we have  Winter Seminars In reponse to Irma

to recycle more than 8,000 telephone directories. The  sponsored in the islands since its inauguration. The week was the  JT also joined the Channel Islands' response to the campaign encouraged children to reduce waste and  most successful yet and saw hundreds of local and global activities  JT's longstanding support for the Institute of Directors Seminar  destruction caused by Hurricane Irma in the Caribbean teach them the importance of recycling, in exchange we  taking place. JT ran free coding workshops for start-ups and small  Series saw 4 high profile topics debated amongst large audiences  and Florida by waiving all roaming charges for any JT donated 53 tablets to schools throughout the island. businesses.  of industry leaders and key business influencers in Guernsey. customer caught up in the disaster.

Dividends paid (£'m)

5.0

4.5 Performance review

4.0 3.5

3.0 2.5 2.0

1.5

How are we doing? Headline results  Ordinary dividends paid during the year rose by 52% (2016:

81% ). No exceptional dividend ( 2016: £2.4m ) was paid during  1.0

JT's financial results are similar to last year's, but with higher  2017.

depreciation charges reflecting JT's ongoing investment in Jersey  JT Group Limited  2016 (£'m)  2017 (£'m) 0.5

infrastructure and higher tax charges due to US tax rate changes.

Cash flow from operating activities decreased by 13% to  0

Revenue  185.0  260.7  £37.5m, and of this cash generated:

Revenue is obtained through providing telecommunication services  2016 2017

to consumer, enterprise and wholesale customers: fixed access  Gross profit  90.7  92.0 •  £21.8m (2016: £23.5m) was used on capital expenditure,  Ordinary dividend  Exceptional dividend charges and network usage, mobile airtime usage, messaging and  equivalent to 8% (2016: 13%) of revenue (£'m) (£'m)

data services, interconnection and roaming revenue, broadband  Operating profit  11.7  11.1  •  £6.9m (2016: £7.6 m) was paid to States of Jersey as

rentals and usage, private circuit rentals, equipment, sales through  corporate tax, preference interest and dividends Cash at Bank

international sponsored roaming, fraud protection services and  Profit on ordinary activities  •  £1.7m (2016: 2.0m) was used to contribute to pension  (£'m)

IoT and maintenance and support services. before taxation  9.0  9.0  schemes and net of non-Jersey taxes paid and refunded 25

• £2.2m (2016: £2.2m) was used to pay net interest on

20

Revenue rose by 41% to £260.7m mainly from the increase in low  Profit on ordinary  borrowings, offset by £0.4m (2016: £nil) in proceeds from

margin off-island wholesale voice revenues (137%) (2016: -20%).  activities after taxation  6.0  4.8 disposals, leaving £19.8m (2016: £14.8m) in cash at bank at  15

Other increases in revenue from our growth business lines within  year end.

fraud protection services (48%) (2016: 48%), sponsored roaming  10

(117%) (2016: 100% as new business line) and IoT (19%) (2016:  Revenue  5

138%) helped to offset the decline in fixed line (-5%) (2016: -8%)

and equipment and device sales (-14%) (2016: 26%). (£'m) 0

300 Gross profit rose by 1% to £92.0m, mainly due to growth in our  250

international lines of business in fraud protection services (48%)

(2016: 16%) and IoT business (20%) (2016: 101%). 200 150

Operating profit was £11.1m (2016 £11.7m). This decrease was mainly due to an increase in depreciation and amortisation (excluding goodwill) charges from £16.8m to £19.3m arising from JT's continued investment in its network to support local and international customers. Capital expenditure during the year was £22.0 m (2016: £22.8m). The Gigabit programme made up 54% of the overall investment in 2017. Increased depreciation charges were somewhat offset by falling operating overheads and costs across the group.

100 50 0

2016 2017

Jersey (£'m) Rest of the World (£'m)

Gross Profit Profit on ordinary activities before taxation was £9.0m (2016:  (£'m)

£9.0m) despite a fall in operating profits following an increase in  100

the value of shares purchased in Energous Corporation of £0.2m  80

and decreased interest charged to the income statement of

£0.3m compared to 2016. 60

40

Profit on ordinary activities after taxation was £4.8m (2016:

£6.0m) from increased tax charges following tax reform in the US  20

which resulted in a prior year adjustment to reduce the value of  0

our deferred tax asset in ekit.com Inc (a US subsidiary).

2016 2017 Gross Profit (£'m)

"JT's global success brings investment back  2016 2017

to the Island and its Jersey shareholders"

Cash at Bank (£'m)

£2.0m  Jersey income tax

£4.7m  Dividends paid

£1.7m  Pension net of non-Jersey paid and refunded £5.3m  Net increase in cash

£2.4m  Interest paid

£0.4m  Capital expenditure Rest of World £0.9m  Capital expenditure Guernsey £20.5m  Capital expenditure Jersey

Board of Directors

JOE MOYNIHAN MERIEL LENFESTEY

Non-Executive Director (appointed  Non-Executive Director, Chairman JOHN STARES

with effect from 1 May 2018) of the Remuneration Committee (resigned as Chairman with effect

from 31 March 2018)

Joe Moynihan is an experienced  Meriel joined JT's Group Board as a  

international financial services executive  Non-Executive Director in 2016. She has

with senior level commercial and public- experience driving and enabling a shift to

sector experience. He has held a wide  customer centricity with forward looking

range of board level positions in Jersey and  companies across a wide range of business

International businesses during a career  sectors. After receiving her MA in Computer

that has spanned over 30 years. This  Related Design from the Royal College of

includes being President of the Jersey  Art, spells working at Microsoft in the US

Bankers Association, Chief Officer/Director  and the BBC in London, in 1997 she

of Financial Services for the States of  founded a London-based User Experience

Jersey, and consultant to a number of  Company and grew it to become the UK

financial services projects. Joe has an MBA  market leader and highly respected globally.

PHIL MALE COLIN TUCKER SEAN COLLINS from the CASS Business School, University  Her work has included tactical and strategic  KEVIN KEEN

Chairman  Non-Executive Director, Non-Executive Director, Chairman  of London, is a fellow of the Association of  engagements with clients embracing digital

(resigned as Chairman of the Audit (with effect from 1 April 2018) Senior Independent Director  of Audit and Risk Committee Chartered Certified Accountants and a  transformation across many sectors

and Risk Committee with effect graduate of the Irish Institute of Bankers. including Financial Services, Consumer

from December 2017)

After obtaining a computer science  Senior Independent Director A chartered accountant and a graduate in Electronics & Software, Telecoms, Media,

degree at Imperial College, Phil Male was a  Dr Colin Tucker trained as an Electrical  Classics from Cambridge University, Sean Retail, Transport and Public Sector. She is

founding director of Computer Newspaper  Engineer at UMIST achieving a BSc, MSc  was formerly a senior audit and advisory also a Non-Executive Director for several

Services and became involved in the  and ultimately a PhD. He has spent over 25  partner at KPMG, where he had worked companies including Aurigny locally. She  With sincere thanks to out-going Chairman start-up of Demon Internet (one of the  years in the telecommunications industry  since 1972. From 2009 to 2012, Mr Collins holds voluntary roles with the IoD and  and Board members John Stares and Kevin world's first commercial Internet Service  in a number of senior roles. The last two  was Head of Markets, Asia Pacific, Startup Guernsey. Keen for their valuable personal Providers), ultimately becoming the  positions were as main board director and  responsible for the firm's business contributions to JT during 2017. John Technical Director with responsibility for  COO of Orange Plc and Managing Director  development in the Asia Pacific region. He Stares stood down as Chairman as of

all operational and development activity.  and Deputy Chairman of 3. Colin has also  also led the Global Communications and March 2018 and Kevin Keen left the JT The company was acquired by Scott ish  served as a Non-Executive Director for  Media practice for over a decade. Mr Board in December 2017.

Telecom in 1998 and Phil was one of the  Sarantel, TTP, Morse, and Monitise and as  Collins has deep and extensive experience

three founding directors that floated the  Chairman of UIQ Technologies. In addition  of corporate governance, financial

combined business on the London Stock  to his industrial experience Colin has acted  reporting and other corporate disciplines, GRAEME MILLAR

Exchange as THUS Plc in 1999. as Industrial Professor at Loughborough  gained during many years as lead partner Chief Executive Officer

Phil became Chief Operating Officer in  University and continues to assist in the  for a large number of major international

2002, and when THUS was acquired by  academic world with management and  clients. He was the Senior Independent Graeme was appointed JT CEO in January

Cable & Wireless Worldwide in 2008, Phil  mentoring of spin-out companies coming  Non-Executive Director and Chairman of 2010. A Cambridge science graduate with

became Group Operations Director, then  from Edinburgh University. the Audit Committee of Millennium &

Chief Strategy Officer and served on the  Copthorne Hotels Plc until December aG rpaoesmtger ahdasuaotvee ern2g5inyeeearrisn go fq teualelicfiocmatsio  n,  JOHN KENT

Executive Board, leading the demerger  2014. Other appointments include experience. Graeme has worked in  Chief Financial Officer

and listing of Cable & Wireless Worldwide  member of the Conduct Committee and countries as diverse as the USA, Russia,

Plc in 2010. Phil left Cable & Wireless  Case Management Committee of the

in 2010 and today serves as a Non- Financial Reporting Council, former  Hcoumngpaarnyieasnsdu tchhe asNe Vthoedralafonndes afonrd  John joined JT as CFO of the JT Group in

Executive Director on a number of boards,  trustee of the Royal Society for Asian Motorola. Immediately prior to taking up  February 2012. He is a highly commercial

actively investing in new technology  Affairs, Trustee and Finance Chairman at  his role at JT Group, Graeme was the Chief  CFO who has spent a major part of his

businesses, and works in an advisory  Cystic Fibrosis Trust, Governor and  Commercial Officer Russia for MTS,  ccaormeeprawnioerskiinn gthfeo ru ttwilitoielas rsgeec FtoTrS,VEo dafone

capacity with a number of institutions in  Chairman of More House School in Surrey,

the City. England. Sean is also a Crown  Ropusesraiat'osr l. a Inrgaedsdt imtioonb itloe hteislerpohleo ante J T,  and British Gas, in financial and commercial

Representative at the Cabinet Office,  Graeme is also a Non-Executive Director of  lweaads ethrsehCipFrOo lfeosr. VPoridoar ftoonjoei nIrienlagnJdT,, tJhoehn1

overseeing the provision of

telecommunication services by major Wanedll ii ns ga t Foenl lPoawr tonfetrhseMInasntaitguetemoef nDt iLreimctiotersd.  billion turnover Vodafone operating

suppliers to UK Government. cMoamthpeamnya tbicass edde ginr eDeu fbrolinm. JCoahmn bhraidsgae.

Reappointment

The receipt of confirmation from Senior Management of the The Executive Directors are not subject to retirement by rotation  proper operation of controls throughout the period of the review.

but they are subject to periods of notice related to the termination

of employment, as are other members of the Company's Senior  The review and approval during the year of the schedule of Management. matters specifically reserved for its attention.

The Company has adopted a policy of requiring Non-Executive  The review of reports received from the Audit Committee Corporate Governance

Directors to seek re-election after having served a three-year term.  concerning the findings of the external auditors on the financial Non-Executive Directors who have served on the Board for nine  statements of the Company and the systems of internal control. 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  Audit Committee

shareholders at the next Annual General Meeting ("AGM").

Relations with the shareholder

Compliance with the UK Corporate Governance  Meetings and Committee membership While the Company is wholly owned by the States of Jersey, under Code 2016 (the Code'). the terms of Article 32(6) of the Telecommunications (Jersey)

During the year, the Board met eight times. Details of attendance

Law 2002, the Minister for Treasury & Resources (the "Minister") is The Company adheres to the principles of good corporate  at Board meetings are as follows:

charged as its representative in matters related to its shareholding governance and best practice set out in the Code and, in

in the Company. Limitations on the powers of the Minister, which particular, has in place a sound system of internal controls to

Number of Board Meetings  relate principally to share ownership matters, are set out in that safeguard its shareholder's investment and its assets.

in 2017 8 same article. In order to ensure an appropriate accountability Directors and the Board Sean Collins 8 framework, a Memorandum of Understanding exists between the

Company and the Minister, and that Memorandum of

The Board Kevin Keen 8 Understanding recognises the obligation that the directors have in

John Kent 8 regard to cooperating at all times in the best interests of the During the financial year the Board consisted of eight directors,  Meriel Lenfestey 7 company.

two of whom are Executive Directors and six of whom are

Phil Male 8 Internal Controls

Non-Executive Directors. The Board has a schedule of regular

meetings, normally between six and eight per year, with any  Graeme Millar 8

The Board is responsible for ensuring that there are effective additional meetings convened as and when required. The Board John Stares 8

is collectively responsible for the long- term success of the  Colin Tucker 8 systmisstatems ofement or internal contr loss and tol in place to ensure that business objectivo reduce the risk of es are Company. This is achieved by setting the overall operating

met. These systems are designed to manage and mitigate strategy, approving detailed business plans and overseeing

(rather than to eliminate) the risk of failure to achieve business delivery of objectives by continually monitoring performance  Director independence

objectives and can only provide reasonable and not absolute against those plans. The Board establishes the culture, standards

assurance against material misstatement or loss.

and values of the Company. The Board oversees the management  The Board considers all of the Non-Executive Directors to be

of risk, monitors financial performance and reporting and  independent in character and judgement. In determining

The Company has developed and adopted corporate and ensures that appropriate and effective succession planning and  independence, the Board considers the specific circumstances of

operational risk registers detailing and risk grading the significant remuneration policies are in place. Whilst maintaining oversight  each Director. The Board has concluded that Sean Collins, Kevin

risks faced by the Company. Alongside the register is a process

at regular meetings of the Board, the day to day operation of  Keen, Meriel Lenfestey, Phil Male and Colin Tucker shall be

through which the significant risks faced by the business are

the Company has been delegated to the Executive Directors.  deemed independent, with Colin Tucker adopting the role of

identified and evaluated on a regular basis and the controls The Board is supplied with a sufficient level of regular, detailed  Senior Independent Director. John Stares, as Chairman of the

operating over those risks are assessed to ensure that they are and timely management information to allow it to discharge its  Company for the year ended 31 December 2017, was considered

adequate.

functions efficiently. independent on appointment and, in accordance with the Code, is

not subject to the independence test thereafter.

The process of risk assessment and reviewing the effectiveness of Performance evaluation the systems of internal control is regularly reviewed by the Audit

Committee, accords with Turnbull guidance and has been in place In order to ensure that the Board continues to operate effectively,  for the whole of the year, up to and including the date on which

the Board and its Committees carry out an assessment of  the financial statements were approved.

performance across key areas. The results of the performance

assessments and appraisals are fed back to the Board as a whole  Controls adopted by the Board (or its Committees) to ensure (as appropriate) and action taken accordingly. the effectiveness of the systems of internal control include the

following:

Other significant commitments

The review of the corporate and operational risk and control Under the terms of engagement for each Non-Executive Director, an

registers maintained and updated by the Company and of the indication of required hours is agreed that should enable the

status of any actions arising from their regular review. 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.

41516_Annual_Review_210x270.indd 34-35

During the year ended 31 December 2017, the Audit Committee comprised Sean Collins (Chairman), Phil Male and Kevin Keen. The auditors, KPMG LLP, and the Executive Directors also attend the meetings by invitation.

There were five meetings of the Audit Committee during 2017, 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:

To monitor the integrity of the financial statements of the Company and any formal announcements relating to the Company's financial performance.

To provide advice, when requested by the Board, on whether the annual report, taken as a whole, is fair, balanced and understandable and provides the information necessary for the shareholder to assess performance, the business model and strategy.

Ensure that arrangements are in place for the proportionate and independent investigation of concerns raised confidentially by whistle-blowers about possible improprieties in matters of financial reporting or any other matters.

To review and monitor the adequacy, operation and effectiveness of the Company's internal financial and other controls and make recommendations for improvement where necessary.

To oversee the external audit process and manage the relationship with the external auditors.

To make recommendations to the Board as to the re-election and remuneration of the auditors at the Annual General Meetings based upon its assessment of the performance of the auditors and giving due regard to their continued independence and any other regulatory or professional requirements.

During the year ended 31 December 2017, the Audit Committee formed the view that there is now a need for an internal audit function and assigned accountability for this to a senior accountant reporting to the CFO.

11/05/2018 12:47

Review of Financial Statements Remuneration Committee Nomination Committee

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

The Audit 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, changes in accounting or disclosure requirements and the accounting or disclosure implications of one off events occurring in the year. Where necessary, the Audit Committee considers evidence and independent third-party advice on the key matters for consideration. At the year end, the Audit 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 Audit Committee. The Audit 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.

During the year ended 31 December 2017, the Remuneration Committee comprised Kevin Keen (Chairman) (resigned with effect from 31 December 2017), Sean Collins, Meriel Lenfestey (replaced Kevin Keen as Chairman of the Remuneration Committee), 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 2017, 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:

Review and determine the level of remuneration of Executive Directors.

Review and determine the level of remuneration of the Senior Management Team.

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

During the financial year ended 31 December 2017, the Nomination Committee comprised Phil Male (Chairman), Sean Collins, Kevin Keen (resigned with effect from 31 December 2017), Meriel Lenfestey, John Stares, Colin Tucker and Graeme Millar . Executive Director, John Kent may also attend the meeting by invitation.

There were two formal meeting of the Nomination Committee during 2017, with full attendance at that meeting.

The Nomination 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 Nomination Committee include:

Making recommendations to the Board as to the re-election of Directors under the retirement by rotation' provisions in the Company's Articles of Association whilst giving due regard to their performance and ability to continue to contribute to the Board in light of the knowledge, skills and experience required.

Reviewing and making recommendations to the Board as to the succession planning for Executive and Non-Executive Directors.

When selecting candidates for potential appointment as a Non-Executive Director, the Nomination Committee evaluates the needs of the Company and identifies the necessary skills

and experience required by candidates for consideration. 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.

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.

Make recommendations to the Board on the Company's overall  Regularly reviewing the structure, size and composition, including framework of salaried staff remuneration and costs. the balance of skills and attributes required of the Board,

compared to its current position and making recommendations to Review and make recommendations to the Board concerning the  the Board with regard to any changes.

remuneration of the Chairman.

Keeping under review the leadership needs of the organisation, both Executive and Non-Executive, including succession plans, with a view to ensuring the continued ability of the organisation to operate effectively.

The current auditor is KPMG LLP who replaced Deloitte LLP following a competitive tender for audit services for the year ending 31 December 2017 carried out in 2016, following which 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

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 6 to 8 of the consolidated financial statements.

The Group made an operating profit of £11.1m (2016: £11.7m). This decrease is mainly due to an increase in depreciation and amortisation charges totalling £2.6m. Revenue has increased to £260.7m (2016: £185.0m).

Profit on ordinary activities after taxation was £4.8m (2016: £6.0m) from increased tax charges following tax reform in the US which resulted in a prior year adjustment to reduce the value of our deferred tax asset on ekit.com Inc (a US subsidiary).

At the year end the Group's net assets were £91.8m (2016: £92.4m).

The 2016 final and 2017 interim dividends of £4.7m were paid during 2017 (2016: £3.1m). No special dividend was paid during the year (2016: £2.4m).

The Directors have approved the payment of a final dividend for 2017 of £2.4m (2016: final dividend for 2016 of £1.2m).

Directors

The Executive and Non-Executive Directors of the group who served during the year and subsequently are:

Non-Executive

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 of the consolidated financial statements.

The Group has considerable financial resources together with long-term contracts with customers and suppliers. Therefore, 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 2018, 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  Directors' interests

foreseeable future. Accordingly, they continue to adopt the going

concern basis in preparing the annual report and the consolidated  The Directors of the Group had no interests, beneficial or financial statements. otherwise, in the shares of the Group.

Insurance of Directors and officers

The Group maintains an insurance policy on behalf of all Directors and officers of the Group against liability arising from neglect, breach of duty and breach of trust in relation to their activities as Directors and officers of the Group.

Independent auditor

KPMG LLP were appointed as the company's auditors at the AGM on 5th June 2017 and have indicated their willingness to continue in office as auditor.

By order of the Board.

Daragh J McDermott Company Secretary

Financial Summary

The financial summary presents the main highlights from the  The Group financial statements consolidate the financial

2017 financial statements prepared under accounting standards  statements of the company and its subsidiary undertakings as at currently applicable in the United Kingdom and in accordance with  31 December each year. The results of subsidiary undertakings Jersey company law. A copy of the detailed audited consolidated  acquired or disposed of during the year are consolidated for the financial statements may be obtained via www.jtglobal.com  periods from or to the date on which control passed.

Consolidated income statement 2017 2016 for the year ended 31 December 2017 £'000 £'000

Revenue 260,660 184,968 Cost of sales (168,633) (94,275)

Gross profit 92,027 90,693 Operating expenses (80,949) (79,008)

Operating profit 11,078 11,685 Share of results of associated undertakings (2) (2) Gain/(loss) on financial assets at fair value through profit or loss 210 (8)

Profit before interest and taxation 11,286 11,675 Finance income and similar income 6 9 Finance costs and similar charges (2,328) (2,636)

Profit on ordinary activities before taxation 8,964 9,048 Tax on profit on ordinary activities (4,147) (3,020)

Profit on ordinary activities after taxation 4,817  6,028

Consolidated statement of comprehensive income 2017 2016 for the year ended 31 December 2017 £'000 £'000

Profit for the financial year 4,817 6,028

Currency translation difference (704) 768 Cash flow hedge movement 171 (171) Remeasurements of net defined benefit obligations 55 (42) Total tax on components of other comprehensive income  (11) 8

Other comprehensive income for the year, net of tax (489) 563 Total comprehensive income for the year 4,328 6,591

Profit for the year attributable to

– Owners of the parent 4,817 6,028

– Non-controlling interest - - 4,817 6,028 Total comprehensive income attributable to

– Owners of the parent 4,328 6,591

– Non-controlling interest - - 4,328 6,591

Financial Summary

Consolidated statement of financial position 2017 2016 Consolidated statement of changes in equity At 31 December 2017 £'000 £'000 for the year ended 31 December 2017

Called up  Equity Hedging  Currency share capital reserve reserve translation reserve

Fixed assets

Intangible assets and goodwill 20,156 26,645 £'000 £'000 £'000 £'000 Tangible assets  112,468 109,224

Investment in associate 611 728 Balance at 1 January 2016 20,000 71,054  -  (422) Other investments 4,209 3,999

Deferred tax asset 941 1,769 Profit for the year - 6,028  -  - Other comprehensive income for the year - 734 (171) -

138,385 142,365

Total comprehensive income for the year - 6,762 (171) - Current assets Currency retranslation on foreign operations  - - - 719 Inventories 3,355 6,433 Dividends - (5,496) - - Receivables due within one year 38,969 36,333

Receivables due after one year 3,013 2,519 - 1,266 (171)  719 Cash at bank and in hand 19,781 14,786

Balance as at 31 December 2016 20,000 72,320 (171) 297 65,118 60,071

Balance at 1 January 2017  20,000 72,320 (171) 297 Payables: amounts falling due within one year (38,548) (38,169)

Profit for the year  - 4,817 - - Net current assets 26,570 21,902 Other comprehensive income for the year - (660) 171 -

Total assets less current liabilities 164,955 164,267 Total comprehensive income for the year  - 4,157 171 -

Currency retranslation on foreign operations - - - (295) Payables: amounts falling due after more than one year (51,000) (51,000) Dividends - (4,692) - -

Deferred tax liability (9,238) (8,169)

Provision for other liabilities (2,205) (1,849)

Post-employment benefits (725) (803)

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

Financial Summary

Consolidated cash flow statement 2017 2016 Consolidated cash flow statement (continued) 2017 2016 for the year ended 31 December 2017 £'000 £'000 for the year ended 31 December 2017 £'000 £'000

Profit for the financial year 4,817 6,028 Cash flow from financing activities

Dividends paid (4,692) (5,496) Adjustment for:

Borrowings  - (665) Tax on profit on ordinary activities 4,147 3,020

Interest paid (2,174) (2,200) Finance income and similar income (6) (9)

Preference dividend paid (200) (200) Finance costs and similar charges 2,328 2,636

Share of results in associate 2 -

Fair value movements on financial assets at fair value through profit or loss (210) - Net cash used in financing activities (7,066) (8,561)

Net increase in cash and cash equivalents 5,290 3,311 Operating profit  11,078 11,675

Cash at bank and in hand at beginning of the year 14,786 10,756 Amortisation of goodwill and intangible assets 7,986 6,323 Effect of foreign exchange rate changes (295) 719 Depreciation of tangible assets 15,945 15,104

Amortisation of goodwill in associate 115 24 Cash at bank and in hand at end of year 19,781 14,786 Loss on disposal of intangible assets 162 -

Loss on disposal of tangible assets  228 244

Provision for bad debts and bad debt write off 313 519

Inventory impairment 240 133

Currency translation difference 300 205

Net cash used in investing activities (21,435) (27,473)

Business combinations and goodwill  Under the revised Terms of Admission there is insufficient

information available to use defined benefit accounting and, with Business combinations are accounted for by applying the  effect from 1 October 2015, JT (Jersey) Limited has accounted

purchase method. for the scheme as if it was a defined contribution scheme.

Notes to the Financial Summary

General information  Network equipment, fixtures and fittings and motor vehicles are

stated at cost less accumulated depreciation and accumulated JT Group Limited (the "company") and its subsidiaries (together  impairment losses. The cost of network equipment includes all

the "Group") has its principal operations in Jersey. The Group  cable, ducting and transmission equipment extending from the also has operations in UK, Australia and USA. The principal  main switching systems to the customers' premises.

activity of the company and its subsidiaries is the supply of

telecommunication services and equipment. Capital work in progress comprises capital projects which are

under construction. Once completed, projects are capitalised as The Group financial statements of JT Group Limited have been  separately identifiable assets and depreciated over their estimated

prepared in compliance with United Kingdom Accounting  useful economic lives.

Standards, including Financial Reporting Standard 102, The

Financial Reporting Standard applicable in the United Kingdom  The costs of tangible assets, less estimated residual value, are and the Republic of Ireland'' (FRS 102'') and in compliance with  written off over their estimated useful economic lives on a straight- the Companies (Jersey) Law 1991. line basis as follows:

The ultimate controlling party of JT Group Limited is the States of  Freehold buildings  50 years Jersey.

Leasehold buildings  the term of the lease Jersey taxation

Motor vehicles  7 years

Current tax, including income tax in Jersey and foreign tax, is

provided at amounts expected to be paid (or recovered) using

the tax rates and laws that have been enacted or substantively  Equipment fixtures and fittings:

enacted by the statement of financial position date.

Network infrastructure  3-25 years Deferred tax is recognised in respect of all timing differences that  Other*   5-10 years

have originated but not reversed at the time of the statement of

financial position, where transactions or events that result in an  *This includes freehold and leasehold fixtures and fittings.

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  Intangible assets (excluding goodwill)

date. Deferred tax is measured on a non-discounted basis.

The cost of a business combination is the fair value of the

consideration given, liabilities incurred or assumed and of equity  This change resulted in the release of the defined benefit liability, instruments issued plus the costs directly attributable to the  held by the group on the statement of financial position from its business combination. previous accounting basis, down to nil as at 31 December 2015.

Associates The deficit in the defined benefit plan for TBPS, being the Investments in associates are accounted for using the equity  difference between the value of the scheme assets and the

method. Investments in associates are initially recognised at the  present value of the scheme liabilities, is recognised in the transaction price (including transaction costs) and are  statement of financial position.

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

loss and other comprehensive income of the associate. Goodwill  201 employees of the company are members of PECRS. This has arising on the acquisition of associates is accounted for in  been closed to new joiners since 2011. TBPS has 3 members. accordance with the policy set out above.

The company also offers employees the JT Group Limited Pension Financial assets - Investments Plan, which is a defined contribution scheme.

Investments in equity instruments which are not subsidiaries,  Share capital, dividends and redeemable associates or joint ventures, are initially measured at fair value,  preference shares

which is normally the transaction price.

The States of Jersey have been issued with 20m ordinary shares Such assets are subsequently carried at fair value and the  at £1 each, authorised and fully paid up. The shares carry a voting changes in fair value are recognised in profit or loss, except that  right of one vote for each share held.

investments in equity instruments that are not publically traded

and whose fair values cannot be measured reliably are measured  Dividends of £4.7m (2016: £5.5m) were paid during 2017 to the at cost less impairment. States of Jersey.

Inventories In 2012, JT Group Limited issued 10m 2.5% preference shares at

£1 each to the States of Jersey Currency Fund, with interest Inventories are valued at the lower of cost and net realisable value,  payable twice yearly.

and accounted for on a weighted average cost basis.

Other provisions for liabilities and charges

Provisions are recognised when the company has a present legal or constructive obligation as a result of past events. Asset retirement obligations and dilapidations are recognised 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.

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 and costs directly attributable to bringing the asset to its working condition for its intended use.

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

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:

Websites and website development  3–5 years Software, software development and software applications 3–5 years Software licences   the term of the licence

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 of 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.  

Notes

Notes

PRIVATE AND CONFIDENTIAL

Annual Report and  Audited Consolidated Financial Statements 31 December 2017

JT Group Limited

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Facts and figures correct at time of publication. June 2018.

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

2 Annual Report and Consolidated Financial Statements 3ements 31 December1 December 2017 2017 Directors' Report Responsibilities Limited Statement Income Financial Position Equity Statement Statements 1

Contents Directors' Report

01 Directors' Report  The directors present their report and audited financial  Directors