#WFH, staying connected and leading through change
JT chief executive officer Graeme Millar talks to
Jo Meerveld about life in, and after, lockdown
Graeme Millar is dressed casually and relaxed on his sofa, as we chat via FaceTime.
I ask him how he’s finding working from home.
‘A lot easier than I was expecting actually. In about four days flat I became an expert at Zoom, Microsoft Teams, Cisco WebEx, FaceTime and WhatsApp.
‘I knew about all this stuff, but just wasn’t using it. Now I’m competent enough to teach my 76-year-old parents.’
Despite the informality, Graeme is focused on the job at hand.
‘We’ve spent a lot of time, energy and effort on keeping our employees safe, our people safe, so that they can in turn help our customers.
‘We’ve coped well and we’re very, very lucky.
‘And we’re lucky because we’re one of the few businesses that still has a big demand for what we sell.
‘Living on a small island in a local community, you can’t but help know people, in my case my son, who works in the restaurant business, who are affected, from thriving business to no sales overnight.
‘That is not the case with the phone business. We are probably, after health services, the next most-used service.
‘I’d also say that’s quite humbling.’
Island businesses and island life have inevitably been impacted by the lockdown. I ask Graeme how this has affected revenue streams, notably from roaming charges.
‘That is a good question. I mean it’s down, it’s down to almost zero and we won’t see any uplift until at least September, possibly to the end of the year.
‘It’s going to represent about 5% to 7% of our business.
‘I think there’s going be a very healthy debate on both islands, about at what point can we open ourselves up to travel again, and there’s a lot of different opinions about when that should be.’
The crisis has hit other areas of the business too – with sales in stores down about 75% during lockdown, although a doubling in online sales in Jersey and Guernsey.
‘Whilst we haven’t had to furlough any staff, some have been redeployed, with shop staff manning our credit management hotline for example. We’ve got rid of our late payment charges, and we’ve said, look, if you’ve got a problem with your bill let us know, so we’re working out payment plans for customers.
‘So we’ve moved folk across, and they’ve been doing a great job working under social distancing guidelines, packaging up phones and computers and sending them out.’
In its latest financial report, JT reports plans to cut capital expenditure and operating costs, which contrasts with its planned commitment to invest in emerging technologies. Graeme explains the impetus behind the report.
‘Well I think you have to look at the sort of short term versus the medium term. We’re working really hard to help our customers basically stay afloat.
‘Right now, we just don’t know how many people at the end of this crisis are going to be unemployed, how many businesses sadly won’t still exist, and we’re going to have to give them some forbearance with debt. So right now in the short term, the game is conserve your cash, support your customers, and let’s get through this together.
‘The other side of this is that we have substantial cash reserves and debt facilities that will allow us to have a very solid foundation for growth and taking advantage of the opportunities on the other side of the crisis.’
Group revenue reduced to just over £206m. in 2019 compared with just under £250.5m. in 2018, something Graeme attributes to a fall in low-margin, off-island voice revenues by £51.7m., partly offset by an increase from higher margin sectors within the international business.
‘We have got a very low margin, it’s less than 1% of margin on our voice trading business, it’s very high turnover but very low margin and actually all of the reduction in turnover you see last year is attributable to that.
‘That was a deliberate decision by JT to reduce our dependency on that part of the business.’
JT’s management team have assessed the group’s financial stability and liquidity over the next 18 months to a stressed scenario.
A sharp reduction in transactional revenue is anticipated, with a recovery period extending into 2021. They continue to monitor the cash position. Management has already secured £20m. additional funding with its existing revolving credit facility, with a peak utilisation of the RCF around March 2021 with some limited headroom remaining.
Steps to provide additional headroom that have not yet been factored into the model include further reducing planned capital expenditure, deferring dividend and tax payments and making further cuts to operating costs.
The business is strong, though, stressed its CEO. ‘JT is a strong, well-financed business, and we have already implemented sound financial planning measures to make sure that we have the firm foundations in place to continue serving our communities for many years to come.’
Words that will be welcome by customers across the Channel Islands and, indeed, globally.