TIDMJTC
RNS Number : 0819M
JTC PLC
12 September 2023
12 September 2023
JTC PLC
(the "Company") together with its subsidiaries (the "Group" or
"JTC")
Interim results for the period ended 30 June 2023
Outstanding financial performance, alongside further strategic
M&A, outlook ahead of market expectations
As reported Underlying*
H1 2023 H1 2022 Change H1 2023 H1 2022 Change
------------------------------- ------- ------- ------ ------- ------- ------
Revenue (GBPm) 121.5 93.0 +30.6% 121.5 93.0 +30.6%
------------------------------- ------- ------- ------ ------- ------- ------
EBITDA (GBPm) 36.5 25.3 +44.0% 40.2 30.7 +30.8%
------------------------------- ------- ------- ------ ------- ------- ------
EBITDA margin 30.0% 27.2% +2.8pp 33.1% 33.0% +0.1pp
------------------------------- ------- ------- ------ ------- ------- ------
Operating profit/EBIT (GBPm) 24.7 14.8 +66.7% 28.4 20.2 +40.5%
------------------------------- ------- ------- ------ ------- ------- ------
Profit before tax (GBPm) 11.9 21.0 -43.3% 19.7 16.9 +16.3%
------------------------------- ------- ------- ------ ------- ------- ------
Earnings per share (p)** 7.61 14.21 -46.5% 18.16 16.23 +11.9%
------------------------------- ------- ------- ------ ------- ------- ------
Cash conversion 113% 101% +12pp 113% 101% +12pp
------------------------------- ------- ------- ------ ------- ------- ------
Net debt (GBPm) 44.6 104.1 -59.5 28.0 92.2 -64.2
------------------------------- ------- ------- ------ ------- ------- ------
Interim dividend per share (p) 3.5 3.1 +12.9% 3.5 3.1 +12.9%
------------------------------- ------- ------- ------ ------- ------- ------
* For further information on our alternative performance
measures (APM) see the appendix to the CFO Review.
** Average number of shares (thousands) for H1 2023: 147,075 (H1 2022: 144,429)
OUTSTANDING FINANCIAL PERFORMANCE
-- Very strong net organic revenue growth of 21.0% (H1 2022:
9.5%), driven by the highly successful implementation of the
Group's growth strategies
-- Revenue +30.6% to GBP121.5m (H1 2022: GBP93.0m)
-- Underlying EBITDA +30.8% to GBP40.2m (H1 2022: GBP30.7m) with
an underlying EBITDA margin of 33.1% (H1 2022: 33.0%)
-- Record new business wins +15.9% to GBP14.6m (H1 2022: GBP12.6m)
-- Strong underlying cash conversion of 113% (H1 2022: 101%)
alongside the SDTC equity fundraise in June has resulted in a
significant reduction in leverage to 0.37x underlying EBITDA at
period end
-- Following completion of the SDTC deal post period end,
leverage is still expected to be below 2.0 times reported
underlying EBITDA by the year-end, as previously announced
-- Interim dividend +12.9% to 3.5p (H1 2022: 3.1p)
SUCCESSFUL STRATEGIC EXECUTION
-- Both the Group's ICS and PCS divisions performed extremely
well, delivering organic growth of 22.4% and 18.6% respectively
-- The lifetime value of the JTC client book now stands at
GBP1.6bn with an average lifespan of 14 years
-- The Group strengthened its position in the strategically
important US market through the acquisition of SDTC, which
completed on 2 August 2023. JTC is now the leading independent
provider of trust and administration services to the large, high
growth, US private trust market
-- H1 2023 strong organic performance was supported by greater
penetration of the Group's centrally developed offerings such as
Banking, Tax Compliance, and its Strategic Transformation services,
which together contributed incremental revenues in the period,
which we expect to continue to contribute to Group growth
STRONG GROWTH OUTLOOK AHEAD OF MARKET EXPECTATIONS
-- Strong growth momentum will continue with net organic growth
through 2023 expected to remain well above the top end of the
Group's medium-term revenue guidance, and the Group expects to
deliver full year results ahead of current market expectations
-- The addition of the SDTC business to JTC is expected to offer
significant growth synergies post the completion of integration
-- Galaxy era growth strategy to be achieved by the year end, two years ahead of plan
-- Continued strong pipeline of further consolidation
opportunities across both Divisions over the medium-term
-- New Cosmos era growth ambition to double the size of the
Group, relative to performance delivered at FY 2023, by 2027
-- All medium-term guidance metrics to remain as JTC commences
the Cosmos era: net organic revenue growth of 8% - 10% per annum;
underlying EBITDA margin of 33% - 38%; cash conversion of 85% - 90%
and net debt of between 1.5x - 2.0x underlying EBITDA
Nigel Le Quesne, CEO of JTC PLC, said:
"Today's excellent results and the continued growth of our
platform, including the successful acquisition of SDTC, which
further enhances our platform in the important US market, yet again
demonstrate the significant earnings power of JTC. Organic revenue
growth in the period has been outstanding and we continue to
successfully acquire and integrate great businesses that deliver
increasing returns, particularly from capturing incremental share
of wallet from our growing client base. The fact that this is being
achieved in a more challenging global environment proves how
powerful JTC's business model, and ability to innovate, really is.
At the core of this is our people, whose commitment to raise the
bar results after results, as collective owners of our Company, is
incredible.
By the end of 2023, we will have delivered our Galaxy era
business plan, resulting in a quadrupling of the size of the Group
since listing in 2018. The momentum in the business, coupled with
the long-term structural drivers in our sector, mean that we remain
as ambitious for the Group as ever and aim to once again double in
size during the Cosmos era, which will commence in 2024 and is
expected to run until 2027. We look forward to continuing to
deliver strong, consistent results, with compounding revenues, for
all of our shareholders year in and year out."
ENQUIRIES
JTC PLC +44 (0) 1534 700 000
Nigel Le Quesne, Chief Executive
Officer
Martin Fotheringham, Chief Financial
Officer
David Vieira, Chief Communications
Officer
Camarco
Geoffrey Pelham-Lane +44 (0) 7733 124 226
Sam Morris +44 (0) 7796 827 008
A presentation for analysts will be held at 09:30 BST today via
Zoom video conference. The slides and an audio-cast of the
presentation will subsequently be made available on the JTC website
www.jtcgroup.com/investor-relations
FORWARD LOOKING STATEMENTS
This announcement may contain forward looking statements. No
forward-looking statement is a guarantee of future performance and
actual results or performance or other financial condition could
differ materially from those contained in the forward looking
statements. These forward-looking statements can be identified by
the fact they do not relate only to historical or current facts.
They may contain words such as "may", "will", "seek", "continue",
"aim", "anticipate", "target", "projected", "expect", "estimate",
"intend", "plan", "goal", "believe", "achieve" or other words with
similar meaning. By their nature forward looking statements involve
risk and uncertainty because they relate to future events and
circumstances. A number of these influences and factors are outside
of the Company's control. As a result, actual results may differ
materially from the plans, goals and expectations contained in this
announcement. Any forward-looking statements made in this
announcement speak only as of the date they are made. Except as
required by the FCA or any applicable law or regulation, the
Company expressly disclaims any obligation or undertaking to
release publicly any updates or revisions to any forward-looking
statements contained in this announcement.
ABOUT JTC
JTC is a publicly listed, global professional services business
with deep expertise in fund, corporate and private client services.
Every JTC person is an owner of the business, and this fundamental
part of our culture aligns us with the best interests of all our
stakeholders. Our purpose is to maximize potential and our success
is built on service excellence, long-term relationships and
technology capabilities that drive efficiency and add value.
www.jtcgroup.com
CHIEF EXECUTIVE OFFICER'S REVIEW
Consistently delivering year in and year out
NIGEL LE QUESNE
CHIEF EXECUTIVE OFFICER
JTC has delivered uninterrupted growth for every one of its 35
years. This has been achieved in all conditions, regardless of
whether the global economy is strong or weak, or equity markets are
confident or uncertain. If further evidence of this was needed
during what has proved to be a period of significant macro-economic
and geopolitical instability, then our half year results are
precisely that, demonstrating yet again the consistent earnings
power of our business model through economic cycles. The fact that
we will achieve our Galaxy era goal of doubling the size of the
Group (in terms of revenue and EBITDA) by the end of 2023, some two
years earlier than originally anticipated, is a fantastic team
effort and provides great energy and momentum to the business.
H1 2023 FINANCIAL PERFORMANCE
Revenue grew 30.6% to GBP121.5m driven by record net organic
growth of 21.0% (H1 2022: 9.5%), significantly above our
medium-term guidance range of between 8% and 10%. Underlying EBITDA
rose by 30.8% to GBP40.2m (H1 2022: GBP30.7m), with an underlying
EBITDA margin to 33.1% (H1 2022: 33.0%). The very strong net
organic revenue growth was driven by strong annualised new business
wins (from both new and existing clients), which increased 15.9% to
a record GBP14.6m (H1 2022: GBP12.6m). There was also an impressive
improvement in underlying cash conversion to 113% (H1 2022: 101%),
reflecting the continued cash generative nature of our business
model. While leverage at the period end was very low at 0.37x, this
was due to the proceeds of the equity fundraise for the acquisition
of the South Dakota Trust Company ("SDTC"), which didn't complete
until after the period end on 2 August 2023. By the year end,
leverage is expected to be below 2.0x underlying EBITDA, consistent
with our medium-term guidance of between 1.5x and 2.0x underlying
EBITDA. Based on these results and the Board's confidence in JTC's
ability to continue to deliver consistent returns to shareholders,
our interim dividend has increased by 12.9% to 3.5 pence per
share.
INSTITUTIONAL CLIENT SERVICES DIVISION
Revenue increased 27.0% to GBP80.7m (H1 2022: GBP63.5m) and
underlying EBITDA was up 27.4% to GBP25.5m (H1 2022: GBP20.0m). The
underlying EBITDA margin rose by ten basis points to 31.6% (H1
2022: 31.5%). The Division delivered excellent net organic growth
on a last twelve months basis ("LTM") of 22.4% (H1 2022: 14.1%),
and the annualised value of new business wins rose 28% to a record
GBP10.9m (H1 2022: GBP8.5m), providing good revenue visibility of
future growth.
The ICS Division has benefited from a number of initiatives
delivered over a period of time to improve and extend the service
offering, talent and 'go to market' strategy. The strong net
organic growth was driven in particular by performance in the US,
the Channel Islands & UK and Luxembourg and through revenues
generated by our centrally developed banking, tax and regulatory
compliance and strategic transformation services. The Division
continues to invest in scaling its offering in Ireland and during
the period launched a consolidated Global AIFM Solutions service,
which currently spans Luxembourg, Ireland and Guernsey.
This performance is all the more impressive in that it has been
achieved without the benefit of any recent acquisitions,
demonstrating the increasing returns on capital being generated
from previously acquired businesses as they have been successfully
integrated within the ICS Division and the valuable synergies
realised. Stand out performers from the acquisitions completed in
recent years include the Employer Solutions business (formerly RBC
cees) and SALI Fund Services in the US, which completed in
2021.
PRIVATE CLIENT SERVICES DIVISION
Revenue increased strongly by 38.3% to GBP40.8m (H1 2022:
GBP29.5m) with a similarly impressive increase of 37.1% in
underlying EBITDA to GBP14.7m (H1 2022: GBP10.7m), with
contributions from strategic transformation services mandates such
as Amaro, Campari and Ottawa. The underlying EBITDA margin reduced
slightly to 36.0% (H1 2022: 36.3%), reflecting the first half
impact of the acquisition of New York Private Trust Company
("NYPTC"), which completed on 1 November 2022. Excluding this, the
Division's underlying EBITDA margin would have been 36.5%. LTM net
organic growth was a sector-leading 18.6% (H1 2022: 4.0%), driven
in part by the Amaro mandate coming on-stream, but even without
this, the Division would have delivered organic growth well above
guidance, reflecting growth in banking and tax and regulatory
compliance services, which demonstrate the important connection to
our Group Commercial Office. The annualised value of new business
wins was GBP3.7m (H1 2022: GBP4.1m), which whilst a lower figure is
due to an exceptional H1 2022 comparator, when the Amaro mandate
was won.
The acquisitions of NYPTC, which completed just prior to the
start of the period and SDTC, which completed just after the period
end, slightly ahead of schedule, have significantly strengthened
the Division's market leadership in the global trust company
industry. The integration of Delaware-based NYPTC, which offers a
broad range of fiduciary services, is progressing well. The
acquisition of SDTC, makes JTC the leading independent provider of
trust and administration services to the US private trust sector,
providing the benefits that come from scale in the very large and
fast-growing US market.
Our US PCS offering can now service both international and
domestic clients, it is worth noting that the US is home to the
largest number of ultra-high net worth individuals (UHNWI) of any
country in the world and it is estimated that the core addressable
market captures approximately US$1.2 trillion of assets. This
market has grown at a compound annual growth rate ("CAGR") of 9.4%
from 2018 to 2022 and is forecast to grow at a CAGR of 8.2% from
2023 to 2028 (source: Cerulli Associates). Similar to JTC, and a
key part of the strategic rationale for acquiring the business,
SDTC has a 22-year track record of consistent growth, with revenues
increasing at a CAGR of 33% from 2000 to 2022 while steadily
increasing its market share. SDTC also delivers high margins and
benefits from highly predictable fees, which when coupled with the
opportunities from an enormous and growing market, creates a
transformational platform opportunity for JTC in the US over the
medium to long-term.
OTHER GROWTH INITIATIVES
Key to our culture at JTC is that we never stand still or take
continued profitable growth for granted. Through investment in our
Group Commercial Office, which acts as a catalyst for both
Divisions, we have introduced other services of value to our
clients, including; banking, treasury, tax and regulatory
compliance, and our strategic transformation services. What all
these have in common is that they are complementary to our core
fund, corporate and private client business lines, which are the
bedrock of JTC. Our client book now has an average lifespan of some
14 years and the Lifetime Value Won (LVW)[1] in the period, based
on this lifespan, was a record GBP195.1m, up 16% (H1 2022:
GBP168.2m). This gives us visibility of at least GBP1.6 billion of
forward revenues from our existing client book, which is without
the addition of any new future mandates.
OUR GREATEST ASSET
I have also said before that none of what JTC has achieved to
date would be possible without the commitment and expertise of our
people. As we conclude our Galaxy era and look ahead to the Cosmos
era beginning in 2024, the same could be said about what is to
come. This is why having a business where every one of your
employees are also owners is so important. What I have said in the
past about the benefit of and commitment to ownership for all
employees couldn't be more relevant today when navigating the
current macro-economic volatility and as always, I extend my
sincere thanks to every member of our growing global team.
RISK
The principal risks facing the Group remain as set out in the
JTC Annual Report and Accounts 2022 (pages 50 to 53). The Group's
principal risks are periodically re-examined and reported by the
Chief Risk Officer to the Governance and Risk Committee with an
assessment on (i) their impact if they were to occur and (ii) the
likelihood of occurrence, together with a description of the
controls and mitigation in place to manage those controls and any
actions deemed necessary by the risk owner to further reduce the
assessed residual risk. Ongoing material risks include acquisition
risk, competitor and client demand risk, strategy risk, performance
of business risk, client and process risk, data security risk,
political/regulation risk, financial crime risk, fiduciary risk and
adequate resource risk.
Global macroeconomic developments and geopolitical tensions
heightened by the conflict in Ukraine, high inflation, higher
interest rates, the energy crisis, supply chain shortages and the
risk of a global economic downturn all present a particular set of
risks that have the potential to slow investment and global growth.
Whilst the Group is unable to control these risks we remain
vigilant to their impact and react accordingly e.g. to attract and
retain talent in a competitive employment market beset by wage
inflation, we believe that the business will continue to prove
resilient in the face of these challenges. Overall, we remain
satisfied as to the effectiveness of the Group's risk analysis,
management and culture, developed over 35 years of JTC
operations.
DIVID
The Board has declared an interim dividend of 3.5p per share, an
increase of 0.4p period on period (H1 2022: 3.1p). The interim
dividend will be paid on 20 October 2023 to shareholders on the
register as at close of business on the record date of 22 September
2023. The shares will become ex-dividend on 21 September 2023.
OUTLOOK
Based on these results, our step up in the delivery of
additional recurring revenues in H1, the exciting opportunities
from our latest acquisitions in the US, delivered by a highly
committed team, we remain confident in the Group's continued
success. As before, we will deliver this through a combination of
organic and inorganic growth. In terms of the M&A pipeline, we
continue to see potential opportunities (including some off market
such as the recent SDTC transaction) and will maintain our
selective and disciplined approach. Strong growth momentum will
continue with net organic growth through 2023 expected to remain
well above the top end of the Group's medium-term revenue guidance,
and the Group expects to deliver full year results ahead of current
market expectations
We are particularly pleased that we will achieve our Galaxy era
goal of doubling the business from where we finished 2020, by the
end of this year; some two years' earlier than planned and having
previously delivered a similar result in the Odyssey era, which ran
from 2018 to 2020. Our next business plan era, which we are calling
Cosmos, will commence in 2024 and we are again aiming to double the
Group by 2027, with a particular focus on leveraging the US
platform built during Galaxy. And, in the meantime, our medium-term
guidance metrics for responsible compounding delivery of achieving
between 8% to 10% net organic revenue growth, a 33% to 38%
underlying EBITDA margin, cash conversion of between 85% to 90% and
net debt of between 1.5 times and 2 times underlying EBITDA remain
intact.
In summary, JTC continues to extend its excellent track record
of profitable growth driven by consistent and innovative organic
growth, a disciplined approach to M&A, a robust and scalable
global platform, exceptional talent and our unique shared ownership
culture. Since our listing on the stock market in 2018, we will
have quadrupled the size of the Group and we aim to double it again
no later than the end of 2027. As such, we look forward to
continuing to deliver the performance our shareholders expect, year
in and year out.
NIGEL LE QUESNE
CHIEF EXECUTIVE OFFICER
Chief Financial Officer's review
Delivering long term value through exceptional revenue
growth
Martin Fotheringham
CHIEF FINANCIAL OFFICER
REVENUE
In H1 2023, revenue was GBP121.5m, an increase of GBP28.5m
(+30.6%) from H1 2022. Revenue growth on a constant currency basis
was +27.9% (H1 2022: +37.4%).
Net organic growth for the last twelve months (LTM) ended 30
June 2023 was a record 21.0% (H1 2022: 9.5%) with the rolling three
year average now reporting 12.7% (H1 2022: 9.1%).
Within organic growth, we have seen particularly strong volume
growth with a significant contribution coming from the expansion of
our Tax Compliance offering (heavily involved with Project Amaro)
as well as the introduction of our Treasury Services. The latter is
a positive endorsement of the creation and investment we have made
in the Group Commercial Office. We have embedded the revenues
associated with these services into the underlying business and can
see further opportunities for growth.
Our largest 15 clients represent only 11.5% (H1 2022: 11.6%) of
our annual revenue thereby demonstrating the lack of customer
concentration in the business. The new business pipeline was
healthy and at the period end was reported at GBP47.1m (31.12.2022:
GBP45.8m) increasing to GBP54.1m as at 1 September.
Net organic growth was driven by gross new business revenues for
the proceeding twelve months of 26.7% (H1 2022: 16.2%). This was
offset by reduced attrition of 5.7% (H1 2022: 6.7%), with the
three-year average now having fallen to 6.9% (H1 2022: 7.6%).
Notably, attrition levels have decreased for five successive
reporting periods, reflecting the increased lifetime value of our
book of business and long-term earnings stability. This is further
enhanced with the SDTC acquisition completed in August 2023.
The retention of revenues that were not end of life increased to
98.6% (H1 2022: 97.9%) and the rolling three-year average has now
improved to 97.9% (H1 2022: 97.5%).
As demonstrated by the geographical breakdown below, all regions
generated good growth with the US showing the highest growth by
region.
H1 2023 H1 2022
Revenue Revenue GBP +/- % +/-
--------------------- ---------- --------- ---------- ------
UK & Channel Islands GBP64.7m GBP51.6m +GBP13.1m +25.3%
US GBP25.3m GBP16.2m +GBP9.1m +55.6%
Rest of Europe GBP18.6m GBP16.4m +GBP2.2m +13.3%
Rest of the World GBP12.9m GBP8.8m +GBP4.2m +47.8%
GBP121.5m GBP93.0m +GBP28.5m +30.6%
---------- --------- -------------------------------- ------
LTM revenue growth, on a constant currency basis, is summarised
as follows:
LTM revenue Jun 22 GBP178.0m
------------------------------------- ---------
Lost - JTC decision (GBP0.4m)
------------------------------------- ---------
Lost - Moved service provider (GBP1.8m)
------------------------------------- ---------
Lost - End of life/no longer required (GBP7.1m)
------------------------------------- ---------
Net more from existing clients GBP33.5m
------------------------------------- ---------
New clients GBP10.6m
------------------------------------- ---------
Acquisitions* GBP14.7m
------------------------------------- ---------
LTM revenue Jun 23 GBP227.5m
------------------------------------- ---------
* When JTC acquires a business, the acquired book of clients are
defined as inorganic for the first two years of JTC ownership.
Acquired clients contributed an additional GBP14.7m in the LTM to
30 June 2023 and is broken down as follows: NYPTC GBP4.2m, EFS
GBP1.3m, SALI GBP8.2m, Ballybunion GBP0.6m, perfORM GBP0.1m, and
Segue GBP0.3m.
UNDERLYING EBITDA AND MARGIN PERFORMANCE
Underlying EBITDA in H1 2023 was GBP40.2m, an increase of
GBP9.5m (30.8%) from H1 2022.
The underlying EBITDA margin was 33.1% (H1 2022: 33.0%) and
although the macroeconomic environment remained uncertain, we are
pleased to have continued to deliver margins in line with our
medium-term guidance range.
As highlighted in the 2022 results, during periods of heightened
revenue growth above our medium-term guidance range, the required
upfront investment can inherently slow down margin progression.
Management considers this initial investment as a key allocation of
capital in order to ensure the continued longevity of our client
relationships and support future margin enhancements.
Management re-iterates its medium-term guidance range of 33% -
38%, albeit with the short-term expectation that performance will
continue to be towards the lower end of this guidance range during
periods of heightened revenue growth.
INSTITUTIONAL CLIENT SERVICES
Revenue increased by 27.0% when compared with H1 2022.
Net organic growth improved significantly to 22.4% (H1 2022:
14.1%) with strong growth in the US, Channel Islands & UK, and
Luxembourg. The rolling three year average for net organic growth
now stands at 14.1% (H1 2022: 9.6%).
Attrition for the Division was lower at 6.0% (H1 2022: 7.1%), of
which 5.0% were for end of life losses.
LTM revenue growth, on a constant currency basis, is summarised
below.
The Division's underlying EBITDA margin increased from 31.5% in
H1 2022 to 31.6% in H1 2023 and we are pleased that the margin
continues to improve given the ongoing momentum in the
division.
LTM REVENUE GROWTH ICS
------------------------------------- ---------
LTM revenue Jun 22 GBP118.9m
------------------------------------- ---------
Lost - JTC decision (GBP0.2m)
------------------------------------- ---------
Lost - Moved service provider (GBP0.9m)
------------------------------------- ---------
Lost - End of life/no longer required (GBP5.3m)
------------------------------------- ---------
Net more from existing clients GBP23.4m
------------------------------------- ---------
New clients GBP6.9m
------------------------------------- ---------
Acquisitions* GBP10.5m
------------------------------------- ---------
LTM revenue Jun 23 GBP153.3m
------------------------------------- ---------
* When JTC acquires a business, the acquired book of clients are
defined as inorganic for the first two years of JTC ownership.
Acquired clients contributed an additional GBP10.5m in the LTM to
30 June 2023 and is broken down as follows: EFS GBP1.3m, SALI
GBP8.2m, Ballybunion GBP0.6m, perfORM GBP0.1m, and Segue
GBP0.3m.
PRIVATE CLIENT SERVICES
Revenue increased by 38.3% when compared with H1 2022.
Net organic growth was 18.6% (H1 2022: 4.0%) with strong growth
in the Caribbean, US, and Channel Islands & UK. The rolling
three year average now stands at 10.8% (H1 2022: 8.6%).
Attrition for the Division was also lower at 4.9% (H1 2022:
6.1%), of which 3.0% were for end of life losses.
Net organic growth for the Division in H1 2022 had been
supressed whilst we onboarded the Amaro mandate. Note that even
without the Amaro revenues coming in during the current LTM period,
the Division would have been well above our medium-term guidance
range.
LTM revenue growth, on a constant currency basis, is summarised
below.
The Division's underlying EBITDA margin decreased slightly from
36.3% in H1 2022 to 36.0% in H1 2023. The Division continues to
perform well and excluding the recent NYPTC acquisition, the
underlying EBITDA margin would have been 36.5% and both of these
are comfortably within our medium-term guidance range.
LTM REVENUE GROWTH PCS
------------------------------------- ---------
LTM revenue Jun 22 GBP59.1m
------------------------------------- ---------
Lost - JTC decision (GBP0.2m)
------------------------------------- ---------
Lost - Moved service provider (GBP0.9m)
------------------------------------- ---------
Lost - End of life/no longer required (GBP1.8m)
------------------------------------- ---------
Net more from existing clients GBP10.1m
------------------------------------- ---------
New clients GBP3.7m
------------------------------------- ---------
Acquisitions* GBP4.2m
------------------------------------- ---------
LTM revenue Jun 23 GBP74.2m
------------------------------------- ---------
* When JTC acquires a business, the acquired book of clients are
defined as inorganic for the first two years of JTC ownership.
Acquired clients contributed an additional GBP4.2m in the LTM to 30
June 2023 and all of which can be attributed to NYPTC GBP4.2m.
PROFIT BEFORE TAX
The reported profit before tax was GBP11.9m (H1 2022:
GBP21.0m).
The depreciation and amortisation charge increased to GBP11.8m
from GBP10.5m in H1 2022. Of the GBP1.3m increase, GBP0.6m was as a
result of previously acquired intangible assets and GBP0.7m as a
result of increased software and customer contracts, the latter
driven by costs incurred in 2022 to fulfil the Amaro mandate.
Adjusting for non-underlying items, the underlying profit before
tax increased by 16.3% to GBP19.7m (H1 2022: GBP16.9m).
The relative increase was lower than the 30.8% growth reported
in underlying EBITDA and this was due to the increased interest
expense on our borrowings that fund M&A activity and an
underlying foreign exchange rate loss of GBP1.4m (H1 2022: GBP2.2
gain).
The interest rate applied to our loan facilities is determined
using SONIA plus a margin based on net leverage calculations and
the base rate increases have resulted in a GBP2.4m increase in H1
2023 to the interest expense on our borrowings.
NON-UNDERLYING ITEMS
Non-underlying items incurred in the period totalled a GBP7.8m
debit (H1 2022: GBP4.1m credit) and comprised the following:
H1 2023 H1 2022
GBPm GBPm
---------------------------------------------------- ------- -------
EBITDA
---------------------------------------------------- ------- -------
Acquisition and integration costs 3.5 0.5
---------------------------------------------------- ------- -------
Office start-up costs 0.1 -
---------------------------------------------------- ------- -------
Revision of ICS operating model - 0.4
---------------------------------------------------- ------- -------
Employee Incentive Plan (EIP) - 4.5
---------------------------------------------------- ------- -------
Other costs 0.1 -
---------------------------------------------------- ------- -------
Total non-underlying items within EBITDA 3.7 5.4
---------------------------------------------------- ------- -------
Profit before tax
---------------------------------------------------- ------- -------
Items impacting EBITDA 3.7 5.4
---------------------------------------------------- ------- -------
Gain on revaluation of contingent consideration (0.2) (0.4)
---------------------------------------------------- ------- -------
Foreign exchange losses/(gains) 4.3 (9.0)
---------------------------------------------------- ------- -------
Total non-underlying items within profit before tax 7.8 (4.1)
---------------------------------------------------- ------- -------
Acquisition and integration costs were significantly higher
(+GBP3.0m) than the prior period due to GBP2.6m of costs incurred
in relation to the SDTC acquisition, which was announced pre period
end but completed in early August. There were also GBP0.2m of costs
incurred in relation to the NYPTC acquisition that completed in Q4
2022.
The business incurred GBP0.1m of non-underlying office start-up
costs in relation to establishing the infrastructure to trade in
new offices in Austria and the Bahamas. Our experience is that
these require significant up-front investment in personnel in
advance of trading and the generation of revenues.
The H1 2022 EIP expense related to the second tranche of the
awards made in 2021 which vested in July 2022.
The foreign exchange loss of GBP4.3m relates to the revaluation
of intercompany loans (GBP9.0m gain in H1 2022). Management
consider these foreign exchange movements to be non-underlying as
they are unrealisable losses/(gains) as the loans are eliminated
upon consolidation.
EARNINGS PER SHARE
Basic EPS decreased by 46.5% to 7.61p but this was as a result
of the above non-underlying items. Adjusted underlying basic EPS
increased by 11.9% and was 18.16p (H1 2022: 16.23p).
Adjusted underlying basic EPS reflects the profit for the period
adjusted to remove the impact of non-underlying items, amortisation
of acquired intangible assets and associated deferred tax,
amortisation of loan arrangement fees and unwinding of net present
value discounts in relation to contingent consideration.
CASH FLOW AND DEBT
Underlying cash generated from operations was GBP45.2m (H1 2022:
GBP30.9m) and the underlying cash conversion was 113% (H1 2022:
101%).
Reported net debt includes regulatory trapped cash. Underlying
net debt excludes this and at the period end was GBP28.0m compared
with GBP104.8m at 31 December 2022. This significant reduction was
driven by the aforementioned strong cash collection and the
proceeds from the June equity raise associated with the SDTC
acquisition.
In anticipation of the acquisition of SDTC, on 15 June 2023, our
lenders agreed to increase our revolving credit facility (RCF) by
GBP50m to a total commitment of GBP275m.
Leverage at the period end was 0.37x underlying EBTIDA. On 30
June 2023 the Group had undrawn funds of GBP169.3m available from
the GBP275m facility. On 1 August 2023 GBP118m was withdrawn from
the banking facility to provide the necessary proceeds to complete
the SDTC acquisition.
MARTIN FOTHERINGHAM
CHIEF FINANCIAL OFFICER
Statement of directors' responsibilities in respect of the
interim financial statements
For the 6 month period ended 30 June 2023
"The directors' confirm that these condensed interim financial
statements have been prepared in accordance with International
Accounting Standard 34, 'Interim Financial Reporting', as adopted
by the European Union and that the interim management report
includes a fair review of the information required by DTR 4.2.7 and
DTR 4.2.8, namely:
-- an indication of important events that have occurred during
the first six months and their impact on the condensed set of
financial statements, and a description of the principal risks and
uncertainties for the remaining six months of the financial year;
and
-- material related-party transactions in the first six months and any material changes in the related-party transactions described in the last annual report."
Nigel Le Quesne Martin Fotheringham
Chief Executive Officer Chief Financial Officer
11 September 2023 11 September 2023
Appendix: Reconciliation of reported results to Alternative
Performance Measures (APM s )
In order to assist the reader's understanding of the financial
performance of the Group, APMs have been included to better reflect
the underlying activities of the Group excluding specific items as
set out in note 8 in the interim financial statements. The Group
appreciates that APMs are not considered to be a substitute for, or
superior to, IFRS measures but believes that the selected use of
these may provide stakeholders with additional information which
will assist in the understanding of the business.
An explanation of our key APMs and link to equivalent statutory
measures has been detailed below.
Alternative performance measure Closest equivalent statutory measure APM Definition
------------------------------- ------------------------------------ -----------------------------------------------
net Organic revenue growth % Revenue Definition: Revenue growth from clients not
acquired through business combinations and
reported
on a constant currency basis where the prior
year results are restated using current year
consolidated income statement exchange rates.
Acquired clients are defined as inorganic for
the first two years of JTC ownership.
Purpose and strategic link: Enables the
business to monitor growth excluding
acquisitions
and the impact of external exchange rate
factors. The current strategy is to double the
size
of the business by a mix of organic and
acquisition growth and the ability to monitor
and
set clear expectations on organic growth is
vital to the successful execution of its
business
strategy.
Management's medium-term guidance range is 8% -
10%.
------------------------------- ------------------------------------ -----------------------------------------------
Underlying EBITDA % Profit/(loss) Definition: Earnings before interest, tax,
depreciation and amortisation excluding
non-underlying
items (see note 8 of the financial statements).
Purpose and strategic link: An
industry-recognised alternative measure of
performance which
has been at the heart of the business since its
inception and therefore fundamental to the
performance management of all business units.
The measure enables the business to measure the
relative profitability of servicing clients.
Management's medium-term guidance range is 33%
- 38%.
------------------------------- ------------------------------------ -----------------------------------------------
Underlying cash conversion % Net cash from operating activities Definition: The conversion of underlying EBITDA
into cash excluding
non-underlying items.
Purpose and strategic link: Measures how
effectively the business is managing its
operating
cash flows. It differs to net cash from
operating profits as it excludes non-underlying
items
and tax, the latter in order to better compare
operating profitability to cash from operating
activities.
Management's medium-term guidance range is 85%
- 90%.
------------------------------- ------------------------------------ -----------------------------------------------
Underlying leverage Cash and cash equivalents Definition: Leverage ratio showing the relative
amount of third party debt (net of cash held
in the business) that we have in comparison to
underlying LTM EBITDA.
Purpose and strategic link: Ensures Management
can measure and control exposure to reliance
on third party debt in support of its inorganic
growth.
Management's medium-term guidance range is 1.5x
- 2.0x.
------------------------------- ------------------------------------ -----------------------------------------------
Adjusted underlying EPS (p) Basic Earnings Per Share Definition: Reflects the profit after tax for
the period adjusted to remove the impact of
non-underlying items. Additionally, a number of
other items relating to the Group's acquisition
activities, including amortisation of acquired
intangible assets and associated deferred tax,
amortisation of loan arrangement fees and
unwinding of NPV discounts in relation to
contingent
consideration, are removed.
Purpose and strategic link: Presents an
adjusted underlying EPS which is used more
widely
by external investors and analysts, and is in
addition the basis upon which the dividend is
calculated.
------------------------------- ------------------------------------ -----------------------------------------------
A reconciliation of our APMs to their closest equivalent
statutory measure has been provided below.
1. ORGANIC GROWTH
H1 2023 H1 2022
GBPm GBPm
-------------------------------------------------------------- ------- -------
Reported prior year full year revenue (2021 / 2020) 147.5 115.1
-------------------------------------------------------------- ------- -------
Less: reported prior year interim revenue (H1 2021, H1 2020) (67.0) (53.7)
-------------------------------------------------------------- ------- -------
Plus: reported interim revenue (H1 2022 / H1 2021) 93.0 67.0
-------------------------------------------------------------- ------- -------
Less: impact of exchange rate restatement* (4.5) 0.4
-------------------------------------------------------------- ------- -------
Less: acquisition revenues (12.4) (5.6)
-------------------------------------------------------------- ------- -------
a. Prior period LTM organic revenue 165.6 123.2
-------------------------------------------------------------- ------- -------
Reported prior year full year revenue (2022 / 2021) 200.0 147.5
-------------------------------------------------------------- ------- -------
Less: reported prior year interim revenue (H1 2022 / H1 2021) (93.0) (67.0)
-------------------------------------------------------------- ------- -------
Plus: reported interim revenue (H1 2023 / H1 2022) 121.5 93.0
-------------------------------------------------------------- ------- -------
Less: impact of exchange rate restatement* (1.1) 0.9
-------------------------------------------------------------- ------- -------
Less: acquisition revenues (27.1) (39.3)
-------------------------------------------------------------- ------- -------
b. Current period LTM organic revenue 200.3 135.1
-------------------------------------------------------------- ------- -------
Net organic growth % (b / a) -1 21.0% 9.5%
-------------------------------------------------------------- ------- -------
* Impact of restating LTM revenue on a constant currency basis
using the H1 2023 / H1 2022 average rates
2. UNDERLYING EBITDA
H1 2023 H1 2022
GBPm GBPm
------------------------------------ ------- -------
Reported profit 11.2 20.5
------------------------------------ ------- -------
Add:
------------------------------------ ------- -------
Income tax 0.8 0.5
------------------------------------ ------- -------
Finance cost 7.5 5.4
------------------------------------ ------- -------
Finance income (0.3) (0.0)
------------------------------------ ------- -------
Other losses/(gains) 5.5 (11.6)
------------------------------------ ------- -------
Depreciation and amortisation 11.8 10.5
------------------------------------ ------- -------
Non-underlying items within EBITDA* 3.7 5.4
------------------------------------ ------- -------
Underlying EBITDA 40.2 30.7
------------------------------------ ------- -------
Underlying EBITDA % 33.1% 33.0%
------------------------------------ ------- -------
* As set out in note 8 in the interim financial statements
3. UNDERLYING CASH CONVERSION
H1 2023 H1 2022
GBPm GBPm
--------------------------------------------- ------- -------
Net cash generated from operating activities 41.5 28.7
--------------------------------------------- ------- -------
Less:
--------------------------------------------- ------- -------
Non-underlying cash items* 1.6 1.5
--------------------------------------------- ------- -------
Income taxes paid 2.1 0.7
--------------------------------------------- ------- -------
a. Underlying cash generated from operations 45.2 30.9
--------------------------------------------- ------- -------
b. Underlying EBITDA 40.2 30.7
--------------------------------------------- ------- -------
Underlying cash conversion (a / b) 113% 101%
--------------------------------------------- ------- -------
* As set out in note 19.2 in the interim financial statements
4. UNDERLYING LEVERAGE
H1 2023 H1 2022
GBPm GBPm
-------------------------- ------- -------
Cash and cash equivalents 75.7 60.9
-------------------------- ------- -------
Bank debt (103.7) (153.1)
-------------------------- ------- -------
Other debt - -
-------------------------- ------- -------
a. Net debt - underlying (28.0) (92.2)
-------------------------- ------- -------
b. LTM underlying EBITDA 75.5 57.2
-------------------------- ------- -------
Leverage (a / b) 0.37 1.61
-------------------------- ------- -------
5. ADJUSTED UNDERLYING EPS
H1 2023 H1 2022
GBPm GBPm
----------------------------------------------------------------------------------------------- ------- -------
Profit for the year as per basic EPS 11.2 20.5
----------------------------------------------------------------------------------------------- ------- -------
Less:
----------------------------------------------------------------------------------------------- ------- -------
Non-underlying items* 7.8 (4.1)
----------------------------------------------------------------------------------------------- ------- -------
Amortisation of customer relationships, acquired software and brands 6.5 5.9
----------------------------------------------------------------------------------------------- ------- -------
Amortisation of loan arrangement fees 0.4 0.6
----------------------------------------------------------------------------------------------- ------- -------
Unwinding of NPV discounts for contingent consideration 1.6 1.7
----------------------------------------------------------------------------------------------- ------- -------
Temporary tax differences arising on amortisation of customer relationships, acquired software
and brands (0.8) (1.2)
----------------------------------------------------------------------------------------------- ------- -------
a. Adjusted underlying profit for the year 26.7 23.4
----------------------------------------------------------------------------------------------- ------- -------
b. Weighted average number of shares 147.1 144.4
----------------------------------------------------------------------------------------------- ------- -------
Adjusted underlying EPS (a / b) 18.16 16.23
----------------------------------------------------------------------------------------------- ------- -------
* As set out in note 8 in the financial statements
Independent review report to JTC PLC
Report on the condensed consolidated interim financial
statements
Our conclusion
We have reviewed JTC PLC's condensed consolidated interim
financial statements (the "interim financial statements") in the
Interim Financial Report (the "interim financial report") of JTC
PLC for the 6-month period ended 30 June 2023 (the "period").
Based on our review, nothing has come to our attention that
causes us to believe that the interim financial statements are not
prepared, in all material respects, in accordance with
International Accounting Standard 34, 'Interim Financial
Reporting', as adopted by the European Union and the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority.
The interim financial statements comprise:
-- the condensed consolidated interim balance sheet as at 30 June 2023;
-- the condensed consolidated interim income statement for the period then ended;
-- the condensed consolidated interim statement of comprehensive
income for the period then ended;
-- the condensed consolidated interim statement of changes in equity for the period then ended;
-- the condensed consolidated interim statement of cash flows for the period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the interim
financial report have been prepared in accordance with
International Accounting Standard 34, 'Interim Financial
Reporting', as adopted by the European Union and the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International
Standard on Review Engagements 2410, 'Review of Interim Financial
Information Performed by the Independent Auditor of the Entity'
issued by the International Auditing and Assurance Standards Board.
A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the interim
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The interim financial report, including the interim financial
statements, is the responsibility of, and has been approved by, the
directors. The directors are responsible for preparing the interim
financial report in accordance with International Accounting
Standard 34, 'Interim Financial Reporting', and the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority.
Our responsibility is to express a conclusion on the interim
financial statements in the interim financial report based on our
review. This report, including the conclusion, has been prepared
for and only for the company for the purpose of complying with the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority and for no other purpose. We
do not, in giving this conclusion, accept or assume responsibility
for any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
PricewaterhouseCoopers CI LLP
Chartered Accountants
Jersey, Channel Islands
11 September 2023
(a) The maintenance and integrity of the JTC PLC website is the
responsibility of the directors; the work carried out by the
auditors does not involve consideration of these matters and,
accordingly, the auditors accept no responsibility for any changes
that may have occurred to the financial statements since they were
initially presented on the website.
(b) Legislation in Jersey governing the preparation and
dissemination of financial statements may differ from legislation
in other jurisdictions .
JTC PLC
INTERIM FINANCIAL REPORT 30 JUNE 2023
UNAUDITED
Condensed consolidated interim income statement
Condensed consolidated interim statement of comprehensive
income
Condensed consolidated interim balance sheet
Condensed consolidated interim statement of changes in
equity
Condensed consolidated interim statement of cash flows
Notes to the condensed consolidated interim financial
statements
1. Reporting entity
2. Significant changes in the current reporting period
3. Basis of preparation
4. Significant accounting policies and standards
5. Critical accounting estimates and judgements
6. Segmental reporting
7. Staff expenses
8. Non-underlying items
9. Other net (losses)/gains
10. Finance cost
11. Income tax
12. Earnings Per Share
13. Goodwill and other intangible assets
14. Share capital and reserves
15. Trade and other payables
16. Loans and borrowings
17. Other non-financial liabilities
18. Financial risk and capital management
19. Cash flow information
20. Related party transactions
21. Contingencies
22. Events occurring after the reporting period
CONDENSED CONSOLIDATED INTERIM INCOME STATEMENT
GBP'000 Note H1 2023 H1 2022
---------------------------------------------- ---- -------- --------
Revenue 6 121,492 93,022
Staff expenses 7 (61,616) (51,666)
Other operating expenses (22,038) (15,213)
Credit impairment losses (1,466) (1,160)
Other operating income 22 21
Share of profit of equity-accounted investee 101 333
---------------------------------------------- ---- -------- --------
Earnings before interest, taxes, depreciation
and amortisation ("EBITDA") 36,495 25,337
---------------------------------------------- ---- -------- --------
Comprising:
Underlying EBITDA 40,174 30,714
Non-underlying items 8 (3,679) (5,377)
---------------------------------------------- ---- -------- --------
36,495 25,337
---------------------------------------------- ---- -------- --------
Depreciation and amortisation (11,813) (10,530)
---------------------------------------------- ---- -------- --------
Profit from operating activities 24,682 14,807
---------------------------------------------- ---- -------- --------
Other net (losses)/gains 9 (5,530) 11,622
Finance income 323 15
Finance cost 10 (7,536) (5,411)
---------------------------------------------- ---- -------- --------
Profit before tax 11,939 21,033
---------------------------------------------- ---- -------- --------
Comprising:
Underlying profit before tax 19,708 16,942
Non-underlying items 8 (7,769) 4,091
---------------------------------------------- ---- -------- --------
11,939 21,033
---------------------------------------------- ---- -------- --------
Income tax 11 (753) (513)
---------------------------------------------- ---- -------- --------
Profit for the period 11,186 20,520
---------------------------------------------- ---- -------- --------
Earnings per Ordinary share ("EPS") Pence Pence
---------------------------------------------- ---- -------- --------
Basic EPS 12.1 7.61 14.21
Diluted EPS 12.2 7.54 13.96
---------------------------------------------- ---- -------- --------
The above condensed consolidated interim income statement should
be read in conjunction with the accompanying notes.
CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE
INCOME
GBP'000 Note H1 2023 H1 2022
----------------------------------------------- ---- -------- -------
Profit for the period 11,186 20,520
----------------------------------------------- ---- -------- -------
Items that may be reclassified to profit
or loss:
Exchange differences on translation of foreign
operations (net of tax) 18.1 (10,665) 20,541
----------------------------------------------- ---- -------- -------
Total comprehensive income for the period
(net of tax) 521 41,061
----------------------------------------------- ---- -------- -------
The above condensed consolidated interim statement of
comprehensive income should be read in conjunction with the
accompanying notes.
CONDENSED CONSOLIDATED INTERIM BALANCE SHEET
GBP'000 Note 30.06.2023 31.12.2022
-------------------------------- ---- ---------- ----------
Assets
Property, plant and equipment 45,952 49,566
Goodwill 13 352,408 363,708
Other intangible assets 13 116,871 128,020
Investments 3,506 3,156
Other non-financial assets 2,218 2,369
Other receivables 226 535
Deferred tax assets 69 143
-------------------------------- ---- ---------- ----------
Total non-current assets 521,250 547,497
-------------------------------- ---- ---------- ----------
Trade receivables 32,891 33,290
Work in progress 12,262 12,525
Accrued income 28,436 23,911
Other non-financial assets 8,704 5,983
Other receivables 4,360 3,827
Cash and cash equivalents 75,726 48,861
-------------------------------- ---- ---------- ----------
Total current assets 162,379 128,397
-------------------------------- ---- ---------- ----------
Total assets 683,629 675,894
-------------------------------- ---- ---------- ----------
Equity
Share capital 14.1 1,595 1,491
Share premium 14.1 350,993 290,435
Own shares 14.2 (3,912) (3,697)
Capital reserve 25,654 24,361
Translation reserve 5,314 15,979
Retained earnings 14.3 72,776 71,648
-------------------------------- ---- ---------- ----------
Total equity 452,420 400,217
-------------------------------- ---- ---------- ----------
Trade and other payables 15 3,481 26,896
Loans and borrowings 16 103,741 153,622
Lease liabilities 37,438 40,602
Deferred tax liabilities 10,953 11,184
Other non-financial liabilities 17 950 788
Provisions 1,928 1,884
-------------------------------- ---- ---------- ----------
Total non-current liabilities 158,491 234,976
-------------------------------- ---- ---------- ----------
Trade and other payables 15 43,058 23,424
Lease liabilities 3,832 4,292
Other non-financial liabilities 17 22,017 8,628
Current tax liabilities 3,610 4,088
Provisions 201 269
-------------------------------- ---- ---------- ----------
Total current liabilities 72,718 40,701
-------------------------------- ---- ---------- ----------
Total equity and liabilities 683,629 675,894
-------------------------------- ---- ---------- ----------
The above condensed consolidated interim balance sheet should be
read in conjunction with the accompanying notes.
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN
EQUITY
For the period ended 30 June 2023
-----------------------------------------------------------------------
Attributable to owners of JTC PLC
-----------------------------------------------------------------------
Share Share Own Capital Translation Retained Total
GBP'000 Note capital premium shares reserve reserve earnings equity
----------------------- ---- -------- -------- ------- -------- ----------- --------- --------
Balance at 1 January
2023 1,491 290,435 (3,697) 24,361 15,979 71,648 400,217
Profit for the period - - - - - 11,186 11,186
Other comprehensive
loss for the period - - - - (10,665) - (10,665)
----------------------- ---- -------- -------- ------- -------- ----------- --------- --------
Total comprehensive
income for the period - - - - (10,666) 11,186 520
----------------------- ---- -------- -------- ------- -------- ----------- --------- --------
Issue of share capital 14.1 104 60,558 - - - - 60,662
Share-based payment
expense 7 - - - 1,293 - - 1,293
Movement of own shares 14.2 - - (215) - - - (215)
Dividends paid 14.3 - - - - - (10,058) (10,058)
----------------------- ---- -------- -------- ------- -------- ----------- --------- --------
Balance at 30 June
2023 1,595 350,993 (3,912) 25,654 5,314 72,776 452,419
----------------------- ---- -------- -------- ------- -------- ----------- --------- --------
For the period ended 30 June 2022
----------------------------------------------------------------------
Attributable to owners of JTC PLC
----------------------------------------------------------------------
Share Share Own Capital Translation Retained Total
GBP'000 capital premium shares reserve reserve earnings equity
---------------------------- -------- -------- ------- -------- ----------- --------- -------
Balance at 1 January
2022 1,476 285,852 (3,366) 17,536 (5,335) 48,462 344,625
Profit for the period - - - - - 20,520 20,520
Other comprehensive income
for the period - - - - 20,541 - 20,541
---------------------------- -------- -------- ------- -------- ----------- --------- -------
Total comprehensive income
for the period - - - - 20,541 20,520 41,061
---------------------------- -------- -------- ------- -------- ----------- --------- -------
Issue of share capital 15 1,985 - - - - 2,000
Share-based payment expense - - - 977 - - 977
EIP share-based payment
expense - - - 4,330 - - 4,330
Movement of own shares - - (11) - - - (11)
---------------------------- -------- -------- ------- -------- ----------- --------- -------
Balance at 30 June 2022 1,491 287,837 (3,377) 22,843 15,206 68,982 392,982
---------------------------- -------- -------- ------- -------- ----------- --------- -------
The above condensed consolidated interim statement of changes in
equity should be read in conjunction with the accompanying
notes.
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS
GBP'000 Note H1 2023 H1 2022
----------------------------------------------- ---- -------- -------
Cash generated from operations 19.1 43,639 29,420
Income taxes paid (2,130) (740)
----------------------------------------------- ---- -------- -------
Net movement in cash generated from operations 41,509 28,680
----------------------------------------------- ---- -------- -------
Comprising:
Underlying cash generated from operations 45,219 30,906
Non-underlying cash items 19.2 (1,580) (1,486)
----------------------------------------------- ---- -------- -------
43,639 29,420
----------------------------------------------- ---- -------- -------
Investing activities
Interest received 322 15
Property, plant and equipment (777) (841)
Intangible assets (1,462) (3,606)
Business combinations (net of cash acquired) (1,392) (33)
Investment (250) -
Costs to obtain or fulfil a contract (465) (1,234)
Loans to related parties (160) -
Net cash used in investing activities (4,184) (5,699)
----------------------------------------------- ---- -------- -------
Financing activities
Proceeds from the issue of shares 62,000 -
Share issuance costs (1,713) (169)
Dividends paid (10,058) -
Repayment of loans and borrowings (50,000) -
Interest paid on loans and borrowings (4,668) (2,312)
Principal paid on lease liabilities (3,040) (2,983)
Interest paid on lease liabilities (645) (633)
----------------------------------------------- ---- -------- -------
Net cash used in financing activities (8,124) (6,097)
----------------------------------------------- ---- -------- -------
Net increase in cash and cash equivalents 29,201 16,884
----------------------------------------------- ---- -------- -------
Cash and cash equivalents at start of the
period 48,861 39,326
Effect of foreign exchange rate changes on
cash and cash equivalents (2,336) 4,738
----------------------------------------------- ---- -------- -------
Cash and cash equivalents at end of the period 75,726 60,948
----------------------------------------------- ---- -------- -------
The above condensed consolidated interim statement of cash flows
should be read in conjunction with the accompanying notes.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
1. REPORTING ENTITY
JTC PLC ("the Company") was incorporated on 12 January 2018 and
is domiciled in Jersey, Channel Islands. The address of the
Company's registered office is 28 Esplanade, St Helier, Jersey.
The condensed consolidated interim financial statements of the
Company for the period from 1 January 2023 to 30 June 2023 comprise
the Company and its subsidiaries (together "the Group" or "JTC")
and the Group's interest in an associate and investments.
2. SIGNIFICANT CHANGES IN THE CURRENT REPORTING PERIOD
"The business performance has remained at a consistently strong
level during the six months to 30 June 2023. Despite the depressed
global macroeconomic outlook and continued inflationary pressures
the business has continued to perform well and meet the
expectations of the Board."
There were no significant transactions or events during the
period that affected the financial position and performance.
For a detailed discussion about the Group's performance and
financial position, please refer to the Chief Financial Officer's
review.
3. BASIS OF PREPARATION
The condensed consolidated interim financial statements (the
"interim financial statements") for the six months to 30 June 2023
have been prepared in accordance with IAS 34 'Interim Financial
Reporting' as adopted by the European Union ("EU"), the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority and Companies (Jersey) Law 1991. The
interim financial statements are presented in pounds sterling
(GBP), which is the functional and reporting currency of the
Company. They do not include all the information required for a
complete set of International Financial Reporting Standards
("IFRS") financial statements. Accordingly, the interim financial
statements should be read in conjunction with the annual
consolidated financial statements for the year ended 31 December
2022, which have been prepared in accordance with IFRS as adopted
by the EU. Selected explanatory notes are included to explain
events and transactions that are significant to an understanding of
the changes in the Group's financial position and performance since
the last annual consolidated financial statements as at and for the
year ended 31 December 2022.
The Group has adopted the going concern basis of accounting in
preparing the interim financial statements. The Directors are
confident that the Group will meet its day-to-day working capital
requirements through its cash-generating activities and bank
facilities. The Group's forecasts and projections, taking account
of possible changes in trading performance, show that the Group
should be able to operate within the level of its current
facilities. The Directors therefore have a reasonable expectation
that the Group has adequate resources to continue in operational
existence for the foreseeable future, being at least 12 months from
the date of approval of these interim financial statements.
These interim financial statements were approved by the Board on
11 September 2023 and have been reviewed but not audited by the
Group's external auditors.
4. SIGNIFICANT ACCOUNTING POLICIES AND STANDARDS
The accounting policies applied in these condensed consolidated
interim financial statements are the same as those applied in the
Group's consolidated financial statements as at and for the year
ended 31 December 2022.
To the extent relevant, all IFRS standards and interpretations
including amendments that were in issue and effective from 1
January 2023, have been adopted by the Group from 1 January 2023.
The Group has not early adopted any standard, interpretation or
amendment that has been issued but is not yet effective. Several
amendments apply for the first time in 2023, but they do not have
an impact on these condensed consolidated interim financial
statements.
5. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
In the application of the Group's accounting policies,
Management are required to make judgements, estimates and
assumptions about the carrying amounts of assets and liabilities
that are not readily apparent from other sources. The estimates and
associated assumptions are regularly evaluated based on historical
experience, current circumstances, expectation of future events and
other factors that are considered to be relevant. Actual results
may differ from these estimates.
In preparing these condensed interim financial statements, the
significant judgements made by Management in applying the Group's
accounting policies and the key sources of estimation uncertainty
were the same as those that applied to the consolidated financial
statements for the year ended 31 December 2022.
6. SEGMENTAL REPORTING
6.1. BASIS OF SEGMENTATION
The Group has a multi-jurisdictional footprint and the core
focus of operations is on providing services to its institutional
and private client base, with revenues from alternative asset
managers, financial institutions, corporates, high-net-worth and
ultra-high-net-worth individuals and family office clients.
Recognised revenue is generated from external customers.
The Chief Executive Officer and Chief Financial Officer are
together the Chief Operating Decision Makers of the Group and
determine the appropriate business segments to monitor financial
performance. Each segment is defined as a set of business
activities generating a revenue stream determined by divisional
responsibility and the management information reviewed by the
Board. They have determined that the Group has two reportable
segments: these are Institutional Client Services ("ICS") and
Private Client Services ("PCS").
6.2. SEGMENTAL INFORMATION
The table below shows the segmental information provided to the
Board for the two reportable segments (ICS and PCS) on an
underlying basis:
ICS PCS Total
------------------ ------------------ ------------------
GBP'000 H1 2023 H1 2022 H1 2023 H1 2022 H1 2023 H1 2022
------------------------- -------- -------- -------- -------- -------- --------
Revenue 80,692 63,521 40,800 29,501 121,492 93,022
Direct staff costs (33,729) (27,019) (15,672) (11,354) (49,401) (38,373)
Other direct costs (1,408) (1,061) (1,649) (722) (3,057) (1,783)
------------------------- -------- -------- -------- -------- -------- --------
Underlying gross profit 45,555 35,441 23,479 17,425 69,034 52,866
Underlying gross profit
margin % 56.5% 55.8% 57.5% 59.1% 56.8% 56.8%
Indirect staff costs (8,153) (5,290) (3,498) (3,955) (11,651) (9,245)
Other operating expenses (11,931) (10,160) (5,401) (3,101) (17,332) (13,261)
Other income 15 9 108 345 123 354
------------------------- -------- -------- -------- -------- -------- --------
Underlying EBITDA 25,486 20,000 14,688 10,714 40,174 30,714
Underlying EBITDA margin
% 31.6% 31.5% 36.0% 36.3% 33.1% 33.0%
------------------------- -------- -------- -------- -------- -------- --------
The Board evaluates segmental performance based on revenue,
underlying gross profit and underlying EBITDA. Profit before income
tax is not used to measure the performance of the individual
segments as items such as depreciation, amortisation of
intangibles, other net (losses)/gains and net finance costs are not
allocated to individual segments. Consistent with the
aforementioned reasoning, segment assets and liabilities are not
reviewed regularly on a by-segment basis and are therefore not
included in segmental reporting.
6.3. GEOGRAPHICAL INFORMATION
The table below shows revenue generated by the geographical
location of the contracting Group entity.
Increase/(decrease)
--------------------- -------- -------- ---------------------
H1 2023 H1 2022
GBP'000 GBP'000 GBP'000 %
--------------------- -------- -------- ------------ -------
UK & Channel Islands 64,675 51,605 13,070 25.3%
US 25,279 16,246 9,033 55.6%
Rest of Europe 18,613 16,423 2,190 13.3%
Rest of the World 12,925 8,748 4,177 47.8%
--------------------- -------- -------- ------------ -------
121,492 93,022 28,470 30.6%
--------------------- -------- -------- ------------ -------
6.4. SEASONALITY
There is no material change for seasonality or cyclicality in
the condensed consolidated interim income statement. The condensed
consolidated balance sheet is impacted where annual fees have been
billed in advance at the start of the calendar year, see deferred
income in note 17.
7. STAFF EXPENSES
GBP'000 H1 2023 H1 2022
----------------------------------------------------- ------- -------
Salaries and Directors' fees 50,163 38,719
Employer-related taxes and other staff-related
costs 4,850 4,192
Other short-term employee benefits 2,801 1,655
Pension employee benefits 2,461 1,793
Share-based payments 1,341 977
Employee Incentive Plan ("EIP") share-based payments - 4,330
----------------------------------------------------- ------- -------
Total staff expenses 61,616 51,666
----------------------------------------------------- ------- -------
8. NON-UNDERLYING ITEMS
GBP'000 H1 2023 H1 2022
--------------------------------------------------- ------- -------
EBITDA 36,495 25,337
Non-underlying items within EBITDA:
Acquisition and integration costs(1) 3,495 501
Office start-up costs(2) 141 -
Revision of ICS operating model - 351
EIP share-based payments - 4,511
Other 43 14
Total non-underlying items within EBITDA 3,679 5,377
--------------------------------------------------- ------- -------
Underlying EBITDA 40,174 30,714
--------------------------------------------------- ------- -------
Profit before tax 11,939 21,033
--------------------------------------------------- ------- -------
Total non-underlying items within EBITDA 3,679 5,377
Gain on revaluation of contingent consideration(3) (167) (424)
Foreign exchange losses/(gains)(4) 4,257 (9,044)
--------------------------------------------------- ------- -------
Total non-underlying items within profit
before tax 7,769 (4,091)
--------------------------------------------------- ------- -------
Underlying profit before tax 19,708 16,942
--------------------------------------------------- ------- -------
1 Acquisition and integration costs include deal and tax
advisory fees, legal and professional fees, any client-acquired
penalties, staff reorganisation costs and other integration costs.
This includes acquisition related share-based payment awards
granted to act as retention tools for key management and/or to
recruit senior management to support various acquisitions. Most
acquisition and integration costs are incurred in the first two
years following acquisition but this period can be longer depending
on the nature of the costs.
2 Initial costs incurred to establish the infrastructure to
trade in new offices in Austria and the Bahamas.
3 Gain on revaluation of liability-classified contingent
consideration payable for perfORM of GBP0.03m and Segue of
GBP0.13m, see note 15.1.
4 Non-underlying foreign exchange losses/(gains) relate to the
revaluation of intercompany loans. Management consider these to be
non-underlying items and adjust accordingly in order to reflect the
Group's underlying trading performance.
9. OTHER NET (LOSSES)/GAINS
GBP'000 Note H1 2023 H1 2022
------------------------------------------------ ---- ------- -------
Gain on revaluation of contingent consideration 8(3) 167 424
Foreign exchange (losses)/gains 8(4) (5,697) 11,198
------------------------------------------------ ---- ------- -------
Total other net (losses)/gains (5,530) 11,622
------------------------------------------------ ---- ------- -------
10. FINANCE COST
GBP'000 H1 2023 H1 2022
----------------------------------------- ------- -------
Bank loan interest 4,347 1,940
Amortisation of loan arrangement fees 465 566
Unwinding of net present value discounts 2,271 2,328
Other finance expense 453 577
----------------------------------------- ------- -------
Total finance costs 7,536 5,411
----------------------------------------- ------- -------
11. INCOME TAX
GBP'000 H1 2023 H1 2022
-------------------------------- ------- -------
Current tax 1,635 1,666
Deferred tax (882) (1,153)
-------------------------------- ------- -------
Total tax charge for the period 753 513
-------------------------------- ------- -------
12. EARNINGS PER SHARE
The Group calculates basic, diluted and adjusted underlying
basic Earnings Per Share ("EPS"). The results can be summarised as
follows:
Pence Note H1 2023 H1 2022
------------------------------ ---- ------- -------
Basic EPS 12.1 7.61 14.21
Diluted EPS 12.2 7.54 13.96
Adjusted underlying basic EPS 12.3 18.16 16.23
------------------------------ ---- ------- -------
12.1. BASIC EARNINGS PER SHARE
GBP'000 H1 2023 H1 2022
---------------------- ------- -------
Profit for the period 11,186 20,520
---------------------- ------- -------
No. of No. of
Thousands shares shares
--------------------------------------------------------- ------- -------
Issued ordinary shares at 1 January 146,001 144,326
Effect of shares issued to acquire business combinations 13 -
Effect of movement in treasury shares held 232 103
Effect of equity placing 829 -
--------------------------------------------------------- ------- -------
Weighted average number of Ordinary shares (basic) 147,075 144,429
--------------------------------------------------------- ------- -------
Basic EPS 7.61 14.21
--------------------------------------------------------- ------- -------
12.2. DILUTED EARNINGS PER SHARE
GBP'000 H1 2023 H1 2022
---------------------- ------- -------
Profit for the period 11,186 20,520
---------------------- ------- -------
No. of No. of
Thousands shares shares
----------------------------------------------------- ------- -------
Weighted average number of Ordinary shares (basic): 147,075 144,429
Effect of movement in share-based payments 1,187 2,586
Weighted average number of Ordinary shares (diluted) 148,262 147,015
----------------------------------------------------- ------- -------
Diluted EPS 7.54 13.96
----------------------------------------------------- ------- -------
12.3. ADJUSTED UNDERLYING BASIC EARNINGS PER SHARE
GBP'000 Note H1 2023 H1 2022
-------------------------------------------------- ---- ------- -------
Profit for the period 11,186 20,520
-------------------------------------------------- ---- ------- -------
Non-underlying items 8 7,769 (4,091)
Amortisation of customer relationships, acquired
software and brands 6,548 5,898
Amortisation of loan arrangement fees 465 566
Unwinding of net present value discounts 1,627 1,694
Temporary tax differences arising on amortisation
of customer relationships, acquired software
and brands (882) (1,153)
-------------------------------------------------- ---- ------- -------
Adjusted underlying profit for the period 26,713 23,434
-------------------------------------------------- ---- ------- -------
No. of No. of
Thousands shares shares
--------------------------------------------------- ------- -------
Weighted average number of Ordinary shares (basic) 147,075 144,429
--------------------------------------------------- ------- -------
Adjusted underlying basic EPS 18.16 16.23
--------------------------------------------------- ------- -------
Adjusted underlying basic EPS is an alternative performance
measure which reflects the underlying activities of the Group. The
following definition is not consistent with the requirements of IAS
33.
The Group's definition of adjusted underlying basic EPS reflects
the profit for the year adjusted to remove the impact of
non-underlying items (see note 8). Additionally, a number of other
items relating to the Group's acquisition activities including
amortisation of acquired intangible assets and associated deferred
tax, amortisation of loan arrangement fees and unwinding of NPV
discounts in relation to contingent consideration are removed to
present an adjusted underlying basic EPS which is used more widely
by external investors and analysts.
13. GOODWILL AND OTHER INTANGIBLE ASSETS
IMPAIRMENT OF NON-FINANCIAL ASSETS
Goodwill that arises on the acquisition of business combinations
and intangible assets that have an indefinite useful life are not
subject to amortisation and are tested annually for impairment, or
more frequently if events or changes in circumstances indicate that
they might be impaired.
Other non-financial assets are tested for impairment whenever
events or changes in circumstances indicate that the carrying
amount might not be recoverable. An impairment loss is recognised
for the amount by which the asset's carrying amount exceeds its
recoverable amount.
At 30 June 2023, Management have concluded there are no
impairment indicators present for Goodwill, intangible assets with
an indefinite useful life and other non-financial assets.
14. SHARE CAPITAL AND RESERVES
14.1. SHARE CAPITAL AND SHARE PREMIUM
Share
No. of shares Par value premium
Movements in Ordinary shares Note (thousands) GBP'000 GBP'000
-------------------------------- ------- ------------- --------- --------
At 31 December 2022 149,061 1,491 290,435
Shares issued for equity raises 8,857 88 60,198
PLC EBT issue 1,580 16 -
Acquisition of Segue 15.1(3) 45 - 360
Movement in the period 10,482 104 60,558
-------------------------------- ------- ------------- --------- --------
At 30 June 2023 159,543 1,595 350,993
-------------------------------- ------- ------------- --------- --------
On 14 June 2023, the Company issued 8,857,143 Placing Shares at
a price of GBP7.00 per share, raising gross proceeds of GBP62m for
the Company. Share issuance costs were GBP1.7m. The Placing Shares
are fully paid and rank pari passu in all respects with the
existing shares, including the right to receive all dividends and
other distributions declared, made or paid after the issue
date.
On 21 June 2023, the Company issued an additional 1,579,636
Ordinary shares to the Company's Employee Benefit Trust ("PLC EBT")
in order for PLC EBT to satisfy anticipated future exercises of
awards granted to beneficiaries.
14.2. OWN SHARE RESERVE
Own shares represent the shares of the Company that are
unallocated and held by PLC EBT for the benefit of its employees.
Own shares have been excluded from the weighted average number of
Ordinary shares for the purpose of calculating EPS as they are not
outstanding.
No. of
shares PLC EBT
Note (thousands) GBP'000
----------------------- ---- ------------ --------
At 31 December 2022 2,957 3,697
PSP and DBSP awards (281) -
Other awards (18) -
PLC EBT issue 14.1 1,580 16
Purchase of own shares 28 199
----------------------- ---- ------------ --------
Movement in the period 1,309 215
----------------------- ---- ------------ --------
At 30 June 2023 4,266 3,912
----------------------- ---- ------------ --------
14.3. RETAINED EARNINGS
The retained earnings include accumulated profits and
losses.
The final dividend for the year 2022 of 6.88p per qualifying
Ordinary share was paid on 30 June 2023.
An interim dividend of 3.5p per qualifying Ordinary share (2022:
3.1p per qualifying Ordinary share) was declared by the Directors
on 11 September 2023 and will be payable on 20 October 2023 to
shareholders on the record on 22 September 2023. The interim
dividend has not been recognised as a liability as at 30 June
2023.
15. TRADE AND OTHER PAYABLES
GBP'000 Note 30.06.2023 31.12.2022
----------------------------------- ---- ---------- ----------
Non-current
Other payables 134 72
Contingent consideration 15.1 3,347 26,824
----------------------------------- ---- ---------- ----------
Total non-current 3,481 26,896
----------------------------------- ---- ---------- ----------
Current
Trade payables 1,455 2,728
Other taxation and social security 818 926
Other payables 3,946 4,391
Accruals 11,164 9,907
Contingent consideration 15.1 25,675 5,472
----------------------------------- ---- ---------- ----------
Total current 43,058 23,424
----------------------------------- ---- ---------- ----------
Total trade and other payables 46,539 50,320
----------------------------------- ---- ---------- ----------
15.1. CONTINGENT CONSIDERATION
Contingent consideration payables are discounted to NPV, split
between current and non-current and are due as follows:
GBP'000 30.06.2023 31.12.2022
------------------------------------------- ---------- ----------
Acquisition
perfORM(1) 3,347 3,181
SALI - 23,643
------------------------------------------- ---------- ----------
Total non-current contingent consideration 3,347 26,824
------------------------------------------- ---------- ----------
INDOS(2) 1,537 1,483
Segue(3) 403 2,163
SALI 23,735 -
Sterling - 1,826
------------------------------------------- ---------- ----------
Total current contingent consideration 25,675 5,472
------------------------------------------- ---------- ----------
1 The earn-out for perfORM is calculated based on a multiple of
their underlying EBITDA for the year ended 31 December 2024 (up to
a maximum of GBP6m). This is payable in an equal split of cash and
JTC PLC Ordinary shares, the 50% payable in shares is
liability-classified contingent consideration as the no. of shares
due is calculated based on a fixed share price as defined in their
share purchase agreement ("SPA"). In accordance with IAS 32,
Management are required to update the fair value at each reporting
date.
At the acquisition date, Management forecast the underlying
EBITDA for perfORM and estimated that GBP4.48m would be due. At 30
June 2023, Management revisited their forecast and have identified
no evidence to indicate an adjustment was required to the total
due. To update the fair value of the 282,854 JTC PLC Ordinary
shares payable, the Monte Carlo simulation was updated and this
decreased the share price applied to GBP7.59 (31.12.2022:
GBP7.92).
The simulation is based on JTC's share price at 30 June 2023,
factoring in historical volatility and projected dividend payments
and is then discounted using an appropriate risk free rate.
The updated share price resulted in a gain on revaluation of
GBP0.03m (see note 9) as the fair value of the contingent
consideration payable in JTC Ordinary Shares decreased to GBP2.15m
(31.12.22: GBP2.24m).
The revalued earn-out contingent consideration of GBP4.37m (cash
GBP2.22m/ JTC PLC Ordinary shares GBP2.15m) has then been
discounted to a present value of GBP3.35m.
2 Contingent consideration of GBP1.5m was payable subject to JTC
PLC meeting an underlying EPS target for the period ended 31
December 2022. As the business performed successfully, on 14 April
2023, equity awards were granted and subject to continued
employment, will vest on 31 December 2023.
3 Contingent consideration was subject to Segue meeting adjusted
EBITDA targets over the calendar years 2022 and 2023. During the
period, Management paid GBP1.4m ($1.7m) in cash and issued 45,386
JTC Ordinary shares in part-payment of the outstanding liability
(see note 14.1), the timing of the settlement resulted in a small
gain on revaluation of contingent consideration of GBP0.13m (see
note 9).
16. LOANS AND BORROWINGS
GBP'000 30.06.2023 31.12.2022
--------------------------- ---------- ----------
Non-current
Bank loan 103,741 153,622
--------------------------- ---------- ----------
Total loans and borrowings 103,741 153,622
--------------------------- ---------- ----------
At 31 December 2022, the Group had a multicurrency loan facility
agreement for a total commitment of GBP225m consisting of a term
loan of GBP75m and a revolving credit facility ("RCF") of GBP150m.
On 15 June 2023, the lenders agreed to increase the RCF by GBP50m
increasing the total commitment to GBP275m. Following the equity
raise that took place on 14 June 2023, the Group used GBP50m of the
proceeds to temporarily repay the RCF on 21 June 2023.
At 30 June 2023 the Group had available GBP169.3m of committed
facilities currently undrawn (31 December 2022: GBP69.3m).
On 1 August 2023, GBP118m of the facility was drawn to part
satisfy the cash consideration for the acquisition of SDTC (see
note 22).
All facilities are due to be repaid on or before the termination
date of 6 October 2025 unless the termination date is extended for
the available one year extension. It is Management's intention to
exercise the option to extend the facility for the additional
year.
17. OTHER NON-FINANCIAL LIABILITIES
GBP'000 30.06.2023 31.12.2022
-------------------------------------- ---------- ----------
Non-current
Contract liabilities 394 216
Employee benefit obligations 556 572
-------------------------------------- ---------- ----------
Total non-current 950 788
-------------------------------------- ---------- ----------
Current
Deferred income 21,168 7,856
Contract liabilities 849 772
-------------------------------------- ---------- ----------
Total current 22,017 8,628
-------------------------------------- ---------- ----------
Total other non-financial liabilities 22,967 9,416
-------------------------------------- ---------- ----------
As a result of annual fees being billed in advance at the start
of the financial year, deferred income is higher at 30 June than at
31 December.
18. FINANCIAL RISK AND CAPITAL MANAGEMENT
PRINCIPAL FINANCIAL INSTRUMENTS
All financial assets and liabilities are measured at amortised
cost which is deemed to be representative of fair value. The
exception to this is liability-classified contingent consideration
payable of GBP1.7m for perfORM (31 December 2022: GBP1.6m).
Management considered the following fair value hierarchy levels
in line with IFRS 13.
Level 1 - Inputs are quoted prices (unadjusted) in active
markets for identical assets and liabilities
Level 2 - Inputs other than quoted prices included within Level
1 that are observable for the asset and liability, either directly
or indirectly.
Level 3 - Inputs are unobservable inputs for the asset or
liability.
Management concluded that the contingent consideration was
classified under the level 3 inputs of the fair value hierarchy.
Please see note 15 for further detail on changes to fair value for
the six months ended 30 June 2023.
18.1. FOREIGN CURRENCY RISK
The Group's exposure to the risk of changes in exchange rates
relates primarily to the Group's operating activities when the
revenue or expenses are denominated in a different currency from
the Group's functional and presentation currency of pounds sterling
('GBP'). For trading entities that principally affect the profit or
net assets of the Group, the exposure continues to be mainly from
Euro, US dollar and South African rand. The Group's bank loans are
denominated in GBP although the facility is multicurrency. As
disclosed in note 29.1 of the JTC Annual Report and Accounts 2022,
Management continue to monitor the effectiveness of the Group's
policy to minimise foreign currency risk and regularly assess if a
foreign currency hedge is appropriate.
For the six months to 30 June 2023, mainly due to the Euro and
United States dollar foreign currency exchange rate movements, we
have recognised the following:
-- a foreign exchange loss of GBP10.7m in other comprehensive income (H1 2022: GBP20.5m gain) upon translating our
foreign operations to our functional currency
-- a foreign exchange loss of GBP5.7m (H1 2022: GBP11.2m gain) in the condensed consolidated income statement upon
the retranslation of monetary assets and liabilities denominated in foreign currencies (see note 9)
On 7 July 2023, JTC entered a foreign exchange forward contract
to sell GBP60m and buy $76.1m on 31 August 2023 to mitigate the
foreign exchange risk between the date of signing their SPA and the
date of completion for SDTC (see note 22).
18.2. INTEREST RATE RISK
The Group is exposed to interest risk as it borrows funds at
floating interest rates. The interest rate applied to loan
facilities is determined using SONIA plus a margin based on net
leverage calculations.
The risk is managed by the Group maintaining an appropriate
leverage ratio and by giving consideration to the use of hedging
instruments.
Sensitivity for variable rate instruments
The Group's sensitivity to interest rate risk as disclosed in
the JTC Annual Report and Accounts 2022 is impacted by rising
interest rates during the first six months of 2023.
For loans and borrowings with floating rates at the 30 June
2023, the Group still considers a reasonable interest rate movement
for sensitivity analysis to be 100 basis points.
If interest rates had been higher/lower by 100 basis points and
all other variables were held constant, the Group's profit for the
period ended 30 June 2023 would decrease/increase by GBP0.8m.
18.3. CREDIT RISK
The Group's principal exposure to credit risk arises from
contracts with customers and therefore from the following financial
assets: trade receivables, work in progress and accrued income
(together "customer receivables") as well as cash and cash
equivalents and other receivables. Despite the challenging economic
environment the impact on the recoverability of customer
receivables has not been significant, as evidenced by our strong
performance for underlying operating cash conversion and credit
impairment losses. Following an analysis on a customer-by customer
basis we anticipate that customers will meet their payment
obligations and as a result we have not incorporated updated
forward-looking information into measuring expected credit losses
as at 30 June 2023. Our credit risk management as set out in note
29.2 of the JTC Annual Report and Accounts 2022 remains
unchanged.
18.4. LIQUIDITY RISK
There has been no change in our liquidity risk assessment
compared to our disclosure in note 29.3 of the JTC Annual Report
and Accounts 2022.
18.5. CAPITAL MANAGEMENT
The Group's objective for managing capital is unchanged from
that disclosed in Note 30 of the JTC Annual Report and Accounts
2022
In accordance with the Group's capital risk management
objective, the financial covenants attached to the bank borrowings
continue to be met.
19. CASH FLOW INFORMATION
19.1. OPERATING CASH FLOWS
GBP'000 H1 2023 H1 2022
---------------------------------------------- -------- --------
Operating profit 24,682 14,807
Adjustments:
Depreciation of property, plant and equipment 3,883 3,822
Amortisation of intangible assets 7,930 6,708
Equity-settled share-based payment expense 1,293 1,085
EIP share-based payment expense - 4,330
Share of profit of equity-accounted investee (101) (333)
---------------------------------------------- -------- --------
Operating cash flows before movements
in working capital 37,687 30,419
---------------------------------------------- -------- --------
Net changes in working capital:
Increase in receivables (6,662) (12,327)
Increase in payables 12,614 11,328
---------------------------------------------- -------- --------
Cash generated from operations 43,639 29,420
---------------------------------------------- -------- --------
19.2. NON-UNDERLYING ITEMS WITHIN CASH GENERATED FROM
OPERATIONS
GBP'000 H1 2023 H1 2022
------------------------------------------------- ------- -------
Cash generated from operations 43,639 29,420
Non-underlying items:
Acquisition and integration 1,439 1,121
Office start-up costs 141 -
Revision of ICS operating model - 351
Other - 14
------------------------------------------------- ------- -------
Total non-underlying items within cash generated
from operations 1,580 1,486
------------------------------------------------- ------- -------
Underlying cash generated from operations 45,219 30,906
------------------------------------------------- ------- -------
20. RELATED PARTY TRANSACTIONS
Balances and transactions between the Company and its
subsidiaries, which are related parties, have been eliminated on
consolidation and are not disclosed in this note.
The Group has defined key management personnel as Directors and
members of senior management who have the authority and
responsibility to plan, direct and control the activities of the
Group. The remuneration of key management personnel in aggregate
for each of the specified categories is as follows:
GBP'000 H1 2023 H1 2022
------------------------------------------------ ------- -------
Salaries and other short-term employee benefits 1,250 1,472
Post-employment and other long-term benefits 60 76
Share-based payments 801 628
EIP share-based payments - 325
------------------------------------------------ ------- -------
Total payments 2,111 2,501
------------------------------------------------ ------- -------
21. CONTINGENCIES
The Group operates in a number of jurisdictions and enjoys a
close working relationship with all of its regulators. It is not
unusual for the Group to find itself in discussion with regulators
in relation to past events. With any such discussions there is
inherent uncertainty in the ultimate outcome but the Board
currently does not believe that any such current discussions are
likely to result in an outcome that would have a material impact
upon the Group.
22. EVENTS OCCURRING AFTER THE REPORTING PERIOD
There are no material subsequent events to disclose other than
those already noted in the condensed consolidated financial
statements except for the following:
Acquisition of TC3 Group Holdings LLC (trading as South Dakota
Trust Company ("SDTC"))
On 2 August 2023, following receipt of all applicable change of
control and regulatory approvals, JTC completed the acquisition of
100% of the share capital of TC3 Group Holdings LLC (trading as
SDTC) for a maximum consideration of $270m. The initial
consideration of $200m comprised of $147m in cash and up to a
maximum of $53m in new JTC PLC Ordinary shares. On 8 August 2023,
the Company issued and admitted 5,978,400 Ordinary shares at fair
value to satisfy the initial consideration. A further $70m
contingent consideration is available on the achievement of
specific revenue performance targets for the two year period ending
31 December 2025 and is payable in cash and JTC PLC Ordinary
shares.
The acquisition is hugely complementary to JTC's existing US
operations and establishes JTC as the leading independent provider
of administration services to the US personal trust sector.
At the date the condensed consolidated interim financial
statements were authorised for issue, it was impracticable to
disclose the information required by IFRS 3 'Business Combinations'
as some of the required information was not available.
[1] LVW is 14 times annualised value of work won minus value of
attrition in past year.
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END
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