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Annual Report 2019

“A year of disciplined growth and robust performance.”

Financial Highlights

REVENUE (£) £0M 2018: £77.3M +28.5%
UNDERLYING EBITDA (£)* £0M 2018: £23.9M +32.4%
UNDERLYING EBITDA MARGIN (%) 0 2018: 31% +0.9pp
ADJUSTED UNDERLYING BASIC EPS (P)** 0 2018: 19.2 +16.1%
STATUTORY EBIT (£M) £0M 2018: £0.7M +3,084.6%
DILUTED EPS (P) 0 2018: (3.9) +498.7%
FINAL DIVIDEND PER SHARE (P) 0 2018: 3.0 +2.3P
NET DEBT (£M) 0M) 2018: (£48.7M) -£17.8M

* Items classified as non-underlying are as detailed in Note 7 to the financial statements. Non-underlying items are defined as specific items that the Directors do not believe will recur in future periods. The 2018 results reflect the pre-listing capital structure up to 14 March 2018 and the subsequent structure post IPO.

** Adjusted underlying Basic EPS is the profit/(loss) for the year adjusted to remove the impact of IFRS 16 as well as non-underlying items, unwinding of net present value discounts, amortisation and associated deferred tax impact of customer relationship intangible assets and loan arrangement fees.

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Key Performance Indicators

NET ORGANIC GROWTH (%)

Net organic growth in Group revenue

UNDERLYING EBITDA MARGIN (%)

The EBITDA of the underlying business.

UNDERLYING CASH CONVERSION (%)

Our success in turning profits into cash.

LEVERAGE (multiples)

The relative amount of third party debt we have in the business.

NEW BUSINESS WINS (£M)

The annualised value of new business won (AVNBW) each year.

CLIENT ATTRITION (%)

Work lost in the year that was regretted

STAFF TURNOVER (%)

The number of staff that leave each year that we did not want to leave.

SHARED OWNERSHIP (%)

How many of our permanent employees are owners of the business.

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Our Business Model

Business model
Our Resources and Strengths
We invest in our people

Our team of more than 900 professionals bring our culture to life and deliver excellent client service.

Over 70% of our people are professionally qualified or working towards it. We help everyone to achieve their potential through our JTC Academy, JTC Gateway and JTC Wellbeing programmes, and reward all through our shared ownership model.

We embrace technology

We believe that combining the right technology capabilities with deep sector expertise enables client service excellence and market-leading efficiency.

We invest accordingly and use best-in-class systems to provide and maintain an impeccable standard of administration as well as to innovate and add value.

We put relationships first

We pick the most appropriate team for each client's needs, and aim to build strong client relationships that last. We serve more than 5,500 clients from over 100 different countries and are trusted to administer assets in excess of US$130bn. As an independent administrator, we are also able to form strong commercial relationships with intermediary partners.

We have global reach

Our network of 23 offices in 19 different jurisdictions provides a scalable and resilient global platform that allows us to offer a complete range of services, including multi-jurisdictional solutions for an increasingly international client base.

Our Growth Strategy
Organic Strategy

We target net organic growth in the range 8% – 10% at Group level.

Inorganic Strategy

We take a disciplined approach to M&A and are expert at integrating acquired businesses onto our platform.

Our clients and what we do
Institutional Client Services

Provides fund and corporate administration services to institutional clients, primarily fund managers, listed companies and multinationals

Private Client Services

Provides trust and corporate administration services for private clients, including HNW and UHNW individuals and families as well as family and private offices and international wealth management firms

How we create long-term value for our key stakeholders
Shareholders

We aim to generate value for our shareholders by successfully and consistently executing our organic and acquisition growth strategies. We share profits through dividends, while investing the balance in the business to support steady and sustainable growth.

Employees

Through our shared ownership programme, we ensure every employee is an owner of the business and can share in its long-term success. We work to maximise the potential of every employee, providing support through our range of development programmes.

Clients

We take an entrepreneurial approach to finding solutions for our clients, and build long-term relationships by adopting a can-do attitude and aiming to exceed expected service levels. We nurture and value client relationships over the long term, with an average client relationship of around ten years.

Intermediary Partners

As an independent administrator, we are able to provide best-in-class solutions to the clients of our intermediary partners, and complement their own offering. We develop reciprocal commercial relationships to support our mutual growth.

Communities

We value and respect the communities where we operate around the world, and understand the support they provide to our employees, clients and intermediary partners. We aim to create a positive impact, creating jobs, while making charitable donations of time, expertise and money.

Download Our Business Model

I am pleased to make my first Annual Report contribution, having taken over as Group Head of ICS from Tony Whitney in April 2019.

Having orientated myself as the leader of the Division, I believe we have an excellent platform from which to deliver a first-class business with a talented multinational team, a high quality client base and strong market fundamentals to support long-term growth.

“We are earning our seat at a competitive top table and have delivered solid financial performance with strong new business flows. Margin improvement work will be accelerated and our talented multinational team is well placed to capitalise on the organic and inorganic growth opportunities we see.”

Jonathan Jennings

Jonathan Jennings

Group Head Of Institutional Client Services

Highlights

  • Record year for new business wins +48% by value
  • Competing for and winning top-end mandates (£1m+)
  • Strengthening of senior team with focus on technical operations, business development and subject matter expertise
  • Premises upgrades in London, Netherlands and Cayman to support growth
  • Successful integration of Van Doorn (Netherlands)
  • Successful integration of Exequtive Partners (Luxembourg)
Revenue (£M)
+26.4%
EBITDA (£M)
+25.2%
EBITDA Margin (%)
-0.3pp
LVW* (£M)
+48.3%

* Lifetime Value Won (LVW) is 10 times annualised value of work won minus value of attrition in past year.

Outlook 2020
  • Resilient response to COVID-19 pandemic
  • Post-period end acquisition of NESF in the US, a transformational deal for the ICS Division
  • Operating model improvements to deliver margin
  • Enhanced business development and marketing focused on key asset classes and services
  • Further M&A with focus on US, Luxembourg, Ireland and UK
  • Premises upgrade and deeper penetration in Luxembourg
  • Further investment in technology capabilities to drive both growth and efficiencies

The PCS Division had an excellent year in 2019 building materially on performance in 2018.

In a sector where reputation and quality are paramount, our profile and standing as a market leader received external validation when we won the prestigious Society of Trust and Estate Practitioners (STEP) Trust Company of the Year (Large Firm) award. This longstanding and keenly contested accolade is a recognised symbol of quality and the win reflected a fantastic and global team effort.

“Our performance in 2019 demonstrates the continued potential in the PCS market and the strength of our team. I am pleased with the results and am confident of further growth in 2020.”

Iain Johns

Iain Johns

Group Head Of Private Client Services

Highlights

  • Increase in PCS Jurisdictional Strength Index (JSI) from investment in platform and operating model
  • Strong growth in the Channel Islands and US markets
  • Record year for new business wins +62% by value
  • Continued investment in people, in particular JTC Private Office
  • Successful integration of the Minerva business
  • Adopted new PCS governance structure and regional business development model
  • Won Trust Company of the Year (Large Firm) at the STEP Private Client awards
Revenue (£M)
+31.2%
EBITDA (£M)
+40.3%
EBITDA Margin (%)
+2.3pp
LVW* (£M)
+70.6%

* Lifetime Value Won (LVW) is 10 times annualised value of work won minus value of attrition in past year.

Outlook 2020
  • Resilient response to COVID-19 pandemic
  • Post-period end acquision of SANNE private client business in Jersey
  • Strong pipeline of new business heading into 2020
  • Continue to invest in people, including senior hires
  • Further investment in technology capabilities
  • Further expansion into the US building on our existing PCS platform
  • Focused acquisition strategy as sector consolidation continues

While the bedrock of our business will always remain organic growth, JTC has a track record of successfully identifying and integrating acquisitions dating back to 2010.

The industry in which we operate has a number of fundamental features that support inorganic growth, in particular:

  • the high degree of fragmentation arising from the early stages of the industry, which is still prevalent today;
  • globalisation and increasing global wealth, which in turn drive client needs for global solutions; and.
  • the trends towards increased regulation and greater outsourcing.

JTC’s response has been the formulation of a disciplined and coherent acquisition strategy and the development of a wellhoned operational framework that delivers the effective and efficient integration of acquisitions onto our scalable global platform.

“We take a disciplined approach to acquisitions, from our core screening criteria and clear strategic focus, through to our proven and highly effective integegration framework and capabilitites.”

Wendy Holley

Wendy Holley

Chief Operating Officer

Highlights

CORE ACQUISITIONS CRITERIA
  • Improve Jurisdictional Strength Index (JSI)
  • Add scale/new territory
  • Strengthen offering (services, people, technology, processes)
  • Cross-selling opportunities
  • Cost synergy opportunities
DISCIPLINED AND ENTREPRENEURIAL
  • Active deal pipeline (c. 25+ at any time)
  • Visibility of most deals in the sector
  • Smart sub-strategies (regional plays, opportunistic lift-outs)
  • We know when to say no
PROVEN VALUE CREATION
  • Kleinwort Benson becomes Global Service Centre (GSC)
  • BAML and Minerva enhanced on JTC platform
  • Van Doorn and Exequtive Partners accelerate key jurisdictions
  • 18 deals since 2010
CURRENT FOCUS
  • ICS with focus on alternative assets
  • US, Luxembourg, UK and Ireland
  • First cousin services
  • Technology capabilities

Environmental, Social and Governance Framework

Business model

Our environmental, social and governance (ESG) framework has at its heart our culture of shared ownership, which was established in 1998 and places the interests of the collective above that of any individual. The framework is further informed by our cultural values and our purpose, which is to help maximise the potential of every client, colleague and partner with whom we work.

The principal items considered under each element of our ESG framework are those that we believe are both meaningful and material to the business. We work to continuously develop and improve our approach in all of these areas, creating clear links with our commercial strategies, engaging with our value chain and seeking to provide ever greater levels of measurement and disclosure.

Oversight and governance of the ESG framework is led by the Board and embedded within the business through our cultural values, client facing behaviours and reporting frameworks. We aim for continuous year-on-year improvement in all areas.

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