Interim results for the period ended 30 June 2022

RNS Number : 1674Z

JTC PLC

13 September 2022

 

13 September 2022

JTC PLC

("the Company") together with its subsidiaries ("the Group" or "JTC")

Interim results for the period ended 30 June 2022

Strong growth, operational improvement and robust cash conversion

	As reported			Underlying*
	H1 2022	H1 2021	Change	H1 2022	H1 2021	Change
Revenue (£m)	93.0	67.0	+38.8%	93.0	67.0	+38.8%
EBITDA (£m)	25.3	19.9	+27.3%	30.7	21.9	+40.1%
EBITDA margin	27.2%	29.7%	-2.5pp	33.0%	32.7%	+0.3pp
Operating profit/EBIT (£m)	14.8	11.7	+26.1%	20.2	13.8	+46.7%
Profit before tax (£m)	21.0	36.8	-42.9%	16.9	11.4	+49.0%
Earnings per share (p)**	14.21	29.73	-52.2%	16.23	12.00	+35.3%
Cash conversion	101%	103%	-2pp	101%	108%	-7pp
Net debt (£m)	104.1	28.2	75.9	92.2	23.6	+68.6
Interim dividend per share (p)	3.1	2.6	+0.5p	3.1	2.6	+0.5p

*  For further information on underlying results see appendix to CFO Review.

**  Average number of shares (thousands) for H1 2022: 144,429 (H1 2021: 122,883)

financial highlights

· Revenue up 38.8% to £93.0m (H1 2021: £67.0m), reflecting continued strong net organic growth of 9.5% (+16.2% gross) and inorganic growth of 29.3%

· Underlying EBITDA up 40.1% to £30.7m (H1 2021: £21.9m) with an improved underlying EBITDA margin of 33.0% (H1 2021: 32.7%)

· Annualised new business wins up 22% to £12.6m (H1 2021: £10.3m), a JTC record for a six month period

· Strong underlying cash conversion of 101% (H1 2021: 108%) with cash generation substantially reducing leverage in the period by 0.7x, bringing it to 1.6x underlying EBITDA at period end, towards the bottom of the guidance range of 1.5 to 2.0x 

· Interim dividend of 3.1p per share (H1 2021: 2.6p)

STRATEGIC HIGHLIGHTS

· A period of consolidation, focused on delivering the integration benefits of the seven acquisitions made in 2021; all integration programmes nearing completion

· Outstanding performance and improved margin in the ICS Division with good growth and new business wins

· High performance continues in the PCS Division, with solid margin and good new business wins. Well positioned for a strong H2

· Good revenue growth from both banking and international tax compliance services

· Post period end, announced the acquisition of NYPTC, a US private client services business, subject to regulatory consent

· Post period end, secured a fund administration licence in Ireland, expanding that jurisdiction to offer a full range of corporate and fund services

· Post period end, the second half of the £20m Galaxy Era (2018 to 2020) share award announced in 2021 vested for employees globally as part of JTC's innovative shared ownership model, through which all employees are direct owners of the business

OUTLOOK

· The momentum seen in 2021 has continued into 2022 and the Board is confident that the Group will deliver revenue and underlying EBITDA ahead of market expectations and net organic growth above the guidance range, more than offsetting higher interest costs and cost inflation

· Medium-term guidance unchanged: Net organic revenue growth of 8% - 10% per annum; underlying EBITDA margin of 33% - 38%; cash conversion of 85% - 90% and net debt up to 2.0x underlying EBITDA  

· Focus on finalising the integration of the seven acquisitions made in 2021 onto the JTC global platform

· The Group remains well invested to deliver continued operational improvement

· Continue to see M&A opportunities across both Divisions

Nigel Le Quesne, Chief Executive Officer of JTC PLC, said:

"JTC's exceptional resilience and entrepreneurial growth capabilities have been reflected in a strong financial performance, meeting all our guidance metrics, including a substantial reduction in leverage. The ICS Division was the star performer, with excellent growth and continued margin progression. The PCS Division maintained strong margins as it continued with planned investments that will drive future growth and is poised to benefit in H2 from the on-boarding efforts undertaken in H1. Our inorganic efforts in the period focused on integration of the seven deals completed in 2021. We maintain our disciplined approach to selecting new targets and we were delighted to announce the acquisition of NYPTC in Delaware post period end. The business carries good momentum into H2 and we are excited by the progress we anticipate in the remainder of the second year of our Galaxy era plan. We see tremendous opportunities for the Group moving forward. As always, my thanks go to the outstanding JTC global team for their hard work and dedication to our culture and success."

ENQUIRIES:

JTC PLC   [phone]

Nigel Le Quesne, Chief Executive Officer 

Martin Fotheringham, Chief Financial Officer

David Vieira, Chief Communications Officer

Camarco  [phone]

Geoffrey Pelham-Lane 

Georgia Edmonds

Sam Morris

A presentation for analysts will be held at 09:30 today via audio-conference arranged by Camarco.

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

Resilience and growth

Nigel Le Quesne

CHIEF Executive OFFICER

FINANCIAL PERFORMANCE

Performance in the period was outstanding, as the business carried good momentum from 2021 into the first half of the year, despite continued volatility in the macro environment. Group revenue increased 38.8% to £93.0m (H1 2021: £67.0m) and underlying EBITDA increased 40.1% to £30.7m (H1 2021: £21.9m). In addition, our underlying EBITDA margin improved by 0.3pp to 33.0% (H1 2021: 32.7%).  

Net organic growth was very pleasing at 9.5% (H1 2021: 7.6%) demonstrating our ability to win more work from both new and existing clients as we broaden our range of services. The annualised value of new business won increased 22.0% to £12.6m (H1 2021: £10.3m) and we typically expect to convert c. 50% of this to revenue within the financial year.

Underlying net debt at 30 June 2022 was £92.2m and as a result leverage reduced by 0.7 times in the period to 1.6x underlying EBITDA, demonstrating the highly cash generative nature of the business and our ability to quickly reduce leverage in the absence of M&A activity. Underlying cash conversion was 101% (H1 2021: 108%).  

Our outlook for the remainder of the year is positive and we are confident that the Group will deliver full year results ahead of market expectations. We once again maintain our established Group-level medium-term guidance of 8%-10% net organic revenue growth per annum; underlying EBITDA margin of 33%-38%; underlying net debt of up to 2.0x underlying EBITDA and annual cash conversion in the range 85%-90%.

GROUP-WIDE INNOVATION

There has always been strong alignment and natural cross-pollination between our two Divisions. In recent years, an accelerating trend has been the innovative development and incubation of new service lines driven from the commercial centre of the Group, in a manner that intrinsically spans both ICS and PCS. Examples of this since our IPO in 2018 include the development of new banking and investment services, broader international tax compliance services and new ESG services, which together are beginning to make a material contribution to Group revenue. As the business continues to scale, both organically and through acquisitions, we will nurture and invest in this important Group-wide capability, which will provide another differentiator for JTC and a catalyst for growth.

Institutional Client Services (ICS) division

The ICS Division has had an outstanding six-month period. Revenue increased 59.7% to £63.5m (H1 2021: £39.8m) with last twelve months ("LTM") net organic growth of 14.1% (H1 2021: 5.9%). Underlying EBITDA increased 72.9% to £20.0m (H1 2021: £11.6m) and the underlying EBITDA margin continued to improve, up 2.4pp to 31.5% (H1 2021: 29.1%) and is closing in on medium-term Group guidance levels. The ongoing margin improvement in ICS is a direct result of structural, behavioural and process changes and the reorganisation that has been undertaken within the Division and the fund services practice in particular over the past two years.

New business wins in H1 were up 77% to £8.5m (H1 2021: £4.8m), with momentum carried into H2 and good opportunities emerging from the SALI business, as anticipated.

The seven M&A deals completed in 2021 were all primarily ICS focused and integration of all these businesses is approaching completion. We are particularly pleased with the performance of the JTC Employer Solutions business (the former RBC cees business) and SALI Fund Services in the US. These two acquisitions epitomise the resilient growth engine that sits at the heart of JTC and, in particular, the ability to add substantial long-term value to the Group through client contracts that will continue for multiple decades.

In the US specifically, work continued to integrate Segue Partners, SALI Fund Services and EFS onto our existing platform, which together will form a sophisticated ICS business of scale in what is a strategically important growth market.

In Europe, the Luxembourg business continued to perform strongly and the core UK business continues to grow, with a second London office added to our network in March to support expansion. The INDOS and Ballybunion acquisitions have helped us rapidly build out our presence in Ireland, which has been further supported by the move to new, larger premises in Dublin and the granting of a fund services licence by the Irish regulator in August. This means that we are now able to offer a full suite of corporate, fund, depositary and Management Company ('ManCo') services from Ireland, which alongside Luxembourg, is one of the most important jurisdictions in Europe. Ireland also has the added benefit of being a popular location for US corporates and funds looking to operate or raise capital in Europe, thus creating a bridge between two very important markets. The innovative perfORM Operational Due Diligence business continues to grow as planned and has already generated cross-selling opportunities with other acquisitions, including SALI in the US.

The ICS Division continues to enjoy strong market fundamentals and the impetus we have built in recent years, coupled with ongoing investment and opportunities for further organic and inorganic growth, means that we are confident and excited about its future.

PRIVATE CLIENT SERVICES (PCS) DIVISION

Revenue increased 8.4% in the period to 29.5m (H1 2021: £27.2m) and underlying EBITDA increased 3.5% to £10.7m (H1 2021: £10.4m). LTM net organic growth was 4.0% (H1 2021: 9.9%) and the three-year average for the Division is now 8.6%. The underlying EBITDA margin decreased by 1.7pp to 36.3% (H1 2021: 38.0%), which remains comfortably in the middle to upper end of guidance.

New business wins were an impressive £4.1m, slightly ahead of our internal target for the mid-point of the year and against a tough comparator from H1 2021 of £5.5m, which included £2.5m for Project Amaro, the Group's largest ever new mandate win.

The on-boarding work and associated upfront costs required for Project Amaro progressed well in H1 and this substantial US-based global bank client will be revenue generating in Q4. As anticipated with a mandate of this type and scale, we have already created a pathway to further revenue growth and this work will now deliver services to 2,500+ entities at a value of at least £3.2m per annum, an increase of 28% on the initial value estimated in 2021.

The PCS team has achieved these results even when taking into account inflationary pressures and ongoing planned investment in talent, including regulatory compliance capabilities, technology and the development of service lines.

Our work to establish a US Domestic Trust business, which will complement our existing US International Trust business operating out of South Dakota, continued as planned and we were delighted to announce the NYPTC acquisition in Delaware (subject to regulatory approval) post period end.  

Inorganic Growth

Given that 2021 was a record year for M&A, with seven deals and two fundraises completed, the first half of 2022 has seen a natural period of consolidation, with a focus on the smooth and thorough integration of the businesses acquired last year onto the JTC platform. All integration programmes are progressing to completion and the JTC Employer Solutions business (formerly RBC cees) continues to reveal itself as one of the best acquisitions we have ever made, with good growth and strong margins.

We maintain our disciplined approach to inorganic growth and have a pipeline of opportunities that span both Divisions, with a particular focus on the high growth US market as well as the UK, Ireland and Luxembourg.

shared ownership

JTC's Shared Ownership programme, through which every employee is an owner of the business, has been in place since 1998 and lives at the heart of our unique culture. On 22 July 2021, we awarded c.£20m worth of JTC shares to our global team to reflect the performance of the business between our listing in 2018 and year end 2020. The three-year business plan for this period was known internally as the Odyssey era and ran from 2018 to 2020, during which time we succeeded in doubling the size of the Group, despite the new demands associated with becoming a public company and the initial impact of the Covid pandemic.

In the 24 years since JTC established shared ownership, we have made three separate awards, including this latest one, and created value in excess of £350m for owner-employees. Much of this value is still held in the Company today.  

The Group's most valuable asset will always be its people and we believe that our innovative approach to shared ownership creates a bond and dedication between the JTC teams which goes far beyond the individual financial benefits each person derives. It creates an environment of mutual respect and camaraderie, which in turn creates an understanding of the importance and satisfaction that comes from the enhanced results of shared endeavour. It increases employee engagement and loyalty, contributing to one of the lowest employee churn rates in our industry. This spirit is part of the driving force we see in the current Galaxy era, as our global teams work together to help the Group achieve its aims and create the next step on which future growth will be based.

Risk

The principal risks facing the Group remain as set out in the JTC Annual Report and Accounts 2021. 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.  The lingering effects of Covid-19 and more recently the war in Ukraine, inflation and interest rates present a particular set of risks and we believe that the business will continue to prove resilient in the face of these challenges, having demonstrated tremendous resilience to date in this regard. Overall, we remain satisfied as to the effectiveness of the Group's risk analysis, management and culture, developed over 35 years of JTC operations.

Dividend

The Board has declared an interim dividend of 3.1p per share, an increase of 0.5p period on period (H1 2021: 2.6p). The interim dividend will be paid on 21 October 2022 to shareholders on the register as at close of business on the record date of 23 September 2022.

Outlook

The momentum carried into H1 2022 from a strong full year 2021 has been maintained going into H2 and we are confident that the Group will deliver full year results ahead of market expectations. The outstanding performance of the ICS Division is something we expect to continue as the acquisitions made last year integrate fully onto our global platform and we realise further benefits from incremental improvements in ICS operations. The PCS Division remains the pre-eminent trust company business in the market and the trend towards attracting large, sophisticated clients continues. The Division is poised to have a good H2, benefiting from the new client on-boarding work undertaken since late 2020.

While we focussed in H1 on integration programmes, we were delighted to announce the acquisition of NYPTC in Delaware (subject to regulatory approval) and this business will help to accelerate the further development of our US domestic PCS business. Our inorganic growth strategy remains active, disciplined and firmly focussed on securing new deals that add long-term value to the Group.

The macro drivers of our sector, including consolidation, propensity to outsource, increasing regulation, increasing global wealth, opportunities provided by technology and the rise of ESG, provide a number of clear and robust tailwinds for the business. We are cognisant of the challenges created by macro uncertainty, but have a long track record of growth through previous periods of economic turmoil and identifying opportunities to broaden our range of services to clients.

We remain highly ambitious for the Group and believe that our compounding strategy of consistent organic growth within the core business, continuous refinement of our global platforms to deliver operational excellence and disciplined inorganic growth will enable us to capture opportunities and generate long-term growth and value for all our stakeholders.

Nigel Le Quesne

Chief Executive Officer

CHIEF FINANCIAL OFFICER'S REVIEW

Delivering on revenue growth alongside continued margin improvement

MARTIN FOTHERINGHAM

CHIEF FINANCIAL OFFICER

Revenue

In H1 2022, revenue was £93.0m, an increase of £26.0m (+38.8%) compared with H1 2021.

Net organic growth for the last twelve months ("LTM") ending 30 June 2022 was 9.5% and very close to the top of our medium-term guidance range of 8 - 10%. Our rolling three year net organic growth average is now 9.1% with both metrics demonstrating the continuing robustness of our business and the strong market fundamentals.

Growth was driven by gross new business of 16.2% (H1 2021: 16.0%) and inorganic growth of 29.3% (H1 2021: 17.2%) offset by attrition of 6.7% (H1 2021:8.4%). The lower attrition for the period was impacted by fewer clients reaching the natural end of their lifecycle and the rolling three year attrition average stands at 7.6%.

The retention of revenues that were not end of life increased to 97.9% (H1 2021: 97.0%). Not end of life attrition continues to be on less complex mandates where clients may seek lower cost solutions, not fitting with our high quality service model. The rolling three year average retention of not end of life revenues was 97.5%, demonstrating the quality of the wider client book.

ICS revenue increased by 59.7% when compared to H1 2021. LTM net organic growth improved significantly to 14.1% (H1 2021: 5.9%) with a rolling three year average of 9.6%. We have continued to see particularly strong growth in Luxembourg, UK and the Channel Islands. Attrition for the Division was 7.1% (H1 2021: 9.1%), 5.0% of which was for end of life losses.

PCS revenue increased by 8.4% when compared to H1 2021. LTM net organic growth was 4.0% (H1 2021: 9.9%) with a rolling three year average of 8.6% (H1 2021: 8.0%). Attrition for the Division was 6.1% (H1 2021: 7.5%), 4.5% of which was for end of life losses.

The onboarding of Project Amaro, the previously disclosed largest ever new business win is progressing well and despite the complexity of the mandate, we are scheduled to start generating revenue during the final quarter of the year. The necessary investment we have made in this client has adversely affected organic growth for PCS in the short-term and when adjusted to include these revenues, the Division would have delivered well in excess of 8% LTM net organic growth.

Revenue growth, on a constant currency basis, is summarised as follows:

	PLC	ICS	PCS
LTM revenue Jun 21	£128.8m	£73.5m	£55.3m
Lost - JTC decision	(£0.5m)	(£0.4m)	(£0.1m)
Lost - Moved service provider	(£2.1m)	(£1.1m)	(£1.0m)
Lost - End of life/no longer required	(£5.6m)	(£3.4m)	(£2.2m)
Net more from existing clients	£11.2m	£8.4m	£2.8m
New clients	£8.8m	£6.0m	£2.8m
Acquisitions	£33.7m	£33.7m	-
LTM revenue Jun 22	£174.3m	£116.7m	£57.6m

ACQUISITIONS

Acquisitions contributed £33.7m of new revenue in the LTM which is detailed as follows:

	PLC	ICS	PCS
EFS (Q4 2021)	£0.6m	£0.6m	-
SALI (Q4 2021)	£8.3m	£8.3m	-
Ballybunion (Q4 2021)	£1.4m	£1.4m	-
PerfORM (Q4 2021)	£0.2m	£0.2m	-
Segue (Q3 2021)	£1.2m	£1.2m	-
INDOS (Q2 2021)	£3.5m	£3.5m	-
RBC cees (Q2 2021)	£18.5m	£18.5m	-
Total	£33.7m	£33.7m	-

When JTC acquires a business, the acquired book of clients is defined as inorganic. These clients continue to be treated as inorganic for the first two years of JTC ownership.

NEW BUSINESS/PIPELINE

JTC secured new work with an annual value of £12.6m (H1 2021: £10.3m) and £4.2m of this was recognised during the period (H1 2021: £2.9m). The divisional split of new work won was ICS £8.5m (H1 2021: £4.8m) and PCS £4.1m (H1 2021: £5.5m). The PCS new business wins were strong and the drop reflects the fact that H1 2021 included the Divisions largest ever win, Project Amaro, which was valued at c. £2.5m p.a. at the time but is now expected to be £3.2m p.a. with room for further growth over the lifetime of the contract.

The enquiry pipeline increased by £4.3m (+8.9%) from £47.9m at 31 December 2021 to £52.2m at 30 June 2022.

UNDERLYING EBITDA AND MARGIN PERFORMANCE

Underlying EBITDA in H1 2022 was £30.7m, an increase of £8.8m (40.1%) from H1 2021.

Despite a difficult global economic and political backdrop, including inflationary pressures, JTC improved its underlying EBITDA margin to 33.0% (H1 2021: 32.7%). This resilience to macro-economic conditions alongside the continued investment in infrastructure, will position the business to be able to continue to deliver growth at consistent margins.

Management reiterates its medium-term guidance on the underlying EBITDA margin of 33% - 38%.

ICS's underlying EBITDA margin increased from 29.1% in H1 2021 to 31.5% in H1 2022. This improvement is the result of the exercise to implement a revised operating model in the Division alongside the ongoing, and to date successful, integration of the seven businesses acquired in 2021.

PCS's underlying EBITDA margin decreased from 38.0% in H1 2021 to 36.3% in H1 2022. The reduced margin reflects the continuing investment in clients, people and systems. The Division continues to perform very well and in line with the 2021 full year results where the H2 2021 margin of 36.3% has been maintained in 2022.

DEPRECIATION AND AMORTISATION

The depreciation and amortisation charge increased to £10.5m in H1 2022 from £8.2m in H1 2021. £1.9m of this increase was as a result of acquired intangible assets and £0.4m of the increase was as a result of an increased charge for right-of-use assets reflecting the increased global footprint of the business.

STATUTORY OPERATING PROFIT

The Group recognises that statutory operating profit is a more commonly accepted reporting metric and hence shows these results for the benefit of external stakeholders.

Statutory operating profit is impacted by a variety of non-underlying items which are detailed below.

PROFIT BEFORE TAX

The reported profit before tax was £21.0m (H1 2021: £36.8m).

Adjusting for non-underlying items, the underlying profit before tax for H1 2022 was £16.9m (H1 2021: £11.4m).

NON-UNDERLYING ITEMS

Non-underlying items incurred in the period totalled a £4.1m credit (H1 2021: £25.5m credit) and is comprised of:

	H1 2022 £m	H1 2021 £m
EBITDA
Employee Incentive Plan ("EIP")	4.5	-
Acquisition and integration costs	0.5	1.7
Revision of ICS operating model	0.4	0.3
Total non-underlying items within EBITDA	5.4	2.0
Profit before tax
Items impacting EBITDA	5.4	2.0
(Gain) on revaluation of contingent consideration	(0.4)	(20.9)
(Gain) on bargain purchase of RBC cees	-	(8.0)
Foreign exchange (gains)/losses	(9.0)	1.4
Total non-underlying items within profit before tax	(4.1)	(25.5)

We announced the distribution of the EIP awards during H2 2021 and the £4.5m charge in the current period relates to the second tranche of the awards that vested in July 2022.

Acquisition and integration costs were significantly lower (£1.2m) than the prior period and this reflects the fact that there were no acquisitions in H1, 2022 whilst the business has focused on the integration of the seven businesses acquired in 2021.

The foreign exchange gain of £9.0m relates to the revaluation of intercompany loans. Management considers these foreign exchange movements to be non-underlying items and not reflective of the underlying performance of the business.

UNDERLYING EARNINGS PER SHARE

Underlying basic EPS increased by 35.3% and was 16.23p (H1 2021: 12.00p). Underlying basic EPS reflects the profit for the year 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.

Every year we issue 1% of our share capital to the JTC EBT. This is equity that is allocated amongst all JTC staff and we believe this promotes better client service, a higher staff retention rate and our unique culture. Whilst this issuance dilutes EPS we believe that the benefits greatly outweigh the cost.

CASH FLOW AND DEBT

Underlying cash generated from operations was £30.9m (H1 2021: £22.5m) and the underlying cash conversion was 101% (H1 2021: 108%). This continues to reflect the predictability and highly cash generative nature of our business, and we maintain our medium-term guidance for the full year of 85% - 90%.

Underlying net debt at the period end was £92.2m compared with £113.3m at 31 December 2021 and £23.6m at 30 June 2021. Underlying leverage is therefore 1.61x underlying EBITDA (31 December 2021: 2.34x) and this evidences our ability to reduce leverage quickly in the absence of acquisitions.

With no additional drawdowns in the first half of 2022, there continues to be undrawn funds of £69.3m available out of the £225m banking facilities secured in 2021.

Martin Fotheringham

Chief Financial Officer

Statement of directors' responsibilities in respect of the interim financial statements

For the 6 month period ended 30 June 2022

"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

12 September 2022 12 September 2022

Appendix: Reconciliation of Reported results to APMs

In order to assist the reader's understanding of the financial performance of the Group, alternative performance measures (APMs) have been included to better reflect the underlying activities of the Group excluding specific items as set out in note 8 to the interim financial report. 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.

1. EBITDA

	H1 2022 £m	H1 2021 £m
Reported EBITDA	25.3	19.9
Non-underlying items
Acquisition and integration costs	0.5	1.7
Revision of ICS operating model	0.4	0.3
EIP	4.5	-
Underlying EBITDA	30.7	21.9

2. underlying CASH CONVERSION

	H1 2022 £m	H1 2021 £m
Net cash generated from operations	28.7	20.0
Non-underlying cash items	1.5	1.9
Income taxes paid	0.7	0.6
Underlying cash generated from operations	30.9	22.5
Acquisition normalisation*	-	1.1
Normalised underlying cash generated from operations	30.9	23.6
Underlying EBITDA	30.7	21.9
Underlying cash conversion	101%	108%

* Acquisition normalisation refers to the following: In 2021, £1.1m of RBC cees revenues were billed in advance and collected by the previous owners in advance of JTC ownership.

3. Underlying NET DEBT/LEVERAGE

	H1 2022 £m	H1 2021 £m
Cash balances	(60.9)	(79.8)
Bank debt	153.1	103.5
Other debt	-	-
Net debt - underlying	92.2	23.6
LTM underlying reported EBITDA	57.2	42.8
Leverage	1.61	0.55

4. UNDERLYING PROFIT AND EPS

In H1 2021, as a result of the volume and nature of acquisitions, management reviewed and updated the definition of underlying basic EPS to exclude the impact of the amortisation of acquired brands and software. This change ensures that underlying EPS continues to measure performance excluding the impact of all intangible assets and liabilities created through the IFRS 3 'Business Combinations' accounting standard.

The above resulted in an update of the H1 2021 comparative for underlying EPS (previously 11.74p to 12.00p).

Report on the condensed consolidated interim financial statements

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Our conclusion

We have reviewed JTC PLC's condensed consolidated interim financial statements (the "interim financial statements") in the Interim Financial Report 30 June 2022 of JTC PLC for the 6-month period ended 30 June 2022. 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.

_________________________________________________________________________

What we have reviewed

The interim financial statements comprise:

● the condensed consolidated interim balance sheet as at 30 June 2022;

● 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 30 June 2022 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.

_________________________________________________________________________

Responsibilities for the interim financial statements and the review

_________________________________________________________________________

Our responsibilities and those of the directors

The Interim Financial Report 30 June 2022, 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 30 June 2022 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.

Our responsibility is to express a conclusion on the interim financial statements in the Interim Review Report 30 June 2022 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.
____________________________________________________________________________

What a review of interim financial statements involves

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 30 June 2022 and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial statements.

PricewaterhouseCoopers CI LLP

Chartered Accountants

Jersey, Channel Islands

12 September 2022

(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 2022

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 costs

8.  Non-underlying items

9.  Other net gains

10. Finance cost

11. Income tax expense

12. Earnings per share

13. Goodwill

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

£'000	Note	H1 2022	H1 2021
Revenue	6	93,022	67,003
Staff costs	7	(51,666)	(34,070)
Other operating expenses		(15,213)	(12,366)
Credit impairment losses		(1,160)	(904)
Other operating income		21	17
Share of profit of equity-accounted investee		333	219
Earnings before interest, taxes, depreciation and amortisation ("EBITDA")		25,337	19,899
Comprising:
Underlying EBITDA		30,714	21,920
Non-underlying items	8	(5,377)	(2,021)
		25,337	19,899
Depreciation and amortisation		(10,530)	(8,159)
Profit from operating activities		14,807	11,740
Other net gains	9	11,622	27,370
Finance income		15	32
Finance cost	10	(5,411)	(2,318)
Profit before tax		21,033	36,824
Comprising:
Underlying profit before tax		16,942	11,368
Non-underlying items	8	4,091	25,456
		21,033	36,824
Income tax	11	(513)	(287)
Profit for the period		20,520	36,537
Earnings per ordinary share ("EPS")		Pence	Pence
Basic EPS	12.1	14.21	29.73
Diluted EPS	12.2	13.96	29.46

The above condensed consolidated interim income statement should be read in conjunction with the accompanying notes.

CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME

£'000	Note	H1 2022	H1 2021
Profit for the period		20,520	36,537
Items that may be subsequently reclassified to profit or loss:
Exchange differences on translation of foreign operations (net of tax)	18.1	20,541	(2,147)
Total comprehensive income for the period (net of tax)		41,061	34,390

The above condensed consolidated interim statement of comprehensive income should be read in conjunction with the accompanying notes.

CONDENSED CONSOLIDATED INTERIM BALANCE SHEET

£'000	Note	30.06.2022	31.12.2021
Assets
Property, plant and equipment		48,445	48,340
Goodwill	13	365,423	341,605
Other intangible assets		126,840	120,715
Investments		2,971	2,638
Other non-financial assets		1,740	558
Other receivables		271	988
Deferred tax assets		106	119
Total non-current assets		545,796	514,963
Trade receivables		32,441	28,870
Work in progress		13,033	12,834
Accrued income		23,487	19,587
Other non-financial assets		7,378	4,147
Other receivables		4,004	2,090
Cash and cash equivalents		60,948	39,326
Total current assets		141,291	106,854
Total assets		687,087	621,817
Equity
Share capital	14.1	1,491	1,476
Share premium	14.1	287,837	285,852
Own shares	14.2	(3,377)	(3,366)
Capital reserve		22,843	17,536
Translation reserve		15,206	(5,335)
Retained earnings	14.3	68,982	48,462
Total equity		392,982	344,625
Trade and other payables	15	26,743	23,680
Loans and borrowings	16	153,127	152,578
Lease liabilities		37,558	37,916
Deferred tax liabilities		25,037	24,355
Other non-financial liabilities	17	36	179
Provisions		2,023	1,720
Total non-current liabilities		244,524	240,428
Trade and other payables	15	19,157	19,497
Lease liabilities		5,992	5,463
Other non-financial liabilities	17	20,372	8,579
Current tax liabilities		4,050	2,978
Provisions		10	247
Total current liabilities		49,581	36,764
Total equity and liabilities		687,087	621,817

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 2022
		Attributable to owners of JTC PLC
£'000	Note	Share capital	Share premium	Own shares	Capital reserve	Translation reserve	Retained earnings	Total 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	14.1	15	1,985	-	-	-	-	2,000
Share-based payment expense	7	-	-	-	977	-	-	977
EIP share-based payment expense	7	-	-	-	4,330	-	-	4,330
Movement of own shares	14.2	-	-	(11)	-	-	-	(11)
Balance at 30 June 2022		1,491	287,837	(3,377)	22,843	15,206	68,982	392,982

		For the period ended 30 June 2021
		Attributable to owners of JTC PLC
£'000	Note	Share capital	Share premium	Own shares	Capital reserve	Translation reserve	Retained earnings	Total equity
Balance at 1 January 2021		1,225	130,823	(3,084)	1,456	(2,859)	30,844	158,405
Profit for the period		-	-	-	-	-	36,537	36,537
Other comprehensive loss for the period		-	-	-	-	(2,147)	-	(2,147)
Total comprehensive income for the period		-	-	-	-	(2,147)	36,537	34,390
Issue of share capital	14.1	108	64,851	-	-	-	-	64,959
Share-based payment expense	7	-	-	-	787	-	-	787
Movement of own shares	14.2	-	-	(168)	-	-	-	(168)
Balance at 30 June 2021		1,333	195,674	(3,252)	2,243	(5,006)	67,381	258,373

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

£'000	Note	H1 2022	H1 2021
Cash generated from operations	19.1	29,420	20,563
Income taxes paid		(740)	(589)
Net cash generated from operations		28,680	19,974
Comprising:
Underlying cash generated from operations		30,906	22,447
Non-underlying cash items	19.2	(1,486)	(1,884)
		29,420	20,563
Investing activities
Interest received		15	31
Payment for property, plant and equipment		(841)	(406)
Payment for intangible assets		(3,606)	(696)
Payment for business combinations		(33)	(25,517)
Payment for contract assets		(1,234)	(380)
Net cash used in investing activities		(5,699)	(26,968)
Financing activities
Share capital raised		-	65,882
Share issuance costs		(169)	(2,003)
Purchase of own shares		-	(168)
Loans to related parties		-	(301)
Repayment of loans and borrowings		-	(23,770)
Proceeds from loans and borrowings		-	22,397
Interest paid on loans and borrowings		(2,312)	(1,203)
Facility fees paid on loans and borrowings		-	(167)
Principal paid on lease liabilities		(2,983)	(2,512)
Interest paid on lease liabilities		(633)	(571)
Net cash (used in)/generated from financing activities		(6,097)	57,584
Net increase in cash and cash equivalents		16,884	50,590
Cash and cash equivalents at the beginning of the period		39,326	31,078
Effect of foreign exchange rate changes on cash and cash equivalents		4,738	(1,837)
Cash and cash equivalents at end of period		60,948	79,831

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 2 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 2022 to 30 June 2022 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 2022. Despite difficult global economic and political conditions and increasing inflationary pressures the business has continued to meet the expectations of the Board.

There were no significant transactions or events during the period that affected the financial position and performance, the Group has focused on consolidating the seven acquisitions made in 2021 alongside initiatives to further strengthen the global platform and invest in the long term success of the business.

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 2022 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. They are presented in pounds sterling (£), 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 2021, 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 2021.

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 8 September 2022 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 2021.

To the extent relevant, all IFRS standards and interpretations including amendments that were in issue and effective from 1 January 2022, have been adopted by the Group from 1 January 2022. 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 2022, 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.

This note provides an overview of the areas that involved a higher degree of judgement or complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions that turn out to be wrong.

There are no additional critical estimates and judgements to those set out in note 28.1 of the JTC Annual Report and Accounts 2021 that Management have made in the process of applying the Group's accounting policies that significantly effect the amounts recognised in the interim financial statements, except for the following critical accounting estimate and assumption.

US - NESF cash generating unit ("CGU") impairment assessment

The recoverable amount of the US - NESF CGU has been determined based on the higher of the value in use calculation and fair value less cost to sell. Management consider the key assumptions in the calculation to be annual revenue growth and EBIT margin. See note 13 for further detail and sensitivity analysis.

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. Declared 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
£'000	H1 2022	H1 2021	H1 2022	H1 2021	H1 2022	H1 2021
Revenue	63,521	39,784	29,501	27,219	93,022	67,003
Direct staff costs	(27,019)	(16,668)	(11,354)	(9,521)	(38,373)	(26,189)
Other direct costs	(1,061)	(163)	(722)	(645)	(1,783)	(808)
Underlying gross profit	35,441	22,953	17,425	17,053	52,866	40,006
Underlying gross profit margin %	55.8%	57.7%	59.1%	62.7%	56.8%	59.7%
Indirect staff costs	(5,290)	(4,085)	(3,955)	(3,207)	(9,245)	(7,292)
Other operating expenses	(10,160)	(7,304)	(3,101)	(3,726)	(13,261)	(11,030)
Other income	9	3	345	233	354	236
Underlying EBITDA	20,000	11,567	10,714	10,353	30,714	21,920
Underlying EBITDA margin %	31.5%	29.1%	36.3%	38.0%	33.0%	32.7%

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 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 the IFRS segmental reporting.

6.3. SEASONALITY

There is no material change for seasonality 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 note 17).

7. STAFF COSTS

£'000	Note	H1 2022	H1 2021
Salaries and Directors' fees		38,719	28,665
Employer-related taxes and other staff-related costs		4,192	2,487
Other short-term employee benefits		1,655	958
Pension employee benefits		1,793	1,173
Share-based payments		977	787
Employee Incentive Plan ("EIP") share-based payments	8(i)	4,330	-
Total staff costs		51,666	34,070

8. NON-UNDERLYING ITEMS

£'000		H1 2022	H1 2021
EBITDA		25,337	19,899
Non-underlying items within EBITDA:
Acquisition and integration costs		501	1,710
Revision of ICS operating model		351	311
EIP share-based payments (i)		4,511	-
Other		14	-
Total non-underlying items within EBITDA		5,377	2,021
Underlying EBITDA		30,714	21,920
Profit before tax		21,033	36,824
Total non-underlying items within EBITDA		5,377	2,021
Gain on bargain purchase		-	(8,036)
Gain on revaluation of contingent consideration (ii)		(424)	(20,840)
Foreign exchange (gains)/losses (iii)		(9,044)	1,399
Total non-underlying items within profit before tax		(4,091)	(25,456)
Underlying profit before tax		16,942	11,368

(i)  Share-based payment expense and associated employer-related taxes for awards made to staff under the EIP following the conclusion of the Odyssey business plan era (see note 36.1 of the JTC Annual Report and Accounts 2021).

(ii)  Gain on revaluation of liability-classified contingent consideration payable for perfORM (see note 15). Prior year gain related to the release of the NESF contingent consideration.

(iii)  Foreign exchange (gains)/losses relate to the revaluation of intercompany loans. Management consider these foreign exchange movements to be non-underlying items so have adjusted in order to reflect the Group's underlying performance.

9. OTHER NET GAINS

£'000	Note	H1 2022	H1 2021
Gain on bargain purchase	8	-	8,036
Gain on revaluation of contingent consideration	8(ii)	424	20,840
Foreign exchange gains/(losses)	8(iii)	11,198	(1,506)
Total other net gains		11,622	27,370

10. FINANCE COST

£'000	H1 2022	H1 2021
Bank loan interest	1,940	1,156
Amortisation of loan arrangement fees	566	283
Unwinding of net present value discounts	2,328	580
Other finance expense	577	299
	5,411	2,318

11. INCOME TAX

£'000	H1 2022	H1 2021
Current tax	1,666	849
Deferred tax	(1,153)	(562)
Total tax charge for the period	513	287

12. EARNINGS PER SHARE

The Group calculates basic, diluted and underlying basic Earnings Per Share ("EPS"). The results can be summarised as follows:

Pence	Note	H1 2022	H1 2021
Basic EPS	12.1	14.21	29.73
Diluted EPS	12.2	13.96	29.46
Underlying basic EPS	12.3	16.23	12.00

12.1. BASIC EARNINGS PER SHARE

£'000	H1 2022	H1 2021
Profit for the period	20,520	36,537

Thousands	No. of shares	No. of shares
Issued ordinary shares at 1 January	144,326	119,097
Effect of shares issued to acquire business combinations	-	29
Effect of movement in treasury shares held	103	117
Effect of equity placing	-	3,640
Weighted average number of Ordinary shares (basic)	144,429	122,883
Basic EPS	14.21	29.73

12.2. DILUTED EARNINGS PER SHARE

£'000	H1 2022	H1 2021
Profit for the period	20,520	36,537

Thousands	No. of shares	No. of shares
Weighted average number of Ordinary shares (basic):	144,429	122,883
Effect of movement in share-based payments	2,586	1,154
Weighted average number of Ordinary shares (diluted)	147,015	124,038
Diluted EPS	13.96	29.46

12.3. UNDERLYING BASIC EARNINGS PER SHARE

£'000	Note	H1 2022	H1 2021
Profit for the period		20,520	36,537
Non-underlying items	8	(4,091)	(25,456)
Amortisation of customer relationships, acquired software and brands		5,898	3,934
Amortisation of loan arrangement fees		566	283
Unwinding of net present value discounts		1,694	8
Temporary difference arising on amortisation of customer relationships, acquired software and brands		(1,153)	(562)
Adjusted underlying profit for the period		23,434	14,744

Thousands		No. of shares	No. of shares
Weighted average number of Ordinary shares (basic)		144,429	122,883
Underlying basic EPS		16.23	12.00

The definition of underlying basic Earnings Per Share has been updated to include amortisation for acquired software and brand intangibles which Management consider require adjustment in order to reflect the Group's underlying trading. Prior to these adjustments underlying basic Earnings Per Share was 16.10p (H1 2021: 11.74p).

13. GOODWILL

Goodwill is not amortised but is tested annually for impairment or more frequently if events or changes in circumstances indicate that the carrying amount may not be recoverable. At 30 June 2022, Management have concluded there are no impairment indicators present except for the US - NESF CGU where the level of previously anticipated growth in 2022 has yet to materialise. Whilst Management remain confident in the medium term growth outlook for this CGU, a full impairment assessment was performed in accordance with IAS 36.

Key assumptions used to calculate the recoverable amount of US - NESF CGU

The recoverable amount of the CGU has been determined based on the higher of the value in use calculation and fair value less cost to sell. Management prepared cash flow forecasts through an assessment of historical revenues from existing clients, the pipeline of new projects and expected market demand, and the required resource base needed to service new and existing clients, coupled with their knowledge of wider industry trends and the economic environment. Management estimate discount rates using pre-tax rates that reflect current market assessments of the time value of money.

A summary of the values assigned to the key assumptions used are as follows:

· Revenue growth rate: between 10.8% and 25.4% per annum (30.06.2021: 13.0% and 24.9%)

· EBIT margin: 5 year annual margin improvement of 5.4pp (30.06.2021: 19pp improvement)

Any potential changes in pre-tax discount rates and terminal growth rates are driven in the main by external economic factors.

Conclusion

The recoverable amount determined for the US - NESF CGU at 30 June 2022 was found to be higher than the carrying amount.

Sensitivity to changes in assumptions

Management have concluded that the US - NESF CGU is sensitive to impairment and the sensitivity of the key assumptions have been detailed below.

The following would cause the carrying amount to exceed the recoverable amount:

· A reduction of 5% in the forecast annual revenue growth rates used for years 1 - 5 would result in a £1.8m impairment

· A reduction of 6% in the forecast EBIT margin used for years 1 - 5 would result in a £1.6m impairment

The following would cause the recoverable amount to be equal to the carrying amount:

· A reduction of 4% in the forecast annual revenue growth rates used for years 1 - 5

· A reduction of 5% in the forecast EBIT margin used for years 1 - 5

14. SHARE CAPITAL AND RESERVES

14.1. SHARE CAPITAL AND SHARE PREMIUM

Movements in Ordinary shares	No. of shares (thousands)	Par value £'000	Share premium £'000
At 31 December 2021	147,586	1,476	285,852
PLC EBT issue	1,151	12	(71)
Acquisition of SALI	325	3	2,056
At 30 June 2022	149,062	1,491	287,837

On 14 June 2022, the Company issued an additional 1,475,852 Ordinary shares to the Company's Employee Benefit Trust ("PLC EBT"). Of this amount, 325,272 Ordinary shares settled an element of consideration for the SALI acquisition, the remaining 1,150,580 Ordinary shares were issued 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.

	Note	No. of shares (thousands)	PLC EBT £'000
At 31 December 2021		3,171	3,366
PSP and DBSP awards		(251)	-
Other awards		(21)	-
PLC EBT issue	14.1	1,151	11
Acquisition of SALI	14.1	325	-
Movement in the period		1,204	11
At 30 June 2022		4,375	3,377

During the six months to 30 June 2022, 271,555 Ordinary shares were exercised by employees of the Group for fully vested share awards.

14.3. RETAINED EARNINGS

The retained earnings include accumulated profits and losses.

The final dividend for the year 2021 of 5.07p per qualifying Ordinary share was paid on 8 July 2022.

An interim dividend of 3.1p per qualifying ordinary share (2021: 2.6p per qualifying Ordinary share) was declared by the Directors on 12 September 2022 and will be payable on 21 October 2022 to shareholders on the record on 23 September 2022.  The interim dividend has not been recognised as a liability as at 30 June 2022.

15. TRADE AND OTHER PAYABLES

£'000		30.06.2022	31.12.2021
Non-current
Other payables		343	382
Contingent consideration		25,731	22,521
Employee benefit obligations		669	777
Total non-current		26,743	23,680
Current
Trade payables		1,906	2,091
Other taxation and social security		477	642
Other payables		4,352	3,803
Accruals		6,456	7,059
Contingent consideration		5,966	5,902
Total current		19,157	19,497
Total trade and other payables		45,900	43,177

The contingent consideration payable is discounted to net present value, split between current and non-current and is due as follows: £1.4m for INDOS (31.12.2021: £1.32m), £1.85m for Segue (31.12.2021: £1.69m), £2.58m for perfORM (31.12.2021: 2.77m), £1.75m for Ballybunion (31.12.2021: £1.61m), £22.30m for SALI (31.12.2021: £21.01m), £nil for EFS (31.12.2021: £0.02m) and £1.81m (31.12.2021: £nil) for the purchase of intangible assets.

The earn-out for perfORM is liability-classified contingent consideration as it is calculated based on a multiple of underlying EBITDA for the year ended 31 December 2024 (up to a maximum of £6m) and payable in an equal split of cash and JTC PLC Ordinary shares (see Note 31.4(b)(i) of the JTC Annual Report and Accounts 2021). In accordance with IAS 32, Management are required to update the fair value at each reporting date.

Management therefore reassessed the forecast EBITDA and identified no evidence to indicate an adjustment was required to the £4.44m estimated as due. The Monte Carlo simulation was updated, decreasing the share price applied to the 282,854 JTC PLC Ordinary shares to £5.98 (31.12.2021: £7.99).

The simulation is based on JTC's share price at 30 June 2022, 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 decrease to the fair value of the contingent consideration payable in JTC Ordinary Shares to £1.69m (31.12.2021: £2.26m).

The revalued earn-out contingent consideration of £3.91m (cash £2.2m/ JTC PLC Ordinary shares £1.69m) has then been discounted to a present value of £2.58m.

16. LOANS AND BORROWINGS

£'000		30.06.2022	31.12.2021
Non-current
Bank loan		153,127	152,578
Total loans and borrowings		153,127	152,578

The Group has a multicurrency loan facility agreement for a total commitment of £225m consisting of a term loan of £75m and a revolving credit facility ("RCF") of £150m. The initial termination date is the third anniversary of the date of the agreement (being 6 October 2024) and for the RCF, the termination date can be extended for two one year extensions.

At 30 June 2022, the Group had available £69.3m of committed facilities currently undrawn (31 December 2021: £69.3m). All drawn facilities are due to be repaid on or before the termination date of 6 October 2024.

17. OTHER NON-FINANCIAL LIABILITIES

£'000	30.06.2022	31.12.2021
Non-current
Contract liabilities	36	179
Current
Deferred income	19,932	8,205
Contract liabilities	440	374
Total current	20,372	8,579
Total other non-financial liabilities	20,408	8,758

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. As a result of the acquisitions made in 2021 there is a commensurate increase in the balance compared with the previous year.

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 £2.58m for perfORM.

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 2022. 

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 ('£'). 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 £ although the facility is multicurrency. Management continue to monitor the effectiveness of the Group's policy to minimise foreign currency risk (as disclosed in note 29.1 of the JTC Annual Report and Accounts 2021) and continue to regularly assess if a foreign currency hedge is appropriate.

For the six months to 30 June 2022, mainly due to the Euro and United States dollar foreign currency exchange rate movements, we have recognised the following:

· a foreign exchange gain of £20.5m in other comprehensive income (H1 2021: £2.1m loss) upon translating our foreign operations to our functional currency

· a foreign exchange gain of £11.2m (H1 2021: £1.5m loss) in the condensed consolidated income statement upon the retranslation of monetary assets and liabilities denominated in foreign currencies (see note 11)

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.

18. FINANCIAL RISK AND CAPITAL MANAGEMENT (CONTINUED)

18.2. INTEREST RATE RISK (CONTINUED)

Sensitivity for variable rate instruments

The Group's sensitivity to interest rate risk as disclosed in the JTC Annual Report and Accounts 2021 is impacted by rising interest rates during the first six months of 2022.

Up to 31 December 2021, interest rate fluctuations were historically low and our sensitivity analysis for variable rate instruments noted a decrease/increase to profit for the year of £778k if rates increased/decreased by 50 basis points.

For loans and borrowings with floating rates at the 30 June 2022, the Group now 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 2022 would decrease/increase by £1.56m.

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 2022. Our credit risk management as set out in note 29.2 of the JTC Annual Report and Accounts 2021 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 2021 Annual Report.

18.5. CAPITAL MANAGEMENT

The Group's objective for managing capital is unchanged from that disclosed in Note 30 of the 2021 Annual Report.

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

£'000	H1 2022	H1 2021
Operating profit	14,807	11,740
Adjustments for:
Depreciation of property, plant and equipment	3,822	3,468
Amortisation of intangible assets	6,708	4,691
Share-based payment expense	1,085	787
EIP share-based payment expense	4,330	-
Share of profit of equity-accounted investee	(333)	(219)
Operating cash flows before movements in working capital	30,419	20,467
Net changes in working capital:
Increase in receivables	(12,327)	(6,362)
Increase in payables	11,328	6,458
Cash generated from operations	29,420	20,563

19.2. NON-UNDERLYING ITEMS WITHIN NET CASH FROM OPERATING ACTIVITIES

£'000	H1 2022	H1 2021
Net cash from operating activities	29,420	20,563
Non-underlying items:
Acquisition and integration	1,121	1,573
Revision of ICS operating model	351	311
Other	14	-
Total non-underlying items within net cash from operating activities	1,486	1,884
Underlying net cash from operating activities	30,906	22,447

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's associate Kensington International Group Pte Ltd has provided £0.18m of services to Group entities during the six month period to 30 June 2022 (H1 2021: £0.38m).

The Group has an interest in Harmonate Corp.; during the six month period to 30 June 2022 the Group received £0.5m of services (H1 2021: £0.11m) from Harmonate and provided services of £nil (H1 2021: £0.05m) to it.

The Group's only other significant related parties are key management personnel, comprising the Board of directors of the principal operating entities, JTC PLC and JTC Group Holdings Limited, being those persons having the authority and responsibility for planning, directing and controlling the activities of the Group.

The remuneration of key management personnel of the Group is set out below in aggregate for each of the categories specified in IAS 24 'Related Party Disclosures'.

£'000	H1 2022	H1 2021
Salaries and other short-term employee benefits	1,472	1,282
Post employment and other long-term benefits	76	67
Share-based payments	628	504
EIP share-based payments	325	-
Total payments	2,501	1,853

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

Acquisition of New York Private Trust Company ("NYPTC")

On 26 August 2022, JTC announced the proposed acquisition of NYPTC, a private client services business headquartered in Delaware, USA.  NYPTC offers a broad range of fiduciary services, including trust services, estate administration and white label trust services to high net worth and ultra-high net worth individuals, families and corporate clients. The proposed acquisition supports JTC's strategy to further develop its presence in the high growth US market and in particular to develop a US domestic trust services offering. The transaction is subject to final regulatory approvals and therefore it is impracticable to disclose the information required by IFRS 3 "Business Combinations".

 

END

 

 

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