Full year results for year ended 31 December 2023

JTC PLC

09 April 2024

 

full year RESULTS for year ended 31 december 2023 

9 April 2024

JTC PLC

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

Full year results for the year ended 31 December 2023

Another year of outstanding financial performance and strong momentum into 2024

	As reported			Underlying*
	2023	2022	Change	2023	2022	Change
Revenue (£m)	257.4	200.0	+28.7%	257.4	200.0	+28.7%
EBITDA (£m)	77.8	56.1	+38.8%	85.9	66.0	+30.1%
EBITDA margin*	30.2%	28.0%	+2.2pp	33.4%	33.0%	+0.4pp
Operating profit/EBIT (£m)	52.7	33.8	+55.8%	60.8	43.8	+38.8%
Profit before tax (£m)	24.3	35.9	-32.3%	40.5	34.1	+18.9%
Earnings per share (p)**	14.20	23.92	-40.6%	37.23	33.27	+11.9%
Cash conversion*	106%	91%	+15pp	106%	91%	+15pp
Net debt (£m)	135.1	120.4	+14.7	123.3	104.8	+18.5
Dividend per share (p)	11.17	9.98	+11.9%	11.17	9.98	+11.9%

*     For further information on our alternative performance measures (APM) see the appendix to the CFO Review.

**   Average number of shares (thousands) for 2023: 153,659 (2022: 145,137)

EXCEPTIONAL FINANCIAL PERFORMANCE

·      Revenue +28.7%, driven by record net organic growth of 19.9% (2022: 12.0%)

·      Underlying EBITDA +30.1% to £85.9m (2022: £66.0m) with an improvement in underlying EBITDA margin to 33.4% (2022: 33.0%)

·      New business wins +25.2% to a record £30.8m (2022: £24.6m)

·      Significant reduction in client attrition to 5.1% (2022: 6.4%) reflecting the longevity of client relationships associated with recent acquisitions

·      Exceptional underlying cash conversion of 106% (2022: 91%) resulting in leverage of 1.43x underlying EBITDA at period end, below the guidance range of 1.5x - 2.0x

·      Increased debt facility of £400m at period end to support delivery of Cosmos era business plan

·      Total dividend per share +11.9% to 11.17p (2022: 9.98p)

SUCCESSFUL EXECUTION OF GROWTH STRATEGY

·      Institutional Client Services Division performed well with net organic revenue growth of +19.4% as the businesses acquired during the Galaxy era continue to perform strongly, especially in the US

·      Private Client Services Division saw excellent revenue growth of +48.5% and record net organic revenue growth of +20.9% driven by strong performance in the Caribbean, US, and Jersey

·      The Group Commercial Office delivered strong results with cross-sales value increasing +32.3%

·      Strategically important acquisition of SDTC integrating well

·      Galaxy era growth objective of doubling from FY20 achieved two years ahead of plan

STRONG GROWTH OUTLOOK

·      Good momentum into the new year, with strong organic growth trends set to continue, supported by robust pipeline of new business

·      Active pipeline of M&A opportunities across both Divisions with four accretive bolt-on deals in exclusivity, supported by existing balance sheet capacity

·      Net organic revenue growth guidance raised to 10%+ per annum for the Cosmos era

·      All other well-established guidance metrics maintained: underlying EBITDA margin of 33% - 38%; cash conversion of 85% - 90% and net debt of between 1.5x - 2.0x underlying EBITDA

·      Cosmos era strategic objective to double the size of the business again from FY23 by FY27

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

"2023 was another exceptional year for JTC. We delivered further above guidance net organic revenue growth of 19.9%, driven by record net new business wins of £30.8 million, on an improved 33.4% EBITDA margin, supported by continued strong client demand for our services. This result exceeded last year's outstanding performance and continues our track record of 36 years of uninterrupted profitable growth, demonstrating JTC's consistent earnings power through the cycle and resilience to wider market volatility. 

Having achieved our Galaxy era strategic objective to double the size of the business in 2023, two years earlier than planned, we start 2024 with strong growth momentum towards our new Cosmos era goal to double the size of the business again. I am convinced that one of the key drivers of our success has been, and will continue to be, our employee shared ownership, which means that everyone is aligned in creating long-term value for the Group and all its stakeholders. I have no doubt that this success will continue, and we look forward to delivering further strong profitable growth in 2024 and beyond."

ENQUIRIES

JTC PLC	[phone]
Nigel Le Quesne, Chief Executive Officer
Martin Fotheringham, Chief Financial Officer
David Vieira, Chief Communications Officer
Camarco
Geoffrey Pelham-Lane	[phone]
Sam Morris	[phone]
Charles Dingwall	[phone]
([e-mail])

A presentation for analysts will be held at 09:30 BST 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

CHIEF EXECUTIVE OFFICER'S REVIEW

ACCELERATING TOGETHER

NIGEL LE QUESNE

CHIEF EXECUTIVE OFFICER

ANOTHER EXCEPTIONAL YEAR

Last year, I started my review by stating that 2022 had arguably been the best in my 30+ years at JTC. This is a phrase I will have to stop using, as 2023 surpassed it. From record organic growth to another platform acquisition in the US, the Group delivered an exceptional performance, in every respect.

DELIVERING OUR GALAXY ERA GOAL TWO YEARS EARLY

We are proud of our ability to deliver against stretching multi-year business plans, which we call eras. We deliberately name each era to give it an identity and focus collective effort within the business to achieve it. Each era is a controlled effort that matches the ever-growing capabilities of the Group with the market opportunities we see. To our employee-owners, the eras are also milestone targets that create opportunities for Shared Ownership awards, which have sat at the heart of our culture for over 25 years.

After listing in March 2018, we commenced the 'Odyssey era' and doubled the size of the Group (as measured by revenue and underlying EBITDA) by the end of 2020.

We then set ourselves the challenge of doubling again and named the era 'Galaxy', anticipating a four-to-five-year timeframe due to increased scale. The strong execution of our growth strategies allowed us to accelerate progress in both 2021 and 2022 and in 2023 we achieved our Galaxy era goal after just three years, some two years ahead of schedule. This is an outstanding performance, especially given the post pandemic environment and wider macro volatility and demonstrates how robust our business model is and how the demand for our services continues to grow. I am particularly pleased that net organic revenue growth has increased each year from 9.6% in 2021, to 12.0% in 2022 and now 19.9% in 2023, well ahead of our 8% - 10% medium term guidance. The Galaxy era also saw us make several important acquisitions in the US, most notably the platform businesses SALI in the ICS Division and SDTC in the PCS Division. These, along with smaller complementary deals, have created a strong platform for growth in the US. We now enter the Cosmos era during which we aim to double the size of the Group for the third time in a decade and achieve £0.5bn+ of revenue, with a higher proportion of Group revenues coming from the high growth US market.

FINANCIAL PERFORMANCE

Revenue grew 28.7% to £257.4m (2022: £200.0m) and underlying EBITDA also increased 30.1% to £85.9m (2022: £66.0m). Net organic revenue growth was a record 19.9% (2022: 12.0%) driven by another record in new business wins of £30.8m (2022: £24.6m). Despite the excellent organic growth performance and associated costs of on-boarding new business, our underlying EBITDA margin increased by 0.4pp to 33.4% (2022: 33.0%) and continued within our medium-term guidance for this metric of 33% to 38%. Cash conversion was once again robust and above guidance at 106% (2022: 91%). With the acquisition of SDTC being funded by a successful capital raise in June, leverage stood at 1.43x underlying EBITDA at period end, again aligned with our guidance range of 1.5x to 2.0x.

CONSISTENT GROWTH AND INNOVATION

I have written before about the natural 'hedge' that exists within the business, which allows us to deliver consistent growth throughout the economic cycle. When markets are buoyant, we win more 'new from new' business as clients launch new investment vehicles (notably funds) and the propensity to invest and add to portfolios more generally increases. When conditions are less favourable, we generate more work from existing clients as they respond to threats and opportunities in relation to their current holdings and structures. As a professional services business with client contracts that span 14 years or more, increased activity levels within the existing client base can generate meaningful growth for the Group.

In addition to this established pattern of demand, which we have observed for more than 30 years, we have a culture of continuous improvement and innovation that permeates through the business and sets ambitious standards for growth. Through both M&A and internal development via our Divisions and the Commercial Office, we add new services that are complementary to our core fund, corporate and private client offering. This allows us to grow 'share of wallet' with existing clients and also helps us to win new mandates. Service lines that we added or proactively expanded in the Galaxy era are now making meaningful contributions to Group revenue, often at strong margins. These include our banking platform (incorporating foreign exchange, treasury and custody), employer solutions, tax compliance, regulatory reporting, operational due diligence and strategic transformation services, all of which in combination delivered over £60m of revenue in 2023. With a global addressable market that we believe is at least $12bn per annum in size, there remains enormous opportunity for further long-term growth.

INSTITUTIONAL CLIENT SERVICES DIVISION

Revenue increased 19.5% to £163.3m (2022: £136.7m) with a 19.9% increase in underlying EBITDA to £51.6m (2022: £43.0m). Underlying EBITDA margin increased by 0.1pp to 31.6% (2022: 31.5%) and improved by a total of 3.7pp during the Galaxy era (2021 to 2023 inclusive). Net organic growth was once again strong and increased by 4.8pp to 19.4% (2022: 14.6%) with the annualised value of new business wins increasing by 19.8% to a record £20.6m (2022: £17.2m).

The availability of acquisitions that met our disciplined criteria led to a front-loading of inorganic activity for the Division during the Galaxy era, with a record seven ICS deals in 2021. This led to a natural period of focus on integration and value capture in 2022, which continued in 2023. We announced the acquisition of Blackheath Capital, an established UK ManCo business, which completed post period end and will add further scale and strategically important UK coverage to our Global AIFM Solutions business.

The ICS businesses acquired during the Galaxy era continued to perform strongly. JTC Employer Solutions (formerly RBC cees) remains one of the Group's most successful acquisitions in terms of ROIC and continues to evolve and grow on our platform. The innovative perfORM Operational Due Diligence business has scaled well, with expansion in the US and Europe, as well as the UK, creating a large number of cross-selling opportunities. Ballybunion, the Irish ManCo business, was fully re-branded as JTC and continued to contribute to our growing platform in Ireland, along with the depositary business, INDOS. In the US, the in-country senior leadership team delivered even greater cohesion and alignment, bringing together the talent and skills from SALI , Segue and EFS, as well as legacy JTC operations. Post period end in January, the final earnout payment for the SALI acquisition was made, confirming its smooth integration into the Division and the highly predictable, long-term revenue streams that SALI brings to the Group as an ICS platform business in the large, high-growth US market.

Regionally, the US remained the fastest growing market for ICS, and we also saw good growth in our Luxembourg and UK offices with stable performance from the Netherlands, Channel Islands and South Africa. At the end of the year, the Division stood at some c. 1,000 people serving clients from 21 offices and generating 63.4% of Group revenues (2022: 68.3%). This scale and reach, combined with our focus on providing client service excellence enabled by best-in-class technology, stands us in good stead to succeed in a competitive market.

Overall, the ICS Division made excellent progress in 2023 and has been a major component of the Group's accelerated delivery of the Galaxy era. As the Division continues to scale, particularly in the US, we anticipate further strong organic growth, additional opportunities for M&A and more service line innovation.

We have assembled a strong global leadership team, with a number of key appointments during the period. The team are ambitious for further success during the Cosmos era and have constructed an ambitious plan centred on our clients, employee-owners, growth (organic and inorganic) and enhanced market positioning.

PRIVATE CLIENT SERVICES DIVISION

Revenue increased 48.5% to £94.1m (2022: £63.4m) with an increase of 49.2% in underlying EBITDA to £34.3m (2022: £23.0m). The underlying EBITDA margin was 36.5% (2022: 36.3%) and remains towards the top end of our established guidance range of 33% - 38%. The investments made in the PCS platform throughout the Galaxy era continued to bear fruit, with net organic revenue growth increasing by an outstanding 12.2pp to 20.9% (2022: 8.7%) and the annualised value of new business wins being a record £10.2m (2022: £7.4m).

The strong organic growth reflects both the quality of our offering as the pre-eminent trust company business and our commitment to innovation and the delivery of sophisticated services including JTC Private Office, Strategic Transformation services, treasury, custody tax compliance and regulatory reporting. The Division continues to successfully redefine the parameters of a world-class PCS offering, which includes both direct services to end clients and indirect services providing solutions and support to institutions for their PCS client books, which in turn, enlarges its addressable global market.

The integration of New York Private Trust Company (NYPTC), which was acquired in the final quarter of 2022, progressed as planned. NYPTC enabled us to become the first non-US, non-bank firm to be licensed to provide trust company services from Delaware, an important competitive advantage as we build out our offering in the US. This was supplemented in August when we made our latest strategic 'platform' move in the US with the acquisition of South Dakota Trust Company (SDTC), a business known to JTC since 2016, with an established client base of c. 1,700 high net worth and ultra-high net worth clients and a 22-year track record of consistent growth, high margins and strong cash conversion. We have been pleased with the performance of the business to date, with integration progressing well, including a strong cultural alignment. These deals, in combination with our well-established legacy business in the US, established JTC as the leading independent provider of administration services to the US personal trust market with more than $150 billion of assets under administration (AuA).

Regionally, we further expanded our footprint with a licence to operate in the Bahamas in support of Project Amaro, the Group's largest ever single mandate for the provision of services to a US-based global bank and its clients. Our Miami and Cayman offices celebrated their ten-year anniversaries and post period end we established a new office in Vienna, Austria, to enhance our European presence. The Division continued to attract top talent from the industry and its global network delivered growth across key regions, including the US, Caribbean and Jersey.

The Division has cemented its position as a leader in its markets. In support of JTC's ambition for its brand to be recognised globally as a hallmark of quality, the Division launched its six client service excellence principles: Above and Beyond Service, Can Do Attitude, Entrepreneurial Outlook, Know Your Client, Transparent Communications, and Integrity. These, along with ambitious growth targets, will form the foundation of the Division's approach to success during the Cosmos era.

RISK

We continued our excellent record in managing the risks associated with being a leading regulated professional services business. In 2023 the team focused much of their time and effort on further enhancing our Risk & Compliance function globally to meet the ever-evolving requirements of international regulation. While this inevitably presents challenges, it also creates opportunities for growth and we seek to embrace these as our clients, especially larger and more complex organisations, look to us for expertise and support in this area. Many of our most recently developed service lines, including Strategic Transformation, tax compliance and regulatory reporting are driven, in part or in whole, by the regulatory landscape.

We continue to see long-term emerging risks come into greater focus, including transition risks associated with the world seeking to decarbonise. The internal Sustainability Forum, created in 2022, worked to manage and deliver our sustainability roadmap across the Group. At Board level, the Governance & Risk Committee, formed at the end of 2022, took on responsibility for oversight of risk at a Group level, as well as providing guidance on our sustainability journey and the commercial opportunities the Group might capture through the provision of sustainability services to clients. We were once again a Carbon Neutral+ organisation and made our first public submission to the Carbon Disclosure Project (CDP). Our commitment to achieve net zero by 2030 was advanced with the selection of the Science Based Target initiative (SBTi) as the framework we will follow to achieve this goal. More detail, including our latest TCFD disclosures, will be published in our 2023 Annual Report.

As the war in Ukraine enters its third year and with conflict between Israel and Palestine and the wider Middle East region, global macro uncertainty escalated significantly in 2023. As a Group, we remain acutely aware of our responsibilities in relation to sanctions compliance and enforce all such measures rigorously.

Significant advances in artificial intelligence (AI) came to the fore in 2023, in particular generative AI and large language models. As with almost every technological innovation, we see both opportunity and risk inherent in these inventions. Given that our services rely extensively on dealing with large amounts of data in a secure manner and where many of the outputs we produce to clients are in the form of 'words and numbers', we have embraced the opportunity to partner with our technology providers and examine use cases that are of benefit to the growth of the business, as well as those that present risks. This work has been supplemented with updates to system use policies and internal training and communications.

Looking ahead 2024 will see a presidential election in the US and a high probability of a general election in the UK. While we will continue to closely monitor any potential impact from these key political events, our experience over 36 years of trading suggests that the Group will remain resilient and adaptable to any changes that arise.

OUTLOOK

2023 was another exceptional year for JTC and will go down as a milestone in our history with the achievement of our Galaxy era goal to once again double the size of the Group. Our ability to grow consistently is a fundamental feature of the business that has been refined over 36 years and we remain dedicated to the culture, approach and discipline that have enabled it. I am particularly pleased with the organic growth performance of the Group, in 2023 specifically, where we had a number of initiatives come to fruition simultaneously, bringing and embedding revenue upgrade to the Group. The ability to continually expand client relationships over lifespans that average 14 years, as well as to win new clients in competitive markets, is testament to the quality of service that our people deliver and the way we innovate and add value through relevant new services over time.

While we are committed to using the best technology tools available, it is our people that form and nurture relationships with our clients and it is our culture of Shared Ownership that binds our team together and gives us shared vision, purpose and belief in our ability to succeed. Our commitment to a meritocratic Shared Ownership culture remains unwavering and I look forward to the anticipated opportunity to share the success of the Galaxy era with our global team later this year.

Our inorganic growth has always been highly disciplined and focused on the opportunities that we believe will deliver the best long-term benefits for the Group. We made nine acquisitions during the Galaxy era, all of which have and will add value to the business. We had a specific focus on establishing a platform for growth in the important US market and I am pleased that in the form of SALI and SDTC, we have made the cornerstone purchases needed for the ICS and PCS Divisions respectively. We will continue to identify and target high quality opportunities in our chosen markets and in addition will seek to return, on occasion, to our pre-IPO approach of acquisitions at lower multiples where we were able to revitalise under-performing businesses on our platform, thus delivering an attractive return on invested capital across our portfolio of acquisitions.

Our two Divisions continue to provide balance and diversification to the Group and as noted above, have sizeable opportunities to capture in the US, as well as growth potential in other markets, including Asia, in the Cosmos era. The catalyst of the Commercial Office proved itself in Galaxy and it has already been strengthened, with a new Group Head appointed post period end in January.

Looking ahead, we begin the Cosmos era with excellent momentum and anticipate continued strong organic growth in 2024 and beyond. While we are excited by our ambition to double the size of the Group for the third time in a decade and achieve £0.5bn+ of revenue, we will continue to ensure that the JTC platform remains well-invested at all times and that our talented global team are ready and equipped to grow with the business, maximise their individual potential and exceed the expectations of our clients. JTC will continue to innovate and shape the markets we serve in a way that supports long-term value creation for the Group and all its stakeholders.

In concluding, I once again extend my thanks to every member of the growing and talented JTC team for their efforts in 2023.

NIGEL LE QUESNE

Chief Executive Officer

CHIEF FINANCIAL OFFICER'S REVIEW

EXCEPTIONAL FINANCIAL PERFORMANCE

MARTIN FOTHERINGHAM

CHIEF FINANCIAL OFFICER

REVENUE

In 2023, revenue was £257.4m, an increase of £57.4m (+28.7%) from 2022 (+35.6%). Revenue growth on a constant currency basis was also +28.7% (2022: +32.0%).

Net organic growth continued to be strong through the year with an excellent full-year result of 19.9% (2022: 12.0%). The rolling three year average increased to 13.8% (2022: 9.8%).

As highlighted in our interim results, we have continued to see particularly strong volume growth in the business. This was driven by the expansion of our Tax Compliance offering as well as an increased uptake of our Treasury and Banking services. As a predominantly time and materials business, organic growth was also supported by strong pricing growth.

Our largest 15 clients represent 9.5% (2022: 10.7%) of our annual revenue thereby demonstrating the lack of customer concentration in the business. The new business pipeline is healthy and at the period end stood at £54.9m (31.12.2022: £45.8m).

Net organic growth was driven by gross new business revenues in the year of £49.6m (24.9%) (2022: £23.9m, 18.4%). Within this we saw client attrition of 5.1% (2022: 6.4%), with the three year average falling to 6.4% (2022: 7.7%). 

Alongside the increased lifetime value of our book and long-term earnings stability, this reduction in attrition can be attributed in large part to the high quality acquisitions the Group has made in recent years (notably RBC cees and SALI). In making these acquisitions, we deployed our capital at a lower immediate rate of return knowing that the contracts associated with these businesses are typically of a 30 - 40 year duration and represented a sound investment in the future of the business.

The retention of revenues that were not end of life remained consistent at 98.2% (2022: 98.3%) with the rolling three year average improving to 98.0% (2022: 97.4%).

Geographical growth is summarised below, with the highlight being the US which grew by 70.5% and represents 25% of our 2023 revenues (2022: 19%).

	2023 Revenue	2022 Revenue	£ +/-	% +/-
UK & Channel Islands	£128.2m	£107.8m	+£20.4m	+18.9%
US	£64.8m	£38.0m	+£26.8m	+70.5%
Rest of Europe	£38.7m	£34.3m	+£4.4m	+12.7%
Rest of the World	£25.7m	£19.9m	+£5.8m	+29.3%
	£257.4m	£200.0m	+£57.4m	+28.7%

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

2022 Revenue	£200.0m
Lost - JTC decision	(£0.8m)
Lost - Moved service provider	(£2.7m)
Lost - Natural end/no longer required	(£6.6m)
Net more from existing clients	£36.3m
New clients	£13.3m
Acquisitions*	£17.9m
2023 Revenue	£257.4m

*     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 £17.9m in 2023 and is broken down as follows: NYPTC £5.2m and SDTC £12.7m.

UNDERLYING EBITDA AND MARGIN PERFORMANCE

Underlying EBITDA in 2023 was £85.9m, an increase of £19.9m (30.1%) from 2022.

We are pleased to have delivered further margin improvement with an underlying EBITDA margin of 33.4% (2022: 33.0%), despite the macroeconomic environment remaining uncertain.

Management were also particularly pleased to be able to deliver margin improvement at the same time as registering organic growth of 19.9%. During periods of heightened growth, the required up-front investment in infrastructure and human capital inherently slows down margin progression. This initial investment is a key allocation of capital in order to maximise and deliver on growth opportunities and ensure the continued longevity of our client relationships.

INSTITUTIONAL CLIENT SERVICES

Revenue increased by 19.5% when compared with 2022 (47.4%).

Net organic growth, on a constant currency basis, was 19.4% (2022: 14.6%) with the main source of growth coming from the US. The rolling three year average now stands at 15.2% (2022: 11.0%).

Attrition for the Division fell to 5.2% (2022: 7.5%), of which 3.5% (2022: 5.6%) was for end of life losses. The improvement in attrition is largely attributable to the SALI and RBC cees acquisitions but also to lengthening of structure lives as the adverse economic environment persisted.

Revenue growth, on a constant currency basis, is summarised below.

REVENUE GROWTH ICS

2022 Revenue	£136.7m
Lost - JTC decision	(£0.6m)
Lost - Moved service provider	(£1.7m)
Lost - Natural end/no longer required	(£4.8m)
Net more from existing clients	£25.5m
New clients	£8.2m
2023 Revenue	£163.3m

The Division's underlying EBITDA margin increased from 31.5% in 2022 to 31.6% in 2023 and we are pleased that the margin continues to improve in the face of outstanding growth and continued investment.

PRIVATE CLIENT SERVICES

Revenue increased by 48.5% when compared with 2022 (15.7%).

Net organic growth, on a constant currency basis, was 20.9% (2022: 8.7%) with strong growth in the Caribbean, US, and Jersey. The rolling three year average now stands at 12.2% (2022: 8.3%). 

Attrition for the Division was consistent at 5.0% (2022: 4.8%), of which 3.0% (2022: 3.3%) were for end of life losses. 

Net organic growth for the Division in 2022 had been suppressed whilst we onboarded our largest ever mandate. This was a complex mandate to fulfil and without these revenues in 2023, the Division would have been well above our medium-term guidance range.

Revenue growth, on a constant currency basis, is summarised below.

REVENUE GROWTH PCS

2022 Revenue	£63.3m
Lost - JTC decision	(£0.2m)
Lost - Moved service provider	(£1.0m)
Lost - Natural end/no longer required	(£1.8m)
Net more from existing clients	£10.8m
New clients	£5.1m
Acquisitions*	£17.9m
2023 Revenue	£94.1m

*     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 £17.9m in 2023 and is broken down as follows: NYPTC £5.2m and SDTC £12.7m.

The Division's underlying EBITDA margin increased from 36.3% in 2022 to 36.5% in 2023. The Division continues to perform well and the margin improvement has been driven by the integration of NYPTC and the recent acquisition of SDTC.

PROFIT BEFORE TAX

The reported profit before tax was £24.3m (2022: £35.9m).

The depreciation and amortisation charge increased to £25.1m from £22.3m in 2022. Of the £2.8m increase, £2.2m was as a result of intangible assets and £0.4m as a result of increased depreciation charges on property, plant and equipment.

Whereas in 2022 we reported an exchange rate gain upon revaluation of our intercompany loans of £11.9m, in 2023 there was a translation loss of £8.5m as a result of closing exchange rates. Management considers these gains/(losses) as non-underlying as they are unrealisable movements from the elimination of inter-company loans upon consolidation and do not relate to the underlying trading activities of the Group.

Adjusting for non-underlying items, the underlying profit before tax increased by 18.9% to £40.5m (2022: £34.1m).

The relative increase was lower than the 30.1% 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 £1.1m (2022: £2.5m gain).

The interest rate applied to our loan facilities is determined using SONIA plus a margin based on net leverage calculations. Policy rate increases in 2023 resulted in a £5.9m increase in the interest expense on our borrowings.

The Board sought to increase the predictability of JTC's interest expense and minimise market risk over the next couple of years. During Q4 2023, we successfully completed a refinancing process and purchased a two year interest rate swap covering £180m of our drawn debt facilities. This fixed the interest rate for that portion of the facility at c. 4.3% (excluding bank margin). The remaining balance of the facility is chargeable at the floating SONIA rate.

NON-UNDERLYING ITEMS

Non-underlying items incurred in the period totalled a £16.2m debit (2022: £1.9m credit) and comprised the following:

	2023 £m	2022 £m
EBITDA
Acquisition and integration costs	7.1	3.4
Office start-up costs	0.6	0.8
Other costs	0.4	0.2
Employee Incentive Plan (EIP)	-	5.2
Revision of ICS operating model	-	0.4
Total non-underlying items within EBITDA	8.1	10.0
Profit before tax
Items impacting EBITDA	8.1	10.0
(Gains)/losses on revaluation of contingent consideration	(0.4)	0.1
Foreign exchange losses/(gains)	8.5	(11.9)
Total non-underlying items within profit before tax	16.2	(1.9)

Non-underlying items within EBITDA were lower than the prior period as 2022 included an EIP expense in relation to the vesting of the second tranche of awards made to employees in 2021.

Acquisition and integration costs of £7.1m were £3.7m higher than 2022, reflecting the increased M&A activity and primarily the costs associated with the acquisition of SDTC.

Office start-up costs of £0.6m included 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 gain on revaluation of contingent consideration relates to the Segue earn-out (acquired Q2 2021) where upon reassessment on 31 December 2023, Management concluded that no additional payments would be due. 

As highlighted in the profit before tax commentary, the foreign exchange loss of £8.5m relates to the revaluation of inter-company loans (£11.9m gain in 2022).

TAX

The net tax charge in the year was £2.5m (2022: £1.2m). The cash tax charge was £4.1m (2021: £2.8m), but this is reduced by deferred tax credits of £1.6m (2022: £1.6m) mainly as a result of movements in relation to the value of acquired intangible assets held on the balance sheet. When excluding non-underlying items, our 2023 effective tax rate was 10.1% (2022: 8.2%).

With our increasing global presence, this increased tax rate reflects the restructuring of our US businesses to support the M&A activity in the region. This has resulted in an increased tax charge but enables the Group to efficiently manage its global cash flows.

The Group regularly reviews its transfer pricing policy, is fully committed to responsible tax practices and continues to be fully compliant with OECD guidelines. Whilst we are not legally required to publish our tax strategy, we consider it best practice to demonstrate transparency on tax matters and our Board-approved strategy is available online.

EARNINGS PER SHARE

Basic EPS decreased by 40.6% to 14.20p. Taking into account non-underlying items and adjustments that we make against profit for the year our adjusted underlying EPS increased by 11.9% and was 37.23p (2022: 33.27p).

Adjusted 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, impairment of intangible customer relationships and the unwinding of net present value discounts in relation to contingent consideration.

RETURN ON INVESTED CAPITAL (ROIC)

ROIC for 2023 was 12.3%, reporting a strong increase on prior year (2022: 11.5%) with both periods significantly above our cost of capital. In 2023 we completed the acquisition of SDTC, our largest to date, and such outlays can result in a short-term dilution on returns. 

These investment decisions are critical and when evaluating opportunities, we consider both the immediate return on capital but also the long-term potential and strategic fit. As highlighted in the commentary on revenue, the SALI acquisition (acquired in 2021) was an example whereby short-term return on capital was reduced but we gained 30 - 40 year customer life-cycles which lead to lower attrition rates as well as significant cross-selling opportunities resulting in attractive returns when measured over the long term.

We measure ROIC on a post-tax basis and more information on our approach can be found in the CFO's Review appendix.

INTANGIBLE ASSETS

Our total assets at 31 December 2023 were £905.1m, a c. 300% increase to the £225.3m reported in our first post-IPO set of results (2018). Much of this increase has been the result of acquisitions, with goodwill now comprising 58% of our total assets with other intangible assets representing a further 16%.

Goodwill is assessed for impairment on an annual basis, or more frequently if events or changes in circumstances indicate potential impairment. No goodwill impairments were recorded in 2023. One significant and positive change in 2023 was the consolidation of our US ICS acquisitions into one single cash-generating unit (CGU) - reflecting both how the segment is now managed and the successful integration of these acquisitions.

Customer relationships that form part of other intangible assets are subject to impairment assessments when impairment indicators are present. Forthcoming legislative changes in the Netherlands highlighted a possible impairment with our previously acquired Aufisco customer relationship. Having considered all the risk factors, the Group decided to sell its Global Tax Support (GTS) subsidiary (sold on 1 March 2024). The assessment of the customer relationship balance at 31 December 2023 resulted in a £0.7m impairment. No goodwill impairment was required for the Netherlands CGU.

CASH FLOW AND DEBT

Underlying cash generated from operations was £91.2m (2022: £60.3m) and underlying cash conversion was 106%, significantly ahead of 2022 (91%) and well above our medium-term guidance range.

This exceptional result was driven by the acceleration in the growth of our Treasury and Banking services and our growing US presence, both of which continued to shorten our working capital cycle with highly predictable and timely cash receipts. These helped drive down our net investment days, excluding SDTC, to 89 (2022: 110).

Management maintain their medium-term cash conversion guidance range of 85% - 90%. 

Reported net debt includes cash balances set aside for regulatory compliance purposes. Underlying net debt excludes this and at the period end was £123.3m compared with £104.8m at 31 December 2022. This increase in net debt at the year end was expected as the business funded the SDTC acquisition in part through a £62m gross fundraise in June and a subsequent £118m drawdown from its debt facility on 1 August 2023.

We are pleased to report that we reduced our net debt / underlying EBITDA leverage at the year end to a level below our guidance range (1.5x - 2.0x) at 1.43x (2022: 1.59x).

The business completed a successful refinancing process in Q4 2023 and increased its debt facilities to £400m, with an accordion for an additional £100m. As of 31 December 2023, the Group had undrawn funds of £176.3m providing the business with significant capacity for further M&A activity. The facilities terminate on 4 December 2026 with an option to extend to 30 June 2028. 

Post year end, on the 10 January 2024, the Group paid out £21.1m from its cash on hand to settle the SALI earn-out in full.

DIVIDEND PER SHARE

We are pleased to propose a final dividend of 7.67p, resulting in a 2023 dividend per share of 11.17p (2022: 9.98p) which was a 11.9% increase on prior year. This remains consistent with our dividend policy to declare at 30% of adjusted underlying EPS.

Subject to Shareholders' approval at the forthcoming AGM, the final dividend will be paid on 28 June 2024 to Shareholders on the register of members as at close of business on 31 May 2024.

MARTIN FOTHERINGHAM

CHIEF FINANCIAL OFFICER

APPENDIX: RECONCILIATION OF REPORTED RESULTS TO ALTERNATIVE PERFORMANCE MEASURES (APMS)

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 7 in the 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 measure has been detailed below.

Alternative performance measure	Closest equivalent statutory measure	APM Definition / PURPOSE AND STRATEGIC LINK
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. For all periods up to and including 2023, Management's medium-term guidance range was 8% - 10%.
Underlying EBITDA %	Profit/(loss)	Definition: Earnings before interest, tax, depreciation, and amortisation excluding non-underlying items (see note 7 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 incorporation 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 BASIC EPS (p)	Basic Earnings Per Share	Definition: Reflects the profit after tax for the year 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, impairment of intangible customer relationships and the unwinding of NPV discounts in relation to contingent consideration, are removed. Purpose and strategic link: Presents an adjusted underlying basic EPS which is used more widely by external investors and analysts, and is in addition the basis upon which the dividend is calculated.
return on invested capital (ROIC)	Profit/(loss)	Definition: Reflects the net operating profit after tax divided by the average invested capital. Purpose and strategic link: Measures our capital efficiency in generating profit against deployed capital. An industry-accepted APM and one that both external investors and analysts use in addition to statutory measures.

A reconciliation of our APMs to their closest equivalent statutory measure has been provided below.

1. ORGANIC GROWTH

	2023 £m	2022 £m
Reported prior year revenue	200.0	147.5
Impact of exchange rate restatement	-	4.1
Acquisition revenues	(1.0)	(21.2)
a. Prior year organic growth	199.0	130.4
Reported revenue	257.4	200.0
Less: acquisition revenues	(18.9)	(54.0)
b. Current year organic growth	238.5	146.0
Net organic growth % (b/a) -1	19.9%	12.0%

2. UNDERLYING EBITDA

	2023 £m	2022 £m
Reported profit	21.8	34.7
Less:
Income tax	2.7	1.2
Finance cost	19.2	12.3
Finance income	(0.8)	(0.2)
Other losses/(gains)	9.7	(14.2)
Depreciation and amortisation	25.1	22.3
Non-underlying items within EBITDA*	8.1	10.0
Underlying EBITDA	85.9	66.0
Underlying EBITDA %	33.4%	33.0%

* As set out in note 7 in the financial statements. A reconciliation of divisional EBTIDA can be found in note 4 of the financial statements.

3. UNDERLYING CASH CONVERSION

	2023 £m	2022 £m
Net cash generated from operating activities	81.3	53.3
Less:
Non-underlying cash items*	6.5	4.9
Income taxes paid	3.4	2.1
a. Underlying cash generated from operations	91.2	60.3
b. Underlying EBITDA	85.9	66.0
Underlying cash conversion (a / b)	106%	91%

* As set out in note 35.2 in the financial statements.

4. UNDERLYING LEVERAGE

	2023 £m	2022 £m
Cash and cash equivalents	97.2	48.9
Bank debt	(220.5)	(153.6)
a. Net debt - underlying	123.3	104.8
b. Underlying EBITDA	85.9	66.0
Leverage (a / b)	1.43	1.59

5. ADJUSTED UNDERLYING BASIC EPS

	2023 £m	2022 £m
Profit for the year as per basic EPS	21.8	34.7
Less:
Non-underlying items*	16.8	(1.9)
Amortisation of customer relationships, acquired software and brands	14.3	12.4
Impairment of customer relationship intangible asset	0.7	-
Amortisation of loan arrangement fees	0.8	1.1
Unwinding of NPV discounts for contingent consideration	5.1	3.5
Temporary tax differences arising on amortisation of customer relationships, acquired software and brands	(1.7)	(1.5)
a. Adjusted underlying profit for the year	57.2	48.3
b. Weighted average number of shares	153.7	145.1
Adjusted underlying basic EPS (a / b)	37.23	33.27

The definition of adjusted underlying basic EPS was updated to include the removal of any impairments to acquired intangible assets. Management consider this adjustment to be consistent with their existing treatment of acquired intangible assets. Prior to this update, the adjusted underlying EPS was 36.76p (2022: 33.27p).

* As set out in note 7 in the financial statements.

6. RETURN ON INVESTED CAPITAL

	2023 £m	2022 £m
Profit for the period	21.8	34.7
Add back:
Non-underlying items	16.2	(1.9)
Amortisation of customer relationships, acquired software and brands	14.3	12.4
Impairment of customer relationship intangible asset	0.7	-
Temporary tax differences arising on amortisation of customer relationships, acquired software and brands	(1.7)	(1.5)
Net finance costs	18.4	12.1
Tax estimate on financing costs	(0.3)	(0.4)
a. Net operating profit after tax	69.5	55.3
+ Closing equity	503.9	400.2
+ Closing debt	220.5	153.6
- Closing cash	(97.2)	(48.9)
Invested capital	627.2	505.0
b. Average invested capital (opening + closing/2)	566.1	481.4
c. ROIC (a / b)	12.3%	11.5%

CONSOLIDATED INCOME STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2023

	Note	2023 £'000	2022 £'000
Revenue	4	257,440	200,035
Staff expenses	5	(131,921)	(105,831)
Other operating expenses	6	(44,855)	(35,570)
Credit impairment losses	12	(2,934)	(3,092)
Other operating income		75	44
Share of (loss)/profit of equity-accounted investee	32	(15)	478
Earnings before interest, taxes, depreciation and amortisation ("EBITDA")		77,790	56,064
Comprising:
Underlying EBITDA		85,909	66,039
Non-underlying items	7	(8,119)	(9,975)
		77,790	56,064
Depreciation and amortisation	8	(25,140)	(22,261)
Profit from operating activities		52,650	33,803
Other (losses)/gains	9	(9,912)	14,201
Finance income	10	794	244
Finance cost	10	(19,222)	(12,313)
Profit before tax		24,310	35,935
Comprising:
Underlying profit before tax		40,498	34,052
Non-underlying items	7	(16,188)	1,883
		24,310	35,935
Income tax	11	(2,489)	(1,221)
Profit for the year		21,821	34,714
Earnings Per Share ("EPS")		Pence	Pence
Basic EPS	34.1	14.20	23.92
Diluted EPS	34.2	14.07	23.60

The notes are an integral part of these consolidated financial statements.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2023

	Note	2023 £'000	2022 £'000
Profit for the year		21,821	34,714
Other comprehensive (loss)/income
Items that may be reclassified to profit or loss:
Exchange difference on translation of foreign operations (net of tax)	38	(7,038)	21,314
Losses on cash flow hedges	29.1	(615)	-
Hedging gains reclassified to profit or loss	10	(134)	-
Items that will not be reclassified to profit or loss:
Remeasurements of post-employment benefit obligations	5.1	(300)	316
Total other comprehensive (loss)/income		(8,087)	21,630
Total comprehensive income for the year		13,734	56,344

The notes are an integral part of these consolidated financial statements.

CONSOLIDATED BALANCE SHEET

AS AT 31 DECEMBER 2023

	Note	2023 £'000	2022 £'000
Assets
Property, plant and equipment	20	49,659	49,566
Goodwill	21	522,964	363,708
Other intangible assets	21	147,302	128,020
Investments	32	3,365	3,156
Other non-financial assets	22	2,981	2,369
Other receivables	15	-	535
Deferred tax assets	23	266	143
Total non-current assets		726,537	547,497
Trade receivables	12	32,071	33,290
Work in progress	13	11,615	12,525
Accrued income	14	26,574	23,911
Other non-financial assets	22	6,899	5,983
Other receivables	15	4,181	3,827
Cash and cash equivalents	16	97,222	48,861
Total current assets		178,562	128,397
Total assets		905,099	675,894
Equity
Share capital	26.1	1,655	1,491
Share premium	26.1	392,213	290,435
Own shares	26.2	(3,912)	(3,697)
Capital reserve	26.3	28,584	24,361
Translation reserve	26.3	8,941	15,979
Other reserve	26.3	(749)	-
Retained earnings	26.3	77,144	71,648
Total equity		503,876	400,217
Liabilities
Trade and other payables	17	49,794	26,896
Loans and borrowings	18	220,531	153,622
Lease liabilities	19	37,924	40,602
Deferred tax liabilities	23	9,474	11,184
Derivative financial instruments	29	749	-
Other non-financial liabilities	24	1,307	788
Provisions	25	2,200	1,884
Total non-current liabilities		321,979	234,976
Trade and other payables	17	46,897	23,424
Lease liabilities	19	6,117	4,292
Other non-financial liabilities	24	20,512	8,628
Current tax liabilities		5,346	4,088
Provisions	25	372	269
Total current liabilities		79,244	40,701
Total equity and liabilities		905,099	675,894

The consolidated financial statements were approved by the Board of Directors on 8 April 2024 and signed on its behalf by:

NIGEL LE QUESNE                                                                            MARTIN FOTHERINGHAM

CHIEF EXECUTIVE OFFICER                                                          CHIEF FINANCIAL OFFICER

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2023

	Note	Share capital £'000	Share premium £'000	Own shares £'000	Capital reserve £'000	Translation reserve £'000	Other reserve £'000	Retained earnings £'000	Total equity £'000
Balance at 1 January 2023		1,491	290,435	(3,697)	24,361	15,979	-	71,648	400,217
Profit for the year		-	-	-	-	-	-	21,821	21,821
Other comprehensive loss		-	-	-	-	(7,038)	(749)	(300)	(8,087)
Total comprehensive income for the year		-	-	-	-	(7,038)	(749)	21,521	13,734
Issue of share capital	26.1	164	103,631	-	-	-	-	-	103,795
Cost of share issuance	26.1	-	(1,853)	-	-	-	-	-	(1,853)
Share-based payments	36.5	-	-	-	4,223	-	-	-	4,223
Movement of own shares	26.2	-	-	(215)	-	-	-	-	(215)
Dividends paid	27	-	-	-	-	-	-	(16,025)	(16,025)
Total transactions with owners		164	101,778	(215)	4,223	-	-	(16,025)	89,925
Balance at 31 December 2023		1,655	392,213	(3,912)	28,584	8,941	(749)	77,144	503,876
Balance at 1 January 2022		1,476	285,852	(3,366)	17,536	(5,335)	-	48,462	344,625
Profit for the year		-	-	-	-	-	-	34,714	34,714
Other comprehensive income		-	-	-	-	21,314	-	316	21,630
Total comprehensive income for the year		-	-	-	-	21,314	-	35,030	56,344
Issue of share capital	26.1	15	4,654	-	-	-	-	-	4,669
Cost of share issuance	26.1	-	(71)	-	-	-	-	-	(71)
Share-based payments	36.5	-	-	-	2,045	-	-	-	2,045
Employee Incentive Plan (EIP) share-based payments	36.5	-	-	-	4,780	-	-	-	4,780
Movement of own shares	26.2	-	-	(331)	-	-	-	-	(331)
Dividends paid	27	-	-	-	-	-	-	(11,844)	(11,844)
Total transactions with owners		15	4,583	(331)	6,825	-	-	(11,844)	(752)
Balance at 31 December 2022		1,491	290,435	(3,697)	24,361	15,979	-	71,648	400,217

The notes are an integral part of these consolidated financial statements.

CONSOLIDATED CASH FLOW STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2023

	Note	2023 £'000	2022 £'000
Cash generated from operations	35.1	84,725	55,366
Income taxes paid		(3,432)	(2,053)
Net movement in cash generated from operations		81,293	53,313
Comprising:
Underlying cash generated from operations		91,180	60,308
Non-underlying cash items	35.2	(6,455)	(4,942)
		84,725	55,366
Investing activities
Interest received		744	254
Payments for property, plant and equipment	20	(2,346)	(2,979)
Payments for intangible assets	21	(3,811)	(5,491)
Payments for business combinations (net of cash acquired)	17.1, 31	(114,719)	(15,113)
Payments to obtain or fulfil a contract	22	(693)	(2,210)
Payment for investment	32	(250)	-
Loan to third party	15	(160)	-
Net cash used in investing activities		(121,235)	(25,539)
Financing activities
Proceeds from issue of shares	26.1	62,000	-
Share issuance costs	26.1	(1,853)	(169)
Purchase of own shares	26.2	(200)	(320)
Dividends paid	27	(16,025)	(11,844)
Repayment of loans and borrowings	18	(50,000)	-
Proceeds from loans and borrowings	18	118,000	-
Loan arrangement fees	18	(1,896)	-
Interest paid on loans and borrowings		(11,348)	(6,173)
Principal paid on lease liabilities		(6,074)	(4,907)
Interest paid on lease liabilities		(1,439)	(1,336)
Net cash generated from/(used in) financing activities		91,165	(24,749)
Net increase in cash and cash equivalents		51,223	3,025
Cash and cash equivalents at the beginning of the year		48,861	39,326
Effect of foreign exchange rate changes		(2,862)	6,510
Cash and cash equivalents at the end of the year	16	97,222	48,861

The notes are an integral part of these consolidated financial statements.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2023

SECTION 1 - BASIS FOR REPORTING AND GENERAL INFORMATION

1.             Reporting entity

2.             Basis of preparation

3.             Material accounting policies and standards

SECTION 2 - RESULT FOR THE YEAR

4.             Operating segments

5.             Staff expenses

6.             Other operating expenses

7.             Non-underlying items

8.             Depreciation and amortisation

9.             Other (losses)/gains

10.          Finance income and finance cost

11.          Income tax

SECTION 3 - FINANCIAL ASSETS AND FINANCIAL LIABILITIES

12.          Trade receivables

13.          Work in progress

14.          Accrued income

15.          Other receivables

16.          Cash and cash equivalents

17.          Trade and other payables

18.          Loans and borrowings

19.          Lease liabilities

SECTION 4 - NON-FINANCIAL ASSETS AND NON-FINANCIAL LIABILITIES

20.          Property, plant and equipment

21.          Goodwill and other intangible assets

22.          Other non-financial assets

23.          Deferred tax

24.          Other non-financial liabilities

25.          Provisions

SECTION 5 - EQUITY

26.          Share capital and reserves

27.          Dividends

SECTION 6 - RISK

28.          Critical accounting estimates and judgements

29.          Financial risk management

30.          Capital management

SECTION 7 - GROUP STRUCTURE

31.          Business combinations

32.          Investments

33.          Subsidiaries

SECTION 8 - OTHER DISCLOSURES

34.          Earnings Per Share

35.          Cash flow information

36.          Share-based payments

37.          Contingencies

38.          Foreign currency

39.          Related party transactions

40.          Consideration of climate change

41.          Events occurring after the reporting period

SECTION 1 - BASIS FOR REPORTING AND GENERAL INFORMATION

1. REPORTING ENTITY

JTC PLC (the "Company") was incorporated on 12 January 2018 and is domiciled in Jersey, Channel Islands. The Company was admitted to the London Stock Exchange on 14 March 2018 (the "IPO"). The address of the Company's registered office is 28 Esplanade, St Helier, Jersey.

The consolidated financial statements of the Company for the year ended 31 December 2023 comprise the Company and its subsidiaries (together the "Group" or "JTC") and the Group's interest in an associate and investments.

The Group provides fund, corporate and private wealth services to institutional and private clients.

2. BASIS OF PREPARATION

2.1. STATEMENT OF COMPLIANCE AND BASIS OF MEASUREMENT

The consolidated financial statements for the year ended 31 December 2023 have been approved by the Board of Directors of JTC PLC. They are prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union, the interpretations of the IFRS Interpretations Committee ("IFRS IC") and Companies (Jersey) Law 1991.

They are prepared under the historical cost convention except for certain items which are measured at fair value as described in the accounting policies shown in relevant notes.

In assessing the going concern assumption, the Directors considered the principal risks and uncertainties that can be impacted by wider macroeconomic volatility and noted that against this backdrop the Group continued to experience revenue growth and generate positive cash flows from its operating activities and has funding available from its bank loan facilities. Considering these factors as part of the review of the Group's financial performance and position, forecasts and expected liquidity, the Directors have a reasonable expectation that the Group will have adequate resources to continue in operational existence for the foreseeable future, being at least 12 months from the date of approval of the consolidated financial statements. They have concluded it is appropriate to adopt the going concern basis of accounting in preparing the consolidated financial statements.

2.2. FUNCTIONAL AND PRESENTATION CURRENCY

The consolidated financial statements are presented in pounds sterling, which is the functional and reporting currency of the Company and the presentation currency of the consolidated financial statements. All amounts disclosed in the consolidated financial statements and notes have been rounded to the nearest thousand (£'000) unless otherwise stated.

3. MATERIAL ACCOUNTING POLICIES AND STANDARDS

3.1. CHANGES IN ACCOUNTING POLICIES AND NEW STANDARDS ADOPTED

The accounting policies set out in these consolidated financial statements have been consistently applied by all Group entities for the years presented. There have been no significant changes compared with the prior year consolidated financial statements as at and for the year ended 31 December 2022.

NEW AND AMENDED STANDARDS ADOPTED BY THE GROUP

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 considered the following amendments for the first time for its annual reporting period commencing 1 January 2023:

·  Presentation of Financial Statements - Amendments to IAS 1

·  Accounting Policies, Changes in Accounting Estimates and Errors - Amendments to IAS 8

·  Deferred Tax - Amendments to IAS 12

·  Insurance Contracts - IFRS 17

The amendments listed above did not have any material impact on the amounts recognised in prior periods and are not expected to significantly affect the current or future periods.

NEW STANDARDS AND INTERPRETATIONS NOT YET ADOPTED

Certain new accounting standards and interpretations have been published that are not mandatory for the 31 December 2023 reporting period and have not been early adopted by the Group. These standards are not expected to have a material impact on the Group in the current or future reporting periods or on foreseeable future transactions.

3.2. SUMMARY OF MATERIAL ACCOUNTING POLICIES

The basis of consolidation is described below, otherwise material accounting policies related to specific items are described under the relevant note. The description of the accounting policy in the notes forms an integral part of the accounting policies. Unless otherwise stated, these policies have been consistently applied to both years presented.

BASIS OF CONSOLIDATION

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its "subsidiaries"). The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity.

De-facto control exists where the Company has the practical ability to direct the relevant activities of the entity without holding the majority of the voting rights. In determining whether de-facto control exists the Company considers the size of the Company's voting rights relative to other parties, substantive potential voting rights held by the Company and by other parties, other contractual arrangements and historical patterns in voting attendance.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. When the Group loses control over a subsidiary, it derecognises the assets and liabilities of the subsidiary, and any related non-controlling interest and other components of equity. Any resulting gain or loss is recognised in the consolidated income statement.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with the Group. All inter-company transactions and balances arising from transactions between Group companies are eliminated on consolidation.

The acquisition method of accounting is used to account for business combinations by the Group (see note 31). Investments in associates are accounted for via the equity method of accounting (see note 32).

COMPANY ONLY FINANCIAL STATEMENTS

Under Article 105(11) of the Companies (Jersey) Law 1991, the directors of a holding company need not prepare separate financial statements (i.e. company only financial statements). Separate financial statements for the Company are not prepared unless required to do so by the members of the Company by ordinary resolution. The members of the Company had not passed a resolution requiring separate financial statements and, in the Directors' opinion, the Company meets the definition of a holding company. As permitted by law, the Directors have elected not to prepare separate financial statements.

SECTION 2 - RESULT FOR THE YEAR

4. OPERATING SEGMENTS

Revenue recognition

Revenue is measured as the fair value of the consideration received or receivable for satisfying performance obligations contained in contracts with customers excluding discounts, VAT and other sales-related taxes.

To recognise revenue in accordance with IFRS 15 'Revenue from Contracts with Customers', the Group applies the five-step approach: identify the contract(s) with a customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations and recognise revenue when, or as, performance obligations are satisfied by the Group.

The Group enters into contractual agreements with institutional and private clients for the provision of fund, corporate and private client services. The agreements set out the services to be provided and each component is distinct and can be performed and delivered separately. For each of these performance obligations, the transaction price can be either a pre-set (fixed) fee based on the expected amount of work to be performed or a variable time spent fee for the actual amount of work performed. For some clients, the fee for agreed services is set at a percentage of the net asset value ("NAV") of funds being administered or deposits held. Where contracts include multiple performance obligations, the transaction price is allocated to each performance obligation based on its stand-alone selling price.

Revenue is recognised in the consolidated income statement when, or as, the Group satisfies performance obligations by transferring control of services to clients. This occurs as follows depending upon the nature of the contract for services:

·  Variable fees are recognised over time as services are provided at the agreed charge out rates in force at the work date where there is an enforceable right to payment for performance completed to date. Time recorded but not invoiced is shown in the consolidated balance sheet as work in progress (see note 13). To determine the transaction price, an assessment of the variable consideration for services rendered is performed by estimating the expected value, including any price concessions, of the unbilled amount due from clients for the work performed to date (see note 28.2).

·  Pre-set (fixed), cash management and NAV based fees are recognised over time; based on the actual service provided to the end of the reporting period as a proportion of the total services to be provided where there is an enforceable right to payment for performance completed to date. This is determined based on the actual inputs of time and expenses relative to the total expected inputs. Where services have been rendered and performance obligations have been met but clients have not been invoiced at the reporting date, accrued income is recognised; this is recorded based on agreed fees to be billed in arrears (see note 14).

·  Where fees are billed in advance in respect of services under contract and give rise to a trade receivable when recognised, deferred income is recognised and released to revenue on a time apportioned basis in the appropriate reporting period (see note 24).

The Group does not adjust transaction prices for the time value of money as it does not have any contracts where it expects the period between the transfer of the promised services to the client and the payment by the client to exceed one year.

4.1. 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, HNW and UHNW individuals and family office clients. Recognised revenue is generated from external customers. Business activities include the following:

FUND SERVICES

Supporting a diverse range of asset classes, including real estate, private equity, renewables, hedge, debt and alternative asset classes providing a comprehensive set of fund administration services (e.g. fund launch, NAV calculations, accounting, compliance and risk monitoring, investor reporting, listing services).

CORPORATE SERVICES

Includes clients spanning across small and medium entities, public companies, multinationals, sovereign wealth funds, fund managers, HNW and UHNW individuals and families requiring a 'corporate' service for business and investments. As well as entity formation, administration, cash management and other company secretarial services, the Group services international and local pension plans, employee share incentive plans, employee ownership plans and deferred compensation plans.

PRIVATE CLIENT SERVICES

Supporting HNW and UHNW individuals and families, from 'emerging entrepreneurs' to established single and multi-family offices. Services include JTC's own comprehensive Private Office, a range of cash management, foreign exchange and lending services, as well as the formation and administration of trusts, companies, partnerships, and other vehicles and structures across a range of asset classes, including cash and investments.

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).

4.2. 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
	2023 £'000	2022 £'000	2023 £'000	2022 £'000	2023 £'000	2022 £'000
Revenue	163,323	136,657	94,117	63,378	257,440	200,035
Direct staff costs	(68,405)	(56,157)	(36,870)	(24,525)	(105,275)	(80,682)
Other direct costs	(2,910)	(2,499)	(3,241)	(1,874)	(6,151)	(4,373)
Indirect staff costs	(16,024)	(12,091)	(7,805)	(6,414)	(23,829)	(18,505)
Other operating expenses	(24,445)	(22,886)	(11,890)	(8,072)	(36,335)	(30,958)
Other income	47	9	12	513	59	522
Underlying EBITDA	51,586	43,033	34,323	23,006	85,909	66,039
Underlying EBITDA margin %	31.6%	31.5%	36.5%	36.3%	33.4%	33.0%

The Board evaluates segmental performance based on revenue, underlying EBITDA and underlying EBITDA margin. Profit before tax is not used to measure the performance of the individual segments as items such as depreciation, amortisation of intangibles, other (losses)/gains (including foreign exchange movement on revaluation of inter-company loans) and 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.

4.3. GEOGRAPHICAL INFORMATION

Revenue generated by contracting subsidiary by their location is as follows:

	2023 £'000	2022 £'000	Increase/(Decrease)
			£'000	%
UK & Channel Islands	128,193	107,778	20,415	18.9%
US	64,839	38,039	26,800	70.5%
Rest of Europe	38,687	34,323	4,364	12.7%
Rest of the World	25,721	19,895	5,826	29.3%
	257,440	200,035	57,405	28.7%

No single customer made up more than 5% of the Group's revenue in the current or prior year.

5. STAFF EXPENSES

EMPLOYEE BENEFITS

Short-term benefits

Short-term employee benefits are expensed as the related service is provided. A liability is recognised for the amount expected to be paid if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be estimated reliably.

Defined contribution pension plans

Under defined contribution pension plans, the Group pays contributions to publicly or privately administered pension insurance plans. The Group has no further payment obligation once the contributions have been paid. The contributions are recognised as an employee benefit expense when they are due.

Defined benefit pension plans

The liability or asset recognised in the consolidated balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The calculation of defined benefit obligations is performed annually by independent qualified actuaries using the projected unit credit method.

The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms approximating to the terms of the related obligation. In countries where there is no established market in such bonds, the market rates on local government bonds are used.

The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included as an employee benefit expense in the consolidated income statement.

Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the consolidated statement of changes in equity and the consolidated balance sheet.

Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in the consolidated income statement as past service costs.

Termination benefits

Termination benefits are expensed at the earlier of when the Group can no longer withdraw the offer of those benefits and when the Group recognises costs for a restructuring that is within the scope of IAS 37 and involves the payment of termination benefits. If benefits are not expected to be settled wholly within one year of the end of the reporting period, then they are discounted to their present value using an appropriate discount rate.

	Note	2023 £'000	2022 £'000
Salaries and Directors' fees		107,765	82,739
Employer-related taxes and other staff-related costs		10,571	8,841
Other short-term employee benefits		5,521	3,508
Pension employee benefits1		5,230	3,841
Share-based payments	36.5	2,834	2,122
EIP share-based payments	36.5	-	4,780
		131,921	105,831

1    Pension employee benefits include defined contributions of £5.08m (2022: £3.41m) and defined benefits of £0.15m (2022: £0.43m).

5.1. DEFINED BENEFIT PENSION PLANS

The Group operates defined benefit pension plans in Switzerland and Mauritius. Both plans are contribution based with the guarantee of a minimum interest credit and fixed conversion rates at retirement. Disability and death benefits are defined as a percentage of the insured salary. The Group does not expect a significant change in contributions year on year.

The Swiss plan must be fully funded in accordance with Swiss Federal Law on Occupational Benefits (LPP/BVG) on a static basis at all times. The subsidiary, JTC (Suisse) SA, is affiliated to the collective foundation Swiss Life. The collective foundation is a separate legal entity. The foundation is responsible for the governance of the plan; the board is composed of an equal number of representatives from the employers and the employees chosen from all affiliated companies. The foundation has set up investment guidelines, defining in particular the strategic allocation with margins. Additionally, there is a pension committee responsible for the set-up of the plan benefit; this is composed of an equal number of representatives of JTC (Suisse) SA and its employees.

The Mauritius plan is administered by Swan Life Ltd. JTC Fiduciary Services (Mauritius) Limited is required to contribute a specific percentage of payroll costs to the retirement benefit scheme. Employees under this pension plan are entitled to statutory benefits prescribed under parts VIII and IX of the Workers' Rights Act 2019.

The amounts recognised in the consolidated balance sheet are as follows:

	Note	2023 £'000	2022 £'000
Present value of funded obligations		(4,020)	(3,342)
Fair value of plan assets1		3,205	2,770
Consolidated balance sheet liability	24	(815)	(572)

1    All plan assets are held in insurance contracts.

The movement in the net defined benefit obligation recognised in the consolidated balance sheet is as follows:

		2023			2022
	Defined benefit obligation £'000	Fair value of plan assets £'000	Net defined benefit obligation £'000	Defined benefit obligation £'000	Fair value of plan assets £'000	Net defined benefit obligation £'000
At 1 January	3,342	2,770	572	2,010	1,233	777
Included in the consolidated income statement
Current service cost	229	-	229	233	-	233
Past service cost	(98)	-	(98)	18	-	18
Interest	81	67	14	13	4	9
Total	212	67	145	264	4	260
Included in other comprehensive loss
Remeasurements loss/(gain):
- Change in demographic assumptions	15	-	15	-	-	-
- Change in financial assumptions	360	-	360	(739)	-	(739)
- Experience adjustment	(127)	-	(127)	432	-	432
- Return on plan assets	-	(52)	52	-	9	(9)
Total	248	(52)	300	(307)	9	(316)
Other
Contributions:
- Employers	-	221	(221)	-	214	(214)
- Plan participants	109	109	-	105	105	-
Benefit payments	(18)	(18)	-	994	994	-
Exchange differences	127	108	19	276	211	65
Total	218	420	(202)	1,375	1,524	(149)
At 31 December	4,020	3,205	815	3,342	2,770	572

The plans are exposed to actuarial risks relating to the discount rate, the interest rate for the projection of the savings capital, salary increases and pension increases.

The principal actuarial assumptions used for the IAS 19 disclosures were as follows:

	Switzerland	Mauritius
Discount rate at 1 January 2023	2.4%	5.2%
Discount rate at 31 December 2023	1.4%	5.0%
Future salary increases	1.4%	5.2%
Rate of increase in deferred pensions	0.0%	0.0%

For the Swiss plan, longevity must be reflected in the defined benefit liability. The mortality probabilities used were as follows:

	2023 Years	2022 Years
Mortality probabilities for pensioners at age 65
- Males	21.80	21.84
- Females	23.54	23.58
Mortality probabilities at age 65 for current members aged 45
- Males	23.46	23.50
- Females	25.14	25.18

6. OTHER OPERATING EXPENSES

Other operating expenses are accounted for on an accruals basis.

	2023 £'000	2022 £'000
Third party administration fees	6,241	4,403
Legal and professional fees1	12,226	8,354
Auditor's remuneration for audit services	1,409	1,255
Auditor's remuneration for other assurance services	287	337
Establishment costs	3,362	3,618
Insurance	1,649	1,660
Travel and accommodation	2,559	1,772
Marketing	2,235	1,950
IT expenses	10,915	9,286
Telephone and postage	1,726	1,638
Other expenses	2,246	1,297
Other operating expenses	44,855	35,570

1    Included in legal and professional fees are £4.5m (2022: £1.4m) of non-underlying items.

7. NON-UNDERLYING ITEMS

Non-underlying items represent specific items of income or expenditure that are not of a continuing operational nature or do not represent the underlying operating results, and based on their significance in size or nature are presented separately to provide further understanding about the financial performance of the Group.

	Note	2023 £'000	2022 £'000
EBITDA		77,790	56,064
Non-underlying items within EBITDA:
Acquisition and integration costs1		7,080	3,380
Office start-up2		612	768
Other3		427	228
EIP share-based payments4		-	5,197
Revision of ICS operating model5		-	402
Total non-underlying items within EBITDA		8,119	9,975
Underlying EBITDA		85,909	66,039
Profit before tax		24,310	35,935
Total non-underlying items within EBITDA		8,119	9,975
(Gain)/loss on revaluation of contingent consideration6	9	(446)	78
Foreign exchange losses/(gains)7	9	8,515	(11,936)
Total non-underlying items within profit before tax		16,188	(1,883)
Underlying profit before tax		40,498	34,052

1    Acquisition and integration costs include deal and tax advisory fees, legal and professional fees, 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. Acquisition and integration costs are typically incurred in the first two years following acquisition.

2    Office start-up includes up-front investment in personnel and infrastructure which is required in advance of trading.

3    Includes expenses in relation to a change in making annual bonus awards in cash rather than shares (see note 36.3(B)), legal costs relating to a regulatory action from the Dutch Central Bank and aborted project costs.

4    The prior year included the share-based payment expense and employer-related taxes for share awards under the EIP which vested on 22 July 2022 (see note 36.1).

5    The prior year included costs to complete the implementation of a revised operating model for ICS.

6    Includes the gain on the revaluation of contingent consideration for Segue of £0.58m (2022: loss of £0.13m), the loss on revaluation of liability-classified contingent consideration payable for perfORM of £0.17m (2022: gain of £0.05m) and the gain on the revaluation of contingent consideration for INDOS of £0.03m (2022: £nil) (see note 17.1).

7    Foreign exchange losses/(gains) that relate to the revaluation of inter-company loans. Management consider these to be non-underlying as they are unrealisable movements as the loans are eliminated upon consolidation.

8. DEPRECIATION AND AMORTISATION

	Note	2023 £'000	2022 £'000
Depreciation of property, plant and equipment	20	8,262	7,883
Amortisation of intangible assets	21	15,766	13,562
Amortisation of assets recognised from costs to obtain or fulfil a contract	22	1,112	816
Depreciation and amortisation		25,140	22,261

9. OTHER (LOSSES)/GAINS

	Note	2023 £'000	2022 £'000
Net profit/(loss) on disposal of fixed asset		5	(130)
Gain/(loss) on revaluation of contingent consideration	17.1	446	(78)
Impairment of customer relationship intangible asset	21.2	(737)	-
Foreign exchange (losses)/gains1	38	(9,626)	14,409
Other (losses)/gains		(9,912)	14,201

1    This includes £8.5m of foreign exchange losses (2022: £11.9m gains) that relate to the revaluation of inter-company loans; these foreign exchange movements are considered by Management to be non-underlying items.

10. FINANCE INCOME AND FINANCE COST

Finance income includes interest income from loan receivables and bank deposits and is recognised when it is probable that the economic benefits will flow to the Group and the amount of revenue can be measured reliably.

Finance costs include interest expenses on loans and borrowings, the unwinding of the discount on provisions, contingent consideration and lease liabilities and the amortisation of directly attributable transaction costs which have been capitalised upon issuance of the financial instrument and released to the consolidated income statement on a straight-line basis over the contractual term.

		2023 £'000	2022 £'000
Bank interest		744	239
Loan interest		50	5
Finance income		794	244
Bank loan interest		11,123	5,112
Gain on cash flow hedge reclassified from other comprehensive income		(134)	-
Amortisation of loan arrangement fees		805	1,062
Unwinding of net present value ("NPV") discounts1		6,514	4,852
Other finance expense		914	1,287
Finance cost		19,222	12,313

1    Of the £6.5m total, £5.1m relates to unwinding of NPV discounts on contingent consideration (see note 17.1); this is excluded when calculating underlying basic EPS (see note 34.3). By acquisition this is as follows:

		2023 £'000	2022 £'000
INDOS		54	161
Segue		139	342
perfORM		461	472
Ballybunion		-	214
SALI		2,316	2,329
SDTC		2,123	-
		5,093	3,518

11. INCOME TAX

Income tax

Income tax includes current and deferred tax. Current and deferred tax are recognised in the consolidated income statement, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are recognised in other comprehensive income or directly in equity respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.

Current tax

Current tax is the expected tax payable or receivable on the taxable income or loss for the year using tax laws enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable or receivable in respect of previous years.

Deferred tax

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit or losses.

Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated using tax rates which have been enacted or substantively enacted at the balance sheet date, for the periods when the asset is expected to be realised or the liability is expected to be settled.

Deferred tax assets are offset with deferred tax liabilities when there is a legally enforceable right to set off tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

The income tax expense in the consolidated income statement comprises:

		2023 £'000	2022 £'000
Jersey tax on current year profit		1,197	1,197
Foreign company taxes on current year profit		2,583	1,611
Adjustment in respect of previous periods		305	-
Total current tax expense		4,085	2,808
Deferred tax (see note 23):
Temporary differences in relation to acquired intangible assets		(1,694)	(1,531)
Jersey origination and reversal of temporary differences		(6)	(17)
Foreign company origination and reversal of temporary differences		104	(39)
Total deferred tax credit		(1,596)	(1,587)
Income tax expense		2,489	1,221

The difference between the total current tax shown above and the amount calculated by applying the standard rate of Jersey income tax to the profit before tax is as follows:

	2023 £'000	2022 £'000
Profit on ordinary activities before tax	24,310	35,935
Tax on profit on ordinary activities at standard Jersey income tax rate of 10% (2022: 10%)	2,431	3,594
Effects of:
Results from entities subject to tax at a rate of 0% (Jersey company)	(1,262)	(1,040)
Results from tax exempt entities (foreign company)	(186)	(223)
Foreign taxes not at Jersey rate	1,313	(1,301)
Depreciation in excess of capital allowances (Jersey company)	(6)	(17)
Depreciation in excess of capital allowances (foreign company)	104	(39)
Temporary differences in relation to acquired intangible assets	(1,694)	(1,531)
Non-deductible expenses	118	479
Consolidation adjustments	1,639	1,304
Other differences	32	(5)
Income tax expense	2,489	1,221

Income tax expense computations are based on the jurisdictions in which profits were earned at prevailing rates in the respective jurisdictions.

The Company is subject to Jersey income tax at the general rate of 0%; however, the majority of the Group's trading profits are reported in Jersey by Jersey financial services companies. JTC subsidiaries located in Jersey are categorised as financial services companies and are subject to an income tax rate of 10%. It is therefore appropriate to use this rate for reconciliation purposes.

	2023 %	2022 %
Reconciliation of effective tax rates
Tax on profit on ordinary activities	10.00	10.00
Effect of:
Results from entities subject to tax at a rate of 0% (Jersey company)	(5.19)	(2.89)
Results from tax exempt entities (foreign company)	(0.77)	(0.62)
Foreign taxes not at Jersey rate	5.40	(3.62)
Depreciation in excess of capital allowances (Jersey company)	(0.02)	(0.05)
Depreciation in excess of capital allowances (foreign company)	0.43	(0.11)
Temporary differences in relation to acquired intangible assets	(6.97)	(4.26)
Non-deductible expenses	0.48	1.33
Consolidation adjustments	6.75	3.63
Other differences	0.13	(0.01)
Effective tax rate	10.24	3.40

SECTION 3 - FINANCIAL ASSETS AND FINANCIAL LIABILITIES

This section provides information about the Group's financial instruments, including: accounting policies; specific information about each type of financial instrument; and, where applicable, information about determining the fair value, including judgements and estimation uncertainty involved.

Financial assets

The Group classifies its financial assets as either amortised cost, fair value through profit or loss ("FVTPL") or fair value through other comprehensive income ("FVOCI") depending on the Group's business model objective for managing financial assets and their contractual cash flow characteristics.

All financial assets are measured at amortised cost as they arise from the provision of services to clients (e.g. trade receivables) or the objective is to hold the asset in order to collect contractual cash flows (where the contractual cash flows are solely payments of principal and interest).

Financial assets measured at amortised cost are recognised on the trade date, being the date that the Group became party to the contractual provisions of the instrument. They are initially recognised at fair value less transaction costs and then are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment. Financial assets are derecognised when the contractual rights to the cash flows from the asset expire, or the rights to receive the contractual cash flows from the transaction in which substantially all of the risks and rewards of ownership of the financial asset have been transferred.

The Group assesses, on a forward-looking basis, the expected credit losses ("ECL") associated with its financial assets carried at amortised cost. The impairment methodology applied takes into consideration whether there has been a significant increase in credit risk.

Financial assets comprise trade receivables, work in progress, accrued income, other receivables and cash and cash equivalents. For further details on impairment for each, see notes 12 to 16.

Financial liabilities

The Group classifies its financial liabilities as either amortised cost or FVTPL depending on the purpose for which the liability was acquired.

All financial liabilities are measured at amortised cost, with the exception of liability-classified contingent consideration which is measured at FVTPL and derivative financial instruments where hedge accounting is applied (see note 29.1).

Trade and other payables represent liabilities incurred for goods and services provided to the Group prior to the end of the financial year which are unpaid. They are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method and are presented as current liabilities unless payment is not due within 12 months after the reporting period. The Group derecognises a financial liability when its contractual obligations have been discharged, cancelled or expired.

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the consolidated income statement over the period of the borrowings using the effective interest rate method.

Borrowings are removed from the consolidated balance sheet when the obligation specified in the contract is discharged, cancelled or has expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in the consolidated income statement as finance income or finance cost.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period.

Lease liabilities are financial liabilities measured at amortised cost. They are initially measured at the NPV of the following lease payments:

·  fixed payments, less any lease incentives receivable;

·  variable lease payments that are based on an index or a rate;

·  amounts expected to be payable by the lessee under residual value guarantees;

·  the exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and

·  payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.

Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability.

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, which is generally the case for leases in the Group, the lessee's incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions.

The incremental borrowing rate applied to each lease was determined considering the Group's borrowing rate and the risk-free interest rate, adjusted for factors specific to the country, currency and term of the lease.

The Group can be exposed to potential future increases in variable lease payments based on an index or rate which are not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use asset.

Lease payments are allocated between principal and finance cost. The finance cost is charged to the consolidated income statement over the lease period to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

Derivative financial instruments and hedge accounting

The Group uses derivative financial instruments to hedge its exposure to interest rate risks. All derivative financial instruments are initially measured at fair value on the contract date and subsequently remeasured at fair value at each reporting date. Derivatives are only used for economic hedging purposes and not as speculative investments. Hedge accounting is applied only where all of the following conditions are met:

·  formal documentation exists of the relationship between the hedging instrument and hedged item at inception;

·  the hedged cash flows must be highly probable and must present an exposure to variations in cash flows that could affect comprehensive income;

·  the effectiveness of the hedge can be reliably measured; and

·  an economic relationship exists, with the relationship being assessed on an ongoing basis.

For qualifying cash flow hedges, the fair value gain or loss associated with the effective portion of the cash flow hedge is recognised initially in other comprehensive income and is released to the consolidated income statement in the same period during which the hedged item will affect the Group's results. Any ineffective portion of the gain or loss on the hedging instrument is recognised in the consolidated income statement immediately. See note 29.1 for further detail on the hedging instruments used by the Group.

12. TRADE RECEIVABLES

The ageing analysis of trade receivables with the loss allowance is as follows:

2023	Gross £'000	Loss allowance £'000	Net £'000
<30 days	12,633	(216)	12,417
30-60 days	5,019	(376)	4,643
61-90 days	2,976	(247)	2,729
91-120 days	1,532	(142)	1,390
121-180 days	2,236	(307)	1,929
>180 days	14,088	(5,125)	8,963
Total	38,484	(6,413)	32,071

2022	Gross £'000	Loss allowance £'000	Net £'000
<30 days	15,161	(125)	15,036
30-60 days	3,401	(114)	3,287
61-90 days	2,091	(111)	1,980
91-120 days	2,208	(101)	2,107
121-180 days	1,558	(165)	1,393
>180 days	14,516	(5,029)	9,487
Total	38,935	(5,645)	33,290

The movement in the allowances for trade receivables is as follows:

	2023 £'000	2022 £'000
Balance at the beginning of the year	(5,645)	(4,832)
Credit impairment losses in the consolidated income statement	(2,934)	(3,092)
Amounts written off (including unused amounts reversed)	2,166	2,279
Total allowance for doubtful debts	(6,413)	(5,645)

The loss allowance includes both specific and ECL provisions. To measure the ECL, trade receivables are grouped based on shared credit risk characteristics and the days past due. The ECL are estimated collectively using a provision matrix based on the Group's historical credit loss experience, adjusted for factors that are specific to the debtor's financial position (this includes unlikely to pay indicators such as liquidity issues, insolvency or other financial difficulties) and an assessment of both the current as well as the forecast direction of macroeconomic conditions at the reporting date. Management have identified gross domestic product and inflation in each country the Group provides services in to be the most relevant macroeconomic factors. Management have considered these factors as well as climate-related changes on customers and are satisfied that any impact is not material to the ultimate recovery of receivables, such is the diversification across the book in industries and geographies. The loss allowance at 31 December 2023 is in line with previous trading and supports this conclusion. See note 29.2 for further comment on credit risk management.

ECL provision rates are segregated according to geographical location and by business line. The Group considers any specific impairments on a by-client basis rather than on a collective basis. The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognised in the consolidated income statement as a credit impairment loss. When a trade receivable is uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against credit impairment losses.

13. WORK IN PROGRESS

	2023 £'000	2022 £'000
Total	11,710	12,594
Loss allowance	(95)	(69)
Net	11,615	12,525

Work in progress (WIP) relates to variable fee contracts and represents the net unbilled amount expected to be collected from clients for work performed to date. It is measured at the chargeable rate agreed with the individual clients adjusted for unrecoverable amounts less progress billed and ECL. As these financial assets relate to unbilled work and have substantially the same risk characteristics as trade receivables, the Group has concluded that the expected loss rates for trade receivables <30 days is an appropriate estimation of the ECL.

Sensitivity analysis

The total carrying amount of WIP (before ECL allowances) is £11.7m (2022: £12.6m). If Management's estimate of the recoverability of the WIP (the amount expected to be billed and collected from clients for work performed to date) is 10% lower than expected on the total WIP balance due to adjustments for unrecoverable amounts, revenue would be £1.2m lower (2022: £1.3m lower).

14. ACCRUED INCOME

	2023 £'000	2022 £'000
Total	26,609	23,936
Loss allowance	(35)	(25)
Net	26,574	23,911

Accrued income relates to pre-set (fixed), cash management, and NAV based fees across all service lines and represents the billable amount relating to the provision of services to clients which has not been invoiced at the reporting date. Accrued income is recorded based on agreed fees billed in arrears less ECL. As these financial assets relate to unbilled work and have substantially the same risk characteristics as trade receivables, the Group has concluded that the expected loss rates for trade receivables <30 days is an appropriate estimation of the ECL.

15. OTHER RECEIVABLES

	2023 £'000	2022 £'000
Non-current
Loan receivable from third party	-	535
Total non-current	-	535
Current
Other receivables	2,685	2,804
Loans receivable from employees	-	162
Loan receivable from related party1	-	861
Loans receivable from third parties	1,496	-
Total current	4,181	3,827
Total other receivables	4,181	4,362

1    The balance at 31 December 2022 related to amounts owed from Harmonate Corp. (see note 32), as there is no longer a common directorship this has been reclassified to loans receivable from third parties.

Other receivables are subject to the impairment requirements of IFRS 9 and they were assessed to have low credit risk and no loss allowance is recognised.

16. CASH AND CASH EQUIVALENTS

	2023 £'000	2022 £'000
Cash and cash equivalents	97,222	48,861
Total	97,222	48,861

For the purpose of presentation in the statement of cash flow, cash and cash equivalents includes cash in hand, deposits held on call with banks, other short-term highly liquid investments with original maturities of three months or less and bank overdrafts.

Cash and cash equivalents are subject to the impairment requirements of IFRS 9 but, as balances are held with reputable international banking institutions, they were assessed to have low credit risk and no loss allowance is recognised.

The cash and cash equivalents disclosed above and in the statement of cash flows includes cash allocated against regulatory and capital adequacy requirements of £11.8m (see note 35.4). These deposits vary by jurisdiction and therefore are not available for general use by the other entities within the Group.

17. TRADE AND OTHER PAYABLES

	2023 £'000	2022 £'000
Non-current
Other payables	-	72
Contingent consideration	49,794	26,824
Total non-current	49,794	26,896
Current
Trade payables	1,255	2,728
Other taxation and social security	1,127	926
Other payables	4,333	4,391
Accruals	13,276	9,907
Contingent consideration	26,906	5,472
Total current	46,897	23,424
Total trade and other payables	96,691	50,320

For current trade and other payables, due to their short-term nature, Management consider the carrying value of these financial liabilities to approximate to their fair value.

17.1. CONTINGENT CONSIDERATION

Contingent consideration payables are discounted to NPV, split between current and non-current, and are due as follows:

Acquisition	2023 £'000	2022 £'000
SDTC	45,989	-
perfORM1	3,805	3,181
SALI2	-	23,643
Total non-current contingent consideration	49,794	26,824
INDOS3	-	1,483
Segue4	-	2,163
SALI2	24,644	-
SDTC	1,536	-
Sterling	726	1,826
Total current contingent consideration	26,906	5,472
Total contingent consideration	76,700	32,296

1    The earn-out (capped at £6m) for perfORM is calculated based on a multiple of its underlying EBITDA for the year ending 31 December 2024. 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 this is settled by a variable number of shares. 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 £4.48m would be due. At 31 December 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 increased the share price applied to £8.47 (2022: £7.92).

      The simulation is based on JTC's share price at 31 December 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 loss on revaluation of £0.17m as the fair value of the contingent consideration payable in JTC Ordinary shares increased to £2.40m (2022: £2.24m). The revalued earn-out contingent consideration of £4.62m (cash £2.22m/ JTC PLC Ordinary shares £2.40m) has then been discounted to a present value of £3.81m.

2    On 10 January 2024, having successfully met earn-out targets for the two year period following acquisition, the earn-out for SALI was settled in full.

3    At 31 December 2023, 212,014 JTC Ordinary shares vested to settle the £1.5m contingent consideration payable to INDOS (see note 26.2) and is shown within the capital reserve. This resulted in a gain on revaluation of £0.03m.

4    Contingent consideration was subject to Segue meeting adjusted EBITDA targets over the calendar years 2022 and 2023. During the period, Management paid £1.4m ($1.7m) in cash and issued 45,386 JTC Ordinary shares in part-payment of the outstanding liability (see note 26.1). Adjusted EBITDA targets were not met for 2023, resulting in a gain on revaluation of contingent consideration of £0.58m.

18. LOANS AND BORROWINGS

This note provides information about the contractual terms of the Group's interest-bearing loans and borrowings, which are measured at amortised cost.

	2023 £'000	2022 £'000
Non-current
Bank loans	220,531	153,622
Total loans and borrowings	220,531	153,622

The terms and conditions of outstanding bank loans are as follows:

Facility	Currency	Initial termination date	Interest rate	2023 £'000	2022 £'000
Term facility	GBP	4 December 2026	SONIA + 1.65% margin	100,000	75,000
Revolving credit facility ("RCF")	GBP	4 December 2026	SONIA + 1.65% margin	123,662	80,662
Total principal value				223,662	155,662
Issue costs				(3,131)	(2,040)
Total bank loans				220,531	153,622

The interest rate applied to loan facilities is determined using SONIA plus a margin based on net leverage calculations. At 1 January 2023, the margin was 1.65%; this reduced to 1.15% effective from 29 September 2023 and increased to 1.65% on 4 December 2023 (2022: At 1 January 2022, the margin was 1.9%; this reduced to 1.65% effective from 16 September 2022 until 31 December 2022).

On 4 December 2023, the Group entered into a two year interest rate swap at a fixed interest (excluding margin) of 4.237% on £180m of its drawn debt facilities. For more information on the Group's hedging strategy, see note 29.1.

Under the terms of the facility, the debt is supported by guarantees from JTC PLC and other applicable subsidiaries deemed to be obligors, and in the event of default, demand could be placed on these entities to settle outstanding liabilities.

The movement in bank facilities is as follows:

	At 1 January 2023 £'000	Drawdowns1 £'000	Repayment1 £'000	Amortisation release £'000	At 31 December 2023 £'000
Principal value	155,662	118,000	(50,000)	-	223,662
Issue costs	(2,040)	(1,896)	-	805	(3,131)
Total	153,622	116,104	(50,000)	805	220,531

	At 1 January 2022 £'000	Drawdowns £'000	Repayment £'000	Amortisation release £'000	At 31 December 2022 £'000
Principal value	155,662	-	-	-	155,662
Issue costs	(3,084)	-	-	1,044	(2,040)
Total	152,578	-	-	1,044	153,622

1    On 21 June 2023, following the Company's equity raise that took place on 14 June 2023 (see note 26.1), the Group used £50m of the proceeds to temporarily part repay its existing RCF. On 1 August 2023, £118m of the RCF was drawn to satisfy the cash consideration for the acquisition of SDTC (see note 31.1).

On 6 October 2021, the Group entered into a multicurrency loan facility agreement (the "original facilities agreement") with HSBC for a total commitment of £225m consisting of a term loan of £75m and a RCF of £150m. The initial termination date was the third anniversary of the date of the agreement, being 6 October 2024.

On 4 December 2023, an amendment and restatement agreement (the "A&R agreement") relating to the original facilities agreement increased the total commitment to £400m and extended the initial termination date to 4 December 2026 with an option for two further extensions available to 30 June 2027 and 30 June 2028, respectively. At 31 December 2023, the Group had available £176.3m of committed facilities currently undrawn (2022: £69.3m).

The cost of the facility depends upon a covenant tested on net leverage being the ratio of total net debt to underlying EBITDA (for LTM at average exchange rates and adjusted for pro-forma contributions from acquisitions) for a relevant period as defined in the A&R agreement. At 31 December 2023, arrangement and legal fees amounting to £5.3m have been capitalised for amortisation over the term of the loan (2022: £3.4m).

The Group has complied with the financial covenants of its borrowing facilities during the 2023 and 2022 reporting periods (see note 30).

The fair values are not materially different from their carrying amounts since the interest payable on those borrowings is close to current market rates.

19. LEASE LIABILITIES

Where the Group is a lessee its lease contracts are for the rental of buildings for office space and also office furniture and equipment. In accordance with IFRS 16 'Leases', the Group recognises right-of-use assets which are shown within property, plant and equipment (see note 20) and lease liabilities which are shown separately on the consolidated balance sheet.

	2023 £'000	2022 £'000
Non-current	37,924	40,602
Current	6,117	4,292
Total lease liabilities	44,041	44,894

The Group makes business decisions that affect their lease contracts and those containing renewal and termination clauses are reassessed to determine whether there is any change to the lease term. Management has an ongoing programme of review and have not identified any leases with an extension option that would have a significant impact on the carrying amount of lease assets and liabilities. Where the Group has issued an early termination notice, the net present value of the liability and carrying value of the right-of-use asset has been reassessed based on the new expected termination date.

SECTION 4 - NON-FINANCIAL ASSETS AND NON-FINANCIAL LIABILITIES

20. PROPERTY, PLANT AND EQUIPMENT

Items of property, plant and equipment are initially recorded at cost and are stated at historical cost less depreciation and impairment losses. Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives, using the straight-line method, on the following bases:

·  Computer equipment - 4 years

·  Office furniture and equipment - 4 years

·  Leasehold improvements - over the period of the lease

The estimated useful lives, residual values and depreciation methods are reviewed at the end of each reporting period with the effect of any changes in estimate accounted for on a prospective basis.

An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.

An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the consolidated income statement when the asset is derecognised.

For right-of-use assets, upon inception of a contract, the Group assesses whether a contract conveys the right to control the use of an identified asset for a period in exchange for consideration, in which case it is classified as a lease. The Group recognises a right-of-use asset and a lease liability at the lease commencement date. Right-of-use assets are measured at cost comprising of the following: the amount of the initial measurement of lease liability; any lease payments made at or before the commencement date less any lease incentives received; any initial direct costs; and estimated restoration costs.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the useful life; this is considered to be the end of the lease term as assessed by Management. The lease asset is periodically adjusted for certain remeasurements of the lease liability and impairment losses (if any).

The movements of all tangible assets are as follows:

	Computer equipment £'000	Office furniture and equipment £'000	Leasehold improvements £'000	Right-of-use assets £'000	Total £'000
Cost
At 1 January 2022	4,188	2,710	9,457	53,304	69,659
Additions	633	1,249	1,076	4,592	7,550
Additions through business combinations	22	-	-	471	493
Disposals	(330)	(977)	(671)	-	(1,978)
Exchange differences	116	249	351	2,085	2,801
At 31 December 2022	4,629	3,231	10,213	60,452	78,525
Additions	424	406	1,770	4,482	7,082
Additions through business combinations	62	38	616	2,735	3,451
Disposals	(278)	(271)	-	(1,454)	(2,003)
Exchange differences	34	415	395	(828)	16
At 31 December 2023	4,871	3,819	12,994	65,387	87,071
Accumulated depreciation
At 1 January 2022	3,215	1,511	3,627	12,966	21,319
Charge for the year	524	516	759	6,346	8,145
Disposals	(329)	(842)	(548)	-	(1,719)
Exchange differences	77	267	116	754	1,214
At 31 December 2022	3,487	1,452	3,954	20,066	28,959
Charge for the year	523	598	1,296	6,240	8,657
Disposals	(208)	(261)	-	(186)	(655)
Exchange differences	66	481	422	(518)	451
At 31 December 2023	3,868	2,270	5,672	25,602	37,412
Carrying amount
At 31 December 2023	1,003	1,549	7,322	39,785	49,659
At 31 December 2022	1,142	1,779	6,259	40,386	49,566

21. GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill

Goodwill that arises on the acquisition of subsidiaries is considered an intangible asset. See note 31 for the measurement of goodwill at initial recognition; subsequent to this, measurement is at cost less accumulated impairment losses.

Intangible assets acquired in a business combination

Intangible assets acquired in a business combination and recognised separately from goodwill are initially recognised at their fair value at the acquisition date (which is regarded as their cost). The initial valuation work is performed with support from external valuation specialists. Subsequent to initial recognition, these are measured at cost less accumulated amortisation and accumulated impairment losses.

Amortisation is recognised in the consolidated income statement on a straight-line basis over the estimated useful life of the asset from the date of acquisition. The estimated useful lives are as follows:

·  Customer relationships - 8 to 25 years

·  Software - 5 to 10 years

·  Brand - 5 to 10 years

The estimated useful lives and residual value are reviewed at each reporting date and adjusted if appropriate, with the effect of any change in estimate being accounted for on a prospective basis.

Intangible assets acquired separately

Intangible assets that are acquired separately by the Group and have finite useful lives are measured at cost less accumulated amortisation and accumulated impairment losses.

Amortisation is recognised in the consolidated income statement on a straight-line basis over the estimated useful life of the asset from the date that they are available for use. The estimated useful lives are as follows:

·  Customer relationships - 10 years

·  Regulatory licence - 12 years

·  Software - 4 years

The estimated useful lives and residual value are reviewed at each reporting date and adjusted if appropriate, with the effect of any change in estimate being accounted for on a prospective basis.

Internally generated software intangible assets

Development costs that are directly attributable to the design and testing of identifiable software products controlled by the Group are recognised as intangible assets where the following criteria are met:

·  it is technically feasible to complete the software so that it will be available for use;

·  there is an ability to use or sell the software;

·  Management intend to complete the software and use or sell it;

·  it can be demonstrated how the software will generate probable future economic benefits;

·  adequate technical, financial and other resources to complete the development and to use or sell the software are available; and

·  the expenditure attributable to the software during its development stage can be reliably measured.

Directly attributable costs that are capitalised as part of the software include employee costs and an appropriate portion of relevant overheads. Capitalised development costs are recorded as intangible assets and amortisation is recognised in the consolidated income statement on a straight-line basis over the estimated useful life of the asset from the date at which the asset is ready to use. The estimated useful life for internally generated software intangible assets is four years.

The estimated useful lives and residual value are reviewed at each reporting date and adjusted if appropriate, with the effect of any change in estimate being accounted for on a prospective basis.

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. The recoverable amount is the higher of an asset's fair value less costs of disposal ("FVLCD") and value in use ("VIU"). For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units or CGUs). Non-financial assets other than goodwill that have been previously impaired are reviewed for possible reversal of the impairment at the end of each reporting period.

The movements in goodwill and other intangible assets are as follows:

	Goodwill1 £'000	Customer relationships £'000	Regulatory licence £'000	Software £'000	Brands £'000	Total £'000
Cost
At 1 January 2022	327,868	137,769	314	10,861	2,613	479,425
Additions	-	4,288	-	3,018	-	7,306
Additions through business combinations	10,982	5,663	-	-	-	16,645
Disposals	-	-	-	(46)	-	(46)
Exchange differences	24,858	8,884	17	316	268	34,343
At 31 December 2022	363,708	156,604	331	14,149	2,881	537,673
Additions	-	-	-	3,811	-	3,811
Additions through business combinations	171,108	34,747	-	16	2,455	208,326
Measurement period adjustments	(235)	-	-	-	-	(235)
Impairment charge	-	(737)	-	-	-	(737)
Disposals	-	(1,003)	-	(182)	-	(1,185)
Exchange differences	(11,617)	(4,165)	(6)	(79)	(365)	(16,232)
At 31 December 2023	522,964	185,446	325	17,715	4,971	731,421
Accumulated amortisation
At 1 January 2022	-	24,984	178	5,406	274	30,842
Charge for the year	-	11,219	29	1,817	525	13,590
Disposals	-	-	-	(46)	-	(46)
Exchange differences	-	1,374	11	130	44	1,559
At 31 December 2022	-	37,577	218	7,307	843	45,945
Charge for the year2	-	12,799	20	2,276	712	15,807
Disposals	-	(79)	-	(119)	-	(198)
Exchange differences	-	(151)	(4)	(186)	(58)	(399)
At 31 December 2023	-	50,146	234	9,278	1,497	61,155
Carrying amount
At 31 December 2023	522,964	135,300	91	8,437	3,474	670,266
At 31 December 2022	363,708	119,027	113	6,842	2,038	491,728

1    In accordance with IFRS 3, the presentation of the 2022 opening balance has been updated for measurement period adjustments.

2    Total amortisation charge includes £1.6m (2022: £1.2m) related to software not acquired through business combinations; the balance of £14.2m (2022: £12.4m) is excluded when calculating adjusted underlying basic EPS (see note 34.3).

21.1. GOODWILL

The aggregate carrying amounts of goodwill allocated to each CGU is as follows:

In the current year: CGU	Note	At 1 Jan 2023 £'000	Combination of CGUs £'000	Business combinations £'000	Exchange differences £'000	At 31 Dec 2023 £'000
Jersey		66,104	-	-	-	66,104
Guernsey		10,761	-	-	-	10,761
BVI		752	-	-	-	752
Switzerland		2,504	-	-	52	2,556
Cayman		251	-	-	(14)	237
Luxembourg		29,186	-	-	(459)	28,727
Netherlands		14,992	-	-	(258)	14,734
Dubai		1,975	-	-	(105)	1,870
Mauritius		2,656	-	-	(138)	2,518
US - ICS		-	205,421	-	(10,955)	194,466
US - NESF		49,704	(49,704)	-	-	-
US - SALI		144,271	(144,271)	-	-	-
US - Other		11,446	(11,446)	-	-	-
US - SDTC	31.1	-	-	171,108	844	171,952
US - NYPTC		8,062	-	-	(664)	7,398
Ireland		9,051	-	-	(155)	8,896
UK		11,993	-	-	-	11,993
		363,708	-	171,108	(11,852)	522,964

In the prior year: CGU	Note	Balance at 1 Jan 2022 £'000	Combination of CGUs £'000	Business combinations £'000	Exchange differences £'000	Balance at 31 Dec 2022 £'000
Jersey		66,104	-	-	-	66,104
Guernsey		10,761	-	-	-	10,761
BVI		752	-	-	-	752
Switzerland		2,366	-	-	138	2,504
Cayman		224	-	-	27	251
Luxembourg		27,809	-	-	1,377	29,186
Netherlands		14,220	-	-	772	14,992
Dubai		1,763	-	-	212	1,975
Mauritius		2,379	-	-	277	2,656
US - NESF		44,387	-	-	5,317	49,704
US - SALI		126,136	-	2,598	15,537	144,271
US - Other		10,177	-	-	1,269	11,446
US - NYPTC	31.2	-	-	8,384	(322)	8,062
Ireland		8,796	-	-	255	9,051
UK		11,994	-	-	(1)	11,993
Total		327,868	-	10,982	24,858	363,708

(A) COMBINATION OF ICS CGUS

At 31 December 2023, Management made an assessment of facts and circumstances and determined that US - NESF, US - SALI and US - Other should form one CGU (known as "US - ICS CGU").

The facts and circumstances used in arriving at this conclusion are detailed below:

·  the US ICS CGUs have integrated fully post acquisition;

·  components benefit from significant cross-selling revenues;

·  Management now forecast, monitor, and drive growth for US ICS revenues through a combined jurisdictional offering, as opposed to the individual CGUs' product offerings; and

·  collective US Management oversight and decision-making have been in operation during 2023.

Individual assessments have been performed to establish whether impairments existed before consolidation. Management have concluded no impairment is required for US - NESF, US - SALI, or US - Other CGUs, and have proceeded to combine into one US - ICS CGU as at 31 December 2023.

Other US CGUs (US - NYPTC and US - SDTC) that relate to the PCS Division will continue to be assessed at their individual levels.

(B) GOODWILL IMPAIRMENT

Goodwill is not amortised but is tested for impairment annually, or more frequently if events or changes in circumstances indicate that the carrying amount may not be recoverable. With the exception of US - SDTC and US - NYPTC, goodwill is monitored at a jurisdictional level by Management. Goodwill is allocated to groups of CGUs for the purpose of impairment testing and this allocation is made to those CGUs that are expected to benefit from the business combination in which the goodwill arose.

Key assumptions used to calculate the recoverable amount for each CGU

The recoverable amount of all CGUs has been determined based on the higher of VIU and FVLCD. Projected cash flows are calculated with reference to each CGU's latest budget and business plan which are subject to a rigorous review and challenge process. Management prepare the budgets through an assessment of historical revenues from existing clients, the pipeline of new projects, historical pricing, and the required resource base needed to service new and existing clients, coupled with their knowledge of wider industry trends and the economic environment.

Year 1 cash flow projections are based on the latest approved budget and years 2 to 5 on detailed outlooks prepared by Management. The US - ICS CGU employs a 10 year period due to the significantly longer useful economic life of their customer relationships, where these cash flow projections are able to be accurately forecasted due to their recurring nature and increased client longevity.

Previously, the terminal growth rate was based on expected long-term inflation. This has been updated to also consider the long-term average growth rate for the jurisdiction and services provided.

Management estimate discount rates using pre-tax rates that reflect current market assessments of the time value of money. In assessing the discount rate applicable to the Group the following factors have been considered:

·  long-term treasury bond rates for the relevant jurisdiction;

·  the cost of equity based on an adjusted Beta for the relevant jurisdiction; and

·  the risk premium to reflect the increased risk of investing in equities.

Management have given due consideration to climate change and any potential impact on projected cash flows. Such is the nature of JTC's business and the diversification of customer relationships that Management have concluded the impact to be immaterial to each of the CGUs recoverable amount.

The recoverable amounts for both the US - SDTC and Ireland CGUs were determined based on FVLCD. These were calculated using a discounted cash flow method, utilising Level 3 inputs under the IFRS 13 fair value hierarchy.

A summary of the values assigned to the key assumptions used in the VIU and FVLCD are as follows:

·  Revenue growth rate: up to 33%

·  Terminal value growth rate: between 0.5% to 4.0%

·  Discount rate: between 9.6% to 11.2%

The key assumptions used for CGUs where the carrying amount is a significant proportion of the Group's total carrying value of goodwill is as follows:

		Forecasted average annual revenue growth rate		Terminal value growth rate		Discount rate
CGU	% of Group's total carrying value of goodwill	2023 %	2022 %	2023 %	2022 %	2023 %	2022 %
Jersey	12.6	6.8	7.6	2.6	2.5	10.8	11.2
Luxembourg	5.5	8.7	10.9	2.0	2.0	9.9	11.4
US - ICS	37.2	18.2	-	4.0	-	10.9	-
US - SDTC	32.9	13.1	-	2.5	-	10.5	-

At 31 December 2023, the recoverable amount of goodwill determined for each CGU was found to be higher than its carrying amount.

Sensitivity to changes in assumptions

Management believe that any reasonable changes to the key assumptions on which recoverable amounts are based would not cause the aggregate carrying amount to exceed the recoverable amount of the CGUs, except for US - SDTC where for the recoverable amount to equal the carrying amount there would need to be a reduction of £43.6m. This may be caused by an increase of 1.5% in the discount rate from 10.5% to 12.0%. An increase of 1.6% in discount rate would result in a £1.98m impairment.

21.2. CUSTOMER RELATIONSHIP INTANGIBLE ASSETS

The carrying amounts of identifiable customer relationship intangible assets acquired separately and through business combinations are as follows:

Acquisitions	Amortisation period end	Useful economic life ("UEL")	Carrying amount
			2023 £'000	2022 £'000
During previous financial reporting periods
Signes	30 April 2025	10 years	412	699
KB Group	30 June 2027	12 years	1,221	1,570
S&GFA	30 September 2025	10 years	689	1,143
BAML	30 September 2029	12 years	4,851	6,016
NACT	31 July 2027	10 years	706	957
Van Doorn	28 February 2030	11.4 years	3,985	4,724
Minerva	30 May 2027 - 30 July 2030	8.7 - 11.8 years	7,387	8,762
Exequtive	31 March 2029	10 years	5,261	6,373
Aufisco	30 June 2029	10 years	398	1,365
Sackville	28 February 2029	10 years	545	681
NESF	30 April 2028	8 years	739	1,256
Sanne Private Clients	30 June 2030	10 years	4,155	4,794
Anson Registrars	28 February 2030	10 years	19	22
RBC cees	31 March 2033	12 years	17,241	19,105
INDOS	31 May 2031	10 years	1,003	1,138
Segue	30 September 2031	10 years	826	1,016
perfORM	30 September 2031	10 years	21	23
Ballybunion	31 October 2031	10 years	2,058	2,362
SALI	31 October 2046	25 years	41,917	46,215
EFS	30 November 2031	10 years	1,136	1,351
Sterling	30 June 2032	10 years	2,621	4,099
NYPTC	31 October 2032	10 years	4,555	5,356
During the year ended 31 December 2023
SDTC	31 January 2036	12.5 years	33,554	-
Total			135,300	119,027

(A) ACQUIRED IN A BUSINESS COMBINATION

On 2 August 2023, the Group recognised customer relationship intangible assets for SDTC of £34.5m ($44.2m) (see note 31.1(A)). The UEL of twelve and a half years was based on the historical length of relationships as well as observed attrition rates for companies operating in the personal trust administration sector. At 31 December 2023, the carrying amount was £33.6m as shown in the previous table.

Key assumptions in determining fair value

The fair value at acquisition was derived using the multi-period excess earnings method ("MEEM") financial valuation model. Management consider the following key assumptions to be significant for the valuation of new customer relationships:

·  annual revenue growth;

·  the discount rate applied to free cash flow; and

·  annual client attrition rate.

Sensitivity analysis

Management carried out a sensitivity analysis on the key assumptions used in the valuation of new customer relationship intangible assets for SDTC. The following table shows the impact reasonable changes in the UEL/Attrition rate % and discount rate would have on the valuation of the customer relationships (£'000):

	UEL/Attrition rate %
Discount rate	13.3 years/7.5%	12.5 years/8.0%	11.8 years/8.5%
9.5%	3,336	1,357	(420)
10.5%	1,837	-	(1,656)
11.5%	452	(1,256)	(2,802)

Management estimate that any other reasonable change to the key assumptions for the new customer relationship intangible assets recognised in the year would not result in a significant change to fair value.

(B) IMPAIRMENT

At 31 December 2023, forthcoming legislative changes in the Netherlands were considered to be an indicator of impairment for the Aufisco customer relationship intangible ("Aufisco"). Having considered all the risk factors, on 1 March 2024, the Group decided to sell its subsidiary, Global Tax Support B.V. ("GTS"). The sale terms included all GTS clients and associated future cash inflows and the subsequent impairment assessment of Aufisco resulted in an impairment charge of £0.74m.

For all other customer relationship intangibles, consideration was given to many indicators, including the current macroeconomic environment and its potential impact on financial performance. With the exception of Aufisco for the reasons set out above, Management concluded there were no indicators of impairment present at 31 December 2023.

21.3. BRAND INTANGIBLE ASSETS

(A) ACQUIRED IN A BUSINESS COMBINATION

On 2 August 2023, the Group recognised a brand intangible asset for SDTC of £2.2m ($2.8m) (see note 31.1(A)).The UEL of five years was based on Management's expectation, as well as UELs observed for benchmark transactions.

Key assumptions in determining fair value

The fair value at acquisition was derived using a relief from royalty methodology. Management consider the key assumptions in this model to be the UEL and the royalty rate applied to projected revenue growth.

Sensitivity analysis

Management estimate that any reasonable change to the key assumptions for the new brand intangible asset recognised in the year would not result in a significant change to fair value.

(B) IMPAIRMENT

Management review brand intangible assets for indicators of impairment at each reporting date and have concluded that no indicators were present as at 31 December 2023.

22. OTHER NON-FINANCIAL ASSETS

Assets recognised from costs to obtain or fulfil a contract

Incremental costs of obtaining a contract (i.e. costs that would not have been incurred if the contract had not been obtained) and the costs incurred to fulfil a contract are recognised within non-financial assets if the costs are expected to be recovered. The capitalised costs are amortised on a straight-line basis over the estimated useful economic life of the contract. The carrying amount of the asset is tested for impairment on an annual basis.

	2023 £'000	2022 £'000
Non-current
Prepayments	614	361
Assets recognised from costs to obtain or fulfil a contract	2,367	2,008
Total non-current	2,981	2,369
Current
Prepayments	5,237	4,660
Assets recognised from costs to obtain or fulfil a contract	656	549
Current tax receivables	1,006	774
Total current	6,899	5,983
Total other non-financial assets	9,880	8,352

Current and non-current assets recognised from costs to obtain or fulfil a contract include £1.9m for costs to obtain a contract (2022: £1.2m) and £1.1m for costs incurred to fulfil a contract (2022: £1.3m). The amortisation charge for the year was £1.1m (2022: £0.8m). Management review assets recognised from costs to obtain or fulfil a contract and have concluded that there was no impairment at 31 December 2023.

23. DEFERRED TAX

For the accounting policy on deferred income tax, see note 11.

The deferred tax (assets) and liabilities recognised in the consolidated financial statements are set out below:

		2023 £'000	2022 £'000
Deferred tax (assets)		(266)	(143)
Deferred tax liabilities		9,474	11,184
		9,208	11,041
Intangible assets		9,167	11,097
Other origination and reversal of temporary differences		41	(56)
		9,208	11,041

The movement in the year is analysed as follows:

Intangible assets		2023 £'000	2022 £'000
Balance at the beginning of the year		11,097	10,375
Recognised through business combinations		-	1,682
Recognised in the consolidated income statement		(1,694)	(1,531)
Foreign exchange (to other comprehensive income)		(236)	571
Balance at 31 December		9,167	11,097
Other origination and reversal of temporary differences
Balance at the beginning of the year		(56)	(2)
Recognised in the consolidated income statement		97	(54)
Balance at 31 December		41	(56)

At 31 December 2023, the total unrecognised deferred tax (asset) in respect of brought forward losses was approximately £2.1m (2022: £2.5m).

24. OTHER NON-FINANCIAL LIABILITIES

Deferred income

Fixed fees received in advance across all the service lines and up-front fees in respect of services due under contract are time apportioned to respective accounting periods, and those billed but not yet earned are included in deferred income in the consolidated balance sheet. As such liabilities are associated with future services, they do not give rise to a contractual obligation to pay cash or another financial asset.

Contract liabilities

Commissions expected to be paid over the term of a customer contract are discounted and recognised at the NPV. The finance cost is charged to the consolidated income statement over the contract life so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

Employee benefit obligations

For the accounting policy on employee benefit obligations, see note 5.

	2023 £'000	2022 £'000
Non-current
Contract liabilities	492	216
Employee benefit obligations	815	572
Total non-current	1,307	788
Current
Deferred income1	19,639	7,856
Contract liabilities	873	772
Total current	20,512	8,628
Total other non-financial liabilities	21,819	9,416

1    Of the £7.9m of deferred income at 31 December 2022, £7.8m was recognised as revenue in the 2023 consolidated income statement.

25. PROVISIONS

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Provisions are not recognised for future operating losses.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. If the impact of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as a finance cost in the consolidated income statement.

Dilapidations

The Group has entered into lease agreements for the rental of office space in different countries. There are a number of leases which include an obligation to remove any leasehold improvements (thus returning the premises to an agreed condition at the end of the respective lease terms) and to restore wear and tear by repairing and repainting (this is known as "dilapidations"). The estimated cost of the dilapidations payable at the end of each tenancy, unless specified, is generally estimated by reference to the square footage of the building and in consultation with local property agents, landlords and prior experience. Having estimated the likely amount due, a country specific discount rate is applied to calculate the present value of the expected outflow. The provisions are expected to be utilised when the leases expire or upon exit. The discounted dilapidation cost has been capitalised against the leasehold improvement asset in accordance with IFRS 16.

	Dilapidations
	2023 £'000	2022 £'000
At 1 January	2,153	1,967
Additions	277	219
Additions through business combinations	409	56
Release of unutilised provided amount	(230)	(181)
Unwind of discount	40	22
Amounts utilised	-	(21)
Impact of foreign exchange	(77)	91
At 31 December	2,572	2,153

Analysis of total provisions:	2023 £'000	2022 £'000
Non-current	2,200	1,884
Current	372	269
Total	2,572	2,153

SECTION 5 - EQUITY

26. SHARE CAPITAL AND RESERVES

26.1. SHARE CAPITAL AND SHARE PREMIUM

The Group's Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of Ordinary shares are recognised as a deduction from equity, net of any tax effects.

	2023 £'000	2022 £'000
Authorised
300,000,000 Ordinary shares (2022: 300,000,000 Ordinary shares)	3,000	3,000
Called up, issued and fully paid
165,521,678 Ordinary shares (2022: 149,061,113 Ordinary shares)	1,655	1,491

Ordinary shares have a par value of £0.01 each. All shares are equally eligible to receive dividends and the repayment of capital and represent one vote at Shareholders' meetings of JTC PLC.

Movements in Ordinary shares	Note	No. of shares (thousands)	Par value £'000	Share premium £'000
At 1 January 2022		147,586	1,476	285,852
PLC EBT issue		1,150	12	-
Acquisition of SALI - EBT Contribution		325	3	2,056
Acquisition of SALI - adjust fair value of equity instruments		-	-	2,598
Less: Cost of share issuance		-	-	(71)
Movement in the year		1,475	15	4,583
At 31 December 2022		149,061	1,491	290,435
Shares issued for equity raises1		8,857	88	61,912
PLC EBT issue2		1,580	16	-
Acquisition of SDTC	31.1	5,978	60	41,359
Acquisition of Segue	17.1	45	-	360
Less: Cost of share issuance3		-	-	(1,853)
Movement in the year		16,460	164	101,778
At 31 December 2023		165,521	1,655	392,213

1    On 14 June 2023, the Company issued 8,857,143 Placing Shares at a price of £7.00 per share, raising gross proceeds of £62m for the Company. 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.

2    On 21 June 2023, the Company issued an additional 1,579,636 Ordinary shares to the Company's Employee Benefit Trust ("PLC EBT") (see note 26.2) in order for PLC EBT to satisfy anticipated future exercises of awards granted to beneficiaries.

3    This includes costs associated with the equity raise (£1.7m) and the issue of shares for the acquisition of SDTC (£0.15m).

26.2. OWN SHARES

Own shares represent the shares of the Company that are unallocated and currently held by PLC EBT. They are recorded at cost and deducted from equity. When shares vest unconditionally, are cancelled or are reissued, they are transferred from the own shares reserve at their cost. Any consideration paid or received for the purchase or sale of the Company's own shares is shown as a movement in Shareholders' equity.

	Note	No. of shares (thousands)	PLC EBT £'000
At 1 January 2022		3,171	3,366
EIP award	36.1	(1,411)	-
PSP awards	36.2	(188)	-
DBSP awards	36.3	(62)	-
Other awards	36.4	(70)	-
PLC EBT issue		1,475	12
Purchase of own shares		42	319
Movement in year		(214)	331
At 31 December 2022		2,957	3,697
PSP awards	36.2	(200)	-
DBSP awards	36.3	(48)	-
Other awards	36.4	(89)	-
Acquisition of INDOS	17.1	(212)	-
PLC EBT issue		1,580	15
Purchase of own shares		29	200
Movement in year		1,060	215
At 31 December 2023		4,017	3,912

26.3. OTHER RESERVES

CAPITAL RESERVE

This reserve is used to record the gains or losses recognised on the purchase, sale, issue or cancellation of the Company's own shares, which may arise from capital transactions by the Group's employee benefit trusts as well as any movements in share-based awards to employees (see note 36).

TRANSLATION RESERVE

The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign operations.

OTHER RESERVE

Other reserve includes the cash flow hedge reserve, which is used to recognise the effective portion of gains or losses on derivatives designated and qualifying as cash flow hedges (see note 29.1).

RETAINED EARNINGS

Retained earnings includes accumulated profits and losses.

27. DIVIDENDS

Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the entity, on or before the end of the reporting period but not distributed at the end of the reporting period. Interim dividends are recognised when paid.

The following dividends were declared and paid by the Company for the year:

	2023 £'000	2022 £'000
Final dividend for 2021 of 5.07p per qualifying Ordinary share	-	7,322
Interim dividend for 2022 of 3.1p per qualifying Ordinary share	-	4,522
Final dividend for 2022 of 6.88p per qualifying Ordinary share	10,240	-
Interim dividend for 2023 of 3.5p per qualifying Ordinary share	5,785	-
Total dividend declared and paid	16,025	11,844

SECTION 6 - RISK

28. 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 the financial statements, Management have ensured they have assessed any direct and indirect impacts of inflation and interest rates when applying IFRS.

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 turning out to be wrong.

The following are the critical judgements and estimates that Management have made in the process of applying the Group's accounting policies and that have the most significant effect on the amounts recognised in the consolidated financial statements.

28.1. CRITICAL JUDGEMENTS IN APPLYING THE GROUP'S ACCOUNTING POLICIES

RECOGNITION OF SEPARATELY IDENTIFIABLE INTANGIBLE ASSETS

In 2023, the Group acquired SDTC (see note 31.1). IFRS 3 'Business Combinations' requires Management to identify assets and liabilities purchased, including intangible assets. Following their assessment, Management concluded that the intangible assets meeting the recognition criteria were customer relationships and brand. The fair values at acquisition date were £34.5m ($44.2m) and £2.2m ($2.8m), respectively.

TREATMENT OF CONTINGENT CONSIDERATION FOR SDTC

IFRS 3 'Business Combinations' requires Management to assess whether contingent payments are consideration or remuneration. Following their assessment, Management concluded the total earn-out of £54.7m ($70.0m) for SDTC to be contingent consideration (see note 31.1(B)).

28.2. CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS

RECOVERABILITY OF WIP

To assess the fair value of consideration received for services rendered, Management are required to make an assessment of the net unbilled amount expected to be collected from clients for work performed to date. To make this assessment, WIP balances are reviewed regularly on a by-client basis and the following factors are taken into account: the ageing profile of the WIP, the agreed billing arrangements, value added and status of the client relationship. See note 13 for the sensitivity analysis.

GOODWILL IMPAIRMENT - KEY ASSUMPTIONS USED TO CALCULATE THE RECOVERABLE AMOUNT FOR EACH GROUP OF CGUS

Goodwill is tested annually for impairment and the recoverable amount of groups of CGUs is determined based on a value in use or fair value less costs of sale calculation using cash flow projections containing key assumptions. See note 21.1 for further detail on key assumptions and sensitivity analysis.

FAIR VALUE OF CUSTOMER RELATIONSHIP INTANGIBLES

The customer relationship intangible assets are valued using the MEEM financial valuation model. Cash flow forecasts and projections are produced by Management and form the basis of the valuation analysis. Other key estimates and assumptions used in the modelling to derive the fair values include: annual revenue growth, the discount rate applied to free cash flow and annual client attrition rates. See note 21.2(A) for the sensitivity analysis.

FAIR VALUE OF EARN-OUT CONSIDERATION FOR SDTC

To derive the fair value of the earn-out contingent consideration, Management assessed the likelihood of achieving pre-defined revenue targets to determine the value of contingent consideration. Management considers the forecast revenue to be the key assumption in the calculation of the fair value. See note 31.1(B) for the sensitivity analysis.

29. FINANCIAL RISK MANAGEMENT

The Group is exposed through its operations to the following financial risks: market risk (including foreign currency risk and interest rate risk), credit risk and liquidity risk.

The Group is exposed to risks that arise from the use of its financial instruments. This note describes the Group's objectives, policies and processes for managing those risks and the methods used to measure them.

There have been no material changes in the Group's exposure to financial instrument risks, its objectives, policies and processes for managing those risks or the methods used to measure them from previous periods unless otherwise stated in this note.

General objectives, policies and processes

The Board has overall responsibility for determining the Group's financial risk management objectives and policies and, whilst retaining ultimate responsibility for them, it delegates the authority for designing and operating processes that ensure effective implementation of the objectives and policies to Management, in conjunction with the Group's finance department.

The financial risk management policies are considered on a regular basis to ensure that these are in line with the overall business strategies and the Board's risk management philosophy. The overall objective is to set policies to minimise risk as far as possible without adversely affecting the Group's financial performance, competitiveness and flexibility.

Principal financial instruments

The principal financial instruments used by the Group, from which financial instrument risk arises, are as follows:

	Note	2023 £'000	2022 £'000
Financial assets - measured at amortised cost
Trade receivables	12	32,071	33,290
Work in progress	13	11,615	12,525
Accrued income	14	26,574	23,911
Other receivables	15	4,181	3,991
Cash and cash equivalents	16	97,222	48,861
		171,663	122,578
Financial assets - measured at fair value
Other receivables	15	-	371
		-	371
Financial liabilities - measured at amortised cost
Trade and other payables	17	94,789	48,722
Loans and borrowings	18	220,531	153,622
Lease liabilities	19	44,041	44,894
		359,361	247,238
Financial liabilities - measured at fair value
Derivative financial liabilities	29.1	749	-
Trade and other payables1	17	1,902	1,598
		2,651	1,598

1    Included within trade and other payables is the liability-classified contingent consideration of £1.9m for perfORM (2022: £1.6m) (see note 17.1)

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 for the asset or liability

Management concluded that the interest rate swap was classified under Level 2, calculated as the present value of the estimated future cash flows based on observable yield curves, and the liability-classified contingent consideration was classified under Level 3, as per the valuation methodology outlined in note 17.

29.1. MARKET RISK

Market risk arises from the Group's use of interest-bearing, tradable and foreign currency financial instruments. It is the risk that changes in interest rates (interest rate risk) or foreign exchange rates (currency risk) will affect the Group's future cash flows or the fair value of the financial instruments held. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

FOREIGN CURRENCY RISK MANAGEMENT AND SENSITIVITY

Foreign currency risk arises when individual Group entities enter into transactions denominated in a currency other than their functional currency. The Group's policy is, where possible, to allow Group entities to settle liabilities denominated in their functional currency with the cash generated from their own operations in that currency. Where Group entities have liabilities denominated in a currency other than their functional currency (and have insufficient reserves of that currency to settle them), cash already denominated in the required currency will, where possible and ensuring no adverse impact on local regulatory capital adequacy requirements (see note 30), be transferred from elsewhere in the Group.

In order to implement and monitor this policy, on an ongoing basis Management periodically analyse cash reserves by individual Group entities and in major currencies together with information on expected liabilities due for settlement. The effectiveness of this policy is measured by the number of resulting cash transfers made between entities and any necessary foreign exchange trades. Management consider this policy to be working effectively but continue to regularly assess if foreign currency hedging is appropriate.

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 is mainly from Euro and US dollar. The Group's bank loans are denominated in £, although the facility is multicurrency.

As at 31 December 2023, the Group's exposure to its material foreign currency denominated financial assets and liabilities is as follows:

	£		Euro		US dollar
Net foreign currency assets/(liabilities)	2023 £'000	2022 £'000	2023 £'000	2022 £'000	2023 £'000	2022 £'000
Trade receivables	18,661	17,612	2,894	3,502	10,021	12,031
Work in progress	8,894	9,628	1,441	1,625	875	743
Accrued income	13,820	12,802	2,314	1,704	10,326	9,395
Other receivables	1,243	1,693	-	374	2,776	2,053
Cash and cash equivalents	12,102	9,811	15,534	10,192	67,669	27,114
Trade and other payables	(8,708)	(10,435)	(7,529)	(6,236)	(79,097)	(32,695)
Loans and borrowings	(223,662)	(153,622)	-	-	-	-
Lease liabilities	(24,966)	(26,621)	(9,168)	(10,863)	(7,093)	(5,603)
Total net exposure	(202,616)	(139,132)	5,486	298	5,477	13,038

The following table illustrates the possible effect on comprehensive income for the year and net assets arising from a 20% strengthening or weakening of UK sterling against other currencies.

	Strengthening/ (weakening) of UK sterling1	Effect on comprehensive income and net assets
		2023 £'000	2022 £'000
Euro	+20%	(914)	(50)
US dollar	+20%	(913)	(2,173)
Total		(1,827)	(2,223)
Euro	(20%)	1,371	74
US dollar	(20%)	1,369	3,259
Total		2,740	3,333

1    Holding all other variables constant.

Inter-company loans

A 20% strengthening of UK sterling would result in a £1.6m foreign exchange loss within the consolidated income statement. Conversely, a 20% weakening of UK sterling would result in a £2.5m foreign exchange gain.

INTEREST RATE RISK MANAGEMENT AND SENSITIVITY

(A) BANK LOANS

The Group is exposed to interest rate risk as it borrows all 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 Group manages the interest rate risk by maintaining an appropriate leverage ratio and through this ensuring that the interest rate is kept as low as possible.

During the current year, the macroeconomic environment resulted in increased interest rates and higher costs for the Group. Management have continued to assess the risk and the cost versus benefit of taking hedging instruments to manage this exposure, and upon the refinancing of the RCF on 4 December 2023, entered into a two year interest rate swap.

(B) HEDGE ACCOUNTING

The Group exercised the choice to use hedge accounting for the two year interest rate swap on its loans and borrowings in accordance with IFRS 9 'Financial Instruments'.

The Group designates certain derivatives held for risk management as hedging instruments in qualifying hedging relationships. On initial designation of the hedge, the Group formally documents the relationship between the hedging instruments and hedged items, including the risk management objective, the strategy in undertaking the hedge and the method that will be used to assess the effectiveness of the hedging relationship.

The Group makes an assessment, both at the inception of the hedge relationship and on an ongoing basis, as to whether the hedging instruments are expected to be highly effective in offsetting the movements in the fair value of the respective hedged items during the period for which the hedge is designated.

Cash flow hedges

In accordance with its risk management strategy, the Group entered into interest rate swap contracts to manage the interest rate risk arising in respect of the floating interest rate exposures on its borrowings.

The Group assessed prospective hedge effectiveness by comparing the changes in the floating rate on its borrowings with the changes in fair value of allocated interest rate swaps used to hedge the exposure.

The Group has identified the following possible sources of ineffectiveness:

·  the use of derivatives as a protection against interest rate risk creates an exposure to the derivative counterparty's credit risk which is not offset by the hedged item;

·  different amortisation profiles on hedged item principal amounts and interest rate swap notionals;

·  for derivatives the discounting curve used depends on collateralisation and the type of collateral used; and

·  differences in the timing of settlement of hedging instruments and hedged items.

Management have concluded there are no sources of ineffectiveness.

Instruments used by the Group

The Group holds three interest rate swap contracts which commenced on 4 December 2023 and expire on 4 December 2025, with a blended swap rate of 4.237% (excluding margin). Each of the contracts covers a notional amount of £60m, and as at 31 December 2023, the Group held 80% (2022: 0%) of fixed rate debt and 20% (2022: 100%) of floating rate debt, from its total borrowings of £223.7m (2022: £153.6m).

As at 31 December 2023, the interest rate swap contracts were revalued resulting in a financial liability with a fair value of £0.75m. There was a corresponding loss recorded within other comprehensive income, of which £0.13m was reclassified to the profit or loss (see note 10).

(C) SENSITIVITY ANALYSIS FOR VARIABLE RATE INSTRUMENTS

An increase/decrease of 100 basis points in interest rates on loans and borrowing with floating interest rates would have decreased/increased the profit and loss before tax by £1.6m (2022: increase/decrease by 100 basis points, +/-£1.6m). This analysis assumes that all other variables remain constant.

The Group's exposures to interest rates on financial assets and financial liabilities are detailed in the liquidity risk management section of this note.

29.2. CREDIT RISK MANAGEMENT

Credit risk is the risk of financial loss to the Group should a customer or counterparty to a financial instrument fail to meet its contractual obligations. The Group's principal exposure to credit risk arises from contracts with customers and therefore the following financial assets: trade receivables, work in progress and accrued income (together "customer receivables").

The Group manages credit risk for each new customer by giving consideration to the risk of insolvency or closure of the customer's business, current or forecast liquidity issues and general creditworthiness (including past default experience of the customer or customer type).

Subsequently, customer credit risk is managed by each of the Group entities subject to the Group's policy, procedures and control relating to customer credit risk management. Outstanding customer receivables are monitored and followed up continuously. Specific provisions incremental to ECL are made when there is objective forward-looking evidence that the Group will not be able to bill the customer in line with the contract or collect the debts arising from previous invoices. This evidence can include the following: indication that the customer is experiencing significant financial difficulty or default, probability of bankruptcy, problems in contacting the customer, disputes with a customer, or similar factors.

Management give close and regular consideration to the potential impact of the macroeconomic environment (including increased interest rates) and any climate-related risks upon the customer's behaviours and ability to pay. This analysis is performed on a customer-by-customer basis. Such is the diversification across the book in industries and geographies that any impact is not considered to be material to the recoverability of customer receivables. For more commentary on this, the ageing of trade receivables and the provisions thereon at the year end, including the movement in the provision, see note 12.

Credit risk in relation to other receivables is considered for each separate contractual arrangement and the risk of the counterparty defaulting is considered to be low.

Credit risk also arises from cash and cash equivalents and deposits with banks and financial institutions. Cash and cash equivalents are held mainly with banks which are rated 'A-' or higher by Standard & Poor's Rating Services or Fitch Ratings Ltd for long-term credit rating.

The financial assets are subject to the impairment requirements of IFRS 9; for further detail of how this is assessed and measured, see notes 12 to 16.

CREDIT RISK EXPOSURE

Trade receivables, work in progress and accrued income result from the provision of services to a large number of customers (individuals and corporate), spread across different industries and geographies. The gross carrying amount of financial assets represents the maximum credit exposure and as at the reporting date this can be summarised as follows:

	Total 2023 £'000	Loss allowance 2023 £'000	Net 2023 £'000	Total 2022 £'000	Loss allowance 2022 £'000	Net 2022 £'000
Trade receivables	38,484	(6,413)	32,071	38,935	(5,645)	33,290
Work in progress	11,710	(95)	11,615	12,594	(69)	12,525
Accrued income	26,609	(35)	26,574	23,936	(25)	23,911
Other receivables	4,181	-	4,181	4,362	-	4,362
Cash and cash equivalents	97,222	-	97,222	48,861	-	48,861
	178,206	(6,543)	171,663	128,688	(5,739)	122,949

29.3. LIQUIDITY RISK MANAGEMENT

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group manages liquidity risk to maintain adequate reserves by regular review around the working capital cycle using information on forecast and actual cash flows. Management have considered the impact of increased interest rates during the year, and do not consider there to be a significant negative impact on the Group's ability to meet its financial obligations.

The Board is responsible for liquidity risk management and it has established an appropriate liquidity risk management framework for the management of the Group's short, medium and long-term funding and liquidity management requirements. Regulation in most jurisdictions also requires the Group to maintain a level of liquidity in order that the Group does not become exposed.

LIQUIDITY TABLES

The tables detail the Group's remaining contractual maturity for its financial liabilities with agreed repayment years. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay. The table includes both interest and principal cash flows. To the extent that interest flows are floating rate, the undiscounted amount is derived from interest rates at the balance sheet date. The contractual maturity is based on the earliest date on which the Group may be required to pay.

The total contractual cash flows are as follows:

2023	<6 months £'000	6-12 months £'000	1-3 years £'000	3-5 years £'000	5-10 years £'000	>10 years £'000	Total contractual cash flow £'000
Loans and borrowings1	7,292	7,372	253,457	-	-	-	268,121
Trade payables and accruals	19,896	-	-	-	-	-	19,896
Contingent consideration	25,465	-	59,342	-	-	-	84,807
Lease liabilities	3,888	3,888	13,136	10,887	14,012	5,931	51,742
Total	56,541	11,260	325,935	10,887	14,012	5,931	424,566

2022	<6 months £'000	6-12 months £'000	1-3 years £'000	3-5 years £'000	5-10 years £'000	>10 years £'000	Total contractual cash flow £'000
Loans and borrowings1	4,221	4,344	170,020	-	-	-	178,585
Trade payables and accruals	17,952	-	72	-	-	-	18,025
Contingent consideration	2,734	-	29,358	-	-	-	32,092
Lease liabilities	3,537	3,511	13,225	10,346	14,812	7,806	53,237
Total	28,444	7,855	212,675	10,345	14,812	7,806	281,938

1    This includes the future interest payments not yet accrued and the repayment of capital upon maturity.

30. CAPITAL MANAGEMENT

30.1. RISK MANAGEMENT

The Group's objective for managing capital is to safeguard the ability to continue as a going concern, while maximising the return to Shareholders through the optimisation of the debt and equity balance, and to ensure capital adequacy requirements are met for local regulatory requirements at entity level.

The managed capital refers to the Group's debt and equity balances; for quantitative disclosures, see note 18 for loans and borrowings and note 26 for share capital and reserves. For the Group's risk management and strategy regarding interest rate and foreign exchange risk, see note 29.1.

30.2. LOAN COVENANTS

The Group has bank loans which require it to meet leverage and interest cover covenants. In order to achieve the Group's capital risk management objective, the Group aims to ensure that it meets financial covenants attached to bank borrowings. Breaches in meeting the financial covenants would permit the lender to immediately recall the loan. In line with the loan agreement the Group tests compliance with the financial covenants on a bi-annual basis.

Under the terms of the loan facility, the Group is required to comply with the following financial covenants:

·  Leverage (being the ratio of total net debt to underlying EBITDA (for LTM at average exchange rates and adjusted for pro-forma contributions from acquisitions) for a relevant period) must not be more than 3:1.

·  Interest cover (being the ratio of underlying EBITDA to net finance charges) must not be less than 4:1.

The Group has complied with all financial covenants throughout the reporting period and is satisfied that there is sufficient headroom should rising inflation and interest rates adversely affect trading going forward.

30.3. CAPITAL ADEQUACY

Individual regulated entities within the Group are subject to regulatory requirements to maintain adequate capital and liquidity to meet local requirements in Jersey, Guernsey, Ireland, the Isle of Man, the UK, the US, Switzerland, the Netherlands, Luxembourg, Mauritius, South Africa and the Caribbean; all are monitored regularly to ensure compliance. There have been no breaches of applicable regulatory requirements during the reporting period.

SECTION 7 - GROUP STRUCTURE

31. BUSINESS COMBINATIONS

A business combination is defined as a transaction or other event in which an acquirer obtains control of one or more businesses. Where the business combination does not include the purchase of a legal entity but the transaction includes acquired inputs and processes applied to those inputs in order to generate outputs, the transaction is also considered a business combination.

The Group applies the acquisition method to account for business combinations. The consideration transferred in an acquisition comprises the fair value of assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group in exchange for control of the acquiree. The identifiable assets acquired and liabilities assumed in a business combination are measured at their fair values at the acquisition date. Acquisition-related costs are recognised in the consolidated income statement as non-underlying items within operating expenses.

The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the business acquired, the difference is recognised directly in the consolidated income statement as a gain on bargain purchase.

When the consideration transferred includes an asset or liability resulting from a contingent consideration arrangement, this is measured at its acquisition-date fair value. Changes in fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill.

Measurement period adjustments are adjustments that arise from additional information obtained during the measurement period (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date.

The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that is classified as an asset or liability is remeasured at subsequent reporting dates at fair value with the corresponding gain or loss being recognised in the consolidated income statement.

31.1. TC3 GROUP HOLDING LLC AND ITS SUBSIDIARIES INCLUDING SOUTH DAKOTA TRUST COMPANY LLC (together "SDTC")

On 14 June 2023, JTC entered into an agreement to acquire 100% of the share capital of TC3 Group Holding LLC and its subsidiaries, including South Dakota Trust Company LLC. SDTC is a US based and market-leading provider of private client trust services, including the administration of trusts and estates on behalf of HNW and UHNW individuals. The acquisition is highly complementary to JTC's existing US operations and establishes JTC as the leading independent provider of administration services to the US personal trust sector.

Following regulatory approval for the transaction, 100% of the cash consideration was transferred on 2 August 2023, as well as the equity element of initial consideration. The results of the acquired business have been consolidated from 2 August 2023 as Management concluded this was the date control was obtained by the Group.

The acquired business contributed revenues of £12.8m and underlying profit before tax (before central costs have been applied) of £5.6m to the Group for the period from 2 August 2023 to 31 December 2023. If the business had been acquired on 1 January 2023, the consolidated pro-forma revenue and underlying profit before tax for the period would have been £275.4m and £33.7m, respectively.

(A) IDENTIFIABLE ASSETS ACQUIRED AND LIABILITIES ASSUMED ON ACQUISITION

The following table shows, at fair value, the recognised assets acquired and liabilities assumed at the acquisition date:

	Note	Book value at acquisition £'000	Adjustments £'000	Fair value £'000	Fair value $'000
Property, plant and equipment1		1,941	1,299	3,240	4,146
Intangible assets - computer software		16	-	16	22
Intangible assets - customer relationships	21.2	-	34,540	34,540	44,198
Intangible assets - brand	21.3	-	2,212	2,212	2,831
Trade receivables		831	-	831	1,064
Other receivables		163	-	163	209
Cash and cash equivalents		1,588	-	1,588	2,032
Assets		4,539	38,051	42,590	54,502
Trade and other payables		381	1,385	1,766	2,257
Lease liabilities1		1,708	1,076	2,784	3,563
Deferred income		7,177	-	7,177	9,185
Provisions		-	409	409	524
Liabilities		9,266	2,870	12,136	15,529
Total identifiable net (liabilities)/assets		(4,727)	35,181	30,454	38,973

Other than those items detailed below and referenced above, all adjustments relate to additional information obtained post acquisition, about facts and circumstances that existed at the acquisition date.

1    The acquired business leases office premises, a lease liability of £2.8m ($3.6m) is measured at the present value of the remaining lease payments with a corresponding right-of-use assets.

(B) CONSIDERATION

Total consideration is satisfied by the following:

	£'000	$'000
Cash consideration1	114,916	147,050
Equity instruments2	41,419	53,000
Deferred consideration - PLC EBT contribution3	1,499	1,918
Contingent consideration - earn-out4	43,728	55,955
Fair value of total consideration at acquisition	201,562	257,923

1    This comprises £115.1m ($147.2m) of initial cash consideration paid upon completion less £0.15m ($0.2m) received subsequently for purchase price adjustments.

2    On 2 August 2023, the Company issued 5,978,400 Ordinary shares at fair value to satisfy the equity element of initial consideration (see note 26.1).

3    This relates to a £1.6m ($2.0m) contribution to PLC EBT due to be paid during 2024. The amount payable has been discounted to its present value of £1.5m ($1.9m).

4    A total of up to £54.7m ($70.0m) is payable, subject to meeting revenue targets for the calendar years 2024 and 2025. Based on Management's assessment of the budgeted forecast for the period, it is estimated that the contingent consideration payable will be £54.7m ($70.0m), therefore meeting the earn-out in full. The estimated contingent consideration has been discounted to its present value of £43.7m ($56.0m) and is payable in a 73.5%/26.5% ratio of cash and JTC PLC Ordinary shares. In determining the fair value of the contingent consideration payable under IFRS 3 'Business Combinations', Management noted that the seller may distribute up to £6.6m ($8.4m) of the earn-out to employees of SDTC in recognition of their past service, should the earn-out targets be met. Management have applied judgment to the treatment of this contingent payment and concluded that the full earn-out (including the £6.6m ($8.4m)) should be recognised as consideration, as the seller is the main beneficiary of the service provided and the Company will be required to make any contingent payments regardless of the employment status of the recipients.

Sensitivity analysis on fair value of earn-out consideration

Management carried out a sensitivity analysis on the output of the key assumptions and estimates used to calculate the fair value of the earn-out contingent consideration. Management consider the key assumption and estimate to be forecast revenue for the two year period. A decrease in the forecast revenue of 5% would decrease the earn-out contingent consideration by £2.7m ($3.5m). Discounted to its present value this would be equal to a £2.2m ($2.8m) decrease.

(C) GOODWILL

	£'000	$'000
Total consideration	201,562	257,923
Less: Fair value of identifiable net assets	(30,454)	(38,973)
Goodwill	171,108	218,950

Goodwill is represented by assets that do not qualify for separate recognition or other factors. The acquisition is highly complementary to JTC's existing US operations and establishes JTC as the leading independent provider of administration services to the US personal trust sector, including new customer relationships, a recognised brand and the effects of an assembled workforce.

(D) IMPACT ON CASH FLOW

	£'000	$'000
Cash consideration	114,916	147,050
Less: cash balances acquired	(1,588)	(2,032)
Net cash outflow from acquisition	113,328	145,018

(E) ACQUISITION-RELATED COSTS

The Group incurred acquisition-related costs of £3.8m for legal, professional, advisory and other integration expenses. These costs have been recognised within other operating expenses in the Group's consolidated income statement (see note 6) and are treated as non-underlying items to calculate underlying EBITDA (see note 7).

31.2. NEW YORK PRIVATE TRUST COMPANY ("NYPTC")

On 31 October 2022, JTC acquired NYPTC, a Delaware non-deposit trust company offering a broad range of services to HNW and UHNW individuals, families and corporate clients.

At the acquisition date, the fair value of consideration was £17.0m ($19.7m) for acquired identifiable net assets of £8.6m ($10.0m), resulting in goodwill of £8.4m ($9.7m). Consideration for the acquisition was paid as 100% cash.

Within the acquired identifiable net assets were customer relationship intangibles of £5.7m ($6.6m) with a UEL of 10 years. Deferred tax liabilities of £1.7m ($2.0m) were recognised in relation to identified intangible assets, the amortisation of which is non-deductible against US Corporation Taxes and therefore creates temporary differences between the accounting and taxable profits.

 

32. INVESTMENTS

The Group's interest in other entities includes an associate and other investments held at cost.

An associate is an entity in which the Group has significant influence, but not control or joint control, over the financial and operating policies. The Group's interest in an equity-accounted investee solely comprises an interest in an associate.

Investments in associates are accounted for using the equity method. Under the equity method, the investment in an associate is initially recognised at cost, which includes transaction costs. Subsequent to initial recognition, the carrying amount of the investment is adjusted to recognise the Group's share of post-acquisition profits or losses in the consolidated income statement within EBITDA, and the Group's share of movements in other comprehensive income of the investee in other comprehensive income. Unrealised gains and losses resulting from transactions between the Group and the associate are eliminated to the extent of the interest in the associate.

The carrying amount of equity-accounted investments is tested for impairment in accordance with the policy described in note 21.

Where the Group has an interest in an entity but does not have significant influence, the investment is held at cost.

The following table details the associate and investments the Group holds as at 31 December 2023. The entities listed have share capital consisting solely of Ordinary shares, which are held directly by the Group. The country of incorporation is also their principal place of business, and the proportion of ownership interest is the same as the proportion of voting rights held.

				% of ownership interest		Carrying amount
Name of entity	Country of incorporation	Nature of relationship	Measurement method	2023 %	2022 %	2023 £'000	2022 £'000
Kensington International Group Pte. Ltd	Singapore	Associate1	Equity method	42	42	2,310	2,325
Harmonate Corp.	United States	Investment2	Cost	11.2	11.2	805	831
FOMTech Limited	United Kingdom	Investment3	Cost	0.2	-	250	-
Total investments						3,365	3,156

1    Kensington International Group Pte. Ltd ("KIG") provides corporate, fiduciary, trust and accounting services and is a strategic partner of the Group, providing access to new clients and markets in the Far East.

2    Harmonate Corp. ("Harmonate") provides fund operation and data management solutions to clients in the financial services industry.

3    FOMTech Limited and its subsidiaries operate a FinTech platform that specialises in venture capital funding.

The summarised financial information for KIG, which is accounted for using the equity method, is as follows:

Summarised income statement	2023 £'000	2022 £'000
Revenue	7,554	7,253
Gross profit	6,313	6,133
Operating expenditure	5,753	4,933
Total comprehensive income for the year	114	668

Summarised balance sheet	2023 £'000	2022 £'000
Non-current assets	650	600
Current assets	6,944	10,805
Current liabilities	(3,365)	(7,141)
Closing net assets	4,229	4,264

Reconciliation of summarised financial information	2023 £'000	2022 £'000
Opening net assets	4,264	3,133
Total comprehensive income for the year	114	668
Foreign exchange differences	(149)	463
Closing net assets	4,229	4,264
Group's share of closing net assets	1,788	1,803
Goodwill	522	522
Carrying value of investment in associate	2,310	2,325

Impact on consolidated income statements	2023 £'000	2022 £'000
Balance at 1 January	2,325	1,847
Share of (loss)/profit of equity-accounted investee	(15)	478
Balance at 31 December	2,310	2,325

33. SUBSIDIARIES

In the opinion of Management, the Group's subsidiaries which principally affect the profit or the net assets of the Group at 31 December 2023 are listed below. Unless otherwise stated, the Company owns 100% of share capital consisting solely of Ordinary shares, and the proportion of ownership interests held equals the voting rights held by the Group. The country of incorporation is also their principal place of business.

Where shareholding and voting rights are less than 100%, Management have considered the circumstances of each subsidiary shareholding and any specific agreements in support and have concluded that the subsidiaries should be consolidated (as per the accounting policy in note 3.2), the interest attributed in full to the Company and no minority interest recognised. Please see specific comments below the table.

Name of subsidiary	Country of incorporation and place of business	Activity	% holding
JTC Group Holdings Limited	Jersey	Holding	100
JTC Group Limited	Jersey	Head office services	100
JTC (Jersey) Limited	Jersey	Trading	100
JTC Employer Solutions Limited	Jersey	Trading	100
JTC Fund Solutions (Jersey) Limited	Jersey	Trading	100
JTC (Austria) GmbH	Austria	Trading	100
JTC (Bahamas) Limited	Bahamas	Trading	100
JTC (BVI) Limited	British Virgin Islands	Trading	100
JTC (Cayman) Limited	Cayman Islands	Trading	100
JTC Fund Services (Cayman) Ltd	Cayman Islands	Trading	100
JTC Corporate Services (DIFC) Limited	Dubai	Trading	100
JTC Fund Solutions (Guernsey) Limited	Guernsey	Trading	100
JTC Global AIFM Solutions Limited	Guernsey	Trading	100
JTC Registrars Limited	Guernsey	Trading	100
JTC Employer Solutions (Guernsey) Limited	Guernsey	Trading	100
JTC Corporate Services (Ireland) Limited	Ireland	Trading	100
JTC Fund Solutions (Ireland) Limited	Ireland	Trading	100
JTC Global AIFM Solutions (Ireland) Limited	Ireland	Trading	100
INDOS Financial (Ireland) Limited	Ireland	Trading	100
JTC Trustees (IOM) Limited	Isle of Man	Trading	100
JTC Luxembourg Holdings S.à r.l.	Luxembourg	Holding	100
JTC (Luxembourg) S.A.	Luxembourg	Trading	100
JTC Global AIFM Solutions SA	Luxembourg	Trading	100
JTC Corporate Services (Luxembourg) SARL	Luxembourg	Trading	100
JTC Signes Services SA	Luxembourg	Trading	100
Exequtive Services S.à r.l.	Luxembourg	Trading	100
JTC Fiduciary Services (Mauritius) Limited	Mauritius	Trading	100
JTC (Netherlands) B.V.	Netherlands	Trading	100
JTC Holdings (Netherlands) B.V.	Netherlands	Holding	100
JTC Institutional Services Netherlands B.V.	Netherlands	Trading	100
Global Tax Support B.V.1	Netherlands	Trading	-
JTC Fund and Corporate Services (Singapore) Pte. Limited	Singapore	Trading	100
JTC Fund Solutions RSA (Pty) Ltd	South Africa	Trading	100
JTC (Suisse) SA	Switzerland	Trading	100
JTC Trustees (Suisse) Sàrl	Switzerland	Trading	100
JTC Group Holdings (UK) Limited	UK	Holding	100
INDOS Financial Limited	UK	Trading	100
JTC Fund Services (UK) Limited	UK	Trading	100
JTC Trust Company (UK) Limited	UK	Trading	100
JTC (UK) Limited	UK	Trading	100
JTC UK (Amsterdam) Limited	UK	Holding	100
JTC Registrars (UK) Limited	UK	Trading	100
perfORM Due Diligence Services Limited	UK	Trading	100
JTC USA Holdings, Inc.	US	Trading	100
JTC Miami Corporation2	US	Trading	50
JTC Trust Company (South Dakota) Ltd	US	Trading	100
Essential Fund Services, LLC	US	Trading	100
SALI Fund Management, LLC	US	Trading	100
JTC Americas Holdings, LLC	US	Holding	100
JTC Americas TrustCo Holdings, LLC	US	Holding	100
Segue Partners, LLC	US	Trading	100
JTC Trust Company (Delaware) Limited	US	Trading	100
TC3 Group Holding, LLC	US	Holding	100
South Dakota Trust Company, LLC	US	Trading	100

1    At 31 December 2023, JTC had a call option to purchase Global Tax Support B.V. for €1 from its parent company, therefore Management had control of this entity and no minority interest is recognised.

2    JTC Miami Corporation is 50% owned by an employee as part of their residential status in the US. The employee has signed a declaration of trust to confirm they hold the shares in trust for JTC, would vote as directed and would not seek to benefit from dividends or profit. Management therefore consider it appropriate to attribute 100% of the interest to JTC and no minority interest is recognised.

JTC PLC has the following dormant UK subsidiaries that are exempt from filing individual accounts with the registrar in accordance with s448A of Companies Act 2006: PTC Securities Limited, Stratford Securities Limited, St James's Securities Limited, JTC Fiduciary Services (UK) Limited, JTC Trustees (UK) Limited, PTC Investments Limited, Castle Directors (UK) Limited, JTC Securities (UK) Limited, JTC Corporate Services (UK) Limited, JTC Trustees Services (UK) Limited and JTC Directors (UK) Limited.

SECTION 8 - OTHER DISCLOSURES

34. EARNINGS PER SHARE

Basic Earnings Per Share

The calculation of basic Earnings Per Share is based on the profit for the year divided by the weighted average number of Ordinary shares for the same year.

Diluted Earnings Per Share

The calculation of diluted Earnings Per Share is based on basic Earnings Per Share after adjusting for the potentially dilutive effect of Ordinary shares that have been granted.

Adjusted underlying basic Earnings Per Share

The calculation of adjusted underlying basic Earnings Per Share is based on basic Earnings Per Share after adjusting profit for the year for non-underlying items and to remove the amortisation of acquired intangible assets and associated deferred tax, amortisation of loan arrangement fees and unwinding of NPV discounts in relation to contingent consideration.

The Group calculates basic, diluted and adjusted underlying basic Earnings Per Share. The results can be summarised as follows:

	2023 Pence	2022 Pence
Basic EPS	14.20	23.92
Diluted EPS	14.07	23.60
Adjusted underlying basic EPS	37.23	33.27

34.1. BASIC EARNINGS PER SHARE

	2023 £'000	2023 £'000
Profit for the year	21,821	34,714

	No. of shares (thousands)	No. of shares (thousands)
Issued Ordinary shares at 1 January	146,001	144,326
Effect of shares issued to acquire business combinations	2,474	-
Effect of movement in treasury shares held	322	811
Effect of placing	4,862	-
Weighted average number of Ordinary shares (basic):	153,659	145,137
Basic EPS (pence)	14.20	23.92

34.2. DILUTED EARNINGS PER SHARE

	2023 £'000	2022 £'000
Profit for the year	21,821	34,714

	No. of shares (thousands)	No. of shares (thousands)
Weighted average number of Ordinary shares (basic)	153,659	145,137
Effect of share-based payments issued	1,440	1,930
Weighted average number of Ordinary shares (diluted):	155,099	147,067
Diluted EPS (pence)	14.07	23.60

34.3. ADJUSTED UNDERLYING BASIC EARNINGS PER SHARE

	Note	2023 £'000	2022 £'000
Profit for the year		21,821	34,714
Non-underlying items	7	16,188	(1,883)
Amortisation of customer relationships, acquired software and brands	21	14,265	12,400
Impairment of customer relationship intangible asset	21.2	737	-
Amortisation of loan arrangement fees	10	805	1,062
Unwinding of NPV discounts for contingent consideration	10	5,093	3,518
Temporary tax differences arising on amortisation of customer relationships, acquired software and brands	11	(1,694)	(1,531)
Adjusted underlying profit for the year		57,215	48,280

	No. of shares (thousands)	No. of shares (thousands)
Weighted average number of Ordinary shares (basic)	153,659	145,137
Adjusted underlying basic EPS (pence)	37.23	33.27

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 underlying basic EPS reflects the profit for the year adjusted to remove the impact of non-underlying items (see note 7). Additionally, a number of other items relating to the Group's acquisition activities including amortisation of acquired intangible assets and associated deferred tax, impairment of acquired intangible assets, 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.

The definition of adjusted underlying basic Earnings Per Share has been updated to include the impairment of acquired intangible assets. Management consider this adjustment to be consistent with its existing treatment of acquired intangible assets. Prior to this update, adjusted underlying basic Earnings Per Share was 36.76p (2022: 33.27p).

35. CASH FLOW INFORMATION

35.1. CASH GENERATED FROM OPERATIONS

	2023 £'000	2022 £'000
Operating profit	52,650	33,803
Adjustments:
Depreciation of property, plant and equipment	8,262	7,883
Amortisation of intangible assets and assets recognised from costs to obtain or fulfil a contract	16,878	14,378
Equity-settled share-based payment expense	2,716	2,045
EIP share-based payment expense	-	4,780
Share of loss/(profit) of equity-accounted investee	15	(478)
Operating cash flows before movements in working capital	80,521	62,411
Net changes in working capital:
Decrease/(increase) in receivables	164	(10,247)
Increase in payables	4,040	3,202
Cash generated from operations	84,725	55,366

35.2. NON-UNDERLYING ITEMS WITHIN CASH GENERATED FROM OPERATIONS

	2023 £'000	2022 £'000
Cash generated from operations	84,725	55,366
Non-underlying items:
Acquisition and integration costs	5,799	3,127
Office start-up	612	768
Other	44	228
Capital distribution from EBT	-	417
Revision of ICS operating model	-	402
Total non-underlying items within cash generated from operations	6,455	4,942
Underlying cash generated from operations	91,180	60,308

35.3. FINANCING ACTIVITIES

Changes in liabilities arising from financing activities:

	Lease liabilities due within one year £'000	Lease liabilities due after year £'000	Borrowings due within one year £'000	Borrowings due after one year £'000	Total £'000
At 1 January 2022	5,463	37,916	-	152,578	195,957
Cash flows:
Acquired on acquisition	216	101	-	-	317
Repayments	(41)	(6,202)	-	-	(6,243)
Other non-cash movements1	(1,346)	8,787	-	1,044	8,485
At 31 December 2022	4,292	40,602	-	153,622	198,516
Cash flows:
Acquired on acquisition	554	2,230	-	-	2,784
Drawdowns	-	-	-	118,000	118,000
Repayments	(28)	(7,482)	-	(50,000)	(57,510)
Other non-cash movements1	1,299	2,574	-	(1,091)	2,782
At 31 December 2023	6,117	37,924	-	220,531	264,572

1    Other non-cash movements include the capitalisation and amortisation of loan arrangement fees, foreign exchange movements, additions and disposals of lease liabilities relating to right-of-use assets and the unwinding of NPV discounts.

35.4. NET DEBT

	2023 £'000	2022 £'000
Bank loans	(220,531)	(153,622)
Cash allocated against regulatory and capital adequacy requirements1	(11,827)	(15,673)
Loans receivable from employees	-	16
Less: cash and cash equivalents	97,222	48,861
Total net debt	(135,136)	(120,418)

1    Represents the minimum cash balance to be held to meet regulatory capital requirements.

36. SHARE-BASED PAYMENTS

The Company operates equity-settled share-based payment arrangements under which services are received from eligible employees as consideration for equity instruments. The total amount to be expensed for services received is determined by reference to the fair value at grant date of the share-based payment awards made, including the impact of any non-vesting and market conditions.

The fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on Management's estimate of equity instruments that will eventually vest. At each balance sheet date, Management revises its estimate of the number of equity instruments expected to vest as a result of the effect of non-market based vesting conditions. The impact of the revision of the original estimates, if any, is recognised in the consolidated income statement such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to equity reserves.

36.1. EMPLOYEE INCENTIVE PLAN ("EIP")

JTC has an ongoing commitment to the concept of Shared Ownership and adopted the EIP upon listing on the London Stock Exchange in March 2018. The EIP is designed to recognise and reward long-term performance across the whole Group and its alignment of employees' and Shareholders' interests is linked to multi-year business plans. All permanent employees of the Group (excluding all Executive Directors of JTC PLC) are eligible to be granted an award under the EIP at the discretion of the Remuneration Committee.

On 22 July 2021, following the conclusion of the Odyssey business plan (which ran from the IPO until the end of 2020), JTC PLC granted 3,104,007 shares to employees of the Group. Each award was separated into two tranches: 50% vested at the grant date ("Tranche one") and 50% was a deferred award in the form of a conditional right to receive shares on the first anniversary of grant, subject to the achievement of the applicable performance conditions ("Tranche two"). Tranche one was expensed in full upon grant and Tranche two was expensed over the one year vesting period to 22 July 2022. There were no shares granted, exercised or forfeited during 2023.

Details of movements in the number of shares are as follows:

	2023		2022
	No. of shares (thousands)	£'000	No. of shares (thousands)	£'000
Outstanding at the beginning of the year	-	-	1,479	9,240
Granted	-	-	-	-
Exercised	-	-	(1,411)	(8,813)
Forfeited	-	-	(68)	(427)
Outstanding at the end of the year	-	-	-	-

Following the Odyssey era, the Galaxy business plan commenced in 2021 and its goals were completed by the end of 2023. The Remuneration Committee will use its discretion to consider the granting of awards under the EIP scheme during 2024.

36.2. Performance share plan ("PSP")

Executive Directors and senior managers may receive awards of shares, which may be granted annually under the PSP. The maximum policy opportunity award size under the PSP for an Executive Director is 150% of annual base salary; however, the plan rules allow the Remuneration Committee the discretion to award up to 250% of annual base salary in exceptional circumstances. The Remuneration Committee determines the appropriate performance measures, weightings and targets prior to granting any awards. Performance conditions include Total Shareholder Return relative to a relevant comparator group and the Company's absolute underlying EPS performance.

The following table provides details for PSP awards:

Plan name	Performance period	Grant date	Vest date	No. of shares (thousands)	Fixed amount at fair value £'000
PSP 2019	1 January 2019 to 31 December 2021	3 April 2019	19 April 2022	254	614
PSP 2020	1 January 2020 to 31 December 2022	23 April 2020	6 April 2023	213	825
PSP 2021	1 January 2021 to 31 December 2023	20 May 2021	1	283	1,507
PSP 2022	1 January 2022 to 31 December 2024	19 April 2022	1	246	1,384
PSP 2023	1 January 2023 to 31 December 2025	11 April 2023	1	414	2,328

1    The vesting of awards is subject to continued employment and achievement of performance conditions over the specified period. The awards will vest for each PSP when the conditions have been measured for the relevant performance period.

Details of movements in the number of shares are as follows:

	2023		2022
	No. of shares (thousands)	£'000	No. of shares (thousands)	£'000
Outstanding at the beginning of the year	673	3,346	733	2,903
Awarded	414	2,328	246	1,384
Exercised	(200)	(771)	(188)	(425)
Forfeited	(3)	(17)	(118)	(516)
Outstanding at the end of the year	884	4,886	673	3,346

36.3. DEFERRED BONUS SHARE PLAN ("DBSP")

Depending on the performance of the Group, consideration is given annually by the Remuneration Committee to the granting of share awards under the DBSP to eligible Directors. This forms part of the annual bonus awards for performance during the preceding financial year end.

(A) ANNUAL BONUS AWARDS TO EXECUTIVE DIRECTORS

For performance during the year ended 31 December 2023, the portion of bonus earned by Executive Directors in excess of 50% of salary has been deferred into shares. The date of grant will be determined following the release of the annual report for the relevant performance period.

Plan name	Performance period	Vest date1	Fixed amount £'000
ED DBSP 1	Year ended 31 December 2023	1 January 2026	116

1    The vesting of awards is subject to continued employment up to the vest date.

(B) ANNUAL BONUS AWARDS TO DIRECTORS

In previous years, the Remuneration Committee exercised its discretion and in accordance with the DBSP rules, determined that 50% of the annual cash bonus awards for Directors would be awarded as shares. The portion of the bonus award deferred into shares was expensed over the three year period to the date of vest. For the year ended 31 December 2023, the Remuneration Committee intends to make annual bonus awards to Directors in cash rather than deferring a portion of the bonus into shares. Due to this change, the cash bonus awards have been expensed in full and are shown within salaries and Directors fees. The remaining expenses associated with DBSP 4 and DBSP 5 awards that continue to the vesting date are shown within non-underlying (see note 7³).

The following table provides details for each DBSP award for Directors:

Plan name	Performance period	Grant date	Vest date1	No. of shares (thousands)	Fixed amount £'000
DBSP 2	Year ended 31 December 2019	23 April 2020	23 April 2022	73	313
DBSP 3	Year ended 31 December 2020	14 April 2021	1 January 2023	56	364
DBSP 4	Year ended 31 December 2021	19 April 2022	1 January 2024	67	476
DBSP 5	Year ended 31 December 2022	11 April 2023	1 January 2025	96	679

1    The vesting of awards is subject to continued employment up to the vest date.

Details of movements in the number of shares held within the DBSP schemes at the year end were as follows:

	2023		2022
	No. of shares (thousands)	£'000	No. of shares (thousands)	£'000
Outstanding at the beginning of the year	109	756	114	614
Awarded	96	680	67	476
Exercised	(48)	(315)	(62)	(267)
Forfeited	(4)	(29)	(10)	(67)
Outstanding at the end of the year	153	1,092	109	756

36.4. OTHER AWARDS

AD HOC AWARDS

The Group may offer ad hoc awards to Directors joining the business. The award is expensed from the start of their employment, with the value being a fixed amount as stated in the employee's offer letter. The number of shares awarded is determined by the mid-market close price at the grant date which is at the next available window since their start date (typically April or September). The awards will vest two years following grant subject to continued employment.

NEW JOINER AWARDS

As part of the Group's commitment to 100% employee share ownership, a share award is made to every employee joining the business. The award is expensed from the start of their employment with the amount based on a pre-determined number of shares as stated in the employee's offer letter. Following successful completion of their probationary period, the shares are granted at the next available window (typically April or September). The awards will vest two years following grant subject to continued employment.

EMPLOYEE REFERRAL SCHEME

As part of the Group's employee referral scheme, permanent employees up to senior manager level are eligible to receive a pre-determined bonus when a referred employee is hired following completion of their probation period. The award is comprised of an initial 50% cash payment and a 50% share award. The number of shares will be calculated using the mid-market close price on the date the referred employee completes their probationary period and expensed from this date. The shares will be granted at the next available window (typically April and September) and will vest one year following grant subject to continued employment.

Details of movements in the number of shares are as follows:

	2023		2022
	No. of shares (thousands)	£'000	No. of shares (thousands)	£'000
Outstanding at the beginning of the year	254	2,104	260	2,102
Awarded1	41	296	86	683
Exercised	(89)	(673)	(70)	(451)
Forfeited	(16)	(174)	(22)	(230)
Outstanding at the end of the year	190	1,553	254	2,104

1    In 2021, as part of the RBC cees acquisition, the Group inherited historical share awards for the eligible directors of the acquired entities. These awards are settled in cash or a combination of 50% cash and 50% equity, as such they are recorded as a liability with the fair value being remeasured at each reporting period end. At the date of acquisition, 141,875 shares with a fair value of £0.88m were awarded. During the year, 41,391 shares vested (2022: 52,622 shares), the fair value of the outstanding awards as at 31 December 2023 is £0.3m (2022: £0.5m).

36.5. EXPENSES RECOGNISED DURING THE YEAR

The equity-settled share-based payment expenses recognised during the year, per plan and in total, are as follows:

	2023 £'000	2022 £'000
PSP awards	1,616	879
DBSP awards	471	455
Other awards	747	788
Share-based payments1	2,834	2,122
EIP share-based payments	-	4,780
Total share-based payments expense	2,834	6,902

1    The share-based expense in the capital reserve of £4.22m (2022: £2.04m) includes other awards that are 100% cash settled as well as those that are settled 50% cash and 50% equity (2023: £0.12m, 2022: £0.08m); also included is £1.5m contingent consideration for INDOS (see note 17.1).

37. 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.

38. FOREIGN CURRENCY

The individual financial statements of each Group company are presented in the currency of the primary economic environment in which it operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each Group company are expressed in pounds sterling, which is the functional currency of the Company and the presentation currency for the consolidated financial statements.

In preparing the financial statements of the individual companies, transactions in currencies other than the entity's functional currency (foreign currencies) are recognised at the rates of exchange prevailing on the dates of the transactions.

At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing at that date. Exchange differences are recognised in the consolidated income statement in the year in which they arise.

For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group's operations with a functional currency other than pounds sterling are translated at exchange rates prevailing on the balance sheet date.

Income and expense items are translated at the average exchange rates for the year, unless exchange rates fluctuate significantly during that year, in which case the exchange rates at the date of transactions are used. Goodwill and other intangible assets arising on the acquisition of a foreign operation are treated as assets of the foreign operation and are translated at the closing rate. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in equity in the translation reserve.

For the year ended 31 December 2023, mainly due to the Euro and US dollar foreign currency exchange rate movements, we have recognised the following:

·  a foreign exchange loss of £7.0m in other comprehensive income (2022: £21.3m gain) upon translating our foreign operations to our functional currency; and

·  a foreign exchange loss of £9.6m (2022: £14.4m gain) in the consolidated income statement upon the retranslation of monetary assets and liabilities denominated in foreign currencies.

39. 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.

39.1. KEY MANAGEMENT PERSONNEL

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:

	2023 £'000	2022 £'000
Salaries and other short-term employee benefits	3,136	2,716
Post-employment and other long-term benefits	119	145
Share-based payments	1,624	979
EIP share-based payments	-	115
Total payments	4,879	3,955

39.2. OTHER RELATED PARTY TRANSACTIONS

The Group's associate, KIG (see note 32), has provided £0.55m of services to Group entities during the year (2022: £0.94m).

39.3. ULTIMATE CONTROLLING PARTY

JTC PLC is the ultimate controlling party of the Group.

40. CONSIDERATION OF CLIMATE CHANGE

As set out in the TCFD disclosures in the Annual Report, climate change has the potential to give rise to a number of transition risks, physical risks and opportunities.

In preparing the consolidated financial statements, Management have considered the impacts and areas that could potentially be affected by climate-related changes and initiatives. No material impact was identified on the key areas of judgement or sources of estimation uncertainty for the year ended 31 December 2023. Items that may be impacted by climate-related risks and were considered by Management were the recoverability of trade receivables (see note 12) and the cash flow forecasts used in the impairment assessments of goodwill (see note 21.1).

Whilst Management consider there is no material medium-term impact expected from climate change, they are aware of the ever-changing risks related to climate change and will ensure regular assessment of risks against judgements and estimates when preparing the consolidated financial statements.

41. EVENTS OCCURRING AFTER THE REPORTING PERIOD

There were no other post balance sheets events other than those discussed within the annual report or detailed below.

41.1. ACQUISITION OF BLACKHEATH CAPITAL MANAGEMENT LLP ("BLACKHEATH")

On 4 March 2024, following regulatory approval from the UK Financial Conduct Authority, JTC announced the completion of the acquisition of 100% of the rights, shares and interests in Blackheath, a partnership known for its bespoke asset management and advisory services. Initial consideration of £0.7m was settled in £0.56m cash and through the issuance of 18,435 JTC PLC Ordinary shares. Contingent consideration up to a maximum of £0.7m is payable subject to achieving performance targets for the period to 31 December 2024. This would be due on or before 1 April 2025 and would be settled in a 80%/20% ratio of cash and JTC PLC Ordinary shares.

This acquisition will complement and enhance JTC's existing Global AIFM Solutions businesses in Ireland, Luxembourg and Guernsey and extends our ability to provide Management Company (ManCo) services to UK-domiciled funds.

At the date the consolidated 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.

 

END