JTC PLC, a global provider of fund, corporate, and private client services, reported robust interim results for the six months ending June 30, 2024. Despite this, the company’s shares declined by 8.47% to 1,038p as of 10:14 BST on September 17, 2024. Vox Markets+1Sharecast+1Sharecast+1Vox Markets+1
Financial Performance
The company achieved a 21.1% increase in revenue, reaching £147.1 million compared to £121.5 million in the same period the previous year. Underlying EBITDA rose by 22.3% to £49.1 million, maintaining a healthy margin of 33.4%. Notably, JTC’s net organic revenue growth over the last 12 months was 12.5%, surpassing its upgraded guidance of over 10% per annum. Vox Markets+1Sharecast+1
New business wins set a record at £18.8 million, a 28.8% increase from £14.6 million in the first half of 2023. Client attrition decreased to 4.8%, indicating strong and enduring client relationships. The U.S. operations performed exceptionally well, with gross revenue growth of 83.4%. Additionally, the company’s underlying cash conversion remained strong at 104%, and leverage was reduced to 1.39 times underlying EBITDA, below the guidance range of 1.5 to 2.0 times. Consequently, the interim dividend was increased by 22.9% to 4.3p per share. Vox Markets+1Sharecast+1
Strategic Acquisitions
During the reporting period, JTC expanded its global footprint through four strategic acquisitions:Vox Markets+1Sharecast+1
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FFP: Acquired in June, specializing in complex engagements such as restructurings, insolvencies, and disputes. FFP will form the foundation of JTC’s new governance services business line, branded as Northpoint Governance, strengthening its leadership position in the Cayman Islands. Vox Markets+1Sharecast+1
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Blackheath Capital and Hanway Advisory: Both UK-based firms. Sharecast
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First Republic Trust Company (FRTC): Based in Delaware. Vox Markets+1Sharecast+1
Post-period, JTC announced two additional acquisitions:Vox Markets+1Sharecast+1
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Buck’s Share Plan Business: Enhances JTC’s employer solutions offering. Sharecast+1Vox Markets+1
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Citi’s Global Trust Company Business (Citi Trust): A transformative deal positioning JTC as the largest independent global trust company within its private client services (PCS) division. Sharecast+1Vox Markets+1
Outlook
As JTC enters what it terms the ‘Cosmos era,’ the company expects to deliver full-year results in line with management guidance and current market expectations. All medium-term guidance metrics were maintained or exceeded, including net organic revenue growth of over 10% per annum, an underlying EBITDA margin between 33% and 38%, cash conversion of 85% to 90%, and net debt between 1.5 and 2.0 times underlying EBITDA. The company reports a strong pipeline of consolidation opportunities across both its institutional client services (ICS) and PCS divisions, targeting growth markets over the medium term. Vox Markets+1Sharecast+1
Conclusion
Despite JTC’s strong financial performance and strategic acquisitions, the share price decline suggests that investors may have had higher expectations or concerns about future integration challenges. Nevertheless, the company’s solid fundamentals and proactive growth strategies indicate a positive outlook for its future performance.
