JTC shares slide despite solid first-half results

17th Sep 2024 10:35

(Sharecast News) - JTC, a global provider of fund, corporate, and private client services, saw its shares slide on Tuesday morning, even after it announced robust interim results for the six months ended 30 June.

The FTSE 250 company said revenue increased 21.1% to £147.1m, up from £121.5m during the same period last year.

Underlying EBITDA rose 22.3% to £49.1m, as the firm maintained a healthy EBITDA margin of 33.4%.

It achieved an impressive last-12-months (LTM) net organic revenue growth of 12.5%, surpassing its upgraded guidance of over 10% per annum.

New business wins reached a record £18.8m - a 28.8% increase compared to £14.6m in the first half of 2023.

Client attrition decreased to 4.8%, reflecting strong and enduring client relationships.

JTC said its operations in the United States showed exceptional performance, with gross revenue growth of 83.4%.

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.

As a result, the interim dividend was increased by 22.9% to 4.3p per share.

During the reporting period, JTC expanded its global footprint through four strategic acquisitions, all funded from existing facilities and acquired at attractive valuations.

In June, the company acquired FFP, a firm specialising in complex engagements such as restructurings, insolvencies, and disputes.

FFP would form the foundation of JTC's new governance services business line, branded as Northpoint Governance, and strengthen its leadership position in the Cayman Islands.

JTC also acquired Blackheath Capital and Hanway Advisory in the UK and First Republic Trust Company (FRTC) in Delaware.

The board said the bolt-on acquisitions were integrating smoothly, and were expected to contribute positively to future growth.

Additionally, the integration of SDTC, which marked its one-year anniversary with JTC in August, was described as successful, significantly boosting revenue in the US market.

Following the reporting period, JTC announced two more acquisitions - the Buck share plan business, which would enhance its employer solutions offering, and Citi's global trust company business.

The acquisition of Citi Trust was set to be transformative, the board said, positioning JTC as the largest independent global trust company within its private client services (PCS) division.

As JTC entered what it termed the 'Cosmos era', it said it expected 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 reported a strong pipeline of consolidation opportunities across both its institutional client services (ICS) and PCS divisions, targeting growth markets over the medium term.

"We have made a strong start to the Cosmos era, with record new business wins, organic growth above our upgraded guidance at a stable margin even as we continue to invest in growth," said chief executive officer Nigel Le Quesne.

"A particular highlight has been our M&A activity with four acquisitions announced or completed during the period.

"Post period end, we were pleased to announce the acquisition of Buck as an addition to our employer solutions business and the significant acquisition from Citibank of Citi Trust, its global trust company business."

Le Quesne said it was a "transformational deal" for the group and the PCS division, cementing JTC as "one of the world's largest" independent trust company businesses.

"Our commitment to ownership for all employees remains our defining characteristic and while it did not fall directly within the period, I must mention our most recent shared ownership event, through which £50m of 'warehoused' shares from our employee benefit trust, were awarded to our global workforce in recognition of their collective achievement to double the size of the group in just three years by delivering our Galaxy Era plan.

"As always, I thank our employee-owners for their dedication to our clients and for bringing the JTC culture to life."

At 1014 BST, shares in JTC were down 8.47% at 1,038p.

Reporting by Josh White for Sharecast.com.