S T R O N G E R T O G E T H E R
2 0 1 8 A N N U A L R E P O R T
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C E L E B R A T I N G O V E R
3 0 Y E A R S O F G R O W T H
In March 2018, JTC secured a premium listing on the main
market of the London Stock Exchange. This milestone marked the
beginning of an exciting new chapter for the Group, and another
phase in a growth story that started over 30 years ago.
20 19
2 0 1 7
› We acquire Merrill Lynch
Wealth Management’s
International Trust and
Wealth Structuring (BAML)
business, strengthening
the depth of our global
offering and commitment
to the Americas.
JTC moves to new global
headquarters, JTC House
in Jersey.
›
J T C T O D A Y
›
JTC acquires Exequtive Partners
in Luxembourg (post period end,
25 March 2019)
1 9 9 1
› Current CEO,
Nigel Le Quesne,
joins the firm as
its fifth employee.
1 9 9 8
› The first
JTC Employee
Benefit Trust (EBT) is
formed, establishing
JTC’s approach that
‘every employee is
an owner’.
1 98 7
› The business
is established
in Jersey.
2 0 0 1 – 2 0 1 1
›
JTC establishes
operations in
the UK, BVI,
Switzerland,
Luxembourg
and Guernsey.
2 0 0 8
› A management
buy-out results in
the Group being
wholly owned
by management
and staff.
2 0 1 0
›
JTC makes its
first acquisition
in Jersey.
2 0 1 2
› CBPE Capital
invests in
JTC, holding a
minority interest
in the business.
This enables
the Group to
embark on its
‘local to global’
expansion strategy.
2 0 1 3
› The Group establishes an
alliance with Kensington
Trust Group, providing
coverage in Hong Kong,
Labuan, Malaysia, New
Zealand and Singapore.
2 0 1 4
› New ‘Equity for All’
(E4A) scheme launches,
enhancing shared
ownership opportunities
for all employees.
2 0 1 5
› We acquire a corporate
services business in
Luxembourg, and a fund
administration business from
GAM in the Cayman Islands.
› The Group acquires Kleinwort
Benson’s fund administration
business, taking employee
numbers to over 450, and
strengthening the Group’s
position as a global provider
in fund administration.
2 0 1 8
›
JTC PLC lists on the main
market of the London
Stock Exchange. The Group
acquires Van Doorn in
the Netherlands and
also Minerva, which adds
additional depth to several
existing JTC locations and
a new Middle East base
in Dubai.
W E A R E J T C
JTC is an award-winning provider of fund, corporate and
private client services to institutional and private clients.
Founded in 1987, we have over 700 people working across
our global office network and are trusted to administer more
than $110 billion of client assets.
The principle of true shared ownership for all employees is
fundamental to our culture and aligns us completely with the best
interests of our clients and other stakeholders.
C O N T E N T S
Chief Executive Officer’s Review
S T R A T E G I C R E P O R T
1 Highlights
2 Our business at a glance
6
14 Our Market Drivers
16 Our Business Model
18 Strategy in Action
24 Key Performance Indicators
28 Risk Management
30 Risks and Uncertainties
33 Principal Risks and Uncertainties
35 Our Resources and Relationships
46 Chief Financial Officer’s Review
G O V E R N A N C E
52 Chairman’s Introduction
56 Leadership and Effectiveness
63 Viability Statement
69 Nomination Committee Report
72 Audit and Risk Committee Report
79 Remuneration Committee Report
90 Directors’ Report
› Chief Executive Officer’s Review page 6
F I N A N C I A L S T A T E M E N T S
100 Consolidated Income Statement
101 Consolidated Statement of Comprehensive Income
102 Consolidated Balance Sheet
103 Consolidated Statement of Changes in Equity
104 Consolidated Cash Flow Statement
105 Notes to the Consolidated Financial Statements
154 Glossary
› Our resources and relationships page 35
H I G H L I G H T S
› For more information see page 46
U N D E R L Y I N G E B I T D A ( £ ) *
A D J U S T E D D I L U T E D E P S ( P ) * *
R E V E N U E ( £ )
£7 7. 3M
£2 3. 8M
2 0 1 7 £ 5 9 . 8 M
2 0 1 7 £ 1 4 . 4 M
1 8. 4P
2 0 1 7 1 3 . 8 P
S T A T U T O R Y E B I T D A ( £ )
D I L U T E D E P S ( P )
F I N A L D I V I D E N D P E R S H A R E ( P )
N E T D E B T ( £ )
£5 .3 M
(3 .9P )
2. 0P
2 0 1 7 £ 9 . 6 M
2 0 1 7 ( 7 . 0 P )
(£ 48 .7 M)
2 0 1 7 ( £ 4 2 . 5 M )
*
Items classified as non-underlying are as detailed in Note 10 of the financial statements. Non-underlying items are defined as specific
items that the Directors do not believe will recur in future periods. The 2018 results reflect the pre listing capital structure up to 14 March
2018 and the subsequent structure post IPO.
** Adjusted diluted EPS is the loss for the year adjusted to remove the impact of non-underlying items within EBITDA, amortisation of
customer contracts, other gains, share of profits from equity accounted investees, finance income, loan note interest, amortisation of loan
arrangement fees and unwinding of NPV discounts.
F I N A N C I A L H I G H L I G H T S
S T R A T E G I C H I G H L I G H T S
Revenue up 29.3% reflecting a good combination of organic growth
Net organic growth of 8.7% with £9.7m of new business won
and growth from acquisitions. Underlying EBITDA margin increased
from existing and new clients and strong organic new business
materially to 30.9% (2017: 24.1%) ahead of expectations due
enquiry pipeline of £32m at 31 December 2018 (2017: £25.6m).
to the focus on improving profitability levels across the Group.
Successfully acquired Van Doorn and Minerva in 2018 and post
Strong performance by both Institutional Client Services (ICS) and
period end acquired Exequtive Partners, a Luxembourg based provider
Private Client Services (PCS) Divisions.
of corporate and related fiduciary services. Well positioned to take
advantage of further consolidation opportunities.
A L T E R N A T I V E P E R F O R M A N C E M E A S U R E S
In order to assist the reader’s understanding of the financial performance of the Group in this period of significant change, alternative
performance measures (‘APMs’) have been included to ensure consistency with the IPO prospectus and to better reflect the underlying activities
of the Group excluding specific non-recurring items as set out in note 10 (page 117). As explained in the Company Prospectus, underlying EBITDA
margin is the main profitability comparator used within the Fund and Trust Administration market. 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.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
O U R B U S I N E S S A T A G L A N C E
JTC is a leading independent and international
provider of fund, corporate and private client services.
O U R G L O B A L R E A C H
JTC has a highly qualified and multi-lingual team of
more than 700 professionals providing a global service
to our clients from a network of 20 offices.
O U R P E O P L E
700+
O U R S T R U C T U R E
Our business is organised into two reporting Divisions each of
which has a global footprint. Cross-selling opportunities exist
between the services we offer and the jurisdictions from which we
deliver those services.
I N S T I T U T I O N A L C L I E N T S E R V I C E S ( I C S ) D I V I S I O N
P R I VAT E C L I E N T S E R V I C E S ( P C S ) D I V I S I O N
Provides fund and corporate administration services to institutional
Provides trust and corporate administration services to meet the
clients, primarily fund managers, listed companies and multinationals.
personal and business needs of private clients, including HNW and
UHNW individuals and families, as well as family and private offices,
and international wealth management firms.
V I S I O N : Be acknowledged as a top-tier global provider of fund and
corporate services.
V I S I O N : Be recognised as the best private client practice in the world.
R E V E N U E
G R O U P T O T A L
R E V E N U E
G R O U P T O T A L
£43.4 m
56.1%
£33. 9 m
43.9%
O U R T W O R E P O R T I N G D I V I S I O N S P R O V I D E C L I E N T S E R V I C E S A C R O S S T H R E E
S E R V I C E L I N E S W I T H , I N E F F E C T , E A C H O F I C S A N D P C S P R O V I D I N G C O R P O R AT E
S E R V I C E S T O T H E I R R E S P E C T I V E C L I E N T G R O U P S .
F U N D S E R V I C E S
C O R P O R A T E S E R V I C E S
P R I VA T E W E A L T H S E R V I C E S
28%
40%
32%
Fund Services administers a wide variety of listed and
unlisted funds across a diverse range of asset classes,
including real estate, private equity, renewables, hedge,
debt and other alternatives. Clients include a broad
spectrum of fund managers from market entrants to
large institutions. We provide support throughout the
entire lifespan of a fund, from establishment to valuation,
including ongoing reporting and regulatory compliance.
Corporate Services provides company secretarial and
administration services to a broad range of clients,
including SMEs, public companies, multinationals and
sovereign wealth funds. We also service private and
family offices and individual private clients who require
a corporate service for business and investments.
Different structures provided include real estate holding
vehicles, investment holding vehicles, joint ventures
and acquisition structures. We also provide services
for pension and employee share plans.
Private Wealth Services include the formation and
administration of vehicles such as trusts, companies
and partnerships on behalf of predominantly HNWIs
and UHNWIs and their families and also dedicated
private and family offices. We also provide Private
Wealth Services to large institutions, such as banks, as
an independent third party provider. We specialise in
a holistic approach to protecting and nurturing private
capital in real estate, financial and non-financial assets
across countries and generations.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
L E A D I N G T O G E T H E R
Leadership takes courage, confidence and commitment.
We understand that our clients want more than just a
service provider, they want to work with a partner that is as
committed to their long-term success as they are.
Courageous. Confident. Committed. Leading.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS C H I E F E X E C U T I V E O F F I C E R ’ S R E V I E W
A N O T H E R Y E A R O F F O C U S E D
G R O W T H A N D I M P R O V E M E N T
W H Y I N V E S T I N J T C ?
C H I E F E X E C U T I V E O F F I C E R
N I G E L L E Q U E S N E
We are very pleased with our first full
year results since listing and in particular
the improvement we delivered in our
profit margin. Both Divisions have
performed well and we are pleased with
the contribution from acquisitions and
progress with their integration onto the
JTC platform. The fundamental drivers for
our sector remain strong and we have a
positive outlook for 2019.
We are delighted to present our first full year results as a listed company.
While we are new to the public markets, JTC has a proud history spanning
more than 30 years and a track record of success built on the foundation of
our shared ownership culture, which aligns the interests of all our stakeholders
for the long term. Our progress is driven by a combination of highly motivated
staff, continuous organic growth, the ability to complete intelligent and
value enhancing acquisitions and above all, a commitment to client service
excellence delivered via a platform that is global and scalable.
We believe it is this combination of our successful history, our clear growth
strategy and our positive momentum that has led to a strong set of results
in 2018 and we are pleased with what the Group has achieved since its IPO.
At JTC we are a progressive business. We seek to advance through a process
of evolution rather than revolution and this approach has served us well for
more than three decades and through periods of substantial change in the
wider business environment. However, we pride ourselves on never being
complacent and understand that to stand still would be to go backwards.
C O N S I S T E N T P E R F O R M A N C E A N D
W E L L - I N V E S T E D B U S I N E S S W I T H C A P A C I T Y
C O N T I N U A L G R O W T H
T O S U P P O R T C O N T I N U E D G R O W T H
We have grown our revenue through organic expansion for 31
We invest in our expertise and infrastructure steadily and
consecutive years, complemented by a successful acquisition
prudently as we grow, avoiding step changes to our cost base.
strategy since 2010.
Our structure and scale can support further growth at limited
additional cost. Our fixed cost base provides the potential to
H I G H - Q U A L I T Y R E C U R R I N G R E V E N U E S
improve margins as revenue grows.
We have visibility of cash flow, with predictable, non-cyclical
revenues from long-term client relationships.
S T R O N G O N C O M P L I A N C E A N D R I S K
M A N A G E M E N T
D I V E R S I F I E D C L I E N T S , S E R V I C E S A N D
This is fundamental to our success in an industry where the
J U R I S D I C T I O N S
ability to manage risk is key. JTC has a sophisticated and well-
This diversification protects us against a downturn in trading
established compliance and risk-management system, and
conditions in any single market. Our largest client contributes
relationships with all relevant regulators.
2.9 per cent of revenue, our largest ten clients just 14 per cent.
E X P E R I E N C E D M A N A G E M E N T T E A M
D E M A N D C R E A T E D B Y
The senior management team has strength and depth, and is
L O N G - T E R M M A R K E T T R E N D S
involved directly in winning new business, maintaining client
These include the increasingly complex regulatory environment,
relationships and successful acquisitions. We have a number of
which encourages outsourcing to a specialist to reduce costs
high potential employees and there is a clear framework in place
and ensure compliance. Also, the demand for international
for identifying and developing future generations of leadership.
structures is increasing, and we can serve these through our
presence in multiple jurisdictions.
S H A R E D O W N E R S H I P C U L T U R E
A H I S T O R Y O F S U C C E S S F U L
A C Q U I S I T I O N , W I T H F U R T H E R
C O N S O L I D A T I O N P O T E N T I A L
Our culture is built around the principle of shared ownership to
ensure all our people are able to share in the success of the Group.
The first JTC Employee Benefit Trust (EBT) was created in 1998
and gave the whole team a direct stake in the business. We have
We have a successful record of identifying and buying suitable
maintained this culture ever since through the development and
companies, having completed 16 acquisitions since 2010.
evolution of our ‘Ownership for All’ programmes.
Our operating platform supports their quick and efficient
integration with minimal disruption. The fragmented market
offers further acquisition opportunities, and this strategy will
continue to be an important part of our growth.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS C H I E F E X E C U T I V E O F F I C E R ’ S R E V I E W
C O N T I N U E D
We believe that we are represented in the key jurisdictions required for
These results were achieved through a combination of net organic growth
steady stream of acquisition opportunities. It is core to our approach that any
The post period end acquisition of Exequtive Partners adds significant scale
our business. We rigorously assess the competence of our business in each
of 8.7% and the positive contribution of the two acquisitions made in 2017;
acquisition has to fit culturally and that the rationale for the acquisition is
in the key ICS jurisdiction of Luxembourg and we also see opportunities for
jurisdiction against a number of key criteria. Depending upon that assessment
New Amsterdam Cititrust (NACT) and the Bank of America Merrill Lynch
about more than just the numbers. We invest in quality businesses with great
further acquisitions due to specific market dynamics in the region.
we invest in infrastructure, people and review acquisition opportunities.
International Trust and Wealth Structuring (BAML) business as well as the
people that provide excellent service to clients.
In jurisdictions where we see further potential we have specific plans for how
part-year contribution from the two acquisitions made in 2018, Van Doorn
During the year, the Division was boosted by a number of senior hires including
we are going to enhance our position in those markets.
and Minerva.
Our continuing investment in scalable infrastructure and our proven disciplined
a Head of Business Development for Institutional Client Services & the US, a
approach to the integration process, coupled with the skill of the team, gives
new Managing Director in London for the UK business and the leadership team
At JTC our goal is to continue to build an outstanding business for the long
Importantly, we have delivered as predicted on the key objective we set
us both the capability and bandwidth to continue to consider both smaller
from the Van Doorn acquisition.
term where high standards are coupled to entrepreneurial spirit and the
ourselves at the time of IPO, which was to improve significantly the underlying
‘bolt-ons’ and larger acquisitions on a regular basis. The two acquisitions
commitment to become a better business for all stakeholders every single day.
EBITDA margin. We achieved a 2018 result of 30.9% (+6.8pp) which was
executed in 2018, Van Doorn and Minerva, demonstrate this.
Moving into 2019 we are pleased that Tony Whitney, Head of our ICS Division,
F I N A N C I A L H I G H L I G H T S
Divisions, the full integration of acquisitions made in 2017 and the positive
It is important to acknowledge that some acquisition opportunities fell away
Tony brings over 20 years of JTC experience to his new post and will work
Our full year results are in line with our expectations at the time of listing in
progress made with integrating acquisitions made in 2018 (statutory EBITDA
in 2018, even after progressing to advanced stages of negotiation, and we
across both Divisions to support and drive our organic and inorganic growth
March 2018 and slightly ahead of consensus expectations. In comparing to the
margin fell to 6.8% (2017: 16.1%) as a result of the one-off costs incurred).
regard this as a positive sign of the rigour with which we apply our disciplined
strategies. Replacing Tony as the new Head of the ICS Division will be Jonathan
previous year, Group revenue increased by 29.3% to £77.3m and underlying
approach to inorganic growth. We are not afraid to walk away from deals that
Jennings, who joined the Group as Managing Director of the UK business in
EBITDA by 65.3% to £23.8m (statutory EBITDA decreased by 45% to £5.3m).
G R O W T H B Y A C Q U I S I T I O N
do not meet our exacting criteria at all stages of the transaction.
2018 and who will combine both roles moving forward, continuing to be based
achieved through improvements to the scalable operating models of both
will take up the new role of Chief Commercial Officer for the Group from April.
Although statutory EBIT for the year was £0.6m, a decrease of 90.7% from
2017 (£6.8m), this is after incurring the following one-off costs:
An important component of our strategy is to continue to supplement organic
growth with acquisitions. JTC has a successful track record of executing deals
Post period end, we acquired Exequtive Partners, a Luxembourg based provider
in London.
> A capital distribution (£13.2m) from “JTC EBT 12” to all staff as
and proven methodology, together with our ability to source, negotiate and
add significant scale in a key jurisdiction and will be complementary to the
In 2018 the PCS Division accounted for 43.9% of Group turnover (39.7%
a result of our IPO relating to our previous share structure
integrate acquisitions swiftly and efficiently.
Van Doorn acquisition within the Benelux region.
in 2017). Gross revenue showed a 43% increase in the year to £33.9m
which enhance our core business and we are well placed to leverage our ability
of administration services to corporate and fund clients. The acquisition will
P R I VA T E C L I E N T S E R V I C E S ( P C S ) D I V I S I O N
> Acquisition and integration costs (£4.3m)
> Costs associated with the IPO (£1.0m)
The opportunity is supported by both the trend towards consolidation in
Our acquisition pipeline remains healthy with a number of opportunities of
(2018: £11.3m vs 2017: £6.3m).
(2017: £23.7m) and 79.6% increase in underlying EBITDA in the year
> Other non-underlying costs / charges (£0.6m)
the industry and leveraging the attraction of our ‘shared ownership for all’
varying scale and stages of progress that are well aligned with the business
model as a fundamental premise of our proposal. Ours is an industry with a
plans of both Divisions.
Revenue growth was driven by the full year effect of the acquisition of the
BAML business made in late 2017, the acquisition of Minerva in the second
I N S T I T U T I O N A L C L I E N T S E R V I C E S ( I C S ) D I V I S I O N
half of 2018 and contributions from across the existing PCS network, with our
In 2018 the ICS Division accounted for 56.1% of Group turnover (60.3%
US offering proving particularly popular.
in 2017). Gross revenue showed a 20.2% increase in the year to £43.4m
(2017: £36.1m) and a 54.1% increase in underlying EBITDA in the year
Margin improvement was particularly strong in the year, as a result of the
(2018: £12.5m vs 2017: £8.1m).
rapid integration of the BAML business and improvements to the PCS
Revenue growth was due to good performance across established asset classes,
operating platform.
especially real estate and private equity, while at the same time adding new
During the year, the Division was boosted by a number of senior hires focused
service areas, including in the emerging FinTech space. In jurisdictional terms,
on regional business development and the new JTC Private Office, as well as
the performance of our Jersey, Netherlands, Luxembourg and UK offices were
the leadership team from the Minerva acquisition, who bring with them a
particular highlights.
wealth of experience and extensive network of contacts in India, Africa, the
Margin improvement was largely achieved by further refining and improving
the operating model between the ICS jurisdictions and the Global Service
O U R P E O P L E A N D C U L T U R E
Middle East and Asia in particular.
Centre (GSC) in Cape Town, South Africa, a trend that we expect to see
It is impossible to overstate the importance of our people and culture in the
continue in 2019 as we capitalise on ongoing investments in technology and
success of JTC.
operating processes, as well as capturing economies of scale.
The addition of the Van Doorn business to the NACT business (acquired in
can collectively build a business for the long-term and at the heart of JTC
2017) substantially enhanced our presence in the Netherlands and provides a
sits a philosophy and commitment of Shared Ownership for all employees.
high growth, business development focused hub in the Benelux region.
This was formalised in 1998 with the creation of our first Employee Benefit
We have long believed that culture is the best foundation from which we
Trust (EBT) and the definition of our Guiding Principles. Our culture guides
us in all interactions with all our stakeholders, including clients, colleagues,
intermediary partners, regulators, government bodies and the communities in
which we operate and live.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS C H I E F E X E C U T I V E O F F I C E R ’ S R E V I E W
C O N T I N U E D
As the Group has grown, our culture has become even more important to us
D I V I D E N D
and it is rewarding to note that it continues to be referenced as a positive factor
In addition to the interim dividend of 1.0p per share, the Board has
in making us an ‘acquirer of choice’ across all sub-sectors and geographies.
recommended a final dividend of 2.0p per share in line with expectations.
Maintaining and investing in our culture and people is a constant priority and
2019 to shareholders on the register as at the close of business on the record
Subject to shareholder approval, the final dividend will be paid on 21 June
2018 saw a number of important milestones and new developments. At IPO
date of 31 May 2019.
the JTC EBT realised more than £13m of value for our people, an outstanding
result for the six years of hard work in growing the business from our previous
O U T L O O K
capital event in 2012. There was never any doubt that the philosophy of
The results delivered in 2018 have generated further momentum which we
Shared Ownership would continue once JTC became a public company and
carry into 2019 and we are confident in the ability of the Group to deliver
we were pleased to roll out updated ‘Ownership for All’ and ‘Advance to Buy’
continued positive progress.
programmes for all staff across the Group following the IPO.
In addition, we continued to invest directly in our people through our in-
consolidation of recent acquisitions, a healthy and growing enquiries pipeline,
house learning and development programme, JTC Academy, including the
new business wins, more work from existing clients and increased cross-selling
design of a new programme for our most senior managers, JTC LION (Leaders
opportunities. We continue to target organic growth, net of attrition, in the
In Our Name), which is also directly linked to our long-term succession
planning strategy.
range 8-10% at a Group level. This growth will be supplemented by further
new strategic and opportunistic acquisitions in the foreseeable future bringing
We see multiple organic growth opportunities in both Divisions through the
Above all, and on behalf of all members of the Board, I would like to
take this opportunity to thank every member of the team from around
In terms of profitability we are delighted to have delivered on the objective
the world for their continuing dedication and contribution in 2018. I am
set at the time of the IPO to return the business to an underlying EBITDA
privileged to lead a business with so much talent.
margin of 30%+. We are confident in our ability to realise further benefits
additional diversification and greater capability to the Group.
R I S K
from the optimisation of our operating platforms across both Divisions, as
well as certain economy of scale benefits. We will maintain our approach to
The principal risks facing the Group remain as set out in our Prospectus at the
be appropriately invested in people, systems and processes at all times and will
time of listing. Material risks include acquisition risk, competition risk, data
continue to target an underlying EBITDA margin in the range 30 – 35% subject
protection and cyber security risk, staff resourcing risk, political and regulatory
to exceptional and clearly explained acquisition activity.
change risk, and regulatory and procedural compliance risk. We remain satisfied
as to the effectiveness of the Group’s risk analysis, management and culture,
Despite ongoing and well-known uncertainties in the macro environment, the
developed over more than 30 years of JTC operations. We were pleased to
outlook remains positive for further growth in the industry with compelling
appoint Steven Bowen as Chief Risk Officer for the Group in January 2019.
fundamentals prevailing in the addressable market. This is particularly the case
Steven joined us as part of the Minerva acquisition and brings with him over
for JTC with its well organised global footprint, clear understanding of market
25 years of industry experience. Further detail on our approach to monitoring
trends and the ability to position itself appropriately from a skill set, operating
and managing risk can be found on pages 28 – 34.
model and technology perspective. All of this means that the Group is well
positioned to respond to an ever-evolving macro environment.
G O I N G C O N C E R N
The financial statements are prepared on a going concern basis, as the Directors
are satisfied that the Group has the resources to continue in business for at
JTC’s history of being able to adapt to these trends and develop accordingly,
together with our own strategy for success, leaves us confident for 2019
least 12 months from the approval of the financial statements. In making this
and beyond.
assessment, the Directors have considered a wide range of information relating
to present and future conditions, including future projections of profitability
and cash flows.
N I G E L L E Q U E S N E
C H I E F E X E C U T I V E O F F I C E R
W H A T M A K E S U S
D I F F E R E N T ?
A U N I Q U E C U L T U R E B A S E D
O N S H A R E D O W N E R S H I P
Our culture is based on the principle of shared ownership and is brought to life through our internal cultural values, which
in turn drive our external client facing behaviours. These are supported by three constantly evolving programmes that are
available to all employees globally. JTC Academy delivers lifelong learning and development opportunities. JTC Gateway
enables and encourages talent mobility between our global network of offices. JTC Wellbeing supports all our people in
attaining optimum physical, emotional and mental good health.
T C A C A D E M Y
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A D A P T I N G T O G E T H E R
When the only certainty in life is constant change, we’re
proud of our ability to be versatile, creative and adaptable.
Being responsive to changing circumstances in a smart and
effective way is just one of the qualities that sets us
apart for our clients.
Versatile. Creative. Smart. Adaptable.
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L O N G - T E R M
S T R U C T U R A L T R E N D S
The breadth of our services and relationships, as well our ability to adapt,
provides us with a competitive edge, as fund, corporate and private clients
all require our specialist skills.
The degree of fragmentation in our global industry means the addressable market size
is difficult to quantify. However, all our end markets share the following long-term
structural trends – which show little sign of slowing, and serve to drive our growth.
C L I E N T S A R E I N C R E A S I N G L Y G L O B A L I N N A T U R E
P O S I T I O N
Institutions are becoming increasingly international, driven in part by greater
In the past decade, we have built scale – often through
communication, co-operation and data sharing between different jurisdictions
merger and acquisition activity, acquiring selectively
globally. In addition, wealthy individuals and family offices typically have a more
and strategically to expand our global footprint.
international footprint than before. This increases the demand for providers of
By integrating acquisitions successfully, we can offer
administrative services, who can work across many jurisdictions, with knowledge
clients seamless services across multiple jurisdictions.
of the regulatory regimes in each region.
G L O B A L W E A L T H I S G R O W I N G
P O S I T I O N
The continuing rise in GDP, and the expanding middle classes in developing
We intend to continue to take advantage of global
countries, means global wealth continues to grow. Asia-Pacific, North America
wealth creation trends in developed markets and,
and Europe contributed equally to the global increase in wealth, particularly
increasingly, in maturing markets such as Asia, Latin
3
4
1
2
D E M A N D I S D R I V E N B Y G R E A T E R R E G U L A T I O N
P O S I T I O N
The financial crisis of 2007-8 prompted a shift toward greater regulation,
Clients increasingly turn to us, as a large, specialist
particularly for the professional services industry. This regulation is increasingly
administrator, for the services we provide to help them
complex, and the requirements for accurate and timely disclosure of information
cope with the regulatory burden and the requirements
have increased. Asset managers, corporates, financial institutions, and wealthy
for independent oversight. The continually developing
for HNWIs, who saw wealth grow 10.6% to surpass US$70 trillion for the first
America and Africa. We will do this through both our
individuals and families, must all comply with current obligations, and plan for
global regulatory framework brings us multiple revenue
time in 2018 – the sixth consecutive year of gains. Global HNWI wealth is now
organic growth strategy and via selective acquisitions.
further impending regulations. This places far greater demands and pressure on
opportunities, as well as increasing the barriers to
predicted to exceed US$100 trillion by 2025.*
their operations, particularly in staffing costs, on top of the potential reputational
entry for competitors.
risks and penalties of non-compliance.
* 2018 Cap Gemini World Wealth Report
O U T S O U R C I N G R E D U C E S R I S K A N D I N C R E A S E S
P O S I T I O N
A F R A G M E N T E D M A R K E T I S C O N S O L I D A T I N G
P O S I T I O N
E F F I C I E N C Y
The complexity and variation across our industry
Historically, our market was serviced by many smaller, local businesses – often
We have successfully acquired 16 businesses since
The increase in regulation and complexity is creating a clear shift towards
means fund, corporate and private clients who do not
outsourcing administration services to specialist providers. Such providers offer
outsource may need more staff, with more specialist
5
part of, or spun out from, professional services firms or banks. Now, many
2010. Our global footprint is now a key strength,
such players are exiting what they regard as non-core activity and the market
while our retained regional expertise offers a
knowledge and experience of multiple jurisdictions, and a full suite of the services
skills. It also means automation of the operations and
is consolidating, driven by increasingly complex and demanding regulatory
thorough understanding of relevant jurisdictions and
needed for compliant and efficient operation. For example, outsourcing reduces
accounting work is more difficult. To offer clients a
requirements. Administrators are growing in scale and becoming more
key intermediaries. We are well placed to identify,
fund managers’ costs across back-office and support functions, bolstering
solution for this, we employ staff who are highly
specialised. However, the market remains relatively fragmented and there is
complete and integrate further opportunities quickly
margins that are under pressure due to competition from low-cost passive and
qualified and experienced in providing administration
scope for further consolidation.
index funds. Using a specialist service provider throughout a product life-cycle
and accounting services to our client base, and who
also reduces the risk of non-compliance.
customise their outputs and formats to individual
client requirements.
and efficiently when they arise. By broadening our
geographical reach and our breadth of services,
we will benefit from the world’s strongest growth
markets, and gain a degree of protection from
adverse regional or economic factors.
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O U R B U S I N E S S M O D E L
O U R B U S I N E S S M O D E L
Our purpose is to help maximise the potential of every client, colleague and partner we work with. JTC’s culture of
shared ownership drives internal values and client facing behaviours that deliver service excellence across our entire
business. Our long-term organic and inorganic growth strategies are aligned with well-understood market drivers and
by maintaining a well invested and scalable global platform we are able to capture opportunities and grow sustainably.
O U R R E S O U R C E S
A N D S T R E N G T H S
1 .
O U R I N T E R N A L
V A L U E S D R I V E
O U R C L I E N T F A C I N G
B E H A V I O U R S
2 .
O U R O R G A N I C A N D
I N O R G A N I C G R O W T H
S T R A T E G I E S A R E A L I G N E D
W I T H M A R K E T D R I V E R S
O U R C L I E N T S A N D
W H A T W E D O
W E I N V E S T I N O U R P E O P L E
JTC’s highly qualified and multilingual team of more than 700 professionals are our most
important asset, bringing our culture to life and delivering client service excellence. Over 70%
of our people are professionally qualified or working towards a relevant professional
qualification and everyone is supported to maximise their individual potential through the
JTC Academy, JTC Gateway and JTC Wellbeing programmes and rewarded through our
Shared Ownership culture.
W E E M B R A C E T E C H N O L O G Y
We believe technology is an enabler for client service excellence and invest accordingly.
JTC uses a variety of best-in-class systems to deliver and maintain an impeccable
standard of administration and uses technology to innovate in both service delivery
and efficiency.
W E P U T R E L A T I O N S H I P S F I R S T
We handpick the best team to look after each client’s needs and aim to work with
clients who share our belief in the importance of building strong relationships over
time. We provide services to more than 4,800 clients from over 100 different countries
and are trusted to administer assets in excess of US$100 billion. As an independent
administrator, we are able to form strong commercial relationships with intermediary
partners, providing complementary services to clients.
W E H A V E G L O B A L R E A C H
Our network of 20 offices in 18 different jurisdictions provides a global platform
that allows us to offer a complete and joined-up range of services, including multi-
jurisdictional solutions for an increasingly international client base.
R E
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4 .
T H E G R O U P D E V E L O P S
B Y B E I N G A W E L L
I N V E S T E D A N D S C A L A B L E
G L O B A L P L A T F O R M
3 .
W E T A K E A
S T A K E H O L D E R
M E N T A L I T Y T O
E V E R Y T H I N G W E D O
I N S T I T U T I O N A L
C L I E N T S E R V I C E S
P R I V A T E C L I E N T
S E R V I C E S
F U N D
S E R V I C E S
C L I E N T S
›
Institutional fund managers
› Market entrant
fund managers
› Real Estate, Private Equity,
Infrastructure, Hedge, Debt
and FinTech
› Other alternative assets
C O R P O R A T E
S E R V I C E S
P R I V A T E W E A L T H
S E R V I C E S
C L I E N T S
› UHNWI and families
› Private and family offices
› Private client institutions
C L I E N T S
› Multinationals
› Listed companies
› Sovereign wealth funds
› Fund managers
› UHNWI and families
› Pension plans
› Employee share incentive and
other ownership plans
H O W W E C R E A T E L O N G T E R M V A L U E .
.
.
.
.
. F O R O U R K E Y S T A K E H O L D E R S
S H A R E H O L D E R S
E M P L O Y E E S
C L I E N T S
I N T E R M E D I A R Y P A R T N E R S
C O M M U N I T I E S
We seek to grow the value of our shareholders’
Through our shared ownership culture we ensure
We take an entrepreneurial approach to finding solutions
As an independent administrator, we are able to
We value and respect the communities in which
investment over time through the successful delivery of
that every employee has a direct stake in the business
for our clients and build long-term relationships by
provide best-in-class solutions to the clients of
we operate around the world and understand the
our organic and acquisition growth strategies. We share
and is able to share in its long-term success. We work
adopting a can do attitude and providing above and beyond
our intermediary partners and complement their
support they provide to our employees, clients and
profits through dividends while simultaneously investing
to maximise the potential of every employee providing
service. We nurture and value client relationships for the
own offering. We develop symbiotic and reciprocal
intermediary partners. We seek to create a positive
the balance in the business on an ongoing basis to
support through the JTC Academy, JTC Gateway and
long-term with average client relationships of c.10 years.
commercial relationships to support mutual growth.
impact wherever we operate, creating opportunities
support steady and sustainable growth.
JTC Wellbeing programmes.
for employment and giving back through charitable
donations of time, expertise and money.
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S T R A T E G Y I N A C T I O N : I N S T I T U T I O N A L C L I E N T S E R V I C E S
I N S T I T U T I O N A L C L I E N T S E R V I C E S
.
.
.
I N A C T I O N
The ICS Division services an international client base spanning the US,
Europe, Africa and Asia and operates a global platform that includes: New
York, Miami, Cayman, Jersey, Guernsey, London, Luxembourg, Amsterdam,
Cape Town, Mauritius and Dubai. The scalable infrastructure of the Division is
underpinned by asset class expertise, best-in-breed IT systems and our Global
Service Centre (GSC) in South Africa, which provides fund administration and
accounting services to the ICS platform.
We operate in markets with strong fundamentals and clear growth prospects.
Key drivers include the ongoing trend for greater outsourcing particularly
in the alternative assets arena led by a number of factors including greater
regulatory complexity, a desire from investors for third party scrutiny and
transparency and a preference from managers to concentrate on performance
rather than building and managing internal infrastructure.
Against this positive backdrop, the ICS Division will drive further growth by
focusing on three priority areas. Winning new business by demonstrating
high levels of asset class expertise and service quality. Continuing to make
operational efficiency improvements, in particular through the development
of our GSC. Selective M&A activity to further enhance our global footprint.
It has been a privilege to lead the ICS Division and I look forward to continuing
to work closely with the team in my new role as Chief Commercial Officer.
I hand over the reins to the very capable hands of Jonathan Jennings from
1 April 2019.
“Our 3-year business plan vision to 2020
is to be acknowledged as a top-tier global
provider of fund and corporate services.”
G R O U P H E A D O F
I N S T I T U T I O N A L C L I E N T
S E R V I C E S
T O N Y W H I T N E Y
Our ICS Division provides fund and corporate administration services to institutional
clients, primarily fund managers, listed companies and multinationals.
Fund Services administers a wide variety of listed and unlisted funds across a
diverse range of asset classes including real estate, private equity, renewables,
infrastructure, FinTech, hedge, debt and other alternatives. We provide support
throughout the entire lifespan of a fund, including ongoing reporting and
regulatory compliance.
Corporate Services provides company secretarial and administration services
and the broad range of structures supported include real estate holding vehicles,
investment holding vehicles, joint ventures and acquisition structures. We also
provide services for pension and employee share plans and enable cross-
selling opportunities with the PCS Division through the provision of relevant
corporate services to private and family offices and HNW/UHNW clients.
2 0 1 8 F I N A N C I A L P E R F O R M A N C E
R E V E N U E O F
£43 . 4M
U N D E R L Y I N G E B I T D A O F
N E W B U S I N E S S E N Q U I R Y P I P E L I N E O F
£12.5M
£22.2M
U P 2 0 . 2 % F R O M £ 3 6 . 1 M I N 2 0 1 7
U P 5 4 . 1 % F R O M £ 8 . 1 M I N 2 0 1 7
A S A T 3 1 D E C E M B E R 2 0 1 8 U P 2 7 . 6 % F R O M
£ 1 7 . 4 M A T 3 1 D E C E M B E R 2 0 1 7
I C S D I V I S I O N G E N E R A T E D
U N D E R L Y I N G E B I T D A M A R G I N O F
56. 1 %
28.8%
O F G R O U P T U R N O V E R ( 2 0 1 7 : 6 0 . 3 % )
U P 6 . 3 P P F R O M 2 2 . 5 % I N 2 0 1 7
2 0 1 8 H I G H L I G H T S
2 0 1 9 O U T L O O K
> Improved margin through top line growth and continued
> Acquisition and integration of Exequtive Partners
operational improvement
in Luxembourg
> Enhanced business development capability, processes
> Appointment of Chief Commercial Officer and internal
and systems
promotion for new Head of ICS Division
> Significant personnel upgrades – a strong and talented
> Continued operational improvement via Global Service
global team
Centre (GSC) including ongoing investment in technology
> Excellent new business enquiry pipeline
and processes
> Integration of Van Doorn and continued high growth
> Continued focus on establishment of US platform
> Exemplary client testimonials and Ambassador
> Increased resource and focus on business development
Programme feedback
activities, particularly cross-sell opportunities
> M&A opportunities
I N S T I T U T I O N A L C L I E N T S E R V I C E S T E S T I M O N I A L S
F O R E S I G H T
N I M R O D C A P I T A L L L P
“Since April 2008, JTC has been Foresight Group’s administrator
“JTC has an excellent reputation, vast experience and expertise
of choice for its offshore fund products in Guernsey, Jersey and
in administering innovative investment companies. That, along
Luxembourg. JTC’s experienced and professional team are responsive
with the strength of their existing relationship with Nimrod
and supportive, and provide a reliable, comprehensive service.”
Capital, made them an ideal and perfect fit when selecting
B R I C K B L O C K
our administrator.”
“JTC’s expertise is integral for realising the potential of blockchain
B A N K J U L I U S B A E R
technology to positively impact the real estate investment process.
“We have worked with JTC since January 2017. Throughout this
I am certain that working together with a company of JTC’s calibre
time JTC has been a highly supportive partner providing us with
will reinforce the confidence of our clients and potential investors
first-class services including accounting, company secretarial
when it comes to BrickBlock’s offering.”
and administration. The JTC team is very professional and our
experience of working with them has been very positive.”
Z U B R C A P I T A L
“We value our long-term partnership with JTC. Their top-level
C A T A L Y S T I N V E S T
private equity services and attention to detail relieve the pressures
“JTC clearly places a premium on nurturing quality client
of the day-to-day, giving us peace of mind. The JTC team truly
relationships. They are reliable, flexible to meet our demands and
understand our business and always look for opportunities and
invest extra resource when required to ensure our deadlines are
offer solutions.”
met. JTC’s support is a key element in ensuring we maintain high
quality communications and goodwill to meet the ongoing needs
of our international investors.”
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P R I V A T E C L I E N T S E R V I C E S
.
.
.
I N A C T I O N
With the sustained growth in wealth of, and the rise of a generation of true
‘world citizens’ in the UHNW community, underpinned by a growing desire
for generational wealth transfer and preservation, legitimate privacy and to
be fully compliant across all territories, the outlook for private client services
remains positive. There is also growing demand for more sophisticated service
provision, as opposed to product sales, in emerging markets, with a flight to
quality evident. In the wider market there is a desire to provide access to client
friendly consolidated information supplementing a preference for delivery
from one service provider rather than several. These dynamics together with
JTC’s historic pedigree and reputation for delivering client service excellence,
as well as our ability to provide corporate services to meet the business
needs of UHNW individuals and family and private offices, provide a positive
backdrop for the Division.
More specifically within this environment, JTC will continue to drive growth in
private client services through its newly created regional business development
model, designed and structured to deliver new clients into our global service office
platform which has been augmented by the successful integration of the BAML
and Minerva businesses. This business development model also includes a focus
on cross-selling with the ICS Division for which we are seeing positive momentum.
Operationally, the PCS Division remains focused on driving through efficiencies
via its four-pillar construct of Business Process Improvements, Business
Integration, Outsourcing and New Business.
“Our 3-year business plan vision to 2020 is
to be recognised as the best Private Client
practice in our sector.”
G R O U P H E A D O F P R I V A T E
W E A L T H S E R V I C E S
I A I N J O H N S
Our PCS Division might typically be described as a trust company business.
It provides trust and corporate administration services to fulfil the personal
and business needs of private clients including HNW and UHNW individuals
and families as well as family and private offices. The Division also services
institutions such as international wealth management firms.
The PCS Division services clients from more than 100 countries and has a global
platform that includes: New York, Miami, South Dakota, Cayman, BVI, Jersey,
Guernsey, Isle of Man, London, Geneva, Dubai, Labuan, Mauritius, Singapore,
Hong Kong, Malaysia and New Zealand. The scalable infrastructure of the
Division is underpinned by regional expertise, best-in-class IT systems and
growing outsourcing centres in Labuan (Malaysia), Singapore and Mauritius,
which provide bookkeeping and accounting services to the PCS network.
2 0 1 8 F I N A N C I A L P E R F O R M A N C E
R E V E N U E O F
£33 . 9M
U N D E R L Y I N G E B I T D A O F
N E W B U S I N E S S E N Q U I R Y P I P E L I N E O F
£11.3M
£9.9M
U P 4 3 % F R O M £ 2 3 . 7 M I N 2 0 1 7
U P 7 9 . 6 % F R O M £ 6 . 3 M I N 2 0 1 7
A S A T 3 1 D E C E M B E R 2 0 1 8 U P 2 0 . 7 % F R O M
£ 8 . 2 M A T 3 1 D E C E M B E R 2 0 1 7
P C S D I V I S I O N G E N E R A T E D
U N D E R L Y I N G E B I T D A M A R G I N O F
43. 9%
33.5%
O F G R O U P T U R N O V E R ( 2 0 1 7 : 3 9 . 7 % )
U P 6 . 9 P P F R O M 2 6 . 6 % I N 2 0 1 7
2 0 1 8 H I G H L I G H T S
2 0 1 9 O U T L O O K
> Revenue growth, margin improvement and new business
> Complete Minerva integration
pipeline growth
> Focus on continued organic new business enquiry pipeline
> Excellent integration of the BAML acquisition and popularity of
growth and conversion
US proposition
> Implementation of updated global operating model
> Integration of the Minerva acquisition progressing well
(improved client experience and operational efficiencies)
> Establishment of regional business development
> Grow JTC Private Office proposition and client base
model with dedicated Regional Heads to further drive
> Capitalise on cross-selling opportunities within the global
organic growth
network, with support from new Chief Commercial
> Global launch of JTC Private Office powered by our
Officer role
proprietary ‘Edge’ client portal
> M&A opportunities
> Overwhelmingly positive client and intermediary
feedback from latest cycle of the JTC
Ambassador Programme
J T C P R I VAT E O F F I C E
> JTC has provided ‘private’ and ‘family’ office services
for decades. With growth in this space driven by a
combination of global wealth creation and our own
expanding international footprint, we created an
engaging proposition brought to life with its own sub-
brand: JTC Private Office.
> JTC Private Office recognises that time is the ultimate
luxury and delivers a world-class combination of personal
service, deep understanding and global reach. It is
powered by Edge, our proprietary client portal, which
provides secure, unified and always-on access for JTC
Private Office clients.
> JTC Private Office will be actively marketed across all
target regions and complements perfectly our full suite
of underlying private client services.
jtcprivateoffice.com
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A C Q U I S I T I O N
G R O W T H S T R A T E G Y
JTC has an excellent record of identifying and delivering sustainable growth
In larger acquisitions, we have seen a healthy dynamic to integrating staff, who
from acquisitions since our first in 2010. Over time we have become a
were not ‘owners’ in their previous employment and as a consequence feel
popular acquirer in a consolidating industry with a reputation for an honest,
more empowered than in a small division of a large parent company. And in the
straightforward approach and the ability to understand the underlying
same way, the former parent company can feel assured their staff will be well
fundamentals and deliver flexible solutions to suit the situation. Our acquisition
looked after in the new model. This also helps provide continuity for the clients,
growth strategy is designed to build scale, add new capabilities, or deliver both
and so more assurance of value in the deal.
simultaneously and applies to our geographic reach and service offering. In this
way, we are able to grow progressively while protecting our core business at
M U L T I - F A C E T E D C R I T E R I A
all times.
A S U C C E S S F U L A P P R O A C H
We will assess a potential acquisition based on a number of indicators.
Transactions often offer multi-faceted benefits, including a combination of:
JTC’s acquisition growth strategy is designed to build scale and add new
> Adding operational scale in existing or complementary jurisdictions
capabilities to the Group from a geographic reach and service offering perspective.
> Adding a ‘book’ of clients
> Strengthening our existing service platform
Our highly experienced Group Development Committee and external advisers
> Acquiring a skilled workforce or experienced leaders
are aware of acquisition opportunities in the market and review them regularly.
> The cost synergy potential of rationalising systems and central functions
Our disciplined approach follows an established process developed over time for
> The cross-selling opportunities for the combined business
assessing these opportunities, with potential targets prioritised by region, type
> The ability to strengthen common client relationships.
“We have a long record of successfully
completing and integrating acquisitions
using our disciplined, established and
proven structure and processes.”
and scale. Our process runs from initial assessment, through clearly defined due
diligence requirements and documentation, to deploying a specific integration
team to facilitate a swift transition onto the JTC platform. In this way, we can
grow steadily and comfortably while protecting our existing core business at
all times.
A S S E S S I N G P O T E N T I A L T A R G E T S
We identify and assess potential targets with the following attributes:
> Smaller acquisitions that add incremental earnings or
geographic capability.
> Larger-scale and transformational international opportunities.
Many of our completed acquisitions demonstrate our success in buying under-
performing businesses. We grow our revenue at a Group level and by bringing
them into our operating model, transform their levels of profitability. This brings
a positive differential between the price we pay and the increase in value of the
expanded Group.
Notwithstanding this, we will pay for the right high quality business when it
becomes available, and tend to offer a mix of cash and equity. In this way,
we have the ongoing commitment from the business’ owners and senior
management, helping to ensure cultural alignment from the outset.
MANAGING DIRECTOR JTC NETHERLANDS AND
FORMER MANAGING DIRECTOR OF VAN DOORN
E K E V E R B E K E
J T C A M B A S S A D O R A N D F O R M E R
C H A I R M A N O F M I N E R V A
V I P I N S H A H
“When we first met the management
team of JTC, we instantly knew that the
fit would be perfect, as we sensed the
same entrepreneurial spirit. We are now
connecting all the dots of our businesses
that will result in further growth and
success of the Group.”
“We worked closely with JTC leading up
to and throughout our transaction during
which time JTC demonstrated a respectful,
professional and trustworthy approach that
was fully aligned with Minerva’s long standing
values. Support from JTC, including the
integration team, has been faultless.”
A N N O U N C E D
17 August 2018
O F F E R I N G
Corporate and fund
administration services
A N N O U N C E D
6 September 2018
O F F E R I N G
Private client, corporate,
fund and treasury services
F O O T P R I N T
J T C D I V I S I O N
F O O T P R I N T
J T C D I V I S I O N
Amsterdam, Netherlands
Institutional Client Services
Jersey, London, Geneva,
Primarily Private Client Services
E M P L O Y E E S
15+
Singapore, Mauritius and Dubai
E M P L O Y E E S
100+
R A T I O N A L E
R A T I O N A L E
> High-margin, high-growth specialist provider of corporate and
> Established trust company business with 40 year history and
related fiduciary services
good cultural fit
> Expands and strengthens existing jurisdictional presence
> High quality client book
> Adds high quality team and leadership
> Increased scale in five existing jurisdictions and addition of
> Part of wider Benelux region strategy to take advantage
Dubai office.
of high quality consolidation opportunities
> Extended reach in the markets of sub-Saharan Africa, India
> Creates increased ability to cross-sell with JTC’s PCS Division
and Asia
C O N S I D E R A T I O N
> Enhances the JTC treasury services offering.
Mix of cash (69%) and shares (31%). Earn out based on FY 2018
C O N S I D E R A T I O N
results. Total consideration subject to absolute cap of ¤21.5 million
Mix of cash (60%) and shares (40%). Earn out based on performance
in six months following completion. Total consideration subject to
absolute cap of £30 million plus cash acquired
C H I E F O P E R A T I N G
O F F I C E R
W E N D Y H O L L E Y
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
K E Y P E R F O R M A N C E I N D I C A T O R S
T H E J T C B O A R D U S E S
T H E F O L L O W I N G K P Is
T O
M E A S U R E T H E P E R F O R M A N C E
O F T H E G R O U P
R E V E N U E ( £ M )
Revenue growth measures the overall growth
in the business.
U N D E R L Y I N G E B I T D A ( £ M )
Underlying EBITDA measures how much profit we
make from running the business.
U N D E R LY I N G E B I T D A M A R G I N ( % )
Underlying EBITDA margin measures how well
we are running the business against our peers and
industry norms.
8 0
6 0
4 0
2 0
0
2 5
2 0
1 5
1 0
5
0
3 5
3 0
2 5
2 0
1 5
1 0
5
0
77
60
51
2 0 1 6
2 0 1 7
2 0 1 8
24
14
12
2 0 1 6
2 0 1 7
2 0 1 8
31
23
24
2 0 1 6
2 0 1 7
2 0 1 8
C A S H C O L L E C T I O N /
C O N V E R S I O N ( % ) *
We measure the level of cash conversion to tell
us how successful we are in converting profits
into cash.
Note: Adjusted to include full 12 month cycle
of BAML cash receipts, 2018 proforma cash
conversion = 89%
N E W B U S I N E S S W I N S ( £ M )
We measure new business wins to understand how
well we are growing the business and how well we
are performing.
U N D E R L Y I N G P R O F I T
B E F O R E T A X ( £ M )
Underlying profit before tax measures the
profitability of the Group.
L E V E R A G E ( R A T I O )
Leverage measures the level of our external
debt obligations.
1 0 0
91
85
8 0
8 0
6 0
3 0
2 0
0
1 0
8
6
4
2
0
2 0
1 5
1 0
5
0
-5
3 . 5
3 . 0
2 . 5
2 . 0
1 . 5
1 .0
0 . 5
0
2 0 1 6
2 0 1 7
2 0 1 8
9 .7
8.9
7.8
2 0 1 6
2 0 1 7
2 0 1 8
1 7
-2
-1
2 0 1 6
2 0 1 7
2 0 1 8
3.2
2.9
1 .9
2 0 1 6
2 0 1 7
2 0 1 8
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* Cash conversion is the ratio of Net cash from operating activities compared with underlying EBITDA.
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
S T R O N G E R T O G E T H E R
Our strength is the sum of our many intelligent parts.
Hundreds of dedicated individuals, working around the clock
and around the globe, to create robust solutions that deliver
lasting value for our clients. Together we transform vision into
reality and purpose into action.
Intelligent. Dedicated. Loyal. Strong.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS R I S K M A N A G E M E N T
S T R O N G F O C U S
O N R I S K M A N A G E M E N T
A N D C O M P L I A N C E
As a regulated provider of fund, corporate and trust administration services, JTC
The Audit and Risk Committee has been constituted by the Board to approve
has a strong focus on risk management and compliance. Risk is considered at
and periodically review the audit and risk management policies of the Group
all levels, from strategic planning by the senior executive team to every action
and to oversee the operation of an enterprise-wide risk management framework
taken in each jurisdiction. Operating in a regulated environment, JTC has taken,
and the Company’s capital planning, liquidity risk management and resolution
and continues to take, compliance with laws and regulations very seriously and
planning activities.
enjoys positive relationships with the relevant regulatory authorities.
The Board has overall responsibility for oversight of the risk management
Executive Officer, Group General Counsel, Group Risk Director who are responsible
policies of the Company and the operation of the Group-wide risk management
framework, ensuring that such framework is commensurate with the Company’s
for considering all aspects of operational risk which may affect the Group including
but not limited to strategic risk, regulatory risk, people risk, systems and cyber risk,
structure, risk profile, complexity, activities and size, as well as providing
competition risk, client risk, fiduciary risk and performance risk.
The Group Executive Risk Committee comprises of the Chief Risk Officer, Chief
oversight of the Group’s capital planning, liquidity risk management and
resolution planning activities.
J T C P L C B O A R D
J T C P L C A U D I T A N D R I S K C O M M I T T E E
G R O U P E X E C U T I V E R I S K C O M M I T T E E
R I S K A P P E T I T E A N D A S S E S S M E N T
K E Y C O N T R O L S
The Group’s risk appetite and risk tolerances are determined and monitored
JTC has in place a number of key controls to ensure that client assets and the
by the Board in accordance with the Group’s strategic objectives, and policies
risks taken by it as a fiduciary are monitored and managed.
and procedures.
These include:
The Group reviews and monitors its risk exposure closely, considering the
potential impact and any actions required to mitigate the impact of emerging
> High level of jurisdictional director control over processes
issues and potential future events.
> Dedicated Group monitoring function
> Defined authority mandates and Terms of Reference
Risk is considered at all levels, from strategic planning by the senior executive
> Controls ensuring separation of transaction approval and payment
team to every action taken in each jurisdiction.
> Regularly updated cyber security policies and protections
> A strong IT platform and business continuity arrangements
R I S K M A N A G E M E N T A N D I N T E R N A L C O N T R O L S
> A rigorous human resource screening and on-boarding process
The Group’s risk management model adopts an industry standard three tier risk
> Experienced and well trained employees
approach. The first tier is formed by the business and operations managers in
> Regular risk and compliance updates
each regulated jurisdiction, who are responsible for maintaining a strict control
environment on a day-to-day basis. Where the Group has regulated companies
Many of these controls are captured by the rigorous, bespoke JTC “Recommendation
requiring it to have a Compliance Officer, Money Laundering Reporting Officer
for Signing” (RFS) approval process. This internal control tool ensures that decisions
and Money Laundering Compliance Officer, it does so, and each regulated entity
made by business divisions are thoroughly documented, reviewed and approved at
submits monthly risk reports to the Group’s risk function (Group Risk Function).
an appropriate level on a ‘six-eyes’ basis, dictating that at least three employees
The Group Risk Function forms the second tier of the risk model. This team
manage and monitor client, transactional, operational and internal risks within JTC.
compiles the regulatory reports from each jurisdiction and reports to the
It was developed, and is continually refined, to provide control over the Group’s
Group Executive Risk Committee on a monthly basis. This ensures regular risk
diverse client base, business operations and geographies and to maintain the highest
and compliance oversight at senior management team level. The Group places
standard of control in a rapidly growing organisation. All new employees are required
reliance on the audit process and ISAE accreditation partners for the third tier
to take pre-recorded RFS training and a test, with updates also included in refresher
must review and approve key decisions and transactions. The RFS also helps identify,
of the risk model.
training. RFSs from each Division are independently tested on a monthly basis as
part of the JTC compliance monitoring by the Group Risk Function. There is a strict
C O M P L I A N C E M O N I T O R I N G A N D I N T E R N A L A U D I T
exceptions management process, with exceptions (if any) ultimately being dealt
The Group Executive Risk Committee meets quarterly and is responsible
with at Board level of the relevant regulated entity and reported to the Executive
for overseeing the Group’s internal risk and accreditation arrangements.
Risk Committee.
It also manages the remit of the Group Risk Function’s audit of each regulated
jurisdiction’s risk management and compliance processes, as part of the JTC
Compliance Monitoring Plan.
The Group Risk Function routinely carries out spot checks on the different
jurisdictions to ensure the compliance and adherence to these procedures.
“Our expertise in the effective management of
risk, for clients and the Group, is fundamental
to our long-term success and a key strength
of JTC.”
C H I E F R I S K O F F I C E R
S T E V E N B O W E N
C O M P L I A N C E
G O V E R N A N C E
O P E R AT I O N A L
R E G U L AT O R Y
The Group Risk Function also carries out a programme of independent
G R O U P R I S K F U N C T I O N ( R I S K A U D I T F U N C T I O N )
E A C H R E G U L AT E D J U R I S D I C T I O N
> Ongoing day-to-day risk management responsibility, with business
and operations management ensuring a robust control environment
is maintained
> MLRO, MLCO and CO in each regulated jurisdiction
> Monthly reporting provided to Group Risk function
transaction monitoring.
The Group Executive Risk Committee is mandated under clear Terms of Reference
which include oversight of client acceptance, dealing with exceptional cases and
quality assurance protocols. The Group Executive Risk Committee supervises the
Group Risk Function. The Group Risk Function in turn monitors the risk sub-
groups in each regulated jurisdiction, ensuring standards are maintained and
procedures adhered to.
The Directors believe a culture of compliance is embedded within its staff and
service teams.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
R I S K S A N D U N C E R T A I N T I E S
R I S K M A T R I X A S S E S S M E N T
The likelihood of risks actually materialising, the potential significance of the risks
The Board acknowledges that it must be prepared to take a certain level of risk
or of the scope of any potential harm to the Group’s business, prospects, results
if the Group is to be successful in meeting its objectives, such risks are carefully
of operation and financial position are first discussed, debated and challenged by
considered, assessed and monitored to ensure they are proportionate and clearly
senior management and the Group Risk Committee, then by the Audit & Risk
aligned to the Group’s strategic goals.
Committee, and then presented to the Board identified as follows:
The Board has carried out a robust assessment of the principal and emerging
risks and uncertainties which might prevent the Group from achieving its goal of
long-term growth in revenue and shareholder returns.
H
G
I
H
W
O
L
D
O
O
H
I
L
E
K
I
L
M E D I U M
C R I T I C A L ( H I G H R I S K )
L O W
H I G H I M P A C T ( L O W R I S K )
M O D E R A T E
C R I T I C A L
I M P A C T
The Board has agreed that the top risks to JTC will be presented in the Annual Report and Accounts as the “Principal Risks”.
The risk taxonomy is represented by a two level architecture:
> LEVEL 1 is the primary overarching risk elements, containing six components
> LEVEL 2 represents the cohorts of specific risks that JTC is exposed to.
L E V E L O N E
L E V E L T W O
M I T I G A T I O N
L E G A L
F I N A N C I A L
P O L I T I C A L /
R E G U L A T O R Y
> Litigation / Contractual
> Fiduciary
> Robust policies, procedures and processes in operation within the Group (particularly risk
escalation policy)
> Qualified and experienced staff operating within a “6-eyes” control parameter
> Utilisation of external counsel in all disputes where appropriate
> Substantial PII cover
> The hiring of an experienced in-house legal team
> Free legal helpline with two international law firms
> Robust policies, procedures and processes in operation within the Group
> JTC does not provide legal or tax advice to its clients
> Continuous training programme
> Performance of business
> Ongoing monthly reporting and KPIs that help monitor performance against performance
> Earnings (fx)
> Impairment
> Financing
> Listing Rules
> Regulation
> AML/CFT
assumptions and targets
> Robust annual business planning and budget process
> Ongoing review of processes
> Active cash management process including matching of cash flows where possible
> Monitoring of f/x rates
> Robust due diligence process in place prior to acquisitions being completed
> Regular impairment testing as per accounting rules
> Ongoing management and monitoring against performance assumptions
> Cash management procedures in place
> Robust monitoring of loan covenants
> Retention of specialist advisers
> Deployment of staff dedicated to ensure compliance
> Utilisation of NED expertise
> Product/jurisdictional diversification reduces impact
> Review by appropriate boards/committees and business of horizon for potential changes
> Comprehensive policies, procedures and processes in operation within the Group that align
to the appropriate regulatory regimes
> Promoting a robust risk and compliance culture across the Group
> Ensuring appropriate compliance resource in each jurisdiction
> Compliance monitoring programme in place
> Comprehensive policies, procedures and processes in operation within the Group that are
specifically drafted for AML/CFT purposes
> The hiring of capable employees that undertake the key person roles (e.g.
Compliance Officer and Money Laundering Reporting Officer)
> Frequent staff training / awareness initiatives
> Adequate resources
> Comprehensive policies, procedures and processes in operation within the Group that are
> Retention
> Key person
H U M A N
R E S O U R C E
specifically drafted for AML/CFT purposes
> The hiring of capable employees that undertake the key person roles (e.g.
Compliance Officer and Money Laundering Reporting Officer)
> Frequent staff training / awareness initiatives
> JTC ensures that the remuneration package is competitive in the market place and
benchmarks against peer group
> Shared ownership scheme embedded across the business
> JTC encourages a strong management culture where talent management and people
development is a core focus
> Coverage of roles – certain roles have been identified as ‘key’ and a robust succession plan
within current staff pool is being developed
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS R I S K S A N D U N C E R T A I N T I E S
C O N T I N U E D
P R I N C I P A L R I S K S A N D U N C E R T A I N T I E S
L E V E L O N E
L E V E L T W O
M I T I G A T I O N
P R I N C I P A L R I S K S A N D U N C E R T A I N T I E S
The Principal risks and uncertainties, their mitigation and the evolution of risk
The Principal Risks JTC is exposed to are separately assessed and recorded on the
during the year are set out below. They are consistent with those reported in the
Group Risk Register and Group Risk Assessment Matrix. The Chief Risk Officer
IPO Prospectus, although now include the potential impact of a disorderly Brexit.
> Client
> Process
> Robust policy and procedures including at ‘take-on’ subject to regular review with
reports to the Audit & Risk Committee, presenting the Group Risk Register and
appropriate escalation for higher risk clients
Group Risk Assessment Matrix, providing an assessment of the risk status based
> Business continuity
> Frequent staff training / awareness initiatives
on the controls and mitigation.
> Data Security Risk
> Established reporting and escalation process with review by boards/committees
as appropriate
> Independent client and compliance monitoring review program
> Promoting a robust risk and compliance culture across the Group
> Ensuring quality administration and compliance resource in each jurisdiction plus internal
legal counsel support as appropriate
> Well established RFS process
P R I N C I P A L R I S K
P O T E N T I A L C A U S E S
M I T I G A T I O N
Risk of a security
breach including
> Data exfiltration
> Malware
> Defined and audited IT procedures
> External security assessment conducted annually
cyber-attacks from
> Financial theft
> System access controls including least privilege
I M P A C T
Critical /
medium risk
O P E R A T I O N A L
specifically drafted for business continuity and IT security purposes
> Comprehensive policies, procedures and processes in operation within the Group that are
1
leading to loss of
> Cyber-physical attacks
> Dedicated Senior IT Security Manager
confidentiality and
> Network service failures
> Training including compulsory online Security
> Evolution to a ‘three lines of defence’ assurance and controls model
destructive forces
> Denial of service attacks
access model
> JTC run an active/active dual datacentre model, across the Channel Islands, with one
integrity of data.
datacentre in Jersey and another in Guernsey, this provides inter island redundancy should
either datacentre suffer power or communication failure. The datacentres are connected via
four diverse and redundant network links to allow for synchronous replication
> The ability to continue business in alternative location if an issue arises in one jurisdiction,
as was implemented for the JTC BVI office in 2017
> Defined and audited IT procedures
> External security assessment conducted annually
> System access controls including least privilege access model
> Dedicated Senior IT Security Manager
> Training including compulsory online Security Awareness courses
> Employee error
> Malicious employee intent
Awareness courses
> Review of data security procedures and controls as part
of the annual ISAE 3402 Report
> Robust business continuity planning
Risk of the Group
> Failure to apply policy and
> Robust policy and procedures including at take on
Medium /
taking on the wrong
follow procedures
subject to regular review with appropriate escalation
low risk
type of clients, or
the Group or the
> Failure to follow codes of conduct
for higher risk clients
> Failure to invest in appropriate
> Frequent staff training / awareness initiatives
clients actions during
and timely talent development
> Established reporting and escalation process with
the clients life cycle
> Failure of managerial oversight
review by boards/committees as appropriate
> Review of data security procedures and controls as part of the annual ISAE 3402 Report
leading to losses,
> Failure to adequately train and
> Independent client and Compliance monitoring
> Acquisition
> Competitor
> Strategy
S T R A T E G I C
> Robust acquisition due diligence process including 3rd party assessments by well regarded
accounting and legal firms
> Governance and challenge from Non-Executive Directors
> Integration strategy in place prior to acquisition
> Integration committees established to manage integration process
> Group Holdings Board responsibility for identifying forthcoming requirements in respect of
digital / business systems investment
> GHB responsibility for identifying and prioritising product innovation
> Strategy regularly reviewed and challenged by Board respectively
> Strategy drives annual business planning process and performance based targets
2
failed strategic
objectives, poor
customer service and
employee frustration
and potentially
enforcement,
supervision or
regulatory sanction
develop employees
review program
> Promoting a robust risk and compliance culture across
the Group
> Ensuring quality administration and compliance
resource in each jurisdiction plus internal legal counsel
support as appropriate
> Well established RFS process
> Evolution to a three lines of defence assurance and
controls model
Risk that acquisitions
> Paying too much
> Robust due diligence process including 3rd party
High /
do not achieve
> Lack of strategic clarity
assessments by well regarded accounting and
medium risk
R E P U T A T I O N A L
> Regulatory sanction
> Comprehensive risk management capability including controls embedded within the
intended objectives
> Slow decision making
legal firms
> Public litigation
procedural environment
> Breaching sanctions,
> Prompt and effective communication with all stakeholders – regulators, shareholders,
3
or give rise to
> Lack of buy-in
> Governance and challenge from Non-
ongoing or previously
> Failure to integrate swiftly
Executive Directors
> Involvement in money
employees, clients and suppliers
unidentified liabilities.
laundering or the
> Strong and consistent enforcement and testing of controls on governance, business and
financing of terrorism
legal compliance
> Integration strategy in place prior to acquisition
> Integration committees established to manage
integration process
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C O N T I N U E D
O U R R E S O U R C E S A N D R E L A T I O N S H I P S
P R I N C I P A L R I S K
P O T E N T I A L C A U S E S
M I T I G A T I O N
I M P A C T
S T R O N G E R T O G E T H E R
4
5
6
Failure to retain high
> Lack of adequate
> JTC ensures that the remuneration package is
High / low risk
calibre, talented
succession planning
competitive in the marketplace and benchmarks
senior managers and
> Failure to invest in appropriate &
against peer group
other key roles in
timely talent development
> Shared ownership scheme embedded across
the business.
the business
> JTC encourages a strong management culture where
talent management and people development are a
core focus
C O R P O R A T E S O C I A L R E S P O N S I B I L I T Y
C U L T U R A L VA L U E S
Our approach to Corporate Social Responsibility (CSR) is driven by our shared
Our internal cultural values guide employees in their actions and form part of the
ownership culture and we believe that by working with our colleagues, clients
‘JTC Way’ of doing business.
and the communities in which we operate, we can all be Stronger Together.
Failure to recruit or
> Failure to identify roles most
> Coverage of roles – certain roles have been identified
High / low risk
develop good quality
essential to delivering on
as ‘key’ and a robust succession plan within the current
O U R P E O P L E
> MAXIMISE INDIVIDUAL POTENTIAL – as a growth and learning focused
business, we passionately believe in helping all our people to understand
people to achieve our
strategic aims
staff pool is being developed
Our people bring the JTC culture and brand to life. They possess the experience,
and achieve their full potential throughout the full duration of their
strategic aims
> Failure to identify what skills the
> Frequent staff training / awareness initiatives
expertise and energy that adds value for our clients and partners and they
career with JTC.
position really requires
> Focus too heavily on technical
> JTC Academy programme for all employees globally
> JTC ‘LION’ senior management
represent JTC every day in the communities and markets where we operate.
skills and not enough on attitude
development programme
S H A R E D O W N E R S H I P
> MERITOCRACY – at JTC, we value outstanding behaviours that lead to
outstanding results. Progress within the organisation is meritocratic and
based on an individual’s ability and desire to contribute to the Group
and motivation
> Lack of adequate
succession planning
> Failure to invest in appropriate
and timely talent development
Through our shared ownership programmes, every permanent employee is a
achieving its goals.
direct stakeholder in the business and following our IPO we set ourselves the
> STAKEHOLDER MENTALITY – our shared ownership culture means
aim of having at least 20% of the total issued share capital owned directly by
that we are all owners of the business and all have a role to play in its
employees at any time. As of 31 December 2018 this figure was 25%. Since its
long-term success. From new ideas to drive growth and delight clients,
inception, the JTC shared ownership model has created more than £200m of
to innovation in processes and cost control, we ask every member of
value for stakeholders, much of which is still held by employees as JTC PLC
the team to take a stakeholder mentality and treat the business and its
Risk that a change in
> Disorderly Brexit
> Dedicated risk and compliance resource with the
High /
equity. Over £25m in cash has been generated directly for employees from our
resources as their own.
laws and regulations
> Geopolitical uncertainty
requisite skills, resources to monitor and report to the
medium risk
Employee Benefit Trusts (EBTs).
> COMPANY BEFORE INDIVIDUAL – at JTC, no individual, however
will materially impact
> OECD tax reviews
Board on strategic outlook / impact of change
the sector and / or
> ‘4AMLD’ / Public Beneficial
> Robust and sustainable regulatory change
our business.
Ownership Registers
management model
> GDPR and data
protection initiatives
> Well-hedged and positioned with a global platform and
established EU operations (Luxembourg & Netherlands)
> Challenge and cost of measuring,
> Data-focused approach that enables continuous
monitoring and demonstrating
monitoring and real-time insight into impact
good conduct as well as meeting
on operations
new requirements
> Proven track record of navigating and maximising
> Keeping up with the rapid pace of
revenue growth opportunities from regulatory change
regulatory change
> Minimal FX risk exposure
T C A C A D E M Y
T C A C A D E M Y
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talented, is ever more important than the collective whole. We celebrate
and reward outstanding contributions, but always ask our people to put
the long-term interests of the company first.
In order to help our people live our cultural values and deliver our client
facing behaviours we provide three constantly evolving programmes to all
employees globally.
These topics are considered regularly so that we can adapt to changing market conditions or competition. This report should be read in conjunction with the Viability
Statement on page 63.
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O U R R E S O U R C E S A N D R E L A T I O N S H I P S
C O N T I N U E D
S P O T L I G H T
S P O T L I G H T
J T C G A T E W A Y T E S T I M O N I A L
J T C A C A D E M Y – L I F E L O N G L E A R N I N G A N D D E V E L O P M E N T
We want everyone, wherever they work in the JTC network, to be able to develop
the skills and knowledge that they need to be excellent in our world and we
deliver this to our team through the JTC Academy.
A C C R E D I TAT I O N
A N D R E C O G N I T I O N
In 2018 JTC was awarded STEP Gold Employer Partner accreditation
across ten of its jurisdictions. This was in recognition of our supportive
In its purest form, JTC Academy is there to help maximise our people’s potential
and empowering learning and development culture. The Society of Trust
within the business – it’s as simple as that.
and Estate Practitioners (STEP) is the global professional association for
practitioners advising families across generations.
From the outset, it provides a structured development programme for all employees,
giving access to materials and training tailored to job roles, performance, ambitions
Following the development of our in-house management development
and potential.
programmes, JTC has been ‘awarded’ ‘Recognised Provider’ status by
the Institute of Leadership and Management (ILM).
JTC Academy builds on our traditions of mentoring and academic training and
brings those practices up to date. The three main aspects of JTC Academy are:
JTC is an ‘Approved Employer’ of the Association of Chartered Certified
Accountants (ACCA).
P R O F E S S I O N A L D E V E L O P M E N T
We operate in a technical sector and relevant professional qualifications ensure
that our people have the essential skills and knowledge required. Over 70% of
staff hold, or are currently studying for, a relevant professional qualification.
L E A D E R S H I P A N D M A N A G E M E N T D E V E L O P M E N T
Leadership, team work and performance management are essential parts of life
at JTC and we have developed bespoke in-house courses, accredited by the ILM,
to support our people as they take on management and leadership roles within
the Group.
> STEP UP TO MANAGEMENT (SUTM) – a course of 7 modules delivered
over 8 months to support first time line managers
> MANAGING THE JTC WAY (MTJTCW) – a course of 13 modules
delivered over 18 months to support managers up to Associate
Director level
> LEADERS IN OUR NAME (LION) – a course of 8 modules delivered over
12 months to develop our most senior leaders in the business, from
Directors through to members of the Group Holdings Board.
S O F T S K I L L S D E V E L O P M E N T
We understand that client service excellence and outstanding individual and
team performance require more than just strong technical skills. JTC Academy
also provides a range of soft skills training to enable our people to develop their
wider skillset and become as effective as possible.
Q H O W D I D J T C S U P P O R T Y O U I N A L L O F
T H I S ?
I had a huge amount of encouragement and backing from my line
managers in both jurisdictions who each took the time to help
with any questions I had about the transfer. Additionally, the
operational teams who helped facilitate the move provided a lot
of support every step of the way.
Q H O W D I D Y O U R F A M I L Y A N D F R I E N D S
F E E L A B O U T Y O U R M O V E ?
As I lived in Jersey for four years, my friends and family (especially
my Mum) were really delighted to have me back home!
Q W H A T W E R E Y O U R L E S S O N S L E A R N T
A L O N G T H E W A Y ?
Always be open to new experiences and challenges.
Q W H Y D O Y O U T H I N K T H E
I N T E R N A T I O N A L E X P E R I E N C E T H A T
G A T E W A Y O F F E R S I S I M P O R T A N T ?
Career and personal growth. You get to meet people in different
jurisdictions, understand their roles and remits and of course build
on your network within JTC and beyond.
“An invaluable experience which
fostered really beneficial relationships
between the jurisdictional teams.”
M A N A G E R ,
C O R P O R A T E S E R V I C E S
E S P E R A N C E
M A R A I S
Q H O W D I D G A T E W A Y W O R K F O R Y O U ?
Starting off, I was actually at one of the medium sized
accountancy and audit firms in South Africa and had made the decision
to move to Jersey to increase my financial services experience in
a well-known offshore jurisdiction. At the time, some of my audit
clients were administered by JTC and so I regularly had to work
with JTC’s Corporate Division. I was always impressed with not
only their level of professional client care but also their friendly
approach and real sense of team.
The experience made me think about working within a similar
dynamic culture and when the position for a Manager in the JTC
Jersey office came about, I jumped at the opportunity. I was also
aware of the Gateway programme and that as JTC has a Cape
Town office, there was the possibility of staying with the Group
but being able to transfer back.
Prior to joining the corporate team in Jersey, I was also in
a fortunate position to have been seconded to the Finance
department for five months which provided invaluable experience
in understanding the bigger Group picture.
A role back in the Cape Town team soon became available and
the Gateway initiative meant that I was able to take up the
opportunity. I was extremely happy to be able to remain with JTC.
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C O N T I N U E D
J T C G A T E W A Y – G L O B A L T A L E N T M O B I L I T Y
Equally important is the invaluable experience of living abroad, being immersed
J T C W E L L B E I N G – A H O L I S T I C A P P R O A C H
Engagement begins with the recruitment and selection process, where we ensure
JTC Gateway offers our people the opportunity to develop their careers by
in new cultures, gaining new perspectives, meeting new people, making
T O W E L L B E I N G
personable and timely communication through the recruitment process. All new
working in Group locations across the world. It is a key element of our employee
new friends, exploring new terrains and discovering hidden strengths as new
Launched at the end of 2018, JTC Wellbeing supports all our people in attaining
starters are given a structured induction programme and assigned a ‘buddy’, an
proposition which aims to support personal and professional growth as well as
challenges are met each day.
optimum physical, emotional and mental good health. Following a pilot
established colleague who is assigned to help with practical orientation on a day-
attract and retain talent.
programme in our Jersey office, the JTC Wellbeing programme has been rolled
to-day basis. Where colleagues join us via an acquisition, the standard induction
Since the launch of the programme over a dozen JTC Gateway placements have
out to all employees globally and includes a custom app that provides employees
programme is tailored appropriately as part of the structured integration process
From individual secondments to key talent rotational programmes and
been facilitated, ranging from temporary secondments to permanent relocations.
with access to tailored advice and support on a range of wellbeing topics,
that we follow.
permanent transfers, JTC Gateway enables employees to broaden their
professional, managerial, technical and interpersonal skills and share their own
knowledge and expertise with their international colleagues facilitating cross-
functional learning and fostering cross-departmental teamwork.
“An invaluable chance to immerse myself
in new work and develop my skills”
C H R I S T O P H E R G I B B O N S
including nutrition, fitness, stress management and mental health awareness.
E M P L O Y E E E N G A G E M E N T
Informal and formal staff social events are encouraged across the Group and
in our larger offices, including Jersey, South Africa and Guernsey, we have
Our shared ownership culture and stakeholder mentality mean that employee
established JTC Sports and Social Committees, which are run by employees
engagement and effective internal communications are a constant focus across
on a voluntary basis and organise a wide range of social events from sports
the Group. We work hard to share information at all levels and foster a common
participation to dinners and family days.
team spirit whilst also respecting local norms in all office locations.
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C O N T I N U E D
E M P L O Y E E C O M M U N I C A T I O N S
> Online business travel portal
We use a variety of communication methods to share information about the
> Video and audio conferencing portal
business and the markets in which we operate. This includes communication of
> People HR portal (an online tool to manage all personnel records,
the Group’s goals and strategies, performance updates and market news.
including vacations, absence, remuneration and annual appraisal)
E Q U A L O P P O R T U N I T Y
JTC is committed to the policy of equal treatment of all its employees and
requires all employees of whatever grade or authority, to abide by and aspire to
this general principle.
Our policy is to always ensure that all persons are treated fairly, irrespective of
their age, colour, disability, ethnicity, family or marital status, gender identity
or expression, language, national origin, physical and mental ability, political
affiliation, race, religion, sexual orientation, socio-economic status, veteran
status, and other characteristics that make our employees unique. We will
endeavour to provide those who have physical disabilities with specific assistance
and arrangements to enable them to work for us wherever and whenever this is
reasonably practical.
At JTC we recognise that our human capital is the most valuable asset we have.
The collective sum of our individual employees’ differences, life experiences,
knowledge, inventiveness, innovation, self-expression, unique capabilities and
talent represents a significant part of not only our culture but our reputation and
inevitably JTC’s achievements.
We have created an environment in which all existing and prospective employees
of JTC can access all appropriate employment opportunities. In the context of
I N P E R S O N U P D A T E S
We are a people business and encourage open communication and the cascade
of information in person on a regular basis. Team meetings are used across
the business and are adapted to suit the size of each office, with larger offices
running ‘town hall’ style meetings.
B R A N D E D E - C O M M S
We have developed a suite of clearly signposted internal emails covering updates
meeting our business objectives the following principles will guide our approach:
from different parts of the business, these include:
> CEO Updates
> CFO Updates
> COO Updates
> We will discuss and be flexible in meeting individual employee’s needs
and aspirations
> All existing and potential employees will be fairly selected for job
opportunities based on their ability to perform their role
> Risk & Compliance Updates, which includes AML and GDPR
> There will be respectful communication and co-operation between
> HR Updates, which includes JTC Academy, JTC Gateway and JTC Wellness
all employees
> IT Updates
> Marketing Updates
> Acquisition Updates
I N T R A N E T
> Teamwork and employee participation, permitting the representation of
all groups and employee perspectives will be encouraged
> A work/life balance through agreed flexible working principles to
accommodate employees’ varying needs will be considered in line with
the needs of the business
Our well-developed intranet ‘JTC Joogle’ is available to all staff and hosts a raft
> JTC is committed to the principles of equal opportunity for all and
of news and information, as well as being a secure ‘single sign on’ point of access
specifically prohibits discrimination of every type
for a number of core systems. Highlights include:
> Daily internal JTC newsfeed
> Notification of new starters and leavers
> Global staff directory
> JTC Academy online
> Salesforce CRM access
> Bespoke ‘Ownership for All’ staff portal
> GDPR portal
> Marketing materials portal
M O D E R N A N T I - S L A V E R Y A N D H U M A N T R A F F I C K I N G
JTC has taken steps to ensure slavery and human trafficking is not taking
place in our supply chains or in any part of our business. A statement in response
to Section 54, Part 6 of the Modern Slavery Act 2015 is available on the
JTC website at jtcgroup.com and sets out the steps that the Group has taken and
its on-going commitment to this vitally important topic.
O U R C L I E N T S
Within our cultural framework, our internal values drive our external client facing
behaviours. Through these behaviours, we seek to work in partnership with our
clients, gaining a deep understanding of their needs and goals so that we can
deliver the best service possible.
> ENTREPRENEURIAL OUTLOOK – our high levels of client engagement
and stakeholder mentality allow us to take an entrepreneurial approach
to finding the best service solution for each and every client.
> WANT TO WIN MENTALITY – JTC is proud of its independence and
we recognise that we operate in a competitive market where clients
have a choice of firms to work with. We work hard to win the trust
and confidence of our clients and to help them succeed in their
chosen activities.
> CAN DO ATTITUDE – we understand that our clients rely on us to
deliver services, often with high levels of technical complexity, on a
consistent basis. Our can do attitude is about finding answers and
delivering results.
> ABOVE AND BEYOND SERVICE – with client relationships that last
on average c.10 years (and which can extend for decades over multiple
generations) we know that maintaining client service excellence is key to
long-term success.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
O U R R E S O U R C E S A N D R E L A T I O N S H I P S
C O N T I N U E D
O U R C O M M U N I T I E S
We also recognise the important partnerships we have with our clients and
We value and respect the communities in which we operate around the world and
intermediaries and, where possible and appropriate, will look to support their
understand the support they provide to our employees, clients and intermediary
chosen causes.
partners. We seek to create a positive impact wherever we operate, creating
opportunities for employment and giving back through charitable donations of
2 0 1 8 C O M M U N I T Y H I G H L I G H T S
time, expertise and money.
In 2018, JTC employees in Jersey and Guernsey raised over £18,000 for Channel
Islands’ charities through a number of exciting and memorable fundraising
We believe in promoting an employee-led approach to the Group’s charitable
activities, including ‘director dress-up’ days, bake-offs, and a variety of other
fundraising and donations so that our people, wherever they are based, can
work together in making a difference in their local communities. In addition
challenges. Additionally, Jersey support was given to the Rotary International
Shoebox appeal whilst in Guernsey, similar collections were made to create gifts
In the Cayman Islands, a local charity known as ARK – Acts of Random Kindness
– gathers funding and offers of personal support from local businesses in order to
support children who lag behind in school because of their family circumstances.
Having initially tackled poverty, the charity is now attempting to tackle the root
causes of generational poverty in this way. JTC worked alongside other local
businesses in support of this worthwhile cause.
Additionally, we were able to make financial donations to a significant number
of employees who were participating in fundraising events and challenges in
support of local charities close to their hearts.
E N V I R O N M E N T A L , S O C I A L A N D G O V E R N A N C E ( E S G )
JTC understands the importance of Environmental, Social and Governance
(ESG) risks and opportunities for its clients and in particular, international asset
managers. As an administrator with deep expertise across a range of asset
classes, we are able to support our clients in delivering their ESG commitments.
In South Africa, 2018 was a busy year for colleagues who run the Ubuntu
As a business, JTC is committed to its own ESG related policies and in particular
and in appreciation of their endeavours outside of the working environment the
for elderly people spending Christmas alone.
Committee – Ubuntu being a Bantu term meaning humanity. They worked
to equal opportunities and wellbeing for our global workforce and comprehensive
Group aims to financially support individuals who choose to undertake personal
challenges on behalf of charities or initiatives close to their own hearts.
tirelessly to organise numerous activities which aimed to give back to those
governance and compliance practices, as underpinned by our status as a UK PLC
less fortunate and in need. There were several events in support of their long-
with a premium listing on the London Stock Exchange (LSE).
standing association with Leliebloem Child & Youth Care Centre, including
bringing children from the centre to work for a day, volunteering to help at the
As a financial services firm, whilst our environmental impact is small compared
centre and organising a day of carnival fun for the kids.
to many other industries, we also recognise the importance of having a role
Colleagues on the Isle of Man raised Christmas money for the children’s wing
for managing the effect we have on the environment. As a minimum, however,
of their local hospice, which provides end-of-life care for children with life-
we encourage all jurisdictions to procure paper from managed forests, ‘upcycle’
threatening conditions. At other times of year, they organised events in support
furniture, telephones and IT equipment between jurisdictions and from
of a programme that supports the elderly and aims to improve their quality of
acquisitions, recycle old equipment and stationery by redistributing to schools
life through providing a helping hand alongside various social events.
and charities, and to use filtered rather than disposable plastic bottled water in
to play and are at the early stages of our review, planning and measurement
glass bottles provided to our teams.
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To succeed in a fast-paced world requires dynamic thinking,
bold ideas and sophisticated solutions.
We understand the importance and value of time, working
quickly to present our clients with the options they require
and the answers they need.
Bold. Dynamic. Sophisticated. Fast.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS C H I E F F I N A N C I A L O F F I C E R ’ S R E V I E W
A C H I E V I N G T H E T A R G E T S
W E S E T O U R S E L V E S
R E V E N U E
Client attrition in the period was 8.9% compared to 8.3% in 2017 and is
In 2018, revenue was £77.3m, an increase of £17.5m (29.3%) compared to 2017.
consistent with previous periods. Attrition is broken down into three principal
categories as also shown in the chart below. This demonstrates that 98.2% of
Period on period growth was driven by net LTM organic growth of 8.7% and
revenues that are not end of life were retained in the period.
inorganic growth of 20.6% from the acquisitions made in 2017 of the Bank
of America Merrill Lynch International Trust and Wealth Structuring business
Acquisitions contributed £13.0m of new revenue in the year broken down
(BAML) and New Amsterdam Cititrust (NACT) as well as the 2018 acquisitions
as follows:
of Minerva and Van Doorn.
C H I E F F I N A N C I A L O F F I C E R
M A R T I N
F O T H E R I N G H A M
Revenue growth, on a constant currency basis, in the year is summarised in the
chart below.
Minerva
Van Doorn
NACT
BAML
Total
£4.4m
£1.4m
£1.6m
£5.6m
£13.0m
Revenue from acquisitions is treated as inorganic for the first 12 months of JTC
ownership. NACT and BAML revenues appear in both 2017 and 2018 covering
the first 12 months of JTC ownership
N E W B U S I N E S S / P I P E L I N E
The enquiry pipeline increased by 25% from £25.6m at 31 December 2017
to £32m at 31 December 2018. During 2018 JTC secured new work with an
annual value of £9.7m (2017: £8.9m). Typically this revenue will have an
average lifecycle of approximately 10 years.
F I N A N C I A L R E V I E W
J T C G R O U P F I N A N C I A L K P Is
The 2018 results reflect the pre listing capital
structure up to 14 March 2018 and the current
capital structure post IPO.
Revenue (£)
Underlying*
EBITDA (£)
In order to assist the reader’s understanding of the
EBITDA margin (%)
financial performance of the Group in this period of
significant change, alternative performance measures
(‘APMs’) have been included to ensure consistency
with the IPO prospectus and to better reflect the
underlying activities of the Group excluding specific
non-recurring items as set out in note 10 (page
117). As explained in the Company Prospectus,
underlying EBITDA margin is the main profitability
measure used within the Fund and Trust Company
EBIT (£)
Adjusted diluted EPS (p)**
Statutory
Gross profit margin (%)
Gross profit margin ICS (%)
Gross profit margin PCS (%)
EBITDA (£)
EBIT (£)
Administration market. The Group appreciates that
Loss before tax (£)
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.
Basic and diluted EPS (p)
Final dividend per share (p)
Cash conversion (%)
Net debt (£)
2018
2017
Growth
£77.3m
£59.8m
+29.3%
£23.8m
£14.4m
+65.3%
30.9%
24.1%
£19.2m
£11.5m
18.4p
13.8p
61.5%
61.1%
62.2%
£5.3m
£0.6m
56.5%
56.4%
56.7%
£9.6m
£6.8m
+6.8pp
+66.6%
+33.1%
+5.0pp
+4.7pp
+5.5pp
-45.4%
-90.7%
(£2.1m)
(£3.6m)
+40.2%
(3.9p)
2.0p
80%
(7.0p)
–
85%
N/A
+2.0p
-5.0pp
(£48.7m)
(£42.5m)
+£6.2m
*
Items classified as non-underlying are as detailed in Note 10 (page 117) of the financial statements. Non-
underlying items are defined as specific items that the directors do not believe will recur in future periods. Non-
underlying items charged to EBIT in 2018 include: EBT Capital Distribution (£13.2m), acquisition and integration
costs (£4.3m) IPO costs (£1.0m) and other costs (£0.1m).
** Adjusted diluted EPS is the loss for the year adjusted to remove the impact of non-underlying items within EBITDA,
amortisation of customer contracts, other gains, share of profits from equity accounted investees, finance income, loan
note interest, amortisation of loan arrangement fees and unwinding of NPV discounts..
R E V E N U E B R I D G E
L O S T
W O N
£ 1 3 . 0M
£ 7 7 . 3M
£ 5 9 . 4M
Acquisition £3.2m
£ 0 . 1M
£ 0 . 9M
£ 4 . 0M
£ 5 . 5M
£ 4 . 4M
Organic £56.2m
FY17 revenue
JTC decision
Moved service
provider
End of life
Existing clients
New clients
Acquisitions
FY18 revenue
Note: Constant currency using FY18 Consolidated Income Statement Exchange Rates
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C O N T I N U E D
G R O S S P R O F I T M A R G I N
margin improved from 26.6% to 33.5% in the year. This was driven by the swift
L O S S B E F O R E T A X
collection. Adjusting for this we would have seen an 89% cash conversion
Gross profit margin for 2018 was 61.5%, an improvement of 5.0pp from 2017.
and effective integration of the BAML business as well as the benefits accruing
The reported loss before tax for the period ended 31 December 2018 was
in the year. This is a strong performance when considered in the context of
This improvement was seen in both operating Divisions with ICS improving
continued to invest in processes, systems and operational capabilities and this
from the operational changes made in the latter part of 2017. The business has
£2.1m (2017: £3.6m loss).
revenue growth of 29%. Working capital (trade receivables minus deferred
revenue) as a percentage of revenue fell from 33.0% at 31 December 2017 to
gross margin from 56.4% in 2017 to 61.1% (+4.7pp) in 2018. The margin
investment will support future growth.
Adjusting for non-underlying items the underlying profit before tax for 2018
31.1% (improvement of 1.9pp) by 31 December 2018.
improvement is due to the continuing focus on improving operational
was £17.0m (2017: £0.9m loss). The improvement reflects both the strong
efficiency and leveraging the Global Service Centre (GSC) in Cape Town.
The Group recognises that EBIT is a more commonly accepted reporting
business performance in the current year as well as the higher financing
Net debt at the period end was £48.7m compared to £42.5m at 31 December
metric and will over the next 12 months transition to using this as its primary
costs associated with the Group’s capital structure pre–IPO, albeit offset by
2017. This represents 2.0 times the underlying 2018 EBITDA (2017: 2.9 times).
Within PCS the gross profit margin was 62.2%, a 5.5pp improvement from
profitability indicator for external stakeholders. Statutory EBITDA and EBIT are
increased non underlying costs.
2017. The gross profit margin improvement was particularly strong in H1 due
both impacted by significant non underlying costs in this first year of reporting
Underlying 2018 EBITDA does not include the full year impact of the profit of
the Van Doorn or Minerva acquisitions in this calculation. On a proforma basis,
to the swift integration and re-organisation of the global PCS business following
post the IPO. Details of these non underlying costs are set out below.
It should be noted that Finance costs in the reporting period include the
net debt as a proportion of underlying EBITDA would fall to 1.7 times.
the acquisition of BAML. The focus in the first half of 2018 was to right-size
costs of the Group’s pre IPO capital structure and changes to the capital
the business taking into account the BAML acquisition. Having successfully
N O N U N D E R L Y I N G I T E M S
structure made at the time of listing. Finance costs in 2018 comprise £1.5m of
R E C O N C I L I A T I O N O F U N D E R L Y I N G E B I T D A
achieved that, management moved their attention to delivering stronger
Non underlying items incurred in the period totalled £19.1m. These comprised
amortisation/non cash flow items and £2.0m of costs which impact cash flow.
T O L O S S B E F O R E T A X
Within the cash flow impacting items, the loan note interest relates to the pre
The reconciliation of underlying EBITDA to loss before tax for 2018 is as follows:
organic growth and invested in senior BD capability to deliver this. This led to
the following:
slightly lower margins in the division in H2 in the expectation that this would
deliver stronger future revenue growth.
> £13.2m capital distribution from JTC EBT12 to all staff as a result of
U N D E R L Y I N G P R O F I T A N D M A R G I N P E R F O R M A N C E
> £4.3m of acquisition and integration costs
our IPO
IPO period and is not recurring. The bank loan interest rate pre IPO was higher
than the rate under the post IPO debt package. The interest rate charged in the
first six months of the new bank loan facility was higher than the ongoing rate.
Underlying EBITDA in 2018 was £23.8m, an increase of £9.4m and 65.3%
> £1.0m costs associated with the IPO
E A R N I N G S P E R S H A R E
from 2017. The reconciliation of the improvement in the underlying EBITDA is
> £0.6m other costs/ charges
shown in the chart below.
Underlying diluted EPS was 15.3p (2017: (2.9p)). Adjusted diluted EPS was
18.4p (2017: 13.8p). Adjusted diluted EPS is the loss for the year adjusted
The underlying EBITDA margin % is the primary KPI used by the business and
£0.4m are included within Finance costs and £0.1m are other costs.
of customer contracts, other gains, share of profits from equity accounted
Of the £19.1m of non underlying costs, £18.6m are incurred at EBIT level, and
to remove the impact of non-underlying items within EBITDA, amortisation
is a key measure of management’s ability to run the business effectively and
in line with competitors and historic performance levels. The performance in
2018 highlights the progress that has been made with underlying EBITDA margin
JTC consolidates its EBTs within its results and hence the reason that the
fees and unwinding of NPV discounts.
capital distribution is included within staff costs. The full charge to the Income
investees, finance income, loan note interest, amortisation of loan arrangement
increased to 30.9% from 24.1% in 2017 – a significant improvement of 6.8pp.
Statement is recognised in the period to 31 December 2018. Acquisition and
C A S H F L O W A N D D E B T
This has been driven by improved operational efficiency in both operating divisions
integration costs reflect costs incurred on the completed acquisitions as well
Cash generated from underlying operating activities was £19.2m representing
All figures in £’m for 2018
Statutory results
Non underlying
items
Underlying
results
EBITDA
Depreciation and amortisation
Profit from operating activities (EBIT)
Finance costs, other gains
and losses etc.
Loss / profit before tax
5.2
(4.6)
0.6
(2.7)
(2.1)
18.6
–
(18.6)
0.5
(19.1)
23.8
(4.6)
19.2
(2.2)
17.0
Non underlying items are set out in detail in note 10 (page 117) to the
consolidated financial statements and are, in the opinion of the Directors,
specific items that will not recur.
as well as continuing cost control. ICS’s underlying EBITDA margin improved from
as transactions which are ongoing or did not complete.
22.5% in 2017 to 28.8% reflecting the continuing refinement of the divisional
operating model and utilisation of the Cape Town GSC. PCS’s underlying EBITDA
an 80% conversion of underlying EBITDA (2017: 85%). During 2018 the
conversion rate was adversely impacted due to the BAML acquisition.
Former BAML clients are billed bi-annually in arrears and therefore JTC had
not yet benefited from a full cycle of cash flows. At 31 December 2018 there
was still a mismatch whereby three months of the revenues were not due for
M A R T I N F O T H E R I N G H A M
C H I E F F I N A N C I A L O F F I C E R
U N D E R LY I N G E B I T D A B R I D G E
C A S H C O N V E R S I O N
V O L U M E
£ 5 . 8M
E F F I C I E N C Y
£ 1 . 8M
£ 1 4 . 4M
V O L U M E
£ 4 . 1M
E F F I C I E N C Y
£ 2 . 0M
£ 1 . 3M
£ 23 . 8M
£ 3 . 0M
9 1 %
8 5 %
1 7 %
8 9 %
8 0 %
Proforma adjustment
to include full 12 month
cycle of BAML cash receipts
2 9 %
Underlying EBITDA
FY17
ICS Gross Profit
PCS Gross Profit
Indirect
Staff
Operating
Expenses
Underlying EBITDA
FY18
FY16
FY17
–– Year on Year Revenue Growth % –– Underlying Operating Cash Conversion
FY18
Note: Reported Rates from FY18 Financial Statements
Note: Cash Conversion = Underlying Cash Flow From Operating Activities/Underlying EBITDA
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS G R E A T E R T O G E T H E R
Our success has been built over decades, founded on
our independence and an enduring belief in our values and
how they translate to service excellence. While our outlook
and reach has grown on a global scale, we remain as true
to our founding principles as ever
Powerful. Independent. Enduring. Global
G O V E R N A N C E :
52 Chairman’s Introduction
56 Leadership and Effectiveness
63 Viability Statement
69 Nomination Committee Report
72 Audit and Risk Committee Report
79 Remuneration Committee Report
88 Directors’ Report
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS C H A I R M A N ’ S I N T R O D U C T I O N
D R I V I N G P E R F O R M A N C E
T H R O U G H C U L T U R E
N O N - E X E C U T I V E C H A I R M A N
M I K E L I S T O N
O B E
B O A R D
A S A N E W L I S T E D B U S I N E S S , W H A T I S Y O U R
As Chairman, my aim is to maintain an environment in which the skills and
V I E W O N T H E R O L E O F G O V E R N A N C E ?
experience of every director can be fully exploited to enhance the success of
“Excellence in governance is fundamental to the Group’s day-to-day
the Company. The challenge in any team endeavour is the management of
activities. The Board recognises the importance of corporate governance
relationships and in public ownership this is magnified by the duty of Non-
in order to generate and protect value for our investors.
Executive Directors to challenge and scrutinize, whilst simultaneously sharing
the Executive Directors’ responsibility for the success of the Company.
Our governance structure is designed to maintain effective control
and oversight of our business whilst at the same time promoting the
The Executive Directors’ vast experience and patience has been of great value to
entrepreneurial spirit that has underpinned JTC’s success to date.”
their new colleagues as the full range of mature controls, business processes and
procedures have been reviewed by the Board. The knowledge and comfort gained
from this familiarisation effort has enabled us to move forward collectively
Client benefits include risk mitigation, operational efficiency, business model
to agree the fundamentals for the business in the next stage of its life, under
agility and demonstrable third party scrutiny.
public ownership.
We have agreed or reaffirmed Company purpose, values, strategy, risk appetite,
number of high net worth and ultra-high net worth individuals in both mature
culture and accountabilities. I am confident that we can preserve an environment
where the corporate governance requirements of a London Stock Exchange
and nascent markets. Increasingly they are internationally mobile and financially
sophisticated, and the need to manage their affairs amidst myriad complex and
listing can be fulfilled without sacrificing the agility and flair of private enterprise
ubiquitous regulation generates opportunities from both a private assets and
which has defined the Company so far.
corporate services perspective.
Our private client business continues to benefit from rapid growth in the
P U R P O S E A N D VA L U E S
Our proven ability to build scale at marginal cost and achieve synergies
The Directors believe that the Company serves a positive purpose in assisting
which creates value for our shareholders, derives from our ongoing calibrated
the legitimate facilitation of the capital flows on which the economic and
investment in infrastructure alongside our historic early stage investment in key
social benefits of globalization depend. We enable companies and individuals to
jurisdictions for global delivery.
operate internationally whilst demonstrating full compliance with a myriad of
rules and regulations without themselves having to maintain the infrastructure
W O R K I N P R O G R E S S
demanded by this increasingly complex environment. We respect client needs
Although the Board’s review of corporate governance during its first three quarters
for the legitimate privacy to which they are entitled and on which their personal
has validated its high expectations, there are areas where its continuing scrutiny
security or business competitiveness may depend. These fundamentals are the
will be augmented by specific further work to comply more comprehensively
As a specialist provider of outsourced
administration services, including
corporate governance and company
secretarial services, JTC is committed
to achieving the highest levels of
corporate governance.
D E A R S H A R E H O L D E R
drivers of demand for our professional expertise and we look to build strong
with the FRC’s new governance codes when we report against them next year.
The PLC Board took office in March last year with the great benefit of absolute
sustainable relationships with clients for the long term and partner with them
clarity on what was expected of it, defined not only in the Prospectus from the
in their endeavours.
IPO but also in the newly revised UK Governance Code.
We are conscious that shareholder engagement in these early days has in
practice been largely with the Executive Directors, generally at the time of the
Our challenge as Directors is generating value for shareholders whilst
Amongst them, integrity, the unique ownership mentality and mutual
feedback from the advisers and brokers on the views of the major shareholders,
complying with these enhanced governance expectations and respecting the
respect form the basis for the behaviour of our business, its people and its
and of course the Non-Executive Directors are available to meet at any time.
interests of a wide range of stakeholders. Our task is assisted by the quality
of the business and the people within it. Moreover, with the provision of
wider stakeholders.
We intend to enhance the mechanisms for shareholder engagement and, for
example, we plan to arrange a capital markets day later in the year to allow
governance and compliance services as a core business offering to a diverse
S O U R C E S O F VA L U E G E N E R A T I O N
shareholders to meet the full Board as well as the wider executive team.
institutional and private client base, JTC is accustomed to applying those
JTC has a more than 30 year history of delivering growth year on year, both
disciplines internally too.
organically and more recently by acquisition following the Group’s first purchase
We also aim to review the composition of the Board in light of the planned
Our values are justifiably a common thread throughout this Annual Report.
results announcements and on an ad hoc basis. The entire Board receives formal
in 2010. The opportunities to generate value in this balanced manner are
Effectiveness Reviews and the evolving needs of the business. In making any
The company’s genetic characteristics have evolved over three decades and
accelerating in what is a rapidly consolidating market.
new appointments we will maintain JTC’s guiding principle to recruit on merit
as in life itself, they are key to its growth and longevity. Its entrepreneurial
whilst conscious that gender diversity at Board level presently does not reflect
parentage remains a strong influence in JTC’s corporate values and ethical
We operate in a global environment which offers highly favourable fundamentals
that which prevails throughout the rest of the organisation, where 51% of the
behaviour, with this DNA strengthened by the addition of minority private
for growth for JTC in all three of our service lines (Funds, Corporate and Private
management grades are occupied by women.
equity ownership (CBPE Capital) to its blood line in 2012. Add to this its
Wealth) which are enveloped by our two fee earning Divisions – Institutional
hard-wired culture of rigorous compliance and governance honed during its
formative years by being headquartered in Jersey, one of the world’s most
Client Services and Private Client Services.
Our attention to continuous executive development of the management team
has confirmed the great potential of the LION (Leaders in our Name) programme
rigorously regulated international finance centres, and you have a pedigree
From an institutional perspective sustained investment growth in alternative
to develop our future leaders and facilitate succession in the longer term by
which replicates well in any environment.
asset classes , which are forecast by PwC to double in the decade to 2025,
evolution from within. A more immediate benefit of this initiative has been the
when coupled with the complexity of demonstrating cross-border compliance,
is driving greater outsourcing of services to expert third party providers like JTC.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
C H A I R M A N ’ S I N T R O D U C T I O N
C O N T I N U E D
opportunity it has afforded the Executive Directors to turn a larger proportion of
S T A T E M E N T O F C O R P O R A T E G O V E R N A N C E
their time and attention to the new challenges of being a listed business, whilst
The Directors present this first Annual Report for the year ended 31 December
delivering business growth and sustainable organisational change.
2018, on the affairs of JTC, together with the Consolidated Financial Statements
We have been very greatly reassured by the very evident commitment of the
corporate governance and, in 2018, has continued to build on the corporate
executive team throughout a very demanding year. We are also pleased to see
governance framework which was established on incorporation of the Company.
very promising talent emerging from within the growing ranks of professionals
as the Company acquires new businesses and develops its own team, as well as
This Corporate Governance Report, including the sections which follow, sets out
and the Auditor’s report. JTC is committed to achieving the highest levels of
G O V E R N A N C E H I G H L I G H T S
making strategic hires as necessary. The formal leadership development programs
how the Company has applied the main principles of good governance as set
I N D E P E N D E N C E
E VA L U A T I O N
and the increased delegation of authority are already improving ‘bench-strength’
out by the UK Corporate Governance Code, April 2016, as issued by the FRC
At the point of listing, and at the date of this Annual Report, we have
We have not undertaken an internal evaluation of the Board or the
in the Company’s Executive team.
(the “Code”).
two independent Non-Executive Directors, on our Board, excluding
Board’s committees as they were established in March 2018. Instead,
the Chairman, which is in line with the guidance under the Code.
an internal evaluation will be undertaken in the second half of 2019
R E M U N E R A T I O N A N D R E W A R D
The Directors consider that the Company has been compliant with the
ahead of the 2019 annual reporting process.
The Board is well supported by the work of the Remuneration Committee in
Code provisions as applied during the period since listing, other than the
E X P E R I E N C E
its aim to ensure that workforce performance and remuneration supports
following exception:
the long term success of the Company and promotes its values. Core to the
Group’s unique culture is that all employees will have an ownership stake in
the business. The importance of this shared ownership is wider than merely the
Provision B.6.1 of the Code states that the Board should report in the Annual
Report how performance evaluation of the Board, its Committees and its
When the Board was established, our focus was to ensure that we
A T T E N D A N C E
had relevant industry, financial and public company expertise and
Each of our Directors attended all relevant Board and committee
we believe that we have achieved that with our Board today.
meetings with an acceptable level attended in person.
financial incentives and this model brings a set of competitive advantages which
individual directors has been conducted. As the Board was only appointed in
A C C O U N T A B I L I T Y
C O M P L I A N C E O F C O M P O S I T I O N
are encompassed in the Group’s guiding principles and client facing behaviours.
March 2018 a formal performance evaluation was not undertaken during the
We have clear and documented separation of duties between the
O F C O M M I T T E E S
Michael Gray, Chair of the Remuneration Committee reports in his introduction
year. The effectiveness of the Board and of the Board and Committee Meetings
Chairman and the CEO. JTC’s CEO, Nigel Le Quesne, is responsible
The composition of our committees complies with the
on page 79 on the approach taken to executive remuneration and the work done
is a standing agenda item at the Board’s six scheduled meetings a year. A formal
for determining JTC strategy and day-to-day operations, leading
Code requirements.
in reviewing the Company’s Remuneration Policy, as well as other work carried
performance evaluation of the Board, its Committees and its individual directors
the JTC Group Holdings Limited Board, which assists in the day to
out during the year on this important matter.
will be conducted in 2019in accordance with the three year evaluation cycle
day delivery of this strategy and general operations. Mike Liston, as
R E M U N E R A T I O N A N D R E W A R D
A N N U A L G E N E R A L M E E T I N G
the strategic direction, key commercial or contracting decisions and
designed to incentivise and motivate the Executive Team to achieve
I look forward to welcoming shareholders to the Company’s AGM. I will be
We have laid out this Corporate Governance Report using the Code as a
overall succession planning for the Board.
the strategy as laid out in this Annual Report.
detailed at page 70 of the Nomination Committee’s report.
Chairman, provides oversight and guidance to Nigel Le Quesne on
We present our Remuneration Policy on pages 79 to 80, which is
joined by the CEO and the CFO, together with the Chairs of the Audit and Risk,
framework for articulating the Board’s activities this period and also to frame our
Nomination and Remuneration Committees to answer questions relating to the
focus for the coming year. The structure of this Corporate Governance Report
responsibilities of those committees. The Notice convening the 2019 AGM, to
is as follows:
be held on 21 May 2019, will be issued along with this Annual Report to the
shareholders at least 21 clear days in advance of the meeting. Separate resolutions
> Leadership and effectiveness
will be proposed on each substantially separate matter and the results of the
> Accountability
proxy votes on each resolution will be clearly collated independently by the
> Stakeholder engagement and relationships
Company’s registrar and will be published on the Company’s website after
> Remuneration
the meeting.
I am grateful to my fellow Directors, JTC’s employees and to all of our
Shareholders for their support in our first year as a listed company, and 31 years
reference to this Corporate Governance Report are shown at page 62, Board
Statements and page 88, the Directors’ Report.
Details of where to find additional information which should be read with
of successful operations.
M I K E L I S T O N O B E
N O N - E X E C U T I V E C H A I R M A N
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS L E A D E R S H I P A N D E F F E C T I V E N E S S
1 . L E A D E R S H I P A N D E F F E C T I V E N E S S
T H E R O L E O F T H E B O A R D
B O A R D B A L A N C E A N D I N D E P E N D E N C E
R I S K M A N A G E M E N T A N D I N T E R N A L C O N T R O L S
The Code recommends that at least half the Board of Directors, excluding the
The Board is responsible for the overall system of internal control and for
JTC is led and controlled by the Board which is collectively responsible for the long-term and sustainable performance of the Group. The roles of the Chairman and
Chairman, should comprise independent Non-Executive Directors. The Non-
reviewing its effectiveness. The Board has carried out a robust assessment of the
the CEO are separate and clearly defined, with the division of responsibilities set out below.
D I R E C T O R S A N D
O F F I C E R S
P R I N C I P A L R E S P O N S I B I L I T I E S
> Manages and provides leadership to the Board
Executive Chairman was independent on appointment and we have appointed
principal risks facing the Group, including those that would threaten its business
two further Independent Non-Executive Directors whose skills and experience
model, future performance, solvency or liquidity as detailed on pages 28 to 34 of
are detailed on page 59 of this Report. The Board considers that all of its Non-
the Strategic Report. The Board has delegated the day-to-day responsibility for
Executive Directors are independent, in character and judgement, and therefore
designing, operating and monitoring the internal control and risk management
the Board complies with the requirements of the Code. Additionally, the
framework and systems to the senior management team. The internal control
Directors, both individually and collectively, have the range of skills, knowledge,
and risk management framework and systems have evolved through the
diversity of experience and dedication necessary to lead the Group and have the
identification, evaluations and assessment of how to manage key risks, taking
> Acts as a direct liaison between the Board and management, working with the CEO to assist the flow
requisite strategic and commercial experience to contribute to the leadership
into account risk appetite. The senior management team reports changes,
N O N - E X E C U T I V E
C H A I R M A N
of information
of JTC.
> Ensures that the Directors have sufficient information to enable the Directors to form appropriate judgements
developments or results of testing to the Board, through the Chief Risk Officer on
a quarterly basis. We have laid out a summary of our risk management processes
> The Chairman develops and sets the agendas for Board meetings, working with the CEO and Company Secretary
B O A R D I N D U C T I O N A N D T R A I N I N G
on pages 28 to 30 to the Strategic Report and provided further detail on page
> Recommends an annual schedule of Board and committee meetings
> Ensures effective communications with shareholders and other stakeholders
> Responsible for the day-to-day management of JTC
To ensure that the Non-Executive Directors are able to influence, participate fully
73 of the Audit and Risk Committee Report. There have been no changes to the
in discussions and challenge appropriately and knowledgeably, all Non-Executive
internal control or risk management frameworks during the period since listing
Directors received a tailored induction on joining the Board, including meeting
with members of the JTC senior team and meetings with JTC’s external advisers.
and up to the date of approval of the Annual Report. It should be noted that the
systems of internal control are designed to manage, rather than eliminate, the
> Together with the Senior Management, is responsible for executing the strategy, once it has been agreed by
The induction involved visits to JTC’s head office in Jersey and management
risk of failure to achieve business objectives and therefore they can only provide
the Board
presentations as part of the Board strategy day. Further training will be provided
reasonable, and not absolute, assurance against material errors, losses, fraud or
C H I E F E X E C U T I V E
O F F I C E R
> Creates a framework that optimises resource allocation to deliver strategic objectives over varying timeframes
as needs are identified and we continue to utilise a portion of our Board meetings
breaches of law and regulations. We have a number of internal controls which
> Ensures the successful delivery against plan and other key business objectives, allocating decision-making and
to provide market updates or to discuss a variety of industry, regulatory and
operate across the JTC business. The key controls which are relied upon during
responsibilities accordingly
governance issues or changes, in light of the impact these could or do have on
the year are set out on page 29 to the Strategic Report. This should be read
> Together with the Executive Committee, identifies and executes new business opportunities and assesses
our business.
potential acquisitions or disposals
in conjunction with the principal risks and uncertainties facing JTC, which are
detailed on page 33 to 34 to the Strategic Report.
> Manages the Group with reference to its risk profile in the context of the Board’s risk appetite
W H A T W E F O C U S E D O N I N 2 0 1 8
S E N I O R
I N D E P E N D E N T
D I R E C T O R
> Is a Non-Executive Director
> Provides a sounding board for the Chairman and CEO
> Serves as an intermediary for the other Directors when necessary
> Is available to shareholders if they have concerns
> Provide constructive challenge to the Executive Directors
> Help develop proposals on strategy
> Scrutinise management’s performance in meeting agreed goals and objectives
During the period since listing we assessed, considered and debated a wide range
Based on the review performed, the board has concluded that they have not
of matters including but not limited to:
identified any significant failings or weaknesses during the year
> Strategy
> Budgets and long-term plans
3 . S T A K E H O L D E R E N G A G E M E N T A N D R E L A T I O N S H I P S
S H A R E H O L D E R R E L A T I O N S
> Performance of the business – both financial and operational
The Board is committed to ensuring that we maintain good communications
> Financial statements, announcements and other financial
with existing and potential shareholders based on mutual understanding of the
reporting matters
> Risk management and controls
Company’s objectives. A comprehensive investor relations programme underpins
this commitment, led by the Chief Communications Officer. The Chief Executive
N O N - E X E C U T I V E
> Monitor performance reports
> Shareholder feedback and reports from brokers and analysts
Officer and the Chief Financial Officer regularly engage with institutional
D I R E C T O R
> Satisfy themselves on the integrity of financial information and that controls and risk management systems are
> Succession and talent management
robust and defensible
> Determine appropriate levels of remuneration for Executive Directors
> Appoint and remove Executive Directors as required and review succession planning
> Overall management of the financial risks of the Group
> Remuneration
> Regulatory updates
> Updates on the industry
2 . A C C O U N T A B I L I T Y
shareholders in order to develop an understanding of their views, which is
communicated back to, and discussed with, the Board. Presentations given to
analysts and investors covering the annual and interim results, along with all
results and other regulatory announcements as well as further information
for investors, are included on the investor relations section of the Company’s
website at www.jtcgroup.com/investor-relations. Additional
shareholder
C H I E F F I N A N C I A L
> Responsible for financial planning and record-keeping, as well as financial reporting to the Board and shareholders
R E S P O N S I B I L I T Y F O R T H E A N N U A L R E P O R T
information is also set out inside the back cover. Shareholders are able to contact
O F F I C E R
> Ensures effective financial compliance and control, while responding to regulatory developments, including
The Board has charged the Audit and Risk Committee with reviewing the
the Company through the Chief Communications Officer or the Company
financial reporting, capital requirements, and corporate responsibility
contents of this 2018 Annual Report to assess whether, when taken as a whole,
Secretary at the Company’s registered office, listed at the end of this Report.
it is fair, balanced and understandable and provides the necessary information
Our Senior Independent Director, Dermot Mathias, serves as an additional point
C O M P A N Y S E C R E T A R Y
> Ensures compliance with statutory and regulatory requirements
model and strategy. This process and the focus of this review is further disclosed
addressed properly through the normal channels. He may be contacted through
> JTC (Jersey) Limited has been appointed as the corporate company secretary
for shareholders to assess the JTC consolidated position, performance, business
of contact for shareholders should they feel that any concerns are not being
> Ensures that decisions of the Board of Directors are accurately recorded and implemented
on page 74 to the Audit and Risk Committee Report.
the Company Secretary.
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O T H E R S T A K E H O L D E R S
Other stakeholders, other than shareholders, have been identified as clients,
employees and the communities in which we operate, see pages 16 and 17 to
the Strategic Report.
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS B O A R D O F D I R E C T O R S
T H E R I G H T S K I L L S A N D
E X P E R I E N C E T O D E L I V E R
O U R S T R A T E G Y
P L C B O A R D
N O N - E X E C U T I V E C H A I R M A N
M I K E L I S T O N
O B E
C H I E F E X E C U T I V E O F F I C E R
N I G E L L E Q U E S N E
C H I E F F I N A N C I A L O F F I C E R
M A R T I N F O T H E R I N G H A M
I N D E P E N D E N T S E N I O R
N O N - E X E C U T I V E D I R E C T O R
D E R M O T M A T H I A S
I N D E P E N D E N T
N O N - E X E C U T I V E D I R E C T O R
M I C H A E L G R A Y
T E N U R E O N B O A R D :
Appointed 8 March 2018
I N D E P E N D E N T C O M M I T T E E
M E M B E R S H I P S :
T E N U R E O N B O A R D :
Appointed 12 January 2018. Overall responsibility for
implementing strategy and day-to-day operations
Joined the Group in 1991.
Nomination, Audit and Risk, Remuneration
E X P E R I E N C E :
E X P E R I E N C E :
Extensive experience across public and private sector
businesses. Chief Executive of Jersey Electricity plc
Key figure in the development of JTC over the last
28 years with extensive trust, fund and corporate
administration experience.
between 1993 and 2008, subsequently holding a
R E L E V A N T S K I L L S :
number of non-executive roles.
> Extensive experience in leadership
R E L E V A N T S K I L L S :
Broad range of experience at board level, including
7 years relevant industry experience.
and management
> Commercial, strategic, communication and
investor relations skills
> Experience of financial markets and
E X T E R N A L A P P O I N T M E N T S :
fund management
Not applicable.
E X T E R N A L A P P O I N T M E N T S :
Not applicable.
T E N U R E O N B O A R D :
T E N U R E O N B O A R D :
Appointed 12 January 2018. Responsible for
Appointed 8 March 2018
T E N U R E O N B O A R D :
Appointed 8 March 2018
implementation of the Group’s financial strategy and
all aspects of accounting and taxation. Joined the
Group in 2015
E X P E R I E N C E :
Chartered Accountant with extensive management,
and corporate finance experience.
R E L E V A N T S K I L L S :
> Strong financial analysis skills
> Extensive experience in financial
management and reporting
> Broad range of management experience
E X T E R N A L A P P O I N T M E N T S :
Not applicable.
I N D E P E N D E N T
I N D E P E N D E N T
C O M M I T T E E M E M B E R S H I P S :
C O M M I T T E E M E M B E R S H I P S :
Nomination, Audit and Risk (Chairman), Remuneration
Nomination (Chairman), Audit and Risk, Remuneration
E X P E R I E N C E :
(Chairman)
Chartered Accountant with extensive management,
E X P E R I E N C E :
corporate finance and NED experience.
FCIBS, Associate AMCT, Dip IoD. 20 years senior
R E L E V A N T S K I L L S :
> Strong financial skills
management, financial and capital raising expertise
and relevant experience.
> Extensive experience in leadership
R E L E V A N T S K I L L S :
and management
E X T E R N A L A P P O I N T M E N T S :
> Extensive experience in the banking sector
> Communication and management skills
Non-Executive Director and Chairman of the
E X T E R N A L A P P O I N T M E N T S :
Audit Committee of Shaftesbury PLC . Governor of
Non-Executive Director Jersey Finance Limited.
Activate Learning
Non-Executive Director, member of the Audit
Committee of GCP Infrastructure Investments
Limited. Director of MMG Consulting Limited.
Director J-Star Jersey Company Limited.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS L E A D E R S H I P A N D E F F E C T I V E N E S S
G R O U P H O L D I N G S B O A R D
G R O U P H E A D O F
I N S T I T U T I O N A L
C L I E N T S E R V I C E S
J O N A T H A N J E N N I N G S
G R O U P H E A D O F
P R I V A T E C L I E N T
S E R V I C E S
I A I N J O H N S
C H I E F C O M M E R C I A L
O F F I C E R
T O N Y W H I T N E Y
C H I E F O P E R A T I N G
O F F I C E R
W E N D Y H O L L E Y
C H I E F R I S K O F F I C E R
S T E V E N B O W E N
J O I N E D J T C :
J O I N E D J T C :
J O I N E D J T C :
J O I N E D J T C :
J O I N E D J T C :
2018
2012
1997
2008
2018
Q U A L I F I C A T I O N S :
Q U A L I F I C A T I O N S :
Q U A L I F I C A T I O N S :
Q U A L I F I C A T I O N S :
Q U A L I F I C A T I O N S :
LLB(Hons), TEP
P R O F I L E :
MBA, BBUS (Acc), CPA, TEP
FCIS
Chartered FCIPD, MIAB
P R O F I L E :
P R O F I L E :
P R O F I L E :
ACIB, TEP
P R O F I L E :
T H E B O A R D ’ S R O L E
M A T T E R S R E S E R V E D F O R T H E B O A R D
The Board is responsible for the long term success of the Company. The main
There is a formal schedule of matters reserved for the Board. The schedule of
responsibilities and key actions carried out are set out at pages 64 to 65.
matters covers a number of areas including strategy, approval of acquisitions and
The Board is scheduled to meet six times in any full calendar year. Attendance at
business development proposals, the dividend policy, budget, internal controls
the Board and Committee meetings during the period from incorporation to
and risk management and Group policies. Other matters have been delegated
December 2018 is set out in the table below.
to the Board Committees, the Senior Management and other committees such
as the Group Development Committee. The schedule of matters are reviewed
There are no relationships or circumstances that are considered likely to affect
periodically and were last reviewed in March 2018 along with the Group Policies
the independence of the Non-Executive Directors .
and Procedures.
B O A R D A N D C O M M I T T E E S T R U C T U R E
B O A R D O F D I R E C T O R S
The Board has formally delegated specific responsibilities to Committees,
Financial Officer and the Company Secretary. The full terms of reference
namely the Audit and Risk, Remuneration and Nomination Committees.
for each of these Committees are available on the Company’s website
Jonathan joined JTC in 2018
Iain joined JTC in 2012 and
Tony joined JTC in 1997,
Wendy joined JTC in 2008 as
As JTC’s Chief Risk Officer, Steven
In addition, during the year it approved the establishment of a Disclosure
(www.jtcgroup.com) or on request from the Company Secretary.
as Managing Director – UK,
has extensive experience in
was appointed a Director in
Head of Human Resources
has day-to-day management
Committee, whose members are the Chief Executive Officer, the Chief
based in London. He is an
dealing with the financial
2007 and became Managing
before being promoted to the
responsibility and oversight
experienced financial services
affairs of some of the world’s
Director of the Jersey office
role of Chief Operating Officer
for the Risk and Compliance
professional with a career
wealthiest individuals and
in 2015. In early 2018 he was
in 2012, at which time she
functions across the Group.
spanning more than two decades.
families. As Group Head of
promoted to the role of Group
was appointed to the Group
In addition, Steven also has
As well as significant expertise
Private Wealth Services, Iain is
Head of Institutional Client
Holdings Board. She has over
oversight of our Treasury
in cross-border corporate
responsible for the leadership,
Services and joined the Group
25 years’ experience in financial
Services business line. He joined
activity emanating from the
strategic development and
Holdings Board. During 2018
services operations, having
JTC in November 2018 as part
Channel Islands, Luxembourg
performance of JTC’s PCS
Tony was responsible for the
previously worked at leading
of the Minerva acquisition,
and UK, he also has a deep
Division, which services clients
leadership, strategic development
offshore law firm Mourant
where he formerly held the
A U D I T A N D R I S K
C O M M I T T E E
N O M I N A T I O N
C O M M I T T E E
R E M U N E R A T I O N
C O M M I T T E E
» F O R M O R E I N F O R M A T I O N
S E E P A G E 7 2
» F O R M O R E I N F O R M A T I O N
S E E P A G E 6 9
» F O R M O R E I N F O R M A T I O N
S E E P A G E 7 9
understanding of the private
from more than 100 countries.
and performance of our ICS
(formerly Mourant Ozannes)
position of Group Managing
B O A R D A N D C O M M I T T E E S T R U C T U R E
client market and has earned
Iain leads a multilingual team
Division, which delivers fund
and Coopers & Lybrand (now
Director. Steven has worked
industry recognition, being
of private client professionals
and corporate services to an
PricewaterhouseCoopers).
in the banking and fiduciary
named one of the ‘50 Most
and has been included in the
international client base.
As Chief Operating Officer,
industry for over 30 years.
Influential’ by ePrivateClient
Citywealth ‘Leaders List’ every
in 2016. Prior to joining JTC,
year since 2011 as well as
Jonathan was Group CEO of
being named as one of the
Dominion Fiduciary in Jersey.
‘50 Most Influential’ by Private
From 1 April 2019 Jonathan
will take over from Tony
Whitney as Group Head of
Institutional Client Services,
responsible for the further
growth and success of our
Fund Services and Corporate
Services business lines, within
the ICS Division.
Client Practitioner (now
ePrivateClient) in 2012 and
every year since 2015. Prior to
joining JTC, Iain was Global
Head of Private Clients for
TMF Group (formerly Equity
Trust) and a member of its
Global Executive Committee.
From 1 April 2019 Tony will
take on the newly created role
of Chief Commercial Officer,
also a Group Holdings Board
position, where he will be
responsible for leading the
Group-wide execution of JTC’s
organic and inorganic growth
strategies and will have oversight
of the marketing and business
development functions.
Wendy is responsible for
He joined Minerva from Standard
evaluating and developing
Bank, where he worked in a
the operational strategy of
number of executive roles,
the Group to ensure it has the
including Global Head of
operational capabilities needed
to support its growth strategies
the Private Clients Trust &
Fiduciary business. Prior to
and deliver its financial targets.
joining Standard Bank, Steven
A significant part of Wendy’s
was employed by JP Morgan
role is to lead the efficient
Chase & Co. for over twenty
and effective integration of
years where he held a number
acquisitions onto the JTC
of senior roles.
operating platform taking
into account all aspects of
operations including people
and culture, technology,
operational finance, marketing
and facilities.
Board Met
Audit & Risk
Nomination
Remuneration
Michael
Liston
Nigel
Le Quesne
Dermot
Mathias
Michael
Gray
Martin
Fotheringham
5
4
2
3
5
N/A
N/A
N/A
5
4
2
3
5
4
2
3
5
N/A
N/A
N/A
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS B O A R D S T A T E M E N T S
V I A B I L I T Y S T A T E M E N T
R E Q U I R E M E N T
B O A R D S T A T E M E N T
W H E R E
T O F I N D
F U R T H E R
I N F O R M A T I O N
This Corporate Governance Report, including the sections which follow, sets out how the Company has
> Page 54
applied the main principles of good governance as set out by the UK Corporate Governance Code, April
> Page 70
2016, as issued by the FRC (the “Code”). The Directors consider that the Company has been compliant
with the Code provisions as applied during the period since listing, with the following exception:
C O M P L I A N C E
Provision B.6.1 of the Code states that the Board should report in the Annual Report how performance
W I T H T H E C O D E
evaluation of the Board, its Committees and its individual directors has been conducted. As the Board
was only appointed in March 2018 a formal performance evaluation was not undertaken during the year.
The effectiveness of the Board and of the Board and Committee Meetings is a standing agenda item at
the Board’s six scheduled meetings a year. A formal performance evaluation of the Board, its Committees
and its individual directors will be conducted in 2019in accordance with the three year evaluation cycle
detailed in the Nomination Committee’s report.
R O B U S T
A S S E S S M E N T
O F T H E
P R I N C I P A L
R I S K S
F A C I N G
T H E G R O U P
A N N U A L
R E V I E W O F
S Y S T E M S
O F R I S K
The risks from the Group Risk Register are discussed, debated and challenged, firstly by senior
management and Executive Directors, and then by the Group Risk Committee, with a view to
> Pages 28 to 34
> Pages 72 to 74
presenting the key risks to the Board. The Board has agreed that the chief risks will be presented
in the Annual Report and Accounts as the ‘Principal Risks’. There is an ongoing process for identifying,
evaluating and managing the Principal Risks faced by the Company.
Based on the review performed, the Board has not identified any significant failings or weaknesses
during the year.
While the Board is ultimately responsible for the operation of an effective system of internal control
> Pages 28 to 34
and risk management appropriate to the business, the Audit & Risk Committee is responsible for
reviewing the risk management systems and internal controls to ensure that they remain effective
and that any identified weaknesses are appropriately dealt with. The systems of internal control and
M A N A G E M E N T
risk management that have been in place for the year are regularly reviewed by the Board. The Board
A N D
I N T E R N A L
C O N T R O L
is satisfied that these systems accord with the provisions of the Code. The process by which the Board
reviews the effectiveness of the internal control and risk management systems is summarised in the
Risk Management section of the Strategy Report.
F A I R ,
The Annual Report and Consolidated Financial Statements, taken as a whole, are fair and balanced and
> Page 91
B A L A N C E D A N D
understandable and provide the information necessary for Shareholders to assess the performance,
UNDERSTANDABLE
strategy and business model of the Company.
A S S E S S M E N T O F P R O S P E C T S
T H E C O N T E X T F O R T H E A S S E S S M E N T
( O F P R O S P E C T S )
The key assumptions in the financial forecasts, reflecting the overall strategy, include:
> 8% to10% annual organic growth year on year
The Group’s business model and strategy are central to an understanding of its
> Target of 30% to 35% margin for the Group as a whole
prospects, and details can be found on pages 16 to 17. The nature of the Group’s
activities is long-term and the business model is open-ended. The Group’s
It has also been assumed that refinancing will be available on similar terms to
current overall strategy has been in place for several years, subject to the ongoing
those negotiated in 2018 to support any proposed expansion of the business.
monitoring and development described below.
The Board continues to take a conservative approach to the Group’s strategy in the
Risks, which are set out on pages 33 to 34. The purpose of the Principal Risks
core business and the focus is largely on cost control and operational efficiency.
table is primarily to summarise those matters that could prevent the Group from
delivering on its strategy. A number of other aspects of the Principal Risks –
Decisions relating to major new projects and investments are made with
because of their nature or potential impact – could also threaten the Group’s
a low appetite for risk and are subject to an escalating system of approvals,
ability to continue in business in its current form if they were to occur. This was
including short payback periods. Similar controls operate in relation to major
considered as part of the assessment of the Group’s viability, as explained below.
These key assumptions are reflected in numbers 1 to 6 of the Group’s Principal
new customer contracts.
G O I N G C O N C E R N B A S I S
The Group is well diversified with its two divisions and three business lines
The Directors also considered it appropriate to prepare the financial statements
with revenues deriving from multiple jurisdictions and clients. . The Board
on the going concern basis, as explained in the Basis of Preparation paragraph in
continuously considers the changes in the risk profile of the Group and ensures
note 2 to the Financial Statements on page 106.
that a thorough risk assessment is made when making any investment decisions.
V I A B I L I T Y S T A T E M E N T I N A C C O R D A N C E W I T H
T H E A S S E S S M E N T P R O C E S S A N D K E Y A S S U M P T I O N S
P R O V I S I O N C . 2 . 2
The Group’s prospects are assessed primarily through its strategic planning
A S S E S S M E N T O F V I A B I L I T Y
process. This process includes an annual review of the ongoing plan, led by the
The Directors have assessed the viability of the Group over a three year period,
CEO and the Group Holdings Board which ensures that all relevant functions are
taking account of the Group’s current position and the potential impact of the
involved. The Board participates fully in the annual process. Part of the Board’s
Principal Risks documented in the strategic report. Based on this assessment,
role is to consider whether the plan continues to take appropriate account
the Directors have a reasonable expectation that the Company will be able to
of the external environment including macroeconomic, political, social and
continue in operation and meet its liabilities as they fall due over the three
technological changes.
year period ending 31 December 2021. In making this statement the Directors
have considered the current financial position of the Group and the resilience
The output of the annual review process is a set of objectives, an analysis of
of the Group in the event of severe but reasonable scenarios. The modelling
the risks that could prevent the plan being delivered, and a number of financial
of these scenarios has taken into account the Principal Risks and their impact
forecasts. The latest updates to the strategic plan were finalised in February
on the business model, future performance, solvency and liquidity over the
2019 following this year’s review. This considered the Group’s current position
period. On the basis that the Group has limited exposure to long-term financial
and the development of the business as a whole over the next 3 years
commitments the Directors have determined that the three year period is an
appropriate period over which to provide its viability statement.
As a result of this focus, detailed financial forecasts were also prepared for the
3 year period to 31 December 2021, so that 2 years and 9 months remains at
V I A B I L I T Y S T A T E M E N T
the time of approval of this year’s annual report. The first year of the financial
Based on their assessment of prospects and viability above, the Directors confirm
forecasts form the Group’s operating budget and is subject to regular review
that they have a reasonable expectation that the Group will be able to continue
throughout the year. The second and third year are in a reasonable level of detail,
in operation and meet its liabilities as they fall due over the three year period
and are flexed based on the actual results in year one.
ending 31 December 2021.
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6 3
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS L E A D E R S H I P A N D E F F E C T I V E N E S S
C O N T I N U E D
B O A R D R O L E S A N D
R E S P O N S I B I L I T I E S
K E Y A C T I O N S
B O A R D R O L E S A N D
R E S P O N S I B I L I T I E S
K E Y A C T I O N S
> Responsibility for the overall management of the Group
> Approval and regular review of the Group’s general commercial strategy
> Changes to the structure, size and composition of the Board, following recommendations from the
Nomination Committee
> Development initiatives and long-term strategic options. Approval of the annual operating and capital expenditure
> Approval of the Terms of Reference, membership of Board Committees, including the four existing committees
S T R A T E G Y A N D
M A N A G E M E N T
budgets and any material changes to them
> Oversight of the Group’s operations ensuring
– competent and prudent management
– sound planning
– an adequate system of internal control
– compliance with statutory and regulatory obligations.
– adequate accounting and other records
> Review of performance in light of the Group’s strategy, objectives, business plans and budgets and ensuring that
any necessary corrective action is taken
> Extension of the Group’s activities into new business or geographic areas
> Any decision to cease to operate all or any material part of the Group’s business
B O A R D M E M B E R S H I P
A N D O T H E R
A P P O I N T M E N T S
– the Audit and Risk Committee, the Remuneration Committee, the Nomination Committee and the
Disclosure Committee
> Appointment and removal of the Directors of the Company and changes to their executive positions all on the
recommendation of the Nomination Committee
> Approval of the terms of reference of the Chairman, Senior Independent Director, Chief Executive and
Executive Directors
> Selection and appointment of the Chairman and Senior Independent Director following recommendations from
the Nomination Committee
> Ensuring adequate succession planning for the Board and senior management
> The scope and extent of delegations to Directors or Board Committees
> Appointment and removal of the Company Secretary
> Appointment, re-appointment or removal of the external auditor to be put to shareholders for the approval,
> Approval of the preliminary announcements of interim and final results and the interim management statements
following recommendations from the Audit Committee
F I N A N C I A L
R E P O R T I N G
following recommendations from the Audit and Risk Committee
> Approval of the Annual Report and Accounts including the Remuneration Report, Directors’ Report and
Corporate Governance Report; Summary Financial Statement and any interim financial statement following
recommendations from the Audit and Risk Committee
A N D C O N T R O L S
> Approval of the dividend policy
> Declaration of the interim dividend and recommendation of the final dividend
> Approval of the remuneration of the auditors and terms of engagement, following recommendations from the
Audit Committee
R E M U N E R A T I O N
and the Company Chairman to be delegated to the Remuneration Committee
> Approval of the policy level of remuneration and terms of appointment of non-Executive Directors on the
> Determining the remuneration policy, level of remuneration and terms of appointment for the Executive Directors
> Approval of any significant changes in accounting policies or practices following recommendations from the Audit
recommendation of the Executive Directors and the Company Chairman
and Risk Committee
C O M M U N I C A T I O N S
> Approval of all circulars (including listing particulars) to shareholders
> Approval of all resolutions and related documentation to be put forward to shareholders at a General Meeting.
R I S K M A N A G E M E N T
> Review and set risk appetite
> Review procedures for detection of fraud and prevention of bribery
> Approve annual assessment of effectiveness of risk and control processes
> Approve levels of insurance coverage for JTC and the Directors and officers
I N T E R N A L C O N T R O L S
from the Audit Committee, including approving an appropriate statement for inclusion in the Annual Report
> Ensuring maintenance of a sound system of internal control and risk management, following recommendation
S T R U C T U R E
A N D C A P I T A L
> Changes relating to the Group’s capital structure including reduction of capital, share issues (except under
employee share plans) and share buy-backs (including the use of treasury shares)
> Major changes to the Group’s corporate structure including the making or receiving of any take-over bid or similar
C O R P O R A T E
G O V E R N A N C E
M A T T E R S
P O L I C I E S
> Performance evaluation of the Board and that of its Committees and individual Directors at least once each
year and reporting to shareholders on whether such performance evaluation had taken place and how it had
been conducted
> Determination of the independence of any Non-Executive Director or proposed Non-Executive Director.
> Review of the Group’s overall corporate governance arrangements
Approval of the Group’s policies and standards, including:
> Key Financial and Non-Financial Risk and Control Policies
> Guide to Ethical Business Practice (and related policies)
> Whistleblowing Policy and Procedure
> The acquisition or disposal of interests in the shareholding of a Group company or the acquisition of businesses
NOT approved in accordance with the Group Development Committee policy and procedure
M A J O R
> Approval of the Group’s annual Budget
T R A N S A C T I O N S
> Capital expenditure of a Group company materially in excess of Budget
> Revenue expenditure of a Group company materially in excess of Budget
> Prosecution, defence or settlement of litigation being material to the interests of the Group
corporate transaction and the entering into of material joint venture agreements
E M P L O Y E E S H A R E S
> Material changes to the rules of the Company pension schemes
> Changes to the Group’s management and control structure
> Any changes to the Company’s listing or its status as a public company
A N D P E N S I O N
> Establishing employee and other incentive schemes and any material changes to them
S C H E M E S
S U C C E S S I O N
P L A N N I N G
> Succession plans for Board and Committees, including selecting a Chairman, CEO and appointing a Senior
Independent Non-Executive Director
> Appointment of a Company Secretary
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS L E A D E R S H I P A N D E F F E C T I V E N E S S
C O N T I N U E D
B O A R D A C T I V I T Y D U R I N G T H E Y E A R
P R I O R I T I E S F O R T H E Y E A R A H E A D
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B O A R D
C O N S I D E R A T I O N S
A N D
F O C U S A R E A S
B O A R D
C O N S I D E R A T I O N S
A N D
F O C U S A R E A S
B U S I N E S S P L A N N I N G
B U D G E T A P P R O VA L
R I S K M O N I T O R I N G , O V E R S I G H T
The 3 year business plan to 31 December
The annual operating and capital expenditure
A N D M I T I G A T I O N
B U S I N E S S P U R P O S E
A N D S T R A T E G Y
B O A R D D I V E R S I T Y
I N T E G R A T I N G C U L T U R E
JTC endeavours to achieve appropriate
It is impossible to overstate the importance
2020 codifies JTC’s strategy for organic
budgets were reviewed and approved in
JTC has a sophisticated and well-established
We seek consistently and clearly to
diversity, including gender diversity,
of our people and culture in the success
growth & strategic acquisitions, as articulated
accordance with the Group’s 3 year business
compliance and risk-management framework.
communicate our strategy to ensure all
throughout the Company. The Board is
of JTC. We have long believed that culture
to investors at IPO. The strategy was
plan, with appropriate challenge made to
The Board carried out a robust assessment of
stakeholders understand how we deliver value.
committed to take into account a variety of
is the best foundation from which we
reviewed in detail and management
challenged on the strength of their planning,
management on their key judgements and
estimates in relation to financial reporting to
the principal risks facing the Group, including
those that would threaten its business model,
In 2019 we will be giving further consideration
as to how we articulate JTC’s wider purpose
factors before making new appointments to
the Board, including relevant skills to perform
can collectively build a business for the
long-term. Maintaining and investing in our
and expectations for the future.
ensure competent and prudent management,
future performance, solvency or liquidity.
as a business.
the role, experience, knowledge and diversity.
culture and people is a constant priority and
sound planning.
2018 saw a number of important milestones.
There are a number of new developments
planned for 2019.
M A R K E T D R I V E R S
M & A P I P E L I N E A N D D E C I S I O N - M A K I N G
S U C C E S S I O N P L A N N I N G
T H R E E Y E A R B U S I N E S S P L A N
Growth is primarily driven by demand for specialist
In 2018 the Board reviewed a number of acquisition opportunities in light of the Group’s strategy
We have started to refine our talent development and succession
The business plan is the framework within which opportunities and
outsourcing due to increased regulation, operational
complexity, globalisation, emerging market wealth
to supplement organic growth with value enhancing acquisition opportunities. Having determined
their benefit to JTC, the Board was pleased to approve the acquisition of Van Doorn and the
planning programme as a listed company and will continue to focus on
this in coming years. The Non-Executive Directors have spent time with
challenges facing the Group are evaluated, and all decisions on strategy
and services, staff roles, financial management, budgeting process and
creation & industry consolidation. JTC’s strategy is
Minerva business, both of which were immediately accretive and met JTC’s criteria of ensuring that
members of the senior management team to gain a deeper insight into
core policies and procedures taken. Performance against the plan is kept
reviewed and tested against these key drivers.
acquisitions enhance the Group’s offering beyond the ‘numbers’.
how we currently manage talent and remuneration, and this is expected
under constant review.
to increase in the coming year.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
L E A D E R S H I P A N D E F F E C T I V E N E S S
C O N T I N U E D
E F F E C T I V E N E S S : N O M I N A T I O N C O M M I T T E E
P U R P O S E A N D C U L T U R E
A L I G N E D
Our purpose is to help maximise the potential of every
client, colleague and partner with whom we work.
At JTC we understand that the purpose of the business extends beyond economic value
creation and is intimately linked to the culture, values and strategies of the Group.
We operate in a complex international space and our services
support capital flows, wealth creation and wealth preservation
across the globe. We have a responsibility to conduct our
business in a sustainable way working within legal and regulatory
frameworks that are constantly developing and evolving.
> For our clients, JTC’s services help them to navigate the
challenges and complexity they face in the most effective
and efficient ways. We help clients to maximise their
potential by partnering with them for the long-term and
delivering innovative solutions that add value and allow
them to focus on their strengths and goals.
M E M B E R S H I P O F T H E C O M M I T T E E
In compliance with the Code, the Committee’s membership is limited to the
Non-Executive Directors of the Company. There have been no changes in
Committee membership since Admission. JTC (Jersey) Limited, the corporate
Company Secretary, acts as secretary to the Committee.
C O M M I T T E E M E M B E R S
Michael Gray – Committee Chairman, Independent Non-Executive Director
Mike Liston – Non-Executive Chairman
Dermot Mathias – Senior Independent Non-Executive Director
C O M M I T T E E M E E T I N G S I N 2 0 1 8
The Committee met twice during the year. Attendance by the Committee
members at these meetings is shown below:
8 Mar
15 Nov
Michael Gray (Chair)
Mike Liston
Dermot Mathias
R O L E O F T H E C O M M I T T E E
The Committee’s primary purpose is to develop and maintain a formal, rigorous
and transparent procedure for identifying appropriate candidates for Board
appointments and re-appointments and to make recommendations to the
Board. In addition, the Committee is responsible for reviewing the succession
plans for the Executive Directors and the Non Executive Directors. This involves:
C H A I R O F T H E R E M U N E R A T I O N C O M M I T T E E
M I C H A E L G R A Y
N O M I N A T I O N
C O M M I T T E E
D E A R S H A R E H O L D E R S ,
> Keeping under review the leadership needs of the Group, both Executive
On behalf of the Board I am pleased to introduce the Nomination Committee
and Non-Executive, with a view to ensuring the continued ability of the
> For our people, JTC’s culture of shared ownership makes
(the “Committee”) Report for 2018. The members of the Committee are
Group to compete effectively in the market-place
every member of the team a direct stakeholder in the
business and able to share in the success we achieve.
Our meritocratic environment and support provided by the
JTC Academy, JTC Gateway and JTC Wellbeing programmes
have been created specifically to maximise the potential of
every colleague.
> For our partners, both commercial and social, JTC’s shared
ownership culture is extended to the people that we work
and live alongside every day. We help our commercial
partners to maximise their potential by providing
complementary services to our shared clients. For our
social partners we give time, expertise and money to help
individuals and groups achieve their aspirations and enjoy
a better life.
myself, the Senior Independent Non-Executive Director, Dermot Mathias, and
> Regularly reviewing the structure, size and composition of the
the Non-Executive Chairman, Michael Liston. We can confirm that we have
Board to ensure it has an appropriate balance of skills, diversity,
complied with the Code recommendations that the Committee comprises
experience, knowledge and independence, and reporting and making
a majority of Independent Non-Executive Directors. Myself and Dermot
recommendations to the Board with regard to any changes
Mathias are confirmed as independent for the purposes of the Code. JTC
> Regularly assessing the knowledge, skills and experience of individual
(Jersey) Limited, the corporate Company Secretary, acts as Secretary to the
members of the Board and reporting the results to the Board
Committee. By invitation, the meetings of the Committee may be attended by
the Chief Executive and Chief Financial Officer. There have been no changes
Further details on the Committee’s roles and responsibilities can be found in our
in Committee membership since formation in March 2018.
Terms of Reference on our website, at jtcgroup.com.
M I C H A E L G R A Y
N O N - E X E C U T I V E D I R E C T O R , C O M M I T T E E C H A I R M A N
H I G H L I G H T S F R O M T H E Y E A R
As part of the preparation for Admission, the Board appointed three Non-Executive
Directors, selected on the basis of their industry and public company skills, knowledge
and experience required for Board members as guided by the UK Corporate
Governance Code. An external recruitment consultant was not engaged as part of
the recruitment process, nor was there public advertising. Instead recommendations
from the Company’s advisers were sought. An assessment of the candidates’ skills
was undertaken and interviews were held with members of the Board and Senior
Management on a one-on-one basis prior to appointment.
A tailored induction programme was arranged for the Non-Executive Directors,
both in the run-up to their appointment but also following the IPO as part of the
strategy day held on 1 May 2018.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS E F F E C T I V E N E S S : N O M I N A T I O N C O M M I T T E E
C O N T I N U E D
C O M M I T T E E C O M P O S I T I O N A N D M E E T I N G
P R I O R I T I E S F O R T H E C O M I N G Y E A R
idea of stated gender quotas. However JTC endeavours to achieve appropriate
L E A D E R S H I P
A T T E N D A N C E
We have started to refine our talent development and succession planning
diversity, including gender diversity, throughout the Company.
Two of our key risks are people focussed and they are:
The first meeting of the Committee took place on 8 March 2018 for the purpose
programme as a listed company and will continue to focus on this in the coming
of reviewing the composition of the Board prior to Admission. The meeting on
years. The Non-Executive Directors have spent time with members of the senior
The Board acknowledges that there is currently relatively low representation of
> The failure to retain high calibre, talented senior managers and other key
15 November focussed on succession planning, constitution of the Board and
management team to gain a deeper insight into how we currently manage talent
female employees at the most senior levels of the organisation. At Director level
roles in the business
Committees and the Board Diversity Policy. The Nomination Committee and the
and remuneration, and this is expected to increase in the coming year.
and above, this currently stands at 35% vs 65% in favour of male employees.
> The failure to recruit or develop good quality people to achieve our
Board are of the view that its size and composition as well as the mix of talents,
quality and skills are well suited to JTC’s current circumstances and needs and
D I V E R S I T Y
At other levels of the business, gender representation is more representative with,
strategic aims
for example, middle management (Assistant Manager to Associate Director)
allow for its efficient functioning as a decision-making body and promoting
The Committee will take into account a variety of factors before recommending
figures standing at 59% female and 41% male. In line with our Guiding Principles
To assist with this, the Chief Operating Officer regularly meets with the
sound governance.
any new appointments to the Board, including relevant skills to perform the
and our commitment to operating a meritocratic approach to career progression,
Committee Chairman and has presented to the Committee on the Group’s
role, experience, knowledge and diversity. The Board is generally opposed to the
this will continue to have the attention of the Board to ensure that we have the
succession planning and talent development programme. A regular review of
B O A R D C O M M I T T E E A N D D I R E C T O R S ’ P E R F O R M A N C E E VA L U A T I O N C Y C L E
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2 0 2 0
2 0 2 1
> Questionnaire
> Questionnaire
> In accordance with the provisions of the
> One-to-one discussions between the
> One-to-one discussions between the
Code it is intended that the evaluation of
Chairman and each director, and senior
Chairman and each director, and senior
the Board’s performance will be externally
management, to solicit feedback
management, to solicit feedback
facilitated every 3 years (Code reference
> Closed session discussion of the Board
> Closed session discussion of the Board
B.6.2).
and Committee evaluations led by the
and Committee evaluations led by the
> An external evaluator has not yet been
Chairman and Committee Chairs
Chairman and Committee Chairs
appointed. The Committee will select
> Summary of evaluation results provided to
> Summary of evaluation results provided
a suitably qualified, experienced and
the full Board
to the full Board
independent evaluator with consideration
> Feedback actioned, policies and practices
> Feedback actioned, policies and practices
to providing comfort for shareholders that
updated as necessary
updated as necessary
the Board has the necessary skills to run
the Company as effectively as possible.
appropriate level of diversity and balance throughout the organisation over time.
succession planning takes place across the Group, with a particular focus given to
The most important priority of the Committee has been and will continue to be
supports the decisions about the organisation’s design and structure. The results
ensuring that members of the Board should collectively possess the broad range
of this review are incorporated into the succession planning process and the
of skills, expertise and industry knowledge, and business and other experience
Committee discusses the succession plan at least annually.
senior executive succession. The process of documenting the Group’s Talent Map
necessary for the effective oversight of the Group.
P E R F O R M A N C E E VA L U A T I O N
In addition to this, a forward looking review of the future anticipated shape
of the organisation will be considered next year to identify any potential gaps
As the Nomination Committee has only been established for a short time, a
that may emerge and work to ensure the organisation’s design remains fit for
formal performance evaluation has not been conducted. It is intended that a
purpose. One of the elements of our People Plan has focussed on the continual
performance evaluation will be conducted in 2019 and reported on in the
development of the senior executive team to provide world class leadership to the
Company’s 2019 Annual Report.
Group. We encourage regular contact between members of the senior executive
team and the Board, the intention is that all members of the senior executive
D I R E C T O R S A N D T H E I R O T H E R I N T E R E S T S
team will present to the Board at least once a year. Through acquisitions,
In accordance with the Companies (Jersey) Law 1991, as amended, all Directors
recruitment and internal promotion we are satisfied that we have an experienced
who were interested in, or subsequently became aware of their interest in, a
senior executive team, with clearly defined roles.
transaction or proposed transaction with the Company or any of its subsidiaries,
are required immediately to declare the nature and extent of such interest to the
R E - E L E C T I O N
Board of Directors.
On the recommendation of the Committee and in accordance with the
Company’s Articles of Association and with the Code, all currently appointed
The Directors’ Register of Interests and Conflicts is maintained by the Company
Directors will retire at the forthcoming AGM and offer themselves for re-election
Secretary and is reviewed by the Directors at every Board meeting.
by shareholders.
Executive Directors may hold external directorships if the Board determines
The Board recommends the re-election of each member of the Board based upon
that such appointments do not cause any conflict of interest. Where such
their skills, experience and contribution towards delivering the Group’s strategy
appointments are approved and held, it is a matter for the Board to agree
and delivering long-term value for stakeholders.
whether fees paid in respect of the appointment are retained by the individual
or paid to the Company.
S H A R E H O L D E R E N G A G E M E N T
T H E P R O C E S S W A S D I V I D E D I N T O F O U R S T A G E S :
I am available to shareholders throughout the year and at the 2019 AGM to
1
1
2
2
3
3
4
4
The Nomination Committee periodically reviews the format of the Board
answer questions on the work of the Committee.
Committee and Directors’ performance evaluation programme to ensure that
feedback is actioned.
Evaluation
360˚ questionnaire
Closed session discussions
Feedback actioned and
methodology set by the
feedback and one-on-one
of evaluations
outcomes reported
Nomination Committee
interviews conducted
M I C H A E L G R A Y
N O M I N A T I O N C O M M I T T E E C H A I R M A N
2 April 2019
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C H A I R O F T H E A U D I T A N D R I S K C O M M I T T E E
D E R M O T M A T H I A S
M E M B E R S H I P O F T H E C O M M I T T E E
T H E R O L E O F T H E C O M M I T T E E
The Committee is satisfied that the Group has robust internal controls. However,
The Committee’s members are all Non-Executive Directors, and therefore the
The Board has delegated to the Committee responsibility for overseeing financial
given the growth in scale and geographic range of its operations the Group will
Committee make-up complies with the Code. There have been no changes
reporting, review and assessment of the effectiveness of the internal control and
be reviewing the need for a dedicated internal control function during the course
in Committee membership since the IPO in March 2018. Members’ skills and
risk management systems and maintaining an appropriate relationship with the
of the year.
experience are documented on page 58 and 59. The Board is satisfied that
External Auditor.
the Committee meets the requirement to have recent and relevant financial
E X T E R N A L A U D I T
experience and that as a whole we have sufficient experience of the sector.
In order to fulfil these responsibilities, the Committee’s duties include the following:
The Group’s auditors are PricewaterhouseCoopers CI LLP, and they were re-
C O M M I T T E E M E M B E R S
> Monitoring the integrity of the consolidated financial statements
2018. The Committee has recommended to the Board that a resolution to
Dermot Mathias – Committee Chairman, Senior Independent
> Reviewing and challenging the application of accounting policies,
reappoint PwC for the 2019 financial period be prepared and presented to
Non-Executive Director
Mike Liston – Non-Executive Chairman
including estimates and judgements made by management, and the
shareholders. The audit partner is Mike Byrne, who has been the partner on the
clarity and completeness of disclosures
engagement since 2016. The Committee has reviewed the quality of the audit
Michael Gray – Independent Non-Executive Director
> Reviewing and assessing the internal audit function including approval of
plan and related reports for the 2018 audit and is satisfied with the quality of
C O M M I T T E E M E E T I N G S I N 2 0 1 8
> Overseeing the relationship with the External Auditor
The Committee met four times during the year. Attendance by the Committee
> Monitoring the effectiveness of the Company’s internal financial controls
The Committee will review the effectiveness and quality of PwC’s 2018 year-end
members at these meetings is shown below:
and risk management systems
> Giving due consideration to applicable laws and regulations
2 May
20 Jul
17 Sep
15 Nov
audit, which will be the first year-end audit following the Listing. This review is
intended to cover the quality of the service being provided, the competence
of the staff and their understanding of the business and related financial risks.
any appointments and the scope of their remit
these documents.
appointed as statutory auditor to the Group for the year ended 31 December
A U D I T
A N D R I S K
C O M M I T T E E
Dermot Mathias (Chair)
Mike Liston
Michael Gray
D E A R S H A R E H O L D E R S
On behalf of the Board I am pleased to present this Audit and Risk Committee
Report for the year ended 31 December 2018 which summarises our
activities since the Committee was formed in March 2018, as well as setting
out intended key areas of focus in 2019. Since formation, the Committee’s
primary focus has been to ensure the integrity and transparency of external
financial reporting as a public company, as we published the interim
condensed consolidated financial statements in September 2018, and to put
in place a work plan for the year ahead.
D E R M O T M A T H I A S
C H A I R O F T H E A U D I T A N D R I S K C O M M I T T E E
At my request, meetings are attended by the External Auditor and members
of the Senior Management team. The Committee met separately with the
Auditors without Executive Management being present. I have met privately
with the External Auditor and to discuss any matters they may wish to raise.
The Committee is satisfied that the External Auditor remains independent
and objective in their work. During the year the Executive Directors attended
Committee meetings by invitation, together with other Senior Managers to
discuss matters such as internal control and IT controls security.
Meeting agendas are linked to the financial calendar and to an annual plan which
was prepared prior to the Listing. The annual plan was devised to ensure that we
cover the requirements as documented in our Terms of Reference. This annual
plan is dynamic and therefore will evolve when the Committee feels that there
is a need for greater focus on a specific area. JTC (Jersey) Limited, our corporate
Company Secretary, acts as Secretary to the Committee and I am satisfied
that the Committee received information on a timely basis and that meetings
were scheduled adequately to allow members to have an informed debate.
In 2019, we would expect the Chief Risk Officer to attend all Audit and Risk
Committee meetings.
Further details on the Committee’s roles and responsibilities can be found in our
The Committee has reviewed the independence of the External Auditor and
Terms of Reference on our website at jtcgroup.com.
concluded that it complies with UK regulatory and professional requirements
R I S K A S S E S S M E N T
and that its objectivity is not compromised. As a Jersey incorporated company
JTC is not required to comply with the Competition and Markets Authority
The principal risks and uncertainties facing the Company are set out in the Risk
requirement in relation to audit tenders every 10 years. The Committee
Management report section of the Strategic Report on pages 33 to 34.
will, however, continue to keep this under review as part of their review of
effectiveness of the External Auditor .
The Board has delegated the day-to-day responsibility for designing, operating
and monitoring the internal control and risk management framework and
The Committee ensures that the auditors are not awarded non-audit work if
systems to the senior management team. The Committee evaluates the risk and
there is a risk that it might impair the objectivity and independence of the audit.
control arrangements, reporting to the Board. The Committee is satisfied that
The award of non-audit work to the External Auditor s of £10,000 or more
there is robust review of the risks and that controls of significant risks operate
is subject to the prior approval of the Committee. Other than in exceptional
effectively. Based on the review performed, the Board has concluded that they
circumstances non-audit fees should not exceed 50% of audit and assurance fees
have not identified any significant failings or weaknesses during the year
over a 3 year rolling period.
I N T E R N A L C O N T R O L S
A U D I T F E E S
The Group does not have a formal internal audit function and the Group Risk
Fees payable to the Auditor for audit and non-audit services are set out in note 8
Committee is responsible for overseeing the Group’s internal risk audit and
to the Financial Statements on page 116. Total fees related to non-audit services
accreditation arrangements. It manages the remit of the Group Risk Function’s
audit of each regulated jurisdiction’s risk management and compliance processes,
as part of the JTC Compliance Monitoring Plan. The Group Risk Function
also routinely carries out spot checks on the different jurisdictions to ensure
compliance and adherence to these procedures. JTC has been ISAE 3402 Type I
certified since 2013 and in 2016 the Jersey head office and Global Service Centre
in South Africa were both awarded ISAE 3402 Type II certification.
represented 9.8% of the total fees for audit services
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A C C O U N T A B I L I T Y : A U D I T A N D R I S K C O M M I T T E E
C O N T I N U E D
H I G H L I G H T S F R O M T H E Y E A R
P R I O R I T I E S F O R T H E C O M I N G Y E A R
The Committee’s key activities during year included the following:
The Committee’s priorities for 2019 include the following:
> The Committee reviewed the content and tone of the half year and
> Assessing the effectiveness of key controls
annual results. The Chief Financial Officer provided a commentary on
> Review of the Whistleblowing Policy
the draft results, financial position and key estimates and judgements.
> Consider need for internal audit function
The Executive Directors confirmed to the Committee that they were
> Cyber-security update
not aware of any material misstatements in the half year and annual
results, and the Auditors confirmed that they had found no material
The Committee recognises that it is imperative JTC remains aligned with relevant
misstatements in the course of their work. After reviewing the reports
IT security regulations and rules to ensure that the risk to JTC’s information
from management and, following discussions with the External Auditor
systems posed by a variety of cyber threats is minimized. In 2019 our IT security
and valuers, the Committee was satisfied that: the financial statements
strategy will be further enhanced by the employment of an IT security specialist,
appropriately addressed the critical judgements and key estimates, both
with specific qualifications and experience providing an additional layer of in-
in respect of the amounts reported and the disclosures; and the Group
house expertise. We have successfully recruited an individual to perform that
has adopted appropriate accounting policies.
role and they started with us in March 2019.
> Reviewing and then reporting to the Board on the audit plan and
strategy, the effectiveness of the External Auditor , the appropriateness
of non-audit fees, risk management and controls, the viability statement
Moving into 2019, we will continue to discuss and give appropriate challenge
to management on their key judgements and estimates in relation to financial
and going concern.
reporting, and to review and assess the risk management systems and processes
> Reviewing the extent to which the Annual Report is fair balanced and
and cyber security arrangements to ensure that they are appropriately robust
understandable. This involved reviewing whether the Report was honest
and aligned with the growth of the business. The Committee will also review the
about successes and failures, balances Alternative Performance Measures
requirement for an enhanced internal audit function.
with IFRS disclosures and has been written in a straightforward manner
> The Group has implemented a whistleblowing policy and procedure
E F F E C T I V E N E S S
which is designed to encourage staff to report suspected wrongdoing
The performance of the Committee will be formally considered as part of the
as soon as possible, in the knowledge that their concerns will be taken
wider Board effectiveness review in 2019. In the meantime we believe that the
A C C O U N T I N G F O R
A C Q U I S I T I O N S
seriously and investigated as appropriate. The policy ensures that their
Committee continues to operate effectively.
confidentiality will be respected and reassures staff that they should be
able to raise genuine concerns in good faith without fear of reprisals,
S H A R E H O L D E R E N G A G E M E N T
even if they turn out to be mistaken. It also provides staff with guidance
I welcome questions from shareholders on the Committee’s activities. If you
on how to raise those concerns. The Committee is scheduled to review
wish to discuss any aspect of this report, please contact me via the Company
the whistleblowing policy and procedure in May 2019.
Secretary. I will be attending the 2019 AGM and look forward to meeting
2 0 1 8 D E V E L O P M E N T S
Steven Bowen was appointed to the role of Chief Risk Officer in November.
Steven joined the Group as part of the Minerva acquisition having been Minerva’s
Group Managing Director. As Chief Risk Officer Steven has responsibility for
oversight and the day to day management of the Risk, Compliance and Treasury
functions across the Group, reporting directly to the Committee.
you there.
I would like to thank the other members of the Committee, management and
our External Auditor s for their support during the year.
D E R M O T M A T H I A S
C H A I R M A N – A U D I T A N D R I S K C O M M I T T E E
2 April 2019
S I G N I F I C A N T I S S U E S
A N D A C C O U N T I N G
J U D G E M E N T S
R E V E N U E
R E C O G N I T I O N ,
A C C R U E D I N C O M E
A N D T R A D E
R E C E I VA B L E S
A C T I O N T A K E N B Y T H E C O M M I T T E E / B O A R D
Management maintains key controls over the largely quarterly billing cycles. The timings of the billing cycle are arranged
to minimise accrued income balances at key reporting dates and thus give greater certainty over income which is still
to be converted into cash. Management assesses the recoverability of all receivables at the year end and attest to the
quality of assets considering past experience of the client, client type and liquidity issues of the client. We agreed with
management’s assessment that no additional provision for losses or impairment either to accrued income or trade
receivables was needed.
E VA L U A T I O N
We considered the results of Management’s impairment assessment which reviews triggers for impairment around
O F I M P A I R M E N T
asset lives, valuation and verification of assets. We considered the judgements taken in relation to asset lives and the
O F I N T A N G I B L E
methodology applied to consider asset verification and we were satisfied that no changes in treatment were needed.
A S S E T S I N C L U D I N G
With regards to Goodwill, we consider the judgements taken in relation to short and long term growth rates and discount
G O O D W I L L A N D
rates used and we were again satisfied that no changes in treatment were needed.
U S E F U L L I F E O F
I N T A N G I B L E A S S E T
S H A R E B A S E D
P A Y M E N T S
We have reviewed the methodology used for the accounting of share based payments and are comfortable with the
assessment by management as to the number of shares expected to vest under the terms of the Performance Share
Plan and Restricted Stock Awards. In doing so we have reviewed and are satisfied with management judgements and
expectations around the achievement of performance targets.
We have reviewed the judgements made and used by management in the allocation of the purchase price of the
acquisition completed during the year. We are satisfied that the overall allocations between goodwill and identifiable
intangible assets are reasonable and also the estimated useful lives of customer and contract intangibles.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS E N G A G I N G W I T H O U R O T H E R S T A K E H O L D E R S
1
3
5
O U R
S T A K E H O L D E R S
A N D H O W W E
R E S P O N D T O
T H E I R N E E D S
1 .
C L I E N T S
3 .
I N T E R M E D I A R I E S
5 .
R E G U L A T O R S
W H Y I T I S I M P O R T A N T T O E N G A G E
W H Y I T I S I M P O R T A N T T O E N G A G E
W H Y I T I S I M P O R T A N T T O E N G A G E
Clients are the lifeblood of the business. The nature of our service offering
As an independent administrator, we are able to offer best-in-class services
We operate in a highly regulated market on a global scale and are
means that we nurture and value long-term relationships, partnering with
to the clients of intermediary partners that are complementary to their
currently registered, regulated or licensed by fourteen different regulatory
our clients to help them grow and achieve their aims. Client relationships
own services. We seek to form long-term relationships with intermediaries,
bodies. We believe it is important to work collaboratively with regulators
typically last at least five years, with many lasting well over a decade and
working to achieve mutually beneficial commercial growth.
to help secure a positive and sustainable future for the industry.
can even be multi-generational.
2
O U T C O M E O F E N G A G E M E N T
By working with a range of high quality intermediaries we are able to grow
By forming appropriate and engaged relationships with our regulators
By taking an entrepreneurial approach and delivering a first class service
the business organically, especially in terms of winning new clients and
we are able to offer an even better and more informed service to our
with a can-do attitude, we are able to retain and grow our clients in a way
also offer our clients access to a wide range of ancillary services from top-
clients, mitigating risk by ensuring compliance with all relevant standards,
O U T C O M E O F E N G A G E M E N T
O U T C O M E O F E N G A G E M E N T
that adds value and is mutually beneficial.
class providers.
H O W W E E N G A G E
H O W W E E N G A G E
regulations and laws.
H O W W E E N G A G E
We take a Director-led approach to client requirements and assemble
We proactively develop, manage and monitor relationships with our
We take a disciplined, timely and proactive approach in monitoring
bespoke teams to meet the individual needs of each client. We pro-actively
intermediary partners, focussing on relationships and complementary
regulatory updates and responding to any regulatory requests and
monitor service levels and seek direct feedback through mechanisms such
services and using technology, such as Salesforce CRM, to make our
requirements. We work closely and transparently with regulators
as client testimonials, client referrals and our JTC Ambassador Programme.
engagement as efficient as possible.
as circumstances dictate, including on convened working parties
and through local professional associations.
4
2 .
E M P L O Y E E S
4 .
C H A R I T I E S
6 .
G O V E R N M E N T B O D I E S
W H Y I T I S I M P O R T A N T T O E N G A G E
W H Y I T I S I M P O R T A N T T O E N G A G E
W H Y I T I S I M P O R T A N T T O E N G A G E
Our people are our most valuable asset and sit at the heart of the business.
The jurisdictions and countries where we operate are more than just the
JTC has a global footprint and currently operates 20 offices in 17 different
They hold the talent, expertise and energy to meet and exceed our clients’
homes of our clients, they are the homes of our employees, their families
jurisdictions and we market our services in many more countries.
expectations and help the Group achieve its long-term goals.
and their communities. Engaging with charities around the world, and in
The long-term success of our business is enhanced through engagement
particular in the markets where our operations are most substantial, is an
with relevant government bodies, including promotional bodies for the
O U T C O M E O F E N G A G E M E N T
important way of giving back to those communities.
financial services sector, as well as bodies that relate to employment,
Through our Shared Ownership culture and Guiding Principles we aim to
environmental, social and governance matters.
help every member of the team maximise their individual potential, enjoy
O U T C O M E O F E N G A G E M E N T
a balanced life and have the opportunity to share directly in the long-term
Engaging directly with charities, both as JTC and where relevant on behalf
O U T C O M E O F E N G A G E M E N T
growth and success of JTC.
H O W W E E N G A G E
of our clients, allows us to support the communities where we operate and
make a difference to people’s lives. We believe in maximising the potential
By engaging directly with government bodies we are able to contribute to
the countries and markets where we operate and positively represent the
of the individual and this provides a focus for our charitable engagement
interests of JTC and its clients. We take a long-term partnership approach
6
Our engagement is supported by three constantly evolving programmes.
and giving.
JTC Academy for learning and development, JTC Gateway for global
mobility opportunities and JTC Wellbeing for physical, emotional and
H O W W E E N G A G E
and respect the value and opportunity that comes from participating in
each market where we do business.
mental good health. All of these are supported and underpinned by our
We take an employee-led approach to charitable giving and seek to get
H O W W E E N G A G E
Ownership for All programmes.
involved with both international and local organisations that benefit the
We engage directly through membership of government trade bodies as
people and communities where we work. We also recognise the value of
well as contributing both time, expertise and experience to groups such as
our client and intermediary relationships and where appropriate seek to
policy working parties. We also directly contribute to the public finances
support their charitable endeavours also.
of the countries where we operate by ensuring timely payment of our
relevant tax liabilities
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
R E L A T I O N S W I T H S H A R E H O L D E R S
R E M U N E R A T I O N C O M M I T T E E :
C H A I R M A N ’ S L E T T E R
O V E R V I E W O F T H E A C T I O N S T A K E N
R E S E A R C H C O V E R A G E
T O E N G A G E W I T H S H A R E H O L D E R S
Currently, five analysts are actively tracking us and they regularly publish equity
> Over 90 meetings with investors and potential investors in the year,
research reports on JTC: Numis, Zeus, Citi, HSBC and N+1 Singer. Their details
including portfolio tours
can be found at: jtcgroup.com
> Chairman and Senior Independent Director available to Shareholders
> Regular updates on shareholder meetings provided to Board
A N N U A L A N D H A L F - Y E A R R E P O R T I N G
> Accessible AGM with voting on a poll, separate resolutions and proxy
JTC’s financial year runs from 1 January to 31 December. We provide trading
voting (for, against or withheld)
updates for the first half of each year, interim financials for the half year and full
> Committee Chairs available at AGM to answer questions
audited financial statements for year end.
> Notice sent out at least 21 clear days before meeting
The aim of JTC’s investor relations programme is to maintain open, transparent
calls/webcasts for Shareholders , analysts and financial journalists that can be
When publishing financial results and trading updates, JTC holds conference
and timely communication with our current and prospective Shareholders .
accessed through our website: jtcgroup.com
The foundations for this ongoing dialogue were laid through the listing process
and we look to enhance this in 2019 and beyond.
F I N A N C I A L C A L E N D A R 2 0 1 9
C H A I R O F T H E R E M U N E R A T I O N C O M M I T T E E
M I C H A E L G R A Y
M E M B E R S H I P O F T H E C O M M I T T E E
In compliance with the Code, the Committee’s membership is limited to the
Non-Executive Directors of the Company. There have been no changes in
Committee membership since Admission. JTC (Jersey) Limited, the corporate
Company Secretary, acts as secretary to the Committee.
C O M M I T T E E M E M B E R S
Michael Gray – Committee Chairman, Independent Non-Executive Director
Michael Liston – Non-Executive Chairman
Dermot Mathias – Senior Independent Non-Executive Director
C O M M I T T E E M E E T I N G S I N 2 0 1 8
The Committee met three times during the year. Attendance by the Committee
members at these meetings is shown below:
The Group’s financial calendar showing all key events may be viewed at: jtcgroup.com
2 May
17 Sep
15 Nov
We aim to provide all relevant information to assist investors in making well-
informed investment decisions and every effort is made to ensure that the
information disclosed is accurate, complete and timely.
M A J O R S H A R E H O L D E R S
Rank
Shareholder
Briefing meetings have been held with analysts and institutional Shareholders,
primarily following the announcement of the interim results but also at other
times during the year.
JTC is committed to maintaining a strong relationship with our Shareholders and
the wider investment community.
Our communication and engagement with Shareholders over the last 12 months
included investor roadshows. All Shareholders had the opportunity to engage
with senior management either at these events, directly or at our Annual
General Meeting.
1
2
3
4
5
6
7
8
9
Mr Nigel Le Quesne
Fidelity Management & Research
Aberdeen Standard Investments
(Standard Life)
Merian Global Investors
12 West Capital Management
Invesco Perpetual Asset Management
Franklin Templeton Investments
Slater Investments
FIL Investment International
10
Liontrust Asset Management
The CEO and CFO provide the Board with feedback from investor and analyst
meetings, in addition to the formal feedback obtained from analysts and
* As at 31 December 2018
institutional Shareholders via our brokers and PR advisors.
No. of Shares*
10,444,128
8,501,232
7,723,972
6,752,250
6,305,270
6,067,915
5,319,564
4,406,280
4,362,463
3,903,737
%
9.42
7.67
6.97
6.09
5.69
5.47
4.80
3.97
3.93
3.52
Michael Gray (Chair)
Michael Liston
Dermot Mathias
R E M U N E R AT I O N
C O M M I T T E E
The key aims of the Group’s remuneration policy are to:
D E A R S H A R E H O L D E R S ,
As Chair of the Remuneration Committee, I am pleased to present our report
covering JTC’s Remuneration Policy and practice since becoming a listed
company. Prior to Admission, the Group undertook a review of JTC’s senior
executive remuneration policy (including the Executive Directors). This review
paid particular regard to practice in the listed company environment, and in
undertaking the review the Remuneration Committee sought independent,
specialist advice. The Committee has reviewed and built on the remuneration
work undertaken by the Board in the lead up to the IPO, as published in the
prospectus. The Remuneration Policy set out in this Annual Report is intended
to incentivise and motivate the Executives to achieve the Company’s
strategic goals. We also believe the approach is structured to encourage the
leadership team to act in your best interests as shareholders.
M I C H A E L G R A Y
C H A I R O F T H E R E M U N E R A T I O N C O M M I T T E E
> Promote the long-term success of the Company
> Attract, retain and motivate high calibre senior management and to
focus them on the delivery of the Group’s long-term strategic and
business objectives
> Be simple and understandable, both externally and to colleagues
> Achieve consistency of approach across the senior management
population to the extent appropriate and informed by relevant
market benchmarks
> Encourage widespread equity ownership across the executive team to
ensure a long-term focus and alignment of interest with Shareholders
The Remuneration Policy came into force with effect from Admission and is
structured broadly in line with those of other UK listed companies of a similar
size and complexity, whilst seeking to avoid making unnecessary changes to the
Group’s established remuneration arrangements where this was not warranted.
The Remuneration Committee has decided, as a matter of good corporate
governance, to adhere to the requirements of the UK remuneration reporting
regulations whenever practicable although, as a Jersey registered company, the
Company is not technically required to do so. At the Company’s first Annual
General Meeting there will be a single advisory vote on the Remuneration
Policy and the Annual Report on Remuneration as the Remuneration Policy will
continue to apply in 2019.
This Report lays out the principles of our proposed Remuneration Policy, how
we have operated it since the IPO and how we plan to operate it in future.
The Annual Statement sets out an overview of 2018. This is followed by the
Remuneration Policy and, finally, the Annual Report on Remuneration, set out
on pages 81 to 85 to this Annual Report, which provides greater detail of the
amounts paid in 2018 and how the Remuneration Policy is intended to be
implemented in 2019. I hope you find the information contained in the Report
to be clear and informative.
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R E M U N E R A T I O N C O M M I T T E E :
C H A I R M A N ’ S L E T T E R
C O N T I N U E D
R O L E O F T H E C O M M I T T E E
Shareholders should note that the Committee will closely monitor the salary and
The Committee’s primary role is to review and set the Remuneration Policy for
total remuneration for the CEO and CFO and reserves the right to make increases
the Executive Directors and certain other members of senior management. It also
in excess of typical market practice if it considers it necessary and appropriate.
approves discretionary performance-related awards to Executive Directors and
senior management. The Committee’s full Terms of Reference may be viewed
Salary for the CEO in 2018 was set at £360,000 per annum and at £275,000 per
on JTC’s website. The CEO, CFO and other senior members of JTC’s management
annum for the CFO. Increases of 9% are proposed for 2018 to £392,400 for the
team may attend by invitation.
CEO and £300,000 for the CFO.
R E M U N E R A T I O N P O L I C Y
I N T R O D U C T I O N
A P P O I N T M E N T O F E X T E R N A L A D V I S E R S
E M P L O Y E E S H A R E O W N E R S H I P
This section sets out JTC’s Remuneration Policy for Executive and Non-Executive
KPMG was appointed as external adviser to the Committee to provide
Widespread employee share ownership has always been and remains an integral
Directors. The policy will be subject to a binding shareholder vote at the 2019
independent support and information as required. KPMG’s fees for 2018
part of JTC’s culture. All JTC employees contribute to our success and we believe
AGM and, subject to Shareholder approval, will become effective from the
amounted to £120,000. In addition, KPMG have provided tax advisory services
that extending share ownership throughout the Company enhances engagement
date of the AGM. Subject to Shareholder approval, the Remuneration Policy is
to the Group.
and performance. In keeping with this ethos, the Committee approved the budget
intended to remain in effect for three years from the 2019 AGM.
P R I N C I P A L A C T I V I T I E S I N 2 0 1 8
of JTC team members with an aggregate value of £150,000. These awards are
The Remuneration Committee has decided, as a matter of good corporate
In the lead-up to Admission, in anticipation of becoming a PLC, the Board
expected to be made in April 2019.
reviewed certain aspects of senior remuneration to ensure an appropriate
remuneration structure and strategy was in place.
F O C U S F O R 2 0 1 9
governance, to adhere to the requirements of the UK remuneration reporting
regulations whenever practicable although, as a Jersey registered company, the
Company is not technically required to do so. The UK remuneration reporting
In the coming year the Remuneration Committee will consider a number of
regulations contain provisions which make Shareholder approval of the policy
for a grant of discretionary nil cost share awards under the DBSP to a wide range
Following the listing, the principal activities were as follows:
matters including:
of UK-incorporated companies binding. As the Company is not UK incorporated
those provisions have no legal effect. However, the Company has taken steps
> Reviewed and approved the Terms of Reference of the Committee
> Assessment of Group performance against 2019 budget and
to limit the power of the Remuneration Committee so that, with effect from
> Reviewed the JTC Remuneration Policy
determination of bonus awards
the date on which the policy on remuneration is approved by Shareholders, the
> Reviewed the annual salaries for the Executive Directors for 2018 and
> Approval of bonus performance measures and targets for 2019
Committee may only authorise payments to Directors that are consistent with
approved increases for 2019
> Approval of performance conditions and awards under the 2019 PSP
the policy as approved by Shareholders. In that way the Company considers the
> Reviewed the annual bonus targets for the Executive Directors for 2018
> Review of any issues raised by shareholders in relation to remuneration
vote of Shareholders on the policy to be binding in its application.
and measured performance against them
and the Remuneration Policy
> Agreed the annual bonus targets for the Executive Directors for 2019
> Assessment of the ongoing appropriateness of the remuneration
The Policy explains the purpose and principles underlying the structure
> Approved awards to employees under the Long-Term Incentive Plans
arrangements in light of remuneration trends and market practice
of remuneration packages and how the Policy links remuneration to the
(LTIP), with appropriate performance measures, bonus deferral shares and
achievement of sustained high performance and long-term value creation.
malus and claw-back provision
The Committee believes that the total remuneration package for each
R E M U N E R A T I O N P O L I C Y O V E R V I E W
remuneration. It will seek to reward personal and corporate outperformance
retain high calibre colleagues necessary for business success whilst ensuring that:
Executive Director represents an appropriate balance between fixed and variable
Overall remuneration is structured and set at levels to enable JTC to recruit and
The principal objectives of the Company’s Remuneration Policy are to attract,
whilst ensuring overall awards are broadly in line with FTSE 350 levels.
retain and motivate the Group’s Executive Directors and senior management,
provide incentives that align with, and support, the Group’s business strategy as
R E S O L U T I O N S A T T H E A G M
> Our reward structure, performance measures and mix between fixed and
variable elements is comparable with similar organisations
it evolves, and align incentives with the creation of long-term Shareholder value.
Shareholders will be asked to vote on our Remuneration Policy on page 81
> Rewards are aligned to the strategy and aims of the business
The Remuneration Committee oversees the implementation of this policy and
seeks to ensure that the Executive Directors are fairly rewarded for the Group’s
to 85 of this Annual Report, which will remain in place for three years from
the date of approval, and on the Annual Report on Remuneration at the 2019
> The approach is simple to communicate to participants and Shareholders
> Particular account has been taken of structures used within FTSE 350
performance over the short, medium and long term. Taking typical practice into
AGM. The vote on the Remuneration Policy will be binding and the vote on
companies, and other comparable organisations
account, the Committee has decided that a significant proportion of potential
the Remuneration Report will be advisory. I look forward to your support on
total remuneration should therefore be performance-related. In readiness for
both resolutions.
Admission, the Committee approved the rules for a Performance Share Plan
(“PSP”), a Deferred Bonus Share Plan (“DBSP”) and an Employee Incentive Plan
I would like to thank the other members of the Committee, management and
(“EIP”). Basic salary, bonus and PSP levels were agreed for the Executive Directors
the Group’s employees for their support during the year.
taking into account their service with JTC and experience in the role.
Prior to Admission a benchmarking exercise was conducted to establish expected
remuneration for both executive positions. It was concluded that the proposed
salaries were low in comparison to the market and the nature and complexity
of the business and their roles. It was agreed, therefore, that the salaries would
be reviewed following the first year of trading as a listed company, with any
disparity being addressed by way of incremental increases over the next two
years in accordance with the standard JTC salary review cycle.
M I C H A E L G R A Y
C H A I R O F T H E R E M U N E R A T I O N C O M M I T T E E
2 April 2019
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R E M U N E R A T I O N P O L I C Y
C O N T I N U E D
F I X E D E L E M E N T S O F R E M U N E R A T I O N F O R E X E C U T I V E D I R E C T O R S
E L E M E N T O F
R E M U N E R A T I O N
P U R P O S E A N D L I N K
T O C O M P A N Y
S T R A T E G Y
O P E R A T I O N
M A X I M U M O P P O R T U N I T Y
E L E M E N T O F
R E M U N E R A T I O N
P U R P O S E A N D L I N K
T O C O M P A N Y
S T R A T E G Y
O P E R A T I O N
M A X I M U M
O P P O R T U N I T Y
P E R F O R M A N C E
M E T R I C S
Provides a set level of
The Committee takes into account a number
There is no set maximum to salary levels
Variable remuneration that
Objectives are set annually
Up to 50% of salary in
Awards are based on financial,
remuneration sufficient to
of factors when setting and reviewing salaries,
or salary increases. Account will be taken
rewards the achievement of
based on the achievement
2018 for the CEO and CFO.
operational and individual
attract and retain Executives
including:
with the appropriate
of increases applied to colleagues as a
whole when determining salary increases
annual financial, operational
of strategic goals.
In the event the Executive
goals set at the start of the
and individual objectives
At the end of the year,
Directors are in receipt of
year. The Committee reserves
experience and expertise.
> Scope and responsibility of the role
for the Executive Directors. However,
integral to Company strategy.
the Committee meets to
a bonus equating to more
the right to make an award of
S A L A R Y
> Any changes to the scope or size of the role
the Committee retains the discretion
> The skills and experience of the individual
to award higher increases where it
> Salary levels for similar roles within
considers it appropriate, especially
appropriate comparators
where salary at the outset has been set
> Value of the remuneration package
at a relatively low level.
as a whole
A N N U A L B O N U S
Provides benefits sufficient to
Executive Directors are entitled to the
The Committee recognises the need
attract and retain Executives
following benefits:
with the appropriate
experience and expertise.
> Life assurance
B E N E F I T S
> Pension contributions
> Private medical insurance
to maintain suitable flexibility in the
benefits provided to ensure it is able to
support the objective of attracting and
retaining personnel in order to deliver
the Company strategy. The maximum
review performance against
than 50% of their base
a different amount produced
the agreed objectives and
salary then this additional
by achievement against the
determines payout levels.
amount will be deferred
measures if it believes the
into the DBSP for a further
outcome is not a fair reflection
three years.
of Company performance.
The split between these
performance measures will
be determined annually by
the Committee.
Variable remuneration
Awards granted under
Up to 75% of salary
Performance measures are
designed to incentivise and
the PSP vest subject
in 2018 for the CEO
currently EPS and relative
reward the achievement
to achievement of
and CFO. Up to 25%
TSR, with equal weighting
> Certain de minimis benefits in kind
will be set at the cost of providing the
of long-term targets
performance conditions
of salary in 2018 for
given to each measure.
Executive Directors are also eligible to participate
in the annual bonus plan and long term
incentive plan.
benefits described. One-off payments
such as legal fees or outplacement
costs may also be paid if it is
considered appropriate.
aligned with shareholder
measured over a three-year
Senior Management.
The Committee reserves the
interests. The LTIP also
period. PSP awards may be
right to adjust the measures
provides flexibility in the
made as conditional share
In any financial year, the
before awards are granted
retention and recruitment of
awards or in other forms
total market value of
to reflect relevant strategic
P E R F O R M A N C E
Executive Directors.
(e.g. nil cost options) if it
shares over which awards
targets. The Committee
Provides pension
Executive Directors are eligible to receive
Up to 10% of salary per annum.
P E N S I O N S
attract and retain Executives
Occupational Retirement plan.
contributions sufficient to
employer contributions to the Group
S H A R E
P L A N
( “ P S P ” )
with the appropriate
experience and expertise.
is considered appropriate.
can be made under the PSP
reserves the right to adjust
Accrued dividends may
to any participant cannot
the outcome produced by
be paid in cash or shares,
normally exceed 150% of
achievement against the
to the extent that awards
their annual base salary,
measures if it believes the
vest. The Committee
but the plan rules will
outcome is not a fair reflection
may adjust and amend
allow the Remuneration
of Company performance.
awards in accordance
Committee the discretion
with the PSP rules, malus
to award up to 250%
and clawback provisions.
of annual base salary in
may be applied in
exceptional circumstances.
exceptional circumstances.
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C O N T I N U E D
E L E M E N T O F
R E M U N E R A T I O N
P U R P O S E A N D L I N K
T O C O M P A N Y
S T R A T E G Y
O P E R A T I O N
M A X I M U M
O P P O R T U N I T Y
P E R F O R M A N C E
M E T R I C S
The Company attaches
All employees of the
The DBSP is designed
The vesting of an award
considerable importance to
Company and its
to incentivise high
and receipt of shares may be
the role of performance-
subsidiaries including
performance and may
subject to the achievement of
based bonuses to drive
Executive Directors will
include further financial
other conditions to be set by
profitability and business
be eligible to participate
and non-financial
the Remuneration Committee
growth and to the importance
in the DBSP. It is currently
performance measures,
at the date of grant.
of the senior managers’
intended that Executive
the precise measures and
interests being aligned with
Directors, Senior Managers
targets will be reviewed
the interests of shareholders.
and certain managers
by the Remuneration
Executive Directors and Senior
below Senior Manager level
Committee each year.
D E F E R R E D
B O N U S S H A R E
P L A N
( “ D B S P ” )
Management are eligible for
will participate.
an annual bonus designed to
incentivise high performance
The Executive Directors will
based on financial and
participate to the extent
non-financial performance
that their annual bonus
measures. In line with market
exceeds 50% of their base
practice, a portion of the
year annual salary.
bonus due, as determined
by the Remuneration
Committee, may be required
to be deferred into shares
before it is paid. In addition,
certain managers below
Executive Director and Senior
Management level may be
selected to participate in
the DBSP.
E M P L O Y E E
I N C E N T I V E
P L A N
The Company attaches
All employees of the
The EIP will not include
The EIP is designed to
considerable importance to
Company and its
any individual limits but
incentivise high performance
the role of performance-
subsidiaries (excluding all
it is intended that, except
and may include financial and
based bonuses to drive
Executive Directors and
potentially in exceptional
non-financial performance
profitability and business
Senior Managers) will
cases, awards would
measures, the precise
growth and to the importance
be eligible to be granted
typically be a fraction of
measures and targets will be
of wider all employee share
an award under the
the participant’s salary.
reviewed by the Committee
and/or performance based
EIP at the discretion of
incentives to align employees’
the Committee.
interests with the interests
of shareholders. The EIP has
Executive Directors and
been adopted to further
Senior Managers are not
those aims.
be eligible to participate in
the EIP.
each year.
N O T E S T O T H E P O L I C Y T A B L E
The Remuneration Committee recognises that it may be necessary in some
All PSP awards made in respect of the 2018 financial year onwards to Executive
circumstances to provide compensation for amounts foregone from a previous
Directors are subject to malus and claw-back provisions. The Committee may,
employer (‘buyout awards’). Any buyout awards would be limited to what is felt
in its absolute discretion, determine to reduce the number of shares to which
to be a fair estimate of the value of remuneration foregone when leaving the
an award or option relates or cancel it altogether. Alternatively, the Committee
former employer and would be structured so as to be, to the extent possible, no
could impose further conditions on the vesting or exercise of an award or option.
more generous in terms of the fair value and other key terms (e.g. time to vesting
and performance targets) than the incentives it is replacing.
R E M U N E R A T I O N P O L I C Y F O R O T H E R E M P L O Y E E S
As with the Executive Directors, salary for other employees is set at a level
T E R M I N A T I O N P O L I C Y
sufficient to attract and retain them, taking into account their experience and
In the event of termination, service contracts provide for payments of base salary,
expertise. Remuneration packages comprise salaries plus cash bonuses and/or
pension and benefits only over the notice period. There is no contractual right to
employee share awards.
any bonus payment in the event of termination although in certain “good leaver”
circumstances the Remuneration Committee may exercise its discretion to pay
The Group regards membership of its share plans (as described at pages 83 and
a bonus for the period of employment and based on performance assessed after
84) as a key part of its reward strategy which also aligns with the interests of
the end of the financial year.
employees and other stakeholders. Most employees receive benefits such as
individual medical cover, permanent health insurance and life assurance.
The default treatment for any share-based entitlements under the Share Plans is
that any outstanding awards lapse on cessation of employment. However, in certain
P E R C E N T A G E C H A N G E I N C E O R E M U N E R A T I O N
prescribed circumstances, or at the discretion of the Remuneration Committee,
C O M P A R E D W I T H E M P L O Y E E S
“good leaver” status can be applied. In these circumstances a participant’s awards
The Committee acknowledges the introduction of new regulations requiring UK
will, ordinarily, vest subject to the satisfaction of the relevant performance criteria
incorporated quoted companies with more than 250 UK employees to publish
and on a time pro-rata basis, with the balance of the awards lapsing.
their CEO pay ratios and its relevance to reviewing remuneration levels in the
wider workforce when setting executive pay. Notwithstanding that, as a non-UK
S H A R E O W N E R S H I P G U I D E L I N E S
incorporated company with fewer than 250 UK employees, JTC is not required
In accordance with good practice and further aligning Executive Directors with
to adhere to the CEO pay regulations, the Committee is keen to ensure that
the long-term interests of the Company, Executive Directors are required to
disclosure in relation to executive pay is consistent with the UK Corporate
build or maintain a shareholding equivalent to 150% of their annual base salary.
Governance Code. Over the course of the remainder of 2019, the Committee
Both Executive Directors will hold a significant shareholding, as detailed at page 87.
will be exploring the regulations in detail in readiness for making an appropriate
voluntary disclosure in the 2019 report and accounts.
A P P O I N T M E N T O F D I R E C T O R S
R E C R U I T M E N T P O L I C Y
At every AGM, each of the Directors on the Board will retire. A Director who
retires at an Annual General Meeting may be re-appointed if they are willing to
Consistent with best practice, new senior management hires (including those
act as a Director.
promoted internally) will be offered packages in line with the Remuneration Policy
in force at the time. It is the Remuneration Committee’s policy that no special
This Annual Report sets out how the Directors’ Remuneration Policy of the
arrangements will be made, and in the event that any deviation from standard
Company has been applied since Admission and how the Committee intends to
policy is required to recruit a new hire, approval would be sought at the AGM.
apply the policy going forward. An advisory shareholder resolution to approve
this Report will be proposed at the AGM.
F I X E D E L E M E N T S O F R E M U N E R A T I O N F O R E X E C U T I V E D I R E C T O R S
E L E M E N T O F
R E M U N E R A T I O N
P U R P O S E A N D L I N K T O
C O M P A N Y S T R A T E G Y
O P E R A T I O N
M A X I M U M
O P P O R T U N I T Y
N O N -
E X E C U T I V E
D I R E C T O R F E E S
Fees are set at a level to reflect the
The fees paid to the Non-Executive
Fee levels are set by reference
amount of time and level of involvement
Directors are determined by the Board
to Non-Executive Director fees
required in order to carry out their
as a whole. Additional fees are payable
at companies of similar size and
duties as members of the Board and its
for acting as Senior Independent Director
complexity and general increases
Committees, and to attract and retain
and as Chair of the Board’s Audit and Risk
for salaried employees within
Non-Executive Directors of the highest
Committee and Remuneration Committee.
the Company.
calibre with relevant commercial and
other experience.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS A N N U A L R E P O R T O N R E M U N E R A T I O N
A L I G N I N G R E M U N E R A T I O N
T O T H E L O N G - T E R M S U C C E S S
O F T H E C O M P A N Y
For 2018 the award parameters are:
Floor (25% award) 80% * 20.59 pence = 17.03 pence
100% award would be earned for EPS of 20.59 pence
A ) A U D I T E D S E C T I O N O F T H E R E M U N E R A T I O N R E P O R T
S I N G L E T O T A L F I G U R E O F R E M U N E R A T I O N – E X E C U T I V E D I R E C T O R S
The following tables set out the aggregate emoluments earned by the Directors in the year ended 31 December 2018.
R E M U N E R A T I O N P A Y A B L E T O E A C H D I R E C T O R F O R S E R V I C E I N 2 0 1 8 .
The table below sets out the remuneration payable to each Executive Director for the period from Admission (14 March 2018) to 31 December 2018. The disclosures
are in respect of qualifying services and are based on full financial years (1 January to 31 December). It should be noted that salary increases received during the
year took effect from 1 April 2018. The remuneration for each Executive Director in 2018 excludes share awards and EBT distributions payable for the period prior to
Admission (14th March 2018).
Executive Directors
CEO
CFO
Salary*
Benefits
Pension**
Bonuses
PSP
Total
288,986
220,753
15,228
5,376
28,899
144,000
0
110,000
61,126
46,693
538,239
382,822
The performance measures associated with each award are clear and no conclusions will be made until vesting. Such awards are subject to final approval by the
Remuneration Committee.
P E R F O R M A N C E S H A R E P L A N A W A R D S 2 0 1 9
PSP awards with a face value of 75% of salary will be granted to Executive Directors in 2019. The Remuneration Committee reviewed the choice of measures and in
light of the Company’s strategic outlook has set a stretching range of adjusted underlying EPS growth targets required to be achieved in the year ending 31 December
2021 as set out below:
50% TSR target is set by the Remuneration Committee on the basis of performance against an agreed comparator group / 50% EPS target based upon consensus
broker forecasts.
Upon achieving consensus target of 27.04 pence 100% of the awards vests. On achievement of 21.63 pence (80% of 27.04 pence) 25% of the award will vest.
Between 21.63 pence and 27.04 pence awards will increase linearly from 25% to 100%.
A two year post-vest holding period will apply, creating a five year period between the grant of an award and the first opportunity to sell (net of tax) the vested shares.
B ) U N A U D I T E D S E C T I O N O F T H E R E M U N E R A T I O N R E P O R T
* Effective as of 1 April 2018 the CEO and CFO’s salaries were £360,000 per annum and £275,000 per annum respectively.
E X T E R N A L A P P O I N T M E N T S
** An employer’s pension contribution of 10% is included in the CFO’s salary. The CFO has elected permanently to opt-out of the Company’s pension scheme.
Executive Directors are permitted to accept appointments outside the Company, with the prior approval of the Board. Any fees may be retained by the Director,
although this is at the discretion of the Board. During 2018 and at the date of this Report, none of the Executive Directors hold external appointments for which they
2 0 1 8 A N N U A L B O N U S
retain a fee.
JTC operates an annual discretionary performance incentive award, this is separate to the Deferred Bonus Share plan detailed in this report. Employees are assessed
against financial and non-financial performance measures through JTC’s annual appraisal process. Our three year Business Plan provides due clarity for Group,
F E E S F O R T H E N O N - E X E C U T I V E C H A I R M A N A N D D I R E C T O R S
divisional and departmental goals, which is supplemented by individual performance and development priorities. While continuous performance monitoring is
The Company’s Chairman and the other Non-Executive Directors do not participate in any of the Company’s incentive arrangements or receive any pension provision.
conducted, success against objectives (or goals as we prefer to call them) and behaviours (JTC values) are assessed annually. Each are graded out of a possible score
of 5 (10 in total).
The fees were agreed on appointment of the Non-Executive Directors on 19 February 2018. A summary of current fees is shown below for the period from
The 2018 annual bonus performance measures were selected to reflect JTC’s annual and long-term objectives and reflect financial and strategic priorities, as
appropriate. Performance targets are set to be stretching and achievable, taking into account a range of reference points including the strategic plan and broker
forecasts, as well as the Group’s strategic priorities and the external context.
A critical element of our appraisal process is moderation. The science behind the bonus awards is to ensure that the individual performance ratings are as fair and
consistent as possible. To eliminate bias a rigorous moderation process is carried out at all levels of the Company. Executives are subject to an internal moderation
process before a second moderation is conducted by the Remuneration Committee. A performance = reward grid is used as a fair measure for cash awards to be
allocated as a % of salary.
appointment to 31 December 2018:
Non-Executive Directors
Michael Liston
Dermot Mathias
Michael Gray
Annual Fee
100,000
75,000
70,000
Fees Paid 2018
Benefits
Pension
Bonuses
PSP
Total Paid 2018
79,589
70,583
60,506
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
79,589
70,583
60,506
D I R E C T O R S ’ I N T E R E S T S I N S H A R E S
Following Admission in March 2018 the Executive Directors have significant shareholdings in the Company, as follows:
P E R F O R M A N C E S H A R E P L A N A W A R D S W I T H P E R F O R M A N C E P E R I O D E N D I N G D U R I N G T H E Y E A R
2 0 1 8 P E R F O R M A N C E S H A R E P L A N G R A N T S
Legally owed as at 31 December 2018
Subject to Restriction Period
(to 14 March 2020)
Unvested PSP awards
% interest in voting rights
Executive Directors
CEO
CFO
CEO
CFO
No. of shares
awarded
Fair value of
Award
Expensed
31.12.18
Annual
Financial
Statements
68,182
£229,432
£61,126
52,083
£175,259
£46,693
Annual Salary Max. Award (%) Max. Award (£)
Share Price
Share Award
(100%)
Performance Measures
Vesting Date
£360,000
£275,000
75
75
£270,000
£206,250
£3.96
£3.96
68,182
TSR (50%)
EPS (50%)
52,083
TSR (50%)
EPS (50%)
Dec-20
Dec-20
Executive Directors
Nigel Le Quesne*
Martin Fotheringham
Non-Executive Directors
Michael Liston
Dermot Mathias
Michael Gray
10,444,128
718,586
32,797
25,863
17,242
10,444,128
671,786
32,797
25,863
17,242
61,126
46,693
N/A
N/A
N/A
9.42%
0.65%
0.03%
0.02%
0.02%
*
Includes Ordinary Shares held by Ocean Drive Holdings Limited, a company in which Nigel Le Quesne is beneficially interested.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
D I R E C T O R S ’ R E P O R T
The Directors of JTC present their Report and the audited financial statements
C O M P A N Y S T A T U S
D I R E C T O R S
for the period ended 31 December 2018.
JTC PLC is public company incorporated in Jersey. It is listed on the London Stock
The Directors of the Company who were in office during the year, and up to
Additional information which is incorporated by reference into this Directors’
Report, including information required in accordance with the Listing Rules 9.8.4R
S U B S I D I A R Y C O M P A N I E S
Exchange main market with a premium listing.
the date of the signing of the financial statements, are set out on pages 58
to 59. The Board shall consist of no fewer than two Directors. Copies of the
Executive Directors’ service contracts are available to Shareholders for inspection
of the UK Financial Conduct Authority’s listing rules, can be located as follows:
JTC operates through a number of subsidiaries in various different countries.
at the Company’s registered office and at the Annual General Meeting (AGM).
Standard Life Aberdeen plc
Franklin Templeton Fund Management Limited
Quilter PLC
Old Mutual Global Investors (UK) Limited
As at 8 March 2019
% interest in voting rights
7.75
4.91
0
0
Statutory information
Section
Employee Involvement
Strategic Report
Employee Diversity and
Strategic Report
Page
35 – 40
40, 71
The list of subsidiaries is available at note 35 to the Financial Statements on
Details of the Directors’ remuneration and service contracts and their interests
pages 151 to 152 .
in the shares of the Company are set out on page 87.
S H A R E C A P I T A L
C O M P L I A N C E W I T H T H E U K C O R P O R A T E
A P P O I N T M E N T A N D R E P L A C E M E N T O F D I R E C T O R S
capital during the year are shown in the Consolidated Statement of Changes in
The issued share capital of the Group and the details of movements in share
Disabilities
Strategic Report
Nomination Committee Report
G O V E R N A N C E C O D E
Directors may be appointed by ordinary resolution of the Shareholders , or by the
Equity shown on page 103 of the Financial Statements. The holders of the shares
It is a requirement of Listing Rule 9.8.7R that as an overseas company with a
Board. Appointment of a Director from outside the Group is on the recommendation
are entitled to receive dividends when declared, to receive a copy of the Annual
Executive Share Ownership
Annual Report on
83 – 84
premium listing JTC must comply with the Code or explain in its Annual Report
of the Nomination Committee, whilst internal promotion is a matter decided by
Report and accounts, to attend and speak at general meetings of the Company,
and Benefit Plans
Remuneration
and accounts any areas of non-compliance and the Company’s reasons for this.
the Board unless it is considered appropriate for a recommendation to be requested
to appoint proxies and to exercise voting rights.
Employee Long-Term
Annual Report on
83 – 84
As at the date of this Report, the Company complies with the UK Corporate
from the Nomination Committee. At every AGM of the Company, any of the
Incentive Plans
Remuneration
Community
Strategic Report
16 – 17, 35,
Corporate Governance Report
42 – 43, 76 – 77
Directors’ Biographies
Corporate Governance Report
58 – 59
– Board of Directors
Executive Share Plans
Annual Report on
81 – 85
Remuneration
Future Developments
Strategic Report
14 – 15, 18 -22
of the Business
Financial position of
CFO’s Review
the Group, its cash flow,
Financial Statements
46 – 49
100 – 152
liquidity position and
borrowing facilities
Governance Code published by the Financial Reporting Council (the “Code”) to
Directors who have been appointed by the Board since the last AGM shall seek
The rights attached to the shares are provided by the Company’s Articles of
the extent applicable to “smaller companies” (being those outside the FTSE 350)
other than the following exception:
election by the members. Notwithstanding provisions in the Company’s Articles of
Association, the Board has agreed, in accordance with the UK Corporate Governance
Association, which may be amended or replaced by means of a special resolution
of the Company in a general meeting. The Directors’ powers are conferred on
Provision B.6.1 of the Code states that the Board should report in the Annual
eligible, offer themselves for re-election by the Shareholders at the 2018 AGM.
admitted to trading on the London Stock Exchange and may be traded through
Code (Provision B.7.1) all of the Directors wishing to continue will retire and, being
them by Jersey company law and by the Articles of Association. Shares are
Report how performance evaluation of the Board, its Committees and its
the CREST system.
individual directors has been conducted. As the Board was only appointed in
D I R E C T O R S ’ I N D E M N I T Y
March 2018 a formal performance evaluation was not undertaken during the
Directors’ and officers’ liability insurance is maintained by the Company.
A L L O T M E N T O F S H A R E S
year. The effectiveness of the Board and of the Board and Committee Meetings
is a standing agenda items at the Board’s six scheduled meetings a year. A formal
P O W E R S O F T H E D I R E C T O R S
The Shareholders have generally and unconditionally authorised the Directors to
allot relevant securities up to two-thirds of the nominal authorised share capital.
performance evaluation of the Board, its Committees and its individual directors
Subject to the Company’s Articles of Association, the Companies (Jersey) Law
It is the Directors’ intention to seek the renewal of this authority in line with the
will be conducted in 2019 in accordance with the three year evaluation cycle
1991, as amended, and any directions given by special resolution, the business
guidance issued by the Investment Association. The resolution will be set out in
detailed at page 70 of the Nomination Committee’s report.
of the Company will be managed by the Board who may exercise all the powers
the notice of the AGM.
of the Company, whether relating to the management of the business of the
Human Rights and Modern
Strategic Report
40
F O R W A R D - L O O K I N G S T A T E M E N T S
Company or not. In particular, the Board may exercise all the powers of the
In 2018 JTC agreed to acquire Van Doorn CFS B.V. (“Van Doorn”) and Minerva
Anti-Slavery Statement
This annual report contains certain forward-looking statements. By their nature,
Company to borrow money, to guarantee, to indemnify, to mortgage or charge
Holdings Limited and MHL Holdings SA (together with its subsidiaries “Minerva”)
Independent Auditor
Audit and Risk
72 – 74, 94 – 99
any statements about the future outlook involve risk and uncertainty because they
any of its undertakings, property, assets (present and future) and uncalled capital
as part of these transactions it agreed to pay part of the consideration in shares.
Committee Report
Audit Opinion
Internal Controls and Risk
Strategic Report
30 – 37
Management
Corporate Governance Report
73
Significant related
Note 34.2 to the consolidated
151
party transactions
financial statements
Subsidiary and Associated
Note 35 to the consolidated
151 – 152
Undertakings
financial statements
Statement of Corporate
Corporate Governance Report
54, 88
Governance
Directors’ Report
Audit and Risk
Committee Report
Corporate Governance Report 72 – 75
relate to events and depend on circumstances that may or may not occur in the
and to issue debentures and other securities and to give security for any debt,
The Van Doorn transaction completed on 28 September 2018 and Minerva on
future. Actual results, performance or outcomes may differ materially from any
liability or obligation of the Company or of any third party.
20 November 2018.
results, performance or outcomes expressed or implied by such forward-looking
statements. Each forward looking statement speaks only as of the date of that
S T A T E M E N T O F D I R E C T O R S ’ R E S P O N S I B I L I T I E S
It is the Board’s intention to propose that an additional special resolution be
particular statement. No representation or warranty is given in relation to any
Our statement on Director’s Responsibilities has been provided on page 91 of
passed at the AGM to allow the Company to allot equity securities up to a
forward-looking statements made by JTC, including as to their completeness or
accuracy. Nothing in this Report and accounts should be construed as a profit
this Report.
forecast. Both the Strategic Report and the Directors’ Report have been drawn up
M A T E R I A L I N T E R E S T I N S H A R E S
further 5% of the Company’s issued share capital for transactions which the
Board determines to be an acquisition or other capital investment.
and presented in accordance with and in reliance upon applicable Jersey Company
Up to year-end being 31 December 2018 and as at 8 March 2019, being the latest
P U R C H A S E O F S H A R E S
law, and the liabilities of the Directors in connection with these Reports shall be
practicable date before the publication of the report, the following disclosures
The Shareholders approved the authority for the Company to buy back up to
subject to the limitations and restrictions provided by such law.
of major holdings in voting rights have been made to the Group pursuant to
10% of its own ordinary shares by market purchase until the conclusion of the
R E S U L T S A N D D I V I D E N D S
Rule 5 DTR.
Governance Report
Corporate Governance Report 50 – 91
The financial statements set out the results of the Group for the financial year
Directors’ Remuneration
Corporate Governance Report 86 – 87
ended 31 December 2018 and are shown on page 92. The Directors recommend
Report
Nomination Committee
Report
Nomination Committee Report 69 – 71
Strategic Report
Strategic Report
Viability Statement
Strategic Report
50 – 91
63
a final dividend of 2 pence per ordinary share for the year ended 31 December
2018. Taken together with the interim dividend of 1 pence per ordinary share
paid in October 2018, makes a total dividend for the year of 3 pence per
ordinary share. Subject to approval by Shareholders of the recommended final
dividend, the dividend to Shareholders for 2018 will total £2.25m. If approved,
the Company will pay the final dividend on 21 June 2019 to Shareholders on the
register of members at 31 May 2019.
AGM to be held this year. The Directors will seek to renew this authority for up to
10% of the Company’s issued share capital at the forthcoming AGM. This power
will only be exercised if the Directors are satisfied that any purchase will increase
the earning per share of the ordinary share capital in issue after the purchase and
accordingly, that the purchase is in the interest of Shareholders.
A R T I C L E S O F A S S O C I A T I O N
The Company’s Articles of Association set out its internal regulations and cover
the rights of Shareholders , the appointment of Directors and the conduct of
Board and general meetings. Copies of the Articles of Association are available
upon request from the Group Company Secretary, and at JTC’s AGM.
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C O N T I N U E D
S T A T E M E N T O F D I R E C T O R S ’ R E S P O N S I B I L I T I E S
S H A R E D E A L I N G C O D E
D I S C L O S U R E T O T H E A U D I T O R S
D I R E C T O R S ’ R E S P O N S I B I L I T Y S T A T E M E N T
R E S P O N S I B I L I T Y S T A T E M E N T O F T H E D I R E C T O R S I N
JTC has adopted a share dealing code which applies to the Company’s Directors,
The Directors who held office at the date of the approval of this Directors’ report
The Directors are responsible for preparing the Annual Report and the Group
R E S P E C T O F T H E A N N U A L F I N A N C I A L R E P O R T
its other PDMRs and certain persons deemed insiders. In accordance with the
confirm that so far as they are aware, there is no relevant audit information of
financial statements in accordance with applicable laws and regulations.
We confirm that to the best of our knowledge:
Market Abuse Regulation, the Directors and PDMRs are responsible for procuring
which the Company’s Auditor is unaware and each Director has taken all the
the compliance of their respective connected persons with the JTC share dealing
necessary steps to make themselves aware of any relevant audit information and
Company law requires the Directors to prepare Group financial statements for
> The Financial Statements, prepared in accordance with the applicable set
code. The share dealing code has been published on the JTC intranet and further
to establish that the Company’s Auditor is aware of that information.
each financial year. Under that law they are required to prepare the financial
of accounting standards, give a true and fair view of the assets, liabilities,
training will be provided on an ongoing basis to all of the JTC team.
statements in accordance with International Financial Reporting Standards
financial position and profit or loss of the Company and the undertakings
P O S T B A L A N C E S H E E T E V E N T S
The Board and the Chairman of each of the Board’s Committees will be present
> The Strategic Report (contained on pages 50 to 91) includes a fair review
Details of post-balance sheet events are given in note 36 of the financial
to answer questions put to them by Shareholders . Proxy appointment forms for
Under company law the Directors must not approve the financial statements
of the development and performance of the business and the position of
statements at page 152.
each resolution provide Shareholders with the option to direct their proxy vote
unless they are satisfied that they give a true and fair view of the state of affairs
the issuer and the undertakings included in the consolidation taken as a
on resolutions or to withhold their vote. All votes are counted by JTC’s Registrars
of the Group and of their profit or loss for that period. In preparing each of the
whole, together with a description of the principal risks and uncertainties
P O L I T I C A L D O N A T I O N S
and the voting results will be announced through the RNS, and made available
Group financial statements, the Directors are required to:
that they face; and
JTC has not made any donations to any political party.
on our website www.jtcgroup.com.
> The directors consider the Annual Report, taken as a whole, is fair,
A N N U A L G E N E R A L M E E T I N G
(IFRSs) as adopted by the European Union and applicable law.
included in the consolidation taken as a whole;
A U D I T O R S
Notice of the first AGM to be held on 21 May 2019 at 10.30am at our offices in
> Make judgements and estimates that are reasonable and prudent
shareholders to assess the Group’s position, performance, business model
PricewaterhouseCoopers CI LLP, which was re-appointed in 2018, has expressed its
willingness to continue in office as the Group’s Auditor and accordingly, resolutions
JTC House, 28 Esplanade, St. Helier, Jersey, JE2 3QA can be viewed or downloaded
from the Company’s website, jtcgroup.com. At that meeting, Shareholders will
> State whether applicable accounting standards have been followed,
subject to any material departures disclosed and explained in the
and strategy.
to reappoint it and to authorise the Directors to determine its remuneration will be
be asked to vote separately on the Annual Report and on the Report on Directors’
Financial Statements
Approved by the Board on 2 April 2019 and signed on its behalf by:
> Select suitable accounting policies and then apply them consistently
balanced and understandable and provides the information necessary for
proposed at the AGM. These are resolutions 5 and 6 set out in the Notice of Meeting.
Remuneration. Separate resolutions will also be proposed on every substantive
> Prepare the financial statements on the going concern basis unless it is
issue. A poll will be held on each resolution to ensure that the votes of the
inappropriate to presume that the Group and the parent company will
G O I N G C O N C E R N
Shareholders unable to attend the meeting are taken into account, and results of
continue in business
Under Provision C.1.3 of the UK Corporate Governance Code, the Board is
the voting will be placed on our website as soon as possible after the meeting.
required to report whether the business is a going concern. In considering this
requirement, the Directors have taken into account the following:
The Directors confirm that they have applied with all the above requirements in
preparing the Financial Statements.
M I R A N D A L A N S D O W N E
J O I N T C O M P A N Y S E C R E T A R Y
J T C ( J E R S E Y ) L I M I T E D , C O M P A N Y S E C R E T A R Y
> The Group’s latest rolling forecast for the next three years, in particular
the cash flows, borrowings and undrawn facilities. Sensitivity analysis is
included within these forecasts;
N I G E L L E Q U E S N E ,
C H I E F E X E C U T I V E O F F I C E R
On behalf of the Board of JTC plc
> The headroom under the Group’s financial covenants; and
2 April 2019
> The risks included on the Group’s risk register that could impact on the
Group’s liquidity and solvency over the next 12 months.
Having due regard to these matters and after making appropriate enquiries, the
Directors have a reasonable expectation that the Group and Company have
adequate resources to continue in operational existence until at least April 2020.
Therefore, the Board continues to adopt the going concern basis in preparing the
financial statements.
The Directors are responsible for keeping proper accounting records that are sufficient
to show and explain the Group’s transactions and disclose with reasonable accuracy
at any time the financial position of the Group and enable them to ensure that
its financial statements comply with the Companies (Jersey) Law 1991. They are
also responsible for safeguarding the assets of the Group and hence for taking
reasonable steps for the prevention and detection of fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible for
preparing a Strategic Report, Directors’ Report, Directors’ Remuneration
Report and Corporate Governance Statement that complies with that law and
those regulations.
The Directors are responsible for the maintenance and integrity of the corporate
and financial information included on the Company’s website. Legislation in the
UK governing the preparation and dissemination of financial statements may
differ from legislation in other jurisdictions.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS S H A R P E R T O G E T H E R
The complexity faced by our clients is immense and
ever-increasing. Our vision enables us to bring distant
issues into sharp focus and we apply our formidable
collective experience to navigate a path to the right
answer for each and every client.
Formidable. Experienced. Focused. Sharp.
F I N A N C I A L S T A T E M E N T S :
100 Consolidated Income Statement
101 Consolidated Statement of Comprehensive Income
102 Consolidated Balance Sheet
103 Consolidated Statement of Changes in Equity
104 Consolidated Cash Flow Statement
105 Notes to the Consolidated Financial Statements
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS I N D E P E N D E N T A U D I T O R ’ S R E P O R T
T O T H E M E M B E R S O F J T C P L C
R E P O R T O N T H E A U D I T O F T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
O U R O P I N I O N
In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of JTC PLC (the “Company”) and its subsidiaries
(together the “Group”) as at 31 December 2018, and of their consolidated financial performance and their consolidated cash flows for the year then ended in
accordance with International Financial Reporting Standards as adopted by the European Union and have been properly prepared in accordance with the requirements
of the Companies (Jersey) Law 1991.
W H A T W E H A V E A U D I T E D
The Group’s consolidated financial statements comprise:
> the consolidated balance sheet as at 31 December 2018;
> the consolidated income statement for the year then ended;
> the consolidated statement of comprehensive income for the year then ended;
> the consolidated statement of changes in equity for the year then ended;
> the consolidated cash flow statement for the year then ended; and
> the notes to the consolidated financial statements, which include a summary of significant accounting policies.
B A S I S F O R O P I N I O N
A U D I T S C O P E
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the consolidated financial statements. In particular,
we considered where the directors made subjective judgements; for example, in respect of significant accounting estimates that involved making assumptions and
considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of management override of internal controls, including among
other matters, consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud.
We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the consolidated financial statements as a whole, taking
into account the structure of the Group, the accounting processes and controls, and the industry in which the Group operates.
M A T E R I A L I T Y
The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance whether the consolidated financial
statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of the consolidated financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall Group materiality for the consolidated
financial statements as a whole as set out in the table below. These, together with qualitative considerations, helped us to determine the scope of our audit and
the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and in aggregate on the consolidated financial
statements as a whole.
We conducted our audit in accordance with International Standards on Auditing (“ISAs”). Our responsibilities under those standards are further described in the
Auditor’s responsibilities for the audit of the consolidated financial statements section of our report.
O V E R A L L G R O U P M A T E R I A L I T Y £623,850
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
I N D E P E N D E N C E
We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements of the Group,
as required by the Crown Dependencies’ Audit Rules and Guidance. We have fulfilled our other ethical responsibilities in accordance with these requirements.
O U R A U D I T A P P R O A C H
O V E R V I E W
M A T E R I A L I T Y
H O W W E D E T E R M I N E D I T
5% of Group loss before tax adjusted for one-off costs relating to the IPO of the Group as set out in note 10.
R A T I O N A L E F O R T H E
The determination of materiality and the benchmark used is a matter of professional judgement. Following the listing of
M A T E R I A L I T Y B E N C H M A R K
JTC PLC on the London Stock Exchange, loss before tax adjusted for one-off costs relating to the IPO is considered to be the
most appropriate benchmark to assess materiality, as this is the measure used by management to assess performance and
to communicate results to the market. The IPO costs are deducted as we do not see these expenses as representative of the
underlying performance of the Group.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £31,192 (de minimis posting level calculated
as 5% of overall materiality), as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.
> Overall Group materiality for the consolidated financial statements was £623,850 which represents 5% of the
K E Y A U D I T M A T T E R S
Group loss before tax adjusted for one-off costs relating to the initial public offering (“IPO”) of the Group as set
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements of the current
Materiality
out in note 10.
A U D I T S C O P E
Audit
scoping
> Group audit scoping was performed based on loss before tax which identified fifteen significant components,
covering 95% of Group loss before tax.
> We conducted the majority of our audit work in Jersey, with audit work also undertaken by component auditors
in Jersey, Luxembourg, Cayman Islands, South Africa, Switzerland and the Isle of Man.
> In determining the significant components we also considered total revenue and total net assets of the Group,
Areas of
focus
ensuring that the fifteen identified significant components also covered 95% of these criteria. Additional factors
were also considered, including new acquisitions, common reporting processes and regulatory requirements to
identify whether additional components should be considered.
> The Group is based primarily in Jersey, where the major financial reporting functions are located.
Trading subsidiaries are based in Africa, Americas, Caribbean, Middle East, Asia and Europe.
K E Y A U D I T M A T T E R S
> Revenue recognition including valuation of work in progress (“WIP”)
> Impairment of intangible assets, specifically goodwill
> Accounting for acquisitions
year. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters.
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T O T H E M E M B E R S O F J T C P L C
Key audit matter
How our audit addressed the Key audit matter
Key audit matter
How our audit addressed the Key audit matter
R E V E N U E R E C O G N I T I O N I N C L U D I N G VA L U A T I O N O F W O R K
I N P R O G R E S S ( “ W I P ” )
Revenue recognition, in particular where services are provided on a time
spent basis for client matters which has not been billed is considered a key
audit matter.
WIP is required to be stated at the amount which is recoverable. There is
a significant level of judgement applied by management in assessing and
determining the value of WIP at the year end. Therefore, there is a risk of
material misstatement that WIP as at year end may not be recoverable and
that revenue could be overstated.
Accounting policies and disclosures in respect of revenue and WIP are set out
in notes 5 and 12 of the annual report respectively.
We evaluated the design and implementation of controls around the billing and
A C C O U N T I N G F O R A C Q U I S I T I O N S
We evaluated the design and implementation of controls around the preparation,
quarterly valuation of WIP;
The Group has acquired a number of subsidiaries during the year.
review and accounting for acquisitions.
For a sample of clients where WIP has been recognised, we reviewed the billing
assets and the allocation of the purchase price to customer contracts.
We challenged the assumptions of the valuation models and purchase price
and amounts recovered post year end;
allocations through reviewing comparable data and the most significant
The judgements arise from the fact that there are a number of assumptions
challenges were around attrition rates, useful economic life and future
Where WIP was not billed post year end, we challenged management’s
included in the valuation model used to determine the fair values and the
projections of revenue / EBITDA margins;
judgement and rationale around the recoverability of the amounts through
allocation of the values between goodwill and customer contract intangible
reviewing client agreements, communication with clients, past billing and
assets. These include estimates for the economic useful lives of the assets,
We performed sensitivity analysis on the key assumptions used in the model,
payment history on a sample basis to support judgements where required; and
projected future earning levels, growth rates, client attrition rates and
including discount rates, useful economic life and revenue growth rates;
Significant judgement is involved in calculating the fair value of acquired
We also reviewed the level of WIP write-offs and credit notes raised post year
We reconciled source data used in the models to underlying accounting records;
end and, on a sample basis, assessed the rationale for these being raised and
Accounting policies and disclosures relating to the acquisitions are disclosed in
and
reviewed any impact on WIP as a result of these.
note 17 of the annual report.
discount rates.
As a result of the procedures performed we have not identified a material
misstatement in respect of the WIP balance.
I M P A I R M E N T O F I N T A N G I B L E A S S E T S , S P E C I F I C A L L Y G O O D W I L L
We evaluated the design and implementation of controls around the preparation
Various acquisitions by the Group have generated a significant amount of
and review of impairment calculations;
goodwill being recognised on the consolidated balance sheet. The initial
allocation of goodwill (calculated as the fair value of the consideration paid
We evaluated and challenged management’s future cash flow forecasts for
less the fair value of net assets acquired, less corresponding valuation of
the material CGUs and the process by which they were prepared, testing the
customer contract intangible assets) is determined in the year of acquisition.
underlying value in use calculation and compared this to management’s forecasts
Management is required to perform annual impairment reviews in respect of
and budgets;
the carrying value of goodwill on a cash generating unit (“CGU”) basis.
A risk of misstatement in the impairment of goodwill exists, to the extent
rates in the forecasts by comparing them to historical results. We challenged
future developments negatively deviate from the assumptions applied during
the discount rates used in the calculation by considering the cost of capital for
the acquisition of the Group entities.
the Group;
We challenged management’s key assumptions for short and long term growth
The annual impairment tests performed were significant to our audit because
We performed sensitivity analysis to identify the key assumptions used in the
the assessment process is complex and judgemental, and based on estimates
value in use calculation and then evaluated management’s rationale for the
that are affected by expected future economic and market conditions.
applied rates; and
Accounting policies and disclosures relating to impairment of intangibles are
We assessed the mathematical accuracy of the goodwill impairment model and
set out in note 19 of the annual report.
assessed whether the calculated present value in use is higher / lower than the
carrying amount.
Based on the testing performed we have not identified a material misstatement
in respect of the impairment of intangible assets, specifically goodwill.
We reviewed management’s accounting assessment to whether the valuations
performed are appropriate and in accordance with applicable financial
reporting standards.
Based on the testing performed we have not identified a material misstatement
in respect of the accounting for acquisitions.
O T H E R I N F O R M A T I O N
The directors are responsible for the other information. The other information comprises all the information included in the 2018 Annual Report but does not include
the consolidated financial statements and our auditor’s report thereon.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above and, in doing so, consider
whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to
be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to
report that fact. We have nothing to report in this regard.
R E S P O N S I B I L I T I E S O F T H E D I R E C T O R S F O R T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
The directors are responsible for the preparation of the consolidated financial statements that give a true and fair view in accordance with International Financial
Reporting Standards as adopted by the European Union, the requirements of Jersey law and for such internal control as the directors determine is necessary to enable
the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the directors are responsible for assessing the Group’s ability to continue as a going concern, disclosing, as
applicable, matters relating to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
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T O T H E M E M B E R S O F J T C P L C
A U D I T O R ’ S R E S P O N S I B I L I T I E S F O R T H E A U D I T O F T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
R E P O R T O N O T H E R L E G A L A N D R E G U L A T O R Y R E Q U I R E M E N T S
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether
Under the Companies (Jersey) Law 1991 we are required to report to you if, in our opinion:
due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered
> we have not received all the information and explanations we require for our audit;
material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated
> proper accounting records have not been kept; or
financial statements.
> the consolidated financial statements are not in agreement with the accounting records.
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
We have no exceptions to report arising from this responsibility.
> Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit
We have nothing to report in respect of the following matters which we have reviewed:
procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional
> the directors’ statement set out on page 90 and 91 in relation to going concern. As noted in the directors’ statement, the directors have concluded that
omissions, misrepresentations, or the override of internal control.
it is appropriate to adopt the going concern basis in preparing the consolidated financial statements. The going concern basis presumes that the Group
> Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not
has adequate resources to remain in operation, and that the directors intend it to do so, for at least one year from the date the consolidated financial
for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
statements were signed. As part of our audit we have concluded that the directors’ use of the going concern basis is appropriate. However, because not
> Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
all future events or conditions can be predicted, these statements are not a guarantee as to the Group’s ability to continue as a going concern;
> Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a
material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we
> the directors’ statement that they have carried out a robust assessment of the principal risks facing the Group and the directors’ statement in relation
to the longer-term viability of the Group. Our review was substantially less in scope than an audit and only consisted of making inquiries and considering
conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated
the directors’ process supporting their statements; checking that the statements are in alignment with the relevant provisions of the UK Corporate
financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the
Governance Code; and considering whether the statements are consistent with the knowledge acquired by us in the course of performing our audit; and
date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. For example, the terms
> the part of the Corporate Governance Statement relating to the parent Company’s compliance with the ten further provisions of the UK Corporate
on which the United Kingdom may withdraw from the European Union are not clear, and it is difficult to evaluate all of the potential implications on the
Governance Code specified for our review.
Group’s trade, customers, suppliers and the wider economy.
> Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated
This report, including the opinion, has been prepared for and only for the members as a body in accordance with Article 113A of the Companies (Jersey) Law 1991 and
financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or
> Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an
into whose hands it may come save where expressly agreed by our prior consent in writing.
opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings,
including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to
communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
M I C H A E L B Y R N E
F O R A N D O N B E H A L F O F P R I C E W A T E R H O U S E C O O P E R S C I L L P
C H A R T E R E D A C C O U N T A N T S A N D R E C O G N I Z E D A U D I T O R
J E R S E Y , C H A N N E L I S L A N D S
2 April 2019
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated
financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes
public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the
adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS C O N S O L I D A T E D I N C O M E S T A T E M E N T
F O R T H E Y E A R E N D E D 3 1 D E C E M B E R 2 0 1 8
C O N S O L I D A T E D S T A T E M E N T O F C O M P R E H E N S I V E I N C O M E
F O R T H E Y E A R E N D E D 3 1 D E C E M B E R 2 0 1 8
Revenue
Staff costs
Establishment costs
Other operating expenses
Credit impairment losses
Other operating income
Notes
2018
£’000
2017
£’000
5
6
8
13
77,254
59,792
(50,703)
(32,006)
(4,705)
(4,082)
(15,638)
(13,134)
(1,285)
(1,357)
343
434
Loss for the year
Other comprehensive income/(loss):
Items that may be subsequently reclassified to profit or loss:
Exchange differences on translation of foreign operations
Total comprehensive loss for the year
2018
£’000
2017
£’000
(3,857)
(4,645)
1,334
(716)
(2,523)
(5,361)
Earnings before interest, taxes, depreciation and amortisation (“EBITDA”)
5,266
9,647
The notes on pages 105 to 152 are an integral part of these consolidated financial statements.
Comprising:
Underlying EBITDA
Non-underlying items
Depreciation and amortisation
Profit from operating activities
Other gains
Finance income
Finance cost
Share of profit/(loss) of equity-accounted investee
Loss before tax
Comprising:
Underlying profit/(loss) before tax
Non-underlying items
Tax
Loss for the year
Earnings per ordinary share (“EPS”)
(expressed in pence per ordinary share)
Basic and diluted EPS (pence)
Underlying EPS (pence)
The notes on pages 105 to 152 are an integral part of these consolidated financial statements.
23,837
10
(18,571)
5,266
20
(4,637)
629
522
103
9
25
25
14,422
(4,775)
9,647
(2,894)
6,753
1,833
73
(3,475)
(12,215)
92
(6)
(2,129)
(3,562)
16,990
10
(19,119)
(2,129)
(858)
(2,704)
(3,562)
28
(1,728)
(1,083)
(3,857)
(4,645)
11
11
(3.87)
15.32
(6.98)
(2.92)
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
C O N S O L I D A T E D B A L A N C E S H E E T
A S A T 3 1 D E C E M B E R 2 0 1 8
C O N S O L I D A T E D S T A T E M E N T O F C H A N G E S I N E Q U I T Y
F O R T H E Y E A R E N D E D 3 1 D E C E M B E R 2 0 1 8
Assets
Property, plant and equipment
Goodwill
Other intangible assets
Investment in equity-accounted investee
Other receivables
Deferred tax assets
Other non-current financial assets
Total non-current assets
Trade receivables
Other receivables
Work in progress
Accrued income
Current tax receivables
Cash and cash equivalents
Total current assets
Total assets
Equity
Share capital
Share premium
Own shares
Capital reserve
Translation reserve
Accumulated profits
Total equity
Liabilities
Loans and borrowings
Other financial liabilities
Provisions
Deferred tax liabilities
Trade and other payables
Total non-current liabilities
Loans and borrowings
Other financial liabilities
Deferred income
Provisions
Current tax liabilities
Trade and other payables
Total current liabilities
Total equity and liabilities
Notes
18
19
19
21
16.1
29
24.1
13
16.1
12
14
27.1
27.1
27.2
27.3
27.3
27.3
23
24.2
30
29
16.2
23
24.2
15
30
16.2
Notes
Share
capital
£’000
10
Own
shares
£’000
(1)
Capital
reserve
£’000
(2,349)
Translation
reserve
£’000
Accumulated
profits/
(losses)
£’000
Total
equity
£’000
1,826
(24,010)
(24,441)
Share
premium
£’000
83
–
–
–
155
–
–
–
–
–
238
238
–
238
–
–
–
–
–
–
–
–
–
–
–
–
10
10
–
10
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
517
(636)
1,255
–
–
(1)
(1,213)
1,110
(1,213)
1,110
–
–
(1,213)
1,110
–
(4,645)
(716)
(716)
–
(4,645)
–
–
–
–
–
–
(4,645)
(716)
(5,361)
155
517
(636)
1,255
–
–
–
–
31,038
31,038
501
2,884
2,884
(168)
2,716
501
3,028
3,028
(168)
2,860
–
–
–
–
–
443
658
–
–
–
–
(3,857)
(3,857)
1,334
1,334
–
1,334
(3,857)
(2,523)
–
–
–
–
–
–
–
–
–
–
–
–
96,202
(742)
443
658
(2,564)
15,641
15,641
(1,074)
(1,074)
(1)
–
(1)
–
–
–
–
–
–
–
(2,564)
–
–
1,109
94,599
(2,565)
(112)
2,444
13,426
108,901
2018
£’000
2017
£’000
6,406
104,835
41,835
978
1,536
135
244
5,504
76,183
21,761
886
940
61
64
155,969
105,399
16,142
10,862
3,884
7,084
9,309
453
32,457
69,329
2,575
5,855
8,052
24
16,164
43,532
Balance at 1 January 2017
Loss for the year
Other comprehensive loss for the year
Total comprehensive loss for the year
Issue of share capital
Share-based payment expense
Sale and purchase of own shares
Own shares movement
Shareholder loan note interest waived
23
Fair value of loan notes
Balance at 31 December 2017
Balance at 1 January 2018 as originally presented
Adoption of new standards
3.1(C)
Restated total equity at 1 January 2018
225,298
148,931
Loss for the year
1,109
94,599
(2,565)
(112)
2,444
13,426
108,901
10
238
(1)
(1,213)
1,110
2,884
3,028
Other comprehensive income for the year
Total comprehensive loss for the year
Issue of share capital
Cost of share issuance
Share-based payment expense
Movement in EBT and JSOPs
Movement of own shares
EBT12 gain on sale of shares
Dividends paid
Balance at 31 December 2018
27
1,099
95,103
7.2
27.2
27.2
27
–
–
–
–
–
–
(742)
–
–
–
–
–
72,032
63,341
The notes on pages 105 to 152 are an integral part of these financial statements.
241
1,038
6,010
5,469
84,790
683
7,968
7,744
401
2,871
11,940
31,607
1,087
646
2,817
718
68,609
56,364
5,356
5,012
187
995
9,380
77,294
225,298
148,931
The notes on pages 105 to 152 are an integral part of these consolidated financial statements.
The financial statements on pages 100 to 152 were approved by the Board of Directors on the 2 April 2019 and signed on its behalf by:
N I G E L L E Q U E S N E
C H I E F E X E C U T I V E O F F I C E R
M A R T I N F O T H E R I N G H A M
C H I E F F I N A N C I A L O F F I C E R
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
C O N S O L I D A T E D C A S H F L O W S T A T E M E N T
F O R T H E Y E A R E N D E D 3 1 D E C E M B E R 2 0 1 8
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
F O R T H E Y E A R E N D E D 3 1 D E C E M B E R 2 0 1 8
Operating cash flows before movements in working capital
Increase in receivables
Increase in payables
Cash generated by operations
Income taxes paid
Net cash from operating activities
Comprising:
Underlying net movement in cash from operating activities
Non-underlying cash items
Investing activities
Interest received
Purchase of property, plant and equipment
Purchase of intangible assets
Acquisition of associate
Acquisition of subsidiaries
Proceeds from sale of subsidiaries
Net cash used in investing activities
Financing activities
Bank charges
Interest on finance leases
Interest on loans
Facility fees
Loan arrangement fees
Share capital raised
Share issuance costs
Proceeds from sale of EBT12 shares
Redemption of loan notes
Sale and purchase of own shares
Redemption of bank loans
Redemption of other borrowings
Bank loan drawn down
Other loan drawn down
Finance lease payments
Dividends paid
Net cash from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effect of foreign exchange rate changes
Cash and cash equivalents at end of year
The notes on pages 105 to 152 are an integral part of these consolidated financial statements.
Notes
33
2018
£’000
6,266
(3,436)
4,565
7,395
(907)
6,488
2017
£’000
10,421
(2,687)
3,461
11,195
(1,175)
10,020
19,158
33
(12,670)
6,488
12,229
(2,209)
10,020
18
19
103
(1,175)
(1,024)
–
56
(4,080)
(425)
(218)
17
(31,176)
(4,482)
–
135
(33,272)
(9,014)
(146)
(3)
(98)
(16)
(1,572)
(2,349)
(93)
(1,318)
20,000
(742)
27.2
15,641
27.2
23.1
(2,161)
(2,565)
(55,836)
(853)
23.1
72,960
–
(18)
(1,074)
42,220
(109)
(38)
–
–
–
–
(636)
–
(959)
1,790
3,017
(57)
–
545
15,436
1,551
16,164
857
32,457
15,765
(1,152)
16,164
S E C T I O N 1 – B A S I S F O R R E P O R T I N G
S E C T I O N 5 – F I N A N C I N G , F I N A N C I A L R I S K
A N D G E N E R A L I N F O R M A T I O N
M A N A G E M E N T A N D F I N A N C I A L I N S T R U M E N T S
1. Reporting entity
2. Basis of preparation
22. Cash and cash equivalents
23. Loans and borrowings
3. Significant accounting policies
24. Other financial assets and other financial liabilities
4. Critical accounting estimates and judgements
25. Finance income and finance cost
S E C T I O N 2 – R E S U L T F O R T H E Y E A R
26. Financial instruments
5. Segmental reporting
27. Share capital and reserves
6. Staff costs
S E C T I O N 6 – O T H E R D I S C L O S U R E S
7. Share-based payments
28. Income tax expense
8. Other operating expenses
9. Other gains
10. Non-underlying items
11. Earnings per share
29. Deferred taxation
30. Provisions
31. Operating leases
32. Foreign currency
S E C T I O N 3 – W O R K I N G C A P I T A L
33. Cash flow information
34. Related party transactions
35. Group entities
36. Events occurring after the reporting period
12. Work in progress
13. Trade receivables
14. Accrued income
15. Deferred income
16. Other receivables and other payables
S E C T I O N 4 – I N V E S T M E N T S
17. Acquisition of subsidiaries
18. Property, plant and equipment
19. Intangible assets and goodwill
20. Depreciation and amortisation
21. Investment in equity-accounted investee
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N T I N U E D
S E C T I O N 1 – B A S I S F O R R E P O R T I N G
A N D G E N E R A L I N F O R M A T I O N
2 . 3 . F U N C T I O N A L A N D P R E S E N T A T I O N C U R R E N C Y
The Group considers the objective of its business model is to collect contractual cash flows and the contractual terms give rise to cash flows representing solely
The financial statements are presented in pounds sterling, which is the functional
payments of principal and interest. As a result of adopting IFRS 9, the Group’s financial assets will be classified and then subsequently measured at amortised cost.
and reporting currency of the Company, and the presentation currency of
1 . R E P O R T I N G E N T I T Y
the consolidated financial statements. All amounts disclosed in the financial
IFRS 9 largely retains the existing requirements in IAS 39 for the classification and measurement of financial liabilities. The adoption of IFRS 9 has not had a significant
JTC PLC (“the Company”) was incorporated on 2 January 2018 and is domiciled
statements and notes have been rounded to the nearest thousand (‘000) unless
effect on the Group’s accounting policies related to financial liabilities.
in Jersey, Channel Islands. The address of the Company’s registered office is 28
otherwise stated.
Esplanade, St Helier, Jersey.
M O D I F I C A T I O N
The financial statements of the Company for the year ended 31 December 2018
3 . 1 . C H A N G E S I N A C C O U N T I N G P O L I C I E S
are substantially different to the original terms. If the terms are substantially different, the Group derecognises the old finance asset or financial liability and recognises
comprise the Company and its subsidiaries (together “the Group” or “JTC”) and
A N D N E W S T A N D A R D S A D O P T E D
a new financial asset or financial liability at fair value. If the terms are not substantially different, the Group recalculates the gross carrying amount based on revised
the Group’s interest in an associate.
The accounting policies set out in these consolidated financial statements have
cash flows of the financial asset or financial liability and recognises the modification gain or loss in the consolidated income statement. The Group has not had any
3 . S I G N I F I C A N T A C C O U N T I N G P O L I C I E S
Where the Group negotiates or otherwise modifies the contractual cash flows of financial assets or financial liabilities, the Group assesses whether or not the terms
The Company was admitted to the London Stock Exchange on 14 March 2018 (“the
Group entities, with the exception of IFRS 9 and IFRS 15 as set out below.
IPO”) having obtained control of the entire share capital of JTC Group Holdings
I M P A I R M E N T O F F I N A N C I A L A S S E T S
been applied consistently to both year ends and have been applied consistently by
substantial modifications to financial assets or financial liabilities in the year.
Limited (“JTCGHL”) via a share exchange, and thus control of the Group, see note 27.
In the current year, to the extent they are relevant to its operations, the Group
IFRS 9 requires an expected credit loss (“ECL”) model, as opposed to an incurred credit loss model under IAS 39. The ECL model requires an entity to account for
has adopted all IFRS standards and interpretations including amendments
expected credit losses and changes in these at each reporting date to reflect changes in credit risk since initial recognition.
Although the share exchange resulted in a change of legal ownership, in substance
that were in issue and effective for accounting periods beginning on
these financial statements reflect the continuation of the pre-existing Group,
1 January 2018.
formerly headed by JTCGHL. As a result, the comparatives for 31 December 2017
( I ) T R A D E R E C E I V A B L E S
The Group applies the simplified approach to measuring expected credit losses and recognises a lifetime expected loss allowance (see note 13 for details). On that
presented in these consolidated financial statements are the consolidated results
( A ) I F R S 9 ‘ F I N A N C I A L I N S T R U M E N T S ’
basis, the total loss allowance as at 1 January 2018 was determined for trade receivables as follows:
of JTCGHL. The impact on the Earnings Per Share calculation, is detailed in note 11.
In July 2014, IFRS 9 ‘Financial Instruments’ was issued, replacing IAS 39
‘Financial Instruments: Recognition and Measurement’. IFRS 9 brings together
The consolidated balance sheet at 31 December 2017 reflects the share capital
all three aspects of the accounting for financial instruments; classification and
structure of JTCGHL. The consolidated balance sheet at 31 December 2018
measurement, impairment and hedge accounting.
reflects the change in legal ownership of the Group, including the share capital
of JTC PLC and the effects of the share exchange transactions.
The adoption of IFRS 9 by the Group from 1 January 2018 resulted in changes
The Group provides fund, corporate and private wealth services to institutional
financial statements following the provision for additional loss allowances for
to accounting policies and adjustments to the amounts recognised in the
and private clients.
trade receivables, work in progress and accrued income. The Group has applied
IFRS 9 retrospectively but has elected not to restate comparative information.
<30 days
30 – 60 days
61 – 120 days
>120 days
Total
Gross trade
receivables
£’000
Loss allowance
as % of trade
receivables
Loss allowance
for trade
receivables
£’000
4,215
2,149
1,360
5,774
1.92%
4.00%
8.97%
44.74%
13,498
21.28%
81
86
122
2,583
2,872
2 . B A S I S O F P R E P A R A T I O N
As a result the comparative information continues to be accounted for with
( I I ) W O R K I N P R O G R E S S A N D A C C R U E D I N C O M E
2 . 1 . S T A T E M E N T O F C O M P L I A N C E
the Group’s previous accounting policies.
These financial assets relate to unbilled work and have substantially the same risk characteristics as the trade receivables. The Group has therefore concluded that the
A N D B A S I S O F M E A S U R E M E N T
expected loss rates for trade receivables <30 days, being 1.92%, was an appropriate estimation of the expected credit loss. This results in a loss allowance for work in
The consolidated financial statements have been prepared in accordance with
C L A S S I F I C A T I O N A N D M E A S U R E M E N T
progress and accrued income of £49k and £15k respectively at 1 January 2018.
International Financial Reporting Standards (“IFRS”) as adopted by the European
IFRS 9 introduces a single classification and measurement model for financial
Union, the interpretations of the IFRS Interpretations Committee (“IFRS IC”) and
assets, depending on both the entity’s business model for managing financial
Companies (Jersey) Law 1991. The financial statements comply with IFRS as
assets and the contractual cash flow characteristics of financial assets. Based on
issued by the International Accounting Standards Board (“IASB”) and have been
these, financial assets are classified as either amortised cost, fair value through
prepared under the historical cost convention.
profit or loss (“FVTPL”) or fair value through other comprehensive income
2 . 2 . G O I N G C O N C E R N
(“FVOCI”). As a result of applying IFRS 9, the previous classifications under IAS
39 have changed as set out in the ‘summary of the impact of adoption’ section
The Group continues to adopt the going concern basis in preparing its financial
of this note.
statements. In making this assessment, the Directors noted a reported loss
before tax position, that was materially impacted by the inclusion of a one-
off capital distribution to employees from the Jersey Trust Company Employee
Benefit Trust 2012 (“EBT12”) following the IPO. They are confident that the
Group will meet its day-to-day working capital requirements through its cash-
generating activities and bank facilities. The Group’s forecasts and projections,
taking account of possible changes in trading performance, show that the Group
should be able to operate within the level of its current facilities. The Directors
therefore have a reasonable expectation that the Group has adequate resources
to continue in operational existence for the foreseeable future, being at least
12 months from the date of approval of these financial statements.
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C O N T I N U E D
3 . S I G N I F I C A N T A C C O U N T I N G P O L I C I E S C O N T I N U E D
To reflect this change in policy, the following adjustments were made to balance sheet items at 1 January 2018, resulting in a net adjustment to retained earnings
3 . 1 . C H A N G E S I N A C C O U N T I N G P O L I C I E S A N D N E W S T A N D A R D S A D O P T E D C O N T I N U E D
of £133k:
S U M M A R Y O F T H E I M P A C T O F A D O P T I O N
> Within trade and other payables; accrued commissions payable of £106k were reversed, and other payables of £292k were recognised, split between
The following table sets out the original measurement categories under IAS 39 and the new measurement categories under IFRS 9 for each class of the Group’s
current and non-current, £167k and £125k (giving a net adjustment to current trade and other payables of £61k),
financial assets and financial liabilities at 1 January 2018. The effect of adopting IFRS 9 on the carrying amounts of financial assets at 1 January 2018 relates solely
> Within other receivables; contract assets of £319k were recognised, split between current and non-current, £92k and £227k.
to the new impairment requirements.
Financial assets
Trade receivables
Other receivables
Work in progress
Accrued income
Other financial assets
Cash and cash equivalents
Total financial assets
Financial liabilities
Loans and borrowings
Trade and other payables
Other financial liabilities
Total financial liabilities
Notes
13
16.1
12
14
24.1
23
16.2
24.2
Classification
under IAS 39
Classification
under IFRS 9
Carrying
amount
under IAS 39
£’000
Carrying
amount
under IFRS 9
£’000
Adjustment
for ECL
£000
Loans and receivables
Amortised cost
10,862
10,625
237
Loans and receivables
Amortised cost
Loans and receivables
Amortised cost
Loans and receivables
Amortised cost
Loans and receivables
Amortised cost
3,515
5,855
8,052
64
3,515
5,806
8,037
64
Loans and receivables
Amortised cost
16,164
16,164
–
49
15
–
–
44,512
44,211
301
Other financial liabilities
Amortised cost
119,705
119,705
Other financial liabilities
Amortised cost
10,098
10,098
Other financial liabilities
Amortised cost
6,443
6,443
136,246
136,246
–
–
–
–
( B ) I F R S 1 5 ‘ R E V E N U E F R O M C O N T R A C T S W I T H C U S T O M E R S ’
IFRS 15 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. IFRS 15 will supersede the
current revenue recognition guidance including IAS 18 ‘Revenue’, IAS 11 ‘Construction Contracts’ and the related interpretations.
The Group has adopted IFRS 15 ‘Revenue from Contracts with Customers’ from 1 January 2018. The accounting policies for revenue recognition are unchanged from
those under IAS 18 except for the incremental costs of obtaining a contract (i.e. costs that would not have been incurred if the contract had not been obtained, e.g.
sales commissions), these are recognised as an asset if the costs are expected to be recovered. The capitalised cost of obtaining a contract is then amortised in a
systemic manner consistent with the pattern of transfer of the related services.
In accordance with the transition provisions in IFRS 15, the Group has applied the modified retrospective approach, which means that the cumulative impact of the
adoption is recognised in retained earnings as of 1 January 2018 and that the comparative figures have not been restated.
A C C O U N T I N G F O R C O S T S T O O B T A I N A C O N T R A C T
When commission is due to a third party or intermediary to obtain a contract, the Group previously expensed these as commissions payable. For the year ended
31 December 2017, the expense was £269k. Following their IFRS 15 assessment, Management concluded that the commission fees paid are incremental to obtaining
a contract and are expected to be recovered over the term of the contract and therefore should be capitalised. As a result, the Group now estimates the commissions
due over the life of each contract and capitalises these costs as contract assets and discloses them within current and non-current other receivables (see note 16.1).
The contract assets are then amortised on a straight-line basis over the expected term of the specific contract it relates to, with an amortisation charge recognised
in the consolidated income statement.
Current and non-current payables are also now recognised as part of other payables, being the commissions payable over the term of the contract (see note 16.2).
These are discounted to record the net present value of the obligation with the unwinding of discount now shown in the consolidated income statement, within
finance costs. The current other payable reflects the cash flows expected within one year and would be reduced as payments are made.
Non-current other receivables
Current other receivables
Non-current trade and other payables
Current trade and other payables
Total
Notes
16.1
16.1
16.2
16.2
( C ) R E S T A T E D O P E N I N G E Q U I T Y F O L L O W I N G A D O P T I O N O F N E W S T A N D A R D S
The impact on the Group’s retained earnings as at 1 January 2018 following the adoption of IFRS 9 and 15 is as follows:
Closing retained earnings at 31 December 2017
Additional loss allowance (adoption of IFRS 9)
Recognition of asset for costs to obtain a contract (adoption of IFRS 15)
Total adoption of new standards
Opening retained earnings at 1 January 2018
Carrying
amount
under IAS 18
£’000
Reclassification
£’000
Carrying
amount
under IFRS 15
£’000
940
2,575
(718)
(9,380)
(6,583)
227
92
(125)
(61)
133
£’000
(301)
133
1,167
2,667
(843)
(9,441)
(6,450)
£’000
2,884
(168)
2,716
3 . 2 . N E W S T A N D A R D S A N D I N T E R P R E T A T I O N S N O T Y E T A D O P T E D
Certain new accounting standards and interpretations have been published that are not mandatory for 31 December 2018 reporting periods and have not been
adopted early by the Group. These are detailed below along with the Group’s assessment of the impact of these.
( A ) I F R S 1 6 ‘ L E A S E S ’
IFRS 16 ‘Leases’ was published in January 2016 and replaces IAS 17 ‘Leases’ for reporting periods beginning on or after 1 January 2019. This standard introduces a
single lessee accounting model, requiring lessees to recognise assets and liabilities for all leases unless the lease term is less than one year or the underlying asset
has a low value. A contract is, or contains, a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
T R A N S I T I O N A P P R O A C H
To assess the impact of IFRS 16, Management has considered existing operating and finance leases as well as reviewing all other contracts in place within the business
to ascertain if they fall within its definition of a lease. Following this initial review and information capture, Management has been required to interpret certain
arrangements as well as exercise judgement when determining the certainty of extension or termination options and the rate to discount lease payments.
D A T E O F A D O P T I O N B Y G R O U P
The Group will apply the standard from its mandatory adoption date of 1 January 2019. The Group intends to apply the modified retrospective approach and will not
restate comparative amounts for the year prior to first adoption. Right-of-use assets for property leases will be measured on transition as if the new rules had always
been applied. All other right-of-use assets will be measured at the amount of the lease liability on adoption (adjusted for any prepared or accrued lease expenses).
Q U A N T I F I C A T I O N O F E S T I M A T E D I M P A C T
At the reporting date, the Group has annual non-cancellable operating lease commitments of £3.6 million (see note 31). Of these commitments, approximately £745k
relate to short-term leases and will be recognised on a straight-line basis as an expense in the consolidated income statement.
Based on the information currently available, the Group estimates that on 1 January 2019 it will recognise right-of-use assets of approximately £28.8 million and
lease liabilities of £28.4 million.
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C O N T I N U E D
3 . S I G N I F I C A N T A C C O U N T I N G P O L I C I E S C O N T I N U E D
When the Group loses control over a subsidiary, it derecognises the assets and
4 . 1 . C R I T I C A L J U D G E M E N T S I N A P P L Y I N G
3 . 2 . N E W S T A N D A R D S A N D I N T E R P R E T A T I O N S N O T Y E T A D O P T E D C O N T I N U E D
liabilities of the subsidiary, and any related non-controlling interest and other
T H E G R O U P ’ S A C C O U N T I N G P O L I C I E S
For the year ended 31 December 2019, the Group expects that net profit after tax will decrease by approximately £587k as a result of adopting the new rules.
components of equity. Any resulting gain or loss is recognised in the consolidated
The following are the critical judgements, apart from those involving estimations
Underlying EBITDA used to measure segmental results is expected to increase by approximately £3 million, as long-term operating lease payments were included in
income statement.
EBITDA, but the amortisation of the right-of-use assets and interest on the lease liability are excluded from this measure.
(which are dealt with separately in 4.2), that the Directors have made in the
process of applying the Group’s accounting policies and that have the most
Where necessary, adjustments are made to the financial statements of
significant effect on the amounts recognised in the financial statements.
Operating cash flows are expected to increase and financing cash flows decrease by approximately £3 million as repayment of the principal portion of the lease
subsidiaries to bring their accounting policy in line with the Group. All inter-
liabilities will be classified as cash flows from financing activities.
The Group expects the adoption of IFRS 16 to have an impact in the deferred tax, the effect of which is in the process of being assessed.
company transactions and balances, including unrealised gains and losses, arising
R E C O G N I T I O N O F C U S T O M E R C O N T R A C T I N T A N G I B L E S
from transactions between Group companies are eliminated.
In 2018, the Group acquired Minerva and Van Doorn, see notes 17.1 and 17.2.
C O M P A N Y O N L Y F I N A N C I A L S T A T E M E N T S
IFRS 3 ‘Business Combinations’ requires Management to identify assets and
liabilities purchased including intangible assets. Following their assessment,
( B ) O T H E R S T A N D A R D S
Under Article 105(11) of the Companies (Jersey) Law 1991, the Directors
Management concluded that the only material intangible asset meeting the
The following new or amended standards are not expected to have a significant impact on the consolidated financial statements:
of a holding company need not prepare separate financial statements (i.e.
recognition criteria is customer contracts. The customer contract intangible
> IFRIC 23 Uncertainty over tax treatments
> Prepayment features with negative compensation (Amendment to IFRS 9)
> Long-term interests in associates and joint ventures (Amendments to IAS 18)
> Plan amendment, curtailment or settlement (Amendments to IAS19)
> Annual improvements to IFRS Standards 2015-2017
> IFRS 17 Insurance Contracts
company only financial statements). Separate financial statements for the
assets recognised through these acquisitions were £13.88 million and
Company are not prepared unless required to do so by the members of the
£7.72 million respectively.
Company by ordinary resolution. The members of the Company had not passed a
resolution requiring separate financial statements and, in the Directors’ opinion,
4 . 2 . C R I T I C A L A C C O U N T I N G
the Company meets the definition of a holding company. As permitted by law,
E S T I M A T E S A N D A S S U M P T I O N S
the Directors have elected not to prepare separate financial statements.
F A I R VA L U E O F C U S T O M E R C O N T R A C T I N T A N G I B L E S
The customer contract intangible assets are valued using the multi-period excess
3 . 3 . S U M M A R Y O F S I G N I F I C A N T A C C O U N T I N G P O L I C I E S
4 . C R I T I C A L A C C O U N T I N G E S T I M A T E S
earnings method (“MEEM”) financial valuation model. Cash flow forecasts and
The basis of consolidation is described below, otherwise significant accounting policies related to specific items are described under the relevant note. The description
A N D J U D G E M E N T S
projections are produced by Management and form the basis of the valuation
of the accounting policy in the notes forms an integral part of the description of the accounting policies. Unless otherwise stated, these policies have been consistently
In the application of the Group’s accounting policies, the Directors are required
analysis. The key estimates and assumptions used in the modelling to derive the
applied to all the years presented.
Revenue
Employee benefits
Share-based payments
Work in progress
Trade receivables
Accrued and deferred income
Business combinations and goodwill
Property, plant and equipment
Intangible assets, including impairment of non-financial assets
Investment in equity-accounted investee
Cash and cash equivalents
Finance income and finance costs
Financial instruments
Capital, reserves and dividends
Taxation
Provisions
Operating leases
Foreign currency
B A S I S O F C O N S O L I D A T I O N
Notes
5
6
7
12
13
14, 15
17
18
19
21
22
25
26
27
28
30
31
32
to make judgements, estimates and assumptions about the carrying amounts
fair values include: year on year growth rates, client attrition rates, EBIT margins,
of assets and liabilities that are not readily apparent from other sources.
the useful economic life of the customer contracts and the discount rate applied
The estimates and associated assumptions are based on historical experience
to free cash flow. See note 19.1 for the sensitivity analysis.
and other factors that are considered to be relevant. Actual results may differ
from these estimates.
R E C O V E R A B I L I T Y O F W O R K I N P R O G R E S S ( “ W I P ” )
To assess the fair value of consideration received for services rendered,
The estimates and underlying assumptions are reviewed on an ongoing basis.
Management is required to make an assessment of the net unbilled amount
Revisions to accounting estimates are recognised in the year in which the
expected to be collected from clients for work performed to date. To make this
estimate is revised if the revision affects only that year, or in the year of the
assessment, WIP balances are reviewed regularly on a by-client basis and the
revision and future years if the revision affects both current and future years.
following factors are taken into account: (i) the ageing profile of the WIP, (ii)
the agreed billing arrangements, (iii) value added and (iv) status of the client
relationship. See note 12 for the sensitivity analysis.
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 over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until
the date on which control ceases.
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N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N T I N U E D
S E C T I O N 2 – R E S U L T F O R T H E Y E A R
5 . 1 . B A S I S O F S E G M E N T A T I O N
5 . 2 . S E G M E N T A L I N F O R M A T I O N
The Group has a multi-jurisdictional footprint and the core focus of
The table below shows the segmental information provided to the Board of Directors for the two reportable segments (ICS and PCS) on an underlying basis.
5 . S E G M E N T A L R E P O R T I N G
R E V E N U E
For 2018, the accounting policies for revenue recognition under IFRS 15 are
unchanged from those under IAS 18 (which apply to the 2017 comparatives)
with the exception of incremental costs to obtain contracts. Revenue is
recognised in the consolidated income statement to the pro-rated part of
the services rendered to the client at the reporting date.
Revenue is recognised to the extent that it is probable that the economic
benefits will flow to the Group and the revenue can be reliably measured.
Revenue is measured as the fair value of the consideration received or
receivable for services provided in the normal course of business, excluding
discounts and sales-related taxes.
Revenue comprises fees and commissions from providing corporate, fund
and private client administration services to institutional and private clients.
The contractual arrangements can be timed-based, fixed fees or service
charges and can be billed in advance or in arrears.
Incremental costs of obtaining a contract (i.e. costs that would not have
been incurred if the contract had not been obtained) will be recognised as
a contract asset if the costs are expected to be recovered. The capitalised
costs of obtaining a contract are amortised on a straight-line basis over the
estimated useful economic life of the contract. The asset will be subject to an
impairment analysis each period end.
P R I N C I P A L V E R S U S A G E N T C O N S I D E R A T I O N
When the Group acts in the capacity of an agent rather than as the principal
in a transaction, the revenue recognised is the net amount of commissions
made by the Group.
O T H E R R E V E N U E
Where revenue is derived from offering treasury services to clients, revenue
is recognised where it is probable that the economic benefits will flow to the
Group and the amount of revenue can be measured reliably.
Rental income from operating leases is recognised on a straight-line basis
over the relevant term of the lease.
operations is on providing services to its institutional and private client
base, with revenues from alternative asset managers, financial institutions,
corporates and family office clients. Declared revenue is generated from
external customers.
B U S I N E S S A C T I V I T I E S I N C L U D E :
F U N D S E R V I C E S
Support 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).
C O R P O R A T E S E R V I C E S
Includes clients spanning across small and medium entities, public companies,
multinationals, sovereign wealth funds, fund managers and high-net-worth
(“HNW”) and ultra-high-net-worth (“UHNW”) individuals and families requiring
a ‘corporate’ service for business and investments. As well as entity formation,
administration and other company secretarial services, the Group also services
international and local pension plans, employee share incentive plans, employee
ownership plans and deferred compensation plans.
P R I V A T E W E A L T H S E R V I C E S
Support HNW and UHNW individuals and families, from ‘emerging
entrepreneurs’ to established single and multifamily offices. Services include
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
Revenue
Direct staff costs
Other direct costs
Underlying gross profit
Underlying gross profit margin %
Indirect staff costs
Other operating expenses
Other income
Underlying EBITDA
Underlying EBITDA margin %
ICS
2018
£’000
2017
£’000
PCS
2018
£’000
2017
£’000
Total
2018
£’000
2017
£’000
43,362
36,071
33,892
23,721
77,254
59,792
(16,465)
(15,541)
(10,782)
(8,816)
(27,247)
(24,357)
(416)
(199)
(2,046)
(1,444)
(2,462)
(1,643)
26,481
20,331
21,064
13,461
47,545
33,792
61.1%
56.4%
62.2%
56.7%
61.5%
56.5%
(4,169)
(10,043)
219
12,488
28.8%
(4,078)
(8,429)
280
(3,600)
(6,240)
125
(2,346)
(7,769)
(6,424)
(4,951)
(16,283)
(13,380)
154
344
434
8,104
11,349
6,318
23,837
14,422
22.5%
33.5%
26.6%
30.9%
24.1%
The Board evaluates segmental performance based on revenue, underlying gross profit and underlying EBITDA. Loss before income tax is not used to measure the
performance of the individual segments as items like depreciation, amortisation of intangibles, other gains and net finance costs are not allocated to individual
segments. Consistent with the aforementioned reasoning, segment assets and liabilities are not reviewed regularly on a by-segment basis and are therefore not
included in the IFRS segmental reporting.
No individual customer represents more than 10% of revenue.
6 . S T A F F C O S T S
E M P L O Y E E B E N E F I T S
S H O R T - T E R M B E N E F I T S
Operating Decision Makers of the Group and determine the appropriate business
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
segments to monitor financial performance. Each segment is defined as a set
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.
of business activities generating a revenue stream determined by divisional
responsibility and the Management information reviewed by the Board of
D E F I N E D C O N T R I B U T I O N P L A N S
Directors. They determined the Group has two reportable segments: these are
Payments to defined contribution retirement benefit schemes are recognised as an expense when employees have rendered services entitling them to contributions.
Institutional Client Services (“ICS”) and Private Client Services (“PCS”).
T E R M I N A T I O N B E N E F I T S
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. If benefits are not expected to be settled wholly within one year of the end of the reporting period, then they are discounted.
E M P L O Y E E B E N E F I T T R U S T ( “ E B T ” )
The Group is committed to the concept of shared ownership and it is this ethos that led to the creation of EBTs to hold shares in the Company for the benefit of
employees. All permanent employees of the Group automatically become beneficiaries once they complete their probationary period. Any awards made upon
completion of a capital event are expensed to staff costs immediately. Due to the capital nature of these awards they are considered to be non-underlying.
Following the IPO, the Company settled a new EBT, the JTC PLC Employee Benefit Trust (“PLC EBT”).
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C O N T I N U E D
6 . S T A F F C O S T S C O N T I N U E D
Details of the number of shares awarded but not vested are as follows:
Salaries and Directors’ fees
Capital distribution from EBT12
Other short-term employee benefits
Defined contribution pension costs
Share-based payments
Training and other staff-related costs
2018
£’000
2017
£’000
31,925
27,172
13,211
986
1,355
443
2,783
–
761
993
517
2,563
50,703
32,006
Outstanding at the start of the year
Awarded
Exercised
Forfeited
Converted at the IPO
Outstanding at the end of the year
No.
8,168
9,013
2018
£’000
800
300
No.
8,974
3,134
(8,168)
(800)
(3,408)
–
643,385
652,398
–
–
(532)
–
300
8,168
2017
£’000
774
351
(278)
(47)
–
800
The Group contributes to a number of defined contribution pension schemes for its employees. The assets of all schemes are held separately from those of the
( B ) P O S T - I P O
Group in funds under the control of relevant external Trustees. For the year ended 31 December 2018, the total employer contribution to schemes was £1,355k
Following Admission to the London Stock Exchange, the Company has implemented and made awards to eligible employees under two equity-settled share-based
(2017: £993k).
7 . S H A R E - B A S E D P A Y M E N T S
payment plans:
P E R F O R M A N C E S H A R E P L A N ( “ P S P ” )
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 the Company’s estimate of equity instruments
that will eventually vest. At each balance sheet date, the Company 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.
7 . 1 . D E S C R I P T I O N O F S H A R E - B A S E D P A Y M E N T A R R A N G E M E N T S
( A ) P R E - I P O
Prior to Admission to the London Stock Exchange, the Group operated a number of equity-settled share-based remuneration schemes. These were as follows:
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 per cent. of annual base salary, however the plan rules allow the Remuneration Committee the discretion to award up
to 250 per cent. of annual base salary in exceptional circumstances. For the initial awards granted in September 2018 the limit for Executive Directors is 75 per cent.
of the annual base salary. Vesting of the initial awards is subject to continued employment and achievement of performance conditions measured over a period of 3
years. The Remuneration Committee determines the appropriate performance measures, weightings and targets prior to granting any awards. Performance conditions
for the initial awards include Total Shareholder Return (“TSR”) relative to a relevant comparator group and the Company’s absolute Underlying Earning Per
Share performance.
Details of the number of shares awarded but not vested are as follows:
Awarded
Outstanding at the end of the year
No.
160,638
160,638
2018
£’000
549
549
B L U E S K Y 1 S C H E M E
The fair value at grant date was £81.51 per share and the shares awarded vested on 1 January 2017 subject to continued employment up to this date.
D E F E R R E D B O N U S S H A R E P L A N ( “ D B S P ” )
B L U E S K Y 2 S C H E M E
The fair value at grant date was £112.78 per share and the shares awarded vested on 1 January 2018 subject to continued employment up to this date.
B L U E I S L A N D 1 S C H E M E
Certain employees at director level may be eligible for an annual bonus designed to incentivise high performance based on financial and non-financial performance
measures. In line with market practice, a portion of the bonus due, as determined by the Remuneration Committee, may be deferred into shares before it is paid.
In 2019, the Group granted a variable number of equity instruments to Directors as part of the annual bonus award for performance during the financial year ended
31 December 2018. These awards vest on 31 December 2020 subject to continued employment up to this date. The fair value measured at grant date is the fixed amount
The fair value at grant date was £112.78 per share and the shares awarded vested upon IPO, subject to continued employment up to this date.
awarded being £150k and this will be expensed over the three year vesting period. The number of shares will be determined when the shares are issued upon vesting.
In addition to the Schemes noted above, the Group also made awards of their own equity instruments to employees in the following circumstances: for promotion,
7 . 2 . E X P E N S E S R E C O G N I S E D D U R I N G T H E Y E A R
for employees joining the business, for the retention of key employees following acquisition and to incentivise key employees.
The equity-settled share-based payment expenses recognised during the year, per plan and in total are as follows:
As these equity instruments were not traded on an active market, they were valued on a debt-free basis taking into account the general market conditions, continuing
trading and potential for growth in order to reach a multiple to apply to EBITDA. The expense was recognised over the period employees rendered services up until
either the specified vesting date or when service conditions were fulfilled.
Awards that had not vested prior to the IPO were converted into the equivalent number of JTC PLC shares upon listing.
PSP Awards
DBSP Awards
Other Awards
Total share-based payments expense
2018
£’000
142
50
251
443
2017
£’000
–
–
517
517
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C O N T I N U E D
8 . O T H E R O P E R A T I N G E X P E N S E S
1 0 . N O N - U N D E R L Y I N G I T E M S
Third party administration fees
Commissions paid
Legal and professional fees
Auditor’s remuneration for audit services
Auditor’s remuneration for other services:
– Acquisitions
– IPO
Insurance
Travelling
Marketing
IT expenses
Other expenses
2018
£’000
2,518
–
4,140
795
78
285
593
961
715
3,565
1,988
2017
£’000
1,472
269
3,050
538
18
605
480
552
460
2,955
2,735
Other operating expenses
15,638
13,134
9 . O T H E R G A I N S
Loan written back/(off)
Foreign exchange gains
Net loss on disposal of property, plant and equipment
Loss on disposal of subsidiary
Gain on derivative forward contract
Gain on bargain purchase (see note 17.3)
Other gains
2018
£’000
30
558
(523)
–
–
457
522
2017
£’000
(490)
257
(2)
(53)
50
2,071
1,833
The Group classifies certain one-off charges or non-recurring credits that have a material impact on the Group’s financial results as non-underlying items.
They represent specific items of income or expenditure that are not of an operational nature and do not represent the core 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.
EBITDA
Non-underlying items within EBITDA:
Capital distribution from EBT12(i) (vi)
IPO costs(vi)
Acquisition and integration costs(ii)
Office closures
One-off costs to reorganise senior Management team
Other
Total non-underlying items within EBITDA
Underlying EBITDA
Loss before tax
Non-underlying items within EBITDA
Gain on bargain purchase(iii)
Loss on disposal of acquired fixed assets(iv)
Unwinding of discount on capital distribution(vi)
Accelerated amortisation of loan arrangement fees(v) (vi)
Total non-underlying items within loss before tax
Underlying profit/(loss) before tax
2018
£’000
5,266
13,211
954
4,257
56
93
–
2017
£’000
9,647
–
1,768
1,995
625
200
187
18,571
23,837
4,775
14,422
(2,129)
(3,562)
18,571
4,775
(457)
(2,071)
564
190
251
–
–
–
19,119
16,990
2,704
(858)
(i) The Group expensed £13.211 million to staff costs being the discounted value of the total committed capital distributions from EBT12 following the IPO.
(ii)
During 2018, the Group completed two acquisitions (Minerva and Van Doorn) and expensed £1.358 million of acquisition and integration expenditure (see notes 17.1 and 17.2).
Also expensed in the year was £2.473 million in relation to the acquisition of BAML (see note 17.3). Acquisition and integration costs includes but is not limited to: travel costs,
professional fees, legal fees, tax advisory fees, onerous leases, transitional services agreement costs, any client-acquired penalties or cost of acquired debtors subsequently
defaulting, acquisition-related share-based payments and staff reorganisation costs.
(iii) Gain on bargain purchase arising on the acquisition of BAML (see note 17.3).
(iv) Loss on disposal of fixed assets acquired on acquisition of Minerva (see note 17.1).
(v) Due to refinancing at the time of the IPO, £251k of loan arrangement fees were written off in relation to the previous bank facility.
(vi) Items relating to the IPO.
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N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N T I N U E D
1 1 . E A R N I N G S P E R S H A R E
S E C T I O N 3 – W O R K I N G C A P I T A L
The Group presents basic and diluted Earnings Per Share (“EPS”). In calculating the weighted average number of shares outstanding during the period any share
restructuring is adjusted by a factor to make it comparable with the other periods. For diluted EPS, the weighted average number of ordinary shares is adjusted to
1 2 . W O R K I N P R O G R E S S
assume conversion of all dilutive potential ordinary shares.
Work in progress (“WIP”) 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 less progress billed and less expected credit losses.
Loss for the year
Non-underlying items:
– included within operating expenses
– included within other gains
– included within finance costs
Underlying profit/(loss) for the year
Weighted average number of ordinary shares in issue:
Original shareholder exchange
New issue to original shareholders
Primary raise
Loan note conversion
Issue of share consideration for Van Doorn
Issue of share consideration for Minerva
2018
£’000
2017
£’000
(3,857)
(4,645)
18,571
107
441
4,775
(2,071)
–
15,262
(1,941)
No.
No.
66,534,213
66,534,213
798,586
5,536,136
26,139,903
291,787
331,132
–
–
–
–
–
Total
Loss allowance (IFRS 9)
Net
2018
£’000
7,132
(48)
2017
£’000
5,855
–
7,084
5,855
For 2018, WIP is subject to the impairment requirements of IFRS 9. As these financial assets relate to unbilled work and have substantially the same risk characteristics
as the trade receivables, the Group has therefore concluded that the expected loss rates for trade receivables <30 days, is an appropriate estimation of the expected
credit losses.
S E N S I T I V I T Y A N A L Y S I S
The total carrying amount of WIP (before ECL loss allowances) is £7.132 million. If Management’s estimate as to the recoverability of the WIP is 10% lower than
expected, the impact to revenue would be £0.713 million.
1 3 . T R A D E R E C E I VA B L E S
Trade and other receivables that were classified as loans and receivables under IAS 39 are now classified at amortised cost. On transition to IFRS 9, opening
retained earnings at 1 January 2018 were adjusted for an increase of £301k in the allowance for impairment over these receivables (see note 3.1).
Weighted average number of ordinary shares for the purpose of diluted EPS
99,631,757
66,534,213
Basic and diluted EPS (pence)
Underlying EPS (pence)
(3.87)
15.32
(6.98)
(2.92)
Trade receivables are initially recognised at fair value, and subsequently measured at amortised cost (if the time value is material), using the effective interest
method, less provision for impairment. To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and
the days past due. The expected credit losses on trade receivables are estimated collectively using a provision matrix based on the Group’s historical credit loss
experience, adjusted for factors that are specific to the debtors’ financial position (this includes unlikely to pay indicators such as liquidity issues, insolvency or
The Group presents basic and diluted EPS and underlying EPS data for its ordinary shares. Basic EPS is calculated by dividing the loss after tax, attributable to ordinary
other financial difficulties) and an assessment of both the current as well as the forecast direction of macroeconomic conditions at the reporting date. The Group
shareholders, by the weighted average number of ordinary shares in issue during the year. Underlying EPS is calculated on the same basis but adjusted for non-
has identified gross domestic product and inflation in each country the Group provides services in to be the most relevant macroeconomic factors. The impact of
underlying items in the year (see note 10).
expected changes in these factors have been assessed and are reflected in the loss allowance for 2018. Provision rates are segregated according to geographical
location and by business line. The Group considers specific impairment on a by client basis rather than on a collective basis. The carrying amount of the asset is
As the Group made a loss for the year, the impact of any dilutive effects of contingently issuable shares (see note 7.1 (B)) are not calculated as the impact would
reduced through the use of an allowance account and the amount of the loss is recognised in the income statement as credit impairment losses. When a trade
be anti-dilutive.
receivable is uncollectable, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against credit
As explained in note 1, the Group’s financial statements reflect the continuation of the pre-existing group previously headed by JTCGHL. To aid comparability
impairment losses.
following the Group’s reconstruction and share reorganisation, the number of ordinary shares issued to the original shareholders in exchange for their shareholding in
IAS 39 is similar to IFRS 9 but without the forward looking economic scenarios. Under IAS 39, financial assets were assessed for indicators of impairment at each
JTCGHL has been used to best indicate the share capital in existence at that time and provide EPS information on a consistent basis.
balance sheet date and were considered impaired when there was objective evidence that, as a result of one or more events that occurred after initial recognition
of the financial asset, the estimated future cash flows of the investment would be adversely affected. The carrying amount of trade receivables was adjusted
through the use of an allowance account consistent with IFRS 9.
The ageing analysis of trade receivables with the loss allowance is as follows:
2018 (IFRS 9)
<30 days
30 – 60 days
61 – 90 days
91 – 120 days
121 – 180 days
180> days
Total
Gross
£’000
Loss
allowance
£’000
10,048
(213)
1,214
1,090
996
256
(38)
(41)
(96)
(89)
Net
£’000
9,835
1,176
1,049
900
167
6,197
(3,182)
3,015
19,801
(3,659)
16,142
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C O N T I N U E D
1 3 . T R A D E R E C E I VA B L E S C O N T I N U E D
2017 (IAS 39)
<30 days
30 – 60 days
61 – 90 days
91 – 120 days
121 – 180 days
180> days
Total
The movement in the allowances for trade receivables is as follows:
Balance at the beginning of the year
IFRS 9 opening balance adjustment
Impairment losses recognised in the consolidated income statement
Amounts written off (net of any unused amounts reversed)
Total allowance for doubtful debts
1 4 . A C C R U E D I N C O M E
Gross
£’000
4,214
2,149
689
671
739
Loss
allowance
£’000
(25)
(26)
(40)
(38)
(115)
Net
£’000
4,189
2,123
649
633
624
5,035
(2,391)
2,644
13,497
(2,635)
10,862
2018
£’000
2017
£’000
(2,635)
(2,455)
(301)
(1,285)
562
(3,659)
–
(1,357)
1,177
(2,635)
1 6 . O T H E R R E C E I VA B L E S A N D O T H E R P A Y A B L E S
1 6 . 1 . O T H E R R E C E I VA B L E S
Current
Prepayments
Other receivables
Contract assets
Total current
Non-current
Prepayments
Contract assets
Total non-current
Total other receivables
For other receivables, Management concluded the expected credit loss would have an immaterial impact on the financial statements.
1 6 . 2 . T R A D E A N D O T H E R P A Y A B L E S
Accrued income across all the service lines represents the billable 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 and time-based charges at the agreed charge-out rates in force at the work date less expected credit losses.
Total
Loss allowance (IFRS 9)
Net
2018
£’000
9,334
(25)
2017
£’000
8,052
–
9,309
8,052
For 2018, accrued income is subject to the impairment requirements of IFRS 9. As these financial assets relate to unbilled work and have substantially the same risk
characteristics as the trade receivables, the Group has therefore concluded that the expected loss rates for trade receivables <30 days, is an appropriate estimation
of the expected credit losses.
1 5 . D E F E R R E D I N C O M E
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 balance sheet.
Current
Trade payables
Other taxation and social security
Other payables
Accruals
Total current
Non-current
Other payables
Total non-current
Total trade and other payables
2018
£’000
2017
£’000
2,054
1,335
495
3,884
693
843
1,536
5,420
1,298
1,277
–
2,575
940
–
940
3,515
2018
£’000
2017
£’000
1,008
210
5,449
5,273
11,940
415
145
4,133
4,687
9,380
5,469
5,469
718
718
17,409
10,098
Trade payables and accruals principally comprise of amounts outstanding for trade purchases and ongoing costs. The Directors consider the carrying value of these
to approximate to their fair value.
Included in current and non-current other payables is £3 million and £2.85 million respectively being the discounted value of capital distributions due from EBT12
to employees (2017: £nil) and £0.51 million and £1 million respectively for commissions payable over the term of the customer contracts obtained (see 3.1(B))
(2017: £nil).
In 2017, current other payables included £2.14 million due to the BAML business for bills raised to clients covering the period prior to the acquisition, this was repaid
to them during 2018.
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C O N T I N U E D
S E C T I O N 4 – I N V E S T M E N T S
1 7 . A C Q U I S I T I O N O F S U B S I D I A R I E S
B U S I N E S S C O M B I N A T I O N S
The Group applies the acquisition method to account for business combinations. The consideration transferred in an acquisition is measured at 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 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 the total of consideration transferred, non-controlling
interest recognised and previously held interest measured is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase,
the difference is recognised directly in the income statement.
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 depend on how
the contingent consideration is classified. Contingent consideration that is classified as equity is not re-measured at subsequent reporting dates and its subsequent
settlement is accounted for within equity. Contingent consideration that is classified as an asset or liability is re-measured at subsequent reporting dates at fair
value with the corresponding gain or loss being recognised in the consolidated income statement.
G O O D W I L L
Goodwill is initially recognised and measured as set out above.
Goodwill is not amortised but is reviewed for impairment at least annually. For the purpose of impairment testing, goodwill is allocated to each of the Group’s
cash-generating units (“CGUs”) expected to benefit from the combination. CGUs to which goodwill has been allocated are tested for impairment annually, or
impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit, pro-rata, on the basis
of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period.
1 7 . 1 . M I N E R VA H O L D I N G S L I M I T E D A N D M H L H O L D I N G S S A ( “ M I N E R VA ” )
On 5 September 2018, JTC entered into an agreement to acquire 100% of share capital of Minerva Holdings Limited and MHL Holdings SA (together “Minerva”) from
Dome Management Limited and Dome Management SA. Minerva is a global provider of private client, corporate, fund and treasury services. It operates in Jersey,
Dubai, Mauritius, Switzerland, United Kingdom and Singapore. Minerva’s client book is mainly focused on private clients, with a small element of corporate and fund
structures and has a strong African focus.
more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the CGU is less than the carrying amount of the unit, the
Cash consideration
( A ) I D E N T I F I A B L E A S S E T S A C Q U I R E D A N D L I A B I L I T I E S A S S U M E D O N A C Q U I S I T I O N
The following table shows, at fair value, the recognised of assets acquired and liabilities assumed at the acquisition date:
Property, plant and equipment
Intangible assets
Trade receivables
Work in progress
Accrued income
Other receivables
Cash and cash equivalents
Assets
Deferred income
Finance lease
Deferred tax liabilities
Current tax liabilities
Trade and other payables
Liabilities
Total identifiable net assets
£’000
884
13,879
932
1,027
863
810
4,068
22,463
1,476
50
1,396
63
1,663
4,648
17,815
Deferred tax liabilities have been recognised in relation to identified customer contract intangible assets, the amortisation of which is non-deductible against
Corporation Tax in the jurisdictions in which the business operates and therefore creates temporary differences between the accounting and taxable profits.
( B ) C O N S I D E R A T I O N
Total consideration is satisfied by the following:
Equity instruments (2,877,698 ordinary shares issued at fair value)
Contingent consideration (discounted to fair value)
Fair value of total consideration
Contingent consideration of £2 million is payable following the first six months of the regulatory completion date and is contingent on Minerva maintaining an
underlying EBITDA target. Based on the historic performance of the business and Management’s view of expected future revenue, it’s anticipated this will be paid in
full. The amount payable has been discounted to its present value of £1.96 million.
£’000
19,608
11,200
1,958
32,766
The acquired business contributed revenues of £4.37 million and profit before tax of £0.234 million to the Group for the period from 1 September to 31 December
2018. If the business had been acquired on 1 January 2018, the consolidated pro-forma revenue and loss for the year for the Group would have been £86 million and
( C ) G O O D W I L L
Goodwill arising from the acquisition has been recognised as follows:
£1.66 million respectively.
Total consideration
Less: Fair value of identifiable net assets
Goodwill
£’000
32,766
(17,815)
14,951
Goodwill is represented by assets that do not qualify for separate recognition or other factors. These include new business wins to new customers, effects of an
assembled workforce and synergies from combining operations of the acquiree and the acquirer.
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C O N T I N U E D
1 7 . A C Q U I S I T I O N O F S U B S I D I A R I E S C O N T I N U E D
1 7 . 1 . M I N E R VA H O L D I N G S L I M I T E D A N D M H L H O L D I N G S S A ( “ M I N E R VA ” ) C O N T I N U E D
( D ) I M P A C T O N C A S H F L O W
Cash consideration
Less: cash balances acquired
Net cash outflow from acquisition
( E ) A C Q U I S I T I O N - R E L A T E D C O S T S
£’000
(19,608)
4,068
(15,540)
1 7 . A C Q U I S I T I O N O F S U B S I D I A R I E S C O N T I N U E D
( B ) C O N S I D E R A T I O N
Total consideration is satisfied by the following:
Cash consideration
Equity instruments (1,121,077 ordinary shares issued at fair value)
Contingent consideration (discounted to fair value)
Fair value of total consideration
¤’000
£’000
11,258
10,093
5,000
5,352
4,482
4,798
21,610
19,373
The Group incurred acquisition-related costs of £212k for professional, legal and advisory fees. These costs have been recognised in other operating expenses in the
Group’s consolidated income statement (see note 8) and are included along with integration costs to reach underlying EBITDA (see note 10).
Contingent consideration of £5 million (¤5.5 million) was paid in February 2019 as the business performed successfully, exceeding the Revenue and underlying EBITDA
1 7 . 2 . VA N D O O R N C F S B . V . ( “ VA N D O O R N ” )
On 17 August 2018, JTC entered into an agreement with International Capital Group B.V. to purchase 100% of the share capital of Van Doorn, a Netherlands-based
( C ) G O O D W I L L
provider of corporate and fiduciary services.
Goodwill arising from the acquisition has been recognised as follows:
targets set for 2018.
The acquired business contributed revenues of £1.42 million and profit before tax of £0.914 million to the Group for the period from 1 September to 31 December
2018. If the business had been acquired on 1 January 2018, the consolidated pro-forma revenue and loss for the year for the Group would have been £80.1 million
and £0.3 million respectively.
Total consideration
Less: Fair value of identifiable net assets
Goodwill
( A ) I D E N T I F I A B L E A S S E T S A C Q U I R E D A N D L I A B I L I T I E S A S S U M E D O N A C Q U I S I T I O N
¤’000
£’000
21,610
19,373
(6,931)
(6,214)
14,679
13,159
The following table shows, at fair value, the recognised of assets acquired and liabilities assumed at the acquisition date:
Goodwill is represented by assets that do not qualify for separate recognition or other factors. These include new business wins to new customers, effects of an
Property, plant and equipment
Intangible assets
Trade receivables
Work in progress
Other receivables
Cash and cash equivalents
Assets
Deferred income
Deferred tax liabilities
Current tax liabilities
Trade and other payables
Liabilities
Total identifiable net assets
¤’000
54
£’000
48
8,616
7,724
342
346
42
547
307
311
38
490
9,947
8,918
177
2,154
468
217
159
1,931
420
194
3,016
2,704
6,931
6,214
assembled workforce and synergies from combining operations of the acquiree and the acquirer.
( D ) I M P A C T O N C A S H F L O W
Cash consideration
Less: cash balances acquired
Net cash outflow from acquisition
( E ) A C Q U I S I T I O N - R E L A T E D C O S T S
¤’000
£’000
(11,258)
(10,093)
547
490
(10,711)
(9,603)
The Group incurred acquisition-related costs of £312k for professional, legal and advisory fees. These costs have been recognised in other operating expenses in the
Group’s consolidated income statement (see note 8) and are included along with integration costs to reach underlying EBITDA (see note 10).
1 7 . 3 . I N T E R N A T I O N A L T R U S T A N D W E A L T H S T R U C T U R I N G B U S I N E S S O F B A N K O F A M E R I C A C O R P O R A T I O N
( “ B A M L ” )
On 30 September 2017, the Group acquired 100% of the issued share capital of the following companies: Merrill Lynch Corporate (New Zealand) Ltd, CM (Suisse)
Trust Company Sarl, CM (IOM) Trust Company Limited and Fiduciary Services (UK) Limited (together the “BAML business”). The BAML business provides the
administration of trust services for international advisory clients and provided the Group with a presence in the Isle of Man as well as increasing headcount in the key
financial centres of the Cayman Islands, Geneva, London, Miami and Singapore.
Deferred tax liabilities have been recognised in relation to identified intangible assets, the amortisation of which is non-deductible against Netherlands Corporation
Tax and therefore creates temporary differences between the accounting and taxable profits.
The fair value of consideration was £6.69 million ($8.98 million) for acquired identifiable net assets of £8.76 million ($11.76 million) resulting in a bargain purchase
and negative goodwill of £2.07 million ($2.78 million). The gain on acquisition is shown within other gains in the consolidated income statement (see note 9).
Contingent consideration of £4.3 million ($5.75 million) was payable one year following completion dependent on the BAML business achieving an agreed revenue
target. On 14 December 2018, deferred consideration of £4.06 million ($5.14 million) was paid, this amount is slightly lower than anticipated as a result of the revenue
target not being met in its entirety.
Within the acquired identifiable net assets we recognised customer contract intangibles of £9.61 million ($12.89 million) with a useful economic life of 12 years.
Deferred tax liabilities of £1.2 million ($1.6 million) were recognised in relation to identified intangible assets, the amortisation of which is non-deductible against
Corporation Tax in the jurisdictions in which the business operates and therefore creates temporary differences between the accounting and taxable profits.
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C O N T I N U E D
1 7 . A C Q U I S I T I O N O F S U B S I D I A R I E S C O N T I N U E D
1 7 . 4 . N E W A M S T E R D A M C I T I T R U S T B . V . ( “ N A C T ” )
On 31 July 2017, the Group acquired 100% of the issued share capital of New Amsterdam Cititrust B.V. (“NACT”), a business providing a range of corporate and
administration services to both institutional and private clients. This acquisition served to strengthen JTC’s presence in Europe and expand its global footprint to
include the Netherlands.
The fair value of consideration was £5.02 million (¤5.62 million) for acquired identifiable net assets of £3.02 million (¤3.38 million) resulting in goodwill of £2.1 million
(¤2.24 million).
Contingent consideration of £1.79 million (¤2 million) was payable in the two years following completion, contingent on the NACT business achieving underlying
EBITDA targets for the financial years ending 31 December 2017 and 2018. On 20 March 2018, contingent consideration of £0.88 million (¤1 million) was paid in
respect of 2017 and on 29 January 2019, contingent consideration of £0.87 million (¤1 million) was paid in respect of 2018 as both targets were achieved.
Within the acquired identifiable net assets were recognised customer contract intangibles of £2.98 million (¤3.34 million) with a useful economic life of 10 years.
Deferred tax liabilities of £0.75 million (¤0.83 million) were recognised in relation to identified intangible assets, the amortisation of which is non-deductible against
Netherlands Corporation Tax and therefore creates temporary differences between the accounting and taxable profits.
1 8 . P R O P E R T Y , P L A N T A N D E Q U I P M E N T
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:
Leasehold improvements
Computer equipment
Office furniture and equipment
over the period of the lease
4 years
4 years
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.
Assets under the course of construction are stated at cost. These assets are not depreciated until they are available for use.
Cost
At 1 January 2017
Additions
Transfers
Additions through acquisitions
Disposals
Exchange differences
At 31 December 2017
Additions
Additions through acquisitions
Disposals
Exchange differences
At 31 December 2018
Accumulated depreciation
At 1 January 2017
Charge for the year
Disposals
Exchange differences
At 31 December 2017
Charge for the year
Disposals
Exchange differences
At 31 December 2018
Carrying amount
At 31 December 2018
At 31 December 2017
Computer
equipment
£’000
Office
furniture and
equipment
£’000
Leasehold
improvements
£’000
Assets
under
construction
£’000
2,352
40
–
286
(27)
(12)
2,639
372
114
(372)
6
858
121
–
9
(62)
1
927
256
277
(254)
–
1,694
3,420
1,016
–
(68)
9
6,071
843
514
(581)
42
2,759
1,206
6,889
1,557
404
(20)
(3)
1,938
423
(327)
4
2,038
702
80
(46)
(1)
735
99
(217)
3
620
919
568
(28)
1
1,460
420
(119)
29
1,790
721
701
586
192
5,099
4,611
1,016
–
(1,016)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
£’000
5,920
3,581
–
295
(157)
(2)
9,637
1,471
905
(1,207)
48
10,854
3,178
1,052
(94)
(3)
4,133
942
(663)
36
4,448
6,406
5,504
The carrying value of property, plant and equipment includes an amount of £162k (2017: £nil) in respect of office furniture and equipment held under finance leases.
1 9 . I N T A N G I B L E A S S E T S A N D G O O D W I L L
G O O D W I L L
Goodwill that arises on the acquisition of subsidiaries is presented with intangible assets. See note 17 for the measurement of goodwill at initial recognition,
subsequent to this measurement is at cost less accumulated impairment losses.
I N T A N G I B L E A S S E T S A C Q U I R E D S E P A R A T E L Y
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:
Regulatory licence
12 years
Software
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
4 years
accounted for on a prospective basis.
Intangible assets under the course of construction are stated at cost and are not depreciated until they are available for use.
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N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N T I N U E D
1 9 . I N T A N G I B L E A S S E T S A N D G O O D W I L L C O N T I N U E D
1 9 . 1 . I N T A N G I B L E A S S E T S A C Q U I R E D I N A B U S I N E S S C O M B I N A T I O N
I N T A N G I B L E A S S E T S A C Q U I R E D I N A B U S I N E S S C O M B I N A T I O N
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). Subsequent to initial recognition, these are measured at cost less accumulated amortisation and accumulated impairment losses.
In 2018, the Group acquired Minerva and Van Doorn and recognised customer contract intangible assets of £13.88 million and £7.72 million respectively.
K E Y A S S U M P T I O N S
The fair value at acquisition was derived using the MEEM valuation model. Management considers the key assumptions used in this model to be:
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.
> Year on year revenue growth
The estimated useful lives are as follows:
Customer contracts
8.7 to 12 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.
The movements of the intangible assets and goodwill are as follows:
Cost
At 1 January 2017
Additions
Transfers
Additions through acquisitions
Disposals
Exchange differences
At 31 December 2017
Adjustments
Additions
Additions through acquisitions
Disposals
Exchange differences
At 31 December 2018
Accumulated amortisation
At 1 January 2017
Charge for the period
Exchange differences
At 31 December 2017
Charge for the period
Prior period adjustment
Disposals
Exchange differences
At 31 December 2018
Carrying amount
At 31 December 2018
At 31 December 2017
Goodwill
£’000
Customer
contracts
£’000
Regulatory
licence
£’000
Software
£’000
Assets under
construction
£’000
Total
£’000
74,022
10,935
237
2,110
–
–
–
–
2,001
12,591
–
160
–
(252)
–
–
–
–
8
282
394
–
(1)
1
76,183
23,274
245
2,786
27
–
–
–
28,110
21,604
–
515
–
1,155
–
–
–
–
6
–
623
45
(40)
22
250
144
(394)
–
–
–
–
–
81
–
–
–
87,554
426
–
14,592
(1)
(83)
102,488
27
704
49,759
(40)
1,698
104,835
46,033
251
3,436
81
154,636
–
–
–
–
–
–
–
–
–
1,429
1,326
(25)
2,730
2,743
–
–
157
5,630
10
21
(2)
29
20
–
–
3
1,289
495
1
1,785
484
–
(7)
22
52
2,284
–
–
–
–
–
–
–
–
–
2,728
1,842
(26)
4,544
3,247
–
(7)
182
7,966
104,835
40,403
76,183
20,544
199
216
1,152
1,001
81
146,670
–
97,944
> The discount rate applied to free cash flow
S E N S I T I V I T Y A N A L Y S I S
Management carried out a sensitivity analysis on the key assumptions used in the valuation of the customer contract intangible assets of the two significant CGUs,
being Minerva Jersey and Van Doorn.
For Minerva Jersey, an increase of 2% in year on year revenue growth would increase fair value by £516k and an increase in discount rate of 2% would decrease fair
value by £550k. For Van Doorn, an increase of 2% in year on year revenue growth would increase fair value by £229k and an increase in discount rate of 2% would
decrease fair value by £351k.
Management estimates that any similar changes to these key assumptions for the other customer contract intangible assets recognised in the year would not result
in a significant change to fair value.
1 9 . 2 . I M P A I R M E N T O F N O N - F I N A N C I A L A S S E T S
The carrying amounts of the Group’s non-financial assets, current and deferred tax assets are reviewed at each reporting date to determine whether there is any
indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.
Goodwill is tested annually for impairment. An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its recoverable amount.
The recoverable amount of an asset or CGU is the higher of fair value less costs to sell or the value in use. In assessing value in use, the estimated future cash flows
are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to
the asset or CGU.
To perform impairment testing, assets are grouped together into the smallest group of assets that generate cash inflows from continuing use that are largely
independent of the cash inflows of other assets or CGUs. Goodwill acquired in a business combination is allocated to groups of CGUs that are expected to benefit
from the synergies of the combination.
Where the recoverable amount is less than the carrying amount, impairment losses recognised in respect of CGUs are allocated first to reduce the carrying
amount of any goodwill allocated to the CGU and thereafter to reduce the carrying amount of other assets in the CGU. Any impairment losses identified would
be immediately recognised in the consolidated income statement.
Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that
the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in
prior years. A reversal of an impairment loss is also recognised immediately in the consolidated income statement. An impairment loss in respect of goodwill is
not reversed.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N T I N U E D
1 9 . I N T A N G I B L E A S S E T S A N D G O O D W I L L C O N T I N U E D
1 9 . 2 . I M P A I R M E N T O F N O N - F I N A N C I A L A S S E T S C O N T I N U E D
( A ) G O O D W I L L I M P A I R M E N T
The aggregate carrying amounts of goodwill allocated to each CGU are as follows:
CGU
Jersey
Guernsey
BVI
Switzerland
Cayman
Luxembourg
Netherlands
Minerva Dubai
Minerva Mauritius
Total
CGU
Jersey
Guernsey
BVI
Switzerland
Cayman
Luxembourg
Netherlands
Total
Balance at
1 Jan 2018
£’000
54,337
10,598
752
1,077
225
7,204
1,990
–
–
Post-
acquisition
adjustments
£’000
–
–
–
–
–
–
Business
combinations
£’000
9,669
–
–
1,208
–
–
27
13,159
–
–
1,761
2,313
Exchange
differences
£’000
Balance at
31 Dec 2018
£’000
–
–
–
64
12
69
105
115
150
64,006
10,598
752
2,349
237
7,273
15,281
1,876
2,463
76,183
27
28,110
515
104,835
Balance at
1 Jan 2017
£’000
Business
combinations
£’000
Exchange
differences
£’000
Balance at
31 Dec 2017
£’000
54,337
10,598
752
1,077
245
7,013
–
74,022
–
–
–
–
–
–
2,001
2,001
–
–
–
–
(20)
191
(11)
160
54,337
10,598
752
1,077
225
7,204
1,990
76,183
The recoverable amount of goodwill has been determined for each CGU as at 31 December 2018 and as at 31 December 2017. For each of the CGUs, the recoverable
amount was found to be higher than its carrying amount.
K E Y A S S U M P T I O N S U S E D I N D I S C O U N T E D C A S H F L O W P R O J E C T I O N C A L C U L A T I O N S
The recoverable amount of all CGUs has been determined based on a value in use calculation using cash flow projections. 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 prepares the budgets through an
assessment of historic revenues from existing clients, the pipeline of new projects, historic 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.
The year 1 cash flow projections are based on detailed financial budgets and years 2 to 5 on detailed outlooks prepared by Management. The revenue growth rate
assumed beyond the initial five year period is between 1% and 2%, based on the expected long-term inflation rate of the relevant jurisdiction of the CGU.
Management estimates 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 rate for the relevant jurisdiction
> The cost of equity based on an adjusted Beta for the relevant jurisdiction
> The risk premium to reflect the increased risk of investing in equities
The above assumptions have resulted in weighted average cost of capital (“WACC”) of between 11.3% and 16.4%.
A summary of the values assigned to the key assumptions used in the value in use calculations are as follows:
> Terminal value growth rate: between 1% and 2%
> Discount rate: between 11.3% and 16.4%
> EBIT Margin: between 25% to 65%
S E N S I T I V I T Y A N A L Y S I S
Management believes 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.
( B ) C U S T O M E R C O N T R A C T I N T A N G I B L E S I M P A I R M E N T
The carrying amount of the identifiable customer contract intangible assets acquired is as follows:
Acquisition
Signes(i)
KB Group(i)
S&GFA(i)
BAML
NACT
Van Doorn
Minerva Jersey
Minerva Mauritius
Minerva Dubai
Minerva Switzerland
Total
Carrying amount
Notes
Useful
economic life
10 years
12 years
10 years
10 years
12 years
11.4 years
11.8 years
10 years
10 years
8.7 years
17.3
17.4
17.2
17.1
17.1
17.1
17.1
2018
£’000
1,853
2,965
2,666
9,100
2,582
7,539
9,736
1,801
1,418
743
2017
£’000
2,107
3,314
2,890
9,392
2,841
–
–
–
–
–
40,403
20,544
(i) Acquisitions in previous years included: Signes S.a.r.l and Signes S.A. (“Signes”), Kleinwort Benson (Channel Islands) Fund Services Limited (“KB Group”) and Swiss & Global Fund
Administration (Cayman) Ltd (“S&GFA”).
Management reviews customer contract intangible assets for indicators of impairment at the reporting date. The only indicator identified was that actual revenues
generated by BAML customer contracts were lower than forecast. An impairment assessment was performed and as the recoverable amount of the BAML customer
contract intangible asset was higher than the carrying amount, Management concluded there was no impairment.
2 0 . D E P R E C I A T I O N A N D A M O R T I S A T I O N
Amortisation of intangible assets
Depreciation of property, plant and equipment
Amortisation of contract assets
Depreciation and amortisation
2018
£’000
3,247
942
448
2017
£’000
1,842
1,052
–
4,637
2,894
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N T I N U E D
2 1 . I N V E S T M E N T I N E Q U I T Y - A C C O U N T E D I N V E S T E E
S E C T I O N 5 – F I N A N C I N G , F I N A N C I A L R I S K M A N A G E M E N T A N D F I N A N C I A L I N S T R U M E N T S
The Group’s interests in an equity-accounted investee solely comprises an interest in an associate. An associate is an entity in which the Group has significant
influence, but not control or joint control, over the financial and operating policies.
2 2 . C A S H A N D C A S H E Q U I VA L E N T S
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 changes in the Group’s share of the net
assets of the associate since the acquisition date.
The consolidated income statement reflects the Group’s share of the results of operations of the associate, after adjustments to align the accounting policies with
those of the Group, from the date that significant influence commenced until the date that significant influence ceases. In addition, when there has been a change
recognised directly in the equity of the associate, the Group recognises its share of any changes, when applicable, in the statement of changes in equity. 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 aggregate of the Group’s
share of profit or loss of an associate is shown on the face of the consolidated income statement outside of operating profit and represents profit or loss after tax.
The Group has a 42% (2017: 42%) interest in Kensington International Group Pte. Ltd (“KIG”), a company incorporated in Singapore. KIG provides corporate, fiduciary,
trust and accounting services and is a strategic partnership for the Group, providing access to new clients and markets in the Far East. The associate has share capital
Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three
months or less and bank overdrafts. Bank overdrafts, when applicable, are shown within borrowings in current liabilities.
Cash attributable to the Company
Committed EBT capital distributions
Total
2018
£’000
2017
£’000
26,354
16,164
6,103
–
32,457
16,164
For 2018, cash and cash equivalents is subject to the impairment requirements of IFRS 9. As balances are mainly held with reputable international banking institutions,
they were assessed to have low credit risk and no loss allowance is recognised.
consisting of ordinary and preference shares, which are held directly by the Group. The country of incorporation is also their principal place of business, and the
2 3 . L O A N S A N D B O R R O W I N G S
Current
Bank loans
Finance leases
Other loans
Total current
Non-current
Bank loans
Investor loan notes
Management loan notes
Finance leases
Other loans
Total non-current
Total loans and borrowings
2018
£’000
2017
£’000
–
5
678
683
71,494
–
–
30
508
55,522
–
842
56,364
–
28,126
34,029
–
1,186
72,032
63,341
72,715
119,705
proportion of ownership interest is the same as the proportion of voting rights held. KIG is a private company and there is no quoted market price available for its
shares. There are no contingent liabilities relating to the Group’s interest in KIG.
The summarised financial information for KIG, which is accounted for using the equity method, is as follows:
SUMMARISED INCOME STATEMENT
Revenue
Gross profit
(Loss)/profit for the year
Other comprehensive income for the year
Total comprehensive (loss)/income for the year
SUMMARISED BALANCE SHEET
Total non-current assets
Total current assets
Total assets
Total current liabilities
Net assets less current liabilities
RECONCILIATION OF SUMMARISED FINANCIAL INFORMATION
Opening net assets
(Loss)/profit for the year
Other comprehensive income
Increase in equity
Foreign exchange differences
Closing net assets
Group’s share of closing net assets
Goodwill
Carrying value of investment in associate
2018
£’000
3,639
2,762
(47)
15
(32)
2018
£’000
516
2,133
2,649
1,572
1,077
2018
£’000
813
(47)
15
225
71
1,077
456
522
978
2017
£’000
2,822
2,178
103
3
106
2017
£’000
460
1,524
1,984
1,171
813
2017
£’000
816
103
3
–
(109)
813
344
542
886
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N T I N U E D
2 3 . L O A N S A N D B O R R O W I N G S C O N T I N U E D
2 3 . 1 . B A N K L O A N S
The terms and conditions of outstanding bank loans are as follows:
Facility
Term facility B
Acquisition facility
Term facility
Revolving facility
Revolving facility
Total principal value
Issue costs
Total bank loans
Currency
Termination Date
Initial interest rate (i)
GBP
GBP
GBP
GBP
EUR
31 December 2018
LIBOR + 4.5%
31 December 2018
LIBOR + 4%
8 March 2023
8 March 2023
8 March 2023
LIBOR + 2%
LIBOR + 2%
EURIBOR + 2%
2018
£’000
–
–
45,000
19,000
9,014
2017
£’000
47,500
8,336
–
–
–
73,014
55,836
(1,520)
(314)
71,494
55,522
(i) From the initial interest rate, the facility margin can change as a result of net leverage calculations.
Movement in bank facilities during the year:
Principal value
Issue costs
Total
At 1 January
2018
£’000
Repayments
£’000
Drawdowns
£’000
Amortisation
release
£’000
55,836
(55,836)
72,960
(314)
–
(1,750)
55,522
(55,836)
71,210
–
544
544
Effect of
foreign
exchange
£’000
54
–
54
At 31
December
2018
£’000
73,014
(1,520)
71,494
On 9 March 2018, the Group entered into a new five year loan facility agreement with HSBC Bank Plc for a total commitment of £55 million (or its equivalent in
EUR and USD) consisting of a term loan of £45 million and a revolving facility commitment of £10 million. The loan agreement was amended on 19 October 2018 to
increase the total commitment to £100 million and to introduce Barclays Bank Plc, Santander UK Plc and the Bank of Ireland as incoming lenders with an additional
revolving facility commitment of £15 million each. All facilities are due to be repaid on or before the Termination Date of 8 March 2023.
An amount of £45 million from the loan facility was used to partially fund the repayment of the existing secured bank loan with HSBC Bank Plc and Royal Bank of
Scotland Plc totalling £55.8 million in March 2018. The issue costs of £251k associated with this loan have been written off, having previously been capitalised for
amortisation over the term of the loan. Two further withdrawals were made on 25 September 2018 and 16 November 2018 for £9 million and £19 million respectively
to partially fund the two acquisitions made by the Group during the year as detailed in notes 17.1 and 17.2.
The cost of the facility depends upon Net Leverage, being the ratio of total net debt to underlying EBITDA (for LTM at average FX rates and adjusted for pro-forma
contributions from acquisitions and synergies) for a relevant period. Arrangement and legal fees amounting to £1.75 million have been capitalised for amortisation
over the term of the loan.
2 3 . 3 . O T H E R L O A N S
On 10 April 2017, the Group entered into a loan facility with Close Leasing Limited to draw down £2.52 million. On this date, the 1% loan arrangement fee of £25k
and an initial instalment of £194k were deducted from the cash received, the remaining balance due will be settled in 41 monthly instalments of £65k each.
On 22 May 2017, the Group entered into a loan facility with Lombard Finance Limited to draw down £479k. There were no arrangement fees and the total due of
£492k was payable in 12 equal monthly instalments. The final instalment was paid in April 2018.
2 4 . O T H E R F I N A N C I A L A S S E T S A N D O T H E R F I N A N C I A L L I A B I L I T I E S
2 4 . 1 . O T H E R F I N A N C I A L A S S E T S
Non-current
Loans receivable from related undertakings
– Northpoint Byala IC
– Northpoint Finance IC
Loan receivable from employee
Total other financial assets
2018
£'000
2017
£'000
53
11
180
244
53
11
–
64
Northpoint Byala IC and Northpoint Finance IC are incorporated cell companies registered in Jersey, Channels Islands and related parties due to common directorships.
The loans are unsecured and interest-free, as the repayment date is unspecified, Management consider these to be non-current.
The loan made to an employee is interest-bearing (LIBOR +1.5%) and this is repayable on 31 December 2020 unless the employment contract is terminated at an
earlier date.
The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivables mentioned above and in note 26.2. The Group does not
hold any collateral as security.
2 4 . 2 . O T H E R F I N A N C I A L L I A B I L I T I E S
Current
Deferred consideration
Total current
Non-current
Deferred consideration
Total non-current
2018
£'000
2017
£'000
7,968
7,968
5,356
5,356
241
241
8,209
1,087
1,087
6,443
At 31 December 2018, the Group had available £27 million of committed facilities currently undrawn (2017: £1.7 million).
Total other financial liabilities
2 3 . 2 . L O A N N O T E S
The Investor (CBPE Capital LLP “CBPE”) and Management were issued 12% Fixed Rate Unsecured loan notes with an aggregate principal amount of £28.4 million and
£34.3 million respectively. They were repayable on the earlier of 27 July 2022 or the date of completion of an exit with interest on the principal amount accruing from
the date of issue at the rate of 12% per annum compounding annually.
On 30 November 2017, the Board approved a restructuring of the Investor and Management loan notes. As a result of the restructuring, £31.038 million of loan note
interest was waived in the 2017 financial year.
The loan notes were initially recognised at fair value at the issue date and were subsequently measured on an amortised cost basis. At 30 November 2017, there was
a substantial change to the terms of the loan notes, whereby they became interest-free. These interest-free loan notes were then fair valued at 31 December 2017
and changes in valuation under the new loan facility in comparison to the original loan facility went through equity as this was a transaction among equity holders.
As part of the restructuring prior to the IPO (save in the case of certain loan notes which were repaid prior to Admission), the loan notes were transferred to the
Company and the Company issued Ordinary Shares to such note holders (see note 27).
Deferred consideration payable for the acquisition of subsidiaries is discounted to net present value. This is split between current and non-current and is due
by acquisition as follows: £5.06 million for Van Doorn, £1.96 million for Minerva, £883k for NACT and £306k for the S&GFA (2017: £1.921 million for NACT,
£4.163 million for BAML and £359k for the S&GFA).
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N T I N U E D
2 5 . F I N A N C E I N C O M E A N D F I N A N C E C O S T
L O A N S A N D R E C E I VA B L E S
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
Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognised initially at fair
Group and the amount of revenue can be measured reliably.
value plus any directly attributable transaction costs. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective
Finance costs include interest expenses on loans and borrowings, the unwinding of the discount on provisions and contingent consideration 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
Loans and receivables comprise loans, trade receivables and other receivables.
on a straight-line basis over the contractual term.
interest method, less any impairment losses.
Bank interest
Loan interest
Finance income
Bank loan interest
Loan note interest
Amortisation of loan arrangement fees
Unwinding of net present value discounts
Other finance expense
Finance cost
2 6 . F I N A N C I A L I N S T R U M E N T S
C L A S S I F I C A T I O N A N D M E A S U R E M E N T
The Group has applied IFRS 9 as of 1 January 2018, the impact is disclosed in note 3.1.
2018
£’000
90
13
103
1,611
48
555
986
275
2017
£’000
56
17
73
2,348
9,202
322
119
224
N O N - D E R I VA T I V E F I N A N C I A L L I A B I L I T I E S
The Group initially recognises debt securities issued and subordinated liabilities on the date that they are originated. All other financial liabilities (including
liabilities designated at fair value through profit or loss) are recognised initially on the trade date, which is the date that the Group becomes a party to the
contractual provisions of the instrument.
The Group derecognises a financial liability when its contractual obligations are discharged, cancelled or expired.
The Group classifies non-derivative financial liabilities into the other financial liabilities category. Such financial liabilities are recognised initially at fair value less
any directly attributable transaction costs. Subsequent to initial recognition, these financial liabilities are measured at amortised cost using the effective interest
method. Other financial liabilities comprise loans and borrowings and trade and other payables.
I M P A I R M E N T
N O N - D E R I VA T I V E F I N A N C I A L A S S E T S
3,475
12,215
Financial assets not classified at fair value through profit or loss, including an interest in an equity-accounted investee, are assessed at each reporting date to
determine whether there is objective evidence of impairment. A financial asset is impaired if there is objective evidence of impairment as a result of one or more
events that occurred after the initial recognition of the asset, and that loss event(s) had an impact on the estimated future cash flows of that asset that can be
estimated reliably.
Objective evidence that financial assets are impaired includes default or delinquency by a debtor, restructuring of an amount due to the Group on terms that
the Group would not otherwise consider, indications that a debtor or issuer will enter bankruptcy, adverse changes in the payment status of borrowers or issuers,
IFRS 9 introduces a single classification and measurement model for financial assets, depending on both the entity’s business model objective for managing
economic conditions that correlate with defaults or the disappearance of an active market for a security. In addition, for an investment in an equity security,
financial assets and the contractual cash flow characteristics of financial assets. Based on this, there are three principal classification categories, these are:
a significant or prolonged decline in its fair value below its cost is objective evidence of impairment.
amortised cost, fair value through profit or loss (“FVTPL”) and fair value through other comprehensive income (“FVOCI”).
N O N - D E R I VA T I V E F I N A N C I A L A S S E T S
The Group considers evidence of impairment for financial assets measured at amortised cost (loans and receivables) at both a specific asset and collective level.
The Group initially recognises loans and receivables and deposits on the date that they are originated. All other financial assets (including assets designated at
All individually significant assets are assessed for specific impairment. Those found not to be specifically impaired are then collectively assessed for any impairment
fair value through profit or loss) are recognised initially on the trade date, which is the date that the Group becomes a party to the contractual provisions of
that has been incurred but not yet identified. Assets that are not individually significant are collectively assessed for impairment by grouping together assets with
the instrument.
similar risk characteristics.
F I N A N C I A L A S S E T S M E A S U R E D A T A M O R T I S E D C O S T
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual
cash flows in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in such a transferred
In assessing collective impairment, the Group uses historical trends of the probability of default, the timing of recoveries and the amount of loss incurred, adjusted
for Management’s judgement as to whether current economic and credit conditions are such that the actual losses are likely to be greater or less than suggested
financial asset that is created or retained by the Group is recognised as a separate asset or liability.
by historical trends.
Financial assets and liabilities are offset and the net amount presented in the consolidated statement of financial position if, and only if, the Group has a legal right
The Group has exposure to the following main risks from its financial instruments: market risk (including foreign currency risk and interest rate risk), credit risk and
to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.
liquidity risk.
The Group classifies non-derivative financial assets into the following categories: loans and receivables.
This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes for measuring and managing risk,
and the Group’s Management of capital.
The financial risk management policies are discussed by the Management of the Group on a regular basis to ensure that these are in line with the overall business
strategies and its risk management philosophy. Management sets policies which seek to minimise the potential adverse impact on the financial performance of the
Group. Management provides necessary guidance and instructions to the employees covering the specific risk areas.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N T I N U E D
2 6 . F I N A N C I A L I N S T R U M E N T S C O N T I N U E D
2 6 . 1 . M A R K E T R I S K
2 6 . 1 . M A R K E T R I S K C O N T I N U E D
I N T E R E S T R A T E R I S K M A N A G E M E N T
The Group’s activities expose it to the financial risks of changes in foreign currency exchange rates and interest rates. There is also a degree of currency risk through
The Group is exposed to interest rate risk as it borrows funds at floating interest rates, the interest rates are directly linked to LIBOR and/or EURIBOR plus a margin
overseas operations with a functional currency other than pounds sterling and to a lesser extent when contracting with clients in currencies other than pounds sterling.
based on the leverage ratio of the Group, the higher the leverage ratio the higher the margin on LIBOR and/or EURIBOR. The risk is managed by the Group maintaining
an appropriate leverage ratio and through this ensuring that the interest rate is kept as low as possible.
F O R E I G N C U R R E N C Y R I S K M A N A G E M E N T
The principal currency of the Group’s financial assets and liabilities is pounds sterling. The Group does, however, own trading subsidiaries based in Africa, Americas,
The interest fluctuations are low which minimises the Group’s exposure to interest rate fluctuations. As a result, no hedging instruments have been put in place.
Caribbean, Middle East, Asia, New Zealand and Europe which are denominated in a currency other than the principal currency. The Group manages exposure to foreign
exchange rates by carrying out the majority of its transactions in the functional currency of the Group company in the jurisdiction in which it operates.
The Group’s exposures to interest rates on financial assets and financial liabilities are detailed in the liquidity risk management section of this note.
The Group entities maintain assets in foreign currencies sufficient for regulatory capital purposes in each jurisdiction. The carrying amounts of the Group’s material
I N T E R E S T R A T E R I S K E X P O S U R E
foreign currency denominated monetary assets and monetary liabilities at the period end are as follows:
The following sensitivity analysis has been determined based on the floating rate liabilities.
Euro
United States Dollar
South African Rand
Swiss Franc
New Zealand Dollars
Singaporean Dollars
Pound Sterling
Total
(i) Monetary assets comprise of cash and cash equivalents and trade and other receivables.
(ii) Monetary liabilities comprise of loans and borrowings and trade and other payables.
F O R E I G N C U R R E N C Y R I S K E X P O S U R E
Monetary Assets(i)
Monetary Liabilities(ii)
2018
£'000
10,459
7,746
1,192
745
13
–
29,602
49,757
2017
£'000
3,786
3,720
792
653
–
–
2018
£'000
(3,020)
(1,484)
–
2017
£'000
(2,984)
(552)
(379)
(580)
(2,562)
–
(31)
–
–
18,040
(86,163)
(119,982)
26,991
(91,278)
(126,459)
The Group considers a reasonable interest rate movement in LIBOR to be 50 basis points based on recent historical changes to interest rates. If interest rates had
been higher/lower by 50 basis points and all other variables were held constant, the Group’s loss for the year ended 31 December 2018 would decrease/increase by
£357k (2017: £278k).
2 6 . 2 . C R E D I T R I S K M A N A G E M E N T
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group’s principal exposure to
credit risk arises from the Group’s trade receivables from clients, work in progress, accrued income and cash and cash equivalents.
Trade receivables, work in progress and accrued income consist of a large number of customers, spread across diverse industries and geographical areas. The carrying
amount of financial assets recorded in the historical financial information, which is net of impairment losses, represents the Group’s maximum exposure to credit risk
as no collateral or other credit enhancements are held.
The Group manages credit risk by review at take-on around:
> The risk of insolvency or closure of the customer’s business
> Customer liquidity issues
> General creditworthiness, including past default experience of the customer, and customer types
The following table illustrates Management’s assessment of the foreign currency impact on the year-end balance sheet and presents the possible impact on the
Subsequently, customer credit risk is managed by each of the Group entities subject to the Group’s policies, procedures and controls relating to customer credit risk
Group’s total comprehensive income for the year and net assets arising from potential changes in the Euro, United States Dollar, South African Rand, Swiss Franc,
management. Outstanding customer receivables are monitored and followed up continuously. Provisions are made when there is objective evidence that the Group
New Zealand Dollar and Singaporean Dollar exchange rates, with all other variables, particularly interest rates, remaining constant. A strengthening or weakening of
will not be able to collect the debts or bill the customer. This evidence can include the following: indication that the customer is experiencing significant financial
pounds sterling by 15% is considered an appropriate variable for the sensitivity analysis given the scale of foreign exchange fluctuations over the last three years.
difficulty or default, probability of bankruptcy, problems in contacting the customer, disputes with a customer, or similar factors. Analysis is done on a case by case
Euro
United States Dollars
South African Rand
Swiss Franc
New Zealand Dollars
Singaporean Dollars
Total
Euro
United States Dollars
South African Rand
Swiss Franc
New Zealand Dollars
Singaporean Dollars
Total
Strengthening/
(weakening) of
pound sterling
Effect on comprehensive income
and net assets
2018
£’000
2017
£’000
+15%
+15%
+15%
+15%
+15%
+15%
(15%)
(15%)
(15%)
(15%)
(15%)
(15%)
1,116
939
179
25
2
(5)
2,256
(1,116)
(939)
(179)
(25)
(2)
5
120
475
62
(286)
–
–
371
(120)
(475)
(62)
286
–
–
(2,256)
(371)
basis in line with policies. The ageing of trade receivables and loss allowance at the reporting date is disclosed in note 13.
Cash and cash equivalents and interest receivable 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.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N T I N U E D
2 6 . F I N A N C I A L I N S T R U M E N T S C O N T I N U E D
2 6 . 2 . C R E D I T R I S K M A N A G E M E N T C O N T I N U E D
C R E D I T R I S K E X P O S U R E
The gross carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was as follows:
Trade receivables
Other receivables
Work in progress
Accrued income
Other financial assets
Cash and cash equivalents
Total
2018
£’000
Loss
allowance
2018
£’000
Net
2018
£’000
Total
2017
£’000
Loss
allowance
2017
£’000
Net
2017
£’000
19,801
(3,659)
16,142
13,497
(2,635)
10,862
5,420
7,132
9,334
244
32,457
–
(48)
(25)
–
–
5,420
7,084
9,309
244
3,515
5,855
8,052
64
32,457
16,164
–
–
–
–
–
3,515
5,855
8,052
64
16,164
74,388
(3,732)
70,656
47,147
(2,635)
44,512
2018
Loans and borrowings(i)
Trade payables and accruals
Deferred consideration for acquisitions
2017
Loans and borrowings(i)
Trade payables and accruals
Deferred consideration for acquisitions
<3 months
£’000
3 – 12 months
£’000
1 – 5 years
£’000
>5 years
£’000
390
1,952
78,685
15,903
5,925
22,218
–
2,065
4,017
–
242
78,927
–
–
–
–
<3 months
£’000
3 – 12 months
£’000
1 – 5 years
£’000
>5 years
£’000
587
58,770
64,151
10,190
–
–
–
5,478
1,379
10,777
64,248
65,530
–
–
–
–
Total
contractual
cash flow
£’000
81,027
15,903
8,232
105,162
Total
contractual
cash flow
£’000
123,508
10,190
6,857
140,555
For trade receivables, work in progress and accrued income the Group has determined that the application of IFRS 9 impairment requirements at 1 January 2018
(i) This includes the future interest payments not yet accrued and the repayment of capital upon maturity.
results in an additional allowance for impairment of £301k (see note 3.1.).
2 6 . 4 . C A P I T A L R I S K M A N A G E M E N T
For the ageing of trade receivable and the provisions thereon at the year end, including the movement in the provision, see note 13.
to continue as going concerns while maximising the return to shareholders through the optimisation of the debt and equity balance.
The capital structure of the Group consists of shares, share premium and borrowings. The Group manages its capital to ensure that entities in the Group will be able
2 6 . 3 . L I Q U I D I T Y R I S K M A N A G E M E N T
As disclosed in note 23, the Group has a bank loan which requires it to meet leverage and interest cover covenants. In order to achieve the Group’s capital risk
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
management objective, the Group aims to ensure that it meets financial covenants attached to bank borrowings. Breaches in meeting the financial covenants would
by regular review around the working capital cycle using information on forecast and actual cash flows.
permit the lender to immediately recall the loan. In line with the loan agreement the Group tests compliance with the financial covenants on a quarterly basis.
Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has established an appropriate liquidity risk management framework
Individual regulated entities within the Group are subject to regulatory requirements to ensure adequate capital and liquidity to meet local requirements in Jersey,
for the Management of the Group’s short, medium and long-term funding and liquidity Management requirements. Regulation in most jurisdictions also requires the
Guernsey, Isle of Man, UK, USA, Switzerland, Netherlands, Luxembourg, Mauritius, South Africa and the Caribbean; all are monitored regularly to ensure compliance.
Group to maintain a level of liquidity so the Group does not become exposed.
There have been no breaches of applicable regulatory requirements during the year.
L I Q U I D I T Y A N D I N T E R E S T R I S K T A B L E S
The Directors continue to review and improve the Group’s objectives, policies and processes for managing capital.
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
2 6 . 5 . C A R R Y I N G A M O U N T O F F I N A N C I A L A S S E T S A N D L I A B I L I T I E S
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.
Financial assets measured at amortised cost:
Trade receivables
Other receivables
Work in progress
Accrued income
Other financial assets
Cash and cash equivalents
Financial liabilities measured at amortised cost:
Loans and borrowings
Trade and other payables
Other financial liabilities
Notes
13
16.1
12
14
24.1
22
23
16.2
24.2
2018
£’000
2017
£’000
16,142
10,862
5,420
7,084
9,309
244
32,457
70,656
3,515
5,855
8,052
64
16,164
44,512
72,715
119,705
17,409
10,098
8,209
6,443
98,333
136,246
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N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N T I N U E D
2 7 . S H A R E C A P I T A L A N D R E S E R V E S
O R D I N A R Y S H A R E S
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.
D I V I D E N D S
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.
O W N S H A R E S
Own shares represent the shares of the Company that are unallocated and held by PLC EBT and previously share ownership trusts and EBT12 (together the “Trusts”).
Own shares 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 by the Trust for the purchase or sale of the Company’s own shares is shown as a movement in
shareholders equity.
2 7 . 1 . S H A R E C A P I T A L
Authorised
300,000,000 Ordinary shares of £0.01 each
Called up, issued and fully paid
110,895,327 Ordinary shares of £0.01 each
£’000
3,000
1,109
Following a capital appointment of £1.5m from EBT12 to PLC EBT, 741,345 Ordinary shares in the Company were purchased and are held by PLC EBT and have been
treated as own shares in accordance with IAS 32 ‘Financial Instruments’.
On 28 September 2018, the Company issued and admitted an additional 1,121,077 ordinary shares at fair value to satisfy the share consideration payable for its
acquisition of Van Doorn, see note 17.2.
On 20 November 2018, the Company issued and admitted an additional 2,877,698 ordinary shares at fair value to satisfy the share consideration payable for its
acquisition of Minerva, see note 17.1.
Movements in share capital
Balance at the beginning of the year
Issue of shares
Balance at the end of the year
Movements in share premium
Balance at the beginning of the year
Issue of shares
Balance at the end of the year
2 7 . 2 . O W N S H A R E S
2018
£’000
–
1,109
1,109
2018
£’000
–
94,599
94,599
The own share reserve comprises the costs of the Company’s shares held by the Group, these have been treated as own shares in accordance with IAS 32 ‘Financial
Instruments’. Under the share exchange agreement (see note 27.1), the shares and loan notes held by EBT12 were converted into PLC shares and then sold for
The Company was incorporated on 12 January 2018 with an authorised share capital of £10,000 divided into 1,000,000 shares of £0.01 each, of which 2 shares were
£15.641 million upon IPO. Following the IPO, the PLC EBT was settled by capital appointments and now holds 741,345 Ordinary shares (0.7% of the issued share
issued on incorporation at par. On 12 February 2018, the date of the IPO prospectus, a further 902,427 Ordinary Shares were issued, also at par.
capital) with a cost of £2.564 million (2017: £1k).
Immediately prior to Admission, the Group undertook a reorganisation (the “Reorganisation”) of its corporate structure that resulted in the Company being the
ultimate holding company of the Group and JTCGHL becoming a direct subsidiary of the Company.
In connection with the Reorganisation and the IPO Offer, the Company’s shareholders resolved by written resolution on 8 March 2018 that the authorised share
capital of the Company be increased from £10,000 divided into 1,000,000 Ordinary Shares to £3,000,000 divided into 300,000,000 Ordinary Shares (known as
“PLC shares”).
The Reorganisation was effected pursuant to a Share Exchange Agreement made with the previous shareholders of, and holders of loan notes issued by, JTCGHL which
was entered into on 14 March 2018.
At 1 January 2017
Movement
At 31 December 2017
Movement
At 31 December 2018
2 7 . 3 . O T H E R R E S E R V E S
C A P I T A L R E S E R V E
JSOPs
No.
EBT12
No.
PLC EBT
No.
36,602
84,000
(7,480)
–
29,122
84,000
–
–
–
(29,122)
(84,000)
741,345
–
–
741,345
Under the Share Exchange Agreement, all of the shares in, and Loan Notes (save in the case of certain Loan Notes which were repaid prior to Admission) issued by
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 as a result of
JTCGHL were transferred to the Company and the Company issued an additional 99,097,573 Ordinary Shares to such shareholders and noteholders following which
transactions with employees or owners of the Group.
the Company became the sole shareholder of JTCGHL.
Completion of the Share Exchange Agreement took place immediately prior to Admission, being conditional upon the Board deciding to proceed with Admission and
The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign operations.
T R A N S L A T I O N R E S E R V E
any necessary prior regulatory consents being obtained.
On 14 March 2018, the Directors authorised the issue of 99,097,573 Ordinary shares at par for the Reorganisation and a further 6,896,552 Ordinary shares at par for
The accumulated profit and loss reserve includes all current and prior year accumulated profits and losses and share-based employee remuneration.
A C C U M U L A T E D P R O F I T S
the IPO Offer and Admission.
The IPO Offer comprised of the sale by Original Shareholders of 77,173,702 Ordinary shares and 6,896,552 New Ordinary Shares at £2.90 per share, raising gross
proceeds of £243.8m. These were admitted to the Official List of the UK Listing Authority with a Premium Listing and approval to trade on the Main Market of the
London Stock Exchange.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N T I N U E D
S E C T I O N 6 – O T H E R D I S C L O S U R E S
The difference between the total current tax shown and the amount calculated by applying the standard rate of Jersey income tax to the loss before tax is as follows:
2 8 . I N C O M E T A X E X P E N S E
C U R R E N T T A X
Loss on ordinary activities before tax
Current tax is the expected tax payable or receivable on the taxable income or loss for the period using tax laws enacted or substantively enacted at the balance
Tax on loss on ordinary activities at standard Jersey income tax rate of 10% (2017: 10%)
sheet date, and any adjustment to tax payable in respect of previous years.
D E F E R R E D T A X
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, and is accounted for using the balance sheet liability method. Deferred tax liabilities
Effects of:
Results from tax exempt entities (Jersey company)
Results from tax exempt entities (Foreign company)
Foreign taxes not at Jersey rate
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
Depreciation in excess of capital allowances (Jersey company)
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 that are expected to apply when the liability is settled or the asset realised using tax rates enacted or substantively
enacted at the balance sheet date.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end
of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current 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.
Depreciation in excess of capital allowances (Foreign company)
Temporary difference arising on amortisation of customer contracts
Non-deductible expenses
Additional provisions
Consolidation adjustments
Other differences
Total tax charge for the year
C U R R E N T T A X A N D D E F E R R E D T A X F O R T H E Y E A R
Reconciliation of effective tax rates
Current and deferred tax are recognised in the consolidated income statement, except when they relate to items that are recognised in other comprehensive income
Tax on loss on ordinary activities
or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively. Where current
Effect of:
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 expense
Jersey tax on current year profits
Foreign company taxes on current year profits
Deferred tax expense (see note 29)
Jersey origination and reversal of temporary differences
Temporary movements in relation to customer contracts
Foreign company origination and reversal of temporary differences
Total tax charge for the year
2018
£’000
2017
£’000
587
1,463
2,050
110
(389)
(43)
(322)
300
982
1,282
7
(172)
(34)
(199)
1,728
1,083
Results from tax exempt entities (Jersey company)
Results from tax exempt entities (Foreign company)
Foreign taxes not at Jersey rate
Depreciation in excess of capital allowances (Jersey company)
Depreciation in excess of capital allowances (Foreign company)
Temporary difference arising on amortisation of customer contracts
Non-deductible expenses
Additional provisions
Consolidation adjustments
Other differences
Effective tax rate
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2018
£’000
2017
£’000
(2,129)
(3,562)
(213)
(356)
1,073
1,280
(87)
788
110
(43)
(389)
72
200
173
44
1,728
(144)
569
6
(34)
(172)
17
–
(101)
18
1,083
2018
£’000
2017
£’000
10.00%
10.00%
(50.67%)
(35.93%)
4.11%
4.05%
(37.19%)
(15.96%)
(5.19%)
(0.17%)
18.36%
2.02%
0.95%
4.82%
(3.36%)
(0.49%)
(9.44%)
(8.15%)
0.00%
2.82%
(2.06%)
(0.51%)
(81.58%)
(30.42%)
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 profits are reported in Jersey by Jersey financial services
companies where the applicable income tax rate is 10%. It is therefore appropriate to use this rate for reconciliation purposes.
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N T I N U E D
2 9 . D E F E R R E D T A X A T I O N
The deferred taxation (assets) and liabilities recognised in the financial statements are set out below:
Intangible assets
Other origination and reversal of temporary differences
Deferred tax assets
Deferred tax liabilities
The movement in the year is analysed as follows:
Intangible assets
Balance at the beginning of the year
Recognised through acquisitions
Recognised in income statement
Foreign exchange (to other comprehensive income)
Balance at 31 December
Other origination and reversal of temporary differences
Balance at the beginning of the year
Recognised in income statement
Balance at 31 December
At 31 December 2018 and 31 December 2017 the Group recognised all material deferred tax assets and liabilities.
2018
£’000
5,869
6
2017
£’000
2,817
(61)
5,875
2,756
(135)
6,010
5,875
2018
£'000
2,817
3,327
(389)
114
(61)
2,817
2,756
2017
£'000
1,022
1,947
(172)
20
5,869
2,817
(61)
67
6
(33)
(28)
(61)
3 0 . P R O V I S I O N S
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.
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.
O N E R O U S C O N T R A C T S
Present obligations arising under onerous contracts are recognised and measured as provisions. An onerous contract is considered to exist where the Group has a
contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received from the contract.
D I L A P I D A T I O N S
The Group has entered into leases for rental agreements in different countries. The estimated cost of the dilapidations amount 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 discounted dilapidation cost has been capitalised against the leasehold improvement asset in accordance with IAS 16.
At 1 January 2017
Additions
Unwind of discount
Amounts utilised
At 31 December 2017
Additions
Unwind of discount
Amounts utilised
Impact of foreign exchange
At 31 December 2018
Analysis of total provisions:
Amounts falling due within one year
Amounts falling due after more than one year
Total
D I L A P I D A T I O N S P R O V I S I O N
Dilapidation
provisions
£’000
Onerous lease
provisions
£’000
159
471
–
(159)
471
422
28
–
7
928
186
223
8
(55)
362
334
12
(210)
13
511
2018
£’000
401
1,038
1,439
Total
£’000
345
694
8
(214)
833
756
40
(210)
20
1,439
2017
£’000
187
646
833
As part of the Group’s property leasing arrangements 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 lease) and to restore wear and tear by repairing and repainting. The provisions are expected to be utilised when
the leases expire or upon exit.
O N E R O U S L E A S E P R O V I S I O N S
As at 31 December 2018, the Group has identified onerous leases for premises in Jersey, Guernsey and Switzerland. The provision is calculated as the net present value
of the cost of the leases less the income from any known sub-leases.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N T I N U E D
3 1 . O P E R A T I N G L E A S E S
The Group principally enters into operating leases for the rental of buildings and equipment. Rentals payable under such leases are charged to the consolidated
income statement on a straight-line basis over the term of the relevant lease except where another more systematic basis is more representative of the time
pattern in which economic benefits from the leased assets are consumed. When an operating lease is terminated before the lease period has expired, any payment
required to be made to the lessor by way of penalty is recognised as an expense in the period in which termination takes place. Any incentives received from the
lessor in relation to operating leases are recognised as a reduction of rental expense over the lease term on a straight-line basis.
Group as lessee
Total lease payments under operating leases recognised as an expense
2018
£’000
2017
£’000
3,587
3,188
3 3 . C A S H F L O W I N F O R M A T I O N
O P E R A T I N G C A S H F L O W S
Operating profit
Adjustments for:
Depreciation of property, plant and equipment
Amortisation of intangible assets
Share-based payment expense
Foreign exchange
2018
£'000
629
943
3,694
443
557
2017
£'000
6,753
1,052
1,842
517
257
Operating cash flows before movements in working capital
6,266
10,421
N O N - U N D E R L Y I N G I T E M S W I T H I N N E T C A S H F R O M O P E R A T I N G A C T I V I T I E S
Net cash from operating activities
Non-underlying items:
Capital distribution from EBT12
IPO costs
Acquisition and integration costs
Office closures
Other
Total non-underlying items within net cash from operating activities
Underlying net cash from operating activities
2018
£'000
2017
£'000
6,488
10,020
7,543
954
4,024
56
93
–
54
1,142
625
388
12,670
2,209
19,158
12,229
At the balance sheet date, the Group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due
as follows:
Within one year
In the second to fifth years inclusive
After five years
2018
£'000
3,499
10,109
24,090
37,698
2017
£'000
3,196
10,736
19,159
33,091
The Group has entered into leases for rental agreements in different countries. Leases are negotiated for a variety of terms over which rentals are fixed with break
clauses and options to extend for further periods at the prevailing market rate. Any lease incentives are spread over the term of the lease. The break dates for the
lease agreements vary.
The Group has also entered into commercial leases on certain motor vehicles and items of office equipment. These leases have an average life of between three and
five years with renewal options included in certain contracts.
3 2 . F O R E I G N C U R R E N C Y
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. Non-
monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined.
Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. 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.
Income and expense items relating to entities acquired during the financial year are translated at the average exchange rate for the period under the Group’s control.
Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in equity in the translation reserve.
Any goodwill arising on the acquisition of a foreign operation subsequent to 1 July 2014 and any fair value adjustments to the carrying amounts of assets and liabilities
arising on the acquisition are treated as assets and liabilities of the foreign operation and translated at the spot rate of exchange at the reporting date.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
C O N T I N U E D
3 3 . C A S H F L O W I N F O R M A T I O N C O N T I N U E D
F I N A N C I N G A C T I V I T I E S
Changes in liabilities arising from financing activities:
At 1 January 2018
Cash flows:
Acquired on acquisition
Drawdowns
Repayments
Loan notes settled on IPO
Accrual of loan note interest
Other non-cash movements(i)
At 31 December 2018
Finance leases
due within
one year
£’000
Finance leases
due after
one year
£’000
Borrowings
due within
one year
£’000
Borrowings
due after
one year
£’000
Total
£’000
–
5
–
–
–
–
–
5
–
56,364
63,341
119,705
48
–
–
–
–
53
72,960
72,960
(18)
(56,000)
(689)
(56,707)
–
–
–
30
–
–
314
678
(62,202)
(62,202)
48
48
(1,456)
(1,142)
72,002
72,715
(i)
Other non-cash movements include the fair value adjustment on the loan note extinguishment, amortisation of loan arrangement fees and foreign exchange movement.
N E T D E B T
Bank loans
Finance leases
Other loans
Trapped cash(i)
Committed capital distributions(ii)
Less: Cash and cash equivalents
Total net debt
Notes
23
23
23
2018
£'000
2017
£'000
(71,494)
(55,522)
(35)
(1,186)
(2,294)
(6,103)
–
(2,028)
(1,127)
–
32,457
16,164
(48,655)
(42,513)
3 4 . R E L A T E D P A R T Y T R A N S A C T I O N S
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.
3 4 . 1 . K E Y M A N A G E M E N T P E R S O N N E L
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:
Salaries and other short-term employee benefits
Capital distribution from EBT12
Post-employment and other long-term benefits
Share-based payments
Total payments
2018
£'000
2017
£'000
1,795
1,217
841
66
194
2,896
–
60
218
1,495
3 4 . 2 . O T H E R R E L A T E D P A R T I E S T R A N S A C T I O N S
During the year, the Group was charged by CBPE Capital LLP (“CBPE”), the Group’s private equity partners up to the point of the IPO; £10k for the provision of Non-
Executive Directors (2017: £50k) and £5k for associated travel and expenses (2017: £24k). See note 23 for the Investor loan notes previously held by CBPE Capital
LLP which were repaid during the year.
Loan receivable balances due from related undertakings are disclosed in note 24.1.
Northpoint Latam Limited (“NPL”), a related party due to common directorships, previously acted as agent for the referral of new business to provide support services
to Group offices in Latin America and North America. In accordance with a letter of agreement from JTC (BVI) Limited (“JTCBVI”) to NPL, JTCBVI agreed to cover any
and all costs in relation to the services provided by NPL. These included operating costs, third party administration and commissions paid. There are no costs in the
current year as the Group closed its direct operations in Latin America at the end of 2017 and the arrangement ceased (2017: £1.24m).
The Group’s associate, KIG (see note 21), has provided £799k of services to Group entities during the year (2017: £182k).
(i) Trapped cash represents the minimum cash balance to be held to meet regulatory capital requirements.
(ii) Committed capital distribution from EBT12 to employees.
3 4 . 3 . P A R E N T A N D U L T I M A T E C O N T R O L L I N G P A R T Y
Prior to admission to the London Stock Exchange, there was no ultimate controlling party as shares were held by both CBPE and Management. Following the IPO, the
Company is the new ultimate controlling party of the Group.
3 5 . G R O U P E N T I T I E S
Detailed below is a list of subsidiaries of the Company at 31 December 2018 which, in the opinion of Management, principally affect the profit or the net assets of
the Group. The Group owns 100% of the ordinary share capital of all subsidiaries within the Group, with 100% voting power held.
Name of subsidiary
Country of incorporation and place of business
JTC Group Holdings Limited
JTC Group Limited
JTC (Jersey) Limited
JTC Fund Solutions (Jersey) Limited
JTC Trust & Corporate Services Limited
JTC (UK) Limited
JTC Fund Services (UK) Limited
JTC Fiduciary Services (UK) Limited
JTC Miami Corporation
JTC Trustees (USA) Ltd
Jersey
Jersey
Jersey
Jersey
Jersey
United Kingdom
United Kingdom
United Kingdom
United States
United States
JTC Fund Solutions (Guernsey) Limited
Guernsey, Channel Islands
Activity
Holding
Head office services
Trading
Trading
Trading
Trading
Trading
Trading
Trading
Trading
Trading
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C O N T I N U E D
I N V E S T O R R E L A T I O N S I N F O R M A T I O N
3 5 . G R O U P E N T I T I E S C O N T I N U E D
Name of subsidiary
Country of incorporation and place of business
JTC Global AIFM Solutions Limited
Guernsey, Channel Islands
JTC Fund Solutions RSA (Pty) Ltd
Caledonia Accounting Services Pte Ltd
South Africa
Singapore
JTC Fiduciary Services (Singapore) Pte Limited
Singapore
JTC (BVI) Limited
JTC (Luxembourg) S.A.
JTC Luxembourg Holdings S.à r.l.
JTC Signes Services SA
JTC Signes S.à r.l.
JTC Global AIFM Solutions SA
JTC (Geneva) Sàrl
JTC (Suisse) SA
JTC Trustees (Suisse) Sàrl
JTC Trust Company (Switzerland) SA
JTC Trustees (IOM) Limited
JTC (Netherlands) B.V.
Autumn Productions B.V.
JTC Holdings (Netherlands) B.V.
Van Doorn CFJ B.V.
British Virgin Islands
Luxembourg
Luxembourg
Luxembourg
Luxembourg
Luxembourg
Switzerland
Switzerland
Switzerland
Switzerland
Isle of Man
Netherlands
Netherlands
Netherlands
Netherlands
JTC Trust Company (New Zealand) Limited
New Zealand
JTC (Cayman) Limited
JTC Fund Services (Cayman) Ltd
JTC (Mauritius) Limited
JTC Fiduciary Services (Mauritius) Limited
JTC Corporate Services (DIFC) Limited
Cayman Islands
Cayman Islands
Mauritius
Mauritius
Dubai
Activity
Trading
Trading
Trading
Trading
Trading
Trading
Holding
Trading
Trading
Trading
Trading
Trading
Trading
Trading
Trading
Trading
Trading
Holding
Trading
Trading
Trading
Trading
Trading
Trading
Trading
C O M P A N Y
I N V E S T O R R E L A T I O N S
David Vieira
Chief Communications Officer
JTC House
28 Esplanade
St Helier
Jersey
JE4 2QP
Email David.vieira@jtcgroup.com
Call +44 1534 816 246
M E D I A R E L A T I O N S
David Vieira
Chief Communications Officer
JTC House
28 Esplanade
St Helier
Jersey
JE4 2QP
Email David.vieira@jtcgroup.com
Call +44 1534 916 246
C O M P A N Y S E C R E T A R Y
JTC (Jersey) Limited
JTC House
28 Esplanade
St Helier
Jersey
JE4 2QP
Email jtc@jtcgroup.com
Call +44 1534 700 000
R E G I S T R A R
3 6 . E V E N T S O C C U R R I N G A F T E R T H E R E P O R T I N G P E R I O D
Computershare Investor Services (Jersey) Limited
There have been a number of subsequent events from 31 December 2018 to the date of issue of these financial statements. They are as follows:
> On 12 February 2019, JTC entered into an outsourcing and a facilitation and referral agreement with Sackville Bank and Trust Company Limited
(“Sackville”) for the referral of Sackville’s clients to JTC as a replacement provider of the trust, custody and administration services. Total compensation is
expected to be between USD $1.2 million and $1.4 million.
> On 25 March 2019, JTC signed a sale and purchase agreement to acquire 100% of the share capital of Exequtive Partners S.A (“Exequtive”) for a
maximum total consideration of ¤34 million, part of which is contingent on Exequtive meeting certain EBITDA and revenue targets. Exequtive is a
privately owned Luxembourg-based provider of domiciliation and corporate administration services. The acquisition was funded using cash, drawing
¤17.9 million from our existing bank facilities and by the issuance of 1,925,650 PLC shares.
> On 1 April 2019, JTC entered into a facilitation and referral agreement with Aufisco B.V. and Oak Tree Management B.V. for the referral of their clients to
JTC as a replacement provider of the trust and administration services. Total estimated compensation is expected to be up to a maximum of ¤2 million.
Queensway House
Hilgrove Street
St Helier
Jersey
JE1 1ES
Call +44 370 707 4040
A D V I S O R S
F I N A N C I A L A D V I S O R S
Zeus Capital Limited
10 Old Burlington Street
Mayfair
London
W1S 3AG
United Kingdom
Email info@zeuscapital.co.uk
Call +44 203 829 5000
Numis Securities Limited
The London Stock Exchange Building
10 Paternoster Square
London
EC4M 7LT
Email mail@numis.com
Call +44 20 7260 1000
A U D I T O R S
PricewaterhouseCoopers CI LLP
37 Esplanade
St Helier
Jersey
JE1 4XA
Call +44 1534 838200
F I N A N C I A L P U B L I C R E L A T I O N S
Camarco
107 Cheapside
London
EC2V 6DN
United Kingdom
Email info@camarco.co.uk
Call +44 20 3757 4980
B A N K E R S
The Royal Bank of Scotland International Limited
71 Bath Street
St Helier
Jersey
JE4 8PJ
Call +44 1534 285200
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D E F I N E D T E R M S
B O A R D
C O S O - E R M F R A M E W O R K
E U R I B O R
G F S C
L S E
The following list of defined terms is not intended
The Board of JTC PLC
The Committee of Sponsoring Organisation’s
Euro Interbank Offered Rate
The Guernsey Financial Services Commission
London Stock Exchange
to be an exhaustive list of definitions, but
provides a list of the defined terms used in this
B R E X I T
Enterprise Risk Management-Integrated Framework
Annual Report
Brexit is the withdrawal of the United Kingdom
C R S
from the European Union
Common Reporting Standard
A D VA N C E T O B U Y
Advance to Buy, or the ‘A2B’ programme has been
C A G R
created to help staff purchase JTC shares directly,
Compounded Annual Growth Rate
independent of eligibility or participation in other
C R O
Chief Risk Officer
F A T C A
G S C
The Foreign Account Tax Compliance Act
Global Service Centre
L T I P
Long-Term Incentive Plan
F C A
H N W / U H N W
L T M
Financial Conduct Authority
High Net Worth individual(s) / Ultra High Net
Last twelve months
F D I
Worth individual(s)
parts of the Ownership for All programme (e.g.
C A P I T A L E M P L O Y E D
C S R
Foreign Direct Investment
I A S B
the EBT, DBSP or PSP)
Total of Working Capital (WC) in the Balance
Corporate Social Responsibility
International Accounting Standards Board
A D J U S T E D D I L U T E D E P S
Intangibles (including acquisition related and
C S S F
Sheet, Property, Plant and Equipment and
F I R S T T R A D I N G D A T E
14 March 2018, the date on which trading in the
I C S
Underlying EPS is adjusted to remove the charge
other assets)
The Luxembourg Commission for the Supervision of
Offer Shares of the Company on the premium
Institutional Client Services
the Financial Sector or Commission de Surveillance
listing segment of the Official List of the FCA and
for amortisation of customer contracts, other gains
and losses, share of profits from equity accounted
investees, amortisation of loan arrangement fees
C A P I T A L E X P E N D I T U R E ( C A P E X )
du Secteur Financier
Investment in property, plant, equipment and
and unwinding of NPV discounts on liabilities
software not related to acquisitions
D B S P
trading on the main market of the London Stock
Exchange commenced
I F R S
International Financial Reporting Standards as
adopted by the European Union
M & A
Merger and acquisition
M A N A G E M E N T
The Directors of JTC Group Holdings Limited
M E E M
Multi-period excess earnings method financial
valuation model
Deferred Bonus Share Plan
F R C
M I N E R VA
A E O I
C A S H C O L L E C T I O N /
Automatic Exchange of Information
C O N V E R S I O N
E B I T
A I F M D
compared with EBITDA
The Alternative Investment Fund Managers
E B I T D A
The ratio of net cash from operating activities
Profit / (loss) before interest and tax
Financial Reporting Council
I F R S I C
Minerva Holdings Limited and MHL Holdings SA
F T Es
Full-Time Equivalents
IFRS Interpretations Committee
I L M
M L R O / M L C O
Money Laundering Reporting Officer / Money
The organisation formerly known as the Institute of
Laundering Compliance Officer
Directive (2011/61/EU)
C B P E C A P I T A L L L P
Profit / (loss) from operating activities before
F V O C I
Leadership and Management
A M L
Anti-Money Laundering
partner from 2012 to 2018)
E B T 1 2
F V T P L
I P O
Initial Public Offering
Close Brothers Private Equity (JTC’s private equity
depreciation, amortisation, interest and tax
Fair value through other comprehensive income
C C O
Jersey Trust Company Employee Benefit Trust 2012
Fair value through profit and loss
N A C T
New Amsterdam Cititrust B.V.
N E T D E B T
A L T E R N A T I V E P E R F O R M A N C E
Chief Commercial Officer
M E A S U R E ( A P M )
A financial measure of historical or future financial
C E O
performance, financial position or cash flows, other
Chief Executive Officer
than a financial measure defined or specified in the
applicable financial reporting framework
C F O
E C L
Expected Credit Loss
E 4 A
F X
Foreign exchange
I S A E 3 4 0 3
Total debt and total committed capital
Assurance standard developed by the International
distributions less cash and cash equivalents
Auditing and Assurance Standards Board and
supported by the International Federation
N E T L E V E R A G E
G B P , £ O R S T E R L I N G
of Accountants.
Total net debt divided by underlying EBITDA (for
the LTM at average FX rates) adjusted for proforma
‘Equity for All’ – JTC’s programme to promote wide
The lawful currency of the United Kingdom
A R T I C L E S O F A S S O C I A T I O N
G D P R
organisation’s controls
The Articles of Association of the Company
C F T
E P S
The General Data Protection Regulation
N P V
Combatting the Financing of Terrorism
Earnings Per Share
(2016/679) on data protection and privacy for all
Type II: Documenting over a period of time
Net Present Value
Chief Financial Officer
employee share ownership in the Company
Type I: Documenting a ‘snapshot’ of the
contribution from acquisitions and synergies
A U D I T A N D R I S K C O M M I T T E E
The Audit and Risk Committee of the Board of
C G U
E S G
the European Economic Area.
managed over time.
for all individuals within the European Union and
(typically 6 months) showing controls have been
the Company
B A M L
Cash Generating Unit
Environmental, Social and Governance
C I M A
E U R O R ¤
The general meeting of the Company
The Jersey Financial Services Commission
G E N E R A L M E E T I N G
J F S C
the Company
N O M I N A T I O N C O M M I T T E E
The Nomination Committee of the Board of
Bank of America Merrill Lynch Wealth
The Cayman Islands Monetary Authority
The single currency introduced at the start of
Management’s International Trust and Wealth
Structuring business
C O
Compliance Officer
B E P S
The Base Erosion and Profit Shifting Project of
C O M P A N Y
the OECD
JTC PLC
the third stage of the European Economic and
Monetary Union pursuant to the Treaty on the
functioning of the European Community, as
amended from time to time
G R O U P
L I B O R
N O N - U N D E R L Y I N G I T E M S
These are certain one-off charges or non-recurring
The Company and its subsidiaries from time
The London Inter-bank Offered Rate is an average
credits that have a material impact on the Group’s
to time
G H B
Group Holdings Board
value of the interest-rate which is calculated from
estimates submitted by the leading global banks on
financial results. They represent items of income
or expenditure that are not of an operational
a daily basis
nature do not represent the core operating results
and based on their significance in size or nature
and are presented separately to provide further
understanding about the performance of the Group.
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C O N T I N U E D
O E C D
T S R
Organisation for Economic Co-operation
Total Shareholder Return
and Development
O 4 A
U N D E R L Y I N G E B I T D A
EBITDA excluding one-off charges or non-recurring
Ownership for All, the evolution of JTC’s shared
credits within operating expenses that are non-
ownership programme for all employees post IPO
underlying
P I I
U N D E R L Y I N G E B I T D A M A R G I N
Professional Indemnity Insurance
Underlying EBITDA divided by revenue, and is
expressed as a percentage
P L C E B T
JTC PLC Employee Benefit Trust
U N D E R L Y I N G E A R N I N G S
P C S
Private Client Services
P D M R
P E R S H A R E
Underlying profit / (loss) for the year divided by
the weighted-average number of basic shares for
the period
Person Discharging Managerial Responsibility
U N D E R L Y I N G G R O S S P R O F I T
P R O F O R M A
Gross profit (being revenue less direct staff and
other direct costs) excluding one-off charges or
Taking into account a full year’s trading
non-recurring credits that are non-underlying
P S P
Performance Share Plan
P W C
PricewaterhouseCoopers CI LLP
U N D E R L Y I N G G R O S S
P R O F I T M A R G I N
Underlying gross profit divided by revenue, and is
expressed as a percentage
U N D E R L Y I N G P R O F I T / ( L O S S )
R E C O M M E N D A T I O N F O R
F O R T H E Y E A R
S I G N I N G ( R F S )
Loss for the year excluding one-off charges or non-
JTC internal control tool ensuring that decisions
recurring credits within operating expenses, other
made by the business are thoroughly documented,
gains and finance costs that are non-underlying
reviewed and approved at an appropriate level on a
‘six-eyes’ basis
U B O
Ultimate Beneficial Owner
R E M U N E R A T I O N C O M M I T T E E
The Remuneration Committee of the Board of
the Company
U S D O R $
The lawful currency of the United States
S H A R E S
U K C O R P O R A T E G O V E R N A N C E
The Ordinary Shares in the capital of the Company
C O D E O R T H E C O D E
The UK Corporate Governance Code 2016
S H A R E H O L D E R
Any holder of Ordinary Shares at any time
VA N D O O R N
Van Doorn CFS B.V.
S M E
Small and Medium sized Enterprise
W A C C
Weighted Average Cost of Capital
S T E P
Society of Trust and Estate Practitioners
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Consultancy, design and production
www.luminous.co.uk
Design and production
www.luminous.co.uk
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J T C P L C
J T C H O U S E
2 8 E S P L A N A D E
S T H E L I E R
J E R S E Y
J E 2 3 Q A
C H A N N E L I S L A N D S
J T C G R O U P . C O M