JTC looking ahead ambitiously after strong first half

by | Sep 12, 2023

(Sharecast News) – JTC reported a solid interim financial performance on Tuesday, recording 30.6% growth in revenue to £121.5m.
The FTSE 250 company noted robust net organic revenue growth of 21% for the six months ended 30 June, up from 9.5% in the prior year, which it said reflected the successful roll-out of its growth strategies.

Underlying EBITDA jumped 30.8% year-on-year to £40.2m, while the EBITDA margin settled at 33.1%.

Operating profit surged to £24.7m, marking a 66.7% increase, while profit before tax decreased 43.3% to £11.9m.

Additionally, earnings per share experienced a dip of 46.5%, setting at 7.61p.

Cash conversion increased 12 percentage points to 113%, while net debt narrowed by £59.5m, setting at £44.6m.

The firm announced a 12.9% increase in its interim dividend, bringing it to 3.5p per share from 3.1p for the first half of 2022.

With the successful SDTC equity fundraise in June, the company said it had managed to notably reduce its leverage, which was expected to be below 2x reported underlying EBITDA by the end of the year.

In line with its strategic plans, both the ICS and PCS divisions of the group posted impressive performances, registering organic growth rates of 22.4% and 18.6%, respectively.

The company also emphasised the increased lifespan of the JTC client book, now at 14 years, valued at £1.6bn.

JTC’s successful acquisition of SDTC on 2 August fortified its dominant position in the pivotal US market, the board said.

Its first half organic performance was buoyed by deeper integration of the group’s core offerings, including banking, tax compliance, and strategic transformation services.

Looking ahead, JTC said it was optimistic about sustaining its growth trajectory and expected to surpass market expectations for the year.

The firm’s ‘Galaxy era’ growth strategy was on track to be realised by the end of the year – two years ahead of the projected time frame.

Its acquisition of SDTC was meanwhile anticipated to bring about substantial growth synergies post-integration.

As the group transitioned into its ‘Cosmos era’, JTC said it was setting ambitious targets, aiming to double its size by 2027 relative to its 2023 full-year performance.

The group’s medium-term guidance remained intact, targeting annual net organic revenue growth of 8% to 10%, an underlying EBITDA margin of 33% to 38%, cash conversion of 85% to 90%, and net debt of between 1.5x and 2.0x underlying EBITDA.

“Today’s excellent results and the continued growth of our platform, including the successful acquisition of SDTC, which further enhances our platform in the important US market, yet again demonstrate the significant earnings power of JTC,” said chief executive officer Nigel Le Quesne.

“Organic revenue growth in the period has been outstanding and we continue to successfully acquire and integrate great businesses that deliver increasing returns, particularly from capturing incremental share of wallet from our growing client base.

“The fact that this is being achieved in a more challenging global environment proves how powerful JTC’s business model, and ability to innovate, really is.”

Le Quesne said that by the end of 2023, the firm would have delivered its ‘Galaxy-era’ business plan, resulting in a quadrupling of the size of the group since listing in 2018.

“The momentum in the business, coupled with the long-term structural drivers in our sector, mean that we remain as ambitious for the group as ever and aim to once again double in size during the ‘Cosmos era’, which will commence in 2024 and is expected to run until 2027.

“We look forward to continuing to deliver strong, consistent results, with compounding revenues, for all of our shareholders year in and year out.”

At 1015 BST, shares in JTC were up 7.78% at 727p.

Reporting by Josh White for Sharecast.com.

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