For many high-margin businesses spread across wide international networks, these are tough times. Not so for JTC (JTC), whose role as an administrator of offshore funds and trusts for wealthy individuals, families and institutions continues with barely any interruption.
Based on the group’s full-year outlook you would not know there is a global pandemic on. Chief executive Nigel Le Quesne told us the first three months of 2020 were JTC’s best ever quarter for new business, which presumably supplies renewed confidence in medium-term guidance for net organic growth of 8 to 10 per cent a year. Steady demand from clients – and few quibbles about price – should also mean underlying cash profit margins hold steady at between 33 per cent and 38 per cent.
In both the institutional and private client divisions, profitability is moving up, despite another year of investments and acquisitions. Looking ahead, the focus will be on integrating the post-period purchases of US fund services group NES Financial and Sanne’s Jersey-based private client team, the cost of which is likely to have stretched the group’s net debt beyond the 1.9 times underlying cash profit multiple recorded at the end of 2019. Still, this is likely to be well below key banking covenants.
Analysts at Numis forecast earnings of 24.4p per share this year, rising to 28p in 2021.
| JTC (JTC) | ||||
| ORD PRICE: | 412p | MARKET VALUE: | £472m | |
| TOUCH: | 410-420p | 12-MONTH HIGH: | 464p | LOW: 280p |
| DIVIDEND YIELD: | 1.3% | PE RATIO: | 27 | |
| NET ASSET VALUE: | 112p* | NET DEBT: | 72%** | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 (pre-IPO) | 59.8 | -3.6 | -7.0 | nil |
| 2018 | 77.3 | -2.1 | -3.9 | 3.0 |
| 2019 | 99.3 | 17.6 | 15.4 | 5.3 |
| % change | +29 | - | - | +77 |
| Ex-div: | 04 Jun | |||
| Payment: | 03 Jul | |||
*Includes intangible assets of £173m, or 151p a share **Includes lease liabilities of £31m | ||||
