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THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.

14 June 2023

For immediate release

JTC PLC

(the "Company" and together with its subsidiaries "JTC" or the "Group")

Acquisition of South Dakota Trust Company

Establishes JTC as the leading independent provider of administration services to the US personal trust sector

JTC, the global provider of fund, corporate and private client services, is pleased to announce that it has entered into a definitive agreement to acquire TC3 Group Holdings LLC, trading as South Dakota Trust Company ("SDTC"), the leading independent provider of administration services to the US personal trust sector, for a maximum consideration of $270 million (the "Acquisition").

The total consideration of $270 million will be satisfied as follows:

·      $200 million initial consideration comprising $147 million in cash and up to a maximum of $53 million in new JTC ordinary shares ("Ordinary Shares"); and

·      A further earn-out of up to $70 million will be payable in cash and JTC Ordinary Shares on the achievement of specific revenue performance targets for the two-year period ending 31 December 2025

The Acquisition is subject to customary US merger control as well as regulatory approval in South Dakota (SD) and is expected to complete before the end of August 2023.  The Acquisition will be funded from the Group's existing cash reserves, debt facilities and the proceeds of a proposed placing of new Ordinary Shares to raise gross proceeds of c.£62 million (the "Placing"), representing approximately 6% of JTC's current issued share capital. 

The Placing is being conducted through an accelerated bookbuilding process which will be launched immediately following the release of the Placing Announcement. Joh. Berenberg, Gossler & Co. KG ("Berenberg") and Numis Securities Limited ("Numis") are acting as the Company's joint bookrunners (Berenberg and Numis together, the "Joint Bookrunners") in connection with the Placing.

Acquisition Highlights:

·      Acquisition of SDTC, the leading independent provider of administration services to the US personal trust sector

·      SDTC provides access to a sticky client base of c.1,700 high net worth and ultra-high net worth clients with a large intermediary network

·      SDTC has a compelling financial profile with a 22-year track record of consistent growth, high margins and strong cash conversion

·      Fixed annual recurring fees and very low client churn (c.3% per annum) provide excellent revenue visibility and predictability, with 98.3% client revenue retention

·      Establishes JTC as the leading independent provider of administration services (combined $152 billion Assets under Administration ("AuA") to the US personal trust market

·      Significantly strengthens JTC's US business, creating a platform for growth as the Group prepares to start its next multi-year business plan, the Cosmos era

·      SDTC has been known to JTC since 2016 and both share strong cultural alignment with a focus on service excellence

·      Acquisition is accretive to Group organic growth and margins, and is expected to deliver mid-single digit EPS accretion to Group EPS from FY24 based on the proposed funding structure

Information on SDTC and the US Personal Trust Market

SDTC, founded in 2002 and headquartered in Sioux Falls, SD, is the leading independent provider of administration services to the US personal trust sector, providing bespoke trust administration services to a highly attractive and sticky client base. SDTC has a uniquely experienced management team leading over 100 full time employees and administering in excess of $135 billion of assets. SDTC's objective is to provide flexible, individualised, service-oriented, cost-effective trust administration and SDTC is able to work with most types of non-financial assets (both onshore and offshore).

The US is home to the most ultra-high net worth individuals of any country in the world and it is estimated JTC's core addressable market captures c.$1.2 trillion of AuA, which has grown at a compound annual growth rate ("CAGR") of 9.4% from 2018 to 2022 and is forecast to grow at a CAGR of 8.2% from 2023E - 2028E¹. As wealth concentration grows and given the current onerous federal transfer tax system, trust structures are imperative in preserving multi-generational wealth and therefore the Board believes that demand for such trust services will continue to increase, particularly as the ownership of alternative asset classes and regulatory sophistication increases.

South Dakota is the largest and most attractive jurisdiction within the US with $458 billion of AuA, supported by best-in-class trust, privacy, tax and asset protection laws alongside a cost-efficient and dedicated workforce, a strong economy and supportive State government.

Strategic Rationale

Establishes JTC as the leading independent provider of administration services to the US personal trust sector

·      Growth market: The US is home to the most ultra-high net worth individuals of any country in the world and it is estimated JTC's core addressable market captures c.$1.2 trillion of AuA, which has grown at a compound annual growth rate ("CAGR") of 9.4% from 2018 to 2022 and is forecast to grow at a CAGR of 8.2% from 2023E - 2028E[1]

·      Market-leader: SDTC is a market leader in the highly fragmented State chartered non-depository trust market

·      Stable client base: SDTC provides access to c.1,700 high net worth and ultra-high net worth family clients, including more than 100 billionaires and 350 centimillionaires, based on a large intermediary network which delivers predictable revenues

·      Wider growth opportunities: with increased scale and JTC's additional service offering, such as its Private Office which provides corporate, accounting, regulatory reporting and family governance services, the acquisition will provide opportunities to increase share of wallet in the wider private client services market in the US

Compelling financial profile that supports long-term value creation within the JTC Group

·      Strong growth: SDTC has a 22-year track record of consistent growth, with revenues increasing at a CAGR of 33% from 2002-2022 and steadily increasing its market share

·      High margins: SDTC's EBITDA margin was 32% in both 2021 and 2022 and is expected to increase to 40% for 2023 on a run rate basis

·      Recurring fixed fee revenues: Over 98% of total revenue is based on recurring fixed annual fees, and therefore not exposed to volatility in AuA values, and the unexpired lifetime value of the book of current clients is c.$530 million[2]

·      Strong cultural alignment: both companies are focused on service excellence and the JTC and SDTC teams have known each other for over seven years

Significantly strengthens and scales JTC's US platform

·      Delivers on JTC's US growth strategy: SDTC builds on JTC's track record of acquisitions in the US, and the Group's complementary US Private Client Services operations, which were established in 2013, already includes a material presence in South Dakota and which were further strengthened with the acquisition in 2022 of New York Private Trust Company, a Delaware-chartered non-deposit trust company

·      Increases scale in the fast growing highly profitable US market:  Post completion of the Acquisition, JTC will have a total of 15 US offices, including both Private Client Services and Institutional Client Services, spanning the East to the West coast, with over 300 employees, enabling JTC to further develop and expand its personal trust services offering in a large and growing market

·      Diversifies revenue and earnings:  Further increases JTC's overall US footprint, with the US expected to represent c.30% of Group revenue in the short term, creating a platform for growth as the Group prepares to start its next multi-year business plan, the Cosmos era

SDTC financial performance

SDTC has a strong and highly complementary financial profile to JTC. For the year ended 31 December 2022, SDTC generated revenue of $31.8m (£25.2m[3]) and adjusted EBITDA of $10.0m (£7.9m³). For the year ending 31 December 2023, SDTC management expectations are for revenue of $35.4m and EBITDA of $14.3m on a run-rate basis[4]. The gross assets of the subject of the transaction are $20.9m as at 31 December 2022.

Financial benefits of the transaction

SDTC's organic growth, strong margins and cash conversion will significantly bolster the overall profile of JTC, and in particular JTC's US platform.  The Acquisition will be accretive to Group organic growth and margins and is expected to deliver mid-single digit EPS accretion to Group EPS from FY24 based on the proposed funding structure. Post completion of the Acquisition and Placing, JTC anticipates leverage to be below 2.0x net debt / underlying EBITDA for the year ended 31 December 2023, in line with JTC's stated guidance.

Nigel Le Quesne, CEO of JTC, said:

"SDTC is a great addition to the JTC Group.  It is a market-leader in the fast-growing personal trust market in the US, which in turn is the largest in the world. It has a highly committed, service-focused team with deep client relationships, an outstanding track record of profitability and growth, and is hugely complementary to our existing US operations, particularly our existing South Dakota business and building on our acquisition of NYPTC last year.  Not only does it bring us greater scale in the US, it also provides significant opportunities to offer our wider private client services to their high net worth and ultra-high net worth family clients.  The acquisition also very much delivers on our previously announced strategy to grow a market leading US personal trust business.  We are delighted to welcome SDTC's valued colleagues, clients and partners and very much look forward to the significant opportunities ahead of us in this exciting growth market".

Al W. King III, Co-Founder and Co-Chief Executive Officer of SDTC, said:

"We are delighted to join JTC.  We have an enormous amount in common including our commitment to our clients, our culture and our professional expertise.  We know the JTC team well having worked with them for over seven years, and see significant opportunities to expand our combined offering to clients and their advisors, so that we can meet more of their needs in this fast growing private client market".

Pierce H. McDowell III, Co-Founder and Co-Chief Executive Officer of SDTC, said:

"Combining SDTC, the leading and fastest-growing independent trust administration business in the US, with JTC, a highly successful global group, with a fast-developing US business, provides enormous opportunities for the benefit of our valued clients, employees and partners.  As a team of over 100 people, including over 60 dedicated trust officers, we very much look forward to joining our colleagues at JTC and realizing the many opportunities that lie ahead".

Enquiries

About JTC

JTC is a publicly listed, global professional services business with deep expertise in fund, corporate and private client services. Every JTC person is an owner of the business and this fundamental part of our culture aligns us with the best interests of all our stakeholders. Our purpose is to maximize potential and our success is built on service excellence, long-term relationships and technology capabilities that drive efficiency and add value.

http://www.jtcgroup.com/

Important Notice

The person arranging release of this announcement on behalf of JTC is Miranda Lansdowne, Company Secretary.

The release, publication or distribution of this announcement in jurisdictions other than the United Kingdom may be restricted by law and therefore any persons who are subject to the laws of any other jurisdiction should inform themselves about, and observe, any applicable requirements. This announcement has been prepared for the purposes of complying with the Listing Rules and the UK Market Abuse Regulation and the information disclosed may not be the same as that which would have been prepared in accordance with the laws and regulation of any jurisdiction outside of England.

The securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended, or any U.S. state securities laws and may not be offered or sold in the United States absent registration or an exemption from registration thereunder. JTC PLC does not intend to register any of the securities in the United States or to conduct a public offering of the securities in the United States.

This announcement contains forward looking statements. No forward-looking statement is a guarantee of future performance and actual results or performance or other financial condition could differ materially from those contained in the forward-looking statements. These forward-looking statements can be identified by the fact they do not relate only to historical or current facts. They may contain words such as "may", "will", "seek", "continue", "aim", "anticipate", "target", "projected", "expect", "estimate", "intend", "plan", "goal", "believe", "achieve" or other words with similar meaning. By their nature forward looking statements involve risk and uncertainty because they relate to future events and circumstances. A number of these influences and factors are outside of the Company's control. As a result, actual results may differ materially from the plans, goals and expectations contained in this announcement. No statement in this announcement is intended to be, nor may it be construed as, a profit forecast or be relied upon as a guide to future performance. Any forward-looking statements made in this announcement speak only as of the date they are made. Except as required by the FCA or any applicable law or regulation, the Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained in this announcement.