Hello and welcome to the JTC PLC Results Presentation. My name is David and I'll be your host for today's event. Please note that this conference has been recorded, and for the duration of the presentation, your lines will be on listen only. However, you will have the opportunity to ask questions at the end of the presentation. This can be done using the raise hand feature in the control panel on your screen. We will address as many questions as possible. When we come to answering your question, we will invite you to unmute and speak live to address our panelists. I will now hand you over to your presenters for today.
Good morning. Welcome to the presentation of JTC PLC's Full Year Results for the year ended 31st December 2023. I'm Nigel Le Quesne, the Group CEO, and presenting with me as usual is Martin Fotheringham, our Group CFO. If we can turn to slide one and the agenda. In the next 30 minutes or so, I'll present my CEO highlights for the year, and Martin will run through the financial review. I will then give an update of the external environment as it relates to the Group and to revisions. We'll then look in more detail at how we use multi-year plans or eras to guide growth at JTC before taking a specific deep dive into our U.S. journey to date. Then finally, we will summarize our key takeaways and expectations for 2024. We will then open the forum up for questions.
2023 was our 36th consecutive year of revenue and profit growth since inception, and having achieved our Galaxy goal two years early, it is difficult not to be very satisfied with the significant progress made in the year. In particular, our net organic growth at 19.9% has been spectacular, up 7.9 percentage points on 2022, with gross growth of 25% and client attrition of just 5.1%, an improvement of 1.3 percentage points year on year. We've also recorded new business wins of GBP 30.8 million, up 25.2%. Group revenue was up 28.7%. EBITDA was up 30.1%, delivered an EBITDA margin of 33.4%, a 0.4 percentage point improvement over 2022 and within our guidance range. These results reflect exceptional growth and great impetus, which we balance with appropriate investment in the Group infrastructure as we grow.
Both of our divisions have made meaningful contributions, supported by a successful Group Commercial Office driving the delivery of new services, enhancing the client experience, and bringing a particular focus on organic growth to the Group. Having made several acquisitions primarily for the ICS division earlier in the Galaxy era, our focus in 2023 was on the enhancement of our PCS business in the U.S., with the acquisition of South Dakota Trust Company in August. When combined with our existing and established U.S. PCS business, this results in our becoming the largest independent provider of private trust company services in the United States. SDTC was a strategically important purchase, providing a platform from which the Group can grow in the world's largest private client services market, with the ability to serve the U.S. domestic and international markets and to provide a wider range of services to both.
Taken together with acquisitions made earlier in the Galaxy era, this gives us a significant presence in the United States from which to drive further growth in the Cosmos era for both institutional and private client services. 2023 was a year of focus for the Institutional Client Services division, and one in which we increased global brand recognition for our expertise and quality of service, particularly in the funds space. The division has now established a regional model, mirroring its sister Private Client Services division, and made some top-quality hires while at the same time increasing overall employee retention rates to 95%. The delivery of an outstanding 19.4% organic growth, along with record new business wins of GBP 20.6 million, are particularly satisfying results for the team.
The Private Client Services division delivered record organic growth of 20.9%, significantly ahead of both our medium-term guidance range and, more importantly, industry norms.
The team has secured some significant new client wins and introduced further new services, bringing a more innovative approach to the market, where we have continued to be recognized as a standout market leader by large family offices, ultra-high net worth individuals, and institutions for the delivery of services to the private client market. The combination of great performance from the divisions, which are recognized for their quality across the competitor landscape, with the ability of the Group commercial office to act as a catalyst for growth, has led to exceptional organic growth in the year. These new revenues are embedded and recurring and have been delivered from banking, tax, and regulatory compliance reporting as strategic transformation services, as well as new client wins that include mature structures, one from competitors.
Finally, and most importantly, none of our successes in 2023 and the Galaxy era would have been achievable without the top-quality JTC team. Our annual employee survey for the year had a fantastic 89% response rate, with 85% of our people saying they value being an employee owner, 86% saying that they understand our plans for future growth, and 83% agreeing that it is a positive workplace culture at JTC. When coupled with our industry-leading employee retention figure for the Group of 96%, these are outstanding results and I'm privileged to lead our global team into the Cosmos era. Let's turn to slide four and the financial highlights. Our revenues have grown to GBP 257.4 million, and underlying EBITDA was GBP 85.9 million, delivered at an underlying Group EBITDA margin of 33.4%. As previously highlighted, our net organic growth was 19.9%, up 7.9 percentage points from 2022.
New business wins were a record GBP 30.8 million, up 25.2%, as the Group continues to benefit from excellent win rates of around 50% across both divisions, implying we win at least half the business we pitch for, a great performance in a very competitive market. The new business pipeline remains strong and stood at GBP 54.9 million at period end, up one-fifth year-on-year. The lifetime value of work won was a record of GBP 421.1 million, based on the 14.3-year average lifespan of our client book and a 25.3% increase on the 2022 figure of GBP 336.1 million. This gives us visibility of a total of circa GBP 2 billion of forward revenues from our existing client book, i.e., what the business would generate without the addition of any new mandates from this point forward. These figures bring home the long-term and compounding value of the Group.
Finally, onto the total dividend, which for 2023 has been proposed at GBP 11.17 per share, up from GBP 9.98 in 2022. Now over to Martin for a deeper look at the financials.
Thank you, Nigel. We are delighted to present an exceptional set of financial results which show continued trading momentum and strong returns on capital. Our financial highlights are set out on slide seven, with our underlying performance showing revenue growth of 28.7%, driven by record organic growth of 19.9%. This is significantly above our medium-term guidance range. Our underlying EBITDA margin increased by 0.4 of a percentage point to 33.4%. Earnings per share increased by 11.9%, a third consecutive year of double-digit growth. Cash conversion was well above guidance at 106%. Net debt has increased by GBP 18.5 million, driven by additional drawdown to fund the SDTC acquisition. At the year end, leverage had fallen to 1.43x EBITDA, just below our medium-term guidance range. Our final dividend of GBP 11.17 per share is an 11.9% increase on the prior year.
Finally, return on invested capital was 12.3% for the year, an improvement from 11.5% in 2022. Let's now look at the results in more detail, starting with revenue. Gross new organic revenue was GBP 49.6 million, a significant increase from GBP 23.9 million last year. Much of this was driven by growth from existing clients, in particular from Treasury and banking, with 73% of gross new revenue coming from existing clients compared to 56% in the prior year. Gross attrition was GBP 10.1 million, which is 5.1% of annual revenues, down from 6.4% reported in the prior year. GBP 6.6 million of this attrition was end-of-life, and therefore 98.2% of non-end-of-life revenue was retained. Revenue recognised so far on new business wins was 59% and is in line with our expectations.
Our pipeline at the period end was a healthy GBP 54.9 million, a 20% increase from the position at the end of 2022.
Let's now move on to slide nine and look at our net organic growth with a focus on the divisions. Net organic growth was a record 19.9%, with the three-year average now increasing to 13.8%. Such has been the consistency of our growth alongside a strong pipeline that we have updated our guidance to be at least 10% net organic growth per year during the Cosmos era. PCS recorded 20.9% net organic growth and benefited from the successful onboarding of Amaro in Q4 2022, which is now our largest single mandate. ICS recorded organic growth of 19.4%, with the division now delivering double-digit growth for three successive financial years. 2023 saw particularly strong growth in the U.S., Channel Islands, U.K., and Luxembourg.
Focusing on the drivers of organic growth, as a largely time and materials business, our pricing growth is dependent on our ability to pass on increases in fee rates, and we're pleased to report pricing growth of 6.4% in 2023. That is 80% of the inflationary staff costs that the business incurred and demonstrates our ability to recover increased costs of doing business. On the revenue bridge slide, I refer to 73% of growth coming from existing clients, which was a significant increase on the prior year. This was driven by strong volume growth, the reasons of which are many-fold and included the launch of our Treasury and banking services, resulting in an exceptional but embedded increase to the organic growth, the continued development of our tax-compliance service offering, and continued high new business win rates. Concluding on revenue, let's look at the geographic profile on slide 10.
We saw all regions report positive net organic growth, and the US continues to be our highest growth performer and is becoming an increasingly large part of the business. As you can see from the trends chart, we've increased our US revenue base significantly since IPO, with the region posting annual revenue growth of 70.5% in 2023, driven by net organic growth of 24.7%. In 2018, when we IPOed, our US revenue was $3.7 million per annum, and in 2023, it was $80.6 million. We move now onto EBITDA margin on slide 11. The underlying margin in the period increased by 0.4 of a percentage point to 33.4%. This sits within our medium-term guidance range and is consistent with our previous messaging on our performance during periods of heightened revenue growth and uncertain macroeconomic conditions.
Delivering margin improvement at a time of record growth is always a challenge, and it's a credit to the JTC team that we've achieved this. We are committed to continued investment in the business, and while this may dilute margin improvements, our priority is always to nurture the continued longevity of our client relationships. The PCS margin was 36.5%, a 0.2 percentage point increase from 2022. With both NYPTC and SDTC integrating well, the division continues to perform strongly and at the top end of our guidance range. The ICS division improved again, coming in at 31.6% against 31.5% in 2022, and we're pleased to see the division build from the foundations previously laid. We maintain our medium-term guidance range of 33%-38%. Let's now look at cash and working capital. Slide 12 focuses on our cash conversion, which reflects how well we're managing our working capital cycle.
As you can see and already touched on, cash conversion was an exceptional 106%. This was driven by several factors: an increased U.S. exposure, where we see a shorter working capital cycle, the uptake of our Treasury and banking services, an improved collection of aged debtors. This has resulted in a reduction in net investment days of 21 days, and it now stands at 89 days. Our business fundamentals remain unchanged, and so we maintain our existing medium-term guidance range for annual cash conversion of 85%-90%. Next to look at is net debt and leverage. At the end of 2022, our reported net debt was GBP 104.8 million, and by the year end, it stood at GBP 123.3 million, an increase of GBP 18.5 million. This was driven in the main by a GBP 180 million drawdown in August, which funded our SDTC acquisition.
Albeit, this is offset by the June equity fund raise of GBP 62 million that supported the financing of the acquisition. Excluding acquisitions, net debt decreased by GBP 36.1 million, evidencing our capacity to de-leverage through strong cash conversion and effective working capital management. We successfully refinanced our debt facility in Q4, and this has resulted in increased facilities of GBP 400 million, with an accordion for an additional GBP 100 million. On the 4th of December, we also hedged to GBP 180 million of our drawn facilities at 4.237% for a two-year period. Our reported leverage now stands at 1.43x underlying EBITDA, which is below our medium-term guidance range. You can see from the graph that we've gone up to 2.34x previously, but that we quickly de-levered back into the guidance range.
This guidance range continues to be up to 2x underlying pro forma EBITDA, but with continued appetite to go up to 2.5x for the right deals. As of 31 December 2023, the Group had undrawn funds of GBP 176.3 million, excluding the accordion, and this combined with the current leverage levels leaves us well positioned to capitalize on inorganic growth opportunities. The next slide summarizes our capital allocation strategy and how we've approached this during the Galaxy era. To recap, we prioritize both organic and inorganic growth, but we also maintain a progressive dividend policy. During the last three years, the Galaxy era, we've raised or generated a total of GBP 477.4 million of cash, with one-third coming from organic means. GBP 313.9 million has come through fundraisers and debt drawdowns to finance acquisitions, which allowed us to complete nine deals.
There's been a significant focus on the US market, with GBP 280.5 million invested here, just under 90% of our acquisition spend. This was a conscious decision to focus our strategic efforts on the region and demonstrates a significant shift from our previous Odyssey era, where we spent only GBP 3.6 million in the US, less than 5% of our total M&A spend. Let's now look at return on capital in more detail on slide 15. The return on invested capital in 2023 was 12.3%, an improvement from 11.5% in 2022. As you know, we have a resilient long-term business model characterized by contracts that now last on average 14 years. We take a duration-adjusted approach to returns on capital, whereby we also take into account client duration, attrition rates, and the potential for the acquisition to be an accelerator.
In the last two years, we've made two platform acquisitions in the US, in SALI and SDTC, where the immediate return on capital has been diluted. We believe that the capital allocation decisions we've taken are for the good of the long-term business for the following reasons. Both have long-term annuity-like revenue streams. SALI has client duration of 30-40 years. Both acquisitions are important platforms for growth in the US. SALI brings significant cross-selling revenues, and the US ICS business is now fully integrated into one reporting model. SDTC brings cross-selling opportunities and also makes us the preeminent and largest independent private trust business in the US, and the only one that has licenses to operate in both Delaware and South Dakota, the two key US trust jurisdictions.
These are businesses that both significantly enhance the overall JTC business, and despite the short-term dilution on return on capital, JTC still comfortably exceeds its cost of capital. We expect that in the absence of any other large deals, that our return on capital will improve further as time progresses. Thank you, and I'll now hand back to Nigel. Thank you, Martin. In a few moments, I will explain how we've doubled the size of the business twice since listing in 2018, and how based upon our capabilities and the prevailing market drivers, we have set ourselves the goal of doubling again in the 3-4-year period in the Cosmos era. Before that, we'll take a quick look at the external environment and current industry trends, and the performance of the business from a group and divisional perspective.
The macro environment remains challenging in 2023, making our performance all the more impressive and pleasing. However, as we start the Cosmos era, there are signs of improvement. Interest rates appear to have peaked, and cuts from central banks in the U.K., Europe, and the U.S. would undoubtedly stimulate more activity, particularly in the alternative fund space, where $ trillions of dry powder is waiting to be deployed. In terms of M&A, I have previously commented on a slowdown in activity. The hiatus in deal flow in our primarily private equity-dominated industry has been largely due to the uncertainty around the cost of capital. We always believe that the pause would be a temporary one, due to the highly attractive nature of the industry, the weight of uninvested capital, and the need for deal flow to allow for desired exits.
Activity has clearly returned in recent months, and some of the assets previously held up are now moving forward. The most notable recent example being Cinven's investment in Alter Domus, a similar, larger group and competitor of JTC, which valued the business at EUR 4.9 billion or $5.3 billion, which equates to 24.5x EBITDA based on reports of the business's 2023 performance. Given that at the time of the transaction, JTC traded on a multiple of 17.5x, it is not lost on us or others as a benchmark transaction. From our perspective, we've been very busy in the M&A space, and currently we have 4 deals in exclusivity, all bolt-ons by nature that are accretive. If they come to fruition, they should secure more than GBP 30 million of revenue and EBITDA of circa GBP 16 million.
We continue to follow our proven and disciplined approach, and have recently rejected two other deals following our DD process. As a result, it is and remains a buyer beware environment. We see opportunities for both divisions across a number of geographies, and we continue to favor off-market deals, always with a view to finding the right deals at the right prices. At our interim results last September, I spoke about the race to scale as something that consumed many industry participants, leading them to suffer a number of negative consequences, including regulatory penalties, over-leveraging, talent drains, and loss of clients due to falls in service levels. At JTC, we have always concentrated on being the best business in our space rather than the biggest.
This approach continues to pay dividends, with JTC being the net beneficiary in terms of winning mature clients from rivals and attracting some of the best talent in the industry, including senior executives. We believe the race to scale, with the renewed activity in the market, will continue, and as a consequence, we'll be able to press home the advantages of our well-invested platform, unique shared ownership culture, disciplined approach to M&A, and client-centric service delivery. Moving on to the divisions, the ICS division has continued to grow and develop its profile to become an established top-tier market participant in the funds and corporate services space, and its employer solutions practice is a genuine market leader.
The hard work to improve talent, capabilities, range of services, and go-to-market strategy is bearing fruit, and as a result of this, the division delivered very strong results in 2023, maintaining the momentum generated in 2022. Revenue increased by 19.5% to GBP 163.3 million and EBITDA by 20% to GBP 51.6 million, at an improved margin of 31.6%, all achieved without the benefit of any sizable acquisitions. Particularly pleasing is the excellent net organic growth of 19.4%, driven by performance in the U.S., Channel Islands, and U.K. New business wins were a record of GBP 20.6 million, up 19.8%. Having established a dedicated operations team, the division continues to make further incremental improvements to its operating model, supporting further margin progression over time. Post-period end in March, we also completed the small Blackheath acquisition, a U.K. AIFM business that complements our existing multi-jurisdictional offering.
The PCS division continues as a standout market leader in the global trust company industry and has accumulated 20 industry awards in the past 12 months. The division has had an exceptional year, with revenue increasing by 48.5% to GBP 94.1 million and underlying EBITDA by 49.1% to GBP 34.3 million. Net organic growth was a record 20.9%, driven by performance in the US, Caribbean, Channel Islands, and UK regions. Underlying EBITDA margin increased to 36.5% and remains towards the top end of our guidance range. With the addition of NYPTC in Delaware and SDTC in South Dakota, our US platform is now the largest independent in the US private trust sector, a market that currently stands at some $136 trillion in AuA and is forecast to grow at over 8% per annum.
Our service and delivery offices are supported by dedicated sales offices in New York and Miami, as well as an ever-increasing volume of international cross-sales from our offices in London, Dublin, Amsterdam, and the Channel Islands. Similar to ICS, the PCS division has also seen large mature structures move from competitors over the past 12 months, driven by the race-to-scale consequences I alluded to earlier. Having delivered the Galaxy era some two years early, I would like to recap on how we approach our multi-year business plans and why we believe that our ambition to double again in the Cosmos era is well within our gift. I will then move on to a specific deep dive on our US journey to date.
Our shared ownership culture has always given us a long-term perspective on how best to grow the business, and it also provides a mechanism through which we can share JTC's success with our people, enabling them to compound the value of their contribution over time. The markets we compete in are worth at least $12 billion in annual revenue, a figure that we believe is conservative as we continue to expand our offering. Underpinning these markets are a number of tailwinds or market drivers that give natural impetus to our efforts and inform how we shape and scale the business. For example, increasing global regulation adds complexity for our clients, leading them to seek expert support and to outsource non-core functions. Rising global wealth and globalization create opportunity and demand across our service lines as clients seek ever more sophisticated and international solutions to manage, grow, and preserve their assets.
Consolidation in our industry comes about largely as a result of the other drivers. Regulatory pressure makes it difficult for small firms to remain competitive, and the desire of clients, especially larger ones, to work with a single provider that can meet all of their needs demands a global footprint. However, as noted previously, demand for reach and scale should not be confused with the demand for service quality, expertise, and consistency, which remain the top priorities for clients and trump both price and technology when it comes to choosing a provider. Aligned with these external tailwinds, we have our internal capabilities. Our 36 years of uninterrupted growth has allowed us to develop and refine the essential components of the business, which in turn underpin our investment case. We have deep experience in our near 1,800-person workforce, in particular the most senior levels of the organization.
JTC has an entrepreneurial flair that is relatively rare in our space, and after 28 deals since 2010, we have a proven and successful formula for M&A. Our ability to manage risk across a client base that spans more than 100 countries and where JTC is licensed by some 25 regulatory bodies is a fundamental part of our attraction to sophisticated clients. The diversity of our business, where we have always believed in both the individual merits and synergies of our two divisions, helps us deliver consistent group performance over decades, regardless of where we find ourselves in the macroeconomic cycle. And finally, our long-term relationships with clients, which now average 14.3 years, give rise to highly visible recurring revenues. In the context of these external factors and our internal capabilities, we grow the business in deliberate multi-year steps, which we call eras.
These are named to give them a clear identity, which helps with internal communication, focus, and cohesion, as we all look to grow in the same direction as employee-owners. When we listed in 2018, we commenced the Odyssey era and doubled the business in terms of revenue and EBITDA within three years, breaking the GBP 100 million revenue barrier for the first time and becoming a FTSE 250 business along the way. The growth strategies we pursued were reflected in our medium-term guidance, with approximately one-third of our growth being organic and two-thirds coming from M&A. We then commenced the Galaxy era, where we again aimed to double the size of the group using the one-third-2/3 mix of organic and inorganic growth. In addition, we also created a group commercial office, which sits between and supports both divisions, driving innovation and bringing new services to market.
During the Galaxy era, these new services included JTC Private Office, banking tax and regulatory reporting, and strategic transformation services, all of which combined now contribute around GBP 45 million or nearly 1/5 of our revenue. Having successfully concluded Galaxy two years earlier than anticipated, in January 2024, we began the Cosmos era, where we aimed to double the business for a third time since IPO and, despite the increased size of the group, believe this can be achieved in a three to four y ear timeframe. If successful, Cosmos will take us to revenue of GBP 0.5 billion. While we continue to be comfortable with a one-third-two-thirds balance, given our strong organic growth performance in 2023 and the momentum carried into 2024, we'll be actively seeking to maximize the organic contribution, while at the same time ensuring that we capture the inorganic opportunities that best fit
our platform and long-term goals as they arise.
As I've already alluded to, with a relatively vibrant environment for M&A currently, we find ourselves with four deals in exclusivity, which, as I've previously mentioned, will take a significant step towards our Cosmos ambitions. Turning to slide 19, I would now like to take you on a deep dive of our story in the United States. The U.S. is recognized as the largest and most sophisticated financial services market in the world. As well as being home to many of the world's leading corporations, it is a thriving funds market, but one where outsourcing penetration for services such as fund administration and fund accounting is only around 40% compared to over 70% in Europe.
The US is home to the largest number of ultra-high-net-worth individuals and families, and a recent diligence report we commissioned in relation to the SDTC transaction sized the US PCS market at $136 trillion, with a growth rate of over 8% per annum. It is a big market with big opportunities. Our journey there began in 2013/2014 when we established greenfield sales offices in Miami and New York. While US-based, these were primarily winning business for international clients that were serviced in other locations, notably the Caribbean and Switzerland. In 2016, four years into the Malbec era, we opened our first domestic US office in South Dakota. In a story that has now gone full circle, that greenfield JTC office availed itself of incubator services provided by SDTC, so beginning the seven-year relationship that would lead to SDTC becoming part of the JTC group.
These early years were a period of discovery and organic growth, with our primary focus being on PCS services. Then in 2020, the final year of our Odyssey era, we entered the ICS segment of the market and acquired our first U.S. funds business, NES Financial. We then went on to acquire further three ICS businesses in 2022: SALI, Segway, and EFS. Of those three, the SALI business was the platform business necessary to anchor our U.S. ICS growth ambitions. At the end of 2021, U.S. revenues were $21.6 million, and by the end of 2022, these had more than doubled to $47.1 million, with 192 employees in nine offices. In 2022 and 2023, we turned our attention back to the PCS division and acquired NYPTC in Delaware and SDTC in South Dakota, with SDTC being the platform business for the division.
When combined with JTC's established US operations, these two acquisitions make us the largest independent provider to the US private trust market. This second land-and-expand phase has seen us build on the knowledge and experience gained in the preceding years to rapidly scale the US business and establish solid foundations for our ambitious Cosmos goals, where we expect proportionally more group revenues to come from the US. At the end of 2023, we achieved US revenues of $80.6 million, serving more than 5,000 clients with 321 employees across 10 offices. JTC now provides ICS services to five of the top 10 US banks, all of the top 10 US private placement insurers, eight of the top 10 alternative US asset managers, as well as around 120+ US billionaires and more than 450 centi-millionaires within the PCS client base.
We are incredibly proud of what we have achieved with our U.S. colleagues in eight years from a standing start and even more ambitious and excited about what the future holds for JTC in this key growth market. Finally, onto our key takeaways. We have delivered our Galaxy era goal of doubling the business from where we finished 2020 in just three years, some two years earlier than anticipated. Our organic growth of 19.9% in 2023 has been outstanding and demonstrates the demand for our services, the quality we offer, and our ability to continuously innovate and create new services that add value for our clients. The transformational acquisition of SDTC is a platform business for the PCS division and makes JTC the largest independent in the U.S. private trust market.
We continue to meet or exceed all of our well-established guidance metrics, demonstrating both the consistency and resilience of the business. Our U.S. platform is now well-established across both divisions, giving us the foundation that we will leverage as we focus on further growth in the Cosmos era. Looking at the early part of 2024 and what the remainder of the year and beyond may hold, we have had a positive start and carried good momentum from 2023. We expect the trend of strong net organic growth to continue. As alluded to earlier, we currently have four deals in exclusivity, and our M&A pipeline contains opportunities for both divisions across key target markets. Generally, we have seen a significant uptick in consolidation activity as the cost of borrowing becomes more certain. We'll continue to invest for growth, ensuring that our global platform is always fit for purpose and scalable.
We have adopted a regional model across both divisions, and in the Cosmos era, there will be particular focus on capturing the U.S. opportunities we see. With the exception of an increase in our organic growth guidance rising to 10%+ per annum for the Cosmos era, we once again maintain our guidance metrics, which we regard as prudent guardrails that define what sustainable success looks like for a business like JTC. Thank you for listening and for your ongoing support. We'll now be happy to take your questions.
Thanks, everybody. If you would like to ask a question, could you please use the raise hand feature, and then we'll go to those who've raised their hand in sequence. I also have a couple of questions that have come through on the chat, so I'll read those out in due course. So just having a look through. The first hand I can see up is David Brockton from Numis. So if we could go to David first, please.
Morning all. Thanks very much for the presentation. Can I ask two questions? Firstly, around strategic transformation services, can you talk about how well Project Tomorrow has gone and whether there are any sort of other similar types of white-label opportunities in the pipeline? Secondly, I noticed in the sort of results release you talk about artificial intelligence and its sort of increasing use across the industry. Can you just talk around how you are in sort of embracing that and implementing it within the business to help you deliver service and whether you see any risk related to it as well? Thanks.
Thank you, David. I think the more strategic transformation point of view and Tomorrow specifically, they are difficult, some of these exercises. What we're doing is doing all of the accounting for all the international clients of the underlying client. So obviously, it's become quite a heavy lifting on the technology side, and the results of that improve and are tested on a regular basis. We're pretty much improving every time we have a run around the sort of quarterly numbers, and in particular, the tax compliance and regulatory reporting has been an enormous success. So generally speaking, everybody's happy with the progress, but it's always been quite a difficult, heavy lifting mandate for us to do. In terms of others, we certainly have got one or two things in the pipeline that look very exciting with regard to that. One in the insurance industry in the U.S.
Another is something more akin to helping a sovereign country with their introduction of pension arrangements, which would require boots on the ground and so on. Yeah, plenty of opportunities out there on that side of the business, and I hope we will start working on those in the short term. One of those is specific to JTC. The other one is competitive, so we'll see over time how that goes. From an AI perspective, obviously, there's immeasurable benefits, I think, for short- and long-term improvements for the business. We've chosen to embrace the technology and use it as an ally. It's particularly helpful, obviously, in automating repetitive tasks and de-risking human error, which should in turn increase productivity for us. So it really helps to drive the know-how.
So I'll put that under the sort of more the numbers category, and we've got straight-through processing, for example, happening on end-to-end NAV calculations in South Africa. I think with words, if I can put it that way, so more the ChatGPT end of the scale. I think it does allow revolutionized content with natural languages, prompting techniques to improve thought leadership. But I do think it will help with market analysis, tailored reporting. Again, I think it will reduce errors, consistency of performance. I do feel, though, still in this regard, that having an enterprise level, we've just got a working party working on something called ChatJTC at the moment. We've got some super users. We're looking at where we can apply it to the business, and I would expect it to become more and more widely used, really, over the next year or so.
So yeah, really pleased with what it can do. Obviously, people also use it or can be used for trying to break through our cyber systems and so on. So I think we have to be very careful. It can be a sword, but you need a shield as well around knowing when to use it and how to use it effectively. I hope that helps.
Great. No, that's helpful. Thank you very much.
Super. Thank you. Next, can we go to James Bayliss, please?
Morning all. James Bayliss from Berenberg here. Thanks for the presentation. Just two questions from me. Firstly, on client attrition numbers, they're down quite a bit year-over-year to 5.1%. Can we just get a sense on whether you think that becomes the new norm, given the likes of SALI's long-term customer lifecycles, increased stickiness as you increase share of wallet with commercial office, etc., etc., or how should we think about attrition going forward? Then secondly, on returns, the messaging there's really clear. Thanks. Sounds like you'll continue to look past day one multiples and returns if the growth and potential is there, which we've seen come through in 2023. Just wondering if you can clarify that a bit more. Is there a sort of internal medium-term returns threshold which acquisitions need to meet, or is it all just considered on a case-by-case business? Thanks.
Morning, James. Client attrition, yes, you're absolutely right. We've seen a good trend the last couple of years, helped by the acquisitions that we've made. I think it's probably fair to say that we would expect that to be the new norm going forward. Clearly, there is a little bit of lumpiness depending on the end-of-life attrition, but I think it's reasonable to assume that the attrition rate will be lower going forward and that where we see it today is a pretty good proxy for that. On the returns point, we're very conscious about returns when we're making investments, and we're aware that we've made two big ones in the U.S. where we've paid up and paid much more than we would normally.
We don't have a hard and fast rule because what really matters to us is looking at what we're buying and being comfortable that we are going to get a long-term benefit from it. And we've seen that come through in SALI. We're already getting very good vibes from the SDTC acquisition. It's fair to say that when we're looking at acquisitions, the return profile is something that is very high up the list for us. And when you've got a Scotsman and a Jerseyman looking at it, we definitely don't want to overpay. So we're very conscious of making sure that the multiples are in the right place, and if it means that we have to walk away from deals, then we'll do that.
Great. That's really clear. Thank you.
Can we go to Dan McCann next, please?
Good morning, guys. I've got three questions, please. First one on pricing, please. You talked about, I think, it was 6% price growth in 2023. Where do you think that might be in the current year, and what are the pressures in either direction on that? Second one is, are there any parts of the business that are still where the end markets are in a relatively subdued state? And I'm thinking along the lines of real estate. Are there any like that that might still be ready to recover or not? Perhaps you could talk a bit to that, please. The final question is hopefully a more straightforward one. On the effective tax rate, I see that's 10% in 2023. Would you expect that to sort of land over the short to medium term, please?
Hi, Dan. If I pick up on the pricing and the tax rate, and maybe Nigel will pick up on the markets more generally. So pricing, yes, 6% in 2023. I don't think it will be quite that high in 2024. The pay rises were lower than we had in 2023. And as you know, we put those pay rises through onto the chargeout rates. I think it will be somewhere between 4%-5%, but we'll see how effective we are at pushing that through. We have got, and Nigel will maybe talk about this as well, we have got some more traction coming with our commercial office. It's done a lot of good things for us with banking and treasury and the like, but we're quite internally focused at the moment on improving the recovery of things like price increases.
We've got a framework in place to do that, so that may manifest itself in slightly better recovery of price increases. But today, as I say, I'm looking between 4%-5%. On the tax rate, I don't know if you got to the back of the deck, but there is actually a slide in there on slide 39 because I had anticipated that this might be something we'd be asked about. Yes, our tax rate was higher. The effective tax rate was 10.1% in 2023, but there was actually a charge in there that was for 2022 tax. It was a catch-up. And if you look at our tax rate for the last four years, it's been really quite steady. It's sort of been between 9%-9.7%. I think the underlying rate is about 9.3% at the moment.
Based on what I can see in the tax planning we've been doing, we've actually invested internally, and now we've got a very senior exec in our team that is looking at our tax for us. And just because we're so complex across the world, we don't expect to see that effective tax rate go up going forward. We think that with some effective planning and structuring, that we should be able to hold that and possibly even get it to come down slightly. Sorry, Dan, does that cover those two questions first?
Yes, that's perfect. Thank you, Martin.
Okay, Dan, just in terms of the market itself, I think what we should see, back to the certainty and the cost of borrowing, is a much more confident environment for business activity. I think I wouldn't differentiate between what that might mean for PE, private equity, real estate, infrastructure, you name it. I think what it will most certainly mean is there'll be more new clients with new structures coming forward, albeit cutting interest rates might be a good thing with regard to that. But there's definitely some green shoots. The corollary of that is, obviously, we've seen a lot more activity from PE in our space and pricing going back towards where we'd seen it two or three years ago. That might mean there might be slightly more expensive deals out there.
Having said that, it's a very active market, as you just heard, and there are plenty of deals at different price points that suit some people and not others. So we're pretty comfortable that we'll be able to find the right deals at the right times. We're probably not in the current horizon. We're not looking for platform deals necessarily to come our way. I think we're in all the right places so we can easily pick up bolt-on deals around that. So yeah, I would think that we will see more activity. But at the same time, as Martin was alluding to, I think with renewed vigor in our commercial office, that frameworks matter he was alluding to.
I think we think we can improve our share of wallet from our existing clients just by improving our billing processes, improving the time we record on our clients, sharing across the business in a more cohesive way, appropriate ways to both cross-sell to our clients as well as give a good service, but to make sure we maximize what we've delivered to them, which obviously in a business of our size, bringing that consistency would be really, really helpful. So the commercial office is quite internally focused around that as well.
Super. Thank you. We've got two more hands at the moment. Can we go to Michael Donnelly next, please?
Hello. Can you hear me?
Yes, you can.
Great. So yeah, I think one of the questions was answered, and actually both of them were. The one that's left is the tax rate that Dan was talking about. So in the statement, you say that U.S. restructuring raises the tax rate from 8%-10%. And I think in your answer to Dan, you spoke about catch-up from 2022. Can I just check, are those two things the same thing, and that 10% is what we should have going for the next two or three years? Thanks.
I would suggest that you should be looking more like 9%, Michael. And effectively, we had in 2023 a charge that should have been in 2022, and there was then some rats and mice kicking around between 2021 and 2022. But 9% is probably the number to it should be the number to use rather than 10%.
That's great. Thank you.
We also have Vivek Raja, please.
Hi. Good morning, chaps. I wanted to ask about two areas. The first one is your revenue guidance. You've raised that. I just wondered if you could unpack that a little bit. What have you seen across, let's say, the sort of three divisions that has made you more confident on the medium-term organic growth outlook? I'm just sort of wondering, particularly within that increase in guidance, how important the central office has been, and if you could just talk to that. The second thing I wanted to ask about was the US platforms that you've acquired across both the ICS and the PCS division, so SALI and SDTC. Just, if you could explain the sort of platform-like characteristics of those businesses as distinct from, say, the wider business.
Why you're using the word platform and what that might mean in terms of operating leverage as you grow out those businesses? Just get a sense of what the sort of margin trajectory, EBITDA margin trajectory might be once those platforms start growing, start contributing more to growth. Thanks.
Thanks, Vivek. From a revenue guidance point of view, I think we have, on average, I think it's 13.8% over the last three years organic growth, and our guidance has been 8%-10%. Obviously, we're closer to 20% this time. And there's a few contributory factors to that. They include a real purple patch of a number of different things, strategic transformation deals like Amaro, win rates of over 50%, which are unusual in our space, but we continue to benefit from some big wins from existing competitors who have been caught up in the sort of race to scale and the importance of the Commercial Office as you've alluded to in helping to sort of drive that organic growth push.
So I think we're in really good shape as we go into, and we did talk about it ad infinitum because I think what we call our medium-term guidance, which is probably long-term guidance really in terms of prudent guardrails to run the business around, it's taken us a lot to sort of shift off that. But we feel that there's still a lot going on that's positive for the group at the moment. So we feel, certainly for the Cosmos era, at least, we would expect to be above 10%. And I won't speculate on exactly where that is, but double-digit growth, I would imagine, every year of the era, but certainly on average throughout that era. Does that cover that for you, Vivek?
Yeah, it does. I mean, it's still sort of fairly high level, but I will take that away and digest. Thank you.
Yeah. I mean, there's still plenty for us. I mean, I think our banking service, which is in the commercial office, still has a little way to go in terms of other things we can do with it. I think there's definitely an opportunity to increase our FX and custody revenues. And also, we haven't got a solution yet on the Euro side. And we're having a good look at the U.S., which is getting bigger, where we sold for some of those banking things in a slightly different way. So we're just looking at all of that. That's a possibility. I mentioned strategic transformation deals a little bit earlier that might be coming through. So yeah, we feel fairly confident around that. Back to the sort of U.S. platforms themselves.
Yeah, I think what we did in the U.S. on the ICS side was we bought a number of individually quite small fund administration businesses, one with a bit of technology, one really in the VC market. But SALI, which is really a manco, as we would describe it in Europe, is a management company. But obviously, by definition, a management company that chooses the fund administrator for the work that they do. It was always the quality of the team, the quality of the sort of clients they had, which would have included clients like KKR and the like, and that Apollo exercise that we talked about from converting their existing book onto the JTC platform, which has been very successful. And now that the institutional practice is established, it's really the SALI management team running the whole of the ICS practice in the US.
Tom Newman, who was the CEO of SALI, is now the CEO of JTC ICS. And he's number two. Cameron has now come up to run SALI. And then we've got offices really on the West Coast in San Jose. We've got a big fund, the main fund administration office. It's just moving into prestigious new offices in State Street, Boston, run by Michael Richards, and a smaller sort of VC-type practice in St. Louis and another sort of insurance dedicated fund specialist practice, which is in New York, upstate New York. So that really has organized itself quite well. And it's really SALI that's driving a lot of that growth we've got, as well as that strategic transformation opportunity coming through because of their connections with the insurance industry.
On the private client side with SDTC, again, our business grew up very well and very successfully with primarily a South American-facing team and Spanish-speaking team who were based in Miami and New York, who did a fantastic job, really, in putting JTC on the map. They were instrumental in us getting an acquisition from Merrill Lynch years ago, five, six years ago, I'm guessing. In the fullness of time, they've done a great job, obviously, in working with South Dakota Trust Company when they were external to us and then encouraging our acquisition. Now that we've had the platform, obviously, the Delaware acquisition was important as well in as much as we're in the one and two states and we're obviously the largest private trust company in the U.S. for individuals. I think. Outside the banking domain. I do think there's more and more to go for there.
In fact, one of the M&A opportunities that I alluded to is a liftout, a relatively small liftout of a bank book in Delaware. So the South Dakota team, really, are beginning in a similar way to the SALI team, take over running the PCS book. So hopefully, that helps to explain why they are more like platforms, really, that you can build around, whereas the others are a bit more like satellites, the bolt-on deals.
Thank you, chaps.
Super. Thanks very much. We're up against time. There were no more hands, so we'll conclude the session there. Thank you very much, everybody, for dialing in, and thanks to our hosts. Thank you.
Thank you.
Thank you.