Earnings Call: H2 2020

Apr 13, 2021

Morning, everyone. Welcome to the presentation of JTC Plc's results for the year ended 31st December 2020. I'm Nigel Lecaine, the Group's CEO. Presenting with me, as usual, is Martin Fotheringham, our Group CFO. Once again, we are faced with a virtual presentation, but I do sincerely hope that on the next occasion, we'll be meeting in person. In the next 25 minutes, I'll present my CEO highlights for 2020, and Mark will run through the financial review. Then we'll follow-up with a more detailed business review and take a look back on the achievements during our 3 year Odyssey era, which ended last December. Finally, we will provide an insight into the outlook for our new refinery Galaxy plan, which commenced in January with focus on the opportunity presented by the compounding nature of the business. We will then open the forum up for questions. More than ever this year, I wanted to take the opportunity to say a huge thank you to our most valuable asset, all the JCC teams around the world, We've shown remarkable resilience and resourcefulness in the face of the pandemic, which has led to another successful year in very difficult circumstances. We are incredibly grateful for the contributions made by the whole team. In the light of the pandemic, We once again produced an excellent set of results for 2020, which marked the end of our 3 year Odyssey era. As anticipated, the business continued to trade in line with our pre COVID expectations, demonstrating the resilience of the business model and underpinned by the quality of the team and our shared ownership culture. Of particular note is that 2020 has been our best year ever for growth in revenue from annualized new business wins, increasing by 20.1 percent to a value of £17,900,000 per annum, in which we expect to realize over GBP 170,000,000 of lifetime value revenue. We've seen an excellent overall performance from our Private Client Services division, which has achieved the landmark of €50,000,000 of revenue for the first time and delivered at a particularly strong margin of 41%. The Institutional Client Services division has had its best year ever for new business and posted what was at the time our largest single new business win. And with progress made in the second half of the year on the structural and technological improvements required to address its relative margin weakness. We've also managed to continue to acquire good quality businesses, and we're delighted with each of them. In the first half of twenty twenty, we completed the acquisition of NES Financial, placing the all important entry point We'll fund services in the United States as well as bringing technological development capabilities to the wider group. Closer to home, the Saan PCS jersey book also completed in the first half and has performed beyond expectations since its acquisition. And finally, the important acquisition in December of the RBC Sees business, which completed earlier this month. We're particularly excited about adding this preeminent Employer Services business to our own and combining it with the JTC employee shared ownership credentials to launch a market leading Employer Solutions proposition as a subdivision of the institutional practice and what we believe will become an area of increasing importance and growth in the ESG environment. Since the year end, we have added Indos Financial, which brings real expertise and sophistication to the group, adding best in class depository, AML and ESG service capabilities that teams in both the UK and Ireland. We continue to have visibility of several acquisition opportunities and have an ongoing active pipeline with the capacity to do more. Finally, we've now completed that 3 year business cycle for Odyssey and embarked on a 5 year Galaxy plan to reflect on the longer term ambitions, the outlook for which we will present later. On to the financial highlights. Our revenue has grown to €115,100,000 a year on year rise of 15.9 percent underlying EBITDA of 38,700,000 a rise of 9.4%, delivered as an underlying group EBITDA margin of 33.6% compared with 35.6% in 2019, although stable at 35.7% in the core business and consistent with underlying EBITDA guidance range of 33% to 38%. Our annual organic growth was 16.7%, up from 15.4%, giving a net organic growth of 7.9%, with slightly higher attrition than is common in 2020 at 8.8%. Our annualized new business wins were up by 20.1 percent to a record €17,900,000 and our inquiry pipeline at the year end was also 49.7% higher at €45,500,000 implying even greater emphasis going into 2021. We anticipate that future revenues from these new business wins of €170,700,000 over their lifetime, up 18.5% on the same period last year. Finally, on to the dividends, where you will Call that we increased the distribution from 25% to 30% of our underlying profit after tax at the half year. Taking the total dividends per share to 6.75p, up 27.4% from 2019. So now I'll turn to Martin for the financial review. Thank you, Nigel. As you've seen from this morning's results, it's been another year of growth. That's now 33 consecutive years. I'll take about 10 minutes or so to run through the numbers, but the message I'd like to convey is that despite the challenging conditions in 2020, We continue to grow profitably. I'm pleased to be able to say that we were very much in line with our management expectations, demonstrating both our resilience, but also the compounding qualities of the business. I'll start this year with Slide 8, which Other headlines, effectively extracted directly from the RNS you saw this morning. What I'd like to do is spend some more time on the key guidance areas and provide you with some additional context around our trading performance. Revenue grew by 15.9% in the year and our organic growth was 7.9%. For the full year, our underlying EBITDA margin fell by 2 percentage points. That was largely the result of the NESF trading, But there was also some operational inefficiency in the ICS division. If we exclude the NESF business, we did in fact Our EBITDA margin. We've delivered a 3.4% increase in underlying EPS. Cash conversion was strong at 91%, improved on 2019 and slightly ahead of our guidance. Net debt increased by £16,500,000 in the period, largely due to acquisitions and settling deferred consideration obligations. I do have a net debt bridge this year in the deck, which we'll come to later. Finally, and as Nigel has said, our dividend for the year is confirmed at 6 0.75p a 27% increase on 2019. So having reminded ourselves of the headlines, let's take a deeper look And if you could turn to the next slide, Slide 9, you'll see our organic revenue bridge. We'll take a look at some of the components in more detail in the slides that follow, but revenue specific areas that I would draw to your attention are: Our new organic growth was £15,800,000 That was an increase of £4,700,000 or 42% For 2019. You may recall that 12 months ago, at the beginning of the COVID period, We expected to see more work from existing clients, and that is what's happened. In 2019, 40% of our revenue growth came from the existing book of clients, and in 2020, it was 52.5%. Attrition was higher in the year, and I'll look at that in more detail in a later slide. We increased our new business wins by over 20 percent to £17,900,000 and of that, £8,900,000 has not been recognized in the 2020 results. Our pipeline at the year end was £45,500,000 Which is an almost 50% increase on 2019 with a very strong contribution from the U. S. ICS market. Let's now turn to Slide 10 and look a bit more deeply at the net organic growth. As you've already seen, net organic growth for the year was 7.9%, just a fraction underneath our 8% to 10% medium term guidance. As you all know, we have long term client relationships and contracts that typically last for more than 10 years. I think it can be slightly misleading to just look at organic growth on a yearly basis and hence I've shown here the average over the last 3 years, which is 8.3%. Going forward, I'll be referencing the 3 year trend as I think that's more consistent with the type of business that we have. What we are seeing is a trend to larger mandates. And hence, in any one year, the timing of some of these landing Can skew the organic growth numbers. You see that in ICS, we increased the number of clients that generated revenue in excess £500,000 per year from £11,000 to £17. In the PCS division, The relevant measure for clients is for clients generating more than £100,000 per year, and that also increased from 52 to 65. The slide shows how the 2 divisions have performed. It's probably not a Surprised to see ICS lower in 2020 with the actual result just under 7%. 2020 was tough for new business, but we're confident that in 2021, we'll be back within our guidance range. With regard to PCS, they've had a really strong last 18 months, as you can see. The market is competitive, We're seeing some of our smaller clients being targeted, but there are, however, some very large and interesting opportunities, which we're very close to winning, And I'm sure Nigel will pick up on this later. I'd like now to move on to attrition and ask you to turn to Slide 11. Appretion increased from 7% in 2019 to 8.8% in 2020. We saw an increase in both divisions for both end of life and non end of life work. There was no single reason for the increased attrition for non end of life work. As I've already said, we have a really resilient business With a very sticky client base. Over the last 3 years, we've averaged a 97.4% retention of those revenues that were not end of life. Looking at the divisions. For ICS, we expect lower attrition in 2021. In 2020, the biggest, which I would categorize as greater than £75,000 not end of life losses, In ICS, where one client took the admin in house, one client moved provider when Our client was taken over and one consolidated their providers from 2 to 1 where we were the minority provider. We continue to see attrition in the NACT book from the Netherlands, which had been reflected in the impairment charge we took to goodwill last year. PCS saw some quite aggressive price competition from boutique players in local markets. We exited a number of structures in the BVI and some Clients there also closed out, and we're conscious we have an aging book in the Isle of Man. Well, the attrition number was higher than last year. We've looked through the detail of every individual loss, and there's nothing that gives us any cause for concern with this number this year. The next slide, number 12, is new and looks at new business wins in the pipeline. The graph at the top of the page shows a new business won in 2020 with 15.6% of the 2020 revenue. Our win rate is pretty stable year to year. And over the last 3 years, we've averaged 14.4%. Bottom chart shows the increase in the pipeline at the end of the period. And as a percentage of the current year revenue, It is consistent at or around 40%. We've had a very positive impact in the pipeline from the NESF acquisition. Having spent quite a lot of time on revenue, I'd like to move on to the EBITDA margin, I would ask you to turn to the next slide. The underlying margin fell by 2% to 33.6 percent, but remained within our guidance range of 33% to 38%. The ICS margin fell by 5.2% to 27.9% and PCS improved their margin 38.8% to 41%. CCS is a well run mature business. We integrated the SAN business quickly and seamlessly, and it's making a positive contribution to the business. You'll recall we paid £9,100,000 for that And I expect to see margin accretive revenues of €4,500,000 in year 1, and that will represent a mid teens return on capital the 1st year. The ICS margin has been disappointing. We spoke at half year of the headwinds we had in the U. S. Due to COVID and the pricing model. We stabilized trading in H2 such that the trading was breakeven, And we're now seeing the beginning of a recovery in trading in 2021. We also talked at midyear about the need for some maintenance to be performed On the core business, this was causing operational inefficiency in the core business. We started to implement the plan that we put together, The progress has been slower due to travel restrictions. We did improve the margin in H2 and do expect We continue to improve margins in the core business in 2021 and that NESF in the U. S. Will also make a positive contribution. However, we're also aware that both Sees and Indos are not currently at the group margin, and therefore, we Do not forecast the ICS margin to be within group guidance for 2021. We do believe there's a clear and significant margin improvement opportunity In any asset, seized and endorsed businesses, which we expect to see in our results in the next 12 to 24 months. What I'd like to do now is move on to the balance sheet and net debt and cash conversion and ask you to move to Slide 14. Our cash conversion at 91% is very consistent with prior periods and with our guidance. You'll recall that cash conversion was 108% in half 1, but that we said that it would fall back in line with guidance in H2. That's a pattern you'll have seen every year from us, and I'm not expecting to change going forward. In 2020, we generated an additional €4,000,000 of cash from operations. Let's now move to Slide 15, where we bridge our net debt position and effectively show where the cash is being utilized by the business in the year. Net debt increased by £16,500,000 in the year, primarily as a result of the acquisitions we made. We spent £23,100,000 on acquisitions and deferred consideration and funded that all withdrawing from the bank facilities we have. Out of the cash we generated, we paid out £7,100,000 in dividends, £3,300,000 in deal costs, €4,900,000 of interest in tax, €5,200,000 of CapEx and €3,100,000 of property leases. The result of all of this is that at the period end, our net debt was £75,800,000 And if we now look at Turning to Slide 16. We can look at what this means for our leverage. You'll recall that our guidance range For leverage, we look to stay within 1.5x to 2x underlying EBITDA, but then we will consider going up to 2.5x for the right deals, that being on the basis of strong cash generation that will bring that spike in leverage down quickly. At the end of December 2020, we were at 1.96x underlying EBITDA. And as you know, we've now acquired RBCCs and are expecting completion of the INDOS deal. On the basis that we complete INDOS in quarter 2, I would expect pro form a net debt to be at 2x at the end of 2021, but it would be higher than that at the half year point. At the year end, we had £44,000,000 of undrawn bank facilities. I'm now going to hand back to Nigel. Thank you, Martin. Basically, I aim to give you further insight into our strategy for the group's Galaxy era, which runs from the beginning of this year out to 2025. Prior to that, we should close out 2020 with a deeper dive into the group operations, Observation of market trends and the performance of the 2 divisions. As with all businesses, the conditions in face as a result of the pandemic in 2020 were unprecedented. There will be a special mention of team responsible for the operational infrastructure of JTC, their work enabled the group's 1100 employees and 25 offices around the world to pivot a working from home environment seamlessly. It allowed the business to continue with its plans and meet the expectations we set prior to the pandemic. This is not to say the pandemic has not created challenges for the business, particularly across remote jurisdictions, hampered in some respects by the inability for team members to travel or to meet face to face. Due to these restrictions, however, 2020 was a year that allowed us to concentrate on some internal work streams to improve processes within the business and to plan and introduce a host of technological enhancements, including, amongst others, digital workflows to payment processing and client onboarding. April 2020 has been a heightened pace change in the regulatory environment. This, of course, is a positive driver for the industry, bringing greater complexity and added service needs to our clients, generally widening out our mandates, as well as acting as a barrier to entry to other smaller scale providers. This is also manifesting itself in the tightening of regulatory scrutiny from international bodies, To demonstrate that they are responsible for highly reputable and well supervised jurisdictions. This required a great deal of attention and investment in risk and compliance in 2020, and we believe could be a relative distraction to the whole industry for the foreseeable future. We've had our best year ever for new business wins and we're delighted with the impetus we have seen. Future we have observed of late is an increasing inclination for large institutions to accelerate projects relating to reorganization of their businesses, generally seeking out a lighter operating model. This can range from dispensing with non core activities, the outsourcing of large elements of their infrastructure or retaining them and looking to white label their service with a trusted partner. We are seeing processes which fit into each of these categories, bringing an accelerated amount of opportunities for increasingly large and more complex mandates. The process of onboarding new business in these instances can be slower with longer lead in time. The size and potential duration of the mandate More than compensates for this. It also presents opportunity to acquire good quality businesses from what are now non core activities in these institutions by way of an acquisition, with RBCC being a good example of this. You see this trend as a positive one in an area where we have a proven ability to deliver. Turning specifically to the 2 divisions, we remain very comfortable with the continuance of our diversified strategy, And we believe that the underlying structural growth drivers remain strong in each. In addition, they do, of course, provide a hedge for one another as their natural business cycles play out over time. The 2 divisions themselves are at different stages of maturity, and we're pleased with the progress of each of them. They both are capable leaders and significant underlying talent, and we are confident each of them will thrive and grow, albeit with different near term challenges. Taking each in turn, the PCS division showed exceptional performance in 2020. It ranked Top of this performance cycle with excellent growth and with great impetus going into 2021, having secured the group's largest ever individual new business win Towards the end of the Q1 of over £2,500,000 per annum, the provision of white label services for a global financial institution. We continue to anticipate strong margins, significant new business wins and increased efficiencies into 2021. The RCF division sits in a larger, more crowded market, and the division continues to land increasingly significant mandates reflected in the new business wins in 2020. The division does, however, currently have greater difficulty than PCS in maintaining its margin. And as mentioned in September, we started a process to reorganize the operations and enhance our service delivery in the division. This coupled with technological changes we are introducing incrementally to bring efficiencies and to facilitate client accessibility, We feel real progress will be made on the underlying margin in 2021, following a better second half of twenty twenty. But to summarize, we remain committed to both divisions and all three service lines, see them as complementary with increasing interdependencies. Our ambition remains to become the leader in each. And on that note, I want to now move on to our plans for the 5 era, which we see as an exciting new face to the business, building on our experience over the past 33 years and leading us to even grow to Success. A popular JPC phrase is evolution, not revolution, and we often find it past experiences that shape and educate future outcomes. As a result, we should start by our observing what was achieved in the Odyssey era, which ran from 2018 to 2020, which is a successful one in every respect, with the most noticeable feature being the rate of acceleration of our growth in the period, with revenue up 92%, EBITDA up 130 2% and over $42,500,000 of new business wins, adding over $400,000,000 of lifetime value, while staying within our guidance EBITDA margin range at an average of 34.7%. We completed 9 deals, added 9 offices and doubled our workforce. And we also received several accolades and awards across our disciplines along the way. Also, the most important number on the slide, however, is that we retained our shared ownership credentials for the whole JPC team. We were delighted to have received recognition from Harvard Business for the unique model we have created. All delivered whilst dealing with the inevitable distraction from an initial listing of the business in March 2018 and now achieving PUC250 status last year. The guidance for Galaxy, therefore, is to continue as we were before On an accelerated trajectory, whilst adapting our approach and adopting new tactics to meet specific challenges or opportunities, which will inevitably present themselves in the future. After 33 years of uninterrupted success, the key to the business remains building on its strong foundation And evolving our strategy around those 3 proven key elements of organic and inorganic growth supported by the delivery of operational excellence, combining and compounding to win for the longer term. As can be seen on the graph, this is nothing new to the group, having achieved a compound annual growth rate of 25.7% over the last 10 year period. Taking each of the elements in turn, it has been inherent throughout the history of the JCT business that we must grow by organic means year on year. The fundamental premise has been achieved every one of those 33 years, And our guidance of net organic growth of 8% to 10% sets our target range to what we see as manageable growth. We assess the performance in each location with a view to improving every year using our proprietary jurisdictional strength index. Maintenance of the existing book also gets significant attention, and we typically see relationships exist beyond the average of 10 years, which has become a normalized industry benchmark. This organic growth discipline we see is a very heartbeat of the business. We also spend a lot of time and effort attempting to ensure that our target group margins are maintained within our guidance 33% to 38%. This requires us to look at improvements to process, the deployment of technology, appropriate talent management And a flexible approach to changes in the macro environment, including determining our optimum operating locations. Increasing importance of technology to the group and the wider industry is well documented, and we see this falling into 2 general categories: an increased reliance on automation and workflows, increasing processing capacity and reducing human error as well as providing clients the opportunity to have access to the group systems in a customized environment to meet their individual needs. We remain of the view, however, that the industry continues to be primarily a people business enabled by technology, although the influence of technology is becoming increasingly more important. In a recent survey by a global management consultancy, Technology rated as those 6 indetermining factors in choice of provider, ranking behind quality of service and relationship, geographic presence, timeliness of delivery and reputation. Also worthy of note was that pricing ranked 7th, clearly with getting the job right being a more important factor for the key key decision makers. This year's good visibility of the M and A deals in the market and is a popular and experienced acquirer with a particularly strong integration team. We've also shown an ability to find off market opportunities and approved ourselves as a credible counterparty We're transacting successfully with larger institutions and banks. We always apply a 2 +2 where the outcome is greater than the sum of the parts. Our core acquisition criteria begins with an analysis of our existing jurisdictional strength and then a consideration of how the potential target We'll add to our offering in terms of management, products and services and outstanding stability in the region. This will be further enhanced our market analysis and medium term focus, which currently would include the United States for both divisions, Luxembourg, Ireland and the UK, primarily for the institutional practice. We will also look to target carve out opportunities from large institutions or global banks having proved our pedigree in this regard. We respect the scarcity of capital and have a very disciplined approach, having looked at 93 deals since IPO and having completed 10 in total with 1 other, Indos, awaiting regulatory approval. As we scale up in size, we will inevitably look to pursue larger deals as they become available. What we will look for are targets that are culturally aligned and will improve our business, ideally located in high growth markets. We will walk away if we see the wrong culture or unrealistic pricing. Ultimately for us, Knowing when to say no remains the key to a successful M and A closing. In determining the direction of travel, we are cognizant of the need to ensure that Structural growth drivers have been inherent in our markets would remain consistent over the duration of the Galaxy era. In this regard, we reassessed the long term market opportunity and considered the demand for our services, size of the addressable market and the ongoing consolidation of the Taking each in turn, long term trends continue to support further growth in the industry As a result of progressively more regulation bringing complexity and ongoing increase in the propensity to outsource and an increased demand for alternative assets. The globalization continues to drive capital flows across borders and the general rise in global wealth, encouraging the need for international providers Efficient across borders, all providing structural tailwinds for all of our service. The industry continues to have low visibility, and as a result, size of the addressable market remains difficult to ascertain. Recent research would imply $12,000,000,000 market, which is estimated to have growth potential of between 2% 8%, depending on the subsector. Same research concluded that Europe has 18% of the total addressable market It has historically been the most penetrated for outsourcing at about 70%, with the opportunity dominated in the near term by the Americas with a 40% market share at a lower level of propensity to outsource at close to 45%. In our view, these statistics, Compelling as they are, do not even capture the right space opportunities that also exist as these businesses scale up. There is no doubt there's been a huge acceleration in the rate of consolidation taking place in the industry in the past 15 to 20 years. In another recent study, however, it was noted that the market for consolidation remains substantial. The European market loan is still believed to have over 2,000 providers with no single business having a significant market share. This is consistent with our experience and suggests that our decision making in the Galaxy era will be deciding what not to do rather than a lack of opportunities. Galaxy Vision, therefore, is to be a sustainable, global professional services firm to be the best in our chosen fields with world class employee stakeholders and ultimately shaping not following the industry. And finally, on to the key takeaways. 2020 was an excellent year in spite of the pandemic with us meeting our financial expectations with a true demonstration of the JC culture at It's best. It's our best year ever for new business wins and made 3 very good acquisitions. Our guidance going into 2021 is a consistent message with an expectation of 8% to 10% net organic growth, The margin in the range of 33% to 38% to normalized net debt of less than 2x underlying EBITDA with strong new business momentum and a well developed pipeline of M and A opportunities. Finally, we anticipate continuation of our compounding strategy during Galaxy to capture market growth opportunities, to increase our services and to bring the delivery of operational excellence, punctuated by regular M and A activity with potentially larger deals. Thank you for listening and for your ongoing support. We'll now be happy to take your questions. And we do have a couple of questions in the queue. The first question comes from the line of Owen Reid From Berenberg. Please go ahead. Hi, guys. It's Owen here and well done on a really good set of results through what's been a difficult year, I imagine. So three questions from the quite broad ranging. But I guess firstly on NSS, when you bought that business last year, one of the benefits So that was the technology integration within the wider group. So it would be good to hear how integration is going and I guess your confidence around that. The second question would have been is on the pipeline that you've got at the moment, which has grown significantly year on year. And how should we think that converted to new business wins? Is there a win rate that you're currently seeing? Or I guess, imply that new business wins for 2021 Will you even grow on 2020 levels? And then lastly on the Galaxy era, I guess if we look at the obviously year and what you In math, in your comments around evolution, not revolution, should we read into it that the ambitions for the Galaxy Euro are similar to Sort of double the headcount and double the EBITDA again? Thank you, Owen. Just taking each of those in turn, I think from a technology point of view, obviously, having Acquired any asset that has been a positive in terms of having development capability for the first time in the inside the business rather than Certainly. So we've done quite a bit. We've looked at technology in a sort of a more proactive way perhaps rather than reactive than we have Historically. It's as I said in the presentation, still ranks From an end user perspective, quite low down the ranks of things to do. But we see it in 2 ways really, driving Efficiency is bringing us some more operational leverage and eradicating human error. Also, probably added to that, On a defensive basis with the likes of Kessian and Darktrace, dealing with data leaks and phishing exercises, which I'm sure we all get these days. And then portals for those sort of long arming into our systems. And we've got portals In the private office, Edge, which we have mentioned before, we're now working on Edge 2, a combination of NESF and an external provider. In Europe, we've got something called Puma, which is something we're developing to bring the NESS, eStack Pipe Technology to the European market. And we've also done a whole lot of work on client onboarding, which has been piloted in the U. S. On the institutional side, but actually introduced slightly different onboarding process in the private client side In Europe. We've also worked with Refinitiv for electronic ID verification documentation, so you can Self serve and authenticate your identification, which has become increasingly important in the institutional side of the business. So plenty going on, and I think pretty much more to follow. But So NESF have played their part in sort of driving that forward, but it's almost a joint effort between the team that we had Originally, plus the NESF guys. On pipeline, it's looking positive in 2021. As we said, There's good impetus at the end of the year. Q1 looks on target for us. We've got that very big new business win that I alluded to And possibly at least one other of a similar size. On the institutional side, very excited about obviously Opportunities we're seeing, so we're seeing that sort of natural come back of sort of private equity and real estate activity that was stalled for some degree last year. But on top of that, obviously, we've got the excitement of bringing the Seas business in as well, which This is a fantastic core client base for the division with plenty more that we can do, I think, around that particular book. So feels very positive with the pipeline, and the Q1 would, to a large degree, bear that out so leading into April as well. And on Galaxy, yes, the Duration of the previous year was a 3 year 3 year 1, this is a 5 year one. So I guess the answer the question, Owen, is I think we're going to carry on doing what we do. I think the deals might get bigger opportunities will get Larger as well. I think that the nature of the mandates in the market are also much bigger mandates. It's not unusual now to have A number of clients will pay you well over £1,000,000 a year. So it's a compounding strategy. It's Certainly building a really fantastic book for the long term. But in the next 5 years, I would given that We roughly doubled in 3. I would be disappointed if that wasn't our ambition. Great. That's very useful. Thank you. The next question comes from the line of David Brockton from Numis. Please go ahead. Good morning, guys. Actually, can I do 3 as well, please? The first question Just related to PCS. You mentioned some pricing competition there. Just really interested to How do you respond to that? And what means are available to you to sort of retain clients, particularly given that I think in the ranking, you said Pricing was ranked 7th. That's the first question. The second question then on the ICS division. Clearly, that business has some good momentum, and you're trending towards some larger contracts there, particularly some white label services. Can you just touch on Is that now becoming a bigger, more prominent feature of the pipeline? And as contracts get larger, how does The competition sort of pan out in that space. The final question is on your long term growth Market growth that you set out, I think you said sort of 2% to 8% depending on subsector. I just wondered if you could just sort of Help me understand what's at the lower end there. And I guess my implication is where are you actually taking more share because you're growing by faster than at that level? Yes. I'll take that, David. I think the pricing competition Point is, it's a very local scenario. The private client practice To a large degree is has individuals within it who Build relationships with individual clients. And so when they move around the market, you will see that clients will attempt to follow them Not much as we would suggest that there's JTC clients in the first instance. So we had a particular run on a particular book from A local firm in Jersey doing that because they managed to hire 1 or 2 of our people. So It's partly pricing, but it's also really popular to say that JTC is now, if you like it, more like Supermarket, and we're a boutique firm, and you'll get better service and partner led service, if I could use that sort of phrase, from us. So it's a typical it's exactly what we used to say about the bigger guys when we were a smaller firm ourselves. So that's the Specific thing there. I think pricing wise, I suspect they'll be in a similar position. But in order to move, they may have been offered something in particular. But anyway, so a little bit of that, but it's local and It's one instance, if you like, with a few clients. Definitely larger contracts we're seeing in Institutional Client Services. You asked us a year ago whether we thought we'd be doing traditional fund type work on a sort of middle and back office basis. I don't think that would have What we've anticipated, but we've done that. And because by virtue of doing that and proving it, there is more and more opportunities that have presented themselves to us. So a much wider church, one of the better phrase of opportunities coming out from that. The competition, I think The issue is there's a difference between being able to have the systems and people to be able to deliver Something. And then actually understanding what a client wants, and I think that was missing in the market for the most part. So for example, one of the bigger ones We picked up in the last 18 months was really us educating them on what they want rather than what they thought they needed. So I think It's getting into that sort of let's be a solution provider for you rather than just a big organization That can throw people and systems at a particular problem you've got. So we're still in really good shape and we've got the track record building up there. And then in terms of the long term growth, I suspect I didn't elaborate on it, but I Suspect from that report, although I haven't got this at my fingertips, the 2% to 8%, they would have probably had the private client Services market at the lower end of that range. And my view with that is, our private client service practice is probably The best, if not close to the best in the world, and we're seeing really good growth from it for the most part as you hear. So I think we get a larger proportion of the market that's there. I think the market is bigger anyway because I think there are services Traditionally, trustees, for example, would not have got involved in whereas where can we get it from a more holistic perspective. So From my point of view, and as you've heard, we don't rate the trust company business or the private client services business That's any less important to us than the institutional business. But it's fair to say the institutional business is probably growing quicker in terms of the market share. Wonderful. That's very clear. Thank you. Your next question comes from the line of Robert Plant from Panmure Gordon. Please go ahead. Good morning, Nigel and Martin. Last week, the Biden administration in the U. S. Effectively sort of conceded to the OECD BEPS campaign Minimum corporation tax, quite a lot of press talk about that could be bad for low tax jurisdictions, Reducing their scope. Given you have a weighting to low tax jurisdictions, could that be a headwind for you in the next era? Good question, Bob. I think from our point of view, we've lived with Obviously, the business has been around, as you've heard, for 30, 33 years now. And we've lived with Changes in tax legislation of all different types in different parts of the world. So my view is that Whatever is coming down the track at us, it's about being able to adapt to meet that. So I suspect it'll mean things will change. Bear in mind, there's a huge amount of business already transacted through all of these jurisdictions. So at the very worst, There's an unraveling process to go through, which would take 20 years to probably to even get anywhere near Dealing with. So if there was some sort of seismic change, there's life beyond Sort of the tax planning around and use of low tax jurisdictions. They've changed significantly in my time in the industry. Some things are better news, some things are worse news, but it's probably fair to say as a group, we're in London, New York, Miami, San Francisco, Luxembourg, you name it, All sorts of different markets. So there's no one move that we feel would disrupt In the same way as COVID didn't, in the same way as nineeleven didn't and in the same way as the financial crisis didn't. So I think We keep on top of these things, but there's nothing coming down the track that we either don't know about or Couldn't adapt to. Is that okay, Rupert? Yes, that's great. Thanks, Nigel. Your next question comes from the line of Vivek Raja from Shaw Capital. Please go ahead. Hi, good morning, Charles. Can you hear me okay? Yes. Super. Thanks. Again, three areas that I want to explore, if I could, please, and they're also related. So the first one is cost efficiency. The next one is acquisitions. And the last is the EBITDA margin Guidance you've reiterated. So on cost efficiencies, the programs you sort of mentioned At interims, I just wondered if you could give a bit more context on where you've got to with those, whether you could And to give a sense of what sort of savings you'd expect to deliver from those. And I suppose sort of related to that, you talked about the In the ICS, particularly in the second half, so if you could just quantify some of that stuff. And maybe some of these savings are to do with South Africa and getting that to work better or whether it's sort of application of technology. So if you could just work that out for us. On the acquisitions, much simpler question. Obviously, the focus has been on ICS of late. I appreciate You're looking at lots of different opportunities, but would you expect the focus over the next few months to be more ICS weighted or more PCS weighted? And the last question, just to bring it all together, the EBITDA margin guidance you've reiterated. I know consensus For the current year 'twenty one, has you coming below the EBITDA margin range that you've outlined? Just wondered if you could comment on that. Is consensus wrong? Or is there something to sort of nuance in terms of our understanding of that? Thanks. Thanks for that. I'll deal with certainly the the cost efficiency piece and maybe a little bit around the acquisitions, Martin can perhaps pick up on the margin range as we see it. But cost efficiency, I think the thing you were alluding to was an exercise we call blueprint At our end, and it was a pivot from a banking departmental model that we inherited with Klein Wilbenson in our Center of excellence in South Africa and moving it into a more professional services model, if that makes sense, in terms of Great reliance on fee earning and ownership of holistic management of the client and ownership of the client within one team. It certainly brought it was there to bring greater consistency, we think, Great satisfaction for the clients and drive operational efficiency, because the Economics of running that line would sit with one team responsible for it. So that was what we were Alluding to in September time, it started earlier than that. There was a need to there was a few aspects to it. There was Technological element to it, there was a change of operation, which in a people business Can cause concern certainly can cause concern in a year by the one we had. So that whole process was Perhaps slower to be delivered than we hoped. I can say from the beginning of this year, the work's done, teams are recast, The ownership, if you like, within Teams has changed. And so we're expecting and I think we began to see it second half of the year Incremental improvement. It will be measured in sort of inches or 0.5% of the time, it's not going to be a big bang scenario. I think also it will probably drive a better way of establishing where We need to top up our fees. So that's the exercise we've been going through. And incrementally, And it's difficult to think on exactly what that will do, but it will it should improve things as we go through the process during the course of the year. I think the difference that you just alluded to, but I'll let Martin pick up on this is how quickly will these things happen, how and How quickly will we get the new acquisitions into a margin that's more typical of the group as a whole. We've also brought some technology into that process. So for example, in one particular client, I think we've got 80% gains in the speed of NAV calculations, for example, for a fund, which is fantastic. And that's using sort of workflows and some machine learning technology. So we've got lots going on in that regard. And Incrementally, all of these things should come together and improve things. In terms of the acquisitions, From my point of view, there definitely has been an emphasis on institutional client services. Obviously, that's a market that's growing the quickest, but it's probably the business that's required the most amount of attention from us over the last several years. So I think we're building out a very nice footprint for the business as a whole in institutional. I think we Maheem made some really good acquisitions. I think Indos, from an expertise perspective in depository and ESG reporting and the like is a fantastic addition, albeit not run at the margins that we've historically dealt with. And the seeds business is definitely it proves you don't have to necessarily play through the We've achieved to find excellent businesses in our market. So we're really pleased with that. In terms of emphasis, We've got we're quite keen on finding a trust company in the United States because that business is growing for us organically very, very quickly. So it'd be quite nice to add to that business. There's also potential bank liftouts, Multi jurisdictional and continuing the sort of trend of late of the banks piling out of trust services over a period of time. So I think We and we've got visibility of things on both sides of the device. So it will come down to The right move at the right time and the negotiation that goes with it. But so I think it will be balanced, I think, is the simple answer. Martin, do you want to pick up a bit more on the margin range? Yes, sure. Good morning, Vivek. You're right. The consensus It's below the group margin range. But if you recall, the guidance that we gave is medium term guidance. I think as we said in the presentation, we've made a couple of acquisitions just recently, one that's completed and one that's about to complete. There are Really good acquisitions. The Sees business, we've only had our hands on that for a week. It's very similar to the Bank of America transaction in many ways and what it could offer us. I'm Even a weekend, I'm feeling very confident that we're going to be able to see a path to that getting to guidance range, Maybe not in 12 months, but definitely within 24 months. And I think there's going to be some really good growth potential There's a fantastic book of business in there. As Nigel said, the indoors acquisition is a really good one. It's not at the margin We have at the group at the moment, but there's a lot of growth potential there. And I think that's just about investing in that business, and it will come through in time. The other aspect, of course, is NESF, which had a tough 2020. It started 2021 well. It's on track where we wanted it to be. It's still got a way to go to get to the group margins, but there's an awful lot of Positive momentum there. Some of the things that the Biden administration are doing in terms of supporting infrastructure and investment Are going to be really positive. It looks like things like the EB-five program, which The guys have a market dominance in, that looks like that's going to be expanded by the way that they treat Visa applications whereby Historically, if you made an application in a family and there was 4 of you, it counted as 4 visas. That's now going to be counted as 1 visa. So there's a big, big potential for growth there as well once that gets through the legislature. So I think that There will be potentially a dip on the margin this year. We're hoping it we might actually do better than that. But the last thing we want to do is overpromise on anything. So we're conscious we've made some good acquisitions. We think that the there's a big margin opportunity on all of these. So we're looking forward to delivering on that. Thank you very much. Really, really clear answer. Thank you. We have no further questions in the queue. So I'll hand the call back to your host Any closing comments? Nothing really to add. Thanks, everybody. Very excited actually about the next 5 year period. I think we're in really good shape. There will be Peeks and troughs along the way as you'd have learned, but generally speaking, most of the drivers are in the right place for us. So Thank you for coming along and listening. Look forward to seeing you in person at some stage soon.