Earnings Call: H1 2020

Sep 15, 2020

Good morning, everybody. Welcome to the presentation of JTC Plc's interim results for 2020. I'm Nigel DuKane, the Group CEO, and presenting with me as usual is Martin Fotheringham, our Group CFO. Once again, we are faced with a virtual presentation, but I do hope on the next occasion we will be meeting in person. The next half an hour or so, I will present my CEO highlights Martin will run through the financial review. Then I'll follow-up with a business review of the first half of twenty twenty, including a more detailed insight the impact on the business of the COVID environment and provide an update on our recent acquisitions and the M and A market as a whole, closing with our outlook for the rest of General terms, I think we've produced solid results and good growth in challenging times. We recognize when we presented to you in April that it was largely going to be shaped for all of us by the COVID-nineteen pandemic. At the time we suggested that, although not complacent in any way, We were reasonably confident that because of the way the business was organized and managed, we had a good chance of trading in line or close to our pre COVID expectations. We felt able to say this in the light of JTC's business fundamentals. These characteristics are why we have delivered outstanding results and have led to revenue and profit growth for 32 years and through previous world crisis. To highlight a few, we have had a well invested scalable platform, as the benefit of being well diversified with 6000 clients in 130 countries, multiple service lines and a presence in all the key locations in the world relevant to deliver outstanding service. We are a cash generative business with cash conversion in the first half of the year with 108% and we benefit from a strong balance and recurring revenues of around 98%. Most importantly, this is all underpinned by our unique shared ownership model, and the behaviors and genders, which in many ways are at their best in the crisis. COVID-nineteen has brought its challenges, but we are delighted we have managed call on these attributes to ensure we have met the expectations we set for ourselves prior to the advent of the pandemic. Due to our confidence in the continuing strength and success of the overall business, we've increased our dividend payout guidance from 25% of underlying EPS to 30%, which results in an increase of 41.2% to our interim dividend, 2.4p on our normal onethree two third basis. Thanks to the progress made in the first half of twenty twenty, we delivered another strong set of results with further revenue and EBITDA growth. Exceeding the target expectations, we had anticipated for net organic growth at 10.1% above our 8% to 10% range. Gross growth of 17.9 percent, all delivered as an EBITDA margin of 33.3 percent, is within our guidance of 33% to 38%. PCS division has once again delivered a particularly strong performance at an excellent margin. And we have continued to see some significant new business wins in the ICS division, including our largest ever winners of group. We managed to complete the acquisitions of the Saum PCS business, which was completed on the 1st July, and NES Financial, the tech enabled fund services business in the United States. Although these acquisitions were quite different businesses, we are pleased with both, which I will return to you later. We also added a small lift out in the UK to add registrar services to our capabilities and established a presence in Dublin Island for the first time. But is remaining active in the market seeing a number of the further the number of further potential deals as the M and A market returns to life. Generally, we've taken the opportunity presented by the external environment to focus internally and to introduce a revised operating model into our fund serves practice of the ICS division, supported by a greater reliance on technology to deliver efficiencies. The short termness had an adverse effect on the ICS margin, but once implemented over the next 6 to 12 months, we are confident that efficiencies will be found in servicing this growing book, providing a more scalable platform and working model for future expansion. After significant move to upgrade premises in London, Amsterdam and Cayman in 2019, we've continued this into the first half of the year, the commitment to a contemporary new office in Luxembourg, bringing the whole Luxembourg based team together for the first time since 2018 and taking further space in JT active team with the appointment of Michael Halloran, CEO of NESF into the new role of Head of Group Technology Strategy. Signaling the increasing importance of technology to JTC and our sector. Received global recognition by featuring as a core case study in the Harvard Business School MBA Program. To calculate, I highlighted JTC's key differentiator and the competitive edge it brings, which has manifested itself in positive attitude dedication and collective spirit shown by the team through the pandemic. I would like to take this opportunity to thank the whole team for their support in what has been a difficult period for us all. So in essence, in the first half of twenty twenty, we've once again enhanced an improvement upon our financial performance has delivered net organic growth of 10.1 percent, which is particularly pleasing in the circumstances. We've made 2 acquisitions in lockdown added further to our group talent, range of services and geographical reach. While accelerating improvements to our infrastructure in relation to our organizational construct, technological capabilities and premises. All in line with the expectations we've set for 2020 and prior to the pandemic. We turn to Slide 5 and on to the financial highlights. Where we've achieved period on period revenue growth of 15.2 percent to 53,700,000 underlying EBITDA growth of 11.2 percent to $17,900,000, an reduction of 1.2 of a percentage point in our EBITDA margin from 34.5 percent to 33.3 percent, which is still within our range and primarily due to the funds practice reorganization, which we have indicated. Our annualized new business wins were up by 45.8% to 8,600,000, which now includes the NESF figures. Our pipeline at the period end was 28.3% higher, at $42,600,000. More generally, currently estimate our win rates in both divisions to be above 35% of the mandates where we have visibility. We are certainly seeing more mandates and the mandates themselves are larger in nature. All achieved in spite of the anticipated inevitable slowdown between spring early summer. Looking forward, we see period on period future revenue from these new business assets of $80,200,000, up 44.1 percent over the same period last year. And I'll now pass over to Martin for his Retail Financial Review. Thank you, Nigel. Good morning, everyone. We have a lot to be pleased about with our H1 trading. Organic growth was 10.1% in the last 12 months, Cash conversion was 108% so far this year. We have new business wins at $8,600,000 in the period and so far, we've completed 2 acquisitions this year. The core business performed particularly well However, EBITDA did fall in the period, albeit remaining within our guidance range, and the NESF trading was adversely affected by COVID. As I go through the next ten slides or so, I'll address all of the above in some more detail. If we turn to Slide 8 in the deck, This is the summarized income statement. As I've said, there were a lot of things in H1 from revenue increased by 15.2%. Underlying profit increased by 33%. Underlying EPS increased by 25% We saw excellent performance in the Channel Islands and Cayman and in Netherlands. However, the EBITDA margin fell back is remained within the guidance range with PCS continuing to outperform. NES has been impacted by COVID, will talk more about that in a moment. I'll also talk about what's been happening in the core ICS business as we go through the slides. Now if we can turn to Slide 9, and here in the next couple of slides, I wanted to give you some more detail about what we've seen in H1 with respect to trading. So Slide 9 is a revenue bridge, and this shows that in the last 12 month period, we won $13,100,000 of new business, That was split 4456 between existing and new clients. That was consistent with what we expected in a lockdown, as we anticipated, we'd see relatively more activity from existing clients. We have had a very strong run with winning new work from new clients. Couple of 1,000,000 plus mandates in there. Indeed, one of these was initiated in 1 during lockdown. Still on the subject of wins in H1, we won a total of $8,600,000 of New York, $1,900,000 of that has been recognized in our results to date. At the end of June, our pipeline was over 1,000,000, with a couple of very large mandates included in it. And of those mandates, we are mid RFP as speak. I will come to attrition in some more detail in a moment. So if we could turn to Slide 10, This slide, has some new analysis, which we wanted to share with you providing some additional detail on organic growth and attrition and where that comes from. If we look first at the organic growth, at a group level we've reported 10.1% growth over the last 12 months. If we dig into that, we can see from the chart here at the top of the page, that PCS has delivered 11.8% at ICS 8.9%. We've had a very strong contribution from both divisions. CS in particular has been extremely well and this speaks volumes to the work the team has done to increase mandate sizes as well as securing new clients. We strongly believe that both divisions are extremely complementary and that having both gives us confidence in our ability able to meet the guidance levels year on year. I think if you look at the graph, you can see that this amply demonstrates this. Let me now turn to the attrition. Here, we've shared historic data in the tables at the bottom of the graph and we also show how the split between end of life and non end of life is made up for both divisions. Whilst our last 12 month attrition did increase from 7% at the end of 2019, to 7.6% at the end of June. This was entirely due to an increase in end of life structures. 97.5% of non end of life revenues were retained, that compares to 97.4% at the end of December. Within those non end of life losses, there were no new losses greater than £50,000 in the 1st 6 months of 2020. Having lifted the lid on revenue, what I'd like to do is now turn to EBITDA margin and ask you to turn to Slide 11. Traditionally, we expect to see our business improve the EBITDA margin in H2 relative to H1 as the graphs on this page demonstrate. The margin for the core business in H1 excluding NESF was comfortably within our guidance range. We're conscious that the PCS margin is significantly ahead of the ICS margin and indeed that the core ICS margin has fallen back to the levels we saw in 2018. When we last presented, we said that we would be addressing this. I think it's fair to say that we've been hampered in implementing the plan to reorganize a division as we're conscious of the need to keep client service at normal levels and that to embark upon such a program with all of our staff working in isolation, we potentially introduce unnecessary risk to the business. We do have a plan and are poised to commence it, but we believe that for the long term benefit of the business, it's better to stop this once the outlook is clearer. The 30 June figures include 2 months of NESF trading. 22 COVID NESF lost money in that period. This was due to a number of factors. First, the business model has been built on AUM interest rate related revenues. We knew this before we signed the deal and that we needed to move this to the JTC time and material billing basis. We didn't expect that the impact of COVID would necessitate this happening immediately. We have been and we continue to work through this with the NESF management. But the impact on the NESF business was that they lost $4,000,000 of annual revenue in the space of a couple of months. In a high fixed cost business, you'll understand the impact this will have on the bottom line. 2nd, NESF was configured for growth and that growth was put on sectors that the funds at NESM typically win are in markets that have been impacted by COVID, real estate, construction, hospitality, and retail. We subsequently restructured the business and cut the cost base until such time as the investment activity restarts again in the U. S. Finally, continuing political uncertainty in the U. S. Is causing investment in our shop. However, We do believe that this will prove to be an extremely good deal for JTC. Nigel will restate the investment thesis in connection with this deal However, suffice to say we are confident that once the pause button has been released, that we will see significant returns from the U. S. Market. I'm conscious I've spent some time on these last couple of slides, and therefore, I propose to quickly move through the slides that we've included on the divisions. Slide 12 summarizes the ICS divisional performance. I've already explained that what we've seen in H1 and what we're doing to address this. Likewise, on Slide 13, this summarizes the PCS performance. I would like though just to pause for a moment and reflect upon a division which delivered double digit organic growth and an EBITDA margin above our guidance levels. We were very pleased to complete the acquisition of the SAN Private Client business at the start of July. This is a very good business and one that we will be a very good deal for cash flow and leverage. Slide 14 shows our balance sheet. Nothing's fundamentally changed here since we last reported We have a high value of goodwill and intangible assets as a result of our past acquisitions. Every 6 months, we test the carrying values for impairment, and I'm pleased to say there are no impairment indicators at the present time. Slides 1516 look at the cash flow of the business. Slide 15 is a summary of the cash flow statement. As you'll know, we're a very cash generative business. We are asset light. And H1 group cash increased by 1,000,000. Slide 16 focuses on cash conversion. We reported in the RNS that we delivered an extremely strong H1 performance with 108% cash conversion. The graph on this slide shows it's typical for us to perform more strongly in H1. This is because of the timing of the billing cycle for a number of the services we deliver. It's normal practice for us to raise a number of annual invoices in January February if collected shortly after. This drives the high H1 cash conversion. You'll also see from the table that by the time we get to the year end, the annual cash conversion typically drops back towards the guidance levels of 85% to 90% that we provide. Slide 17 shows that at 30th June, our the leverage under our bank covenants was 2.1 times. There is significant headroom in this covenant as a test threshold is set at 3.25 times. Adjusting this to a pro form a leverage level to take account of full year trading for acquisitions, our leverage was two times. We maintain our guidance target of up to 2 times pro form a EBITDA, but we do know that there are a number of attractive acquisition opportunities available to us. Nigel will touch more on this in a moment. Our banking facilities expire in March 2023 and we're currently 1,000,000 available to us within these facilities. For the right deal, and I do stress that it has to be the right deal we believe it would be commercially right and fiscally prudent for us to utilize these facilities in priority to issuing and raising equity. We recognize this may lead to a short term increase in our leverage to being closer to 2.5 times, but given the headroom we have available, and the cash generative nature of the business, we believe utilizing lower cost debt that we've already paid for is the right thing for the business. I shall now hand back to Nigel, but I'll be happy to take any questions you may have after he's finished. Thank you, Martin. Now I'll take you through the business review for the first half twenty eighteen, including a more detailed insight into the challenges presented by COVID-nineteen, and we've adapted our business to meet these. We'll also look at how we see affecting the wider landscape, including a look on the potential effects on the M and A market. We'll also provide an update on the acquisitions we made in the first half of the year NES Financial and so on. Usual, I will finish the review of the outlook for the rest of the year. Starting the group overview on Slide 19. Group level, we can compare and contrast the performance of the 2 divisions, with private client services going to strengthen strength, institutional client services growing at a good rate, but with some margin regression. We reorganized the funds practice and introduced the revised model. Divisions are in different stages of their natural cycles. PCS having all aspects aligned at present, which reflected in its ongoing success and the margin it's achieving. For us with ICS, we are seeing good performance in the corporate services practice and an opportunity to proactively improve the performance of the funds practice. In terms of the operational efficiencies to improve margin and drive scalable growth. What I would describe as planned maintenance in the indicative group margin range. As a result, this temporary reduction in the margin is not of undue concern to us. Gard to new business and as anticipated in April, we have seen more activity in the existing book as clients reassessed and adjusted strategies as a result the pandemic, driving more work from existing clients, which was double the same period last year. It also anticipated a falloff in new business as the world went on hold. This was as expected with a slowdown between April July in particular. Performance was strong, however, on the back of an excellent first quarter and that large institutional client services win in the second quarter. Group remains fully committed to all of our service lines and both of the institutional and private client markets. The opportunity for growth in both divisions remaining strong, as well as providing a degree of diversity through business cycles and ensuring revenue resilience. You see the funds and trust company markets as complementary and symbiotic for reasons indicated on the top left hand corner of the slide. Finding that the proximity of the markets and their interdependency is increasing. Let's argue we are well placed to increase mark share in both and become a leader in each. Looking forward to the second half of the year, we will look to consider further acquisition of entities and also focus on an orderly and safely managed return to work over the global footprint at the appropriate time. Continue with the reorganization of our funds practice and with the integration of the NESF business, utilizing the technology capabilities it brings to the wider group. The following slide, we've listed the lid a little on the effect of the pandemic on our business in challenges both current and ongoing and some of the potential opportunities it may present. As I mentioned earlier, in spite of COVID-nineteen, we've been able to deliver on expectations in the first half of twenty twenty. That is not to say that we haven't or won't be presented with challenges, many of which are ongoing and would have applied to all of us. As demonstrated earlier, and as we observed in previous crises, the group's existing client base was more active post COVID. Clients reacting to to ensure their present arrangements were robust or in need of review will change. As a result of the pandemic itself, effect on the financial markets and the likely global recession to follow. Predictably, we saw projects and fund launches put on hold particularly affecting the U. S. Market. Our inability to meet face to face will have slowed down our hampered direct engagement. Is particularly important at the outset of the relationship. For example, this may have led to the Sandbook transferring at a lower level than we had anticipated some of the NESF challenges Martin has alluded to. Looking forward, however, we would expect a general acceleration in reviews of business configurations. We determine even greater desire for leaner working models. Propensity to outsource becoming even more prevalent and likely to proliferate into more and larger mandates. From experience, world events of this nature also tend to lead to a flight to quality and tendency from clients to use larger established businesses with strong balance sheets to manage their affairs rather than smaller boutique operations. Our cash collection was strong, which implies in a crisis the quality of advice and service provider would win out over the marginal cost savings from a suboptimal service. Turning to operations and employees. As I've already mentioned, our shared ownership structure and the behaviors in gender gives us a very special culture at JTC, excellent organizational health. It ensured that the business was supported in all jurisdictions and at every level. Group Platform transitioned seamlessly to work working from home. Business continuity team drawn primarily from our operational heads did an excellent job, logistical challenges of delivery and messaging across the global office Our internal focus on the operational model of the funds practice is well advanced, although our ability to implant some of the early stages have been hampered by travel restrictions and limitations in places on direct communication, training, and team reorganization. Price has led to new daily reporting and more frequent interaction between senior management and has driven greater cohesion across the global network. Improving upon our strong group culture and consistency of messaging. Believe the ESG agendas grow more important post pandemic In particular, the social aspect for both individuals and institutions. This is positive for JTC as we have always looked to promote these behaviors throughout our history. More specifically, for our clients, we have been developing solutions for tracking and measuring ESG and impact investing with our NESF colleagues, to widen our existing relationships and attract new ones in the U. S. And ultimately across our global footprint. So now on to M and A activity. JT remains a popular acquirer with a good track record, as we've described previously. You are, however, disciplined in our approach with less than 5% of the businesses we assess ultimately being acquired. Always favoring, we always favor a 2+2 equals 5 outcome. The key of course is knowing what not to do. After a general slowdown over the summer, the market appears to have reignited with a significant amount of potential acquisitions appearing both on and off market. As we see it, these are a combination of those that were on hold following the arrival of the pandemic returning to the market. Acceleration of intention by others, potentially factoring in a long recession, and then larger more strategic opportunities being suggested and primarily contemplated by the Pfizer community market consolidation. Our recent observations are that as a result of this glut of opportunities, the general reluctance from historical acquirers to reengage as they remain internally focused and view the immediate future with uncertainty may see a softening in pricing. May also be some larger deals, larger deals, presenting themselves in the near future as the industry continues to consolidate at a reasonable pace. Rest assured, we are poised and ready to find the best opportunities and safe reliable. This background Deely takes us through to Slide 21, which reviews our progress with the acquisitions made in the first half of twenty twenty. NESS and SUN PCS. Starting with NES Financial, you will recall that from 2017, been looking to get a foothold in the alternative fund administration market in the United States for our institutional client services division. Infustrated in this regard by the quality and pricing of the opportunities we had seen underdeveloped market as advisors came to understand the opportunity and introduced M and A pricing, which were driven by the scarcity value of the businesses rather than their fundamentals. For separate group vet exercise, we were very keen to accelerate our incremental introduction, technological enhancements business wide. Knowledgeing the increasing influence of technology on our industry and ensuring that we were a leading tech enabled organization. As a result, we were delighted to complete on the acquisition of NESF in April, which is a specialist fund administration business based on the East Coast of the United States Boston and has its core competence in developing fund related technologies from its base in San Jose Silicon Valley. Transaction was at a reasonable price relative to the United States market, was an all stock deal aligning the capable and experienced U. S. Management team. The group from the outset. We're pleased with the progress we've made in the 1st full month in spite of the challenges brought by travel restrictions, and we are certainly already of a good cultural fit with our strategies for the U. S. Business and group technological development. Completely aligned. On the downside, however, as Martin's already explained, the trading in the NESF core business has been adversely affected by the pandemic. We are pleased, however, with the adjustments they have made management have made a short notice in the U S and how the team are assisting at group level with the development of client portals in both divisions, introducing client onboarding efficiencies and assisting with evolution, the evolution of our private and family office offering, Edge 2. We are confident, therefore, in spite of some of these early trading headwinds, we have acquired a good business and the wider strategic advantages we have added, these in better shape for the future. By comparison, a virtual SON acquisition, which completed on the 1st July, has been easier and more straightforward in our home jurisdiction, in spite of the exercise being carried out in lockdown. Bookers transfer book that transferred was 20% smaller than we had originally been led to believe, but the deal dynamics allowed us to adjust consideration accordingly. Prior to this, we are pleased with the team, the client base is of good quality, and the price we paid was reasonable. All in all, in short, we'll make a success of this acquisition, delivering growth at an excellent margin. Two teams have only physically been scheduled for a week or 2 now. So we're looking forward to building on the cohesion we can create between the former Saan team, and their award winning JPC colleagues. In summary, as we've indicated in the past, The acquisitions we make as a group are often motivated and achieved with different outcomes in mind, but always driven by our long term growth strategy. Being the best business in our markets. These two deals are quite different. Donna's routine easier to integrate and immediately earnings enhancing in our home and mature market. NES Financial is a different prospect than driving more strategic and long term goals in the fields of technology and in the developing U. S. Market. And welcome short term headwinds and trading are a disappointment. But not of undue concern when viewed holistically and with the long term goals in mind. And finally, turning on to our key takeaways on Slide 22 and looking forward to the second half of the year. We have all had to acknowledge that we are living in unprecedented times and the pandemic itself and its longer term effects still unraveling. Need to live with COVID-nineteen and its repercussions will run long into 2021. Forecasting the effect of this on JTC and its business community still remains difficult. That said, we do believe we have a very robust and defensive business, should, in relative terms, continue to be protected, should be well placed to capitalize on opportunities arising out of this world event. As a result, we remain cautiously optimistic for the second half of the year, but as we have mentioned, the timings and the contributors to may be different than anticipated. Thank you for listening and for your ongoing support. We'll now be happy to take your questions. Thank you. Please ensure your line is unmuted locally, and you will be advised when to ask your question. Alternatively, you may also submit your questions. By the question and answer box on the presentation plan. We do have some questions coming through and they Our first question comes in from the line of Robin Savage calling from Zoos Capital. Robin, please go ahead. Hello. My question is about ESG And Responsible Investing. Could you talk about a little bit more about the way JTC, has approached, responsible investing and their involvement, prior to the acquisition of NSCF And could you perhaps, talk a little bit more about impact investing and the the way in which impact investing has increased, in the US as well as responsible investing increasing here in the UK? Thanks, Robin. I think JTC, I guess the best way to start that answer is, as you'll appreciate from our shared ownership credentials, we've always believed in having a business that, as many people as possible benefit from by virtue of their ownership stake. And so that's really where our root of, responsible behaviors around as an organization start with And then of course, we built on those over the years and we just tend to be appropriate in every respective. The whole ESG agenda in many ways. I think and historically that manifests itself in probably being a leader in the renewables, space, sort of starting sort of 10, 15 years ago. With regard to NES, that is one of the attractions of the acquisition of NESF and plenty of them to be clear. Their involvement in the opportunity zone arena, where funds which have incentives in the form of tax breaks or ultrahighnetworth to, invest in underdeveloped zones across the U. S. So that, that is that for us is a very attractive prospect, because it plays into that sort of social agenda in a way that we're very call. And in terms of sort of what we're doing in this area at the moment, obviously, the market itself has slowed down significantly as Martin alluded to, by virtue of the pandemic, which is probably what you'd expect with a relatively new market out there. But we've been sort of working with, Professor Howard Buffet, who's the grandson of Warren Buffet and Professor at Columbia University, to work on a sort of proprietary impact rate of return framework, which we can apply to to opportunities own funds, but actually much wider than that to any fund that we work with and indeed, not necessary funds. It can apply to family offices and the like as well. So, so that's going on in the background. We're working very hard at sort of bringing that round and bringing it to the market, obviously we'll start with that in the U. S. For the most part. But look to roll it out across the whole group at some stage in the future. That cover it. Yes. Thank you, Chris. Okay. The next question comes in from the line of Ewan Reed calling from Berenberg. Please go ahead. Really good set of results, which has clearly been managed to a difficult time. I guess I have three questions, if that's okay, and I'll I'll wrap through them and let you answer them. But, Firstly, you, thought that the NESCO becoming head of technology strategy. I guess it would be good to hear what's on his or her agenda for the 1st sort of year in JCC, one of the things that they would like to achieve, Secondly, on the M and A, you kind of talked about, prices dropping, but alluded to some larger deals in the near future. Any color on like I guess, how big those deals are? Are those what you would consider transformational or are they sort of NES type in terms of each added to a new market? And then lastly, thinking about your H2 organic growth, so the 8 to 10% guidance you talk about over 10% in H1, do you expect organic growth to drop off in H2? My expectation would be that attrition rate would probably slowed down or lower in H2 as well. So that meaning that organic gross organic growth is also gonna decline and you have sort of an an 8 to 10% range. Appreciate that. It's quite comforting to explain, but any color on those three points would be great. I guess the best way to think of the the well, first off, the appointment of Michael Halloran is a very experienced technology professional and bringing them on to our board was the first, you know, significant move for the group as a whole. I think, so technology features in every conversation these days as opposed to being something that we might I've got around 2 as a business. So that was the first acknowledgment for us as a group. I think of this in 3 buckets First one is, improving the client's experience. So these are what we're working towards. And that's really adds to the stickiness of the clients by virtue of providing, portal type capability both in the institutional and private client markets I suppose Edge Point 1 was a 1.0, I should say was the 1st step in that direction, which obviously we embarked upon ourselves. And so two things that really should make our existing client base stickier in the first place and more dependent probably give us the opportunity to upsell around the business itself. And should attract more clients in the fullness of time. Whether it's I don't believe it's a revenue driver in its own right, but that's our view there. Obviously, it brings efficiencies to processes and use of sort of robotics within the business, which should drive greater profitability. So we spoke a little bit about, what we're up to in terms of improving the margin in the funds practice And there's a big part to be played with bringing efficiencies in that regard. And then last but not least, I'm picking up slightly on Robyn's question before, I think the measurement of impact investing and how we could do it and the wider market that actually opens should drive obviously, new relationships and could be a revenue driver in its own right. So we've sort of got a defensive element we've got a new revenues element, and we've got an efficiency element. With regard to M and A, yeah, so there's an awful lot awful lot to look at. I guess, when we look at it in if I can segment that, smaller deals, in my view, but we're probably moving smaller deals to have a habit of taking as long to do as much larger ones. So Our view is we're probably aiming off, some of the smaller deals we see in the market. That doesn't mean more like lift out opportunities we won't take an opportunistic stab at because that suits us and is in our DNA in any event. Then if I go up to there's some sort of medium sized deals as we would call it, which, I think it's accelerated slightly in the, in the more recent times that I alluded to. So, we can see some very attractive opportunities there. As I've said in the presentation, reconfiguration and rethinking of people's businesses, which has started in any event, but it's probably been accelerated by COVID-nineteen and, has meant that, I think there'll be opportunities arising out of this, which are sort of bank lift out type or acquisition type opportunities. It's sort of the same thing. It's almost driving the organic growth in the business as a whole actually. So, so we have a scenario. We've got 2 very similar things where we've got a client related instruction on the one hand, which is very, very similar to an acquisition we made a couple of years ago. So all of the difference between the 2 is 1 bank has decided to sell and the other one decided to hang on to the fundamentals, but outsource the whole of the the operations of that business. So we've got those sort of ones in there. Then as I mentioned, I think the adviser community are very keen on playing as we might call it here Star Wars and sort of deciding that who might be best to merge with who, which clearly is, something I think that may well happen in the market, whether that includes JP or not, it would have to be absolutely right for us. And we'd be protecting our culture as a significant part of that, but that's that's, that's really in the background. But if the right the right ones are in the right ones there for us, And then actually, there's a couple of quite big, transformational deals, but ones that were tuck in happily under the JTC banner, sort of big and end up businesses, which, again, we've got visibility of. So it's it's never quite in that area. You know, we are a popular acquirer. There's, there's a couple of deals we've seen where we've been, how can I put it? Blue Korn on staying in a process and we've been chased very closely to want to keep us in. So that's where up my comment and our comment comes from I think we might see some softening in pricing as the next few months roll out. And then organic growth in the second half of the year, while we're based on what I can see, sort of 6 weeks in, we're actually ahead of the run rate from the the 3 to 6 months. So, we're pretty comfortable that, we should be able to keep the run rates up there's some very big mandates that have gone out there in the last several weeks. And looking at our win rates. So I think we've got a reasonable chance of if 1 or 2 of those lands have been ahead of where we were, or ahead of where we were in the first half. So quite excited about that too. So not not necessarily thinking something's going to fall away, but definitely not complacent about it. That's great. Really helpful. Thanks, Valya. The next question comes in from the line of Robert Plant calling from Panmure Gordon. Robert, please go ahead. Good morning, Nigel and Martin. When you presented last time at the full year results, you had said that NESF was gonna be a very useful bridgehead in the US to do more deals. Can you talk more widely about the US acquisition opportunity? And in particular, You mentioned the US business you were tracking that had a focus on tax compliance real estate. Is that still being tracked? Thanks. Thanks, Robert. I'll just pick it up and Martin Bowman's chip in. I think think there are we're aware of at least 2 or 3 deals in the U. S. Actually, which would, would enhance our offering, obviously. What we've been doing, however, is concentrating on stabilizing the business we've got for obvious reasons. At least 2 of those are sort of on hold post COVID in any event. So, I think there's a chance in the in the fourth quarter that we may look at 1 or 2 of those businesses to see whether they're right for us. The tax driven or the business with the tax tax compliance and fund administration together. From our perspective, it's still quite difficult for us to get our arms around exactly what we're buying and for how much, so, without putting too finer points on it. So that one sort of slipped down the priority range, but it's not impossible, and we've got a great relationship with the business. Yeah, there's opportunities there, Robert. And to Nigel's point from earlier. One of those is one that has chased us, again, and are keen to engage with us. So I think there's plenty of opportunity. I think it's in both divisions as well. It's not just on the institutional side, We've actually seen some quite interesting private client opportunities, quite small, but nonetheless would be nice fold into what we've already got Our PCS business in the U. S. Has done extremely well. So we can see that quite a good runway for growth there as well. Okay. The next question comes in from the line of Vivek Raja calling from Shore Capital. Vivek, please go ahead. We can. Thank you. Great. Thanks. I have a couple of questions, please. One probably for Nigel and one probably for Martin. So so the first one, Nigel, thanks for your information on, I guess, I put a technology application. You sort of talked about 3 areas, defenses, efficiencies, and new revenues. I'm interested in in the efficiencies and your application of sort of technology to drive those efficiencies. Just wondered if you could just talk a little bit more about that and talk about time scales, it's a lot of achieving that. And and when we might start seeing that, in an EBITDA margin, And then the the second question I had, probably for Martin. Martin just wanted to invite you to to comment on consensus. Say, for the current year. So if I look at the consensus that you've got compiled on your website, it implies an EBITDA margin of 36 percent in the second half of the year. So just wondered how comfortable you are with that. Thank you. Thanks very much. So I think, with regard to the efficiencies and timing thereof, obviously, it's process and sort of robotics that we're bringing to the business, which has two things create sufficiency and eradicate the opportunity for human error around those things. In terms of timing with regard to that, in the wider view, I think that's primarily going to be applied to our funds practice. Primarily in the engine room of that practice in South Africa. So as we've alluded to in the presentation, We've sort of gone through a process of if you like rethinking exactly how we work those processes through that business and how they interact between South Africa and Southern Hemisphere and the Northern Hemisphere colleagues. To some degree, we've been sort of slowed up in that exercise. It's been helpful to be able to sort of with the world on hold to really think it through and make some operational changes that are more fundamental, we believe. But exactly the timing for implementation has been restricted by our ability to travel and the like. So We say 6 to 12 months, to some degree, that is we've hedged out bets a bit. We've started with probably in the next 6 to 9 months, but I think just difficult to call it, in the market as it is at the moment. I think though we should see some incremental improvement, we're making some changes more close to home actually already that should start to come through. Hi Vivek, it's Martin here. So on consensus, I think I so the core business is going well. Really well, very happy with that. And we recognize that the sand business that we bought, although we paid less for it, less came over than we'd anticipated. And would have been included in that consensus. But I think our view is that that's something that it happens and we'll I think we feel we can probably pick that up in the core business. The NESF business is clearly, not where we expected it to be. My the lost $4,000,000 of annualized revenue at almost at a stroke and that's hard to replace when you've got fixed cost business. We've done a lot of stuff to try to address that, but that doesn't change overnight. So on that basis, I my view is that, NESF is effectively almost moved to the right for a year and Whereas I expected to have, $3,000,000 or so dollars of EBITDA from that this year. I'm now not expecting anything. I'm expecting a breakeven situation until the U. S. Market really picks itself back up and gets firing again And I expect to see that folding effectively into next year, but I'm hopeful by 2022 that with a fair wind and the activity picking up in the U. S. With the growth dynamics there that actually the 22 numbers, in particular on the the consensus around that, I'm not touching at the moment. It's just this year and next. Okay. Thanks so much. The next question comes in from the line of Daniel Cohen calling from HSBC. Yeah. Good day. Hi. Good morning to you. Couple of questions on any SF. The the change in the in the in the pricing model, how has that been going? As you say, you're you're aware of it when you when you bought it and and clearly, it stands at the same, apart from your your your normal model of of timing materials. So I was just wondering how the how that works, how you can how quickly you can change over to a a total more advantageous, let's say you, or interest rates are based based model, for that business. And the second question is, if you can, be interesting to know what level of new business AES contributed in the first half. And and perhaps also, I mean, you've you've mentioned also as a as a as a addition to that, that you've been sort of bidding for some larger opportunities in in the States and and elsewhere, just wondering how that's been going, how that's been affected by everything, Kent, and and what we might expect in in in that in that area as well. Okay. So just quickly on the pricing, I guess the first thing to say is because of the headwinds that opportunity to replace the JTC model over our business as swiftly as we have before. It's a proper demonstration, as Martin was saying, that, timing materials and fix fees, if you can stay there, are a better place to be, if you're in our industry. So, and of course, we'd had that conversation upfront. There was the normal well, the market sort of slightly looks at it differently here and we said, well, we can find a way to sort of bring this into the business over a period of time. Of course, then the demonstration of the effect of, staying with AUM fees and taking revenues from the deposits you have came came home to them very, very quickly. So I have to say this management team are one of the most mature we've ever taken over and they absolutely have embraced the exercise of moving from a growth based business into a sort of understanding the dynamics of our business and what we need to achieve on an ongoing basis. So they have, so where we are now is all our sort of sales team have agreed to we reprice all new clients and that's been implemented from the 1st July. And I think we've seen a $300,000 up by virtue of that in terms of from where they would have been based on the way they'd used to do it. And then we've also gone through an exercise of repricing the back book of clients against time recording data that we have. And we estimate that that might also bring another $300,000 worth of benefit over a period of time. I think that the importance being that they're the market leader in the space, and they're having sensible conversations with their clients saying, for us to continue to be your provider, we need to reprice the model and how we go about doing it. So So they have swung into action very quickly. They're trying to do the best they can. As you probably heard, they've changed members of the team, including some significant sort of operational people. So we couldn't be more pleased with the way they've acted and, a bit like Martin, just to reiterate, we think this is timing more than anything else. And frankly, the general freeze in the market itself. On the, the level of new business won by NESF in the 1st 6 months. So it's GBP 2,200,000 that was won by them. The challenge of course in the US just now is just actually fundraising and the launching of it because of the prevailing COVID situation that's there and the as we kind of refer to that there is a degree of, in the ASHA around what's happening politically. I'm pretty sure though that once the that sorted itself out towards the end of this year that we will see whatever color of party is in, quite a lot of investment in infrastructure in the U. S. And quite a lot of, I think there'll be a lot of activity there in the areas that NESF typically, the funds that it serves. Alright. Thank you. Thank you very much. Thank you. Just as a final reminder before we do move on to our next question that if you would like to ask a question on today's call, And our next question comes in from the line of Robin Savage calling from Zoos Capital. Robin, please go ahead. Hi, Robin. Is your line muted? Sorry about that. Quick question for me. If you look at slide 19, the you've got lifetime value 1 and, which is £80,000,000 and the, new business 1 in the first half, which was just over £8,000,000. So all 8.6. So do we just simply multiply by 9.203, multiply the new business wins by that sort of number to get the estimates of what the lifetime value of the new business wins is? It's as simple as ten times. I think we say on the slide that it's is a 10x. We model it on 10x and then take off the attrition in the year. Oh, that's fine. Okay. And there are no further questions coming through. So I shall turn the call back across to yourselves, Nigel and Martin, for any closing remarks. Nothing from me, but thank you very much, and thank you for your continued support. Gentlemen, any other questions you've got? Obviously, we can pick up offline. So thanks very much. Thank you. Thank you. Thank you for joining today's call. You may now disconnect your handset. Hosts, please stay connected and await further instruction.