Last checked at 18 Apr 2019 07:00
18 April 2019
JTC PLC
(the "Company" and together with its subsidiaries "JTC" or the "Group")
Annual Report and Accounts and Notice of AGM
Following the release on 3 April 2019 of the Company's financial results for the year ended 31 December 2018 (the "Final Results Announcement"), the Company has published its full Annual Report and Accounts for the year ended 31 December 2018 (the "2018 Annual Report and Accounts") and the Notice of Annual General Meeting 2019 (the "2019 AGM Notice"), which is to be held at 10.30 am on Tuesday, 21 May 2019 at JTC House, 28 Esplanade, St. Helier, Jersey, JE2 3QA (the "AGM").
Copies of the documents listed below have today been posted to shareholders:
1. 2018 Annual Report and Accounts
2. 2019 AGM Notice
3. Form of Proxy relating to the AGM
In accordance with Listing Rule 9.6.1 R of the UK Financial Conduct Authority, a copy of each of these documents has been submitted to the UK Listing Authority via the National Storage Mechanism and will shortly be available for inspection at www.morningstar.co.uk/uk/NSM.
The 2018 Annual Report and 2019 AGM Notice will also be accessible later today via the Company's website at www.jtcgroup.com.
Information required under Disclosure Guidance and Transparency Rule 6.3.5
In accordance with Disclosure and Transparency Rule 6.3.5(2)(b), additional information is set out in the appendices to this announcement. The information contained in the appendices, which is extracted from the 2018 Annual Report, is included solely for the purposes of complying with DTR 6.3.5. The information should be read in conjunction with the Final Results Announcement, released on 3 April 2019. This announcement and the Final Results Announcement together constitute the material required by DTR 6.3.5 to be communicated to the media in unedited full text. This material is not a substitute for reading the full 2018 Annual Report. Page numbers and notes in the following appendices refer to page numbers and notes in the 2018 Annual Report.
For further information please contact:
Miranda Lansdowne
JTC (Jersey) Limited
Company Secretary
+44 1534 700 000
Miranda.Lansdowne@jtcgroup.com
APPENDIX A - Principal Risks and Uncertainties
The following description of the principal risks and uncertainties that the Company faces is extracted from the 2018 Annual Report (pages 30 - 34):
Risks and uncertainties
The Board acknowledges that it must be prepared to take a certain level of risk if the Group is to be successful in meeting its objectives, such risks are carefully considered, assessed and monitored to ensure they are proportionate and clearly aligned to the Group's strategic goals.
The Board has carried out a robust assessment of the principal and emerging risks and uncertainties which might prevent the Group from achieving its goal of long-term growth in revenue and shareholder returns.
The likelihood of risks actually materialising, the potential significance of the risks or of the scope of any potential harm to the Group's business, prospects, results of operation and financial position are first discussed, debated and challenged by senior management and the Group Risk Committee, then by the Audit & Risk Committee, and then presented to the Board identified as follows:
LIKELIHOOD |
High |
MEDIUM |
CRITICAL (HIGH RISK) |
Low |
LOW |
HIGH IMPACT (LOW RISK) | |
|
Moderate |
Critical
| |
IMPACT
| |||
The Board has agreed that the top risks to JTC will be presented in the Annual Report and Accounts as the "Principal Risks".
The risk taxonomy is represented by a two level architecture:
· Level 1 is the primary overarching risk elements, containing six components
· Level 2 represents the cohorts of specific risks that JTC is exposed to.
Level one | Level two | Mitigation |
Legal | · Litigation / Contractual · Fiduciary | · Robust policies, procedures and processes in operation within the Group (particularly risk escalation policy) · Qualified and experienced staff operating within a "6-eyes" control parameter · Utilisation of external counsel in all disputes where appropriate · Substantial PII cover · The hiring of an experienced in-house legal team · Free legal helpline with two international law firms · Robust policies, procedures and processes in operation within the Group · JTC does not provide legal or tax advice to its clients · Continuous training programme |
Financial | · Performance of business · Earnings (fx) · Impairment · Financing | · Ongoing monthly reporting and KPIs that help monitor performance against performance assumptions and targets · Robust annual business planning and budget process · Ongoing review of processes · Active cash management process including matching of cash flows where possible · Monitoring of f/x rates · Robust due diligence process in place prior to acquisitions being completed · Regular impairment testing as per accounting rules · Ongoing management and monitoring against performance assumptions · Cash management procedures in place · Robust monitoring of loan covenants |
POLITICAL / REGULATORY | · Listing Rules · Regulation · AML/CFT | · Retention of specialist advisers · Deployment of staff dedicated to ensure compliance · Utilisation of NED expertise · Product/jurisdictional diversification reduces impact · Review by appropriate boards/committees and business of horizon for potential changes · Comprehensive policies, procedures and processes in operation within the Group that align to the appropriate regulatory regimes · Promoting a robust risk and compliance culture across the Group · Ensuring appropriate compliance resource in each jurisdiction · Compliance monitoring programme in place · Comprehensive policies, procedures and processes in operation within the Group that are specifically drafted for AML/CFT purposes · The hiring of capable employees that undertake the key person roles (e.g. Compliance Officer and Money Laundering Reporting Officer) · Frequent staff training / awareness initiatives |
HUMAN RESOURCE | · Adequate resources · Retention · Key person | · Comprehensive policies, procedures and processes in operation within the Group that are specifically drafted for AML/CFT purposes · The hiring of capable employees that undertake the key person roles (e.g. Compliance Officer and Money Laundering Reporting Officer) · Frequent staff training / awareness initiatives · JTC ensures that the remuneration package is competitive in the market place and benchmarks against peer group · Shared ownership scheme embedded across the business · JTC encourages a strong management culture where talent management and people development is a core focus · Coverage of roles - certain roles have been identified as 'key' and a robust succession plan within current staff pool is being developed |
OPERATIONAL | · Client · Process · Business continuity · Data Security Risk | · Robust policy and procedures including at 'take-on' subject to regular review with appropriate escalation for higher risk clients · Frequent staff training / awareness initiatives · Established reporting and escalation process with review by boards/committees as appropriate · Independent client and compliance monitoring review program · Promoting a robust risk and compliance culture across the Group · Ensuring quality administration and compliance resource in each jurisdiction plus internal legal counsel support as appropriate · Well established RFS process · Evolution to a 'three lines of defence' assurance and controls model · Comprehensive policies, procedures and processes in operation within the Group that are specifically drafted for business continuity and IT security purposes · JTC run an active/active dual datacentre model, across the Channel Islands, with one datacentre in Jersey and another in Guernsey, this provides inter island redundancy should either datacentre suffer power or communication failure. The datacentres are connected via four diverse and redundant network links to allow for synchronous replication · The ability to continue business in alternative location if an issue arises in one jurisdiction, as was implemented for the JTC BVI office in 2017 · Defined and audited IT procedures · External security assessment conducted annually · System access controls including least privilege access model · Dedicated Senior IT Security Manager · Training including compulsory online Security Awareness courses · Review of data security procedures and controls as part of the annual ISAE 3402 Report |
STRATEGIC | · Acquisition · Competitor · Strategy | · Robust acquisition due diligence process including 3rd party assessments by well regarded accounting and legal firms · Governance and challenge from Non-Executive Directors · Integration strategy in place prior to acquisition · Integration committees established to manage integration process · Group Holdings Board responsibility for identifying forthcoming requirements in respect of digital / business systems investment · GHB responsibility for identifying and prioritising product innovation · Strategy regularly reviewed and challenged by Board respectively · Strategy drives annual business planning process and performance based targets |
REPUTATIONAL | · Regulatory sanction · Public litigation · Breaching sanctions, · Involvement in money laundering or the financing of terrorism | · Comprehensive risk management capability including controls embedded within the procedural environment · Prompt and effective communication with all stakeholders - regulators, shareholders, employees, clients and suppliers · Strong and consistent enforcement and testing of controls on governance, business and legal compliance |
Principal Risks and uncertainties
The Principal Risks JTC is exposed to are separately assessed and recorded on the Group Risk Register and Group Risk Assessment Matrix. The Chief Risk Officer reports to the Audit & Risk Committee, presenting the Group Risk Register and Group Risk Assessment Matrix, providing an assessment of the risk status based on the controls and mitigation.
The Principal risks and uncertainties, their mitigation and the evolution of risk during the year are set out below. They are consistent with those reported in the IPO Prospectus, although now include the potential impact of a disorderly Brexit.
Principal Risk | Potential causes | Mitigation | IMPACT | |
1 | Risk of a security breach including cyber-attacks from destructive forces leading to loss of confidentiality and integrity of data. | · Data exfiltration · Malware · Financial theft · Denial of service attacks · Cyber-physical attacks · Network service failures · Employee error · Malicious employee intent | · Defined and audited IT procedures · External security assessment conducted annually · System access controls including least privilege access model · Dedicated Senior IT Security Manager · Training including compulsory online Security Awareness courses · Review of data security procedures and controls as part of the annual ISAE 3402 Report · Robust business continuity planning | Critical / medium risk |
2 | Risk of the Group taking on the wrong type of clients, or the Group or the clients actions during the clients life cycle leading to losses, failed strategic objectives, poor customer service and employee frustration and potentially enforcement, supervision or regulatory sanction | · Failure to apply policy and follow procedures · Failure to follow codes of conduct · Failure to invest in appropriate and timely talent development · Failure of managerial oversight · Failure to adequately train and develop employees | · Robust policy and procedures including at take on subject to regular review with appropriate escalation for higher risk clients · Frequent staff training / awareness initiatives · Established reporting and escalation process with review by boards/committees as appropriate · Independent client and Compliance monitoring review program · Promoting a robust risk and compliance culture across the Group · Ensuring quality administration and compliance resource in each jurisdiction plus internal legal counsel support as appropriate · Well established RFS process · Evolution to a three lines of defence assurance and controls model | Medium / low risk |
3 | Risk that acquisitions do not achieve intended objectives or give rise to ongoing or previously unidentified liabilities. | · Paying too much · Lack of strategic clarity · Slow decision making · Lack of buy-in · Failure to integrate swiftly | · Robust due diligence process including 3rd party assessments by well regarded accounting and legal firms · Governance and challenge from Non-Executive Directors · Integration strategy in place prior to acquisition · Integration committees established to manage integration process | High / medium risk |
4 | Failure to retain high calibre, talented senior managers and other key roles in the business. | · Lack of adequate succession planning · Failure to invest in appropriate & timely talent development | · JTC ensures that the remuneration package is competitive in the marketplace and benchmarks against peer group · Shared ownership scheme embedded across the business · JTC encourages a strong management culture where talent management and people development are a core focus | High / low risk |
5 | Failure to recruit or develop good quality people to achieve our strategic aims | · Failure to identify roles most essential to delivering on strategic aims · Failure to identify what skills the position really requires · Focus too heavily on technical skills and not enough on attitude and motivation · Lack of adequate succession planning · Failure to invest in appropriate and timely talent development | · Coverage of roles - certain roles have been identified as 'key' and a robust succession plan within the current staff pool is being developed · Frequent staff training / awareness initiatives · JTC Academy programme for all employees globally · JTC 'LION' senior management development programme | High / low risk |
6 | Risk that a change in laws and regulations will materially impact the sector and / or our business. | · Disorderly Brexit · Geopolitical uncertainty · OECD tax reviews · '4AMLD' / Public Beneficial Ownership Registers · GDPR and data protection initiatives · Challenge and cost of measuring, monitoring and demonstrating good conduct as well as meeting new requirements · Keeping up with the rapid pace of regulatory change | · Dedicated risk and compliance resource with the requisite skills, resources to monitor and report to the Board on strategic outlook / impact of change · Robust and sustainable regulatory change management model · Well-hedged and positioned with a global platform and established EU operations (Luxembourg & Netherlands) · Data-focused approach that enables continuous monitoring and real-time insight into impact on operations · Proven track record of navigating and maximising revenue growth opportunities from regulatory change · Minimal FX risk exposure | High / medium risk |
These topics are considered regularly so that we can adapt to changing market conditions or competition. This report should be read in conjunction with the Viability Statement on page 63.
APPENDIX B - Directors' responsibility statement
The following directors' responsibility statement is extracted from the 2018 Annual Report (page 91):
We confirm that to the best of our knowledge:
· The Financial Statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole;
· The Strategic Report (contained on pages 50 to 91) includes a fair review of the development and performance of the business and the position of the issuer and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face; and
· The directors consider the Annual Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group's position, performance, business model and strategy.
APPENDIX C - Dividend Declaration
The financial statements set out the results of the Group for the financial year ended 31 December 2018 and are shown on page 92 of the 2018 Annual Report. A final dividend of 2 pence per ordinary share is recommended by the Directors. Subject to approval at the AGM, the dividend will be paid on 21 June 2019 to Shareholders who are on the Register of Members at the close on business on 31 May 2019. The shares will become ex-dividend on 30 May 2019. An interim dividend of 1 pence per ordinary share was paid on 26 October 2018.
NOTES
About JTC
JTC is an award-winning provider of fund, corporate and private wealth services to institutional and private clients. The Company has a global presence, with over 700 staff operating in more than 18 different jurisdictions and assets under administration totalling c. US$ 110+ billion.
JTC remains fully committed to its shared ownership culture and philosophy, with management and staff continuing to hold over 20% of the equity in the firm, clearly aligning the interests of clients, employees and other stakeholders.
www.jtcgroup.com