Summary of key financials
Our projection for 2021 is to raise £21.4m in revenue, compared to £22.1m forecast for 2020. We have budgeted our operational expenditure to match projected income, resulting in a balanced net operating position before any litigation costs. We have constructed our budget with continued financial resilience in mind and have kept tight control of our operating costs.
The demands on the JFSC to be both an effective supervisor and a competitive, leading international Registry continue to evolve. And the associated cost demands continue to increase. By investing in technology and process engineering, we have successfully delivered efficiencies in the way we operate so we can meet these increasing demands at the lowest incremental cost to Jersey’s finance industry and our registry customers.
This capital investment is also impacted by having to adapt to emerging opportunities and threats, resulting in fluctuations in capital expenditure, which would be unmanageable for Industry to bear directly through sudden changes in our fee levels.
| 2020 forecast | 2021 projected | Variance between 2020 forecast and 2021 projected | |
| £'000 | £'000 | £'000 | |
| Regulatory fees | 15,818 | 16, 082 | 264 |
| Registry fees | 6, 168 | 5,280 | (888) |
| Other income | 64 | 64 | - |
| Total income | 22,050 | 21,426 | (624) |
| Staff costs | (13,291) | (14,628) | (1,337) |
| Computer systems | (1,456) | (1,784) | (328) |
| Other operating costs | (3,821) | (3,288) | 533 |
| Total operating expenses | (18,568) | (19,700) | (1,132) |
| Depreciation | (1,461) | (1,634) | 173 |
| Investing capital expenditure costs | 2,846 | 2,121 | (725) |
Regulatory income
We have already begun to engage with Industry bodies to explain our approach and gain views on potential revisions to our fee bases so that these plans can reduce risks associated with some of the outdated fee mechanisms. These discussions will continue through 2021 as we seek to retain total revenue at a level
broadly in line with 2020, while determining a revised set of fee bases for future years that will strengthen our financial resilience.
The below figures show forecast fee income from Industry sectors compared to 2021 projected fees income:
| 2020 forecast | 2021 projected | Movement | |
| £'000 | £'000 | £'000 | |
| Banking | 2,115 | 2,160 | 45 |
| Investment Business | 1,432 | 1,513 | 81 |
| Insurance Business* | 1,019 | 1,015 | (4) |
| Funds and Funds Business | 6,979 | 7,174 | 195 |
| Trust Company Business | 3,457 | 3,441 | (16) |
| Other businesses** | 816 | 779 | (37) |
| 15,818 | 16,082 | 264 |
*Insurance Business includes General Insurance Mediation Business
**Other businesses - Designated Non-Financial Businesses and Professions, Money Services Business, and Recognised Auditors
Registry income
The JFSC’s capital funding mechanism for Registry has, to date, benefited from the availability of a proportion of the annual return fees which isn’t allocated to Government. The agreement with Government came to an end in January 2021. The JFSC’s accounts have been prepared on the basis that the unwinding of this previous capital funding arrangement has resulted in a temporary increase in the proportion of annual return fee revenue allocated to the JFSC in 2020, as reflected in the below unaudited forecast position. These revenues levels will return to the previous lower level in 2021. We have therefore consulted on and implemented alternative funding solutions by adjusting our registry fee bases.
The table below provides further details on the composition of registry fee income:
| 2020 forecast | 2021 projected | Variance between 2020 forecast and 2021 projected | |
| £'000 | £'000 | £'000 | |
| Annual confirmation fees | 3,720 | 2,654 | (1,066) |
| Transactional fees | 2,448 | 2,626 | 178 |
| 6,618 | 5,280 | (888) |
Operating costs
Our results in 2020 differed from our budget due to a range of factors, resulting in a material net profit. Our review and enhancement of our project governance at the start of the year provided a solid foundation from which to launch our significant capital investment, but compressed the time frames for completion of the associated work streams. Our focus on these strategically important initiatives also resulted in a slower rate of expenditure on other, lower priority investments. As a result, total capital investment was lower in 2020 than originally planned.
In addition, as many organisations will have observed, operating costs in 2020 were impacted by Covid-19, with a period of slower recruitment in the second quarter and significant reduction in travel, training and engagement costs as we shifted to virtual platforms. We have been proud of the successes achieved in pivoting to remote methods for training, recruitment and on-boarding of new staff and will begin 2021 much closer to a fully staffed position.
The operating costs breakdown is shown in the table below:
| 2020 forecast | 2021 projected | Variance between 2020 forecast and 2021 projected | |
| Staff costs | (13,291) | (14,628) | (1,337) |
| Computer systems | (1,456) | (1,784) | (328) |
| Other operating costs | (3,821) | (3,288) | 533 |
| (18,568) | (19,700) | (1,132) |
Capital investment
Our capital investment in 2021 will focus on securing the benefits from the foundational work we completed in 2020, predominantly in the final elements of the new Registry platform and the configuration of our supervisory systems. This work prepares us well to capture efficiencies in our operating model.
The table below details our forecast capital investments in 2020 compared to our projected capital investments in 2021:
| 2020 forecast | 2021 projected | |
| £'000 | £'000 | |
| Capital investment costs | 2,846 | 2,121 |
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