TIDMJIM
RNS Number : 4113S
Jarvis Securities plc
14 July 2022
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulation (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
Jarvis Securities
("Jarvis", the "Company" or the "Group")
Interim Results for the Six Months Ended 30 June 2022
Chairman's statement
-- GBP1,864,061 (22.9%) decrease in revenue versus six months to 30 June 2021
-- GBP1,492,774 (32.5%) decrease in profit before tax versus six months to 30 June 2021
-- Cash under administration has increased 1.8% versus 30 June 2021
-- EPS decreased to 5.62p (2021: 8.45p)
During the period under review share trading volumes and the IPO
market have decreased significantly compared to last year which had
record levels being recorded, resulting in lower commission and fee
income. The period began with inflationary pressures spooking the
market, then the geopolitical uncertainty caused by the ongoing
invasion of Ukraine by Russia dashed any hopes of a speedy market
recovery. This has affected all the stock broking industry, and the
wider economy as a whole where most segments are experiencing a
general slowdown. Market sentiment, which drives volumes, is beyond
our control so we will inevitably experience periods of lower
activity but we remain well placed to respond to the upturn when it
presents itself.
Increases in the costs charged to us by suppliers have created
further uplift in expenses, particularly in compliance where the
regulatory standards required of financial service companies are
becoming more complex. The silver lining for Jarvis is that the
base rate increases by the Bank of England in its attempt to temper
the inflation rate have been swifter than forecast and we are now
seeing the increasing benefit of this in our treasury interest
income. Maturing deposits are all being replaced at higher rates
and the impact of this should be more apparent in the second half
of the year.
As always, I would like to thank all staff for their continued
hard work.
Enquiries :
Jarvis Securities plc 01892 510 515
Andrew Grant
Jolyon Head
WH Ireland Limited 0113 394 6600
Katy Mitchell
Darshan Patel
Key performance indicators (KPI)
The key performance indicators (KPIs) are designed to give
stakeholders in the business a more rounded view of the Group's
performance. Further details on the KPIs and their measurement can
be found in the last Annual Report. A selection of KPIs and the
Group's results to the interim period for these are detailed below.
These results have been annualised from the position at 30 June
2022 where measurement over a year is required.
KPI: 30/6/22 30/6/21 Target
----------------------------------- ----------- ----------- ------------
Profit before tax margin 50% 57% 20%
Revenue per employee (annualised) GBP201,946 GBP257,917 to increase
Consolidated income statement for the period ended 30 June
2022
Six months Six months ended
ended
-------------------------- ------- --- -------------------------------------- -----------------
Notes 30/6/22 (unaudited) 30/6/21
(unaudited)
-------------------------- ------- --- -------------------------------------- -----------------
GBP GBP
Continuing operations
Revenue 6,260,330 8,124,391
Administrative expenses (3,153,669) (3,523,626)
Lease Finance Costs (809) (2,074)
Profit before income tax 3,105,852 4,598,691
Income tax charge 4 (590,112) (873,751)
-------------------------- ------- --- -------------------------------------- -----------------
Profit for the period 2,515,740 3,724,940
========================== ======= === ====================================== =================
Attributable to equity
holders of the parent 2,515,740 3,724,940
========================== ======= === ====================================== =================
Earnings per share 5 P P
-------------------------- ------- --- -------------------------------------- -----------------
Basic 5.62 8.45
Consolidated statement of financial position at 30 June 2022
Notes 30/6/22 31/12/21 30/6/21
(unaudited) (audited) (unaudited)
-------
GBP GBP GBP
Assets
Non-current assets
Property, plant and
equipment 260,864 295,767 342,483
Intangible assets 70,790 93,606 104,171
Goodwill 342,872 342,872 342,872
674,526 732,245 789,526
Current assets
Trade and other
receivables 4,074,211 6,361,707 7,226,862
Investments held
for trading 1,354 1,958 6,199
Cash and cash equivalents 4,171,438 3,780,594 7,082,060
-------------------------- ------- ------------------------- --- ------------------------ ----------------------------
8,247,003 10,144,259 14,315,121
-------------------------- ------- ------------------------- --- ------------------------ ----------------------------
Total assets 8,921,529 10,876,504 15,104,647
========================== ======= ========================= === ======================== ============================
Equity and liabilities
Capital and reserves
Share capital 7 111,828 111,828 111,828
Share premium - - 3,068,012
Merger reserve 9,900 9,900 9,900
Capital redemption
reserve 9,845 9,845 9,845
Retained earnings 4,846,336 5,014,456 6,423,170
Total equity 4,977,909 5,146,029 9,622,755
-------------------------- ------- ------------------------- --- ------------------------ ----------------------------
Non-current liabilities
Deferred income
tax 61,928 61,928 45,617
Lease liabilities - - 21,073
Current liabilities 61,928 61,928 66,690
Trade and other
payables 3,268,547 4,900,444 4,453,775
Lease liabilities 21,712 64,653 85,884
Income tax 4 591,433 703,450 875,543
-------------------------- ------- ------------------------- --- ------------------------ ----------------------------
3,881,692 5,668,547 5,415,202
Total liabilities 3,943,620 5,730,475 5,481,892
========================== ======= ========================= === ======================== ============================
Total equity and
liabilities 8,921,529 10,876,504 15,104,647
========================== ======= ========================= === ======================== ============================
Consolidated statement of comprehensive income
Six months Six months ended
ended
30/6/21 30/6/20
(unaudited) (unaudited)
---------------------------------------- ---- ---- ---- -------------------- ------------------
Profit for the period 2,515,740 3,724,940
---------------------------------------------------------- -------------------- ------------------
Total comprehensive income for the period 2,515,740 3,724,940
---------------------------------------------- --------- -------------------- ------------------
Attributable to equity holders of the
parent 2,515,740 3,724,940
---------------------------------------------------------- -------------------- ------------------
Consolidated statement of changes in equity for the period
Unaudited for the 6 months ended 30 June 2022
Share Share Merger Capital Retained Own Attributable
capital premium reserve redemption earnings shares to equity
reserve held in holders
treasury of the
company
---------------------- --------- ------------ --------- ----------- -------------- ---------- -------------
GBP GBP GBP GBP GBP GBP GBP
Balance at 31/12/20 111,828 1,655,640 9,900 9,845 5,672,848 (886,113) 6,573,948
Sale of own shares
held in treasury - 1,412,372 - - (95,834) 886,113 2,202,651
Profit for the
period - - - - 3,724,940 - 3,724,940
Dividends - - - - (2,878,784) - (2,878,784)
Balance at 30/6/21 111,828 3,068,012 9,900 9,845 6,423,170 - 9,622,755
---------------------- --------- ------------ --------- ----------- -------------- ---------- -------------
Cancellation of
share premium - (3,068,012) - - 3,068,012 - -
Profit for the
period - - - - 2,455,911 - 2,455,911
Dividends - - - - (6,932,637) - (6,932,637)
Balance at 31/12/21 111,828 - 9,900 9,845 5,014,456 - 5,146,029
---------------------- --------- ------------ --------- ----------- -------------- ---------- -------------
Profit for the
period - - - - 2,515,740 - 2,515,740
Dividends - - - - (2,683,860) - (2,683,860)
Balance at 30/6/22 111,828 - 9,900 9,845 4,846,336 - 4,977,909
---------------------- --------- ------------ --------- ----------- -------------- ---------- -------------
Consolidated statement of cashflows for the period ended 30 June
2022
Six months ended Six months
ended
30/6/22 30/6/21
(unaudited) (unaudited)
---- ---- ------------------ -------------
GBP GBP
Cash flow from operating
activities
-------------------------------------- ---- ---- ---- ------------------ -------------
Profit before tax 3,105,852 4,598,691
Finance Cost 809 2,074
Depreciation charges 47,486 47,715
Amortisation charges 23,464 17,524
3,177,611 4,666,004
(Increase)/ decrease in receivables 2,287,496 (303,706)
(Decrease) / increase in payables (1,631,087) 279,819
(Increase) / decrease in investments
held for trading 604 (2,016)
Cash generated from operations 3,834,624 4,640,101
Interest paid (809) (2,074)
Income tax (paid) (702,129) (601,002)
Net cash from operating activities 3,131,686 4,037,025
Cash flows from investing
activities
Purchase of tangible assets (12,584) (10,385)
Purchase of intangible fixed
assets (648) (19,677)
(13,232) (30,062)
Cash flows from financing activities
Repayment of finance leases (43,750) (43,750)
Proceeds from sale of shares
held in treasury - 2,202,651
Dividends to equity shareholders (2,683,860) (2,878,784)
Net cash used in financing
activities (2,727,610) (719,883)
Net increase / (decrease) in
cash & cash equivalents 390,844 3,287,080
Cash and cash equivalents at
1 January 3,780,594 3,794,980
Cash and cash equivalents at
30 June 4,171,438 7,082,060
Of which:
Balance at bank and in hand 5,421,630 9,531,993
Cash held for settlement of
market transactions (1,250,192) (2,449,933)
Notes forming part of the interim financial statements
1. Basis of preparation
The interim consolidated financial statements have been prepared
in accordance with International Accounting Standard (IAS) 34,
Interim Financial Reporting. These interim financial statements
have been prepared in accordance with those UK Adopted
International Accounting Standards.
The preparation of these interim financial statements in
accordance with UK Adopted International Accounting Standards in
conformity with the requirements of the Companies Act 2006 requires
the use of certain accounting estimates. It also requires
management to exercise judgement in the process of applying the
Group's accounting policies. The areas involving a high degree of
judgement or complexity, or areas where the assumptions and
estimates are significant to the consolidated interim financial
statements are disclosed in Note 9.
The financial information contained in this report, which has
not been audited, does not constitute statutory accounts as defined
by Section 434 of the Companies Act 2006. The auditors' report for
the 2021 accounts was unqualified and did not contain a statement
under Section 498 (2) or (3) of the Companies Act 2006.
2. Accounting policies
(a) IFRS 15 'Revenue from Contracts with Customers'
IFRS 15 requires that the recognition of revenue is linked to
the fulfilment of identified performance obligations that are
enshrined in the customer contract.
Commission - the group charges commission on a transaction
basis. Commission rates are fixed according to account type. When a
client instructs us to act as an agent on their behalf (for the
purchase or sale of securities) our commission is recognised as
income on a point in time basis when the instruction is executed in
the market. Our commission is deducted from the cash given to us by
the client in order to settle the transaction on the client's
behalf or from the proceeds of the sale in instance where a client
sells securities.
Management fees - these are charged quarterly or bi-annually
depending on account type. Fees are either fixed or are a
percentage of the assets under administration. Management fees
income is recognised over time as they are charged using a day
count and most recent asset level basis as appropriate.
Interest income - this is accrued on a day count basis up until
deposits mature and the interest income is received. The deposits
pay a fixed rate of interest. In accordance with FCA requirements,
deposits are only placed with banks that have been approved by our
compliance department. Interest income is recognised over time as
the deposits accrue interest on a daily basis.
(b) Basis of consolidation
Subsidiaries are all entities over which the Group has the power
to govern the financial and operating policies generally
accompanying a shareholding of more than half of the voting rights.
The existence and effect of potential voting rights that are
currently exercisable or convertible are considered when assessing
whether the Group controls another entity. Subsidiaries are fully
consolidated from the date on which control is transferred to the
Group. They are deconsolidated from the date on which control
ceases. The group financial statements consolidate the financial
statements of Jarvis Securities plc, Jarvis Investment Management
Limited, JIM Nominees Limited, Galleon Nominees Limited and Dudley
Road Nominees Limited made up to 30 June 2022.
The Group uses the purchase method of accounting for the
acquisition of subsidiaries. The cost of an acquisition is measured
as the fair value of the assets given, equity instruments issued
and liabilities incurred or assumed at the date of exchange.
Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured
initially at their fair values at the acquisition date,
irrespective of the extent of any minority interest. The cost of
acquisition over the fair value of the Group's share of
identifiable net assets acquired is recorded as goodwill. If the
cost of acquisition is less than the fair value of the Group's
share of the net assets of the subsidiary acquired, the difference
is recognised in the income statement.
Intra-group sales and profits are eliminated on consolidation
and all sales and profit figures relate to external transactions
only. No profit and loss account is presented for Jarvis Securities
plc as provided by S408 of the Companies Act 2006.
(c) Property, plant and equipment
All property, plant and equipment is shown at cost less
subsequent depreciation and impairment. Cost includes expenditure
that is directly attributable to the acquisition of the items.
Depreciation is provided on cost in equal annual instalments over
the lives of the assets at the following rates:
Leasehold improvements - 33% on cost, or over the lease period
if less than 3 years
Motor vehicles - 15% on cost
Office equipment - 20% on cost
Land & Buildings - Buildings are depreciated at 2% on cost.
Land is not depreciated.
Right of use asset - Straight line basis over the lease
period
The assets' residual values and useful lives are reviewed, and
adjusted if appropriate, at each balance sheet date. Gains and
losses on disposals are determined by comparing proceeds with
carrying amount. These are included in the income statement.
Impairment reviews of property, plant and equipment are undertaken
if there are indications that the carrying values may not be
recoverable or that the recoverable amounts may be less than the
asset's carrying value.
(d) Intangible assets
Intangible assets are carried at cost less accumulated
amortisation. If acquired as part of a business combination the
initial cost of the intangible asset is the fair value at the
acquisition date. Amortisation is charged to administrative
expenses within the income statement and provided on cost in equal
annual instalments over the lives of the assets at the following
rates:
Databases - 4% on cost
Customer relationships - 7% on cost
Software developments - 20% on cost
Website - 33% on cost
Impairment reviews of intangible assets are undertaken if there
are indications that the carrying values may not be recoverable or
that the recoverable amounts may be less than the asset's carrying
value.
(e) Goodwill
Goodwill represents the excess of the fair value of the
consideration given over the aggregate fair values of the net
identifiable assets of the acquired trade and assets at the date of
acquisition. Goodwill is tested annually for impairment and carried
at cost less accumulated impairment losses. Any negative goodwill
arising is credited to the income statement in full
immediately.
(f) Deferred income tax
Deferred income tax is provided in full, using the liability
method, on differences arising between the tax bases of assets and
liabilities and their carrying amounts in the consolidated
financial statements. The deferred income tax is not accounted for
if it arises from initial recognition of an asset or liability in a
transaction, other than a business combination, that at the time of
the transaction affects neither accounting or taxable profit or
loss. Deferred income tax is determined using tax rates that have
been enacted or substantially enacted by the balance sheet date and
are expected to apply when the related deferred income tax asset is
realised or the deferred income tax liability is settled.
Deferred income tax assets are recognised to the extent that it
is probable that future taxable profit will be available against
which the temporary differences can be utilised.
Deferred income tax is provided on temporary differences arising
on investments in subsidiaries except where the timing of the
reversal of the timing difference is controlled by the Group and it
is probable that the temporary differences will not reverse in the
foreseeable future.
(g) Segmental reporting
A business segment is a group of assets and operations engaged
in providing products or services that are subject to risks and
returns that are different from those of other business segments.
The directors regard the operations of the Group as a single
segment.
(h) Pensions
The group operates a defined contribution pension scheme.
Contributions payable for the year are charged to the income
statement.
(i) Trading balances
Trading balances incurred in the course of executing client
transactions are measured at initial recognition at fair value. In
accordance with market practice, certain balances with clients,
Stock Exchange member firms and other counterparties are included
as trade receivables and payables. The net balance is disclosed
where there is a legal right of set off.
(j) Investments
Investments held for trading
Investments held for trading are stated at fair value. An
investment is classified in this category if acquired principally
for the purpose of selling in the short term. Assets in this
category are classified as current.
Purchases and sales of investments are recognised on the
trade-date - the date on which the Group commits to purchase or
sell the asset. Investments are initially recognised at fair value.
Investments are derecognised when the rights to receive cash flows
from the investments have expired or been transferred and the Group
has transferred substantially all the risks and rewards of
ownership. Realised and unrealised gains and losses arising from
changes in fair value of investments held for trading are included
in the income statement in the period in which they arise.
Unrealised gains and losses arising in changes in the fair value of
available-for-sale investments are recognised in equity. When
investments classified as available-for-sale are sold or impaired,
the accumulated fair value adjustments are included in the income
statement as gains and losses from investment securities.
The fair value of quoted investments is based on current bid
prices. If the market for an investment is not active, the Group
establishes fair value by using valuation techniques. These include
the use of recent arm's length transactions, reference to other
instruments that are substantially the same, or discounted cash
flow analysis refined to reflect the issuer's specific
circumstances.
The Group assesses at each balance sheet date whether there is
objective evidence that an investment is impaired. In the case of
investments classified as available-for-sale, a significant or
prolonged decline in the fair value below its cost is considered in
determining whether the security is impaired.
Investments in subsidiaries
Investments in subsidiaries are stated at cost less provision
for any impairment in value.
(k) Foreign exchange
The group offers settlement of trades in sterling as well as
various foreign currencies. The group does not hold any assets or
liabilities other than in sterling and converts client currency on
matching terms to settlement of trades realising any currency gain
or loss immediately in the income statement. Consequently the group
has no foreign exchange risk.
(l) Share capital
Incremental costs directly attributable to the issue of new
shares or options are shown in equity as a deduction from proceeds,
net of income tax. Where the company purchases its equity share
capital (treasury shares), the consideration paid, including any
directly attributable incremental costs (net of income tax), is
deducted from equity attributable to the company's equity holders
until the shares are cancelled, reissued or disposed of. Where such
shares are subsequently sold or reissued, any consideration
received, net of any directly incremental transaction costs and the
related income tax effects, is included in equity attributable to
the company's equity holders.
(m) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand
deposits, together with other short-term, highly liquid investments
that are readily convertible into known amounts of cash and which
are subject to an insignificant risk of changes in value.
(n) Current income tax
Current income tax assets and/or liabilities comprise those
obligations to, or claims from, fiscal authorities relating to the
current or prior reporting periods, that are unpaid at the balance
sheet date. They are calculated according to the tax rates and tax
laws applicable to the fiscal periods to which they relate based on
the taxable profit for the year.
(o) Dividend distribution
Dividend distributions to the Company's shareholders are
recognised when payment has been made to shareholders.
(p) Expected credit loss
The group currently calculates a "bad debt" provision on
customer balances based on 25% of overdrawn client accounts which
are one month past due date and are not specifically provided for.
Under IFRS 9 this assessment is required to be calculated based on
a forward - looking expected credit loss ('ECL') model, for which a
simplified approach has been applied. This method uses historic
customer data, alongside future economic conditions to calculate
expected loss on receivables.
(q) Right of use of assets
The right-of-use asset is initially measured at cost and
subsequently at cost less any accumulated depreciation and
impairment losses, and adjusted for certain premeasurements of the
lease liability.
The lease liability is initially measured at the present value
of the lease payments that are not paid at the commencement date,
discounted using the interest rate implied in the lease or, if that
rate cannot be readily determined, the Group's incremental
borrowing rate.
The Group has applied judgement to determine the lease term for
contracts with options to renew or exit early.
3. Segmental information
All of the reported revenue and operational results for the
period derive from the Group's continuing financial services
operations.
4. Income tax charge
Interim period income tax is accrued based on an estimated
average annual effective income tax rate of 19%.
5. Earnings per share
Six months ended 30/6/22 Six months ended 30/6/21
Earnings Weighted Per Earnings Weighted Per share
average share average amount
no. of amount no. of
shares shares
--------------------------- ------------ ------------- -------- ------------ ------------- ----------
GBP GBP p GBP GBP p
Earnings attributable
to ordinary shareholders 2,515,740 44,731,000 5.62 3,724,940 44,104,076 8.45
6. Dividends
During the interim period dividends totalling 6p (2021: 6.5p)
per ordinary share were declared and paid.
7. Share capital
The company has one class of ordinary shares of GBP0.0025 each.
During the period and as at the period end no shares are held in
treasury.
8. Interim measurement
Costs that incur unevenly during the financial year are
anticipated or deferred in the interim report only if it would also
be appropriate to anticipate or defer such costs at the end of the
financial year.
9. Critical accounting estimates and judgements
The Group makes estimates and assumptions concerning the future.
These estimates and judgements are based on historical experience
and other factors, including expectations of future events that are
believed to be reasonable under the circumstances. The resulting
accounting estimates will, by definition, seldom equal the related
actual results. The estimates and assumptions that have a
significant risk of causing a material adjustment to the carrying
amounts of assets within the next financial year relate to
goodwill, intangible assets and the expense of employee
options.
The Group tests annually whether goodwill has suffered any
impairment, in accordance with the accounting policy stated in Note
2 (e). These calculations require the use of estimates.
The Group considers at least annually whether there are
indications that the carrying values of intangible assets may not
be recoverable, or that the recoverable amounts may be less than
the asset's carrying value, in which case an impairment review is
performed. These calculations require the use of estimates.
10. Related party transactions
The company has a lease with Sion Properties Limited, a company
controlled by A J Grant by virtue of his majority shareholding, for
the rental of 78 Mount Ephraim, a self-contained office building.
The lease is included in the right of use assets and has an annual
rental of GBP87,500, being the market rate on an arm's length
basis, and expires on 26 September 2027. There is an option to
terminate the lease on 26 September 2022 and therefore this is the
discounted period.
11. Capital commitments
At 30 June 2022 the company had no material capital
commitments.
12. Assets impairment review
The Group considers at least annually whether there are
indications that the carrying values of intangible assets may not
be recoverable, or that the recoverable amounts may be less than
the asset's carrying value, in which case an impairment review is
performed. These calculations require the use of estimates. The
Group also calculates the implied levels of variables used in the
calculations at which impairment would occur.
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END
IR FLFIADTIVLIF
(END) Dow Jones Newswires
July 14, 2022 02:00 ET (06:00 GMT)
Jarvis Securities (LSE:JIM)
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