TIDMJIM

RNS Number : 8352R

Jarvis Securities plc

11 March 2021

THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED BY THE COMPANY TO CONSTITUTE INSIDE INFORMATION AS STIPULATED UNDER THE EU MARKET ABUSE REGULATION (596/2014). UPON THE PUBLICATION OF THE ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS INFORMATION IS CONSIDERED TO BE IN THE PUBLIC DOMAIN.

11 March 2021

Jarvis Securities plc

("Jarvis" or "the Company" or "the Group")

RESULTS FOR THE YEARED 31 DECEMBER 2020

HIGHLIGHTS

   --      43% increase in profit before tax 
   --      8% increase in year on year interest income 
   --      69% growth in interim dividend per share (excludes 2019 special dividend) 
   --      42% increase in EPS 

CHAIRMAN'S STATEMENT

Few would have predicted how 2020 would unfold with Brexit and the COVID pandemic impacting industries in different ways. For stockbrokers trade volumes have increased, but it would be an oversimplification to attribute these excellent financial results to this alone. At the beginning of 2020 it felt like we were on the cusp of volumes returning to normal, and clearly they have exceeded that prediction. Over the past few years the business has continued to maintain its organic growth and commercial success as the following statement will disclose.

I expect our trade volumes to continue at higher levels than we experienced in 2020 and the years leading up to that. I also see no signs of organic growth slowing as we move into 2021 with a healthy pipeline of potential new outsourcing contracts. Client numbers and cash under administration continue to increase, we are seeing profitable growth in international settlement and our relationship with Primary Bid.

We undertook a 4:1 share split during the year to facilitate and encourage more liquidity in Jarvis shares and encourage a wider shareholder base. The business model remains unaltered - Jarvis will continue with a strategy of profitable organic growth whilst improving internal efficiencies. At present, many of our staff are working from home, which, whilst presenting some challenges also creates additional opportunities to review the way we operate where office space can be a restricting factor. I am proud of the fact we have been able to maintain our high standard of client service to both our retail and commercial clients in spite of the disruption caused by COVID. Our IT infrastructure has been constantly monitored and tailored to cope with the increased trade volumes and different working practices and our phone lines have remained open.

Historically the dividend policy has been relatively formulaic with a fixed proportion of profit after tax being retained within the business to maintain our level of FCA capital adequacy or re-investment where required. This retention accumulates and has then led to the payment of special dividends. We are required to retain regulatory capital far in excess of the normal working capital required to run the business, but in the absence of requirements for investment in the business it is the Directors' intention that cash will be paid out in dividends when available. The sale of Treasury shares has also added to the reserves available to be distributed over the period and this is likely to continue which should also increase the free float or liquidity of shares in the market.

As always, I would like to thank Jarvis staff for their continued hard work.

Andrew Grant

Chairman

Annual General Meeting

The Company will today dispatch to shareholders its Annual Report and Accounts for the year ended 31 December 2020, together with a notice convening the Annual General Meeting ("AGM"), to be held at the Company's offices on Thursday 22(rd) April at 9am. The Annual Report and Accounts and Notice of AGM will also be available from

the Company's website,  www.jarvissecurities.co.uk   . 

During the Covid-19 pandemic, the UK Government has introduced new laws to prevent individuals engaging in non-essential travel and attending public gatherings of more than six people, save where essential for work purposes. Having taken legal advice, the Board has concluded that, in these exceptional circumstances and for as long as the current restrictions remain in place, shareholders should not be permitted to attend the Annual General Meeting but instead will be asked to vote by proxy by appointing the Chairman of the meeting as their proxy. The Board has arranged for three persons to be physically present at the Annual General Meeting to meet the quorum obligations under the Company's articles of association but other than these individuals, no other shareholders will be allowed to attend.

Enquiries :

Jarvis Securities plc

Tel: 01892 510515

Andrew Grant

Jolyon Head

WH Ireland Limited

Tel: 0113 394 6619

Katy Mitchell

Darshan Patel

Consolidated income statement for the year ended 31 december 2020

 
                                               Year to       Year to 
                                              31/12/20      31/12/19 
                                   Notes 
 
                                                   GBP           GBP 
 Continuing operations: 
 Revenue                             3      13,341,136    10,521,806 
 
 Administrative expenses                   (6,465,029)   (5,708,739) 
 
  Lease finance costs                          (5,993)       (8,393) 
 
 
 Profit before income tax            5       6,870,114     4,804,674 
 
 Income tax charge                   7     (1,310,424)     (893,944) 
 
 
 Profit for the period                       5,559,691     3,910,730 
 
 
 Attributable to equity holders 
  of the parent                              5,559,691     3,910,730 
 
 
 Earnings per share                  8               P             P 
 
 Basic and diluted                               12.71          8.96 
 
 

Consolidated statement of comprehensive income for the year

 
                                        Notes        Year to     Year to 
                                                    31/12/20    31/12/19 
                                                         GBP         GBP 
 Profit for the period                             5,559,691   3,910,730 
------------------------------------------------  ----------  ---------- 
 Total comprehensive income for the period         5,559,691   3,910,730 
==============================================    ==========  ========== 
 Attributable to equity holders 
  of the parent                                    5,559,691   3,910,730 
================================================  ==========  ========== 
 

Consolidated STATEMENT OF FINANCIAL POSITION at 31 december 2020

 
 
                                                          31/12/20     31/12/19 
                                      Notes 
                                                               GBP          GBP 
 Assets 
 Non-current assets 
 Property, plant and equipment          9                  379,814      461,471 
 Intangible assets                     10                  102,019      105,428 
 Goodwill                              10                  342,872      342,872 
                                                           824,705      909,771 
 Current assets 
 Trade and other receivables           12                6,923,154    3,373,427 
 Investments held for trading          14                    4,183        4,600 
 Cash and cash equivalents             15                3,794,980    5,290,961 
-----------------------------------  ------  ---  ---  -----------  ----------- 
                                                        10,722,317    8,668,988 
 Total assets                                           11,547,022    9,578,759 
===================================  ======  ===  ===  ===========  =========== 
 
 Equity and liabilities 
 Capital and reserves 
 Share capital                         16                  111,828      111,828 
 Share premium                                           1,655,640    1,576,669 
 Merger reserve                                              9,900        9,900 
 Capital redemption reserve                                  9,845        9,845 
 Retained earnings                                       5,672,848    4,949,467 
  Own shares held in treasury           16               (886,113)    (981,136) 
 Total equity attributable to 
  the equity holders of the parent                       6,573,948    5,676,573 
 
  Non-current liabilities 
   Deferred tax                                             45,617       38,664 
   Lease liabilities                    7                   64,653      148,633 
                                        13 
                                                           110,270      187,297 
 Current liabilities 
 Trade and other payables              17                4,176,030    3,184,059 
 Lease liabilities                     13                   83,980       81,507 
 Income tax                            17                  602,794      449,323 
-----------------------------------  ------  ---  ---  -----------  ----------- 
                                                         4,862,804    3,714,889 
 Total liabilities                                       4,973,074    3,902,186 
 Total equity and liabilities                           11,547,022    9,578,759 
===================================  ======  ===  ===  ===========  =========== 
 

CoMPANY STATEMENT OF FINANCIAL POSITION at 31 december 2020

 
                                                      31/12/20     31/12/19 
                                  Notes 
                                                           GBP          GBP 
 Assets 
 Non-current assets 
 Property, plant and equipment      9                  379,814      461,471 
 Intangible assets                 10                  102,019      105,428 
 Goodwill                          10                  342,872      342,872 
 Investment in subsidiaries        11                  284,239      284,239 
                                                     1,108,944    1,194,010 
 Current assets 
 Trade and other receivables       12                  388,288      636,340 
 Cash and cash equivalents         15                2,222,469    2,181,403 
-------------------------------  ------  ---  ---  -----------  ----------- 
                                                     2,610,757    2,817,743 
 Total assets                                        3,719,701    4,011,753 
===============================  ======  ===  ===  ===========  =========== 
 
 Equity and liabilities 
 Capital and reserves 
 Share capital                     16                  111,828      111,828 
 Share premium                                       1,655,640    1,576,669 
 Capital redemption reserve                              9,845        9,845 
 Retained earnings                                   1,481,763    1,776,865 
  Own shares held in treasury       16               (886,113)    (981,136) 
 Total equity attributable to 
  the equity holders                                 2,372,963    2,494,071 
 
  Non-current liabilities 
   Deferred tax                                         46,253       38,664 
   Lease liabilities                7                   64,653      148,633 
                                    13 
                                                       110,906      187,297 
 
 Current liabilities 
 Trade and other payables          17                  801,020      891,435 
  Lease liabilities                 13                  83,980       81,507 
 Income tax                        17                  350,832      357,443 
-------------------------------  ------  ---  ---  -----------  ----------- 
                                                     1,235,832    1,330,385 
 Total liabilities                                   1,346,738    1,517,682 
 Total equity and liabilities                        3,719,701    4,011,753 
===============================  ======  ===  ===  ===========  =========== 
 

The parent company's profit for the financial year was GBP4,541,208 (2019: GBP3,946,513).

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 
                                                                                Capital      Retained                     Total 
                                               Share      Share      Merger    redemption    earnings                    equity 
                                              capital    premium     reserve    reserve                       Own 
                                                                                                            shares 
                                                                                                            held in 
                                                                                                           Treasury 
------------------------------------------  ---------  ----------  ---------  -----------  ------------  -----------  ------------ 
                                               GBP         GBP        GBP         GBP           GBP          GBP           GBP 
 At 1 January 2019                           111,828    1,576,669    9,900       9,845       5,523,363    (859,587)     6,372,018 
 Adjustment from the adoption of IFRS 16        -           -          -           -          (5,600)         -          (5,600) 
 Profit for the financial year                  -           -          -           -         3,910,730        -         3,910,730 
  Purchase of own shares held in treasury        -          -           -           -            -         (227,002)    (227,002) 
  Sale of own shares held in treasury 
                                                 -          -           -           -          23,254       105,453      128,707 
 Dividends                                      -           -          -           -        (4,502,280)       -        (4,502,280) 
 At 31 December 2019                         111,828    1,576,669    9,900       9,845       4,949,467    (981,136)     5,676,573 
------------------------------------------  ---------  ----------  ---------  -----------  ------------  -----------  ------------ 
 Profit for the financial year                  -           -          -           -         5,559,691        -         5,559,691 
 Sale of own shares held in treasury            -        78,971        -           -             -          95,023       173,994 
 Dividends                                      -           -          -           -        (4,836,310)       -        (4,836,310) 
 At 31 December 2020                         111,828    1,655,640    9,900       9,845       5,672,848    (886,113)     6,573,948 
------------------------------------------  ---------  ----------  ---------  -----------  ------------  -----------  ------------ 
 

COMPANY STATEMENT OF CHANGES IN EQUITY

 
                               Share     Share premium     Capital       Retained     Own shares   Total equity 
                               capital                    redemption     earnings       held in 
                                                           reserve                     treasury 
---------------------------  ---------  --------------  ------------  -------------  -----------  ------------- 
                                GBP           GBP            GBP           GBP           GBP           GBP 
 At 1 January 2019            111,828      1,576,669        9,845       2,314,978     (859,587)     3,153,733 
 Adjustment from the 
  adoption of IFRS 16            -             -              -          (5,600)          -          (5,600) 
  Profit for the financial 
  year                            -            -              -          3,946,513         -         3,946,513 
 Purchase of own shares          -             -              -             -         (227,002)     (227,002) 
  held in treasury 
  Sale of own shares              -            -              -           23,254        105,453       128,707 
  held in treasury 
  Dividends                       -            -              -         (4,502,280)        -        (4,502,280) 
---------------------------  ---------  --------------  ------------  -------------  -----------  ------------- 
 At 31 December 2019          111,828      1,576,669        9,845       1,776,865     (981,136)     2,494,071 
---------------------------  ---------  --------------  ------------  -------------  -----------  ------------- 
 Profit for the financial 
  year                           -             -              -         4,541,208         -         4,541,208 
 Sale of own shares 
  held in treasury                -          78,971            -             -           95,023       173,994 
 Dividends                       -             -              -        (4,836,310)                 (4,836,310) 
---------------------------  ---------  --------------  ------------  -------------  -----------  ------------- 
 At 31 December 2020          111,828      1,655,640        9,845       1,481,763     (886,113)     2,372,963 
---------------------------  ---------  --------------  ------------  -------------  -----------  ------------- 
 

statement OF cashflows for the year ended 31 december 2020

 
 
                                                                        CONSOLIDATED                     COMPANY 
                                                                     Year to        Year to        Year to        Year to 
                                                                    31/12/20       31/12/19       31/12/20       31/12/19 
                                                        Notes 
                                                       ------  -------------  -------------  -------------  ------------- 
                                                                         GBP            GBP            GBP            GBP 
 Cash flow from operating activities 
 Profit before income tax                                          6,870,114      4,804,674      5,250,277      4,608,692 
 Depreciation and amortisation                            5          142,908        153,161        142,908        153,161 
  Lease finance cost                                                   5,993          8,393          5,993          8,393 
                                                                   7,019,015      4,966,228      5,399,178      4,770,246 
 
 (Increase) /Decrease in trade and other receivables             (3,465,602)      1,663,939        248,051         85,140 
 (Decrease) /Increase in trade payables                              907,847      (308,217)       (90,415)        191,348 
 Cash generated from operations                                    4,461,260      6,321,950      5,556,814      5,046,734 
 
 Income tax (paid)/received                                      (1,150,000)      (891,251)      (708,090)      (661,251) 
 Net cash from operating activities                                3,311,260      5,430,699      4,848,724      4,385,483 
 
 Cash flows from investing activities 
 Purchase of property, plant and equipment                          (11,837)       (31,567)       (11,837)       (31,567) 
 Purchase of investments held for trading                        (1,060,177)      (758,021)              -              - 
  Proceeds from sale of investments held for trading 
  Purchase of intangible assets                                    1,060,594        755,377              -              - 
                                                                    (46,005)       (72,925)       (46,005)       (72,925) 
 Cash flows from financing activities                               (57,425)      (107,136)       (57,842)      (104,492) 
 
 Repurchase of ordinary share capital                                      -      (227,002)              -      (227,002) 
  Sale of treasury shares                                             95,023        105,453         95,023        105,453 
  Profit on sale of treasury shares                                   78,971         23,254         78,971         23,254 
  Dividends paid                                                 (4,836,310)    (4,502,280)    (4,836,310)    (4,502,280) 
  Lease finance cost                                                 (5,993)        (8,393)        (5,993)        (8,393) 
  Repayment of finance leases                                       (81,507)       (79,107)       (81,507)       (79,107) 
-----------------------------------------------------  ------  -------------  -------------  -------------  ------------- 
 Net cash used in financing activities                           (4,749,816)    (4,688,075)    (4,749,816)    (4,688,075) 
 
 Net (decrease)/ increase in cash & cash equivalents             (1,495,981)        635,488         41,066      (407,084) 
 Cash and cash equivalents at the start of the year                5,290,961      4,655,473      2,181,403      2,588,487 
-------------------------------------------------------------  -------------  -------------  -------------  ------------- 
 Cash and cash equivalents at the end of the year                  3,794,980      5,290,961      2,222,469      2,181,403 
-------------------------------------------------------------  -------------  -------------  -------------  ------------- 
 Cash and cash equivalents: 
 Balance at bank and in hand                                       6,320,942      5,374,229      2,222,469      2,181,403 
 Cash held for settlement of market transactions                 (2,525,962)       (83,268)              -              - 
                                                                   3,794,980      5,290,961      2,222,469      2,181,403 
-------------------------------------------------------------  -------------  -------------  -------------  ------------- 
 
 

NOTES FOR THE YEARED 31 DECEMBER 2020

1. Basis of preparation

The company has adopted the requirements of International Financial Reporting Standards (IFRS) and IFRIC interpretations endorsed by the European Union (EU) and those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The financial statements have been prepared under the historical cost convention as modified by the revaluation of financial assets at fair value through profit or loss.

These financial statements have been prepared in accordance with the accounting policies set out below, which have been consistently applied to all the years presented.

New standards, not yet effective

There are no standards that are issued but not yet effective that would be expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions.

Significant judgements and estimates

The areas involving a high degree of judgement or complexity, or areas where the assumptions and estimates are significant to the consolidated financial statements, are disclosed in Note 20.

Going concern

The group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Strategic Report on pages 2 to 5. The financial position of the group, its cash flows, liquidity position and borrowing facilities are described within these financial statements. In addition, note 26 of the financial statements includes the group's objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and hedging activities; and its exposure to credit risk and liquidity risk.

The group has considerable financial resources, long term contracts with all its significant suppliers and a diversified income stream. The group does not have any current borrowing or any anticipated borrowing requirements. As a consequence, the directors believe that the group is well placed to manage its business risks successfully.

The directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the annual financial statements.

2. Accounting policies

(a) IFRS 15 'Revenue from Contracts with Customers'

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 31 December 2020.

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

   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) Leases

The following was applicable in 2019. Costs in respect of operating leases are charged on a straight line basis over the lease term in arriving at the profit before income tax. Where the company has entered into finance leases, the obligations to the lessor are shown as part of borrowings and the rights in the corresponding assets are treated in the same way as owned fixed assets. Leases are regarded as finance leases where their terms transfer to the lessee substantially all the benefits and burdens of ownership other than right to legal title.

(k) Investments

Investments held for trading

Under IFRS investments held for trading are recognised as financial assets measured at fair value through profit and loss.

Investments in subsidiaries

Investments in subsidiaries are stated at cost less provision for any impairment in value.

(l) 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.

(m) 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.

(n) Cash and cash equivalents

Cash and cash equivalents comprise:

Balance at bank and in hand - cash in 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.

Cash held for settlement of market transactions - this balance is cash generated through settlement activity, and can either be a surplus or a deficit. A surplus arises when settlement liabilities exceed settlement receivables. This surplus is temporary and is accounted for separately from the balance at bank and in hand as it is short term and will be required to meet settlement liabilities as they fall due. A deficit arises when settlement receivables exceed settlement liabilities. In this instance Jarvis will place its own funds in the client account to ensure CASS obligations are met. This deficit is also temporary and will reverse once settlement receivables are settled.

(o) 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.

(p) Dividend distribution

Dividend distribution to the company's shareholders is recognised as a liability in the group's financial statements in the period in which interim dividends are notified to shareholders and final dividends are approved by the company's shareholders.

(q) IFRS 9 'Financial Instruments'

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 will be applied. The method uses historic customer data, alongside future economic conditions to calculate expected loss on receivables

(r) IFRS 16 'Leases'

The lease liability is 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.

The carrying amount of right-of-use assets recognised was GBP404,863 at the lease start date of 27 September 2017. The retained earnings include a GBP5,600 transitional adjustment in respect of the modified retrospective approach.

A finance charge of 3% APR is used to calculate the finance cost of the lease.

3. Group revenue

The revenue of the group during the year was wholly in the United Kingdom and the revenue of the group for the year derives from the same class of business as noted in the Strategic Report.

 
                                                             2020              2019 
                                                      -----------       ----------- 
                                                              GBP               GBP 
 Gross interest earned from treasury deposits, cash 
  at bank and overdrawn client accounts                 4,580,067         4,232,976 
 Commissions                                            5,279,932         3,320,160 
  Fees                                                  3,481,138         2,968,670 
                                                       13,341,136        10,521,806 
                                                      ===========       =========== 
 

4. Segmental information

All of the reported revenue and operational results for the period derive from the group's external customers and continuing financial services operations. All non-current assets are held within the United Kingdom.

The group is not reliant on any one customer and no customer accounts for more than 10% of the group's external revenues.

As noted in 2 (g) the directors regard the operations of the group as a single reporting segment on the basis there is only a single organisational unit that is reported to key management personnel for the purpose of performance assessment and future resource allocation.

 
 
   5. Profit before income tax                                        2020           2019 
                                                                  --------       -------- 
 Profit before income tax is stated after charging/(crediting):        GBP            GBP 
 Directors' emoluments                                             723,545        671,690 
  Depreciation - right of use asset                                 80,973         80,973 
 Depreciation - owned assets                                        12,521         11,228 
 Amortisation (included within administrative expenses 
  in the consolidated income statement)                             49,414         60,960 
 Operating lease rentals - hire of machinery                         8,852          8,842 
 Impairment of receivable charge                                    30,305         23,398 
 Bank transaction fees                                              91,462         68,734 
                                                                  ========       ======== 
 

Details of directors' annual remuneration as at 31 December 2020 are set out below:

 
                                                                      2020        2019 
                                                                ----------  ---------- 
                                                                       GBP         GBP 
 Short-term employee benefits                                      654,362     589,642 
 Post-employment benefits                                           60,663      73,740 
 Benefits in kind                                                    8,520       8,307 
                                                                ----------  ---------- 
                                                                   723,545     671,690 
                                                                ==========  ========== 
 Details of the highest paid director are as follows: 
 Aggregate emoluments                                              315,700     347,110 
 Company contributions to personal pension scheme                        -           - 
 Benefits in kind                                                    7,788       7,375 
                                                                ----------  ---------- 
                                                                   323,488     354,485 
                                                                ==========  ========== 
 
                                                    Emoluments     Pension       Total 
                                                    & Benefits 
                                                       in kind 
                                           -------------------  ----------  ---------- 
 Directors                                                 GBP         GBP         GBP 
 Andrew J Grant                                        323,488           -     323,488 
 Nick J Crabb (resigned 
  6 July 2020)                                          83,015      24,109     107,124 
 Jolyon C Head                                         106,231      36,554     142,785 
 Graeme McAusland                                       26,000           -      26,000 
                                           -------------------  ----------  ---------- 
 TOTAL                                                 538,734      60,663     599,397 
                                           ===================  ==========  ========== 
 
   During the year benefits accrued for two directors (2019: two directors) 
   under a money purchase pension scheme. Nick Crabb received a payment in 
   lieu of notice of GBP124,148 which is excluded in his emoluments for the 
   current year. 
 
   Staff Costs 
 The average number of persons employed by the group, including directors, 
  during the year was as follows: 
                                                                      2020        2019 
                                                                ----------  ---------- 
 Management and administration                                          61          57 
                                                                ==========  ========== 
 The aggregate payroll costs of these persons were                     GBP         GBP 
  as follows: 
 Wages, salaries & social security                               2,653,470   2,393,437 
 Pension contributions including salary sacrifice                   93,766     102,923 
                                                                 2,747,236   2,496,360 
                                                                ==========  ========== 
 

Key personnel

The directors disclosed above are considered to be the key management personnel of the group. The total amount of employers NIC paid on behalf of key personal was GBP85,159 (2019: 76,621).

 
 
   6. Auditors' remuneration 
 During the year the company obtained the following services from the company's 
  auditors as detailed below: 
                                                                              2020       2019 
                                                                        ----------  --------- 
                                                                               GBP        GBP 
 Fees payable to the company's auditors for the audit 
  of the company's annual financial statements                              25,000     24,150 
 Fees payable to the company's auditors and its associates 
  for other services: 
 The audit of the company's subsidiaries, pursuant to 
  legislation                                                                9,000      9,000 
                                                                        ----------  --------- 
 Total audit fees                                                           34,000     33,150 
 Taxation Compliance                                                         5,000      4,800 
                                                                            39,000     37,950 
                                                                        ==========  ========= 
 
 

The audit costs of the subsidiaries were invoiced to and met by Jarvis Securities plc.

 
  7. Income and deferred tax charges - group                    2020      2019 
                                                           ----------  -------- 
                                                                  GBP       GBP 
   Based on the adjusted results for the year: 
   UK corporation tax                                       1,303,937   902,524 
   Adjustments in respect of prior years                        (465)   (9,793) 
   Total current income tax                                 1,303,472   892,731 
   Deferred income tax: 
   Origination and reversal of timing differences               3,039     9,560 
   Adjustment in respect of prior years                         (569)   (4,923) 
   Adjustment in respect of change in deferred tax rates        4,482   (3,424) 
                                                           ----------  -------- 
   Total deferred tax charge                                    6,952     1,213 
                                                           ----------  -------- 
                                                            1,310,424   893,944 
                                                           ==========  ======== 
 
  The income tax assessed for the year is more than the standard rate of corporation 
  tax in the UK (19%). The differences are explained below: 
  Profit before income tax                                           6,870,114   4,804,674 
                                                                  ============  ========== 
  Profit before income tax multiplied by the standard 
   rate of corporation tax in the UK of 
   19% (2019 - 19%)                                                  1,305,322     912,889 
       Effects of: 
       Expenses not deductible for tax purposes                          1,486           - 
        IFRS 16 transitional adjustment                                  (122)           - 
  Adjustments to tax charge in respect of previous years               (1,034)    (14,716) 
       Ineligible depreciation                                             290         320 
   Adjust in respect of change in deferred tax rate                      4,482     (3,424) 
   Deferred tax timing differences                                           -     (1,125) 
  Current income tax charge for the years                            1,310,424     893,944 
                                                                  ============  ========== 
 
 
 
 Movement in (assets) / provision - group: 
 Provision at start of year                   38,664   37,451 
 Deferred income tax charged in the year       6,953    1,213 
 Provision at end of year                     45,617   38,664 
                                             =======  ======= 
 
 
 
 Movement in (assets) / provision - company: 
 Provision at start of year                     38,664   37,451 
 Deferred income tax charged in the year         7,589    1,213 
 Provision at end of year                       46,523   38,664 
                                               =======  ======= 
 
 
 
 8. Earnings per share                                          2020         2019 
                                                         -----------  ----------- 
                                                                 GBP          GBP 
 Earnings: 
  Earnings for the purposes of basic and diluted 
  earnings per share 
 (profit for the period attributable to the 
  equity holders of the parent)                            5,559,691    3,910,730 
                                                         ===========  =========== 
 
   Number of shares: 
 Weighted average number of ordinary shares for the 
  purposes of basic earnings per share                    43,739,085   43,675,884 
 
                                                          43,739,085   43,675,884 
                                                         ===========  =========== 
 
 

On 29 October 2020 there was a capital reorganisation whereby each of the company's issued and unissued ordinary shares of GBP0.01 each were subdivided into 4 ordinary shares of GBP0.0025 each. The 2019 figures have been adjusted to reflect this subdivision. Shares held in treasury are deducted for the purpose of calculating earnings per share.

 
 9. Property, plant & equipment 
  - group & company                              Right of      Leasehold        Office     Total 
                                               use assets     & Property     Equipment 
                                              - Leasehold 
                                           --------------  -------------  ------------  -------- 
 Cost:                                                               GBP           GBP       GBP 
 At 1 January 2019                                      -        222,450       264,716   487,166 
 Adjustments from 
  the adoption of 
  IFRS 16                                         303,648              -             -   303,648 
  Additions                                             -              -        31,567    31,567 
 Disposals                                              -              -             -         - 
                                           --------------  -------------  ------------  -------- 
 At 31 December 
  2019                                            303,648        222,450       296,283   822,381 
 Additions                                              -              -        11,837    11,837 
 Disposals                                              -              -             -         - 
                                           --------------  -------------  ------------  -------- 
 At 31 December 
  2020                                            303,648        222,450       308,120   834,218 
                                           --------------  -------------  ------------  -------- 
 Depreciation: 
 At 1 January 2019                                      -         13,156       255,553   268,709 
 Charge for the 
  year                                             80,973          1,949         9,279    92,201 
 On Disposal                                            -              -             -         - 
                                           --------------  -------------  ------------  -------- 
 At 31 December 
  2019                                             80,973         15,105       264,832   360,910 
 Charge for the 
  year                                             80,973          1,949        10,572    93,494 
 On Disposal                                            -              -             -         - 
                                           --------------  -------------  ------------  -------- 
 At 31 December 
  2020                                            161,946         17,054       275,404   454,404 
                                           --------------  -------------  ------------  -------- 
 Net Book Value: 
 At 31 December 
  2020                                            141,702        205,396        32,716   379,814 
                                           ==============  =============  ============  ======== 
 
 At 31 December 
  2019                                            222,675        207,345        31,451   461,471 
                                           ==============  =============  ============  ======== 
 

The net book value of non-depreciable land is GBP125,000 (2019: GBP125,000).

 
    10. Intangible assets & goodwill - group & 
                                       company                     Intangible assets 
                                                ----------------------------------------------------  -------- 
                                                       Customer   Databases       Software   Website     Total 
                                      Goodwill    Relationships                Development 
                            ------------------  ---------------  ----------  -------------  --------  -------- 
                                           GBP              GBP         GBP            GBP       GBP       GBP 
 Cost: 
 At 1 January 2019                     342,872          177,981      25,000        226,361   261,713   691,055 
 Additions                                   -                -           -         72,925         -    72,925 
 At 31 December 2019                   342,872          177,981      25,000        299,286   261,713   763,980 
 Additions                                   -                -           -         46,005         -    46,005 
 At 31 December 2020                   342,872          177,981      25,000        345,291   261,713   809,985 
                            ------------------  ---------------  ----------  -------------  --------  -------- 
 Amortisation: 
 At 1 January 2019                           -          175,181      15,719        219,129   187,563   597,592 
 Charge for the year                         -            2,800       1,000         19,470    37,690    60,960 
 At 31 December 2019                         -          177,981      16,719        238,599   225,253   658,552 
 Charge for the year                         -                -       1,000         20,289    28,125    49,414 
 At 31 December 2020                         -          177,981      17,719        258,888   253,378   707,966 
                            ------------------  ---------------  ----------  -------------  --------  -------- 
 Net Book Value: 
 At 31 December 2020                   342,872                -       7,281         86,403     8,335   102,019 
                            ==================  ===============  ==========  =============  ========  ======== 
 
 At 31 December 2019                   342,872                -       8,281         60,687    36,460   105,428 
                            ==================  ===============  ==========  =============  ========  ======== 
 
 

Goodwill represents the difference between the consideration paid and the fair value of assets acquired on the acquisition of a business in 2003. In accordance with the transitional provisions in IFRS 1 the group elected not to apply IFRS 3 retrospectively to past business combinations. Therefore the goodwill balance represents an acquired customer base, that continues to trade with the group to this day and, more fundamentally, systems, processes and a registration that dramatically reduced the group's dealing costs. These systems and the registration contributed significantly to turning the group into the low cost effective provider of execution only stockbroking solutions that it is today. The key assumptions used by the directors in their annual impairment review are that the company can benefit indefinitely from the reduced dealing costs and the company's current operational capacity remains unchanged. The recoverable amount of the goodwill has been assessed using the value in use method and there is significant headroom based on this calculation. There are no reasonable changes in assumptions that would cause the cash generating unit value to fall below its carrying amount.

 
 
 11. Investments in subsidiaries                          Company 
                                                          2020      2019 
                                                  ------------  -------- 
 Unlisted Investments:                                     GBP       GBP 
 Cost: 
 At 1 January                                          284,239   284,239 
 As at 31 December                                     284,239   284,239 
                                                  ============  ======== 
 
 
 
                                           Shareholding            Holding                  Business 
 Jarvis Investment Management Limited    100%   25,000,000    1p Ordinary shares    Financial administration 
 Dudley Road Nominees Limited*           100%            2   GBP1 Ordinary shares   Dormant nominee company 
 JIM Nominees Limited*                   100%            1   GBP1 Ordinary shares   Dormant nominee company 
 Galleon Nominees Limited*               100%            2   GBP1 Ordinary shares   Dormant nominee company 
 
 

All subsidiaries are located in the United Kingdom and their registered office is 78 Mount Ephraim, Tunbridge Wells, Kent, TN4 8BS.

* indirectly held

 
 
   12. Trade and other receivables                  Group                          Company 
 
 Amounts falling due within one year:         2020             2019           2020           2019 
                                        ----------       ----------       --------       -------- 
                                               GBP              GBP            GBP            GBP 
 
 Trade receivables                         588,989          549,872         24,000          9,411 
 Settlement receivables                  5,654,665        2,077,733              -              - 
 Other receivables                         352,864          637,814        343,125        624,550 
 Prepayments and accrued income            326,636          108,009         14,984          2,010 
  Other taxes and social security                -                -          6,179            369 
                                         6,923,154        3,373,427        388,288        636,340 
                                        ==========       ==========       ========       ======== 
 

Settlement receivables are short term receivable amounts arising as a result of the settlement of trades in an agency capacity. The balances due are covered by stock collateral and bonds. An analysis of trade and settlement receivables past due is given in note 26. There are no amounts past due included within other receivables or prepayments and accrued income.

13. Leases

Lease liabilities are secured by the related underlying assets.

 
                                             2020 
 Amounts recognised in the statement 
  of cash flows: 
                                              GBP 
 Repayment of capital element of leases    81,507 
                                           81,507 
 

The undiscounted maturity analysis of lease liabilities as at 31 December 2020 is as follows:

 
                      < 1 year (GBP)   1-2 years (GBP)   2-3 years (GBP) 
 Lease payment        87,500                    65,625                 - 
                     ---------------  ----------------  ---------------- 
 Finance charge       3,520                        972                 - 
                     ---------------  ----------------  ---------------- 
 Net present value    83,980                    64,653                 - 
                     ---------------  ----------------  ---------------- 
 

The undiscounted maturity analysis of lease liabilities as at 31 December 2019 is as follows:

 
                      < 1 year (GBP)   1-2 years (GBP)   2-3 years (GBP) 
 Lease payment        87,500                    87,500            65,625 
                     ---------------  ----------------  ---------------- 
 Finance charge       5,993                      3,520               972 
                     ---------------  ----------------  ---------------- 
 Net present value    81,507                    83,980            64,653 
                     ---------------  ----------------  ---------------- 
 
 
                                                   2020 
 Lease liabilities included in the current 
  statement of financial position 
                                                    GBP 
 Current                                         83,980 
 Non-current                                     64,653 
                                                148,633 
 
                                                   2020 
 Amounts recognised in income statement             GBP 
 Interest on lease liabilities adopted under 
  IFRS 16                                         5,993 
                                                  5,993 
 

The company has a lease with Sion Properties Limited, a company controlled by A J Grant, for the rental of 78 Mount Ephraim, a self-contained office building. The lease has an annual rental of GBP87,500, being the market rate on an arm's length basis, and expires on 26 September 2027. The total cash outflow for leases in 2020 was GBP87,500. There is an option to terminate the lease on 26 September 2022 and therefore this is the discounted period.

 
 14. Investments held for trading                         Group                      Company 
                                                        2020        2019        2020               2019 
                                                ------------  ----------  ----------  ----------------- 
 Listed Investments:                                     GBP         GBP         GBP                GBP 
 Valuation: 
 At 1 January                                          4,600       1,956           -                  - 
 Additions                                         1,060,177     758,021           -                  - 
 Disposals                                       (1,060,594)   (755,377)           -                  - 
 As at 31 December                                     4,183       4,600           -                  - 
                                                ============  ==========  ==========  ================= 
 
    Listed investments held for trading are stated at their market value at 
    31 December 2020 and are considered to be level one assets in accordance 
    with IFRS 13. The group does not undertake any principal trading activity. 
 
        15. Cash and cash equivalents                      Group                      Company 
                                                        2020        2019        2020               2019 
                                                ------------  ----------  ----------  ----------------- 
                                                         GBP         GBP         GBP                GBP 
      Balance at bank and in hand 
       - group/company                             6,320,942   5,374,229   2,222,469          2,181,403 
      Cash held for settlement of 
       market transactions                       (2,525,962)    (83,268)           -                  - 
                                                   3,794,980   5,290,961   2,222,469          2,181,403 
                                                ============  ==========  ==========  ================= 
 
 

In addition to the balances shown above the group has segregated deposit and current accounts held in accordance with the client money rules of the Financial Conduct Authority. The group also has segregated deposits and current accounts on behalf of Counterparties and elected Professional clients of GBP2,111,321 (2019: GBP695,474) not governed by client money rules therefore they are also not included in the statement of financial position of the group. This treatment is appropriate as the business is a going concern however, were an administrator appointed, these balances would be considered assets of the business.

 
 
 
   16. Share capital                                        2020       2019 
                                                       ---------  --------- 
                                                         160,000    160,000 
 Authorised: 
  64,000,000 Ordinary shares of 0.25p each               160,000    160,000 
                                                       ---------  --------- 
 
                                                            2020       2019 
                                                             GBP        GBP 
 At 1 January 2020                                       111,828    111,828 
 
   Allotted, issued and fully paid: 
 44,731,000 (2019: 44,731,000) Ordinary shares of 1p 
  each                                                   111,828    111,828 
                                                       =========  ========= 
 

The company has one class of ordinary shares which carry no right to fixed income.

On 29 October 2020 there was a capital reorganisation whereby each of the company's issued and unissued ordinary shares of GBP0.01 each were subdivided into 4 ordinary shares of GBP0.0025 each. The 2019 figures have been adjusted to reflect this subdivision. Shares held in treasury are deducted for the purpose of calculating earnings per share. During the period 98,400 shares were sold from treasury. As at the period end 917,600 shares are held in treasury.

 
 17. Trade and other payables                  Group                            Company 
 
 Amounts falling due within               2020             2019             2020             2019 
  one year: 
                                    ----------       ----------       ----------       ---------- 
                                           GBP              GBP              GBP              GBP 
 
 Trade payables                        188,688           58,300           10,554              977 
 Settlement payables                 2,997,247        1,892,926                -                - 
 Amount owed to group undertaking            -                -          750,866          840,458 
 Other taxes and social security       174,712          155,478                -                - 
 Other payables                        566,654          561,738                -                - 
 Accruals                              248,729          515,617           39,600           50,000 
                                    ----------       ----------       ----------       ---------- 
 Trade and other payables            4,176,030        3,184,059          801,020          891,435 
  Lease liabilities                     83,980           81,507           83,980           81,507 
 Income tax                            602,794          449,323          350,832          357,443 
 Total liabilities                   4,862,804        3,714,889        1,235,832        1,330,385 
                                    ==========       ==========       ==========       ========== 
 

Settlement payables are short term payable amounts arising as a result of settlement of trades in an agency capacity. Trade payables and other taxes and social security are all paid at the beginning of the month after the invoice was received or the liability created.

 
 18. Dividends                                        2020        2019 
                                                ----------  ---------- 
                                                       GBP         GBP 
 Interim dividends paid on Ordinary 1p shares    4,836,310   4,502,280 
                                                ==========  ========== 
 Dividend per Ordinary 1p share                      11.06       10.31 
                                                ==========  ========== 
 

Please refer to the directors' report for dividends declared post year end.

19. Financial Instruments

The group's principal financial instruments comprise cash, short terms borrowings and various items such as trade receivables, trade payables etc. that arise directly from operations. The main purpose of these financial instruments is the funding of the group's trading activities. Cash and cash equivalents and trade and other receivables are categorised as held at amortised cost, and trade and other payables are classified as held at amortised cost. Other than investments held for trading all financial assets and liabilities are held at amortised cost and their carrying value approximates to their fair value.

The main financial asset of the group is cash and cash equivalents which is denominated in Sterling and which is detailed in note 14. The group operates a low risk investment policy and surplus funds are placed on deposit with at least A rated banks or equivalent at floating interest rates.

The group also holds investments in equities, treasury shares and property.

20. 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 bad debts.

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 assumptions and sensitivity relating to the impairment tests are detailed in note 10.

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.

21. Immediate and ultimate parent undertaking

There is no immediate or ultimate controlling party.

22. Related party transactions

The company has a lease with Sion Properties Limited, a company controlled by a director of the company, for the rental of 78 Mount Ephraim, a self-contained office building. The lease has an annual rental of GBP87,500, being the market rate on an arm's length basis, and expires on 26 September 2027.

During the year Jarvis Investment Management Limited paid Jarvis Securities Plc GBP7,000 (2019: GBP7,000) for rental of a disaster recovery site.

Jarvis Securities plc owed Jarvis Investment Management Limited GBP750,866 (2019: GBP751,208) at year end.

During the year, directors, key staff and other related parties by virtue of control carried out share dealing transactions in the normal course of business. Commissions for such transactions are charged at various discounted rates. The impact of these transactions does not materially or significantly affect the financial position or performance of the company. At 31 December 2020, these same related parties had cash balances of GBP392,110 (2019: GBP1,307,212) and interest was earned during the year amounting to GBP923 (2019: GBP2,203). In addition to cash balances other equity assets of GBP49,950,739 (2019: GBP40,119,621) were held by JIM Nominees Ltd as custodian.

During the year Jarvis Securities Plc charged GBP3,869,812 (2019: GBP3,844,388) to Jarvis Investment Management Limited for use of intellectual properties.

23. Capital commitments

As of 31 December 2020, the company had no capital commitments (2019: nil).

24. Fair value estimation

The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. The quoted market price used for financial assets held by the company is the current bid price. The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values.

25. Financial risk management objectives and policies

The directors consider that their main risk management objective is to monitor and mitigate the key risks to the group, which are considered to be principally credit risk, compliance risk, liquidity risk and operational risk. Several high-level procedures are in place to enable all risks to be better controlled. These include detailed profit forecasts, cash flow forecasts, monthly management accounts and comparisons against forecast, regular meetings of the full board of directors, and more regular senior management meetings.

The group's main credit risk is exposure to the trading accounts of clients. This credit risk is controlled via the use of credit algorithms within the computer systems of the subsidiary. These credit limits prevent the processing of trades in excess of the available maximum permitted margin at 100% of the current portfolio value of a client.

A further credit risk exists in respect of trade receivables. The group's policy is to monitor trade and other receivables and avoid significant concentrations of credit risk. Aged receivables reports are reviewed regularly and significant items brought to the attention of senior management.

The compliance risk of the group is controlled through the use of robust policies, procedures, the segregation of tasks, internal reviews and systems controls. These processes are based upon the Rules and guidance notes of the Financial Conduct Authority and the London Stock Exchange and are overseen by the compliance officer together with the management team. In addition, regular compliance performance information is prepared, reviewed and distributed to management.

The group aims to fund its expansion plans mainly from existing cash balances without making use of bank loans or overdraft facilities. Financial risk is therefore mitigated by the maintenance of positive cash balances and by the regular review of the banks used by the group. Other risks, including operational, reputational and legal risks are under constant review at senior management level by the executive directors and senior managers at their regular meetings, and by the full board at their regular meetings.

The group derives a significant proportion of its revenue from interest earned on client cash deposits and does not have any borrowings. Hence, the directors do not consider the group to be materially exposed to interest rate risk in terms of the usual consideration of financing costs, but do note that there is a risk to earnings. Given the current Bank of England base rate is at its lowest level since its foundation in 1694, and the business has remained profitable, this risk is not considered material in terms of a threat to the long term prospects of the group.

The capital structure of the group consists of issued share capital, reserves and retained earnings. Jarvis Investment Management Limited has an Internal Capital Adequacy Assessment Process ("ICAAP"), as required by the Financial Conduct Authority ("FCA") for establishing the amount of regulatory capital to be held by that company. The ICAAP gives consideration to both current and projected financial and capital positions. The ICAAP is updated throughout the year to take account of any significant changes to business plans and any unexpected issues that may occur. The ICAAP is discussed and approved at a board meeting of the subsidiary at least annually. Capital adequacy is monitored daily by management. Jarvis Investment Management Limited uses the simplified approach to Credit Risk and the standardised approach for Operational Risk to calculate Pillar 1 requirements. Jarvis

Investment Management Limited observed the FCA's regulatory requirements throughout the period. Information disclosure under Pillar 3 of the Capital Requirements Directive is available from the group's websites.

The directors do not consider that the group is materially exposed to foreign exchange risk as the group does not run open currency positions beyond the end of each working day.

As of 31 December 2020, trade receivables of GBP159,784 (2019: GBP131,923) were past due and were impaired and partially provided for. The amount of the provision was GBP131,456 as at 31 December 2020 (2019: GBP101,539). The individually impaired receivables relate to clients who are in a loan position and who do not have adequate stock to cover these positions. The amount of the impairment is determined by clients' perceived willingness and ability to pay the debt, legal judgements obtained in respect of, charges secured on properties and payment plans in place and being adhered to. Where debts are determined to be irrecoverable, they are written off through the income and expenditure account. The group does not anticipate future write offs of uncollectable amounts will be significant as the group now imposes much more restrictive rules on clients who utilise extended settlement facilities.

 
                                         Group            Company 
 Provision of impairment of           2020       2019   2020   2019 
  receivables: 
                                  --------  ---------  -----  ----- 
                                       GBP        GBP    GBP    GBP 
 
 At 1 January                      101,539    105,470      -      - 
 Charge / (credit) for the year     30,306     23,398      -      - 
 Uncollectable amounts written 
  off                                (389)   (27,329)      -      - 
                                  --------  ---------  -----  ----- 
 At 31 December                    131,456    101,539      -      - 
                                  ========  =========  =====  ===== 
 
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March 11, 2021 02:00 ET (07:00 GMT)

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