Final Results

RNS Number : 2930F
Jarvis Securities plc
19 February 2015
 



Jarvis Securities plc

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

 

RESULTS FOR THE YEAR ENDED 31 DECEMBER 2014

 

HIGHLIGHTS

 

·           4% increase in profit before tax

·           3% decrease in year on year interest income

·           14% growth in dividend per share

·           4% increase in EPS

 

 

Enquiries:

Jarvis Securities plc

Tel: 01892 510515

Andrew Grant

Jolyon Head

 

WH Ireland Limited

Tel: 0113 3946600

Andrew Kitchingman

Liam Gribben

 

 

Notes:

Jarvis Securities plc is the holding company for Jarvis Investment Management Limited (AIM: JIM.L) a stock broking company and outsourced service provider for bespoke tailored financial administration. Jarvis was established in 1984 and is a member of the London Stock Exchange; a broker dealer member of ISDX Markets, authorised and regulated by the Financial Conduct Authority and an HM Revenue & Customs approved ISA manager. As well as normal retail broking Jarvis provides cost effective and flexible share trading facilities within ISA and SIPP wrappers.

 

Jarvis provides outsourced and partnered financial administration services to a number of third party organisations. These organisations include advisers, stockbrokers, banks and fund managers. Jarvis can tailor its administration processes to the requirements of each organisation and has a strong reputation for flexibility and cost-effectiveness.

 

The Company is tomorrow sending to shareholders its Annual Report and Accounts for the year ended 31 December 2014, together with a notice convening the Annual General Meeting ("AGM"), to be held at the Company's offices on Thursday 26 March 2015. The Annual Report and Accounts and Notice of AGM will also be available from the Company's website, www.jarvissecurities.co.uk.

 

 

 

CHAIRMAN'S STATEMENT

 

·           4% increase in profit before tax

·           3% decrease in year on year interest income

·           14% growth in dividend per share

·           4% increase in EPS

 

 

This year is best described as a year of two halves. In the first six months we experienced favourable market conditions - high trade volumes in UK equities and consistent interest rates. In the second half the year there was a general decrease in market activity from which Jarvis was not immune. Trade volumes were lower, and there was a further episode of downward pressure on interest rates.

 

Given the slowdown in the latter half I am pleased to present a set of results that consolidates the exceptional rate of growth we have achieved over the past three years. Whilst year on year profit before tax has not increased at the same rate as in recent years, indications for continued growth remain positive. During 2014 we signed 7 new commercial clients, increasing our number of outsourcing agreements by 21%. Whilst some of these are currently low volume, some will inevitably grow and their success will contribute to our future growth. We are beginning 2015 with a healthy pipeline of enquiries, and have several agreements in the latter stages of negotiation. Another area where we have seen significant growth during the period is in the balance of our cash under administration. The average balance held during 2014 is 31% higher than in 2013, driven by client acquisition towards the end of 2013 and throughout 2014. In spite of the downward pressure on interest rates during the latter half of 2014, the increased cash balance has enabled us to almost match our interest income earned in 2013.

 

During 2014 we have built upon our new IT infrastructure and successfully transferred our clients onto our new website, with improved functionality, appearance and security. We will continue to make improvements to both the front end and back office processes.

 

The company's own cash balances are also at an all time high and the majority of the 1/3rd of profit after tax that is retained for reinvestment is held on deposit.  The company has authority to purchase its own shares and these funds may be used to purchase  shares for treasury or cancellation  should it be considered an appropriate means to improve shareholder returns.

 

The IPO market has also picked up during early 2015 and we have been able to participate as an appointed retail intermediary in several issues.  The function enables us to earn additional commission, generate trading activity in the resultant share allocation and satisfy client demand for such issues.

 

The continuing success of the business reflects successful investment in infrastructure, a focus on what the business is good at and managing the risks that any business such as ours faces. To do this requires an excellent group of people and as always I would like to thank all members of the Jarvis team for their continuing hard work.

 

The continuing success of the business reflects successful investment in infrastructure, a focus on what the business is good at and managing the risks that any business such as ours faces. To do this requires an excellent group of people and as always I would like to thank all members of the Jarvis team for their continuing hard work.

 

 

 

Andrew Grant

Chairman


 

Consolidated income statement for the year ended 31 december 2014

 





Year to

Year to





31/12/14

31/12/13


Notes















£

£

Continuing operations:






Revenue

3



7,314,384

7,157,555







Administrative expenses




(4,122,256)

(4,079,547)







Finance costs

5



(5,851)

(10,103)













Profit before income tax

6



3,186,277

3,067,905







Income tax charge

8



(672,067)

(718,300)













Profit for the period




2,514,210

2,349,605













Attributable to equity holders of the parent




2,514,210

2,349,605













Earnings per share

9



P

P







Basic




22.79

21.92

Diluted




22.68

21.41







 

The notes on pages 14 to 29 form part of these financial statements 

 

 

Consolidated statement of comprehensive income for the year

 


Notes



Year to

Year to





31/12/14

31/12/13





£

£

Profit for the period




2,514,210

2,349,605

Total comprehensive income for the period



2,514,210

2,349,605

Attributable to equity holders of the parent




2,514,210

2,349,605

 

 

COMPANY statement of comprehensive income for the year

 


Notes



Year to

Year to





31/12/14

31/12/13





£

£

Profit for the period




2,100,841

2,443,854

Total comprehensive income for the period



2,100,841

2,443,854

Attributable to equity holders of the company



2,100,841

2,443,854

 

The notes on pages 14 to 29 form part of these financial statements 

 

 

Company No.: 5107012

Consolidated STATEMENT OF FINANCIAL POSITION at 31 december 2014











31/12/14

31/12/13


Notes









£

£

Assets






Non-current assets






Property, plant and equipment

10



243,348

250,067

Intangible assets

11



230,722

285,310

Goodwill

11



342,872

342,872

Investments held to maturity

12



-

262,948





816,942

1,141,197

Current assets






Investments held to maturity

12



246,979

-

Trade and other receivables

15



2,674,034

2,719,922

Investments held for trading

16



13,626

5,757

Cash and cash equivalents

17



8,296,385

10,345,718





11,231,024

13,071,397

Total assets




12,047,966

14,212,594







Equity and liabilities






Capital and reserves






Share capital

18



111,200

107,825

Share premium




1,467,485

1,061,972

Merger reserve




9,900

9,900

Capital redemption reserve




9,845

9,845

Share option reserve




136,556

129,162

Retained earnings




2,955,642

2,263,396

Total equity attributable to the equity holders of the parent




4,690,628

3,582,100







Current liabilities

19





Trade and other payables

19



7,055,111

10,095,865

Deferred tax

19



23,919

410

Income tax

19



278,308

534,219

Total current liabilities

19



7,357,338

10,630,494

Total equity and liabilities




12,047,966

14,212,594

 

Approved and authorised for issue by the Board on 18th February 2015 and signed on its behalf by:

 

 

………………………A J Grant - Director

 

 

………………………J C Head - Director

 

The notes on pages 14 to 29 form part of these financial statements 

 

Company No.: 5107012

CoMPANY STATEMENT OF FINANCIAL POSITION at 31 december 2014

 





31/12/14

31/12/13


Notes









£

£

Assets






Non-current assets






Property, plant and equipment

10



243,348

250,067

Intangible assets

11



230,722

285,310

Goodwill

11



342,872

342,872

Investment in subsidiaries

14



284,239

283,038





1,101,181

1,161,287

Current assets






Trade and other receivables

15



1,173,874

545,932

Cash and cash equivalents

17



1,162,770

1,350,516





2,336,644

1,896,448

Total assets




3,437,825

3,057,735







Equity and liabilities












Capital and reserves






Share capital

18



111,200

107,825

Share premium




1,467,485

1,061,972

Capital redemption reserve




9,845

9,845

Share option reserves




136,556

129,162

Retained earnings




1,412,307

1,133,430

Total equity attributable to the equity holders




3,137,393

2,442,234







Current liabilities






Trade and other payables

19



31,700

175,486

Deferred tax

19



23,919

410

Income tax

19



244,813

439,605

Total current liabilities

19



300,432

615,501

Total equity and liabilities




3,437,825

3,057,735

 

Approved and authorised for issue by the Board on 18th February 2015 and signed on its behalf by:

 

 

………………………A J Grant - Director

 

 

………………………J C Head - Director

 

The notes on pages 14 to 29 form part of these financial statements

 

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY


 

Share capital

 

Share premium

 

Merger reserve

Capital redemption reserve

Share option reserve

Retained earnings

Total equity


£

£

£

£

£

£

£

At 1 January 2013

106,015

862,657

9,900

9,845

114,481

1,469,605

2,572,503

Share options exercised during the year

1,810

199,315

-

-

-

-

201,125

Share based payment expense

-

-

-

-

14,681

-

14,681

Profit for the financial year

-

-

-

-

-

2,349,605

2,349,605

Dividends

-

-

-

-

(1,555,814)

(1,555,814)

At 31 December 2013

107,825

1,061,972

9,900

9,845

2,263,396

3,582,100

Share options exercised during the year

3,375

405,513

-

-

-

-

408,888

Share based payment expense

-

-

-

-

7,394

-

7,394

Profit for the financial year

-

-

-

-

-

2,514,210

2,514,210

Dividends

-

-

-

-

-

(1,821,964)

(1,821,964)

At 31 December 2014

111,200

1,467,485

9,900

9,845

136,556

2,955,642

4,690,628

 

 

COMPANY STATEMENT OF CHANGES IN EQUITY

 


 

Share capital

 

Share premium

Capital redemption reserve

Share option reserve

Retained earnings

Total equity


£

£

£

£

£

£

At 1 January 2013

106,015

862,657

9,845

114,481

245,390

1,338,388

Share options exercised during the year

1,810

199,315

-

-

-

201,125

Share based payment expense

-

-

-

14,681

-

14,681

Profit for the financial year

-

-

-

-

2,443,854

2,443,854

Dividends

-

-

-

-

(1,555,814)

(1,555,814)

At 31 December 2013

107,825

1,061,972

9,845

129,162

1,133,430

2,442,234

Share options exercised during the year

3,375

405,513

-

-

-

408,888

Share based payment expense

-

-

-

7,394

-

7,394

Profit for the financial year

-

-

-

-

2,100,841

2,100,841

Dividends

-

-

-

-

(1,821,964)

(1,821,964)

At 31 December 2014

111,200

1,467,485

9,845

136,556

1,412,307

3,137,393

 

The notes on pages 14 to 29 form part of these financial statements 

 

statement OF cashflows

for the year ended 31 december 2014

 



CONSOLIDATED

COMPANY



Year to

Year to

Year to

Year to



31/12/14

31/12/13

31/12/14

31/12/13


Notes







£

£

£

£

Cash flow from operating activities






Profit before income tax


3,186,277

3,067,905

2,659,026

3,069,173

Depreciation and amortisation

6

87,634

62,204

71,663

46,235

Share based payment expense

6

7,394

14,679

7,394

14,679

Finance costs

5

5,851

10,103

-

34

Impairment charge

13

-

44,450

-

44,450

Loss on disposal of investments

13

-

(1,066)

-

(1,066)



3,287,156

3,198,275

2,738,083

3,173,505







Decrease/(Increase) in trade and other receivables

45,887

1,539,247

(627,943)

155,481

(Decrease) /Increase in trade payables


(3,040,756)

4,040,520

(143,785)

(1,384,162)

Increase in investments in subsidiaries


-

-

(1,201)

(2,039)

(Increase)/Decrease in investments held for trading


(7,869)

(4,996)

-

-

Cash generated from operations


284,418

8,773,046

1,965,154

1,942,785







Interest paid


(5,851)

(10,103)

-

(34)

Income tax (paid)/received


(904,469)

(489,496)

(729,469)

(332,043)

Net cash from operating activities


(625,902)

8,273,447

1,235,685

1,610,708







Cash flows from investing activities






Purchase of property, plant and equipment


(9,078)

(2,419)

(9,078)

(2,419)

Receipt from sale of investment


-

2,671

-

2,671

Purchase of intangible assets


(1,277)

(179,870)

(1,277)

(179,870)



(10,355)

(179,618)

(10,355)

(179,618)

Cash flows from financing activities






Issue of share capital          


408,888

201,126

408,888

201,126

Dividends paid


(1,821,964)

(1,555,814)

(1,821,964)

(1,555,814)

Net cash used in financing activities


(1,413,076)

(1,354,688)

(1,413,076)

(1,354,688)







Net increase/(decrease) in cash & cash equivalents

(2,049,333)

6,739,141

(187,746)

76,402

Cash and cash equivalents at the start of the year

10,345,718

3,606,577

1,350,516

1,274,114

Cash and cash equivalents at the end of the year

8,296,385

10,345,718

1,162,770

1,350,516

Cash and cash equivalents:





Cash at bank and in hand

8,296,385

10,345,718

1,162,770

1,350,516

 

 

 

 

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 available-for-sale financial assets, and financial assets and liabilities 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. These accounting policies comply with applicable IFRS standards and IFRIC interpretations issued and effective at the time of preparing these statements.

 

At the date of authorisation of these financial statements, the following Standards and Interpretations which have not been applied in these financial statements were in issue but not yet effective (and in some cases had not yet been adopted by the EU):

 

IFRS 19 - Amendments: Defined Benefit Plans: Employee Contributions

IFRS 10 and IAS 28 - Amendments: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

IAS 27 - Amendment: Equity Method in Separate Financial Statements

IAS 16 and IAS 41 - Amendments: Agriculture: Bearer Plants

IFRS 14 -  Regulatory Deferral Accounts

IAS 16 and IAS 38 - Amendments: Clarification of Acceptable Methods of Depreciation and Amortisation

IFRS 11 - Amendments: Accounting for Acquisitions of Interests in Joint Operations

IFRS 15 - Revenue from Contracts with Customers

IFRS 9 - Financial Instruments

 

Adoption of these Standards and Interpretations is not expected to have a material impact on the results of the Company or Group.

 

The preparation of financial statements in accordance with IFRS requires the use of certain accounting estimates. It also requires management to exercise judgement in the process of applying the Company'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 financial statements, are disclosed in Note 23.

 

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 4. The financial position of the Group, its cash flows, liquidity position and borrowing facilities are described within these financial statements. In addition, note 28 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 together with long term contracts with all its customers and significant suppliers as well as 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 despite the current uncertain economic outlook.

 

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. Summary of significant accounting policies

 

(a) Revenue

Income is recognised as earned in the following way:

 

Commission - we charge 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. 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. Fees are accrued up to the time 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.

 

(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 2014.

 

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 income statement is presented for Jarvis Securities plc as provided by S408 of the Companies Act 2006. The profit for the year of Jarvis Securities plc, as approved by the board, was £2,100,841 (2013: £2,443,854).

 

(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 three years.

Motor vehicles                                                  -              15% on cost

Office equipment                                           -              20% on cost

Land & Buildings                                              -              Buildings are depreciated at 2% on cost. Land is not depreciated.

 

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) Trade receivables and payables

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 debtors and creditors. The net balance is disclosed where there is a legal right of set off.

 

(j) Operating leases and finance leases

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

The Group classifies its investments in the following categories: investments held to maturity, investments held for trading and available-for-sale investments. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition and re-evaluates this designation at every reporting date.

Investments held to maturity

Investments held to maturity are stated at amortised cost. Held to maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturity that an entity has the positive intention and ability to hold to maturity. Assets in this category are classified as non-current, unless they are due to mature in the 12 months following the balance sheet date.

Investment 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 and are considered to be level one assets in accordance with IFRS 13.

 

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 decline in the fair value below its carrying value 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.

 

(l) Foreign Exchange

The company offers settlement of trades in Sterling, US dollars, Euros, Canadian dollars, Australian dollars, South African rand, Norwegian kroner, Swiss francs, Polish zloty, Swedish kroner, Hong Kong dollars, New Zealand dollars, Japanese yen and Singapore dollars. The company 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 company 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 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.

 

(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 paid to shareholders and final dividends are approved by the company's shareholders.

 

(q) Share based payments

The Group applies the requirements of IFRS 2 Share-based Payment and IFRIC 11.

 

The Group issues equity-settled share-based payments to certain employees and other personnel. Equity-settled share-based payments are measured at fair value (excluding the effect of non-market-based vesting conditions) at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of shares that will eventually vest and adjusted for the effects of non market-based vesting conditions.

 

Fair value is measured by use of a Black-Scholes option pricing model. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.

 

3. Group revenue

The revenue of the group during the year was made 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.


2014


2013


£


£

Gross interest earned from treasury deposits, cash at bank and overdrawn client accounts

3,053,533


3,132,575

Fees, commissions, foreign exchange gains and other revenue

4,260,851


4,024,980


7,314,384


7,157,555

 

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 the Group's sole business activity is the provision of stock broking services and all revenue is derived in the UK, management have not had occasion to define any factors to identify reportable segments.

 

5. Finance costs

2014


2013


£


£

Interest on bank loans, overdrafts and tax

5,851


10,103


5,851


10,103

 

 



 

6. Profit before income tax

2014


2013

Profit before income tax is stated after charging/(crediting):

£


£

Directors' emoluments

562,102


558,515

Depreciation - owned assets

15,797


20,620

Amortisation (included within administrative expenses in the consolidated income statement)

55,865


25,615

Operating lease rentals - hire of machinery

9,052


9,185

Operating lease rentals - land and buildings

63,500


63,500

Impairment of receivable charge

84,555


302,609

Finance costs including bank transaction fees

47,086


71,778

 

Details of Directors' annual remuneration as at 31 December 2014 are set out below:


2014


2013


£


£

Short-term employee benefits

491,500


497,600

Post-employment benefits

56,666


40,299

Share based payment expense

6,193


12,640

Benefits in kind

7,743


7,976


562,102


558,515

Details of the highest paid director are as follows:




Aggregate emoluments

264,894


285,997

Company contributions to personal pension scheme

37,966


23,099

Benefits in kind

6,703


7,395


309,563


316,491







Emoluments & Benefits in kind

Pension


Total

Directors





£

£


£

Andrew J Grant





271,596

37,966


309,562

Nick J Crabb





120,840

10,000


130,840

Jolyon C Head





99,000

8,700


107,700

Graeme McAusland





14,000

-


14,000

TOTAL





505,436

56,666


562,102

 

During the year benefits accrued for three directors (2013: three directors) under a money purchase pension scheme. In addition, Andrew Grant made a gain of £780,690 (2013: £136,837) and Nick Crabb made a gain of £257,517 (2013: nil) from exercising options.

 

Staff Costs

The average number of persons employed by the group, including directors, during the year was as follows:


2014


2013

Management and administration

42


41

The aggregate payroll costs of these persons were as follows:

£


£

Wages, salaries & social security

1,546,545


1,393,425

Pension contributions including salary sacrifice

41,700


38,518

Share based payment expense

7,394


14,679


1,595,639


1,446,622

 

Key personnel

The directors disclosed above are considered to be the key management personnel of the group.

 

 

 

7. Auditors' remuneration




During the year the company obtained the following services from the company's auditors as detailed below:


2014


2013


£


£

Fees payable to the company's auditors for the audit of the company's annual financial statements

 

20,000


 

19,375

Fees payable to the company's auditors and its associates for other services:




The audit of the company's subsidiaries, pursuant to legislation

11,950


11,625

Total audit fees

31,950


31,000

Taxation Compliance

4,050


4,050

Other taxation advisory services not relating to compliance

5,000


5,200


41,000


40,250

 

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


 





8. Income and deferred tax charges - group

2014


2013


£


£

Based on the adjusted results for the year:




UK corporation tax

683,182


714,093

Adjustments in respect of prior years

(34,624)


(3,035)

Total current income tax

648,557


711,058

Deferred income tax:




Origination and reversal of timing differences

3,026


3,193

Adjustment in respect of change in deferred tax rate

(1,045)


(39)

Adjustment in respect of prior years

21,528


4,088

Total deferred tax charge

23,509


7,242

Income tax on profit

672,067


718,300

 

The income tax assessed for the year is greater than the standard rate of corporation tax in the UK (21.5%). The differences are explained below:

 

Profit before income tax

3,186,277


3,067,905

Profit before income tax multiplied by the standard rate of corporation tax in the UK of

21.5% (2013 - 23.25%)

 

685,049


 

713,288

Effects of:




Expenses not deductible for tax purposes

-


33

Adjustments to tax charge in respect of previous years

(13,096)


1,052

IFRS 2 (share option) expense

1,590


3,413

Ineligible depreciation

419


453

Adjustment in respect of change in deferred tax rate

(1,045)


(39)

Other

(850)


100

Current income tax charge for the year

672,067


718,300

 

Movement in (assets) / provision - group and company:




Provision at start of year

410


(6,832)

Deferred income tax charged in the income statement for the year

1,981


3,154

Adjustment in respect of prior periods

21,528


4,088

(Asset) / Provision at end of year

23,919


410

(Asset) / Provision for deferred income tax:




Accelerated capital allowances

23,919


410


23,919


410

 

 

8. Income and deferred tax charges - group (continued)

 

The gross movements in the deferred tax account for the company and group are as follows:



Tangible Assets

Provision at start of year



410

Income statement charge



23,509

(Asset) / Provision at end of year



23,919

 

 

9. Earnings per share



2014


2013

 





£


£

 

Earnings:

Earnings for the purposes of basic and diluted earnings per share





 

(profit for the period attributable to the equity holders of the parent)


2,514,210


2,349,605

 

 

Number of shares:





Weighted average number of ordinary shares for the purposes of basic earnings per share

11,031,288


10,718,466

 






Effect of dilutive potential ordinary shares:





Share option scheme

55,474


255,299

 


11,086,762


10,973,765

 

 

No treasury shares were held during the period. Options exercised or those lapsed as relating to former employees have been deducted for the purpose of calculating the diluted weighted average number of shares in issue for the period.

 

 

10. Property, plant & equipment - group & company

 

 

 

 

Freehold Land & Property

 

 

Leasehold

Improvements

 

 

Office

Equipment


 

 

Total

 

Cost:




£

£

£


£

At 1 January 2013




222,450

288,342

242,351


753,143

Additions




-

1,191

1,228


2,419

Disposals




-

(288,342)

-


(288,342)

At 31 December 2013




222,450

1,191

243,579


467,220

Additions




-

2,823

6,255


9,078

Disposals




-

-

-


-

At 31 December 2014




222,450

4,014

249,834


476,298

Depreciation:









At 1 January 2013




1,462

288,342

195,071


484,875

Charge for the year




1,949

397

18,274


20,620

On Disposal




-

(288,342)

-


(288,342)

At 31 December 2013




3,411

397

213,345


217,153

Charge for the year




1,949

556

13,292


15,797

On Disposal




-

-

-


-

At 31 December 2014




5,360

953

226,637


232,950

Net Book Value:









At 31 December 2014




217,090

3,061

23,197


243,348










At 31 December 2013




219,039

794

30,234


250,067

 

 

 

11. Intangible assets & goodwill - group & company

Goodwill


Intangible assets

 




Customer

Relationships

Databases

 

Software

Development

Website


Total

 



£


£

£

£

£


£

Cost:










At 1 January 2013


342,872


177,981

25,000

36,815

103,519


343,315

Additions


-


-

-

179,870

-


179,870

At 31 December 2013


342,872


177,981

25,000

216,685

103,519


523,185

Additions


-


-

-

1,276

-


1,276

At 31 December 2014


342,872


177,981

25,000

217,961

103,519


524,461

Amortisation:










At 1 January 2013


-


65,436

9,719

33,815

103,290


212,260

Charge for the year


-


18,290

1,000

6,096

229


25,615

At 31 December 2013


-


83,726

10,719

39,911

103,519


237,875

Charge for the year


-


18,290

1,000

36,574



55,864

At 31 December 2014


-


102,016

11,719

76,485

103,519


293,739

Net Book Value:










At 31 December 2014


342,872


75,965

13,281

141,476

-


230,722











At 31 December 2013


342,872


94,255

14,281

176,774

-


285,310

 

The addition to software development is capital expenditure on switching and upgrading our core IT system.

 

In reviewing the value of goodwill for impairment, the directors have assumed an attrition rate of 7.0% based upon the actual rate for the previous period and a discount rate of 4.0%. The discounted cashflow is calculated over a period of 5 years. For impairment to the goodwill value to occur, the attrition rate would need to exceed 14.0% or the discount rate would need to exceed 8.4%.

 

 

12. Investments held to maturity

Group


Company


2014


2013


2014


2013

Unlisted Investments:

£


£


£


£

Cost:








At 1 January

300,067


300,067


-


-

As at 31 December

300,067


300,067


-


-

Amortisation:








At 1 January

37,119


21,151


-


-

Charge for the year

15,969


15,968


-


-

As at 31 December

53,088


37,119


-


-

Net Book Value:








At 1 January

262,948


278,916


-


-

At 31 December

246,979


262,948


-


-


The investment held to maturity is an 8% coupon UK Government Gilt maturing in 2015.

 

 

13. Available-for-sale investments

Group


Company


2014


2013


2014


2013

Listed Investments:

£


£


£


£

Cost:








At 1 January

-


1,605


-


1,605

Disposals

-


(1,605)


-


(1,605)

As at 31 December

-


-


-


-

 

No listed investments were held as available for sale at 31 December 2014.


Group


Company


2014


2013


2014


2013

Unlisted Investments:

£


£


£


£

Cost:








At 1 January

-


44,450


-


44,450

Disposals

-


(44,450)


-


(44,450)

As at 31 December

-


-


-


-

 

No unlisted investments were held as available for sale at 31 December 2014.





14. Investments in subsidiaries



Company






2014


2013

Unlisted Investments:





£


£

Cost:








At 1 January





283,038


280,999

Capital contributions re share option costs





1,201


2,039

As at 31 December





284,239


283,038

 


Shareholding

Holding

Business

 

Jarvis Investment Management Limited

100%

25,000,000

1p Ordinary shares

Financial administration

 

Dudley Road Nominees Limited*

100%

2

£1 Ordinary shares

Dormant nominee company

 

JIM Nominees Limited*

100%

1

£1 Ordinary shares

Dormant nominee company

 

Galleon Nominees Limited*

100%

2

£1 Ordinary shares

Dormant nominee company

 






 

All subsidiaries are located in the United Kingdom.                 

* indirectly held





 

15. Trade and other receivables

Group


Company





Amounts falling due within one year:

2014


2013


2014


2013


£


£


£


£









Trade receivables

335,898


187,998


7,026


12,480

Settlement receivables

1,414,929


1,716,487


-


-

Amounts owed by group undertakings

-


-


518,918


-

Other receivables

219,001


50,276


215,875


15,875

Other taxes and social security

-


-


-


5,147

Prepayments and accrued income

704,206


765,161


432,055


512,430


2,674,034


2,719,922


1,173,874


545,932

 

An analysis of trade and settlement receivables past due is given in note 23. There are no amounts past due included within other receivables or prepayments and accrued income.

 

16. Investments held for trading

Group


Company


2014


2013


2014


2013

Listed Investments:

£


£


£


£

Valuation:








At 1 January

5,757


761


-


-

Additions

2,650,116


961,334


-


-

Disposals

(2,642,247)


(956,338)


-


-

As at 31 December

13,626


5,757


-


-

 

 

Listed investments held for trading are stated at their market value at 31 December 2014 and are considered to be level one assets

In accordance with IFRS 13.

 

17. Cash and cash equivalents

Group

 


Company


2014


2013


2014


2013


£


£


£


£

Balance at bank and in hand - group/company

3,255,338


2,645,023


1,162,770


1,350,516

Cash held for settlement of market transactions

5,041,047


7,700,695


-


-


8,296,385


10,345,718


1,162,770


1,350,516

 

 

18. Share capital

2014


2013

Authorised:

16,000,000 Ordinary shares of 1p each

160,000 

160,000


160,000

160,000






2014


2013


£


£

At 1 January 2014

107,825


106,015

Allotted, issued and fully paid during the year

3,375


1,810

Allotted, issued and fully paid:




11,120,000 (2013: 10,782,500) Ordinary shares of 1p each

111,200


107,825

 

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

 

The Company has a share option scheme for certain employees of the Group. The vesting period is five years. If the options remain unexercised after a period of ten years from the date of grant the options expire. Options are forfeited if the option holder leaves the Group before the options are vested and exercised.

 

Details of the share options outstanding during the year are as follows:

 


2014


2013


Number of share options


Weighted average exercise price


Number of share options


Weighted average exercise price




Pence




Pence









Outstanding at the beginning of the year

447,500


134.39


628,500


125.46

Exercised during the year

(337,500)


121.15


(181,000)


111.12

Outstanding at year end

110,000


175.00


447,500


134.39

Exercisable at year end

110,000


175.00


447,500


134.39

 

 

 

 

A detailed breakdown of the exercise prices for options outstanding as at 31 December 2014 is shown in the table below:

 


2014


2013

Exercise Price (pence)

Number outstanding at year end


Exercise dates


Number outstanding at year end


Exercise dates









82.50 (granted 23 Dec 2004)

-


23 Dec 2009 to 23rd Dec 2014


223,500


23 Dec 2009 to 23rd Dec 2014

175.00 (granted 18 May 2007)

110,000


17 May 2013 to 17 May 2017


124,000


17 May 2013 to 17 May 2017

200.00 (granted 12 May 2009)

-


12 May 2014 to 12 May 2019


100,000


12 May 2014 to 12 May 2019

 

The total number of options unexercised and in issue at the year end is 110,000. Options were exercised throughout the year and the weighted average share price for the year was 480p (2013: 313p).

 

The following options are held by a director:






at 175p

A J Grant





76,500







 

 

19. Trade and other payables

Group


Company





Amounts falling due within one year:

2014


2013


2014


2013


£


£


£


£









Trade payables

63,135


112,988


-


4,539

Settlement payables

6,557,470


9,467,755


-


-

Amount owed to group undertaking

-


-


-


140,173

Other taxes and social security

100,428


63,944


1,801


-

Other payables

182,579


215,850


1,750


3,474

Accruals

151,499


235,328


28,149


27,300

Trade and other payables

7,055,111


10,095,865


31,700


175,486

Income tax

278,308


534,219


244,813


439,605

Deferred tax

23,919


410


23,919


410

Total liabilities

7,357,338


10,630,494


300,432


615,501

 

Settlement payables will be settled on their contracted date, which has a maximum allowed time of 20 days from when the trade date. 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.

 

20. Dividends

2014


2013


£


£

Interim dividends paid on Ordinary 1p shares

1,821,964


1,555,814

Dividend per Ordinary 1p share

16.5p


14.5p

 

21. Operating lease commitments - group

At 31 December 2014 the group was committed to making the following payments in respect of operating leases which expire:

 


Equipment


Land & buildings


2014


2013


2014


2013


£


£


£


£

Not later than one year:

9,052


9,052


63,500


63,500

Later than one year and not later than five years:

31,683


36,209


111,125


174,625

Later than five years:

-


4,526


-


-

 

Equipment leases relate to the use of postage processing and franking machines.

 

Operating lease commitments - company

At 31 December 2014 the company was committed to making the following payments in respect of operating leases which expire:

 




Land & buildings






2014


2013






£


£

Not later than one year:





63,500


63,500

Later than one year and not later than five years:





111,125


174,625

 

 

The company has a lease with Sion Holdings 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 £63,500, being the market rate on an arm's length basis, and expires on 26 September 2017.

 

22. 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 loans and receivables, Investments held for trading are categorised as available-for-sale financial assets and trade and other payables are classified as financial liabilities. 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 17. 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 and gilts. 

 

23. 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, bad debts and the expense of employee options.

 

As of 31 December 2014, trade receivables of £251,113 (2013: £269,587) were past due and were impaired and partially provided for. The amount of the provision was £145,483 as at 31 December 2014 (2013: £212,376). 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.

 

 

Group


Company

Provision of impairment of receivables:

2014


2013


2014


2013


£


£


£


£









At 1 January

212,376


86,352


-


-

Charge / (credit) for the year

84,555


302,609


-


-

Uncollectable amounts written off

(151,448)


(176,585)


-


-

At 31 December

145,483


212,376


-


-

 

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 11.

 

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.

 

Employee options are expensed equally in each year from issue to the date of first exercise. The total cost is calculated on issue based on the Black Scholes method with a volatility rate of 30% and a risk free interest rate of 3.75%. It is assumed that all current employees with options will still qualify for the options at the exercise date. If this did not occur profitability would be increased. Applying the Black Scholes method, the effect of a 1% reduction in the assumed risk free rate is a reduction of £4,169 (2013: £15,721) in the value of the options outstanding at 31 December 2014.

 

24. Immediate and ultimate parent undertaking

The company's immediate parent undertaking is Sion Securities Limited, a company registered in England and Wales. The company's ultimate parent company is Tudor House Securities LLP, a limited liability partnership registered in England and Wales. The largest set of accounts that Jarvis Securities plc is consolidated into is that of Tudor House Securities LLP. Tudor House Securities LLP is controlled by Mr A J Grant by virtue of his controlling interest. Consolidated financial statements will be available from Tudor House Securities LLP at its registered office address of 78 Mount Ephraim, Tunbridge Wells, Kent, TN4 8BS.

 

25. 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 has an annual rental of £63,500, being the market rate on an arm's length basis, and expires on 26 September 2017.

 

Jarvis Securities plc paid no performance related management charge to Jarvis Investment Management Limited during the year (2013: £100,000). Jarvis Investment Management Limited owed Jarvis Securities plc £518,918 (2013: Jarvis Securities plc owed Jarvis Investment Management Limited £140,173) at year end.

 

As at 31 December 2014 there were no intercompany balances between Sion Securities, the company's immediate and ultimate parent undertaking (2013: £3,285,014 deposited with Jarvis Investment Management Limited). Sion Holdings Limited, a company controlled by A J Grant by virtue of his majority shareholding, had no (2013: £189,334) cash deposited with Jarvis Investment Management Limited at 31 December 2014.

 

26. Capital commitments

As of 31 December 2014 the company had no capital commitments (2013: nil).

 

27. Fair value estimation

The fair value of financial instruments traded in active markets (such as trading and available for sale securities) 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.

 

28. 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.

 

 


 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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