Final Results

RNS Number : 7942S

Jarvis Securities plc

14 March 2019

 

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.

14 March 2019

                                                                                                       Jarvis Securities plc

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

RESULTS FOR THE YEAR ENDED 31 DECEMBER 2018

HIGHTLIGHTS

·      2% decrease in profit before tax

·      7% increase in year on year interest income

·      4% growth in dividend per share

·      2% decrease in EPS

CHAIRMAN'S STATEMENT

·      2% decrease in profit before tax

·      7% increase in year on year interest income

·      4% growth in dividend per share

·      2% decrease in EPS

I am delighted with these results despite the small drop in the profit before tax. Revenues have increased through restructuring our commercial fee tariffs and providing additional revenue generating services to our commercial clients.  The anticipated cost increases brought about by MIFID II have been offset by the higher revenue and last year's record profitability has been almost equalled in a market that over the course of the year was comparatively more difficult.

The tougher conditions experienced in the final quarter of the year remain at the time of writing, fuelled by economic uncertainty and low investor confidence. I do not anticipate this continuing in the longer term as clarity over Brexit arrangements will soon be forthcoming, at which point I expect client trading volumes to return to previous higher levels. As a UK centric business, we remain largely unaffected by the other ramifications of Brexit.

I am optimistic about the coming year. 2019 will benefit from a full year of the additional services and fee tariffs that were introduced in June 2018. The second half of 2018 substantially outperformed the first six months and we would have had another record year had these been in place for the full 12 months. There are no significant cost increases anticipated, but most importantly there are no further major pieces of regulation to adopt. This will leave management and staff to focus on developing and growing the business.

We continue to receive enquiries from potential commercial clients attracted by our competitively priced service. Our retail client numbers are also increasing, which in turn improve both the balance of cash under administration and interest income earned.  

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

The Company will today dispatch to shareholders its Annual Report and Accounts for the year ended 31 December 2018, together with a notice convening the Annual General Meeting ("AGM"), to be held at the Company's offices on Thursday 25^th 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.

Andrew Grant

Chairman

Enquiries:

Jarvis Securities plc Tel: [phone]

Andrew Grant

Jolyon Head

WH Ireland Limited 0113 3946619

Katy Mitchell

Chris Savidge

Consolidated income statement for the year ended 31 december 2018

				Year to	Year to
				31/12/18	31/12/17
	Notes
				£	£
Continuing operations:
Revenue	3			10,050,567	9,423,436
Administrative expenses				(5,736,062)	(5,002,938)
Profit before income tax	5			4,314,505	4,420,498
Income tax charge	7			(832,546)	(867,168)
Profit for the period				3,481,959	3,553,330
Attributable to equity holders of the parent				3,481,959	3,553,330
Earnings per share	8			P	P
Basic and diluted				31.79	32.40

Consolidated statement of comprehensive income for the year

	Notes			Year to	Year to
				31/12/18	31/12/17
				£	£
Profit for the period				3,481,959	3,553,330
Total comprehensive income for the period				3,481,959	3,553,330
Attributable to equity holders of the parent				3,481,959	3,553,330

Consolidated STATEMENT OF FINANCIAL POSITION at 31 december 2018

				31/12/18	31/12/17
	Notes
				£	£
Assets
Non-current assets
Property, plant and equipment	9			218,457	219,940
Intangible assets	10			93,463	149,662
Goodwill	10			342,872	342,872
				654,792	712,474
Current assets
Trade and other receivables	12			5,285,001	2,947,626
Investments held for trading	13			1,956	13,546
Cash and cash equivalents	14			4,655,473	13,175,503
				9,942,430	16,136,675
Total assets				10,597,222	16,849,149
Equity and liabilities
Capital and reserves
Share capital	15			111,828	111,828
Share premium				1,576,669	1,576,669
Merger reserve				9,900	9,900
Capital redemption reserve				9,845	9,845
Retained earnings Own shares held in treasury	15			5,523,363 (859,587)	4,723,986 (859,587)
Total equity attributable to the equity holders of the parent				6,372,018	5,572,641
Current liabilities
Trade and other payables	16			3,739,910	10,658,206
Deferred tax	16			37,451	32,929
Income tax	16			447,843	585,373
Total current liabilities	16			4,225,204	11,276,508
Total equity and liabilities				10,597,222	16,849,149

Company No.: 5107012

CoMPANY STATEMENT OF FINANCIAL POSITION at 31 december 2018

				31/12/18	31/12/17
	Notes
				£	£
Assets
Non-current assets
Property, plant and equipment	9			218,457	219,940
Intangible assets	10			93,463	149,662
Goodwill	10			342,872	342,872
Investment in subsidiaries	11			284,239	284,239
				939,031	996,713
Current assets
Trade and other receivables	12			721,480	70,481
Cash and cash equivalents	14			2,588,487	3,503,452
				3,309,967	3,573,933
Total assets				4,248,998	4,570,646
Equity and liabilities
Capital and reserves
Share capital	15			111,828	111,828
Share premium				1,576,669	1,576,669
Capital redemption reserve				9,845	9,845
Retained earnings Own shares held in treasury	15			2,314,978 (859,587)	2,116,007 (859,587)
Total equity attributable to the equity holders				3,153,733	2,954,762
Current liabilities
Trade and other payables	16			700,086	1,139,278
Deferred tax	16			37,451	32,929
Income tax	16			357,728	443,677
Total current liabilities	16			1,095,265	1,615,884
Total equity and liabilities				4,248,998	4,570,646

The parent company's profit for the financial year was £3,583,323 (2017: £3,438,880).

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

							Own
				Capital	Share		shares held
	Share	Share	Merger	redemption	option	Retained	in	Total
	capital	premium	reserve	reserve	reserve	earnings	Treasury	equity
	£	£	£	£	£	£	£	£
At 1 January 2017	111,518	1,522,729	9,900	9,845	136,556	3,610,339	(616,943)	4,783,944
Share options exercised during the year	310	53,940	-	-	-	-	-	54,250
Profit for the financial year	-	-	-	-	-	3,553,330	-	3,553,330
Dividends Purchase of own shares held in treasury Transfer to retained earnings	- - -	- - -	- - -	- - -	- - (136,556)	(2,576,239) - 136,556	- (242,644) -	(2,576,239) (242,644) -
At 31 December 2017	111,828	1,576,669	9,900	9,845	-	4,723,986	(859,587)	5,572,641
Profit for the financial year	-	-	-	-	-	3,481,959	-	3,481,959
Dividends	-	-	-	-	-	(2,682,582)	-	(2,682,582)
At 31 December 2018	111,828	1,576,669	9,900	9,845	-	5,523,363	(859,587)	6,372,018

COMPANY STATEMENT OF CHANGES IN EQUITY

			Capital	Share		Own shares
	Share	Share	redemption	option	Retained	held in	Total
	capital	premium	reserve	reserve	earnings	treasury	equity
	£	£	£	£	£	£	£
At 1 January 2017	111,518	1,522,729	9,845	136,556	1,795,050	(616,943)	2,958,755
Share options exercised during the year	310	53,940	-	-	-	-	54,250
Profit for the financial year	-	-	-	-	2,760,640	-	2,760,640
Dividends Purchase of own shares held in treasury Transfer to retained earnings	- - -	- - -	- - -	- - (136,556)	(2,576,239) - 136,556	- (242,644) -	(2,576,239) (242,644) -
At 31 December 2017	111,828	1,576,669	9,845	-	2,116,007	(859,587)	2,954,762
Profit for the financial year	-	-	-	-	2,881,553	-	2,881,553
Dividends	-	-	-	-	(2,682,582)		(2,682,582)
At 31 December 2018	111,828	1,576,669	9,845	-	2,314,978	(859,587)	3,153,733

The notes on pages 17 to 30 form part of these financial statements 

statement OF cashflows

for the year ended 31 december 2018

		CONSOLIDATED		COMPANY
		Year to	Year to	Year to	Year to
		31/12/18	31/12/17	31/12/18	31/12/17
	Notes
		£	£	£	£
Cash flow from operating activities
Profit before income tax		4,314,505	4,420,498	3,583,323	3,438,880
Depreciation and amortisation	5	110,035	90,714	110,035	90,714
		4,424,540	4,511,212	3,693,358	3,529,594
(Increase) /Decrease in trade and other receivables		(1,482,190)	3,390,264	(650,999)	729,036
(Decrease) /Increase in trade payables		(7,773,484)	3,676,029	(439,192)	955,402
Cash generated from operations		(4,831,134)	11,577,505	2,603,167	5,214,032
Income tax (paid)/received		(965,552)	(660,510)	(783,198)	(583,786)
Net cash from operating activities		(5,796,686)	10,916,995	1,819,969	4,630,246
Cash flows from investing activities
Purchase of property, plant and equipment		(6,099)	(549)	(6,099)	(549)
Purchase of investments held for trading Proceeds from sale of investments held for trading Purchase of intangible assets		(661,352) 672,942 (46,253)	(1,644,356) 1,632,522 (67,598)	- - (46,253)	- - (67,598)
		(40,762)	(79,981)	(52,352)	(68,147)
Cash flows from financing activities
Issue of share capital		-	54,250	-	24,250
Repurchase of ordinary share capital Sale of treasury shares Dividends paid		- - (2,682,582)	(242,644) - (2,576,239)	- - (2,682,582)	(242,644) - (2,576,239)
Net cash used in financing activities		(2,682,582)	(2,764,633)	(2,682,582)	(2,794,633)
Net (decrease)/ increase in cash & cash equivalents		(8,520,030)	8,072,381	(914,965)	1,797,466
Cash and cash equivalents at the start of the year		13,175,503	5,103,122	3,503,452	1,705,986
Cash and cash equivalents at the end of the year		4,655,473	13,175,503	2,588,487	3,503,452
Cash and cash equivalents:
Balance at bank and in hand		5,866,848	5,218,686	2,588,487	3,503,452
Cash held for settlement of market transactions		(1,211,375)	7,956,817	-	-
		4,655,473	13,175,503	2,588,487	3,503,452

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

A number of new standards and amendments to standards and interpretations have been issued but are no yet effective and in some cases have not yet been adopted by the EU.

IFRS 16 is effective for periods commencing on or after 1 January 2019. The standard was endorsed by the European Union during 2017 and is available for early adoption. The directors have decided not to adopt this standard early.

The directors assessed the most likely transitional approach the group will apply is the modified retrospective approach.

The directors have assessed the application of IFRS 16, and note that once effective it will have a material impact on the results of the group. Application of this standard will result in changes in presentation of information within the group's financial statements due to the capitalisation of the group's operating leases noted in note 18.

In addition to the above impacts, recognition of lease assets will increase the group's regulatory capital requirement.

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 3. The financial position of the group, its cash flows, liquidity position and borrowing facilities are described within these financial statements. In addition, note 25 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 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) IFRS 15 'Revenue from Contracts with Customers'

IFRS 15 requires that the recognition of revenue is linked to the fulfilment of identified performance obligations that are enshrined in the customer contract. The standard replaces existing revenue recognition guidance, in particular under IAS 18.

The directors have assessed the group will apply the cumulative effect method upon transition to IFRS 15, with the effect of applying the standard recognised at the date of adoption, with no restatement of the comparative period.

The directors have assessed the impact of IFRS 15 on the financial statements and they consider there to be no material impact.

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 2018.

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.

(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.

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 reporting segment is an organisational unit for which information is reported to key management personnel for the purpose of performance assessment and future resource allocation. 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.

(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 receivables and payables. The net balance is disclosed where there is a legal right of set off.

(j) Operating 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.

(k) Investments

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.

The fair value of quoted investments is based on current bid prices. The group assesses at each balance sheet date whether there is objective evidence that an investment is impaired.

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 various currencies, predominately Sterling, US dollars and Euros. 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 minimal 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.

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.

The share option reserve represents the accumulated share option charge. The balance in the reserve has been transferred to retained earnings as all remaining options have been exercised during the prior year.

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.

(r) FRS 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 new method will use historic customer data, alongside future economic conditions to calculate expected loss on receivables

The group has taken advantage of the exemption from restating comparative information for prior periods with respect to classification and measurement (including impairment) requirements.

The directors have assessed the impact of IFRS 9 on the financial statements and they consider there to be no material impact.

Financial Assets	Original classification under IAS 39	Original carrying amount under IAS 39 £'000	New classification under IFRS 9	New carrying amount under IFRS 9 £'000
Investments held for trading	Available for sale	1,956	Fair value through profit or loss	1,956
Cash and cash equivalents	Loans and receivables	4,655,473	Amortised cost	4,655,473
Other financial assets	Loans and receivables	5,010,417	Amortised cost	5,010,417
Total financial assets		9,667,846		9,667,846

The basis of classification for financial liabilities under IFRS 9 remains unchanged from under IAS 39. The two categories are amortised cost or fair value through profit or loss (either designated as such or held for trading).

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.

	2018		2017
	£		£
Gross interest earned from treasury deposits, cash at bank and overdrawn client accounts	4,081,633		3,808,064
Commissions Fees	3,754,725 2,214,209		4,141,315 1,474,057
	10,050,567		9,423,436

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	2018		2017
Profit before income tax is stated after charging/(crediting):	£		£
Directors' emoluments	675,453		621,648
Depreciation - owned assets	7,581		10,229
Amortisation (included within administrative expenses in the consolidated income statement)	102,452		80,485
Operating lease rentals - hire of machinery	8,842		8,842
Operating lease rentals - land and buildings	87,500		70,850
Impairment of receivable charge	36,452		72,604
Bank transaction fees	58,798		70,071

  Details of directors' annual remuneration as at 31 December 2018 are set out below:

						2018		2017
						£		£
Short-term employee benefits						554,896		544,853
Post-employment benefits						110,502		67,463
Benefits in kind						10,055		9,332
						675,453		621,648
Details of the highest paid director are as follows:
Aggregate emoluments						346,027		330,943
Company contributions to personal pension scheme						-		2,167
Benefits in kind						9,123		8,396
						355,150		341,506
					Emoluments & Benefits in kind	Pension		Total
Directors					£	£		£
Andrew J Grant					355,150	-		355,150
Nick J Crabb					100,001	51,995		151,996
Jolyon C Head					84,800	58,507		143,307
Graeme McAusland					25,000	-		25,000
TOTAL					564,951	110,502		675,453
During the year benefits accrued for two directors (2017: three directors) under a money purchase pension scheme. Staff Costs
The average number of persons employed by the group, including directors, during the year was as follows:
						2018		2017
Management and administration						57		50
The aggregate payroll costs of these persons were as follows:						£		£
Wages, salaries & social security						2,250,433		1,983,639
Pension contributions including salary sacrifice						129,217		82,818
						2,379,650		2,066,457

  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 £71,942 (2017: 70,541).

6. Auditors' remuneration
During the year the company obtained the following services from the company's auditors as detailed below:
	2018		2017
	£		£
Fees payable to the company's auditors for the audit of the company's annual financial statements	23,700		23,000
Fees payable to the company's auditors and its associates for other services:
The audit of the company's subsidiaries, pursuant to legislation	8,500		8,500
Total audit fees	32,200		31,500
Taxation Compliance	4,650		4,500
Other taxation advisory services not relating to compliance	-		5,220
	36,850		41,220

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

7. Income and deferred tax charges - group 2018 2017 £ £ Based on the adjusted results for the year: UK corporation tax 834,781 845,095 Adjustments in respect of prior years (6,758) (4,544) Total current income tax 828,023 840,551 Deferred income tax: Origination and reversal of timing differences 7,213 6,561 Adjustment in respect of prior years (2,690) 20,056 Total deferred tax charge 4,523 26,617 832,546 867,168 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	4,314,505		4,420,498
Profit before income tax multiplied by the standard rate of corporation tax in the UK of 19% (2017 - 19.25%)	819,756		850,794
Effects of:
Expenses not deductible for tax purposes Redress Income not taxable	- (1,186)		572 -
Adjustments to tax charge in respect of previous years	(9,449)		15,512
Ineligible depreciation Adjust deferred tax rate to average rate of 19% Deferred tax timing differences Marginal relief	370 - 23,446 (392)		375 (85) - -
Current income tax charge for the years	832,545		867,168

Movement in (assets) / provision - group and company:
Provision at start of year	32,929		6,312
Deferred income tax charged in the year	4,522		26,617
Provision at end of year	37,451		32,929
			Tangible Assets
Deferred tax liability brought forward			32,929
Current year Prior year			7,213 (2,691)
Liability at end of year			37,451

8. Earnings per share				2018		2017
				£		£
Earnings: Earnings for the purposes of basic and diluted earnings per share
(profit for the period attributable to the equity holders of the parent)				3,481,959		3,553,330
Number of shares:
Weighted average number of ordinary shares for the purposes of basic earnings per share				10,951,450		10,966,610
				10,951,450		10,966,610

Shares held in treasury are deducted for the purpose of calculating earnings per share.

9. Property, plant & equipment - group & company				Leasehold & Property	Leasehold Improvements	Office Equipment		Total
Cost:				£	£	£		£
At 1 January 2017				222,450	4,014	258,068		484,532
Additions				-	-	549		549
Disposals				-	-	-		-
At 31 December 2017				222,450	4,014	258,617		485,081
Additions				-	-	6,099		6,099
Disposals				-	-	-		-
At 31 December 2018				222,450	4,014	264,716		491,180
Depreciation:
At 1 January 2017				9,258	2,304	243,350		254,912
Charge for the year				1,949	357	7,923		10,229
On Disposal				-	-	-		-
At 31 December 2017				11,207	2,661	251,273		265,141
Charge for the year				1,949	1,353	4,280		7,582
On Disposal				-	-	-		-
At 31 December 2018				13,156	4,014	255,553		272,723
Net Book Value:
At 31 December 2018				209,294	-	9,163		218,457
At 31 December 2017				211,243	1,353	7,344		219,940

The net book value of non-depreciable land is £125,000 (2017: £125,000).

10. Intangible assets & goodwill - group & company				Intangible assets
		Goodwill		Customer Relationships	Databases	Software Development	Website		Total
		£		£	£	£	£		£
Cost:
At 1 January 2017		342,872		177,981	25,000	217,961	156,262		577,204
Additions		-		-	-	-	67,598		67,598
At 31 December 2017		342,872		177,981	25,000	217,961	223,860		644,802
Additions		-		-	-	8,400	37,853		46,253
At 31 December 2018		342,872		177,981	25,000	226,361	261,713		691,055
Amortisation:
At 1 January 2017		-		138,598	13,719	149,634	112,704		414,655
Charge for the year		-		18,292	1,000	36,574	24,619		80,485
At 31 December 2017		-		156,890	14,719	186,208	137,323		495,140
Charge for the year		-		18,291	1,000	32,921	50,240		102,452
At 31 December 2018		-		175,181	15,719	219,129	187,563		597,592
Net Book Value:
At 31 December 2018		342,872		2,800	9,281	7,232	74,150		93,463
At 31 December 2017		342,872		21,091	10,281	31,753	86,537		149,662

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
					2018		2017
Unlisted Investments:					£		£
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	£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 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:	2018		2017		2018		2017
	£		£		£		£
Trade receivables	597,528		521,794		44,673		5,559
Settlement receivables	3,743,719		2,083,049		-		-
Other receivables	669,170		61,035		669,170		61,035
Prepayments and accrued income Other taxes and social security	274,584 -		281,748 -		879 6,758		3,372 515
	5,285,001		2,947,626		721,480		70,481

An analysis of trade and settlement receivables past due is given in note 25. There are no amounts past due included within other receivables or prepayments and accrued income.

13. Investments held for trading			Group						Company
			2018			2017			2018			2017
Listed Investments:			£			£			£			£
Valuation:
At 1 January			13,546			1,712			-			-
Additions			661,352			1,644,356			-			-
Disposals			(672,942)			(1,632,522)			-			-
As at 31 December			1,956			13,546			-			-
	Listed investments held for trading are stated at their market value at 31 December 2018 and are considered to be level one assets in accordance with IFRS 13. The directors consider the fair value movement on the investments held for trading are immaterial and as such have not been presented separately in the above movement analysis and the statement of cash flows.
		14. Cash and cash equivalents		Group						Company
				2018			2017			2018			2017
				£			£			£			£
		Balance at bank and in hand - group/company		5,866,848			5,218,686			2,588,487			3,503,452
		Cash held for settlement of market transactions		(1,211,375)			7,956,817			-			-
				4,655,473			13,175,503			2,588,487			3,503,452

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 £915,921 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.

15. Share capital	2018		2017
Authorised: 16,000,000 Ordinary shares of 1p each	160,000  160,000		160,000  160,000
	2018		2017
	£		£
At 1 January 2018	111,828		111,518
Allotted, issued and fully paid during the year	-		310
Allotted, issued and fully paid:
11,182,750 (2017: 11,182,750) Ordinary shares of 1p each	111,828		111,828

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

The company had a share option scheme for certain employees of the group. All options were exercised on 2017.

There were no shares purchased to be held in treasury during the period. As at the period end 231,300 shares are held in treasury.

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

											2017
											Number of share options					Weighted average exercise price
																Pence
	Outstanding at the beginning of the prior year										31,000					175.00
	Exercised during the prior year										(31,000)					175.00
	Outstanding at prior year end										-					175.00
	Exercisable at prior year end										-					175.00
16. Trade and other payables			Group							Company
Amounts falling due within one year:			2018			2017				2018					2017
			£			£				£					£
Trade payables			184,155			198,049				1,264					11,368
Settlement payables			2,426,874			9,954,871				-					-
Amount owed to group undertaking			-			-				668,822					1,100,410
Other taxes and social security			155,004			52,117				-					-
Other payables			615,668			85,193				-					-
Accruals			358,209			367,976				30,000					27,500
Trade and other payables			3,739,910			10,658,206				700,086					1,139,278
Income tax			447,843			585,373				357,728					443,677
Deferred tax			37,451			32,929				37,451					32,929
Total liabilities			4,225,204			11,276,508				1,095,265					1,615,884

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

17. Dividends	2018		2017
	£		£
Interim dividends paid on Ordinary 1p shares	2,682,582		2,576,239
Dividend per Ordinary 1p share	24.5p		23.5p

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

18. Operating lease commitments - group

At 31 December 2018 the group was committed to making the following payments in respect of operating leases which expire:

	Equipment				Land & buildings
	2018		2017		2018		2017
	£		£		£		£
Not later than one year:	8,641		8,641		87,500		87,500
Later than one year and not later than five years: After more than five years:	33,844 -		34,564 7,921		350,000 328,125		350,000 415,625

The equipment lease is for the use of postage processing and franking machines.

Operating lease commitments - company

At 31 December 2018 the company was committed to making the following payments in respect of operating leases which expire:

					Land & buildings
					2018		2017
					£		£
Not later than one year:					87,500		87,500
Later than one year and not later than five years: After more than five years:					350,000 328,125		350,000 415,625

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 £87,500, being the market rate on an arm's length basis, and expires on 26 September 2027.

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.

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

The company's immediate and ultimate parent undertaking is Sion Securities Limited, a company registered in England and Wales. Sion Securities Limited is controlled by Mr A J Grant by virtue of his controlling interest.

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 £87,500, 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 £7,000 (2017: £7,000) for rental of a disaster recovery site.

Jarvis Securities plc owed Jarvis Investment Management Limited £668,822 (2017: £1,098,660) 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 2018, these same related parties had cash balances of £288,458 (2017: £1,332,833) and interest was earned during the year amounting to £2,063 (2017: £8,395).  In addition to cash balances other equity assets of £36,381,672 (2017: £40,589,819) were held by JIM Nominees Ltd as custodian.

During the year Jarvis Securities Plc charged £3,671,242 (2017: £3,564,550) to Jarvis Investment Management Limited for use of intellectual properties.

23. Capital commitments

As of 31 December 2018, the company had no capital commitments (2017: 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 near 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 2018, trade receivables of £131,923 (2017: £115,184) were past due and were impaired and partially provided for. The amount of the provision was £105,470 as at 31 December 2018 (2017: £84,995). 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 receivables:	2018		2017		2018		2017
	£		£		£		£
At 1 January	84,995		299,711		-		-
Charge / (credit) for the year	36,452		72,604		-		-
Uncollectable amounts written off	(15,977)		(287,320)		-		-
At 31 December	105,470		84,995		-		-

 

END

 

 

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