RNS Number : 3681S
Jarvis Securities plc
09 March 2023
 

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.

 

9 March 2023

 

Jarvis Securities plc

 

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

 

RESULTS FOR THE YEAR ENDED 31 DECEMBER 2022

 

CHAIRMAN'S STATEMENT

 

·      20% decrease in profit before tax

·      15% decrease in interim dividend per share (excludes 2021 special dividend)

·      20% decrease in EPS

 

This year has definitely been one of the more interesting years at Jarvis since forming the Company in 1984. It began with the Russian invasion of Ukraine, an event which had a wide ranging impact across already stagnant economic conditions, and concluded with the appointment of a skilled person, the first such event in nearly 40 years of regulated activity. The appointment began in late September with a six-month time schedule to review the systems and controls of our subsidiary, Jarvis Investment Management Limited. This review is still ongoing and we expect to provide an update shortly.  Finally, as the year progressed, we witnessed a significant shift in central banks' monetary policy as they used interest rate increases as a tool to fight inflation and was good news.

 

General share transaction volumes remain below average across the whole industry so we have seen a reduction in line with that. The Covid pandemic brought significant volatility to the market between 2020-21, and a flurry of corporate activity after lock down as IPO activity increased. This has largely died down and been replaced by a steadily declining market, which is not ideal for transaction volumes. The negative geo-political situations have weighed heavily on the markets due to uncertain outcomes, however the effect of interest rate and cost of living increases on household spending has yet to be fully realised. There are indications that the market may have now turned, as market indices have turned positive and central banks signalling that interest rates may now have peaked or the rate of increase will slow.

 

The agreed FCA restriction set out in the previous market announcement on our Model B corporate clients has led us to review our business model. We are severing ties with a number of our model B clients whose businesses do not meet the risk tolerance at Jarvis and fall outside of our more restricted outsourcing model. Whilst limiting the business activities in the short term, it was felt necessary to ensure that the business would thrive in the longer term. We have made and continue to make enhancements to our Model B and retail client onboarding procedures and monitoring to ensure that they are in line with market practice and meet that expected of us by the regulator.

 

As many of our investors know, one of our income streams is interest earned on client funds. This has seen a significant upturn throughout the year, and has to an extent offset the reduction in commission income due to lower trade volumes and the significant one off costs associated with the skilled person process. We have in the short term been able to capture these rate increases as funds have matured, but there are still further gains to come in the future.

 

I am confident that the business will emerge financially stronger and more resilient as a result of this year, and whilst we are currently experiencing a period of change the future of Jarvis is bright.

 

As always, I would like to thank all off our staff for their hard work and support over what has been a very challenging and stressful period.

 

Andrew Grant

 

Chairman

 

 

Annual General Meeting

 

The Company will today dispatch to shareholders its Annual Report and Accounts for the year ended 31 December 2022, together with a notice convening the Annual General Meeting ("AGM"), to be held at the Company's offices on Thursday 20th April 2023 at 9am. The Annual Report and Accounts and Notice of AGM will also be available from the Company's website, www.jarvissecurities.co.uk .

 

Enquiries:

 

Jarvis Securities plc

Tel: 01892 510515

Andrew Grant

Jolyon Head

 

WH Ireland Limited

Tel: 0113 394 6618

Katy Mitchell

Darshan Patel

 

 

 

 

Consolidated income statement for the year ended 31 december 2022

 


 

 

 

Year to

Year to


 

 

 

31/12/22

31/12/21


Notes



 

 


 



 

 


 



£

£

Continuing operations:

 



 


Revenue

3

 


12,606,516

14,297,263


 

 


 


Administrative expenses

 

Lease finance costs

 

 


(6,462,706)

 

(5,785)

(6,632,746)

 

(3,520)


 

 


 



 

 


 


Profit before income tax

5

 


6,138,026

7,660,997


 

 


 


Income tax charge

7

 


(1,163,303)

(1,480,146)


 

 


 



 

 


 


Profit for the period

 

 


4,974,723

6,180,851


 

 


 



 

 


 


Attributable to equity holders of the parent

 

 


4,974,723

6,180,851


 

 


 



 

 


 


Earnings per share

8



P

P

 

 



 


Basic and diluted

 

 


11.12

13.91

 

 

 

Consolidated statement of comprehensive income for the year

 


Notes

 

 

Year to

Year to


 

 

 

31/12/22

31/12/21


 



£

£

Profit for the period

 

 


4,974,723

6,180,851

Total comprehensive income for the period

 


4,974,723

6,180,851

Attributable to equity holders of the parent

 

 


4,974,723

6,180,851

 

 

 

Consolidated STATEMENT OF FINANCIAL POSITION at 31 december 2022


 

 

 

 

 


 

 

 

31/12/22

31/12/21


Notes



 

 


 



£

£

Assets

 



 


Non-current assets

 



 


Property, plant and equipment

9

 


598,044

295,767

Intangible assets

10

 


70,142

93,606

Goodwill

10

 


342,872

342,872


 

 


1,011,058

732,245

Current assets

 

 


 


Trade and other receivables

12

 


3,388,927

6,361,707

Investments held for trading

14

 


8,769

1,958

Cash and cash equivalents

15

 


4,278,737

3,780,594

 

 

 


7,676,433

10,144,259

Total assets

 

 


8,687,491

10,876,504


 

 


 


Equity and liabilities

 

 


 


Capital and reserves

 

 


 


Share capital

16

 


111,828

111,828

Merger reserve

 

 


9,900

9,900

Capital redemption reserve

 

 


9,845

9,845

Retained earnings

 

 


4,845,114

5,014,456

Total equity attributable to the equity holders of the parent

 

 


4,976,687

5,146,029

 

Non-current liabilities

Deferred tax

Lease liabilities

 

 

7

13

 


 

 

60,044

297,512

 

 

61,928

-


 

 


357,556

61,928

Current liabilities

 

 


 


Trade and other payables

17

 


2,739,330

4,900,444

Lease liabilities

13

 


70,410

64,653

Income tax

17

 


543,508

703,450


 

 


3,353,248

5,668,547

Total liabilities

 

 


3,710,804

5,730,475

Total equity and liabilities

 

 


8,687,491

10,876,504

 

 

 

 

CoMPANY STATEMENT OF FINANCIAL POSITION at 31 december 2022

 


 

 

 

31/12/22

31/12/21


Notes



 

 


 



£

£

Assets

 



 


Non-current assets

 



 


Property, plant and equipment

9

 


598,044

295,767

Intangible assets

10

 


70,142

93,606

Goodwill

10

 


342,872

342,872

Investment in subsidiaries

11

 


284,239

284,239


 

 


1,295,297

1,016,484

Current assets

 

 


 


Trade and other receivables

12

 


87,924

138,958

Cash and cash equivalents

15

 


1,925,466

2,329,510

 

 

 


2,013,310

2,468,468

Total assets

 

 


3,308,687

3,484,952


 

 


 


Equity and liabilities

 

 


 


Capital and reserves

 

 


 


Share capital

16

 


111,828

111,828

Capital redemption reserve

 

 


9,845

9,845

Retained earnings

 

 


625,967

400,083

Total equity attributable to the equity holders

 

 


747,640

521,756

Non-current liabilities

Deferred tax

Lease liabilities

 

7

13

 


 

61,006

297,512

 

62,847

-


 

 


358,518

62,847


 

 


 


Current liabilities

 

 


 


Trade and other payables

Lease liabilities

17

13

 


1,615,986

70,410

2,427,462

64,653

Income tax

17

 


516,133

408,234


 

 


2,202,529

2,900,349

Total liabilities

 

 


2,561,047

2,963,196

Total equity and liabilities

 

 


3,308,687

3,484,952

 

 

 

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY


 

Share capital

 

Share premium

 

Merger reserve

Capital redemption reserve

Retained earnings

 

 

Own shares held in Treasury

Total equity


£

£

£

£

£

£

£

At 1 January 2021

111,828

1,655,640

9,900

9,845

5,672,848

(886,113)

6,573,948

Profit for the financial year

Sale of own shares held in treasury

Cancellation of share premium

-

 

 

-

-

-

1,412,372

 

(3,068,012)

-

-

 

-

-

-

 

-

6,180,851

(95,834)

 

3,068,012

-

886,113

 

-

6,180,851

2,202,651

 

-

Dividends

-

-

-

-

(9,811,421)

-

(9,811,421)

At 31 December 2021

111,828

-

9,900

9,845

5,014,456

-

5,146,029

Profit for the financial year

-

-

-

-

4,974,723

-

4,974,723

Dividends

-

-

-

-

(5,144,065)

-

(5,144,065)

At 31 December 2022

111,828

-

9,900

9,845

4,845,114

-

4,976,687

 

 

 

COMPANY STATEMENT OF CHANGES IN EQUITY


 

Share capital

 

Share premium

Capital redemption reserve

Retained earnings

Own shares held in treasury

 

 

 

Total equity


£

£

£

£

£

£

At 1 January 2021

111,828

1,655,640

9,845

1,481,763

(886,113)

2,372,963

Profit for the financial year

Sale of own shares held in treasury

Cancellation of share premium

Dividends

-

 

-

-

 

-

-

 

1,412,372

(3,068,012)

 

-

-

 

-

-

 

-

5,757,563

 

(95,834)

3,068,012

 

(9,811,421)

-

 

886,113

-

 

-

5,757,563

 

2,202,651

-

 

(9,811,421)

At 31 December 2021

111,828

-

9,845

400,083

-

521,756

Profit for the financial year

-

-

-

5,369,949

-

5,369,949

Dividends

-

-

-

(5,144,065)

-

(5,144,065)

At 31 December 2022

111,828

-

9,845

625,967

-

747,640

 

 

 

 

statement OF cashflows

for the year ended 31 december 2022


 

 

CONSOLIDATED

 

COMPANY


 

Year to

Year to

Year to

Year to


 

31/12/22

31/12/21

31/12/22

31/12/21


Notes

 

 

 

 


 

£

£

£

£

Cash flow from operating activities

 

 


 


Profit before income tax

 

6,138,026

7,660,997

6,250,665

6,364,617

Depreciation and amortisation

Lease finance cost

5

131,203

5,785

127,433

3,520

131,203

5,785

127,433

3,520


 

6,275,014

7,791,950

6,387,653

6,495,570


 

 


 


(Increase) /Decrease in trade and other receivables

2,971,537

566,607

51,034

249,330

(Decrease) /Increase in trade payables

 

(2,161,711)

719,254

(813,317)

1,626,443

Cash generated from operations

 

7,084,840

9,077,811

5,625,370

8,371,343


 

 


 


Income tax (paid)/received

 

(1,323,288)

(1,363,179)

(772,817)

(533,059)

Net cash from operating activities

 

5,761,552

7,714,632

4,852,553

7,838,284


 

 


 


Cash flows from investing activities

 

 


 


Purchase of property, plant and equipment

 

(12,583)

(11,296)

(12,448)

(11,296)

Purchase of investments held for trading

Proceeds from sale of investments held for trading

Purchase of intangible assets

 

(2,797,364)

 

2,790,552

(12,448)

(1,272,780)

 

1,275,005

(23,677)

-

 

-

(12,583)

-

 

-

(23,677)

Cash flows from financing activities

 

(31,843)

(32,748)

(25,031)

(34,973)

 

 

 


 


Sale of treasury shares

Dividends paid

Lease finance cost

Repayment of lease liability

 

-

(5,144,065)

(5,875)

(81,626)

2,202,651

(9,811,421)

(3,520)

(83,980)

-

(5,144,065)

(5,875)

(81,626)

2,202,651

(9,811,421)

(3,520)

(83,980)

Net cash used in financing activities

 

(5,231,566)

(7,696,270)

(5,231,566)

(7,696,270)


 

 


 


Net (decrease)/ increase in cash & cash equivalents

498,143

(14,386)

(404,044)

107,041

Cash and cash equivalents at the start of the year

3,780,594

3,794,980

2,329,510

2,222,469

Cash and cash equivalents at the end of the year

4,278,737

3,780,594

1,925,466

2,329,510

Cash and cash equivalents:

 


 


Balance at bank and in hand

5,499,464

4,864,077

1,925,466

2,329,510

Cash held for settlement of market transactions

(1,220,727)

(1,083,483)

-

-

 

4,278,737

3,780,594

1,925,466

2,329,510

 

 

 

1. Basis of preparation

 

The company has adopted the requirements of international accounting standards as adopted by the United Kingdom and those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The financial statements have been prepared under the historical cost convention as modified by the revaluation of financial assets at fair value through profit or loss.

 

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

 

New standards, not yet effective

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

 

Significant judgements and estimates

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

 

Going concern

The group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Strategic Report on pages 2 to 5. The financial position of the group, its cash flows, liquidity position and borrowing facilities are described within these financial statements. In addition, note 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.

 

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

 

2. Accounting policies

 

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

 

Commission - the group charges commission on a transaction basis. Commission rates are fixed according to account type. When a client instructs us to act as an agent on their behalf (for the purchase or sale of securities) our commission is recognised as income on a point in time basis when the instruction is executed in the market. Our commission is deducted from the cash given to us by the client in order to settle the transaction on the client's behalf or from the proceeds of the sale in instance where a client sells securities.

 

Management fees - these are charged quarterly or bi-annually depending on account type. Fees are either fixed or are a percentage of the assets under administration. Management fees income is recognised over time as they are charged using a day count and most recent asset level basis as appropriate.

 

Interest income - this is accrued on a day count basis up until deposits mature and the interest income is received. The deposits pay a fixed rate of interest. In accordance with FCA requirements, deposits are only placed with banks that have been approved by our compliance department. Interest income is recognised over time as the deposits accrue interest on a daily basis. 

(b) Basis of consolidation

Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date on which control ceases. The group financial statements consolidate the financial statements of Jarvis Securities plc, Jarvis Investment Management Limited, JIM Nominees Limited, Galleon Nominees Limited and Dudley Road Nominees Limited made up to 31 December 2022.

 

The Group uses the purchase method of accounting for the acquisition of subsidiaries. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange.  Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date,

irrespective of the extent of any non-controlling interest. The cost of acquisition over the fair value of the Group's share of identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the Group's share of the net assets of the subsidiary acquired, the difference is recognised in the income statement.

 

Intra-group sales and profits are eliminated on consolidation and all sales and profit figures relate to external transactions only. No profit and loss account is presented for Jarvis Securities plc as provided by S408 of the Companies Act 2006.

 

(c) Property, plant and equipment

All property, plant and equipment is shown at cost less subsequent depreciation and impairment. Cost includes expenditure that is directly attributable to the acquisition of the items. Depreciation is provided on cost in equal annual instalments over the lives of the assets at the following rates:

Leasehold improvements                 -               33% on cost, or over the lease period if less than 3 years

Office equipment                                                -               20% on cost

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

Right of use asset                                -               Straight line basis over the lease period

 

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each year end 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) Investments

Investments held for trading

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

 

Investments in subsidiaries

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

 

(j) 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.

 

(k) Cash and cash equivalents

Cash and cash equivalents comprise:

Balance at bank and in hand - cash in hand and demand deposits, together with other short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.

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

 

(l) 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 year end 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.  

 

(m) Dividend distribution

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

(n) IFRS 9 'Financial Instruments'

The group currently calculates a "bad debt" provision on customer balances based on 25% of overdrawn client accounts which are one month past due date and are not specifically provided for. Under IFRS 9 this assessment is required to be calculated based on a forward - looking expected credit loss ('ECL') model, for which a simplified approach will be applied. The method uses historic customer data, alongside future economic conditions to calculate expected loss on receivables

 

(o) IFRS 16 'Leases'

The lease liability is measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implied in the lease or, if that rate cannot be readily determined, the Group's incremental borrowing rate.

The Group has applied judgement to determine the lease term for contracts with options to renew or exit early.

The carrying amount of right-of-use assets recognised was £384,985 at the lease start date of 27 September 2022. A finance charge of 5% APR is used to calculate the finance cost of the lease.

 

3. Group revenue

 

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


2022


2021


£


£

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

5,472,439


4,512,260

Commissions

Fees

3,812,087

3,321,990


5,926,669

3,858,334


12,606,516


14,297,263

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

 

 

2022


 

2021

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

£


£

Directors' emoluments

Depreciation - right of use asset

598,733

79,979


491,426

80,973

Depreciation - owned assets

14,393


14,370

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

25,668


32,090

Low value leases

8,852


8,852

Impairment of receivable charge / (credit)

(77,450)


13,152

Bank transaction fees

65,914


121,957

 

  Details of directors' annual remuneration as at 31 December 2022 are set out below:


2022


2021


£


£

Short-term employee benefits

550,551


438,850

Post-employment benefits

40,000


44,043

Benefits in kind

8,182


8,533


598,733


491,426

Details of the highest paid director are as follows:




Aggregate emoluments

415,700


315,700

Benefits in kind

8,182


8,533


423,882


324,233







Emoluments & Benefits in kind

Pension


Total

Directors




£

£


£

Andrew J Grant




423,882

-


423,882

Jolyon C Head




110,851

40,000


150,851

S M Middleton




24,000

-


24,000

TOTAL




558,733

40,000


598,733

 

During the year benefits accrued for one director (2021: two 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:


2022


2021

Management and administration

59


63

The aggregate payroll costs of these persons were as follows:

£


£

Wages & salaries

Social security

2,274,813

244,034


2,261,326

226,461

Pension contributions including salary sacrifice

78,610


78,831


2,597,457


2,566,618

  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 £75,840 (2021: £56,835).

 

6. Auditors' remuneration

 




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


2022


2021


£


£

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

 

28,000


 

26,000

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




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

15,000


10,000

Total audit fees

43,000


36,000

Taxation Compliance

5,560


5,500


48,560


41,500

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

 

 





7. Income and deferred tax charges - group

2022


2021

 


£


£

 

Based on the adjusted results for the year:




 

UK corporation tax

1,165,733


1,463,681

 

Adjustments in respect of prior years

(546)


154

 

Total current income tax

1,165,187


1,463,835

 

Deferred income tax:




 

Origination and reversal of temporary differences

(1,883)


2,052

 

Adjustment in respect of prior years

(1)


(126)

 

Adjustment in respect of change in deferred tax rates

-


14,386

 

Total deferred tax charge

(1,884)


16,312

 


1,163,303


1,480,146

 

 

The income tax assessed for the year is more than the standard rate of corporation tax in the UK (19%). The differences are explained below:

Profit before income tax

6,138,026


7,660,997

 

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

19% (2021 - 19%)

 

1,166,225


 

1,455,589

 

Effects of:




 

Expenses not deductible for tax purposes

-


9,346

 

Adjustments to tax charge in respect of previous years

(547)


28

 

Ineligible depreciation

Adjust in respect of change in deferred tax rate

320

(2,695)


320

14,863

 

Current income tax charge for the years

1,163,303


1,480,146

 

 

 

 

Movement in (assets) / provision - group:




Provision at start of year

61,928


45,617

Deferred income tax charged in the year

(1,884)


16,311

Provision at end of year

60,044


61,928

 

Movement in (assets) / provision - company:




Provision at start of year

62,847


46,253

Deferred income tax charged in the year

(1,841)


16,594

Provision at end of year

61,006


62,847

 

8. Earnings per share



 

2022


 

2021





£


£

Earnings:

Earnings for the purposes of basic and diluted earnings per share





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


4,974,723


6,180,851

 

Number of shares:




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

44,731,000


44,419,318






44,731,000


44,419,318

 

On 29 October 2021 there was a capital reorganisation whereby each of the company's issued and unissued ordinary shares of £0.01 each were subdivided into 4 ordinary shares of £0.0025 each. The 2021 figures have been adjusted to reflect this subdivision. Shares held in treasury are deducted for the purpose of calculating earnings per share.

 

9. Property, plant & equipment - group & company

 

Right of use assets - Leasehold

 

Leasehold & Property

 

Office

Equipment


 

Total

 

Cost:





£

£


£

At 1 January 2021




303,648

222,450

308,120


834,218

Additions




-

-

11,296


11,296

Disposals




-

-

-


-

At 31 December 2021




303,648

222,450

319,416


845,514

Additions




384,985

-

12,583


397,568

Disposals




(303,648)

-

(258,887)


(562,535)

At 31 December 2022




384,985

222,450

73,112


680,547

Depreciation:









At 1 January 2021




161,946

17,054

275,404


454,404

Charge for the year




80,973

1,949

12,421


95,343

On Disposal




-

-

-


-

At 31 December 2021




242,919

19,003

287,825


549,747

Charge for the year




79,979

1,949

12,444


94,372

On Disposal




(303,648)

-

(257,968)


(561,616)

At 31 December 2022




19,250

20,952

42,301


82,503

Net Book Value:









At 31 December 2022




365,735

201,498

30,811


598,044










At 31 December 2021




60,729

203,447

31,591


295,767

 

The net book value of non-depreciable land is £125,000 (2021: £125,000).

 

 

10. Intangible assets & goodwill - group & company


Intangible assets


 

Goodwill

 

Databases

 

Software

Development

Website


Total

 



£


£

£

£


£

Cost:









At 1 January 2021


342,872


25,000

345,291

261,713


632,004

Additions


-


-

23,677

-


23,677

At 31 December 2021


342,872


25,000

368,968

261,713


655,681

Additions


-


-

12,448

-


12,448

Disposals


-


-

(234,628)

(257,836)


(492,464)

At 31 December 2022


342,872


25,000

146,788

3,877


175,665

Amortisation:









At 1 January 2021


-


17,719

258,888

253,378


529,985

Charge for the year


-


1,000

27,752

3,338


32,090

At 31 December 2021


-


18,719

286,640

256,716


562,075

Charge for the year


-


917

23,459

1,292


25,668

On Disposal


-


-

(226,365)

(255,855)


(482,220)

At 31 December 2022


-


19,636

83,734

2,153


105,523

Net Book Value:









At 31 December 2022


342,872


5,364

63,054

1,724


70,142










At 31 December 2021


342,872


6,281

82,328

4,997


93,606

 

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






2022


2021

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:

2022


2021


2022


2021

 

£


£


£


£









Trade receivables

381,367


1,504,513


-


-

Settlement receivables

2,498,019


4,365,820


-


-

Other receivables

83,910


128,183


83,911


122,265

Prepayments and accrued income

Other taxes and social security

425,631

-


363,191

-


1,750

2,263


15,673

1,020


3,388,927


6,361,707


87,924


138,958

 

Settlement receivables are short term receivable amounts arising as a result of the settlement of trades in an agency capacity. The balances due are covered by stock collateral and bonds. An analysis of trade and settlement receivables past due is given in note 25. There are no amounts past due included within other receivables or prepayments and accrued income.

 

13. Leases

 

Lease liabilities are secured by the related underlying assets.

 

The undiscounted maturity analysis of lease liabilities as at 31 December 2022 is as follows:


< 1 year (£)

1-2 years (£)

2-3 years (£)

3-4 years (£)

4-5 years (£)

Lease payment

87,500

87,500

87,500

87,500

65,625

Finance charge

17,090

13,503

9,733

5,711

1,607

Net present value

70,410

73,997

77,767

81,729

64,018

 

The undiscounted maturity analysis of lease liabilities as at 31 December 2021 is as follows:


< 1 year (£)

1-2 years (£)

2-3 years (£)

3-4 years (£)

4-5 years (£)

Lease payment

65,625

-

-

-

-

Finance charge

972

-

-

-

-

Net present value

64,653

-

-

-

-

 

 


2022

Lease liabilities included in the current statement of financial position

£

Current

70,410

Non-current

297,512


367,922




2022


£

Amounts recognised in income statement

5,785


5,785

 

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. The total cash outflow for leases in 2022 was £87,500.

 

14. Investments held for trading

 

Group


 

Company

 


2022


2021


2022


2021

 

Listed Investments:

£


£


£


£

 

Valuation:








 

At 1 January

1,958


4,183


-


-

 

Additions

2,797,363


1,272,780


-


-

 

Disposals

(2,790,552)


(1,275,005)


-


-

 

As at 31 December

8,769


1,958


-


-

 

 

 

Listed investments held for trading are stated at their market value at 31 December 2022 and are considered to be level one assets

in accordance with IFRS 13. The group does not undertake any principal trading activity.

 

 

 

15. Cash and cash equivalents

 

Group


 

Company

 


2022


2021


2022


2021

 


£


£


£


£

 

Balance at bank and in hand - group/company

5,499,464


4,864,077


1,925,466


2,329,510

 

Cash held for settlement of market transactions

(1,220,727)


(1,083,483)


-


-

 


4,278,737


3,780,594


1,925,466


2,329,510

 

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 model B customers of £1,088,375 (2021: £1,527,547) not governed by client money rules therefore they are also not included in the statement of financial position of the group. This treatment is appropriate as the business is a going concern however, were an administrator appointed, these balances would be considered assets of the business.

 

 

16. Share capital

 

 

2022


 

 

2021

Authorised:

64,000,000 Ordinary shares of 0.25p each

160,000 

160,000


160,000 

160,000






2022


2021


£


£

At 1 January 2022

111,828


111,828

 

Allotted, issued and fully paid:




44,731,000 (2021: 44,731,000) Ordinary shares of 0.25p each

111,828


111,828

 

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

 

17. Trade and other payables

 

Group


 

Company


 



Amounts falling due within one year:

2022


2021


2022


2021


£


£


£


£









Trade payables

231,920


383,364


13,586


1,015

Settlement payables

1,219,465


3,138,814


-


-

Amount owed to group undertaking

-


-


1,549,300


2,383,347

Other taxes and social security

125,646


107,162


-


-

Other payables

808,027


893,722


-


-

Accruals

354,272


377,382


53,100


43,100

Trade and other payables

Lease liabilities

2,739,330

70,410


4,900,444

64,653


1,615,986

70,410


2,427,462

64,653

Income tax

543,508


703,450


516,133


408,234

Total liabilities

3,353,248


5,668,547


2,202,529


2,900,349

 

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

 

18. Dividends

2022


2021


£


£

Interim dividends paid on Ordinary 1p shares

5,144,065


9,811,421

Dividend per Ordinary 1p share

11.5


22.0

 

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

 

19. Financial Instruments

 

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

 

The main financial asset of the group is cash and cash equivalents which is denominated in Sterling and which is detailed in note 15. The group operates a low risk investment policy and surplus funds are placed on deposit with at least A rated banks or equivalent at floating interest rates.

 

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

 

20. Critical accounting estimates and judgements

 

The group makes estimates and assumptions concerning the future. These estimates and judgements are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The resulting accounting estimates will, by definition, seldom equal the related actual results.

 

21. Immediate and ultimate parent undertaking

 

There is no immediate or ultimate controlling party.

22. Related party transactions

 

The company has a lease with Sion Properties Limited, a company controlled by a director of the company, for the rental of 78 Mount Ephraim, a self-contained office building. The lease has an annual rental of £87,500. Full details of this lease are disclosed in Note 13.

 

During the year Jarvis Investment Management Limited paid Jarvis Securities Plc £12,500 (2021: £7,000) for rental of a disaster recovery site.

 

Jarvis Securities plc owed Jarvis Investment Management Limited £1,549,300 (2021: £2,663,298) 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 2022, these same related parties had cash balances of £810,742 (2021: £634,423). No interest was earned during the year (2021: £2,181).  In addition to cash balances other equity assets of £30,479,543 (2021: £60,729,502) were held by JIM Nominees Ltd as custodian.

 

During the year Jarvis Securities Plc charged £4,871,178 (2021: £3,304,759) to Jarvis Investment Management Limited for use of intellectual properties.

 

At the period end Directors directly held 11,203,924 shares in the company (2021: 11,183,924). A further 12,547,330 shares (2021: 12,547,330) shares were held by concert parties of the directors as defined by the City Code on Takeovers and Mergers.

 

23. Capital commitments

 

As of 31 December 2022, the company had no capital commitments (2021: 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 that the group has remained profitable during the past decade when the Bank of England base rate was at its lowest level since its foundation in 1694 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 and Risk Assessment process ("ICARA"), as required by the Financial Conduct Authority ("FCA") for establishing the amount of regulatory capital to be held by that company. The ICARA gives consideration to both current and projected financial and capital positions. The ICARA is updated throughout the year to take account of any significant changes to business plans and any unexpected issues that may occur. The ICARA 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. Further information regarding regulatory capital is disclosed in the strategic report.

 

The group offers settlement of trades in sterling as well as various foreign currencies. The group does not hold any assets or liabilities other than in sterling and converts client currency on matching terms to settlement of trades realising any currency gain or loss immediately in the income statement. Consequently the group has no foreign exchange risk.

 

As of 31 December 2022, trade receivables of £128,948 (2021: £186,074) were past due and were impaired and partially provided for. The amount of the provision was £57,828 as at 31 December 2022 (2021: £143,524). 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:

2022


2021


2022


2021


£


£


£


£









At 1 January

143,524


131,456


-


-

Charge / (credit) for the year

(77,450)


13,152


-


-

Uncollectable amounts written off

(8,246)


(1,084)


-


-

At 31 December

57,828


143,524


-


-

 

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