TIDMJIM
RNS Number : 7768E
Jarvis Securities plc
21 July 2016
JARVIS SECURITIES PLC
("Jarvis" or the "Company)
Interim Results
For the six months to 30 June 2016
Highlights
-- Cash under administration has increased 10.7% versus 30 June 2015
-- Client numbers have increased 9.3% versus 30 June 2015
-- GBP51,024 (1.3%) decrease in revenue versus six months to 30 June 2015
-- GBP86,016 (4.8%) decrease in profit before tax versus six months to 30 June 2015
Chairman's statement
It has been some time since I have had to comment on a statement
of numbers that are not better than the comparative period to which
they are being compared. Whilst this isn't an ideal situation, in
the context of market conditions I am pleased with what has been
achieved.
In the first half of 2015 we experienced some of the best market
conditions since the 2008 credit crunch. In the second half of 2015
trading volumes were significantly reduced, and these conditions
continued through to the first half of 2016. Investors were
particularly cautious in the run up to the "Brexit" vote, although
the subsequent volatility and market volumes that accompanied the
surprise result have been beneficial to us. In spite of the
difficult environment, the business continues to acquire retail and
commercial outsourcing clients and this has resulted in us being
able to perform almost comparably with the first half of 2015. As
we report, daily average volumes continue to be at higher levels
than all of 2015 and client assets under administration continue to
grow at a healthy rate.
We anticipate that the second half of the year will be
characterised by further political uncertainty across Europe, which
will translate into market volatility and increased trade
volumes.
We continue to generate significant cash to fund our quarterly
dividend payments, and recently increased the 3(rd) quarterly
dividend payment in comparison to 2015 as we are confident the
business will continue to improve its financial performance.
As is customary I would like to thank all Jarvis staff for their
ongoing contribution to the business.
Andrew J Grant
Chairman
Key performance indicators (KPI)
The key performance indicators (KPIs) are designed to give
stakeholders in the business a more rounded view of the Group's
performance. Further details on the KPIs and their measurement can
be found in the last Annual Report. A selection of KPIs and the
Group's results to the interim period for these are detailed below.
These results have been annualised from the position at 30 June
2015 where measurement over a year is required.
KPI: 30/6/16 30/6/15 Target
-------------------------- ----------- ----------- ------------
Profit before tax margin 44% 45% 20%
Revenue per employee GBP182,675 GBP185,049 to increase
(annualised)
Growth in client numbers
(annualised) 9.3% 6.7% 10%
Company No.: 5107012
Consolidated income statement for the period ended 30 June
2016
Six months Six months
ended ended
------------------------- ------ ------------------------- ------------
Notes 30/6/16 30/6/15
------------------------- ------ ------------------------- ------------
GBP GBP
Continuing operations
Revenue 3,927,519 3,978,543
Administrative expenses (2,218,156) (2,183,164)
Profit before income
tax 1,709,363 1,795,379
Income tax charge 4 (341,873) (363,564)
------------------------- ------ ------------------------- ------------
Profit for the period 1,367,490 1,431,815
========================= ====== ========================= ============
Attributable to equity
holders of the parent 1,367,490 1,431,815
========================= ====== ========================= ============
Earnings per share 5 P P
------------------------- ------ ------------------------- ------------
Basic 12.33 12.88
Diluted 12.29 12.85
Consolidated statement of financial position at 30 June 2016
Notes 30/6/16 31/12/15 30/6/15
------
GBP GBP GBP
Assets
Non-current
assets
Property, plant
and equipment 233,763 235,536 237,260
Intangible assets 159,344 174,857 202,789
Goodwill 342,872 342,872 342,872
735,979 753,265 782,921
Current assets
Trade and other
receivables 4,655,162 3,233,971 3,914,465
Investments
held for trading 56,102 77,057 13,650
Cash and cash
equivalents 12,114,731 9,777,936 17,688,121
--------------------- ------ ------------------- ----------------------- ------------------------
16,825,995 13,088,964 21,616,236
--------------------- ------ ------------------- ----------------------- ------------------------
Total assets 17,561,974 13,842,229 22,399,157
===================== ====== =================== ======================= ========================
Equity and
liabilities
Capital and
reserves
Share capital 7 111,503 111,503 111,503
Share premium 1,520,119 1,520,119 1,520,119
Merger reserve 9,900 9,900 9,900
Capital redemption
reserve 9,845 9,845 9,845
Share option
reserve 136,556 136,556 136,556
Retained earnings 3,111,416 2,626,295 3,398,542
Own shares
held in treasury (590,122) (301,514) (91,810)
Total equity 4,309,217 4,112,704 5,094,655
--------------------- ------ ------------------- ----------------------- ------------------------
Current liabilities
Trade and other
payables 12,929,022 9,389,215 17,128,783
Deferred income
tax 9,238 9,238 23,919
Income tax 4 314,497 331,072 151,800
--------------------- ------ ------------------- ----------------------- ------------------------
13,252,757 9,729,525 17,304,502
Total equity
and liabilities 17,561,974 13,842,229 22,399,157
===================== ====== =================== ======================= ========================
Consolidated statement of comprehensive
income
Six months Six months
ended ended
30/6/16 30/6/15
------------------------------------------- ----------------- -----------
Profit for the period 1,367,490 1,431,815
---------------------------------------------- ----------------- -----------
Total comprehensive income for
the period 1,367,490 1,431,815
-------------------------------------------- ----------------- -----------
Attributable to equity holders
of the parent 1,367,490 1,431,815
---------------------------------------------- ----------------- -----------
Consolidated statement of changes in equity for the period
Share Share Merger Capital Share Retained Own Attributable
capital premium reserve redemption option earnings shares to equity
reserve reserve held holders
in of the
treasury company
------------------- -------- ---------- --------- ----------- --------- ------------ ----------- -------------
GBP GBP GBP GBP GBP GBP GBP GBP
Balance at
31/12/14 111,200 1,467,485 9,900 9,845 136,556 2,955,642 - 4,690,628
Exercise of
employee options 303 52,634 - - - - - 52,937
Profit for
the period - - - - - 1,431,815 - 1,431,815
Dividends - - - - - (891,036) - (891,036)
Purchase of
own shares
held in treasury - - - - - (272,368) (272,368)
Sale of own
shares held
in treasury - - - - - (97,879) 180,558 82,679
Balance at
30/6/15 111,503 1,520,119 9,900 9,845 136,556 3,398,542 (91,810) 5,094,655
------------------- -------- ---------- --------- ----------- --------- ------------ ----------- -------------
Purchase of
own shares
held in treasury - - - - - - (209,704) (209,704)
Profit for
the period - - - - - 1,284,288 - 1,284,288
Dividends - - - - - (2,056,535) - (2,056,535)
Balance at
31/12/15 111,503 1,520,119 9,900 9,845 136,556 2,626,295 (301,514) 4,112,704
------------------- -------- ---------- --------- ----------- --------- ------------ ----------- -------------
Profit for
the period - - - - - 1,367,490 - 1,367,490
Dividends - - - - - (882,369) - (882,369)
Purchase of
own shares
held in treasury - - - - - - (288,608) (288,608)
Balance at
30/6/16 111,503 1,520,119 9,900 9,845 136,556 3,111,416 (590,122) 4,309,217
------------------- -------- ---------- --------- ----------- --------- ------------ ----------- -------------
Consolidated statement of cashflows for the period ended 30 June
2016
Six months Six months
ended ended
30/6/16 30/6/15
------------ ------------
GBP GBP
Cash flow from operating
activities
--------------------------- ------------ ------------
Profit before tax 1,709,363 1,795,379
Depreciation charges 5,287 6,089
Amortisation charges 29,935 27,933
1,744,585 1,829,401
(Increase) in receivables (1,421,191) (1,240,431)
Increase / (Decrease)
in payables 3,539,807 10,073,672
(Increase) in investments
held for trading 20,955 (24)
Cash generated from
operations 3,884,156 10,662,618
Income tax (paid) (358,448) (490,072)
Net cash from operating
activities 3,525,708 10,172,546
Cash flows from investing
activities
Sale of investments - 246,979
Purchase of intangible (3,514) -
assets
Purchase of tangible (14,422) -
fixed assets
(17,936) 246,979
Cash flows from financing activities
Issue of ordinary share
capital - 52,937
Purchase of own shares
held in treasury (288,608) (272,368)
Sale of own shares held
in treasury - 82,678
Dividends to equity
shareholders (882,369) (891,036)
Net cash used in financing
activities (1,170,977) (1,027,789)
Net (decrease)/increase
in cash & cash equivalents 2,336,795 9,391,736
Cash and cash equivalents
at 1 January 9,777,936 8,296,385
Cash and cash equivalents
at 30 June 12,114,731 17,688,121
Notes forming part of the interim financial statements
1. Basis of preparation
The interim consolidated financial statements have been prepared
in accordance with International Accounting Standard (IAS) 34,
Interim Financial Reporting. These interim financial statements
have been prepared in accordance with those IFRS standards and
IFRIC interpretations issued and effective or issued and early
adopted as at the time of preparing these statements (July
2016).
These consolidated interim financial statements have been
prepared in accordance with the accounting policies set out below,
which have been consistently applied to all the periods presented.
These accounting policies comply with applicable IFRS standards and
IFRIC interpretations issued and effective at the time of preparing
these statements.
At the date of authorisation of these interim financial
statements, the following Standards and Interpretations which have
not been applied in these financial statements were in issue but
not yet effective (and in some cases had not yet been adopted by
the EU):
IFRS 14 Regulatory Deferral Accounts
IFRS 15 Revenue from Contracts with Customers
IFRS 9 Financial Instruments
IFRS 16 Leases
Adoption of these Standards and Interpretations is not expected
to have a material impact on the financial statements of the
Company or Group.
The preparation of these interim financial statements in
accordance with IFRS requires the use of certain accounting
estimates. It also requires management to exercise judgement in the
process of applying the Company's accounting policies. The areas
involving a high degree of judgement or complexity, or areas where
the assumptions and estimates are significant to the consolidated
interim financial statements are disclosed in Note 9.
The financial information contained in this report, which has
not been audited, does not constitute statutory accounts as defined
by Section 434 of the Companies Act 2006. The auditors' report for
the 2015 accounts was unqualified and did not contain a statement
under Section 498 (2) or (3) of the Companies Act 2006.
2. Accounting policies
(a) Revenue
Income is recognised as earned in the following way:
Commission - we charge commission on a transaction basis.
Commission rates are fixed according to account type. When a client
instructs us to act as an agent on their behalf (for the purchase
or sale of securities) our commission is recognised as income. Our
commission is deducted from the cash given to us by the client in
order to settle the transaction on the client's behalf or from the
proceeds of the sale in instance where a client sells
securities.
Management fees - these are charged quarterly or bi-annually
depending on account type. Fees are either fixed or are a
percentage of the assets under administration. Fees are accrued up
to the time they are charged using a day count and most recent
asset level basis as appropriate.
Interest income - this is accrued on a day count basis. In
accordance with FCA requirements, deposits are only held with banks
that meet CASS regulations and the parameters set out in The
Company's client money policy.
(b) Basis of consolidation
Subsidiaries are all entities over which the Group has the power
to govern the financial and operating policies generally
accompanying a shareholding of more than half of the voting rights.
The existence and effect of potential voting rights that are
currently exercisable or convertible are considered when assessing
whether the Group controls another entity. Subsidiaries are fully
consolidated from the date on which control is transferred to the
Group. They are deconsolidated from the date on which control
ceases. The group financial statements consolidate the financial
statements of Jarvis Securities plc, Jarvis Investment Management
Limited, JIM Nominees Limited, Galleon Nominees Limited and Dudley
Road Nominees Limited made up to 30 June 2016.
The Group uses the purchase method of accounting for the
acquisition of subsidiaries. The cost of an acquisition is measured
as the fair value of the assets given, equity instruments issued
and liabilities incurred or assumed at the date of exchange.
Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured
initially at their fair values at the acquisition date,
irrespective of the extent of any minority interest. The cost of
acquisition over the fair value of the Group's share of
identifiable net assets acquired is recorded as goodwill. If the
cost of acquisition is less than the fair value of the Group's
share of the net assets of the subsidiary acquired, the difference
is recognised in the income statement.
Intra-group sales and profits are eliminated on consolidation
and all sales and profit figures relate to external transactions
only. No profit and loss account is presented for Jarvis Securities
plc as provided by S408 of the Companies Act 2006.
(c) Property, plant and equipment
All property, plant and equipment is shown at cost less
subsequent depreciation and impairment. Cost includes expenditure
that is directly attributable to the acquisition of the items.
Depreciation is provided on cost in equal annual instalments over
the lives of the assets at the following rates:
Leasehold improvements - 33% on cost, or over the lease period
if less than 3 years
Motor vehicles - 15% on cost
Office equipment - 20% on cost
Land & Buildings - Buildings are depreciated at 2% on cost.
Land is not depreciated.
The assets' residual values and useful lives are reviewed, and
adjusted if appropriate, at each balance sheet date. Gains and
losses on disposals are determined by comparing proceeds with
carrying amount. These are included in the income statement.
Impairment reviews of property, plant and equipment are undertaken
if there are indications that the carrying values may not be
recoverable or that the recoverable amounts may be less than the
asset's carrying value.
(d) Intangible assets
Intangible assets are carried at cost less accumulated
amortisation. If acquired as part of a business combination the
initial cost of the intangible asset is the fair value at the
acquisition date. Amortisation is charged to administrative
expenses within the income statement and provided on cost in equal
annual instalments over the lives of the assets at the following
rates:
Databases - 4% on cost
Customer relationships - 7% on cost
Software developments - 20% on cost
Website - 33% on cost
Impairment reviews of intangible assets are undertaken if there
are indications that the carrying values may not be recoverable or
that the recoverable amounts may be less than the asset's carrying
value.
(e) Goodwill
Goodwill represents the excess of the fair value of the
consideration given over the aggregate fair values of the net
identifiable assets of the acquired trade and assets at the date of
acquisition. Goodwill is tested annually for impairment and carried
at cost less accumulated impairment losses. Any negative goodwill
arising is credited to the income statement in full
immediately.
(f) Deferred income tax
Deferred income tax is provided in full, using the liability
method, on differences arising between the tax bases of assets and
liabilities and their carrying amounts in the consolidated
financial statements. The deferred income tax is not accounted for
if it arises from initial recognition of an asset or liability in a
transaction, other than a business combination, that at the time of
the transaction affects neither accounting or taxable profit or
loss. Deferred income tax is determined using tax rates that have
been enacted or substantially enacted by the balance sheet date and
are expected to apply when the related deferred income tax asset is
realised or the deferred income tax liability is settled.
Deferred income tax assets are recognised to the extent that it
is probable that future taxable profit will be available against
which the temporary differences can be utilised.
Deferred income tax is provided on temporary differences arising
on investments in subsidiaries except where the timing of the
reversal of the timing difference is controlled by the Group and it
is probable that the temporary differences will not reverse in the
foreseeable future.
(g) Segmental reporting
A business segment is a group of assets and operations engaged
in providing products or services that are subject to risks and
returns that are different from those of other business segments.
The directors regard the operations of the Group as a single
segment.
(h) Pensions
The group operates a defined contribution pension scheme.
Contributions payable for the year are charged to the income
statement.
(i) Trading balances
Trading balances incurred in the course of executing client
transactions are measured at initial recognition at fair value. In
accordance with market practice, certain balances with clients,
Stock Exchange member firms and other counterparties are included
as trade receivables and payables. The net balance is disclosed
where there is a legal right of set off.
(j) Operating leases and finance leases
Costs in respect of operating leases are charged on a straight
line basis over the lease term in arriving at the profit before
income tax. Where the company has entered into finance leases, the
obligations to the lessor are shown as part of borrowings and the
rights in the corresponding assets are treated in the same way as
owned fixed assets. Leases are regarded as finance leases where
their terms transfer to the lessee substantially all the benefits
and burdens of ownership other than right to legal title.
(k) Investments
The Group classifies its investments in the following
categories: investments held to maturity, investments held for
trading and available-for-sale investments. The classification
depends on the purpose for which the investments were acquired.
Management determines the classification of its investments at
initial recognition and re-evaluates this designation at every
reporting date.
Investments held to maturity
Investments held to maturity are stated at cost. Held to
maturity investments are non-derivative financial assets with fixed
or determinable payments and fixed maturity that an entity has the
positive intention and ability to hold to maturity. Assets in this
category are classified as non-current unless they are due to
mature in the 12 months following the balance sheet date.
Investments held for trading
Investments held for trading are stated at fair value. An
investment is classified in this category if acquired principally
for the purpose of selling in the short term. Assets in this
category are classified as current.
Purchases and sales of investments are recognised on the
trade-date - the date on which the Group commits to purchase or
sell the asset. Investments are initially recognised at fair value.
Investments are derecognised when the rights to receive cash flows
from the investments have expired or been transferred and the Group
has transferred substantially all the risks and rewards of
ownership. Realised and unrealised gains and losses arising from
changes in fair value of investments held for trading are included
in the income statement in the period in which they arise.
Unrealised gains and losses arising in changes in the fair value of
available-for-sale investments are recognised in equity. When
investments classified as available-for-sale are sold or impaired,
the accumulated fair value adjustments are included in the income
statement as gains and losses from investment securities.
The fair value of quoted investments is based on current bid
prices. If the market for an investment is not active, the Group
establishes fair value by using valuation techniques. These include
the use of recent arm's length transactions, reference to other
instruments that are substantially the same, or discounted cash
flow analysis refined to reflect the issuer's specific
circumstances.
The Group assesses at each balance sheet date whether there is
objective evidence that an investment is impaired. In the case of
investments classified as available-for-sale, a significant or
prolonged decline in the fair value below its cost is considered in
determining whether the security is impaired.
Investments in subsidiaries
Investments in subsidiaries are stated at cost less provision
for any impairment in value.
(l) Foreign exchange
The group offers settlement of trades in sterling as well as
various foreign currencies. The group does not hold any assets or
liabilities other than in sterling and converts client currency on
matching terms to settlement of trades realising any currency gain
or loss immediately in the income statement. Consequently the group
has no foreign exchange risk.
(m) Share capital
Incremental costs directly attributable to the issue of new
shares or options are shown in equity as a deduction from proceeds,
net of income tax. Where the company purchases its equity share
capital (treasury shares), the consideration paid, including any
directly attributable incremental costs (net of income tax), is
deducted from equity attributable to the company's equity holders
until the shares are cancelled, reissued or disposed of. Where such
shares are subsequently sold or reissued, any consideration
received, net of any directly incremental transaction costs and the
related income tax effects, is included in equity attributable to
the company's equity holders.
(n) Cash and cash equivalents
Cash and cash equivalents comprise 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 notified to shareholders
and final dividends are approved by the company's shareholders.
(q) Share based payments
The Group applies the requirements of IFRS 2 Share-based Payment
and IFRIC 11.
The Group issues equity-settled share-based payments to certain
employees and other personnel. Equity-settled share-based payments
are measured at fair value (excluding the effect of
non-market-based vesting conditions) at the date of grant. The fair
value determined at the grant date of the equity-settled
share-based payments is expensed on a straight-line basis over the
vesting period, based on the Group's estimate of shares that will
eventually vest and adjusted for the effects of non market-based
vesting conditions.
Fair value is measured by use of a Black-Scholes option pricing
model. The expected life used in the model has been adjusted, based
on management's best estimate, for the effects of
non-transferability, exercise restrictions and behavioural
considerations.
3. Segmental information
All of the reported revenue and operational results for the
period derive from the Group's continuing financial services
operations.
4. Income tax charge
Interim period income tax is accrued based on an estimated
average annual effective income tax rate of 20.25%.
5. Earnings per share
Six months ended Six months ended
30/6/16 30/6/15
Earnings Weighted Per Earnings Weighted Per
average share average share
no. of amount no. of amount
shares shares
--------------------------- ------------ ------------- -------- ------------ ------------- --------
GBP GBP p GBP GBP p
Earnings attributable
to ordinary shareholders 1,367,490 11,091,616 12.33 1,431,815 11,112,870 12.88
Dilutive effect
of options - 32,500 - - 32,500 -
Diluted earnings
per share 1,367,490 11,124,116 12.29 1,431,815 11,145,370 12.85
6. Dividends
During the interim period dividends totalling 8p (2015: 8p) per
ordinary share were declared and paid. On 8(th) July 2016 a
quarterly interim dividend of 4.5p per share was declared. This
will be paid on 8(th) September 2016.
7. Share capital
During the interim period 84,180 shares were purchased to be
held in treasury. As at the end on the interim period 161,800
shares are held in treasury.
8. Interim measurement
Costs that incur unevenly during the financial year are
anticipated or deferred in the interim report only if it would also
be appropriate to anticipate or defer such costs at the end of the
financial year.
9. Critical accounting estimates and judgements
The Group makes estimates and assumptions concerning the future.
These estimates and judgements are based on historical experience
and other factors, including expectations of future events that are
believed to be reasonable under the circumstances. The resulting
accounting estimates will, by definition, seldom equal the related
actual results. The estimates and assumptions that have a
significant risk of causing a material adjustment to the carrying
amounts of assets within the next financial year relate to
goodwill, intangible assets and the expense of employee
options.
The Group tests annually whether goodwill has suffered any
impairment, in accordance with the accounting policy stated in Note
2 (e). These calculations require the use of estimates.
The Group considers at least annually whether there are
indications that the carrying values of intangible assets may not
be recoverable, or that the recoverable amounts may be less than
the asset's carrying value, in which case an impairment review is
performed. These calculations require the use of estimates.
10. Related party transactions
The company has a lease with Sion Properties Limited, a company
controlled by A J Grant by virtue of his majority shareholding, for
the rental of 78 Mount Ephraim, a self-contained office building.
The lease has an annual rental of GBP63,500, being the market rate
on an arm's length basis, and expires on 26 September 2017.
11. Capital commitments
At 30 June the company had no material capital commitments.
12. Assets impairment review
The Group considers at least annually whether there are
indications that the carrying values of intangible assets may not
be recoverable, or that the recoverable amounts may be less than
the asset's carrying value, in which case an impairment review is
performed. These calculations require the use of estimates. The
Group also calculates the implied levels of variables used in the
calculations at which impairment would occur.
Enquiries:
Jarvis Securities plc 01892 510 515
Andrew Grant
Jolyon Head
WH Ireland Limited 0113 394 6600
Katy Mitchell
Liam Gribben
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR SEMFLSFMSEFW
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