REG - Jarvis Securities - RESULTS FOR THE YEAR ENDED 31 DECEMBER 2023
26/03/2024 07:00
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RNS Number : 2253I Jarvis Securities plc 26 March 2024
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.
26 March 2024
Jarvis Securities plc
("Jarvis" or "the Company" or "the Group")
RESULTS FOR THE YEAR ENDED 31 DECEMBER 2023
CHAIRMAN'S STATEMENT
· 15% decrease in profit before tax
· 27% decrease in interim dividend per share
· 20% decrease in EPS
This year has again been very challenging for Jarvis with the continuing
skilled person review and voluntary requirement ("VREQ") restrictions on the
firm's subsidiary Jarvis Investment Management Limited being the main focus
for the firm. This has had a material impact on costs and continues to do so
but conversely, the interest rate increases seen towards the end of 2022, as a
tool to fight inflation, continued through to Q3 of 2023, which has been of
benefit to the Group. Overall, we have traded in line with current
expectations for the year.
We continue to progress through the skilled person review. We were expecting
the skilled person to have provided their draft report for Phase 1c by 28
February 2024. This has been delayed, with the draft report now expected by
the end of April 2024. During Q2, we expect the skilled person to start its
phase 2 review and assurance report on the remediation work we have undertaken
to date.
The reduction in share transaction volumes first seen in the second half of
2022 has continued throughout 2023. 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 is now
much clearer.
As already announced in September 2022, the VREQ relates to our Model B
Corporate Clients, and over the last 18 months we have continually reviewed
those relationships. As a result of our risk assessments and categorisation, a
number of Corporate Clients have been off-boarded due to falling outside of
our risk appetite, whilst some have simply chosen to transfer elsewhere due to
the restrictions of the VREQ. Our Corporate Client universe has remained
steady since our assessments were completed in Q3 of the financial year under
review and we are pleased to continue to be approached regarding potential new
corporate introductions.
There have been significant enhancements to the onboarding processes and
ongoing monitoring of all our client relationships and our enhanced Compliance
Monitoring Plan is underway which will continuously give assurance as to the
adequacy and effectiveness of our operations, systems and controls for
monitoring compliance risk.
An area of change for Jarvis in 2024 is the decision to exit the SIPP market.
Jarvis Investment Management Limited will of course work with all clients and
SIPP Trustees to assist with a smooth transition to their preferred new
custodian or platform provider and enable full closures of these accounts.
One of the Group's income streams is interest earned on client funds. This
again has seen a significant upturn throughout the year, and has offset the
reduction in commission income due to lower trade volumes and the significant
one-off costs associated with the skilled person process. However, we are
working closely with the skilled person with regard to uninvested client cash,
interest retention and term deposits. Any potential impact on those income
streams from reductions in funds held should become clearer in the coming
months.
Despite these ongoing challenges the Board and staff at Jarvis remain
committed and are working tirelessly so that the business can continue and to
build for a stable, resilient future.
As always, I would like to thank all off our staff for their hard work and
support over what has been another 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 2023, together with a notice convening the
Annual General Meeting ("AGM"), to be held at the Company's offices on
Thursday 18(th) April 2024 at 9am. The Annual Report and Accounts and Notice
of AGM will also be available from today from the Company's
website, www.jarvissecurities.co.uk (http://www.jarvissecurities.co.uk/) .
Enquiries:
Jarvis Securities plc
Tel: 01892 510515
Andrew Grant
Kieran Price
WH Ireland Limited
Tel: 0113 394 6618
Katy Mitchell
Darshan Patel
Consolidated income statement for the year ended 31 december 2023
Year to Year to
31/12/23 31/12/22
Notes
£ £
Continuing operations:
Revenue 3 13,088,907 12,606,516
Administrative expenses (6,523,706) (6,212,770)
Exceptional administrative expenses 5 (1,337,522) (249,936)
Lease finance costs 13 (17,090) (5,785)
Profit before income tax 5 5,210,589 6,138,026
Income tax charge 7 (1,229,356) (1,163,303)
Profit for the period 3,981,233 4,974,723
Attributable to equity holders of the parent 3,981,233 4,974,723
Earnings per share 8 P P
Basic and diluted 8.90 11.12
Consolidated statement of comprehensive income for the year
Notes Year to Year to
31/12/23 31/12/22
£ £
Profit for the period 3,981,233 4,974,723
Total comprehensive income for the period 3,981,233 4,974,723
Attributable to equity holders of the parent 3,981,233 4,974,723
Consolidated STATEMENT OF FINANCIAL POSITION at 31 december 2023
31/12/23 31/12/22
Notes
£ £
Assets
Non-current assets
Property, plant and equipment 9 505,184 598,044
Intangible assets 10 45,331 70,142
Goodwill 10 342,872 342,872
893,387 1,011,058
Current assets
Trade and other receivables 12 2,011,608 3,388,927
Investments held for trading 14 11,966 8,769
Cash and cash equivalents 15 5,514,075 4,278,737
7,537,649 7,676,433
Total assets 8,431,036 8,687,491
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 4,912,384 4,845,114
Total equity attributable to the equity holders of the parent 5,043,957 4,976,687
Non-current liabilities
Deferred tax 7 54,266 60,044
Lease liabilities 13 223,515 297,512
277,781 357,556
Current liabilities
Trade and other payables 17 2,541,690 2,739,330
Lease liabilities 13 73,997 70,410
Income tax 17 493,611 543,508
3,109,298 3,353,248
Total liabilities 3,387,079 3,710,804
Total equity and liabilities 8,431,036 8,687,491
CoMPANY STATEMENT OF FINANCIAL POSITION at 31 december 2023
31/12/23 31/12/22
Notes
£ £
Assets
Non-current assets
Property, plant and equipment 9 505,184 598,044
Intangible assets 10 45,331 70,142
Goodwill 10 342,872 342,872
Investment in subsidiaries 11 884,239 284,239
1,777,626 1,295,297
Current assets
Trade and other receivables 12 166,298 87,924
Cash and cash equivalents 15 1,406,811 1,925,466
1,573,109 2,013,390
Total assets 3,350,735 3,308,687
Equity and liabilities
Capital and reserves
Share capital 16 111,828 111,828
Capital redemption reserve 9,845 9,845
Retained earnings 1,840,421 625,967
Total equity attributable to the equity holders 1,962,094 747,640
Non-current Liabilities
Deferred Tax 7 55,523 61,006
Lease Liabilities 13 223,514 297,512
279,037 358,518
Current liabilities
Trade and other payables 17 541,996 1,615,986
Lease liabilities 13 73,997 70,410
Income tax 17 493,611 516,133
1,109,604 2,202,529
Total liabilities 1,388,641 2,561,047
Total equity and liabilities 3,350,735 3,308,687
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Capital redemption reserve Retained earnings Total equity
Share capital Merger reserve
£ £ £ £ £
At 1 January 2022 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
Profit for the financial year - - - 3,981,233 3,981,233
Dividends - - - (3,913,962) (3,913,962)
At 31 December 2023 111,828 9,900 9,845 4,912,385 5,043,958
COMPANY STATEMENT OF CHANGES IN EQUITY
Share capital Capital redemption reserve Retained earnings
Total equity
£ £ £ £
At 1 January 2022 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
Profit for the financial year - - 5,128,416 5,128,416
Dividends - - (3,913,962) (3,913,962)
At 31 December 2023 111,828 9,845 1,840,421 1,962,094
statement OF cashflows
for the year ended 31 december 2023
CONSOLIDATED COMPANY
Year to Year to Year to Year to
31/12/23 31/12/22 31/12/23 31/12/22
Notes
£ £ £ £
Cash flow from operating activities
Profit before income tax 5,210,589 6,138,026 6,710,558 6,250,665
Depreciation and amortisation 5 118,421 131,203 118,421 131,203
Lease finance cost 17,090 5,785 17,090 5,785
5,346,100 6,275,014 6,846,069 6,387,653
(Increase) /Decrease in trade and other receivables 1,377,319 2,971,537 (78,374) 51,034
(Decrease) /Increase in trade payables (197,640) (2,161,711) (1,399,106) (813,317)
Cash generated from operations 6,525,779 7,084,840 5,368,589 5,625,370
Income tax (paid)/received (1,285,032) (1,323,288) (1,285,032) (772,817)
Net cash from operating activities 5,240,747 5,761,552 4,083,557 4,852,553
Cash flows from investing activities
Purchase of property, plant and equipment - (12,583) - (12,448)
Purchase of investments held for trading (57,933) (2,797,364) - -
Proceeds from sale of investments held for trading 54,736 2,790,552 - -
Investments in subsidiaries - - (600,000) -
Purchase of intangible assets (750) (12,448) (750) (12,583)
Cash flows from investing activities (3,946) (31,843) (600,750) (25,031)
Dividends paid (3,913,962) (5,144,065) (3,913,962) (5,144,065)
Lease finance costs (17,090) (5,875) (17,090) (5,875)
Repayment of lease liability (70,410) (81,626) (70,410) (81,626)
Net cash used in financing activities (4,001,462) (5,231,566) (4,001,462) (5,231,566)
Net (decrease)/ increase in cash & cash equivalents 1,235,338 (498,143) (518,655) (404,044)
Cash and cash equivalents at the start of the year 4,278,737 3,780,594 1,925,466 2,329,510
Cash and cash equivalents at the end of the year 5,514,075 4,278,737 1,406,811 1,925,466
Cash and cash equivalents:
Balance at bank and in hand 5,169,380 5,499,464 1,406,811 1,925,466
Cash held for settlement of market transactions 344,695 (1,220,727) - -
5,514,075 4,278,737 1,406,811 1,925,466
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 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.
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.
2. Accounting policies (continued)
(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 2023.
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.
2. Accounting policies (continued)
(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
temporary 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.
2. Accounting policies (continued)
(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.
2023 2022
£ £
Gross interest earned from treasury deposits, cash at bank and overdrawn 7,614,815 5,472,439
client accounts
Commissions 2,660,896 3,812,087
Fees 2,813,196 3,321,990
13,088,907 12,606,516
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 2023 2022
Profit before income tax is stated after charging/(crediting): £ £
Directors' emoluments 586,881 598,733
Depreciation - right of use asset 76,997 79,979
Depreciation - owned assets 15,863 14,393
Amortisation (included within administrative expenses in the consolidated 25,561 25,668
income statement)
Low value leases 8,852 8,852
Impairment of receivable charge / (credit) (65,466) (77,450)
Bank transaction fees 51,362 65,914
Details of directors' annual remuneration as at 31 December 2023 are set
out below:
2023 2022
£ £
Short-term employee benefits 510,823 550,551
Post-employment benefits 62,893 40,000
Benefits in kind 13,165 8,182
586,881 598,733
Details of the highest paid director are as follows:
Aggregate emoluments 357,500 415,700
Benefits in kind 11,133 8,182
368,633 423,882
Emoluments & Benefits in kind Pension Total
Directors £ £ £
Andrew J Grant 368,633 - 368,633
Kieran M Price 31,199 2,167 33,366
Jolyon C Head 98,156 60,726 158,882
S M Middleton 26,000 - 26,000
TOTAL 523,988 62,893 586,881
During the year benefits accrued for two directors (2022: one director) 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:
2023 2022
Management and administration 54 59
The aggregate payroll costs of these persons were as follows: £ £
Wages & salaries 2,306,091 2,274,813
Social security 243,955 244,034
Pension contributions including salary sacrifice 107,971 78,610
2,658,017 2,597,457
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 £80,549 (2022: £75,840).
Exceptional administrative costs
Exceptional administrative costs represent external third party
professional advice and consultancy relating to the ongoing remediation and
skilled persons work within the firm's subsidiary Jarvis Investment Management
Limited.
6. Auditors' remuneration
During the year the company obtained the following services from the company's
auditors as detailed below:
2023 2022
£ £
Fees payable to the company's auditors for the audit of the company's annual
financial
statements 33,000 28,000
Fees payable to the company's auditors and its associates for other services:
The audit of the company's subsidiaries, pursuant to legislation 17,000 15,000
Total audit fees 50,000 43,000
Taxation Compliance 5,650 5,560
55,650 48,560
The audit costs of the subsidiaries were invoiced to and met by Jarvis
Securities plc.
7. Income and deferred tax charges - group 2023 2022
£ £
Based on the adjusted results for the year:
UK corporation tax 1,231,304 1,165,733
Adjustments in respect of prior years 3,830 (546)
Total current income tax 1,235,134 1,165,187
Deferred income tax:
Origination and reversal of temporary differences (5,779) (1,883)
Adjustment in respect of prior years 2 (1)
Adjustment in respect of change in deferred tax rates - -
Total deferred tax charge (5,777) (1,884)
1,229,357 1,163,303
The income tax assessed for the year is more than the standard rate of
corporation tax in the UK (23.5%). The differences are explained below:
Profit before income tax 5,210,589 6,138,026
Profit before income tax multiplied by the standard rate of corporation tax in
the UK of
23.5% (2022 - 19%) 1,225,559 1,166,225
Effects of:
Expenses not deductible for tax purposes - -
Adjustments to tax charge in respect of previous years 3,832 (547)
Ineligible depreciation 397 320
Adjustment in respect of change in deferred tax rate (431) (2,695)
Current income tax charge for the years 1,229,356 1,163,303
The income tax assessed for the year is more than the standard rate of
corporation tax in the UK (23.5%). The differences are explained below:
Profit before income tax
5,210,589
6,138,026
Profit before income tax multiplied by the standard rate of corporation tax in
the UK of
23.5% (2022 - 19%)
1,225,559
1,166,225
Effects of:
Expenses not deductible for tax purposes
-
-
Adjustments to tax charge in respect of previous years
3,832
(547)
Ineligible depreciation
397
320
Adjustment in respect of change in deferred tax rate
(431)
(2,695)
Current income tax charge for the years
1,229,356
1,163,303
Movement in (assets) / provision - group:
Provision at start of year 60,044 61,928
Deferred income tax charged in the year (5,778) (1,884)
Provision at end of year 54,266 60,044
Movement in (assets) / provision - company:
Provision at start of year 61,006 62,847
Deferred income tax charged in the year (5,483) (1,841)
Provision at end of year 55,523 61,006
8. Earnings per share 2023 2022
£ £
Earnings:
Earnings for the purposes of basic and diluted earnings per share
(profit for the period attributable to the equity holders of the parent) 3,981,233 4,974,723
Number of shares:
Weighted average number of ordinary shares for the purposes of basic earnings 44,731,000 44,731,000
per share
44,731,000 44,731,000
9. Property, plant & equipment - group & company
Right of use assets - Leasehold Leasehold & Property Office Total
Equipment
Cost: £ £ £ £
At 1 January 2022 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
Additions - - - -
Disposals - - - -
At 31 December 2023 384,985 222,450 73,112 680,547
Depreciation:
At 1 January 2022 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
Charge for the year 76,997 1,949 13,914 92,860
On Disposal - - - -
At 31 December 2023 96,247 22,901 56,215 175,363
Net Book Value:
At 31 December 2023 288,738 199,549 16,897 505,184
At 31 December 2022 365,735 201,498 30,811 598,044
The net book value of non-depreciable land is £125,000 (2022: £125,000).
10. Intangible assets & goodwill - group & company
Intangible assets
Databases Software Website Total
Goodwill Development
£ £ £ £ £
Cost:
At 1 January 2022 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
Additions - - 750 - 750
Disposals - - - - -
At 31 December 2023 342,872 25,000 147,538 3,877 176,415
Amortisation:
At 1 January 2022 - 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
Charge for the year - 1,000 23,269 1,292 25,561
On Disposal - - - - -
At 31 December 2023 - 20,636 107,003 3,445 131,084
Net Book Value:
At 31 December 2023 342,872 4,364 40,536 432 45,331
At 31 December 2022 342,872 5,364 63,054 1,724 70,142
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
2023 2022
Unlisted Investments: £ £
Cost:
At 1 January 284,239 284,239
Investments during the year 600,000 -
As at 31 December 884,239 284,239
Shareholding Holding Business
Jarvis Investment Management Limited 100% 85,000,000 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: 2023 2022 2023 2022
£ £ £ £
Trade receivables 781,000 381,367 106,899 -
Settlement receivables 821,072 2,498,019 - -
Other receivables 21,875 83,910 21,875 83,911
Prepayments and accrued income 350,037 425,631 21,875 1,750
Other taxes and social security 37,624 - 15,648 2,263
2,011,608 3,388,927 166,298 87,924
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 2023
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 65,625 -
Finance charge 13,503 9,733 5,711 1,607 -
Net present value 73,997 77,767 81,729 64,018 -
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
2023
Lease liabilities included in the current statement of financial position £
Current 73,997
Non-current 223,515
297,512
2022
£
Amounts recognised in income statement 17,090
17,090
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 2023 was £87,500.
14. Investments held for trading Group Company
2023 2022 2023 2022
Listed Investments: £ £ £ £
Valuation:
At 1 January 8,769 1,958 - -
Additions 57,933 2,797,363 - -
Disposals (54,736) (2,790,552) - -
As at 31 December 11,966 8,769 - -
Listed investments held for trading are stated at their market value at 31
December 2023 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
2023 2022 2023 2022
£ £ £ £
Balance at bank and in hand - group/company 5,169,380 5,499,464 1,406,811 1,925,466
Cash held for settlement of market transactions 344,695 (1,220,727) - -
5,514,075 4,278,737 1,406,811 1,925,466
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 £376,394 (2022 :
£1,088,375) 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
2023 2022
Authorised: 160,000 160,000
64,000,000 Ordinary shares of 0.25p each
160,000
160,000
2023 2022
£ £
At 1 January 2023 and 2022 111,828 111,828
Allotted, issued and fully paid:
44,731,000 (2022: 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: 2023 2022 2023 2022
£ £ £ £
Trade payables 461,328 231,920 8,829 13,586
Settlement payables 1,126,083 1,219,465 - -
Amount owed to group undertaking - - 482,067 1,549,300
Other taxes and social security - 125,646 - -
Other payables 627,239 808,027 - -
Accruals 327,040 354,272 51,100 53,100
Trade and other payables 2,541,690 2,739,330 541,996 1,615,986
Lease liabilities 73,997 70,410 73,997 70,410
Income tax 493,611 543,508 493,611 516,133
Total liabilities 3,109,298 3,353,248 1,109,604 2,202,529
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 2023 2022
£ £
Interim dividends paid on Ordinary 1p shares 3,913,962 5,144,065
Dividend per Ordinary 1p share 8.75 11.5
Please refer to the directors' report for dividends declared post year end.
19. Financial Instruments
The group's principal financial instruments comprise cash 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. Immediate and ultimate parent undertaking
There is no immediate or ultimate controlling party.
21. 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 £18,000 (2022: £12,500) for rental of a disaster recovery site.
Jarvis Securities plc owed Jarvis Investment Management Limited £482,067
(2022: £1,549,300) 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 2023, these same related parties had cash balances of £44,738 (2022:
£810,742). No interest was earned during the year (2022: £0). In addition
to cash balances other equity assets of £4,151,917 (2022: £30,479,543) were
held by JIM Nominees Ltd as custodian.
During the year Jarvis Securities Plc charged £7,365,165 (2022: £4,871,178)
to Jarvis Investment Management Limited for use of intellectual properties.
At the period end Directors directly held 11,125,620 shares in the company
(2022: 11,203,924). A further 12,546,130 shares (2022: 12,547,330) shares were
held by concert parties of the directors as defined by the City Code on
Takeovers and Mergers.
22. Capital commitments
As of 31 December 2023, the company had no capital commitments (2022: nil).
23. 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.
24. 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 any 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. Though 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 monitored as a potential 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 regularly 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 2023, trade receivables of £275,691 (2022: £128,948) were
past due and were impaired and partially provided for. The amount of the
provision was £35,506 as at 31 December 2023 (2022: £57,828). 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: 2023 2022 2023 2022
£ £ £ £
At 1 January 57,828 143,524 - -
Charge / (credit) for the year (13,724) (77,450) - -
Uncollectable amounts written off (8,598) (8,246) - -
At 31 December 35,506 57,828 - -
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