REG - Jarvis Securities - Results for year ended 31 December 2021
10/03/2022 07:01
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RNS Number : 1829E Jarvis Securities plc 10 March 2022
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CONSTITUTE INSIDE INFORMATION AS STIPULATED UNDER THE EU MARKET ABUSE
REGULATION (596/2014). UPON THE PUBLICATION OF THE ANNOUNCEMENT VIA A
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10 March 2022
Jarvis Securities plc
("Jarvis" or "the Company" or "the Group")
RESULTS FOR THE YEAR ENDED 31 DECEMBER 2021
HIGHLIGHTS
· 12% increase in profit before tax
· 22% growth in interim dividend per share (excludes 2021 special
dividend)
· 9% increase in EPS
CHAIRMAN'S STATEMENT
It pleases me greatly that for the 3(rd) year running I am commenting on
another record-breaking set of results. Our 2020 figures may have been viewed
as a pandemic related "one off" but improving on those in 2021 indicates that
given favourable market conditions they can be bettered. Given current global
events this may prove a challenge in the short term, but the fundamental
outlook for the business remains positive.
2021 was very much a year of two halves, with trade volumes high in the first
five months but then tailed off in the second half as markets generally became
quieter. Overall, the general trend for our settlement and transaction volume
continues upwards. Market sentiment can however in the short term overshadow
the long-term growth being achieved and future outlook for the business. The
cash balances held under administration have continued to grow, but in 2021 we
saw the average interest rate achieved on deposits continue to fall. We are
now seeing an upward turn and rates earned on new funds are back up to a level
not seen for over two years and further increases seem very likely. Looking
to 2022 and beyond, my view is that monetary policy is entering a new phase
and one which Jarvis is well positioned to benefit from. Much of the cash we
administer is maturing in the short term and will be available to capture
increases in rates as they materialise. Added to this interest income has
minimal associated marginal costs.
Against this positive outlook we are experiencing cost increases from many of
our suppliers. Some of these have been passed onto our commercial customers,
however we would prefer to offset these cost increases through continued
growth in order to maintain our competitive pricing model.
We intend to continue growing the business organically and return profits to
shareholders where regulatory capital and cashflow permit. We were able to pay
a special dividend to shareholders in 2021 through the cancellation of the
share premium reserve. This was not an expensive exercise though it did
require High Court approval so some legal costs were incurred but it allowed
us to pay out reserves that had built up in the business. Much of the cash for
this transaction was generated from the profitable sale of treasury shares
purchased. The Board retains the authority to purchase shares to be held in
treasury and may repurchase shares if considered to be in stakeholders'
interests.
We have a diversified revenue stream which allows the business to perform in
changing market conditions so I continue to be optimistic that the business
will continue to thrive.
As always, I would like to thank the staff at Jarvis for their continued hard
work.
Andrew Grant
Chairman
Annual General Meeting
The Company will today dispatch to shareholders its Annual Report and Accounts
for the year ended 31 December 2021, together with a notice convening the
Annual General Meeting ("AGM"), to be held at the Company's offices on
Thursday 21(st) April at 9am. The Annual Report and Accounts and Notice of
AGM will also be available from the Company's
website, www.jarvissecurities.co.uk (http://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 2021
Year to Year to
31/12/21 31/12/20
Notes
£ £
Continuing operations:
Revenue 3 14,297,263 13,341,136
Administrative expenses (6,632,746) (6,465,029)
Lease finance costs (3,520) (5,993)
Profit before income tax 5 7,660,997 6,870,114
Income tax charge 7 (1,480,146) (1,310,424)
Profit for the period 6,180,851 5,559,691
Attributable to equity holders of the parent 6,180,851 5,559,691
Earnings per share 8 P P
Basic and diluted 13.91 12.72
Consolidated statement of comprehensive income for the year
Notes Year to Year to
31/12/21 31/12/20
£ £
Profit for the period 6,180,851 5,559,691
Total comprehensive income for the period 6,180,851 5,559,691
Attributable to equity holders of the parent 6,180,851 5,559,691
Company No.: 5107012
Consolidated STATEMENT OF FINANCIAL POSITION at 31 december 2021
31/12/21 31/12/20
Notes
£ £
Assets
Non-current assets
Property, plant and equipment 9 295,767 379,814
Intangible assets 10 93,606 102,019
Goodwill 10 342,872 342,872
732,245 824,705
Current assets
Trade and other receivables 12 6,361,707 6,923,154
Investments held for trading 14 1,958 4,183
Cash and cash equivalents 15 3,780,594 3,794,980
10,144,259 10,722,317
Total assets 10,876,504 11,547,022
Equity and liabilities
Capital and reserves
Share capital 16 111,828 111,828
Share premium - 1,655,640
Merger reserve 9,900 9,900
Capital redemption reserve 9,845 9,845
Retained earnings 5,014,456 5,672,848
Own shares held in treasury 16 - (886,113)
Total equity attributable to the equity holders of the parent 5,146,029 6,573,948
Non-current liabilities
Deferred tax 7 61,928 45,617
Lease liabilities 13 - 64,653
61,928 110,270
Current liabilities
Trade and other payables 17 4,900,444 4,176,030
Lease liabilities 13 64,653 83,980
Income tax 17 703,450 602,794
5,668,547 4,862,804
Total liabilities 5,730,475 4,973,074
Total equity and liabilities 10,876,504 11,547,022
Company No.: 5107012
CoMPANY STATEMENT OF FINANCIAL POSITION at 31 december 2021
31/12/21 31/12/20
Notes
£ £
Assets
Non-current assets
Property, plant and equipment 9 295,767 379,814
Intangible assets 10 93,606 102,019
Goodwill 10 342,872 342,872
Investment in subsidiaries 11 284,239 284,239
1,016,484 1,108,944
Current assets
Trade and other receivables 12 138,958 388,288
Cash and cash equivalents 15 2,329,510 2,222,469
2,468,468 2,610,757
Total assets 3,484,952 3,719,701
Equity and liabilities
Capital and reserves
Share capital 16 111,828 111,828
Share premium - 1,655,640
Capital redemption reserve 9,845 9,845
Retained earnings 400,083 1,481,763
Own shares held in treasury 16 - (886,113)
Total equity attributable to the equity holders 521,756 2,372,963
Non-current liabilities
Deferred tax 7 62,847 46,253
Lease liabilities 13 - 64,653
62,847 110,906
Current liabilities
Trade and other payables 17 2,427,462 801,020
Lease liabilities 13 64,653 83,980
Income tax 17 408,234 350,832
2,900,349 1,235,832
Total liabilities 2,963,196 1,346,738
Total equity and liabilities 3,484,952 3,719,701
The parent company's profit for the financial year was £5,757,563 (2020:
£4,541,208).
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Capital redemption reserve Retained earnings Total equity
Share capital Share premium Merger reserve
Own shares held in Treasury
£ £ £ £ £ £ £
At 1 January 2020 111,828 1,576,669 9,900 9,845 4,949,467 (981,136) 5,676,573
Profit for the financial year - - - - 5,559,691 - 5,559,691
Sale of own shares held in treasury
- 78,971 - - - 95,023 173,994
Dividends - - - - (4,836,310) - (4,836,310)
At 31 December 2020 111,828 1,655,640 9,900 9,845 5,672,848 (886,113) 6,573,948
Profit for the financial year - - - - 6,180,851 - 6,180,851
Sale of own shares held in treasury - 1,412,372 - - (95,834) 886,113 2,202,651
Cancellation of share premium - (3,068,012) - - 3,068,012 - -
Dividends - - - - (9,811,421) - (9,811,421)
At 31 December 2021 111,828 - 9,900 9,845 5,014,456 - 5,146,029
COMPANY STATEMENT OF CHANGES IN EQUITY
Capital redemption reserve Retained earnings Own shares held in treasury
Share capital Share premium
Total equity
£ £ £ £ £ £
At 1 January 2020 111,828 1,576,669 9,845 1,776,865 (981,136) 2,494,071
Profit for the financial year - - - 4,541,208 - 4,541,208
Sale of own shares held in treasury
Dividends - 78,971 - - 95,023 173,994
- - - (4,836,310) - (4,836,310)
At 31 December 2020 111,828 1,655,640 9,845 1,481,763 (886,113) 2,372,963
Profit for the financial year - - - 5,757,563 - 5,757,563
Sale of own shares held in treasury
- 1,412,372 - (95,834) 886,113 2,202,651
Cancellation of share premium - (3,068,012) - 3,068,012 - -
Dividends - - - (9,811,421) - (9,811,421)
At 31 December 2021 111,828 - 9,845 400,083 - 521,756
statement OF cashflows
for the year ended 31 december 2021
CONSOLIDATED COMPANY
Year to Year to Year to Year to
31/12/21 31/12/20 31/12/21 31/12/20
Notes
£ £ £ £
Cash flow from operating activities
Profit before income tax 7,660,997 6,870,114 6,364,617 5,250,277
Depreciation and amortisation 5 127,433 142,908 127,433 142,908
Lease finance cost 3,520 5,993 3,520 5,993
7,791,950 7,019,015 6,495,570 5,399,178
(Increase) /Decrease in trade and other receivables 566,607 (3,465,602) 249,330 248,051
(Decrease) /Increase in trade payables 719,254 907,847 1,626,443 (90,415)
Cash generated from operations 9,077,811 4,461,260 8,371,343 5,556,814
Income tax (paid)/received (1,363,179) (1,150,000) (533,059) (708,090)
Net cash from operating activities 7,714,632 3,311,260 7,838,284 4,848,724
Cash flows from investing activities
Purchase of property, plant and equipment (11,296) (11,837) (11,296) (11,837)
Purchase of investments held for trading (1,272,780) (1,060,177) - -
Proceeds from sale of investments held for trading
Purchase of intangible assets 1,275,005 1,060,594 - -
(23,677) (46,005) (23,677) (46,005)
Cash flows from financing activities (32,748) (57,425) (34,973) (57,842)
Sale of treasury shares 2,202,651 173,994 2,202,651 173,994
Dividends paid (9,811,421) (4,836,310) (9,811,421) (4,836,310)
Lease finance cost (3,520) (5,993) (3,520) (5,993)
Repayment of lease liability (83,980) (81,507) (83,980) (81,507)
Net cash used in financing activities (7,696,270) (4,749,816) (7,696,270) (4,749,816)
Net (decrease)/ increase in cash & cash equivalents (14,386) (1,495,981) 107,041 41,066
Cash and cash equivalents at the start of the year 3,794,980 5,290,961 2,222,469 2,181,403
Cash and cash equivalents at the end of the year 3,780,594 3,794,980 2,329,510 2,222,469
Cash and cash equivalents:
Balance at bank and in hand 4,864,077 6,320,942 2,329,510 2,222,469
Cash held for settlement of market transactions (1,083,483) (2,525,962) - -
3,780,594 3,794,980 2,329,510 2,222,469
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 2021.
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 £404,863 at the
lease start date of 27 September 2017. A finance charge of 3% 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.
2021 2020
£ £
Gross interest earned from treasury deposits, cash at bank and overdrawn 4,512,260 4,580,067
client accounts
Commissions 5,926,669 5,279,932
Fees 3,858,334 3,481,138
14,297,263 13,341,136
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 2021 2020
Profit before income tax is stated after charging/(crediting): £ £
Directors' emoluments 491,426 723,545
Depreciation - right of use asset 80,973 80,973
Depreciation - owned assets 14,370 12,521
Amortisation (included within administrative expenses in the consolidated 32,090 49,414
income statement)
Low value leases 8,852 8,852
Impairment of receivable charge 13,152 30,305
Bank transaction fees 121,957 91,462
Details of directors' annual remuneration as at 31 December 2021 are set
out below:
2021 2020
£ £
Short-term employee benefits 438,850 654,362
Post-employment benefits 44,043 60,663
Benefits in kind 8,533 8,520
491,426 723,545
Details of the highest paid director are as follows:
Aggregate emoluments 315,700 315,700
Company contributions to personal pension scheme - -
Benefits in kind 8,533 7,788
324,233 323,488
Emoluments & Benefits in kind Pension Total
Directors £ £ £
Andrew J Grant 324,233 - 324,233
Jolyon C Head 98,650 44,043 142,693
G S McAusland (resigned 31 March 2021) 6,500 - 6,500
S M Middleton (appointed 1 April 2021) 18,000 - 18,000
TOTAL 447,383 44,043 491,426
During the year benefits accrued for one director (2020: 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:
2021 2020
Management and administration 63 61
The aggregate payroll costs of these persons were as follows: £ £
Wages, salaries & social security 2,487,787 2,653,470
Pension contributions including salary sacrifice 78,831 93,766
2,566,618 2,747,236
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 £56,835 (2020: 85,159).
6. Auditors' remuneration
During the year the company obtained the following services from the company's
auditors as detailed below:
2021 2020
£ £
Fees payable to the company's auditors for the audit of the company's annual
financial statements
26,000 25,000
Fees payable to the company's auditors and its associates for other services:
The audit of the company's subsidiaries, pursuant to legislation 10,000 9,000
Total audit fees 36,000 34,000
Taxation Compliance 5,500 5,000
41,500 39,000
The audit costs of the subsidiaries were invoiced to and met by Jarvis
Securities plc.
7. Income and deferred tax charges - group 2021 2020
£ £
Based on the adjusted results for the year:
UK corporation tax 1,463,681 1,303,937
Adjustments in respect of prior years 154 (465)
Total current income tax 1,463,835 1,303,472
Deferred income tax:
Origination and reversal of timing differences 2,052 3,039
Adjustment in respect of prior years (126) (569)
Adjustment in respect of change in deferred tax rates 14,386 4,482
Total deferred tax charge 16,312 6,952
1,480,146 1,310,424
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 7,660,997 6,870,114
Profit before income tax multiplied by the standard rate of corporation tax in
the UK of
1,455,589 1,305,322
19% (2020 - 19%)
Effects of:
Expenses not deductible for tax purposes 9,346 1,486
IFRS 16 transitional adjustment - (122)
Adjustments to tax charge in respect of previous years 28 (1,034)
Ineligible depreciation 320 290
Adjust in respect of change in deferred tax rate 14,863 4,482
Current income tax charge for the years 1,480,146 1,310,424
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
7,660,997
6,870,114
Profit before income tax multiplied by the standard rate of corporation tax in
the UK of
19% (2020 - 19%)
1,455,589
1,305,322
Effects of:
Expenses not deductible for tax purposes
IFRS 16 transitional adjustment
9,346
-
1,486
(122)
Adjustments to tax charge in respect of previous years
28
(1,034)
Ineligible depreciation
Adjust in respect of change in deferred tax rate
320
14,863
290
4,482
Current income tax charge for the years
1,480,146
1,310,424
Movement in (assets) / provision - group:
Provision at start of year 45,617 38,664
Deferred income tax charged in the year 16,311 6,953
Provision at end of year 61,928 45,617
Movement in (assets) / provision - company:
Provision at start of year 46,253 38,664
Deferred income tax charged in the year 16,594 7,589
Provision at end of year 62,847 46,523
8. Earnings per share 2021 2020
£ £
Earnings:
Earnings for the purposes of basic and diluted earnings per share
(profit for the period attributable to the equity holders of the parent) 6,180,851 5,559,691
Number of shares:
Weighted average number of ordinary shares for the purposes of basic earnings 44,419,318 43,739,085
per share
44,419,318 43,739,085
On 29 October 2020 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 2020 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 Total
Equipment
Cost: £ £ £
At 1 January 2020 303,648 222,450 296,283 822,381
Additions - - 11,837 11,837
Disposals - - - -
At 31 December 2020 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
Depreciation:
At 1 January 2020 80,973 15,105 264,832 360,910
Charge for the year 80,973 1,949 10,572 93,494
On Disposal - - - -
At 31 December 2020 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
Net Book Value:
At 31 December 2021 60,729 203,447 31,591 295,767
At 31 December 2020 141,702 205,396 32,716 379,814
The net book value of non-depreciable land is £125,000 (2020: £125,000).
10. Intangible assets & goodwill - group & company
Intangible assets
Customer Databases Software Website Total
Goodwill Relationships Development
£ £ £ £ £ £
Cost:
At 1 January 2020 342,872 177,981 25,000 299,286 261,713 763,980
Additions - - - 46,005 - 46,005
At 31 December 2020 342,872 177,981 25,000 345,291 261,713 809,985
Additions - - - 23,677 - 23,677
At 31 December 2021 342,872 177,981 25,000 368,968 261,713 833,662
Amortisation:
At 1 January 2020 - 177,981 16,719 238,599 225,253 658,552
Charge for the year - - 1,000 20,289 28,125 49,414
At 31 December 2020 - 177,981 17,719 258,888 253,378 707,966
Charge for the year - - 1,000 27,752 3,338 32,090
At 31 December 2021 - 177,981 18,719 286,640 256,716 740,056
Net Book Value:
At 31 December 2021 342,872 - 6,281 82,328 4,997 93,606
At 31 December 2020 342,872 - 7,281 86,403 8,335 102,019
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
2021 2020
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: 2021 2020 2021 2020
£ £ £ £
Trade receivables 1,504,513 588,989 - 24,000
Settlement receivables 4,365,820 5,654,665 - -
Other receivables 128,183 352,864 122,265 343,125
Prepayments and accrued income 363,191 326,636 15,673 14,984
Other taxes and social security - - 1,020 6,179
6,361,707 6,923,154 138,958 388,288
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 2021
is as follows:
< 1 year (£) 1-2 years (£) 2-3 years (£)
Lease payment 65,625 - -
Finance charge 972 - -
Net present value 64,653 - -
The undiscounted maturity analysis of lease liabilities as at 31 December 2020
is as follows:
< 1 year (£) 1-2 years (£) 2-3 years (£)
Lease payment 87,500 65,625 -
Finance charge 3,520 972 -
Net present value 83,980 64,653 -
2021
Lease liabilities included in the current statement of financial position £
Current 64,653
Non-current -
64,653
2021
£
Amounts recognised in income statement 3,520
3,520
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 2021 was £87,500. There is an option to terminate the
lease on 26 September 2022 and therefore this is the discounted period.
14. Investments held for trading Group Company
2021 2020 2021 2020
Listed Investments: £ £ £ £
Valuation:
At 1 January 4,183 4,600 - -
Additions 1,272,780 1,060,177 - -
Disposals (1,275,005) (1,060,594) - -
As at 31 December 1,958 4,183 - -
Listed investments held for trading are stated at their market value at 31
December 2021 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
2021 2020 2021 2020
£ £ £ £
Balance at bank and in hand - group/company 4,864,077 6,320,942 2,329,510 2,222,469
Cash held for settlement of market transactions (1,083,483) (2,525,962) - -
3,780,594 3,794,980 2,329,510 2,222,469
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 £1,527,547 (2020:
£2,111,321) 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
2021 2020
Authorised: 160,000 160,000
64,000,000 Ordinary shares of 0.25p each
160,000
160,000
2021 2020
£ £
At 1 January 2021 111,828 111,828
Allotted, issued and fully paid:
44,731,000 (2020: 44,731,000) Ordinary shares of 1p each 111,828 111,828
The company has one class of ordinary shares which carry no right to fixed
income.
On 29 October 2020 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 2020 figures have been adjusted
to reflect this subdivision. Shares held in treasury are deducted for the
purpose of calculating earnings per share. During the period 917,600 shares
were sold from treasury. As at the period end no shares are held in treasury.
17. Trade and other payables Group Company
Amounts falling due within one year: 2021 2020 2021 2020
£ £ £ £
Trade payables 383,364 188,688 1,015 10,554
Settlement payables 3,138,814 2,997,247 - -
Amount owed to group undertaking - - 2,383,347 750,866
Other taxes and social security 107,162 174,712 - -
Other payables 893,722 566,654 - -
Accruals 377,382 248,729 43,100 39,600
Trade and other payables 4,900,444 4,176,030 2,427,462 801,020
Lease liabilities 64,653 83,980 64,653 83,980
Income tax 703,450 602,794 408,234 350,832
Total liabilities 5,668,547 4,862,804 2,900,349 1,235,832
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 2021 2020
£ £
Interim dividends paid on Ordinary 1p shares 9,811,421 4,836,310
Dividend per Ordinary 1p share 22.0 11.06
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 14. The group operates a
low risk investment policy and surplus funds are placed on deposit with at
least A rated banks or equivalent at floating interest rates.
The group also holds investments in equities, 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. 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 bad
debts.
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 £7,000 (2020: £7,000) for rental of a disaster recovery site.
Jarvis Securities plc owed Jarvis Investment Management Limited £2,663,298
(2020: £750,866) 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 2021, these same related parties had cash balances of £634,423
(2020: £392,110) and interest was earned during the year amounting to £2,181
(2020: £923). In addition to cash balances other equity assets of
£60,729,502 (2020: £49,950,739) were held by JIM Nominees Ltd as custodian.
During the year Jarvis Securities Plc charged £3,304,759 (2020: £3,869,812)
to Jarvis Investment Management Limited for use of intellectual properties.
23. Capital commitments
As of 31 December 2021, the company had no capital commitments (2020: nil).
24. Fair value estimation
The fair value of financial instruments traded in active markets is based on
quoted market prices at the balance sheet date. The quoted market price used
for financial assets held by the company is the current bid price. The
carrying value less impairment provision of trade receivables and payables are
assumed to approximate their fair values.
25. Financial risk management objectives and policies
The directors consider that their main risk management objective is to monitor
and mitigate the key risks to the group, which are considered to be
principally credit risk, compliance risk, liquidity risk and operational
risk. Several high-level procedures are in place to enable all risks to be
better controlled. These include detailed profit forecasts, cash flow
forecasts, monthly management accounts and comparisons against forecast,
regular meetings of the full board of directors, and more regular senior
management meetings.
The group's main credit risk is exposure to the trading accounts of clients.
This credit risk is controlled via the use of credit algorithms within the
computer systems of the subsidiary. These credit limits prevent the processing
of trades in excess of the available maximum permitted margin at 100% of the
current portfolio value of a client.
A further credit risk exists in respect of trade receivables. The group's
policy is to monitor trade and other receivables and avoid significant
concentrations of credit risk. Aged receivables reports are reviewed regularly
and significant items brought to the attention of senior management.
The compliance risk of the group is controlled through the use of robust
policies, procedures, the segregation of tasks, internal reviews and systems
controls. These processes are based upon the Rules and guidance notes of the
Financial Conduct Authority and the London Stock Exchange and are overseen by
the compliance officer together with the management team. In addition, regular
compliance performance information is prepared, reviewed and distributed to
management.
The group aims to fund its expansion plans mainly from existing cash balances
without making use of bank loans or overdraft facilities. Financial risk is
therefore mitigated by the maintenance of positive cash balances and by the
regular review of the banks used by the group. Other risks, including
operational, reputational and legal risks are under constant review at senior
management level by the executive directors and senior managers at their
regular meetings, and by the full board at their regular meetings.
The group derives a significant proportion of its revenue from interest earned
on client cash deposits and does not have any borrowings. Hence, the directors
do not consider the group to be materially exposed to interest rate risk in
terms of the usual consideration of financing costs, but do note that there is
a risk to earnings. Given the current Bank of England base rate is at its
lowest level since its foundation in 1694, and the business has remained
profitable, this risk is not considered material in terms of a threat to the
long term prospects of the group.
The capital structure of the group consists of issued share capital, reserves
and retained earnings. Jarvis Investment Management Limited has an Internal
Capital Adequacy Assessment Process ("ICAAP"), as required by the Financial
Conduct Authority ("FCA") for establishing the amount of regulatory capital to
be held by that company. The ICAAP gives consideration to both current and
projected financial and capital positions. The ICAAP is updated throughout the
year to take account of any significant changes to business plans and any
unexpected issues that may occur. The ICAAP is discussed and approved at a
board meeting of the subsidiary at least annually. Capital adequacy is
monitored daily by management. Jarvis Investment Management Limited uses the
simplified approach to Credit Risk and the standardised approach for
Operational Risk to calculate Pillar 1 requirements. Jarvis Investment
Management Limited observed the FCA's regulatory requirements throughout the
period. Information disclosure under Pillar 3 of the Capital Requirements
Directive is available from the group's websites. During the period Jarvis
Securities Plc cancelled its share premium account. This did not impact the
regulatory capital of Jarvis Investment Management Limited. 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 2021, trade receivables of £186,074 (2020: £159,784) were
past due and were impaired and partially provided for. The amount of the
provision was £143,524 as at 31 December 2021 (2020: £131,456). 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: 2021 2020 2021 2020
£ £ £ £
At 1 January 131,456 101,539 - -
Charge / (credit) for the year 13,152 30,306 - -
Uncollectable amounts written off (1,084) (389) - -
At 31 December 143,524 131,456 - -
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