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 .

 

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   Exceptional administrative expenses   Lease finance costs	5   13			(6,523,706)   (1,337,522)   (17,090)	(6,212,770)   (249,936)             (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

	Share capital	Merger reserve	Capital redemption reserve	Retained earnings	Total equity
	£	£	£	£	£
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 client accounts	7,614,815		5,472,439
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 income statement)	25,561		25,668
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.