JARVIS SECURITIES PLC

Quarterly Report • Feb 16, 2017

National Storage Mechanism | Additional information

You don't have Javascript enabled. For full functionality this page requires javascript to be enabled.

RNS Number : 0048X

Jarvis Securities plc

16 February 2017

16 February 2017

Jarvis Securities plc

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

RESULTS FOR THE YEAR ENDED 31 DECEMBER 2016

HIGHLIGHTS

·      7% increase in profit before tax

·      2% increase in year on year interest income

·      6% growth in regular dividend per share

·      8% increase in EPS

CHAIRMAN'S STATEMENT

Last year I urged a sense of caution over the short-term performance of Jarvis, whilst highlighting that over the medium to long term the business was positioned to do well and would benefit significantly once interest rates rose and market activity increased. I am happy to report that my short-term pessimism was overdone.   During 2016 we saw a dramatic improvement in market conditions compared to what we experienced in the latter half of 2015. The catalyst for this was the Brexit result. Investors were cautious prior to the vote with many fearing a vote to leave the EU could result in a significant fall in equity prices. Once any decline failed to materialise trade volumes increased throughout the remainder of 2016, and are being sustained at those levels at the time of writing.

Whilst the FTSE 100 has recently set record highs, our own share price has remained below the highs of 2014.  This has however provided an opportunity to purchase more of our own shares to hold in treasury. Although our share price has not fully recovered to the levels of 2014, we have had another record year, and ignoring the special dividend paid out last year, we have increased dividend payments by 6%. We have adhered to our stated policy of distributing 2/3rds of profit after tax but cash reserves in the business continue to build up. Going forward therefore the Board may flex this policy such that we pay out at least 2/3rds of profits as dividends, further announcements will be made as appropriate.

Looking forward into 2017 and beyond I am confident we will continue to grow the business and further improve our financial results. Market conditions are currently excellent for our own retail client activity, we have a strong pipeline of new Custodian and Model B business, and cash under administration is at record levels. Even modest increases in interest rates which now seem as though they may materialise in the shorter term will significantly increase profitability.

Once again, I would like to thank all Jarvis staff members for their hard work and dedication to the business.

The Company will today dispatch to shareholders its Annual Report and Accounts for the year ended 31 December 2016, together with a notice convening the Annual General Meeting ("AGM"), to be held at the Company's offices on 23 March 2017 at 9am. The Annual Report and Accounts and Notice of AGM will also be available from the Company's website, www.jarvissecurities.co.uk.

Andrew Grant

Chairman

Enquiries:

Jarvis Securities plc Tel: 01892 510515

Andrew Grant

Jolyon Head

WH Ireland Limited 0113 3946619

Katy Mitchell

Ed Allsopp

Consolidated income statement for the year ended 31 december 2016

				Year to	Year to
				31/12/16	31/12/15
	Notes
				£	£
Continuing operations:
Revenue	3			8,322,844	7,614,664
Administrative expenses				(4,684,836)	(4,220,406)
Profit before income tax	5			3,638,008	3,394,258
Income tax charge	7			(728,162)	(678,155)
Profit for the period				2,909,846	2,716,103
Attributable to equity holders of the parent				2,909,846	2,716,103
Earnings per share	8			P	P
Basic				26.45	24.46
Diluted				26.38	24.39

The notes form part of these financial statements 

Consolidated statement of comprehensive income for the year

	Notes			Year to	Year to
				31/12/16	31/12/15
				£	£
Profit for the period				2,909,846	2,716,103
Total comprehensive income for the period				2,909,846	2,716,103
Attributable to equity holders of the parent				2,909,846	2,716,103

The notes form part of these financial statements 

Company No.: 5107012

Consolidated STATEMENT OF FINANCIAL POSITION at 31 december 2016

				31/12/16	31/12/15
	Notes
				£	£
Assets
Non-current assets
Property, plant and equipment	9			229,620	235,536
Intangible assets	10			162,549	174,857
Goodwill	10			342,872	342,872
				735,041	753,265
Current assets
Trade and other receivables	13			8,233,866	3,233,971
Investments held for trading	14			1,712	77,057
Cash and cash equivalents	15			5,103,122	9,777,936
				13,338,700	13,088,964
Total assets				14,073,741	13,842,229
Equity and liabilities
Capital and reserves
Share capital	16			111,518	111,503
Share premium				1,522,729	1,520,119
Merger reserve				9,900	9,900
Capital redemption reserve				9,845	9,845
Share option reserve				136,556	136,556
Retained earnings Own shares held in treasury	16			3,610,339 (616,943)	2,626,295 (301,514)
Total equity attributable to the equity holders of the parent				4,783,944	4,112,704
Current liabilities	17
Trade and other payables	17			8,878,155	9,389,215
Deferred tax	17			6,312	9,238
Income tax	17			405,330	331,072
Total current liabilities	17			9,289,797	9,729,525
Total equity and liabilities				14,073,741	13,842,229

Approved and authorised for issue by the Board on 16th February 2017 and signed on its behalf by:

………………………Andrew J Grant - Director

………………………Jolyon C Head - Director

The notes form part of these financial statements 

Company No.: 5107012

CoMPANY STATEMENT OF FINANCIAL POSITION at 31 december 2016

				31/12/16	31/12/15
	Notes
				£	£
Assets
Non-current assets
Property, plant and equipment	9			229,620	235,536
Intangible assets	10			162,549	174,857
Goodwill	10			342,872	342,872
Investment in subsidiaries	12			284,239	284,239
				1,019,280	1,037,504
Current assets
Trade and other receivables	13			799,517	796,631
Cash and cash equivalents	15			1,705,986	1,089,101
				2,505,503	1,885,732
Total assets				3,524,783	2,923,236
Equity and liabilities
Capital and reserves
Share capital	16			111,518	111,503
Share premium				1,522,729	1,520,119
Capital redemption reserve				9,845	9,845
Share option reserves				136,556	136,556
Retained earnings Own shares held in treasury	16			1,795,050 (616,943)	598,450 (301,514)
Total equity attributable to the equity holders				2,958,755	2,074,959
Current liabilities	17
Trade and other payables	17			183,876	525,540
Deferred tax	17			6,312	9,238
Income tax	17			375,840	313,499
Total current liabilities	17			566,028	848,277
Total equity and liabilities				3,524,783	2,923,236

The parent company's profit for the financial year was £3,122,402 (2015: £2,231,593).

Approved and authorised for issue by the Board on 16th February 2017 and signed on its behalf by:

………………………Andrew J Grant - Director

………………………Jolyon C Head - Director

The notes form part of these financial statements

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

	Share capital	Share premium	Merger reserve	Capital redemption reserve	Share option reserve	Retained earnings	Own shares held in Treasury	Total equity
	£	£	£	£	£	£	£	£
At 1 January 2015	111,200	1,467,485	9,900	9,845	136,556	2,955,642	-	4,690,628
Share options exercised during the year	303	52,634	-	-	-	-	-	52,937
Profit for the financial year	-	-	-	-	-	2,716,103	-	2,716,103
Dividends Purchase of own shares held in treasury Sale of own shares held in treasury	- - -	- - -	- - -	- - -	- - -	(2,947,571) - (97,879)	- (482,072) 180,558	(2,947,571) (482,072) 82,679
At 31 December 2015	111,503	1,520,119	9,900	9,845	136,556	2,626,295	(301,514)	4,112,704
Share options exercised during the year	15	2,610	-	-	-	-	-	2,625
Profit for the financial year	-	-	-	-	-	2,909,846	-	2,909,846
Dividends Purchase of own shares held in treasury	- -	- -	- -	- -	- -	(1,925,802) -	- (315,429)	(1,925,802) (315,429)
At 31 December 2016	111,518	1,522,729	9,900	9,845	136,556	3,610,339	(616,943)	4,783,944

COMPANY STATEMENT OF CHANGES IN EQUITY

	Share capital	Share premium	Capital redemption reserve	Share option reserve	Retained earnings	Own shares held in treasury	Total equity
	£	£	£	£	£	£	£
At 1 January 2015	111,200	1,467,485	9,845	136,556	1,412,307	-	3,137,393
Share options exercised during the year	303	52,634	-	-	-	-	52,937
Profit for the financial year	-	-	-	-	2,231,593	-	2,231,593
Dividends Purchase of own shares held in treasury Sale of own shares held in treasury	- - -	- - -	- - -	- - -	(2,947,571) - (97,879)	- (482,072) 180,558	(2,947,571) (482,072) 82,679
At 31 December 2015	111,503	1,520,119	9,845	136,556	598,450	(301,514)	2,074,959
Share options exercised during the year	15	2,610	-	-	-	-	2,625
Profit for the financial year	-	-	-	-	3,122,402	-	3,122,402
Dividends Purchase of own shares held in treasury	- -	- -	- -	- -	(1,925,802) -	- (315,429)	(1,925,802) (315,429)
At 31 December 2016	111,518	1,522,729	9,845	136,556	1,795,050	(616,943	2,958,755

The notes form part of these financial statements 

statement OF cashflows

for the year ended 31 december 2016

		CONSOLIDATED		COMPANY
		Year to	Year to	Year to	Year to
		31/12/16	31/12/15	31/12/16	31/12/15
	Notes
		£	£	£	£
Cash flow from operating activities
Profit before income tax		3,638,009	3,394,258	3,728,647	2,786,670
Depreciation and amortisation	5	75,421	67,457	75,421	67,457
Profit on disposal of investments held to maturity		-	(1,875)	-	-
		3,713,430	3,459,840	3,804,068	2,854,127
Decrease/(Increase) in trade and other receivables		(4,360,107)	(559,937)	(2,886)	377,243
(Decrease) /Increase in trade payables		(1,150,847)	2,334,103	(341,664)	493,839
Cash generated from operations		(1,797,524)	5,234,006	3,459,518	3,725,209
Income tax (paid)/received		(656,832)	(640,072)	(546,830)	(501,072)
Net cash from operating activities		(2,454,356)	4,593,934	2,912,688	3,224,137
Cash flows from investing activities
Purchase of property, plant and equipment		(4,454)	(3,780)	(4,454)	(3,780)
Receipt from sale of investment		-	248,855	-	-
Purchase of investments held for trading Proceeds from sale of investments held for trading Purchase of intangible assets		(3,822,741) 3,898,086 (52,743)	(758,882) 695,451 -	- - (52,743)	- - -
		18,148	181,644	(57,197)	(3,780)
Cash flows from financing activities
Issue of share capital		2,625	52,937	2,625	52,937
Repurchase of ordinary share capital Sale of treasury shares Dividends paid		(315,429) - (1,925,802)	(482,072) 82,679 (2,947,571)	(315,429) - (1,925,802)	(482,072) 82,679 (2,947,571)
Net cash used in financing activities		(2,238,606)	(3,294,027)	(2,238,606)	(3,294,027)
Net increase/(decrease) in cash & cash equivalents		(4,674,814)	1,481,551	616,885	(73,670)
Cash and cash equivalents at the start of the year		9,777,936	8,296,385	1,089,101	1,162,770
Cash and cash equivalents at the end of the year		5,103,122	9,777,936	1,705,986	1,089,101
Cash and cash equivalents:
Cash at bank and in hand		5,103,122	9,777,936	1,705,986	1,089,101

1. Basis of preparation

The company has adopted the requirements of International Financial Reporting Standards (IFRS) and IFRIC interpretations endorsed by the European Union (EU) 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 and liabilities 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. These accounting policies comply with applicable IFRS standards and IFRIC interpretations issued and effective at the time of preparing these statements.

A number of new standards and amendments to standards and interpretations have been issued but are not yet effective and in some cases have not yet been adopted by the EU.

The Directors are still assessing whether the application of IFRS 9, IFRS 15 and IFRS 16, once effective, will have a material impact on the results of the group. Application of these standards may result in changes in presentation of information within the Group's financial statements.

The preparation of financial statements in accordance with IFRS requires the use of certain accounting estimates. It also requires management to exercise judgement in the process of applying the Company's accounting policies.  The areas involving a high degree of judgement or complexity, or areas where the assumptions and estimates are significant to the consolidated financial statements, are disclosed in Note 21.

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 3. The financial position of the Group, its cash flows, liquidity position and borrowing facilities are described within these financial statements. In addition, note 26 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 together with long term contracts with all its customers and significant suppliers as well as 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 despite the current uncertain economic outlook.

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. Summary of significant accounting policies

(a) Revenue

Income is recognised as earned in the following way:

Commission - we charge commission on a transaction basis. Commission rates are fixed according to account type. When a client instructs us to act as an agent on their behalf (for the purchase or sale of securities) our commission is recognised as income 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. Fees are accrued up to the time they are charged using a day count and most recent asset level basis as appropriate.

Interest income - this is accrued on a day count basis 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.

(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 2016.

The Group uses the purchase method of accounting for the acquisition of subsidiaries. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange.  Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The cost of acquisition over the fair value of the Group's share of identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the Group's share of the net assets of the subsidiary acquired, the difference is recognised in the income statement.

Intra-group sales and profits are eliminated on consolidation and all sales and profit figures relate to external transactions only. No income statement 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 three years.

Office equipment                                 -               20% on cost

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

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the income statement. Impairment reviews of property, plant and equipment are undertaken if there are indications that the carrying values may not be recoverable or that the recoverable amounts may be less than the asset's carrying value.

(d) Intangible assets

Intangible assets are carried at cost less accumulated amortisation. If acquired as part of a business combination the initial cost of the intangible asset is the fair value at the acquisition date. Amortisation is charged to administrative expenses within the income statement and provided on cost in equal annual instalments over the lives of the assets at the following rates:

Databases                                             -               4% on cost

Customer relationships                     -               7% on cost

Software developments                      -               20% on cost

Website                                                 -               33% on cost

Impairment reviews of intangible assets are undertaken if there are indications that the carrying values may not be recoverable or that the recoverable amounts may be less than the asset's carrying value.

(e) Goodwill

Goodwill represents the excess of the fair value of the consideration given over the aggregate fair values of the net identifiable assets of the acquired trade and assets at the date of acquisition. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Any negative goodwill arising is credited to the income statement in full immediately.

(f) Deferred income tax

Deferred income tax is provided in full, using the liability method, on differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. The deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction, other than a business combination, that at the time of the transaction affects neither accounting or taxable profit or loss. Deferred income tax is determined using tax rates that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

Deferred income tax is provided on temporary differences arising on investments in subsidiaries except where the timing of the reversal of the timing difference is controlled by the Group and it is probable that the temporary differences will not reverse in the foreseeable future.

(g) Segmental reporting

A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different from those of other business segments. The directors regard the operations of the Group as a single segment.

(h) Pensions

The group operates a defined contribution pension scheme. Contributions payable for the year are charged to the income statement.

(i) Trade receivables and payables

Trading balances incurred in the course of executing client transactions are measured at initial recognition at fair value. In accordance with market practice, certain balances with clients, Stock Exchange member firms and other counterparties are included as trade receivables and payables. The net balance is disclosed where there is a legal right of set off.

(j) Operating leases and finance leases

Costs in respect of operating leases are charged on a straight line basis over the lease term in arriving at the profit before income tax.

(k) Investments

The Group classifies its investments in the following categories: investments held to maturity and investments held for trading. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition and re-evaluates this designation at every reporting date.

Investments held to maturity

Investments held to maturity are stated at amortised cost. Held to maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturity that an entity has the positive intention and ability to hold to maturity. Assets in this category are classified as non-current, unless they are due to mature in the 12 months following the balance sheet date.

Investment held for trading

Investments held for trading are stated at fair value. An investment is classified in this category if acquired principally for the purpose of selling in the short term. Assets in this category are classified as current and are considered to be level one assets in accordance with IFRS 13.

Purchases and sales of investments are recognised on the trade-date - the date on which the Group commits to purchase or sell the asset. Investments are initially recognised at fair value. Investments are derecognised when the rights to receive cash flows from the investments have expired or been transferred and the Group has transferred substantially all the risks and rewards of ownership. Realised and unrealised gains and losses arising from changes in fair value of investments held for trading are included in the income statement in the period in which they arise.

The fair value of quoted investments is based on current bid prices. If the market for an investment is not active, the Group establishes fair value by using valuation techniques. These include the use of recent arm's length transactions, reference to other instruments that are substantially the same, or discounted cash flow analysis refined to reflect the issuer's specific circumstances.

The Group assesses at each balance sheet date whether there is objective evidence that an investment is impaired. In the case of investments classified as available-for-sale, a decline in the fair value below its carrying value is considered in determining whether the security is impaired.

Investments in subsidiaries

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

(l) Foreign Exchange

The group offers settlement of trades in various currencies, predominately Sterling, US dollars and Euros. 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 minimal foreign exchange risk.

(m) Share Capital

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction from proceeds, net of income tax. Where the company purchases its equity share capital (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income tax), is deducted from equity attributable to the company's equity holders until the shares are cancelled, reissued or disposed of.  Where such shares are subsequently sold or reissued, any consideration received, net of any directly incremental transaction costs and the related income tax effects, is included in equity attributable to the company's equity holders.

(n) Cash and cash equivalents

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

(o) Current income tax

Current income tax assets and/or liabilities comprise those obligations to, or claims from, fiscal authorities relating to the current or prior reporting periods, that are unpaid at the balance sheet date.  They are calculated according to the tax rates and tax laws applicable to the fiscal periods to which they relate based on the taxable profit for the year.  

(p) Dividend distribution

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

(q) Share based payments

The Group applies the requirements of IFRS 2 Share-based Payment.

The Group issues equity-settled share-based payments to certain employees and other personnel. Equity-settled share-based payments are measured at fair value (excluding the effect of non-market-based vesting conditions) at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of shares that will eventually vest and adjusted for the effects of non market-based vesting conditions.

The share option reserve represents the accumulated share option charge. The balance in the reserve will be transferred to retained earnings once the options have been exercised.

Fair value is measured by use of a Black-Scholes option pricing model. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.

3. Group revenue

The revenue of the group during the year was made 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.

	2016		2015
	£		£
Gross interest earned from treasury deposits, cash at bank and overdrawn client accounts	3,458,611		3,391,977
Fees and commissions	4,864,233		4,222,687
	8,322,844		7,614,664

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 the Group's sole business activity is the provision of stock broking services and all revenue is derived in the UK, management have not had occasion to define any factors to identify reportable segments.

5. Profit before income tax	2016		2015
Profit before income tax is stated after charging/(crediting):	£		£
Directors' emoluments	586,391		526,329
Depreciation - owned assets	10,370		11,592
Amortisation (included within administrative expenses in the consolidated income statement)	65,051		55,865
Operating lease rentals - hire of machinery	9,052		9,052
Operating lease rentals - land and buildings	65,300		65,300
Impairment of receivable charge	116,300		135,550
Bank transaction fees	71,918		52,199

Details of Directors' annual remuneration as at 31 December 2016 are set out below:

	2016		2015
	£		£
Short-term employee benefits	480,435		455,500
Post-employment benefits	97,023		61,239
Benefits in kind	8,933		9,590
	586,391		526,329
Details of the highest paid director are as follows:
Aggregate emoluments	275,080		240,000
Company contributions to personal pension scheme	37,950		24,000
Benefits in kind	7,906		8,132
	320,936		272,132

					Emoluments & Benefits in kind	Pension		Total
Directors					£	£		£
Andrew J Grant					282,986	37,950		320,936
Nick J Crabb					99,209	36,745		135,954
Jolyon C Head					93,173	22,328		115,501
Graeme McAusland					14,000	-		14,000
Total					489,368	97,023		586,391

During the year benefits accrued for three directors (2015: three 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:

	2016		2015
Management and administration	47		44
The aggregate payroll costs of these persons were as follows:	£		£
Wages, salaries & social security	1,715,577		1,605,814
Pension contributions including salary sacrifice	105,165		63,025
Share based payment expense	-		-
	1,820,742		1,668,839

Key personnel

The directors disclosed above are considered to be the key management personnel of the group.

6. Auditors' remuneration
During the year the company obtained the following services from the company's auditors as detailed below:
	2016		2015
	£		£
Fees payable to the company's auditors for the audit of the company's annual financial statements	21,500		21,000
Fees payable to the company's auditors and its associates for other services:
The audit of the company's subsidiaries, pursuant to legislation	12,300		12,000
Total audit fees	33,800		33,000
Taxation Compliance	4,375		4,250
Other taxation advisory services not relating to compliance	-		-
	38,175		37,250

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

7. Income and deferred tax charges - group	2016		2015
	£		£
Based on the adjusted results for the year:
UK corporation tax	730,695		688,498
Adjustments in respect of prior years	393		4,339
Total current income tax	731,088		692,837
Deferred income tax:
Origination and reversal of timing differences	(2,063)		(11,062)
Adjustment in respect of prior years	(863)		(3,619)
Total deferred tax (credit) / charge	(2,926)		(14,681)
	728,162		678,155

The income tax assessed for the year is more than the standard rate of corporation tax in the UK (20%). The differences are explained below:

Profit before income tax	3,638,008		3,394,258
Profit before income tax multiplied by the standard rate of corporation tax in the UK of 20% (2015 - 20.25%)	727,602		687,337
Effects of:
Expenses not deductible for tax purposes	-		61
Adjustments to tax charge in respect of previous years	(471)		720
Exercise of options	641		(10,358)
Ineligible depreciation	390		395
Current income tax charge for the year	728,162		678,155

Movement in (assets) / provision - group and company:
Provision at start of year	9,238		23,919
Deferred income tax (creditor) / charged in the income statement in the year	(2,926)		(11,062)
Adjustment in respect of prior periods	-		(3,619)
(Asset) / Provision at end of year	6,312		9,238
The deferred tax balances arise from taxable temporary differences in respect of the following:			Share Based Payments
Deferred tax (asset) / liability brought forward			(10,335)
Current year			(2,063)
(Asset) at end of year			(12,398)
			Tangible Assets
Deferred tax liability brought forward			19,573
Prior year			(863)
Liability at end of year			18,710

8. Earnings per share				2016		2015
				£		£
Earnings: Earnings for the purposes of basic and diluted earnings per share
(profit for the period attributable to the equity holders of the parent)				2,909,846		2,716,103
Number of shares:
Weighted average number of ordinary shares for the purposes of basic earnings per share				10,999,237		11,105,705
Effect of dilutive potential ordinary shares:
Share option scheme				31,000		32,500
				11,030,237		11,138,205

Shares held in treasury are deducted for the purpose of calculating earnings per share. Options exercised or those lapsed as relating to former employees have been deducted for the purpose of calculating the diluted weighted average number of shares in issue for the period.

9. Property, plant & equipment - group & company				Leasehold & Property	Leasehold Improvements	Office Equipment		Total
Cost:				£	£	£		£
At 1 January 2015				222,450	4,014	249,834		476,298
Additions				-	-	3,780		3,780
Disposals				-	-	-		-
At 31 December 2015				222,450	4,014	253,614		480,078
Additions				-	-	4,454		4,454
Disposals				-	-	-		-
At 31 December 2016				222,450	4,014	258,068		484,532
Depreciation:
At 1 January 2015				5,360	953	226,637		232,950
Charge for the year				1,949	873	8,770		11,592
On Disposal				-	-	-		-
At 31 December 2015				7,309	1,826	235,407		244,542
Charge for the year				1,949	478	7,943		10,370
On Disposal				-	-	-		-
At 31 December 2016				9,258	2,304	243,350		254,912
Net Book Value:
At 31 December 2016				213,192	1,710	14,718		229,620
At 31 December 2015				215,141	2,188	18,207		235,536

The net book value of non-depreciable land is £125,000 (2015: £125,000).

10. Intangible assets & goodwill - group & company				Intangible assets
		Goodwill		Customer Relationships	Databases	Software Development	Website		Total
		£		£	£	£	£		£
Cost:
At 1 January 2015		342,872		177,981	25,000	217,961	103,519		524,461
Additions		-		-	-	-	-		-
At 31 December 2015		342,872		177,981	25,000	217,961	103,519		524,461
Additions		-		-	-	-	52,743		52,743
At 31 December 2016		342,872		177,981	25,000	217,961	156,262		577,204
Amortisation:
At 1 January 2015		-		102,016	11,719	76,485	103,519		293,739
Charge for the year		-		18,291	1,000	36,574	-		55,865
At 31 December 2015		-		120,307	12,719	113,059	103,519		349,604
Charge for the year		-		18,291	1,000	36,575	9,185		65,051
At 31 December 2016		-		138,598	13,719	149,634	112,704		414,655
Net Book Value:
At 31 December 2016		342,872		39,383	11,281	68,327	43,558		162,549
At 31 December 2015		342,872		57,674	12,281	104,902	-		174,857

Goodwill represents the difference between the consideration paid and the fair value of assets acquired on the acquisition of a business in 2003.  In accordance with the transitional provisions in IFRS 1 the group elected not to apply IFRS 3 retrospectively to past business combinations. Therefore the goodwill balance represents an acquired customer base, that continues to trade with 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.

11. Investments held to maturity	Group				Company
	2016		2015		2016		2015
Unlisted Investments:	£		£		£		£
Cost:
At 1 January Disposals	- -		300,067 (300,067)		- -		- -
As at 31 December	-		-		-		-
Amortisation:
At 1 January	-		53,088		-		-
Charge for the year Disposal	-		15,969 (69,057)		-		-
As at 31 December	-		-		-		-
Net Book Value:
At 1 January	-		246,979		-		-
At 31 December	-		-		-		-

The investment held to maturity was an 8% coupon UK Government Gilt. The Gilt was originally purchased to place as a bond with a 3rd party business partner. The relationship was terminated during 2015 and the Gilt returned to us. As it was no longer needed for its original purpose it was sold.

12. Investments in subsidiaries								Company
								2016			2015
Unlisted Investments:								£			£
Cost:
At 1 January								284,239			284,239
Capital contributions re share option costs								-			-
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.                 

* indirectly held

13. Trade and other receivables	Group				Company
Amounts falling due within one year:	2016		2015		2016		2015
	£		£		£		£
Trade receivables	438,661		219,471		2,850		15,789
Settlement receivables	6,732,763		1,946,180		-		-
Amounts owed by group undertakings	-		-		-		-
Other receivables	427,793		434,225		418,393		415,875
Prepayments and accrued income	634,649		634,095		378,274		364,967
	8,233,866		3,233,971		799,517		796,631

An analysis of trade and settlement receivables past due is given in note 21. There are no amounts past due included within other receivables or prepayments and accrued income.

14. Investments held for trading		Group				Company
		2016		2015		2016		2015
Listed Investments:		£		£		£		£
Valuation:
At 1 January		77,057		13,626		-		-
Additions		3,822,741		758,882		-		-
Disposals		(3,898,086)		(695,451)		-		-
As at 31 December		1,712		77,057		-		-
	Listed investments held for trading are stated at their market value at 31 December 2016 and are considered to be level one assets in accordance with IFRS 13. The directors consider the fair value movement on the investments held for trading are immaterial and as such have not been presented separately in the above movement analysis and the statement of cash flows.

15. Cash and cash equivalents	Group				Company
	2016		2015		2016		2015
	£		£		£		£
Balance at bank and in hand - group/company	3,404,516		2,792,353		1,705,986		1,089,101
Cash held for settlement of market transactions	1,698,606		6,985,583		-		-
	5,103,122		9,777,936		1,705,986		1,089,101

16. Share capital	2016		2015
Authorised: 16,000,000 Ordinary shares of 1p each	160,000  160,000		160,000  160,000
	2016		2016
	£		£
At 1 January 2016	111,503		111,200
Allotted, issued and fully paid during the year	15		303
Allotted, issued and fully paid:
11,151,750 (2015: 11,150,250) Ordinary shares of 1p each	111,518		111,503

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

The Company has a share option scheme for certain employees of the Group. The vesting period is five years and all options have now vested. If the options remain unexercised after a period of ten years from the date of grant the options expire. Options are forfeited if the option holder leaves the Group before the options are vested and exercised.

During the period 94,300 shares were purchased to be held in treasury. As at the period end 170,300 shares are held in treasury.

Details of the share options outstanding during the year are as follows:

		2016				2015
		Number of share options		Weighted average exercise price		Number of share options		Weighted average exercise price
				Pence				Pence
Outstanding at the beginning of the year		32,500		175.00		110,000		175.00
Exercised during the year		(1,500)		175.00		(77,500)		175.00
Outstanding at year end		31,000		175.00		32,500		175.00
Exercisable at year end		31,000		175.00		32,500		175.00
A detailed breakdown of the exercise prices for options outstanding as at 31 December 2016 is shown in the table below:
		2016				2015
Exercise Price (pence)		Number outstanding at year end		Exercise dates		Number outstanding at year end		Exercise dates
175.00 (granted 18 May 2007)		31,000		17 May 2016 to 17 May 2017		32,500		17 May 2016 to 17 May 2017

The total number of options unexercised and in issue at the year end is 31,000. Options were exercised throughout the year and the weighted average share price for the year was 317p (2015: 398p).

17. Trade and other payables	Group				Company
Amounts falling due within one year:	2016		2015		2016		2015
	£		£		£		£
Trade payables	110,644		70,793		1,212		3,474
Settlement payables	8,131,466		8,724,052		-		-
Amount owed to group undertaking	-		-		152,679		471,697
Other taxes and social security	81,499		63,931		110		2,835
Other payables	300,102		326,449		-		18,483
Accruals	254,444		203,990		29,875		29,051
Trade and other payables	8,878,155		9,389,215		183,876		525,540
Income tax	405,330		331,072		375,840		313,499
Deferred tax	6,312		9,238		6,312		9,238
Total liabilities	9,289,797		9,729,525		566,028		848,277

Settlement payables will be settled on their contracted date, which has a maximum allowed time of 20 days from trade date. 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	2016		2015
	£		£
Interim dividends paid on Ordinary 1p shares	1,925,802		2,947,571
Dividend per Ordinary 1p share	17.5ps		26.5p

19. Operating lease commitments - group

At 31 December 2016 the group was committed to making the following payments in respect of operating leases which expire:

	Equipment				Land & buildings
	2016		2015		2016		2015
	£		£		£		£
Not later than one year:	9,052		9,052		47,625		63,500
Later than one year and not later than five years:	13,579		22,631		-		47,625

Equipment leases relate to the use of postage processing and franking machines.

Operating lease commitments - company

At 31 December 2016 the company was committed to making the following payments in respect of operating leases which expire:

					Land & buildings
					2016		2015
					£		£
Not later than one year:					47,625		63,500
Later than one year and not later than five years:					-		47,625

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 £65,300, being the market rate on an arm's length basis, and expires on 26 September 2017.

20. 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 loans and receivables,  and trade and other payables are classified as financial liabilities. 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.

21. Critical accounting estimates and judgements

The Group makes estimates and assumptions concerning the future. These estimates and judgements are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets within the next financial year relate to goodwill, intangible assets, bad debts and the expense of employee options.

As of 31 December 2016, trade receivables of £398,765 (2015: £378,690) were past due and were impaired and partially provided for. The amount of the provision was £299,903 as at 31 December 2016 (2015: £207,711). 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.

	Group				Company
Provision of impairment of receivables:	2016		2015		2016		2015
	£		£		£		£
At 1 January	207,711		145,483		-		-
Charge / (credit) for the year	116,300		135,550		-		-
Uncollectable amounts written off	(24,108)		(73,322)		-		-
At 31 December	299,903		207,711		-		-

The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated in Note 2 (e). These calculations require the use of estimates. The assumptions and sensitivity relating to the impairment tests are detailed in note 10.

The Group considers at least annually whether there are indications that the carrying values of intangible assets may not be recoverable, or that the recoverable amounts may be less than the asset's carrying value, in which case an impairment review is performed. These calculations require the use of estimates. The Group also calculates the implied levels of variables used in the calculations at which impairment would occur.

22. Immediate and ultimate parent undertaking

The company's immediate and ultimate parent undertaking is Sion Securities Limited, a company registered in England and Wales. Sion Securities Limited is controlled by Mr A J Grant by virtue of his controlling interest.

23. 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 £65,300, being the market rate on an arm's length basis, and expires on 26 September 2017.

During the year Jarvis Investment Management Limited paid Jarvis Securities Plc £7,000 for rental of a disaster recovery site. An intercompany dividend of £700,000 was paid by Jarvis Investment Management Limited to Jarvis Securities Plc during the year. These transactions are eliminated on consolidation.

Jarvis Securities plc owed Jarvis Investment Management Limited £150,929 (2015: Jarvis Securities plc owed Jarvis Investment Management Limited £471,697) 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 2016, these same related parties had cash balances of £1,413,834 and interest was earned during the year amounting to £925 (2015, Nil).  In addition to cash balances other equity assets of £45,026,624 were held by JIM Nominees Ltd as custodian.

24. Capital commitments

As of 31 December 2016 the company had no capital commitments (2015: nil).

25. Fair value estimation

The fair value of financial instruments traded in active markets (such as trading and available for sale securities) 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.

26. 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.

The directors do not consider that the Group is materially exposed to foreign exchange risk as the Group does not run open currency positions beyond the end of each working day.

Jarvis Securities plc

78 Mount Ephraim

Royal Tunbridge Wells

Kent, IN4 8BS

Tel: 01892 510515

Email: invest@jarvisim.co.uk

This information is provided by RNS

The company news service from the London Stock Exchange

END

FR TAMFTMBMBBFR