Interim Results

Jarvis Securities plc 13 July 2006 Jarvis Securities plc ('Jarvis' or 'the Company') Financial Highlights • Turnover up 35% to £1.72 million (June 2005: £1.28 million) • PBT up 151% to £710k (June 2005: £283k) • EPS up 180% to 4.34p (June 2005: 1.55p) • Interim dividend payment of 2.5p per share • Launched a new contract for difference (CFD) trading service • Confident outlook for the remainder of 2006 Chairman's Statement When I last reported to shareholders in March 2006 with the 2005 Annual Report, I concluded the Chairman's Statement by promising that the Board would focus entirely on building shareholder value through maintaining our quality service and improving profitability. I am delighted to say that this strategy has, to date, been successful. Our retail client business has continued to expand and we are now one of the UK's top fifteen stockbrokers by retail volume according to data published by the London Stock Exchange. This is a great achievement considering that we only began to transact our own deals just over three years ago. We now have all our Model B settlement service clients on profitable contracts with minimum revenue requirements, even though these have not grown as fast as expected. With the costs of adapting our systems behind us, any future contracts should be profitable from the outset as with our other intermediary and institutional relationships. The Financial Highlights section of this statement shows clearly the significant improvement in our operating performance made in the first half of 2006 compared to the same period in 2005. Our mantra has always been to provide both quality of service and efficiency, goals that we consider to be complementary. Through streamlining and improving our processes we aim to maximise client satisfaction. In our opinion, keeping our customers satisfied is the best possible advertisement, helping to generate new business through recommendation. This philosophy has enabled us to increase customer numbers and improve our operating profit margin from 22% (June 2005) to 41% (June 2006). This also helps to differentiate our business from other brokers, reflecting the skill and commitment of our employees. We have benefited from increasing trading volumes during the period to June 2006, however commissions form only part of our revenue mix and we estimate that the improved operating conditions increased commissions by approximately an extra £100,000 compared to forecasted revenues. Improvements to our operating results were primarily due to cutting operational costs, improving business processes and growing our customer base. When we joined AIM in 2004 we highlighted that scalability was a strength of our business model and I believe that these results prove that to be true. The Board have always aimed to build a robust business and to keep fixed costs to a minimum, thus allowing the company to take advantage of market upturns without having to rely upon them. We have decided to pay a full dividend in accordance with our policy for the first half of this year. The first dividend of 1.5p per share, paid in February 2006, was designed to bridge the old and new payment timetables and hence the Board decided it was appropriate to ignore this in calculating the dividend to be paid based upon these results. The company is cash positive and we intend to maintain a high dividend payout policy. Hence a further interim dividend of 2.5p per share is proposed with the release of these results payable on 16 August 2006 to all shareholders on record as at 28 July 2006. Jarvis Securities plc came to AIM in December 2004 at a placing price of 82.5p per share. I am acutely aware of and disappointed by the fact that our shares have not traded above this price for some time now. The Board do believe that the price has not reflected the recent performance of the business and accordingly 180,000 Ordinary shares have been bought at an average price of 72p per share for treasury. This reflects our confidence in the future of the company. However we do not consider this to be a long-term strategy to create value for shareholders although we will consider further buy backs as appropriate. We hope that our strong trading results will renew investor interest in the business and the opportunities that it presents. Our market capitalisation on admission to AIM was £9.5m and our profit before tax for the nine months to 30 September 2004 was £460,000. Now that we have achieved a profit before tax of more than £700,000 for the six months to 30 June 2006, I hope that more investors will see the potential in our model and that our share price will increase to reflect this to the benefit of all our shareholders. We have launched a new contract for difference (CFD) trading service this month, which we hope will add to our rate of growth. These instruments are becoming increasingly popular and growing our product range is important in maintaining momentum. We plan to improve our internet based offering shortly and launch a new web based service. Following an upturn in the interest rate environment, together with some signs of improved volumes, I look forward with confidence to the remainder of 2006. I am delighted to present the following excellent results to shareholders and I am sure they will join me in expressing thanks to our dedicated team of employees for delivering our strategy. Andrew Grant Chairman Jarvis Securities Plc Tel: 0870 224 1111 Mathew Edmett Daniel Stewart & Company Tel: 0207 776 6550 Lindsay Mair Nicholas Marren CONSOLIDATED PROFIT AND LOSS ACCOUNT (unaudited) For the six months ended 30 June 2006 --------- --------- Six months Six months 30 June 30 June 2006 2005 --------- --------- £ £ TURNOVER 1,724,835 1,275,270 Administrative expenses 1,014,454 945,337 Exceptional administrative expenses - 46,929 --------- --------- 1,014,454 992,266 OPERATING PROFIT 710,381 283,004 Tax on profit on Ordinary Activities 202,065 105,233 --------- --------- PROFIT FOR THE FINANCIAL PERIOD 508,316 177,771 Dividends 172,268 287,114 --------- --------- RETAINED PROFIT/(LOSS) FOR THE PERIOD 336,048 (109,343) ========= ========= GROUP BALANCE SHEET (unaudited) As at 30 June 2006 30/6/2006 30/6/2005 --------------------- -------------------- £ £ £ £ FIXED ASSETS Intangible assets 354,377 375,012 Tangible assets 178,717 215,615 -------- -------- 533,094 590,627 CURRENT ASSETS Investments 23,882 57,215 Debtors 4,736,141 2,941,268 Cash at bank and in hand 6,388,947 4,302,062 -------- -------- 11,148,970 7,300,545 CREDITORS: Amounts falling due 10,091,205 6,632,526 within one year -------- -------- NET CURRENT ASSETS 1,057,765 668,019 -------- --------- TOTAL ASSETS LESS CURRENT LIABILITIES 1,590,859 1,258,646 PROVISIONS FOR LIABILITIES AND CHARGES Deferred taxation 18,119 5,492 -------- --------- NET ASSETS 1,572,740 1,253,154 ======== ========= CAPITAL AND RESERVES Called up share capital 114,600 114,845 Share premium account 789,834 789,834 Capital redemption reserve 245 - Profit and loss account 798,432 348,475 Treasury shares (130,371) - -------- --------- SHAREHOLDERS' FUNDS 1,572,740 1,253,154 ======== ========= Basic earnings per share 4.43p 1.55p Diluted earnings per share 4.19p 1.46p GROUP CASH FLOW STATEMENT (unaudited) For the six months ended 30 June 2006 30/6/2006 30/6/2005 --------- --------- £ £ Reconciliation of operating profit to net cash inflow from operating activities Operating profit 710,381 283,004 Depreciation 40,127 38,164 Amortisation 10,318 10,318 (Profit) on disposal of tangible (246) - fixed asset (Increase)/decrease in current asset 9,295 (20,866) investments (Increase)/decrease in debtors 80,852 32,976 Increase/(decrease) in creditors (306,372) (654,873) --------- --------- Net cash (outflow)/inflow from operating activities 544,355 (311,277) ========= ========= CASH FLOW STATEMENT Cash flow from operating 544,355 (311,277) activities Capital expenditure and financial (42,001) (126,906) investment Equity dividends paid (172,268) (287,114) --------- --------- 330,086 (725,297) Financing (130,371) (10,183) --------- --------- Increase in cash 199,715 (735,480) ========= ========= Reconciliation of net cash flow to movement in net funds 30/6/2006 30/6/2005 --------- --------- £ £ Movement in net funds in the year 199,715 (735,480) Net funds at 1 January 2006 634,730 1,231,041 --------- --------- Net funds at 30 June 2006 834,445 495,561 ========= ========= NOTES TO THE INTERIM ACCOUNTS 1. Basis of Accounts These unaudited interim accounts have been prepared on the basis of accounting policies set out in the Company's 2005 Annual Report and Accounts. 2. Earnings per Share Earnings per share is calculated as: Per Share Per Share Six months Six months Total 30 June 2006 Total 30 June 2005 ------- ---------- ------- ---------- £ p £ p Profit for the financial period 508,316 177,771 Earnings per share 4.43p 1.55p Diluted earnings per share 4.19p 1.46p The weighted average number of shares in issue during the period was calculated as follows: Date Event No. of shares Days 2006 2005 ------- ----------------- --------- ------ --------- --------- 1/1/05 Opening balance 11,484,545 181 - 11,484,545 1/1/06 Opening balance 11,484,545 10 634,505 - 11/1/06 Cancellation of shares 11,480,000 21 1,331,934 - 1/2/06 Cancellation of shares 11,460,000 150 9,497,237 - --------- --------- 11,463,676 11,484,545 --------- --------- The diluted earnings per share calculation is as follows: No. of shares Date Event & options Days 2006 2005 ------- ----------------- --------- ----- --------- --------- 1/1/05 Opening balance 12,134,545 181 - 12,134,545 1/1/06 Opening balance 12,134,545 10 670,417 - 11/1/06 Cancellation of 12,130,000 21 1,407,348 - shares 1/2/06 Cancellation of 12,110,000 150 10,035,911 - shares --------- --------- 12,113,676 12,134,545 --------- --------- 3. Dividends An interim ordinary dividend of 1.5p per ordinary share was proposed and paid during the period. INDEPENDENT REVIEW REPORT TO JARVIS SECURITIES PLC Introduction We have been instructed by the company to review the financial information set out in these interim financial statements and we have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. Directors' Responsibilities The interim report, including the financial information contained therein, is the responsibility of, and has been approved by the directors. The continuing obligations of the AIM listing rules require that the accounting policies and presentation applied to the interim figures should be consistent with those applied in preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed. Review Work Performed We conducted our review in accordance with guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board. A review consists principally of making enquiries of management and applying analytical procedures to the financial information and underlying financial data and based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with Auditing Standards and therefore provides a lower level of assurance than an audit. Accordingly, we do not express an audit opinion on the financial information. Review Conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 30 June 2006. Horwath Clark Whitehill LLP Chartered Accountants 10 Palace Avenue Maidstone Kent ME15 6NF Date: 12 July 2006 This information is provided by RNS The company news service from the London Stock Exchange

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