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Jarvis Securities (JIM)

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Thursday 10 March, 2011

Jarvis Securities

Final Results, Annual Report and Notice of AGM

RNS Number : 6623C
Jarvis Securities plc
10 March 2011
 



10 March 2011

 

Jarvis Securities plc

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

 

RESULTS FOR THE YEAR ENDED 31 DECEMBER 2010

 

HIGHLIGHTS

 

·      Average daily trade volume up 65% on prior year

·      Client cash balances up 39% on prior year

·      Client numbers have increased by 29% on prior year

·      21% increase in fee and commission income year on year

·      8% increase in interest income year on year

·    16% increase in revenue to £5.41m (2009: £4.65m)

·    Profit before tax £1.62m (2009: £1.69m);  pre-exceptional PBT** £2.03m

·    Total dividends for year 9p (2009: 20p*)

·         Earnings per share 10.73p (adjusted EPS** 13.77p) (2009: 11.46p (adjusted EPS** 10.20p))

 

* includes 13p interim dividends paid as prior distributions but declared as 2009 dividends

** before exceptional items and amortisation of goodwill

 

 

Enquiries:

 

Jarvis Securities plc     Tel: 01892 510515

Andrew Grant

Jolyon Head

 

 

Arbuthnot Securities    Tel: 020 7012 2000

Andrew Kitchingman

Richard Johnson

 

Notes:

Jarvis Securities plc is the holding company for Jarvis Investment Management Limited (AIM: JIM.L) a stock broking company and outsourced service provider for bespoke tailored financial administration. Jarvis was established in 1984 and is a member of the London Stock Exchange; a broker dealer member of PLUS Markets, authorised and regulated by the Financial Services Authority and an HM Revenue & Customs approved ISA manager. Jarvis has more than 53,000 retail clients and a growing number of institutional clients. As well as normal retail broking Jarvis provides cost effective and flexible share trading facilities within ISA and SIPP wrappers.

 

Jarvis provides outsourced and partnered financial administration services to a number of third party organisations. These organisations include advisers, stockbrokers, banks and fund managers. Jarvis can tailor its administration processes to the requirements of each organisation and has a strong reputation for flexibility and cost-effectiveness.

 

The Company is today sending to shareholders its Annual Report and Accounts for the year ended 31 December 2010, together with a notice convening the Annual General Meeting, to be held at the Company's offices on Tuesday 5 April 2011. The Annual Report and Accounts will also be available from the Company's website, www.jarvissecurities.co.uk.

 

 

CHAIRMAN'S STATEMENT

 

I am pleased to report another strong set of trading results in what continue to be unprecedented economic conditions. Markets have endured the uncertainty of an unpredictable UK general election and its subsequent outcome, the maintenance of a historic low Bank of England base rate and the continuation of the overall global economic downturn. During this turbulent period the business has continued to increase its client base and trade volumes.

 

We have succeeded by continuing to focus on our core service - the delivery of highly efficient execution-only stockbroking, administration and accounting services to retail and commercial clients. We have found significant organic growth in this area as our highlights illustrate. Trade volumes, client numbers and cash under administration have all increased significantly. One of the key drivers of this growth is our new low cost web only trade service which was launched at the end of 2009 and is continuing to attract new business on a daily basis.

 

In the last quarter of 2010 we began to benefit from increases in interest rates available on longer term deposits as market expectations of a rate increase have materialised. Early indications in 2011 are that base rate increases will be coming soon. This, allied with increased cash under management has improved our year on year interest income, and we will benefit from any further interest rate rises on deposits in 2011.

 

The foundations for an excellent 2011 are in place. The business is positioned to continue to grow our revenue streams off a low marginal cost base. We will continue to focus on organic growth, opportunities to diversify our income streams and further improve the robustness of our business model.

 

The business continues to be highly cash generative with no debt, and we have adhered to our stated policy of paying quarterly dividends of 2/3rd's of profit after tax.

 

Once again I would like to thank every member of the Jarvis team for their continued commitment.

 

Andrew Grant - Chairman

 

 

Consolidated income statement for the year ended 31 december 2010





Year to

Year to





31/12/10

31/12/09


Notes















£

£

Continuing operations:






Revenue

3



5,413,090

4,653,690







Administrative expenses




(3,794,928)

(2,948,162)







Finance costs

5



(3,039)

(12,436)













Profit before income tax

6



1,615,123

1,693,092







Income tax charge

8



(489,179)

(494,588)













Profit for the period




1,125,944

1,198,504













Attributable to equity holders of the parent




1,125,944

1,198,504













Earnings per share

9



P

P







Basic




10.73

11.46

Diluted




10.59

11.14







 

 

Consolidated STATEMENT OF FINANCIAL POSITION at 31 december 2010






As restated





31/12/10

31/12/09


Notes









£

£

Assets






Non-current assets






Property, plant and equipment

10



112,008

267,105

Intangible assets

11



273,626

439,481

Goodwill

11



342,872

342,872

Investments held to maturity

12



-

39,601

Available-for-sale investments

13



110,587

112,001





839,093

1,201,060

Current assets






Trade and other receivables

15



4,578,301

1,729,204

Investments held for trading

16



19,208

26,722

Cash and cash equivalents

17



502,099

2,552,877





5,099,608

4,308,803

Total assets




5,938,701

5,509,863







Equity and liabilities






Capital and reserves






Share capital

18



105,710

105,000

Share premium




837,799

779,934

Merger reserve




9,900

9,900

Capital redemption reserve




9,845

9,845

Fair value reserve




21,928

85,902

Share option reserve




79,264

74,394

Retained earnings




507,531

328,206

Own shares held in treasury




(83,319)

(83,319)

Total equity




1,488,658

1,309,862

Non-current liabilities






Deferred income tax

8



13,880

1,599

Current liabilities

19





Trade and other payables

19



4,141,280

3,780,093

Income tax

19



294,883

418,309

Total current liabilities

19



4,436,163

4,198,402

Total equity and liabilities




5,938,701

5,509,863

 

 

CoMPANY STATEMENT OF FINANCIAL POSITION at 31 december 2010





31/12/10

31/12/09


Notes









£

£

Assets






Non-current assets






Property, plant and equipment

10



109,585

267,105

Intangible assets

11



273,626

439,481

Goodwill

11



342,872

342,872

Investments held to maturity

12



-

39,601

Available-for-sale investments

13



110,587

112,001

Investment in subsidiaries

14



271,437

266,388





1,108,107

1,467,448

Current assets






Trade and other receivables

15



249,434

218,608

Cash and cash equivalents

17



5,033

7,581





254,467

226,189

Total assets




1,362,574

1,693,637







Equity and liabilities












Capital and reserves






Share capital

18



105,710

105,000

Share premium




837,799

779,934

Capital redemption reserve




9,845

9,845

Fair value reserve




21,928

85,902

Share option reserves




79,264

74,394

Retained earnings




311,225

262,033

Own shares held in treasury




(83,319)

(83,319)

Total equity




1,282,452

1,233,789

Non-current liabilities






Deferred income tax

8



21,972

9,475

Current liabilities

19





Trade and other payables

19



48,274

433,104

Income tax

19



9,876

17,269

Total current liabilities

19



58,150

450,373

Total equity and liabilities




1,362,574

1,693,637

 

 

Consolidated statement of comprehensive income for the year


Notes



Year to

Year to





31/12/10

31/12/09





£

£

Profit for the period




1,125,944

1,198,504

Purchase of own shares




-

-

Sale of shares from treasury




-

-

Deferred tax asset on share options

8



-

-

Net income recognised directly in equity




-

-

Total comprehensive income for the period



1,125,944

1,198,504

Attributable to equity holders of the parent




1,125,944

1,198,504

 

 

COMPANY statement of comprehensive income for the year


Notes



Year to

Year to





31/12/10

31/12/09





£

£

Profit for the period




995,812

2,361,171

Purchase of own shares




-

-

Sale of shares from treasury




-

-

Deferred tax asset on share options

8



-

-

Net income recognised directly in equity




-

-

Total comprehensive income for the period



995,812

2,361,171

Attributable to equity holders of the company



995,812

2,361,171

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY


 

Share capital

 

Share premium

 

Merger reserve

Capital redemption reserve

Fair value reserve

Share option reserve

Retained earnings

 

Own shares held in treasury

Total equity


£

£

£

£

£

£

£

£

£

At 1 January 2009

105,000

779,934

9,900

9,845

56,401

54,099

1,255,387

(83,319)

2,187,247

Expense of employee options

-

-

-

-

-

20,295

-

-

20,295

Profit for the financial year

-

-

-

-

-

-

1,198,504

-

1,198,504

Dividends

-

-

-

-

-

-

(2,125,685)

-

(2,125,685)

Investment revaluation

-

-

-

-

29,501

-

-

-

29,501

At 31 December 2009

105,000

779,934

9,900

9,845

85,902

74,394

328,207

(83,319)

1,309,862

Share options exercised during the year

710

57,865

-

-

-

-

-

-

58,575

Deferred tax charge to equity

-

-

-

-

(8,110)

-

-

-

(8,110)

Expense of employee options

-

-

-

-

-

4,870

-

-

4,870

Profit for the financial year

-

-

-

-

-

-

1,125,944

-

1,125,944

Dividends

-

-

-

-

-

-

(946,620)

-

(946,620)

Investment revaluation

-

-

-

-

(55,864)

-

-

-

(55,864)

At 31 December 2010

105,710

837,799

9,900

9,845

21,928

79,264

507,531

(83,319)

1,488,658

 

 

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 2009

105,000

779,934

9,845

56,401

54,099

26,547

(83,319)

948,507

Deferred tax charged to equity

-

-

-

-

-

-

-

-

Expense of employee options

-

-

-

-

20,295

-

-

20,295

Profit for the financial year

-

-

-

-

-

2,361,171

-

2,361,171

Dividends

-

-

-

-

-

(2,125,685)

-

(2,125,685)

Investment revaluation

-

-

-

29,501

-

-

-

29,501

At 31 December 2009

105,000

779,934

9,845

85,902

74,394

262,033

(83,319)

1,233,789

Deferred tax charged to equity

-

-

-

(8,110)

-

-

-

(8,110)

Share options exercised during the year

710

57,865

-

-

-

-

-

58,575

Expense of employee options

-

-

-

-

4,870

-

-

4,870

Profit for the financial year

-

-

-

-

-

995,812

-

995,812

Dividends

-

-

-

-

-

(946,620)

-

(946,620)

Investment revaluation

-

-

-

(55,864)

-

-

-

(55,864)

At 31 December 2010

105,710

837,799

9,845

21,928

79,264

311,225

(83,319)

1,282,452

 

 

statement OF cashflows

for the year ended 31 december 2010



CONSOLIDATED

COMPANY




As restated





Year to

Year to

Year to

Year to



31/12/10

31/12/09

31/12/10

31/12/09









£

£

£

£

Cash flow from operating activities






Profit before income tax


1,615,123

1,693,092

937,981

2,370,211







Depreciation and amortisation


176,738

167,554

176,468

167,554

Goodwill released to the income statement


-

(131,049)

-

(131,049)

Cost of share options


4,869

20,295

4,869

14,811

Finance costs


3,039

12,436

742

372

Impairment charge


124,848

-

124,848

-

Loss on disposal of property, plant & equipments


27,638

-

27,638

-

Loss on disposal of intangibles assets


34

-

34

-



1,952,289

1,762,328

1,272,580

2,421,899







Decrease in trade and other receivables

(2,849,097)

938,951

(30,826)

1,623,901

(Decrease)/increase in trade payables


361,187

547,647

(322,612)

(1,289,934)

Increase in investments in subsidiaries


-

-

(5,049)

(149,700)

(Decrease) in investments held for trading


7,514

24,126

-

-

Cash generated from operations


(528,107)

3,273,052

914,093

2,606,166







Interest paid


(3,039)

(12,436)

(742)

(372)

Income tax (paid)/received


(608,433)

(655,095)

(7,393)

(75,103)

Net cash from operating activities


(1,139,579)

2,605,521

905,958

2,530,691







Cash flows from investing activities






Purchase of property, plant and equipment


(1,650)

(74,481)

(1,650)

(74,481)

Disposal of property, plant and equipment


5,000

-

5,000

-

Purchase of intangible assets


(11,655)

(295,928)

(8,962)

(295,928)

Purchase of investments and long term assets


(14,849)

(25,000)

(14,849)

(25,000)



(23,154)

(395,409)

(20,461)

(395,409)

Cash flows from financing activities






Issue of share capital


58,575

-

58,575

-

Dividends paid


(946,620)

(2,125,685)

(946,620)

(2,125,685)

Net cash used in financing activities


(888,045)

(2,125,685)

(888,045)

(2,125,685)







Net (decrease)/increase in cash & cash equivalents

(2,050,778)

84,427

(2,548)

9,597

Cash and cash equivalents at the start of the year

2,552,877

2,468,450

7,581

(2,016)

Cash and cash equivalents at the end of the year

502,099

2,552,877

5,033

7,581

Cash and cash equivalents:





Cash at bank and in hand

502,099

2,552,877

5,033

7,581

Bank overdraft

-

-

-

-


502,096

2,552,877

5,033

7,581

 

 

Notes forming part of the financial statements

 

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 available-for-sale financial assets, and 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.

 

At the date of authorisation of these financial statements, the following Standards and Interpretations which have not been applied in these financial statements were in issue but not yet effective (and in some cases had not yet been adopted by the EU):

 

IFRS 1 Amendment - Limited exemption from IFRS 7 Disclosures for first time adopters

Amendments to IFRS 1 Additional Exemptions for First-time Adopters

IFRS 1 Amendments Severe Hyperinflation and Removal of Fixed Dates for First-Time Adopters

Amendments to IFRS 2 Group Cash-settled Share-based Payment Transactions

Amendments to IFRS 7 Financial Instruments Disclosures

IFRS 9 Financial Instruments

IAS 12 Amendments to Deferred tax: Recovery of Underlying Assets

IFRIC 14 (Amendment) Prepayments of a minimum funding requirement

IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments

Revised IAS 24 Related Party Disclosures (Issued 4 November 2009)

Amendment to IAS 32 Classification of Rights Issues

 

Adoption of these Standards and Interpretations is not expected to have a material impact on the results of the Company or Group.

 

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 23.

 

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Business Review on pages 3 to 8. The financial position of the Group, its cash flows, liquidity position and borrowing facilities are described within these financial statements. In addition, note 28 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

 

Revenue represents net sales of services, commissions and interest excluding value added tax. Management fees charged in arrears are accrued pro-rata for the expired period of each charging interval. Interest is accrued on cash deposits pro-rata for the expired period of the deposit. Commission income is recognised as earned.

 

(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 2010.

 

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, plus costs directly attributable to the acquisition.  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. The profit for the year of Jarvis Securities plc, as approved by the board, was £995,812 (2009: £2,361,171).

 

(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.

Motor vehicles                                       -           15% on cost

Office equipment                                    -           20% on cost

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               -           33% 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) Trading balances

 

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 debtors and creditors.

 

(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. Where the company has entered into finance leases, the obligations to the lessor are shown as part of borrowings and the rights in the corresponding assets are treated in the same way as owned fixed assets. Leases are regarded as finance leases where their terms transfer to the lessee substantially all the benefits and burdens of ownership other than right to legal title.

 

(k) Investments

 

The Group classifies its investments in the following categories: investments held to maturity, investments held for trading and available-for-sale investments. 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 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.

 

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.

 

Available-for-sale investments

Available-for-sale investments are stated at fair value. They are included in non-current assets unless management intends to dispose of them within 12 months of the balance sheet date.

 

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. Unrealised gains and losses arising in changes in the fair value of available-for-sale investments are recognised in equity. When investments classified as available-for-sale are sold or impaired, the accumulated fair value adjustments are included in the income statement as gains and losses from investment securities.

 

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 significant or prolonged decline in the fair value below its cost 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 sterling, US dollars, euros, Canadian dollars, Australian dollars, South African rand and Swiss francs. The group does not hold any assets or liabilities other than in sterling and converts client currency on matching terms to settlement of trades realising any currency gain or loss immediately in the income statement. Consequently the group has no foreign exchange risk.

 

(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 notified 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 and IFRIC 11.

 

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.

 

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.

 

(r) Trading balances

 

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 debtors and creditors. The net balance is disclosed where there is a legal right of set off.

 

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 Directors' Report.


2010


2009


£


£

Interest received on stockbroking accounts net of interest paid to clients

1,610,328


1,493,617

Fees, commissions, foreign exchange gains and other revenue

3,802,762


3,160,073


5,413,090


4,653,690

 

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.

 

5. Finance costs

2010


2009


£


£

Interest on bank loans, overdrafts and income tax

3,039


12,436


3,039


12,436

 

6. Profit before income tax

2010


2009

Profit before income tax is stated after charging/(crediting):

£


£

Directors' emoluments

560,667


461,544

Depreciation - owned assets

134,113


140,662

Amortisation

42,624


26,892

Impairment

124,487


-

Expenses and income relating to business acquired:




       Negative goodwill

-



(386,143)

       Bad debt charge relating to businesses acquired

-



255,094



-


(131,049)

Operating lease rentals - hire of machinery

10,566


10,566

Operating lease rentals - land and buildings

63,500


63,500

Loss on disposal of fixed assets

6,701


-

Finance costs

48,974


12,436


2010


2009

Directors' emoluments

£


£

Fees

Pension contributions

380,875

18,152


385,719

24,484

Compensation for loss of office

120,750



Cost of share options

21,944


14,811

Benefits in kind

18,946


36,530


560,667


461,544

Details of the highest paid director are as follows:




Aggregate emoluments

210,000


195,493

Company contributions to personal pension scheme

14,272


18,664

Cost of share options

-


6,585

Benefits in kind

10,369


18,382


234,641


239,124





 

Details of Directors' annual remuneration as at 31 December 2010 are set out below:


Emoluments

Share Options

Pension


Total

 

Directors




£

£

£


£

Andrew J Grant




220,369

-

14,272


234,641

Matthew J Edmett




181,046

21,944

3,880


206,870

Nick J Crabb




105,156

-

-


105,156

Graeme McAusland




14,000

-

-


14,000

TOTAL




520,571

21,944

18,152


560,667

 

During the year benefits accrued for two directors (2009 two directors) under a money purchase pension scheme.

 

Staff Costs

The average number of persons employed by the group, including directors, during the year was as follows:


2010


2009

Management and administration

36


30

The aggregate payroll costs of these persons were as follows:

£


£

Wages and salaries

1,294,037


1,045,197

Pension contributions

18,152


24,484

Social security

138,055


108,906

Cost of share options

5,049


20,295


1,455,293


1,198,882

Key personnel

The executive directors and senior management are considered to be the key management personnel of the company.

 

7. Auditors' remuneration




During the year the company obtained the following services from the company's auditors as detailed below:


2010


2009


£


£

Fees payable to the company's auditors for the audit of the company's annual financial statements

 

13,365


 

10,635

Fees payable to the company's auditors and its associates for other services:




The audit of the company's subsidiaries, pursuant to legislation

13,070


10,400

Total audit fees

26,435


21,035

Other services relating to taxation

3,400


2,350

All other services

15,650


13,500


45,485


36,885

 

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

 





8. Income and deferred tax charges - group

2010


2009


£


£

Based on the adjusted results for the year:




UK corporation tax

485,007


509,087

Adjustments in respect of prior years

-


(19,241)

Total current income tax

485,007


489,846

Deferred income tax:




Origination and reversal of timing differences

(14,925)


(12,972)

Adjustment in respect of change in deferred tax rate

392


-

Deferred tax on share options granted

-


17,714

Adjustment in respect of prior years

18,705


-

Total deferred tax charge

4,172


4,742

Income tax on profit

489,179


494,588

 

The income tax assessed for the year is greater than the standard rate of corporation tax in the UK (28%). The differences are explained below:

 

Profit before income tax

1,615,123


1,693,092

Profit before income tax multiplied by the standard rate of corporation tax in the UK of 28% (2009 - 28%)

 

452,235


 

474,066

Effects of:




Expenses not deductible for tax purposes

1,458


11,444

Income not taxable for tax purposes

-


-

Adjustments to tax charge in respect of previous years

18,705


(1,526)

Capital allowances in excess of depreciation



-

Small companies rate marginal relief



(5,756)

Depreciation on non-qualifying assets

16,389


16,360

Adjustment in respect of change in deferred tax rate

392



Other

-



Current income tax charge for the year

489,179


494,588

 

Movement in provision - group:




Provision at start of year

1,599


(3,143)

Deferred income tax charged in the income statement for the year

(14,925)


4,742

Adjustment in respect of prior periods

18,705


-

Adjustment in respect of change in closing deferred tax rate

391


-

Deferred income tax charged to equity for the year

8,110


-

Provision at end of year

13,880


1,599

Provision for deferred income tax:




Accelerated capital allowances

15,534


9,475

Short term timing differences

(1,654)


(7,876)


13,880


1,599

 

Movement in provision - company:




Provision at start of year

9,475


(3,143)

Deferred income tax charged in the income statement for the year

(14,410)


12,618

Adjustment in respect of prior periods

18,705


-

Adjustment in respect of change in closing deferred tax rate

92


-

Deferred income tax charged to equity for the year

8,110


-

Provision at end of year

21,972


9,475

Provision for deferred income tax:




Accelerated capital allowances

14,880


9,475

Short term timing differences

7,092


-


21,972


9,475

 

 

 

9. Earnings per share



2010


2009





£


£

Earnings:

Earnings for the purposes of basic and diluted earnings per share





(profit for the period attributable to the equity holders of the parent)


1,125,944


1,198,504

 

Number of shares:




Weighted average number of ordinary shares for the purposes of basic earnings per share

10,497,500


10,462,000





Effect of dilutive potential ordinary shares:




Share option scheme

137,140


299,298


10,634,640


10,761,298

 

Treasury shares have been deducted from the number of shares in issue for the purpose of calculating the weighted average number of shares in issue for the period. 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.

 

10. Property, plant & equipment - company

Leasehold

Improvements

Motor

Vehicles

Office

Equipment


Total

 

Cost:




£

£

£


£

At 1 January 2009




288,342

63,658

237,107


589,107

Additions




-

34,000

40,481


74,481

Disposals




-

-

(76,213)


(76,213)

At 31 December 2009




288,342

97,658

201,375


587,375

Additions




-

-

8,962


8,962

Disposals




-

(63,658)

(478)


(64,136)

At 31 December 2010




288,342

34,000

209,859


532,201

Depreciation:









At 1 January 2009




75,759

17,004

163,058


255,821

Charge for the year




96,105

12,523

32,034


140,662

On Disposal




-

-

(76,213)


(76,213)

At 31 December 2009




171,864

29,527

118,879


320,270

Charge for the year




95,684

9,775

28,385


133,844

On Disposal




-

(31,227)

(271)


(31,498)

At 31 December 2010




267,548

8,075

146,993


422,616

Net Book Value:









At 31 December 2010




20,794

25,925

62,866


109,585










At 31 December 2009




116,478

68,131

82,496


267,105

 

 

Property, plant & equipment - group

Leasehold

Improvements

Motor

Vehicles

Office

Equipment


Total

 

Cost:




£

£

£


£

At 1 January 2009




288,342

63,658

237,107


589,107

Additions




-

34,000

40,481


74,481

Disposals




-

-

(76,213)


(76,213)

At 31 December 2009




288,342

97,658

201,375


587,375

Additions






11,655


11,655

Disposals





(63,658)

(478)


(64,136)

At 31 December 2010




288,342

34,000

212,552


534,894

Depreciation:









At 1 January 2009




75,759

17,004

163,058


255,821

Charge for the year




96,105

12,523

32,034


140,662

On Disposal




-

-

(76,213)


(76,213)

At 31 December 2009




171,864

29,527

118,879


320,270

Charge for the year




95,685

9,775

28,654


134,114

On Disposal




-

(31,227)

(271)


(31,498)

At 31 December 2010




267,549

8,075

147,262


422,886

Net Book Value:









At 31 December 2010




20,793

25,925

65,290


112,008










At 31 December 2009




116,478

68,131

82,496


267,105

 

 

11. Intangible assets & goodwill - group & company

Goodwill


Intangible assets




Customer

Relationships

Databases

 

Software

Development

Website


Total

 



£


£

£

£

£


£

Cost:










At 1 January 2009


342,872


-

25,000

94,493

89,069


208,562

Additions


-


-

-

28,034

12,800


40,834

Amounts released to the income statement:










Negative goodwill


-


386,143

-

-

-


386,143

Disposals


-


-

-

(87,486)

-


(87,486)

At 31 December 2009


342,872


386,143

25,000

35,041

101,869


548,053

Additions


-


-

-

-

1,650


1,650

Amounts released to the income statement:









Impairment




(124,848)





(124,848)

Disposals


-



-

(1,226)

-


(1,226)

At 31 December 2010


342,872


261,295

25,000

33,815

103,519


423,629

Amortisation:










At 1 January 2009


-


-

5,677

92,213

71,276


169,166

Charge for the year


-


8,421

1,000

4,190

13,281


26,892

On Disposal


-


-

-

(87,486)

-


(87,486)

At 31 December 2009


-


8,421

6,677

8,917

84,557


108,572

Charge for the year


-


20,434

1,042

10,267

10,881


42,624

On Disposal


-




(1,192)



(1,192)

At 31 December 2010


-


28,855

7,719

17,992

95,438


150,004

Net Book Value:










At 31 December 2010


342,872


232,440

17,281

15,823

8,081


273,625











At 31 December 2009


342,872


377,722

18,323

26,124

17,312


439,481

 

 

In reviewing the value of goodwill for impairment, the directors have assumed an attrition rate of 7.0% based upon the actual rate for the previous period and a discount rate of 2.0%. The discounted cashflow is calculated over a period of 5 years. For impairment to the goodwill value to occur, the attrition rate would need to exceed 27.2% or the discount rate would need to exceed 19.1%.

 

During the prior period the businesses of seven commercial clients were acquired following the failure of those businesses under the terms of the contractual agreements in place. The turnover and profit attributable to these intangible assets is not material for the period and has therefore not been separately disclosed. The failure of the businesses resulted in a bad debt expense being recognised of £255,094. The fair value of the customer contractual and non-contractual relationships was £386,143. To estimate their fair value, a discounted cashflow method, specifically the income approach, was used with reference to the contractual terms and management estimates of the level of revenue which will be generated from the customer relationships. An attrition rate of 7% and weighted average cost of capital of 2% was used for the valuation. This valuation resulted in recognition of negative goodwill of £386,143, which was credited to the consolidated income statement. During the current period an impairment review of the customer relationships recognised in the prior period was conducted in accordance with IAS 36. This resulted in an impairment charge to the customer contractual and non-contractual relationships of £124,848. The impairment review applied the actual attrition rate seen over the prior year and to each relationship and used a weighted average cost of capital of 2%. If the weighted average cost of capital were increased to 3% the additional impairment would be £12,659.

 

12. Investments held to maturity

Group


Company


2010


2009


2010


2009

Unlisted Investments:

£


£


£


£

Cost:








At 1 January 2010

39,601


39,601


39,601


39,601

Disposals on maturity

(39,601)




(39,601)



As at 31 December 2010

-


39,601


-


39,601


 

13. Available-for-sale investments

Group


Company


2010


2009


2010


2009

Listed Investments:

£


£


£


£

Cost:








At 1 January 2010

112,001


57,500


112,001


57,500

Additions

10,000


25,000


10,000


25,000

On revaluation

(55,864)


29,501


(55,864)


29,501

As at 31 December 2010

66,137


112,001


66,137


112,001

 

Listed investments are stated at their market value at 31 December 2010

 

Listed investments are interests held in the following company registered in the United Kingdom:

 


Shareholding

Holding

Business

Alexander David Securities Group plc

2.79%

17,636,460

1p Ordinary shares

Stockbrokers

 


Group


Company


2010


2009


2010


2009

Unlisted Investments:

£


£


£


£

Cost:








At 1 January 2010

-


-


-


-

Additions

44,450


-


44,450


-

As at 31 December 2010

44,450


-


44,450


-

 

Unlisted investments are stated at market value.

 

Unlisted investments are interests held in the following company registered in the United Kingdom:

 


Shareholding

Holding

Business

Alexander David Securities Group plc

£44,450 at par

Preference shares

Stockbrokers

 

 

 

14. Investments in subsidiaries



Company






2010


2009

Unlisted Investments:





£


£

Cost:








At 1 January 2010





266,388


111,204

Additions





-


149,700

Capital contributions re share option costs





5,049


5,484

As at 31 December 2010





271,437


266,388

 


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

* indirectly held





 

 

15. Trade and other receivables

Group


Company


As restated



Amounts falling due within one year:

2010


2009


2010


2009


£


£


£


£









Trade receivables

3,731,152


1,300,400


1,996


38,144

Amounts owed by group undertakings

-


-


77,968


-

Other receivables

505,840


75,274


25,870


17,508

Prepayments and accrued income

341,309


353,530


143,600


162,956


4,578,301


1,729,204


249,434


218,608

 

 

16. Investments held for trading

Group


Company


2010


2009


2010


2009

Listed Investments:

£


£


£


£

Valuation:








At 1 January 2010

26,722


50,848


-


-

Additions

208,513


522,106


-


-

Disposals

(216,027)


(546,232)


-


-

As at 31 December 2010

19,208


26,722


-


-

 

 

Listed investments are stated at their market value at 31 December 2010.

 

 

17. Cash and cash equivalents

Group

As restated


Company


2010


2009


2010


2009


£


£


£


£

Balance at bank and in hand - group/company

502,099


2,552,877


5,033


7,581


502,099


2,552,877


5,033


7,581

 

 

18. Share capital

2010


2009


£


£

At 1 January 2010

105,000


105,000

Allotted, issued and fully paid during the year

710


-

Allotted, issued and fully paid:




10,571,000 (2009: 10,500,000) Ordinary shares of 1p each

105,710


105,000

 

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

 

38,000 shares purchased during 2008 continue to be held in treasury at the year end.

 

The Company has a share option scheme for certain employees of the Group. The vesting period is five years. 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.

 

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

 


2010


2009


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

920,000


118.17


820,000


108.19

Granted during the year

-


-


100,000


200.00

Exercised during the year

(71,000)


82.50


-


-

Forfeited during the year

(190,000)


106.84


-


-

Outstanding at year end

659,000


125.60


920,000


118.17

Exercisable at year end

379,000


82.50


590,000


82.5

 

 

 

 

A detailed breakdown of the exercise prices for options outstanding as at 31 December 2010 is shown in the table below:

 


2010


2009

Exercise Price (pence)

Number outstanding at year end


Exercise dates


Number outstanding at year end


Exercise dates









82.50 (granted 23 Dec 2004)

379,000


23 Dec 2009 to 23rd Dec 2014


590,000


23 Dec 2009 to 23rd Dec 2014

175.00 (granted 18 May 2007)

180,000


17 May 2012 to 17 May 2017


230,000


17 May 2012 to 17 May 2017

200.00 (granted 12 May 2009)

100,000


12 May 2014 to 12 May 2019


100,000


12 May 2014 to 12 May 2019

 

The total number of options unexercised and in issue at the year end is 659,000. The weighted average share price for the year was 129p (2009: 167p).

 

The following options are held by directors:


at 82.5p


at 175p


at 200p

A J Grant

273,500


76,500


-

N J Crabb

-


-


100,000

 

 

 

19. Trade and other payables

Group


Company


As restated



Amounts falling due within one year:

2010


2009


2010


2009


£


£


£


£









Bank loans and overdrafts

-


-


-


-

Trade payables

4,038,850


3,268,614


24,152


29,451

Other taxes and social security

11,471


67,696


400



Other payables & provisions

46,084


416,648


12,337


388,518

Accruals

44,875


27,135


11,385


15,135

Trade and other payables

4,141,280


3,780,093


48,274


433,104

Income tax

294,883


418,309


9,876


17,269

Total liabilities

4,436,163


4,198,402


58,150


450,373

 

 

20. Dividends

2010


2009


£


£

Final dividends paid on Ordinary 1p shares

-


648,000

Interim dividends paid on Ordinary 1p shares

946,620


1,477,685


946,620


2,125,685

Dividend per Ordinary 1p share

9p


20p

 

21. Operating lease commitments - group

 

At 31 December 2010 the group was committed to making the following payments in respect of operating leases which expire:

 


Equipment


Land & buildings


2010


2009


2010


2009


£


£


£


£

Between one and five years:

29,868


40,468


-


-

After more than five years:

-


-


428,625


492,125

 

 

Operating lease commitments - company

At 31 December 2010 the company was committed to making the following payments in respect of operating leases which expire:

 




Land & buildings






2010


2009






£


£

Between one and five years:





-


-

After more than five years:





428,625


492,125

 

 

On 26 September 2007 the company entered into a lease with Sion Holdings 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 £63,500, being the market rate on an arm's length basis, and expires on 26 September 2017.

 

In addition, on 24 October 2007, Jarvis Investment Management Limited entered into a lease agreement with Neopost Finance for the rental of various items of post management equipment. The equipment is required to support the increasing volume of post received and sent by the group as a result of the growth of the business. The lease has a term of 6 years.

 

 

 

22. 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.

 

The main financial asset of the group is cash and cash equivalents which is denominated in sterling and which is detailed in note 17. 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. 

 

23. 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.

 

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 11.

 

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 Groups also calculates the implied levels of variables used in the calculations at which impairment would occur.

 

Employee options are expensed equally in each year from issue to the date of first exercise. The total cost is calculated on issue based on the Black Scholes method with a volatility rate of 30% and a risk free interest rate of 3.75%. It is assumed that all current employees with options will still qualify for the options at the exercise date. If this did not occur profitability would be increased.

 

24. Immediate and ultimate parent undertaking

 

The company's immediate and ultimate parent undertaking is Sion Securities Limited, a company registered in England and Wales.  The largest set of accounts that Jarvis Securities plc is consolidated into is that of Sion Securities Limited. Sion Securities Limited is controlled by Mr A J Grant by virtue of his majority shareholding. Consolidated financial statements are available from Sion Securities Limited at its registered office address of Oxford House, 15-17 Mount Ephraim Road, Royal Tunbridge Wells, Kent, TN1 1EN.

 

 

25. Related party transactions

 

On 26 September 2007 the company entered into a lease with Sion Holdings Limited, a company controlled by A J Grant by virtue of his majority shareholding, for the rental of 78 Mount Ephraim, a self-contained office building. The lease has an annual rental of £63,500, being the market rate on an arm's length basis, and expires on 26 September 2017. During the year the company made a management charge of £10,000 to Sion Holdings Limited for office and administrative services and paid Sion Holdings Limited rent of £63,500 under the terms of the lease of 78 Mount Ephraim. Further the company paid Sion Holdings Limited a premium of £175,000 on the assignment of the new lease of 78 Mount Ephraim. The premium related to the VAT position of the lease. As a financial services business, the group cannot reclaim VAT in full. Sion Holdings Limited opted not to tax on the lease in order to save the group the costs of the irrecoverable VAT and in return the company compensated Sion Holdings Limited for the effect of this decision over the lease term.

 

Group and company trade payables include £15,875 (2009 £15,875) due to Sion Holdings Limited at the year end for rent for the quarter commencing 24 December.

 

Jarvis Investment Management Limited paid a performance related management charge to Jarvis Securities plc of £240,000 (2009 £180,000) during the year. Jarvis Investment Management Limited owed Jarvis Securities Limited £15,751 (2009 nil) at the year end.

 

Alexander David Securities Group plc is a related party by virtue of the fact that Mr A J Grant serves as a Non-Executive Director. During the year Jarvis Investment Management Limited earned commission and fees of £107,089 for the provision of outsourcing, execution, trade capture, settlement and related services. As at 31 December 2010 Jarvis Investment Management Limited's immediate parent undertaking, Jarvis Securities plc, also owned £44,500 of preference shares and 17,636,460 ordinary 1p shares (representing 2.79% of the total shareholding) in Alexander David Securities Group plc.

 

As at 31 December 2010 Sion Securities, the company's immediate and ultimate parent undertaking, had £189,000 deposited with Jarvis Investment Management Limited. Sion Holdings Limited, a company controlled by A J Grant by virtue of his majority shareholding, had £54,500 deposited with Jarvis Investment Management Limited at 31 December 2010.

 

26. Capital commitments

 

The company had no capital commitments at 31 December 2010.

 

27. 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.

 

 

28. 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 already in place to enable all risks to be better controlled. These include detailed profit 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 50% 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 Services 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 Services Authority ("FSA") 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 FSA'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.

 

 

29. Prior year adjustment

 

Adjustments have been made to the trade debtors, creditors and cash balances from the prior year. These adjustments reflect a more appropriate view of the company's settlement ledger activities. Within the non client settlement ledger there are a series of payable and receivable accounts such as Model B security deposits, stamp duty payable and commission and income due to our Model B clients that arise as a result of the settlement process. These are now fully reflected in trade payables and trade receivables.

 

The Crest Balances that were previously disclosed on the balance sheet have been netted against each other as from both Jarvis Investment Management and the counterparties perspective it is the net position that is either owed or owing at any given time. The direction of this position is dependent on the relative volume of purchase and sales that Jarvis clients are undertaking at the date of the statement of financial position.

 

As the settlement ledger is being reflected in the company's statement of financial position cash balances that belonged to the company but were previously left off the balance sheet are now reflected in the statement of financial position. These balances represent commission earned that have not been transferred to our corporate account, Model B security deposits, and other payables. In addition, accrued interest on treasury deposits that is deemed to be instantly convertible to cash is now recognised in cash or cash equivalents as opposed to trade and other receivables.

 

These adjustments have no impact on profitability, earning per share or any of the components of equity.

 

 

restated Consolidated STATEMENT OF FINANCIAL POSITION at 1 January 2010






As restated



1/1/10


Adjustments

1/1/10









£


£

£

Assets






Non-current assets






Property, plant and equipment


267,105



267,105

Intangible assets


439,481



439,481

Goodwill


342,872



342,872

Investments held to maturity


39,601



39,601

Available-for-sale investments


112,001



112,001



1,201,060



1,201,060

Current assets






Trade and other receivables


9,581,911


(7,852,707)

1,729,204

Investments held for trading


26,722



26,722

Cash and cash equivalents


8,522,615


(5,969,738)

2,552,877



18,131,248



4,308,803

Total assets


19,332,308



5,509,863







Equity and liabilities






Capital and reserves






Share capital


105,000



105,000

Share premium


779,934



779,934

Merger reserve


9,900



9,900

Capital redemption reserve


9,845



9,845

Fair value reserve


85,902



85,902

Share option reserve


74,394



74,394

Retained earnings


328,206



328,206

Own shares held in treasury


(83,319)



(83,319)

Total equity


1,309,862



1,309,862

Non-current liabilities






Deferred income tax


1,599



1,599

Current liabilities






Trade and other payables


17,602,538


(13,822,445)

3,780,093

Income tax


418,309



418,309

Total liabilities


18,020,847



4,198,402

Total equity and liabilities


19,332,308



5,509,863

 

 

Restated cash and cash equivalents at 1 January 2010






As restated



1/1/10


Adjustments

1/1/10

 

 


£


£

£

Balance at bank and in hand - company


507,306


2,045,571

2,552,877

Balance at bank and in hand - client balances


8,015,309


(8,015,309)

-



8,522,615



2,552,877

 

 

Restated trade and other receivables at 1 January 2010

Amounts falling due within 1 year:





As restated



1/1/10


Adjustments

1/1/10

 

 


£


£

£

Trade receivables


8,822,978


(7,522,578)

1,300,400

Other receivables


75,274



75,274

Prepayments and accrued income


683,659


(330,129)

353,530



9,581,911



1,729,204

 

 

restated Consolidated STATEMENT OF FINANCIAL POSITION at 1 January 2009






As restated



1/1/09


Adjustments

1/1/09









£


£

£

Assets






Non-current assets






Property, plant and equipment


333,286



333,286

Intangible assets


39,396



39,396

Goodwill


342,872



342,872

Investments held to maturity


39,601



39,601

Available-for-sale investments


57,500



57,500

Deferred income tax


3,143



3,143



815,798



815,798

Current assets






Trade and other receivables


5,342,108


(2,673,953)

2,668,155

Investments held for trading


50,848



50,848

Cash and cash equivalents


4,697,721


(2,229,271)

2,468,450



10,090,677



5,187,453

Total assets


10,906,475



6,003,251







Equity and liabilities






Capital and reserves






Share capital


105,000



105,000

Share premium


779,934



779,934

Merger reserve


9,900



9,900

Capital redemption reserve


9,845



9,845

Fair value reserve


56,401



56,401

Share option reserve


54,099



54,099

Retained earnings


1,255,387



1,255,387

Own shares held in treasury


(83,319)



(83,319)

Total equity


2,187,247



2,187,247

Current liabilities






Trade and other payables


8,135,670


(4,903,224)

3,232,446

Income tax


583,558



583,558

Total liabilities


8,719,228



3,816,004

Total equity and liabilities


10,906,475



6,003,251

 

 

Restated cash and cash equivalents at 1 January 2009                                                          






As restated



1/1/09


Adjustments

1/1/09

 

 


£


£

£

Balance at bank and in hand - company


275,638


2,192,812

2,468,450

Balance at bank and in hand - client balances


4,422,083


(4,422,083)

-



4,697,721



2,468,450

 

 

Restated trade and other receivables at 1 January 2009

Amounts falling due within 1 year:





As restated



1/1/09


Adjustments

1/1/09

 

 


£


£

£

Trade receivables


2,937,120


(2,227,410)

709,710

Amount owed by group undertaking


17,319



17,319

Other receivables


317,752



317,752

Charge against ordinary shares


1,393,345



1,393,345

Prepayments and accrued income


676,572


(446,543)

230,029



5,342,108



2,668,155

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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