13th Jul 2006 07:00
Jarvis Securities plc13 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 focusentirely on building shareholder value through maintaining our quality serviceand improving profitability. I am delighted to say that this strategy has, todate, been successful. Our retail client business has continued to expand and we are now one of theUK's top fifteen stockbrokers by retail volume according to data published bythe London Stock Exchange. This is a great achievement considering that we onlybegan to transact our own deals just over three years ago. We now have all our Model B settlement service clients on profitable contractswith minimum revenue requirements, even though these have not grown as fast asexpected. With the costs of adapting our systems behind us, any future contractsshould be profitable from the outset as with our other intermediary andinstitutional relationships. The Financial Highlights section of this statement shows clearly the significantimprovement in our operating performance made in the first half of 2006 comparedto the same period in 2005. Our mantra has always been to provide both qualityof service and efficiency, goals that we consider to be complementary. Throughstreamlining and improving our processes we aim to maximise client satisfaction.In our opinion, keeping our customers satisfied is the best possibleadvertisement, helping to generate new business through recommendation. Thisphilosophy has enabled us to increase customer numbers and improve our operatingprofit margin from 22% (June 2005) to 41% (June 2006). This also helps todifferentiate our business from other brokers, reflecting the skill andcommitment of our employees. We have benefited from increasing trading volumes during the period to June2006, however commissions form only part of our revenue mix and we estimate thatthe improved operating conditions increased commissions by approximately anextra £100,000 compared to forecasted revenues. Improvements to our operatingresults were primarily due to cutting operational costs, improving businessprocesses and growing our customer base. When we joined AIM in 2004 we highlighted that scalability was a strength of ourbusiness model and I believe that these results prove that to be true. The Boardhave always aimed to build a robust business and to keep fixed costs to aminimum, thus allowing the company to take advantage of market upturns withouthaving to rely upon them. We have decided to pay a full dividend in accordance with our policy for thefirst half of this year. The first dividend of 1.5p per share, paid in February2006, was designed to bridge the old and new payment timetables and hence theBoard decided it was appropriate to ignore this in calculating the dividend tobe paid based upon these results. The company is cash positive and we intend tomaintain a high dividend payout policy. Hence a further interim dividend of 2.5pper share is proposed with the release of these results payable on 16 August2006 to all shareholders on record as at 28 July 2006. Jarvis Securities plc came to AIM in December 2004 at a placing price of 82.5pper share. I am acutely aware of and disappointed by the fact that our shareshave not traded above this price for some time now. The Board do believe thatthe price has not reflected the recent performance of the business andaccordingly 180,000 Ordinary shares have been bought at an average price of 72pper share for treasury. This reflects our confidence in the future of thecompany. However we do not consider this to be a long-term strategy to createvalue for shareholders although we will consider further buy backs asappropriate. We hope that our strong trading results will renew investorinterest in the business and the opportunities that it presents. Our marketcapitalisation on admission to AIM was £9.5m and our profit before tax for thenine months to 30 September 2004 was £460,000. Now that we have achieved aprofit before tax of more than £700,000 for the six months to 30 June 2006, Ihope that more investors will see the potential in our model and that our shareprice 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 becomingincreasingly popular and growing our product range is important in maintainingmomentum. We plan to improve our internet based offering shortly and launch anew web based service. Following an upturn in the interest rate environment,together with some signs of improved volumes, I look forward with confidence tothe remainder of 2006. I am delighted to present the following excellent results to shareholders and Iam sure they will join me in expressing thanks to our dedicated team ofemployees for delivering our strategy. Andrew GrantChairman Jarvis Securities Plc Tel: 0870 224 1111Mathew Edmett Daniel Stewart & Company Tel: 0207 776 6550Lindsay MairNicholas 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 1,275,270Administrative expenses 1,014,454 945,337Exceptional 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 ASSETSIntangible assets 354,377 375,012Tangible assets 178,717 215,615 -------- -------- 533,094 590,627 CURRENT ASSETSInvestments 23,882 57,215Debtors 4,736,141 2,941,268Cash at bank and in hand 6,388,947 4,302,062 -------- -------- 11,148,970 7,300,545 CREDITORS:Amounts falling due 10,091,205 6,632,526within 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 CHARGESDeferred taxation 18,119 5,492 -------- ---------NET ASSETS 1,572,740 1,253,154 ======== ========= CAPITAL AND RESERVESCalled up share capital 114,600 114,845Share premium account 789,834 789,834Capital redemption reserve 245 -Profit and loss account 798,432 348,475Treasury shares (130,371) - -------- ---------SHAREHOLDERS' FUNDS 1,572,740 1,253,154 ======== ========= Basic earnings per share 4.43p 1.55pDiluted 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 operatingactivities Operating profit 710,381 283,004Depreciation 40,127 38,164Amortisation 10,318 10,318(Profit) on disposal of tangible (246) -fixed asset(Increase)/decrease in currentasset 9,295 (20,866)investments(Increase)/decrease in debtors 80,852 32,976Increase/(decrease) in creditors (306,372) (654,873) --------- ---------Net cash (outflow)/inflow fromoperating activities 544,355 (311,277) ========= ========= CASH FLOW STATEMENT Cash flow from operating 544,355 (311,277)activitiesCapital expenditure and financial (42,001) (126,906)investmentEquity 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 accountingpolicies 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 508,316 177,771Earnings per share 4.43p 1.55pDiluted earnings per share 4.19p 1.46p The weighted average number of shares in issue during the period was calculatedas 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 paidduring the period. INDEPENDENT REVIEW REPORT TOJARVIS SECURITIES PLC Introduction We have been instructed by the company to review the financial information setout in these interim financial statements and we have read the other informationcontained in the interim report and considered whether it contains any apparentmisstatements or material inconsistencies with the financial information. Directors' Responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by the directors. The continuingobligations of the AIM listing rules require that the accounting policies andpresentation applied to the interim figures should be consistent with thoseapplied in preparing the preceding annual accounts except where any changes, andthe reasons for them, are disclosed. Review Work Performed We conducted our review in accordance with guidance contained in Bulletin 1999/4issued by the Auditing Practices Board. A review consists principally of makingenquiries of management and applying analytical procedures to the financialinformation and underlying financial data and based thereon, assessing whetherthe accounting policies and presentation have been consistently applied unlessotherwise disclosed. A review excludes audit procedures such as tests ofcontrols and verification of assets, liabilities and transactions. It issubstantially less in scope than an audit performed in accordance with AuditingStandards 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 thatshould be made to the financial information as presented for the six monthsended 30 June 2006. Horwath Clark Whitehill LLPChartered Accountants10 Palace AvenueMaidstoneKentME15 6NF Date: 12 July 2006 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Jarvis Securities