29th Jan 2008 07:01
Jarvis Securities plc29 January 2008 Jarvis Securities plc ("Jarvis" or "the Company") Statement of audited results for the year ended 31 December 2007 Highlights: • Final dividend +140% • Earnings per share +114% • Profit before income tax +96% • Revenue +32% Final Dividend: The Board propose an increase in the final dividend to 6.0p (2006 2.5p) perOrdinary 1p share to holders on the register at 8 February 2008 and payable on14 March 2008. The ex-date for the dividend will be 6 February 2008. CHAIRMAN'S STATEMENT A review of the financial highlights and main statements will clearlydemonstrate that it has been another fantastic year for the group. We have beenvery successful at increasing our client numbers, trade volumes, assets undermanagement, profits and proposed final dividend. No less important, we havemaintained or improved the situation with our non-financial key performanceindicators as well. 2007 has certainly been a significant milestone in the growth of the business asin addition to the improvements in our retail business we have experiencedsignificant uptake in our outsourced services offering too. Approximately 25% ofour revenue now comes from commercial clients and this is an importantimprovement in the quality and sustainability of our income for the future.Indeed, we view Jarvis as an administration and outsourcing operation ratherthan an execution-only brokerage. This differentiation of our model andcontinued concentration on efficiency should reward us with a higher rating thanordinary brokerage firms due to the robust and resilient earnings from ourservices. I remain disappointed that this message has not been fully understoodby the market in rating our shares and we shall continue to promote the specialadvantages of Jarvis during 2008. It is easy to become blase about the scale of achievement when referring to ourrecent history. It is timely to reflect on the fact that we have an internal aimof 20% growth in profits each year. This is a very demanding goal in itself.However, we were forecast to generate profit before income tax of £1.4M at thestart of the year and this broker forecast has been upgraded several times.Despite a very challenging final forecast of £2.2M it is extremely pleasing tonote that we have been able to exceed even this level. Whilst I remain confidentin Jarvis and its performance for the future, we need to keep in mind what arealistic aim for growth should be. Conditions have deteriorated in the marketrecently and the interest rate environment may also be turning lower. Havingmade that caveat though, our pipeline of enquiries is good and there remain anumber of new commercial clients in the process of going live. In addition, thenumber of trades and accounts of our current commercial clients also continue torise and volatility is still beneficial to our core business as we are notresponsible for managing the performance of client portfolios. Whilst 2008 willno doubt have its challenges, we expect to improve performance again in thecoming year at this stage. I shall, of course, keep members updated on ourprogress during the next 12 months just as we have during the last 12 months. Jarvis will shortly be moving offices to newly renovated, larger andself-contained premises. We have only been in our current premises for fiveyears and when we moved we anticipated that they would have sufficient room forgrowth for many years. We have gone on to expand faster than expected and thispresented us with a problem, albeit for positive reasons. It is imperative thatwe are positioned for further demand for our services and for assisting ourincreasing and growing existing client base. We have therefore taken thedecision to move into larger premises that have capacity for a significantincrease in the number of staff that we now have. This will leave us very wellplaced to cope with the potential demand. We have also been able to make anumber of specific improvements during the refit that should help improve theefficiency of the operation even further. This will be an exciting developmentfor Jarvis. I would like to thank the entire team for the outstanding efforts made allround. It is just as pleasing to note the improvements in complaint ratios orcall handling for me, as it is the jump in revenue and profits. These are thesituations that our individuals endeavour to improve upon every day. We strivefor efficiency and we have a committed and professional team that are drivingJarvis forward. I am sure that all our members would like to join me inadvancing praise once again for the truly magnificent achievements of the groupover the past year. Andrew J. GrantChairman CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2007 Year to Year to 31/12/07 31/12/06 Notes---------------------------------------- -------- ---------- ---------- £ £Continuing operations:Revenue 3 4,519,116 3,419,658 Administrative expenses (2,210,693) (2,255,165) Finance costs 5 (26,946) (2,605)---------------------------------------- -------- ---------- ----------Profit before income tax 6 2,281,477 1,161,888 Income tax charge 8 (633,710) (364,322)---------------------------------------- -------- ---------- ----------Profit for the period 17 1,647,767 797,566======================================== ======== ========== ========== Attributable to equity holders of the parent 1,647,767 797,566======================================== ======== ========== ========== Earnings per share 9 p p Basic 14.91 6.98Diluted 13.98 6.60 CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2007 31/12/07 31/12/06 Notes------------------------------- -------- ---------- ---------- £ £AssetsNon-current assetsProperty, plant and equipment 10 87,347 105,175Intangible assets 11 38,485 60,793Goodwill 11 342,872 342,872Investments held to maturity 12 20,000 -Deferred income tax 8 79,407 -------------------------------- -------- ---------- ---------- 568,111 508,840Current assetsTrade and other receivables 13 8,293,218 5,710,459Investments held for trading 14 21,599 34,186Cash and cash equivalents 15 8,962,187 6,561,264------------------------------- -------- ---------- ---------- 17,277,004 12,305,909------------------------------- -------- ---------- ----------Total assets 17,845,115 12,814,749=============================== ======== ========== ========== Equity and liabilities Capital and reserves 17Share capital 16 108,000 113,500Share premium 17 789,834 789,834Capital redemption reserve 17 6,845 1,345Other reserves 17 34,010 17,696Retained earnings 17 695,329 688,886Own shares held in treasury 17 (1,930) (69,793)------------------------------- -------- ---------- ----------Total equity 17 1,632,088 1,541,468Non-current liabilitiesDeferred income tax 8 - 13,130------------------------------- -------- ---------- ----------Current liabilities 18Trade and other payables 15,609,935 10,909,451Income tax 8 603,092 350,700------------------------------- -------- ---------- ----------Total liabilities 18 16,213,027 11,260,151------------------------------- -------- ---------- ----------Total equity and liabilities 17,845,115 12,814,749=============================== ======== ========== ========== COMPANY BALANCE SHEET AS AT 31 DECEMBER 2007 31/12/07 31/12/06 Notes--------------------------------- -------- ---------- ---------- £ £AssetsNon-current assetsProperty, plant and equipment 10 87,347 105,175Intangible assets 11 38,485 60,793Goodwill 11 342,872 342,872Investments held to maturity 12 120,300 100,300Deferred income tax 8 79,407 ---------------------------------- -------- ---------- ---------- 668,411 609,140Current assetsTrade and other receivables 13 428,770 472,371Cash and cash equivalents 15 4,115 2,905--------------------------------- -------- ---------- ---------- 432,885 475,276--------------------------------- -------- ---------- ----------Total assets 1,101,296 1,084,416================================= ======== ========== ========== Equity and liabilities Capital and reserves 17Share capital 16 108,000 113,500Share premium 17 779,934 779,934Capital redemption reserve 17 6,845 1,345Other reserves 17 34,010 17,696Retained earnings 17 95,468 156,694Own shares held in treasury 17 (1,930) (69,793)--------------------------------- -------- ---------- ----------Total equity 17 1,022,327 999,376Non-current liabilitiesDeferred income tax 8 - 13,130--------------------------------- -------- ---------- ----------Current liabilities 18Trade and other payables 75,896 71,910Income tax 8 3,073 ---------------------------------- -------- ---------- ----------Total liabilities 18 78,969 71,910--------------------------------- -------- ---------- ----------Total equity and liabilities 1,101,296 1,084,416================================= ======== ========== ========== CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE FOR THE YEAR Notes Year to Year to 31/12/07 31/12/06--------------------------------- -------- ---------- ---------- £ £ Purchase of own shares 17 (1,125,013) (333,228)Sale of shares from treasury 17 252,247 159,990Deferred tax asset on share options 8 29,305 ---------------------------------- -------- ---------- ----------Net income recognised directly in equity (843,461) (173,238) Profit for the period 17 1,647,767 797,566--------------------------------- -------- ---------- ----------Total recognised income and expense for the period 804,306 624,328================================= ======== ========== ==========Attributable to equityholders of the parent 804,306 624,328================================= ======== ========== ========== CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR Share Share Capital Other Retained Own shares Attributable capital premium redemption reserves earnings held to equity reserve holders of the parent-------------------- -------- ------- ------- -------- ------- -------- -------- £ £ £ £ £ £ £ Balance at 1/1/06 114,845 789,834 - 8,848 472,412 (18,879) 1,367,060Purchase of own shares - - - - - (333,228) (333,228)Sale of sharesfrom treasury - - - - - 159,990 159,990-------------------- -------- ------- ------- -------- ------- -------- --------Net incomerecognised directly in equity - - - - - (173,238) (173,239)-------------------- -------- ------- ------- -------- ------- -------- --------Cancellation of own shares (1,345) - 1,345 - (122,324) 122,324 -Expense of employeeoptions - - - 8,848 - - 8,848Profit for the period - - - - 797,566 - 797,566Dividends - - - - (458,768) - (458,768)-------------------- -------- ------- ------- -------- ------- -------- --------Balance at 31/12/06 113,500 789,834 1,345 17,696 688,886 (69,793) 1,541,468Purchase of own shares - - - - - (1,125,013) (1,125,013)Sale of sharesfrom treasury - - - - - 252,247 252,247Deferred tax asset on share options - - - - 29,305 - 29,305-------------------- -------- ------- ------- -------- ------- -------- --------Net income recognised directly in equity - - - - 29,305 (872,766) (843,461)-------------------- -------- ------- ------- -------- ------- -------- --------Cancellation of own shares (5,500) - 5,500 - (940,629) 940,629 -Expense of employeeoptions - - - 16,314 - - 16,314Profit for theperiod - - - - 1,647,767 - 1,647,767Dividends - - - - (730,000) - (730,000)-------------------- -------- ------- ------- -------- ------- -------- --------Balance at 31/12/07 108,000 789,834 6,845 34,010 695,329 (1,930) 1,632,088 CASHFLOW STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007 CONSOLIDATED COMPANY Year to Year to Year to Year to 31/12/07 31/12/06 31/12/07 31/12/06-------------------------------- --------- --------- --------- -------- £ £ £ £Cash flow from operatingactivitiesProfit before income tax 2,281,477 1,161,888 1,519,939 744,104 Loss on disposal ofproperty, plant and equipment - 749 - 749Depreciation and amortisation 64,376 80,385 64,376 80,385Cost of share options 16,314 8,848 16,314 8,848Finance costs 26,946 2,605 (983) 48-------------------------------- --------- --------- --------- -------- 2,389,113 1,254,475 1,599,646 834,134 Decrease/(increase) in trade and other receivables 18,201 (581,828) 22,601 (163,414)Decrease/(increase) in investments held for trading 12,587 (1,009) - -Increase in trade payables 107,693 50,356 3,986 8,841-------------------------------- --------- --------- --------- --------Cash generated from operations 2,527,594 721,994 1,626,233 679,561 Interest paid (26,946) (2,605) - (48)Interest received - - 983 -Income tax paid (444,550) (201,932) 21,000 --------------------------------- --------- --------- --------- --------Net cash from operatingactivities 2,056,098 517,457 1,648,216 679,513 Cash flows from investingactivitiesPurchase of property, plant and equipment (24,240) (64,659) (24,240) (64,659)Proceeds on disposal of property, plant and equipment - 15,977 - 15,977Purchase of other long term assets (20,000) - (20,000) --------------------------------- --------- --------- --------- -------- (44,240) (48,682) (44,240) (48,682)Cash flows from financingactivitiesProceeds from sale oftreasury shares 252,247 159,990 252,247 159,990Purchase of own shares (1,125,013) (333,228) (1,125,013) (333,228)Dividends paid (730,000) (458,768) (730,000) (458,768)-------------------------------- --------- --------- --------- --------Net cash used infinancing activities (1,602,766) (632,006) (1,602,766) (632,006) Net increase/(decrease) in cash and cash equivalents 409,092 (163,231) 1,210 (1,175)Cash and cash equivalents at thestart of the year 471,499 634,730 2,905 4,080-------------------------------- --------- --------- --------- --------Cash and cash equivalents at the end of the year 880,591 471,499 4,115 2,905-------------------------------- --------- --------- --------- --------Client cash held in the course of settlement 8,081,596 6,089,765 - -Balance at bank and inhand (note 15) 8,962,187 6,561,264 4,115 2,905================================ ========= ========= ========= ======== NOTES FORMING PART OF THE FINANCIAL STATEMENTS 1. Basis of preparation The company has adopted the requirements of International Financial ReportingStandards (IFRS) and IFRIC interpretations endorsed by the European Union (EU)and those parts of the Companies Act 1985 applicable to companies reportingunder IFRS for the first time for the purpose of preparing financial statementsfor the year ended 31 December 2007. The financial statements have been preparedunder the historical cost convention as modified by the revaluation ofavailable-for-sale financial assets, and financial assets and liabilities atfair value through profit or loss. These financial statements have been prepared in accordance with the accountingpolicies set out below, which have been consistently applied to all the yearspresented. These accounting policies comply with applicable IFRS standards andIFRIC interpretations issued and effective at the time of preparing thesestatements. The following IFRS standards, amendments and interpretations are effective forthe company from 1 January 2008 and hence have not been adopted within thesefinancial statements. The adoptions of these standards, amendments andinterpretations is not expected to have a material impact on the company'sprofit for the year or equity: IAS1 Presentation of Financial Statements (revised September 2007) IAS 14 Segment Reporting (revised January 2008) IAS 23 Borrowing Costs (revised March 2007) IAS 27 Consolidated and Separate Financial Statements (January 2008) IFRS 2 Share Based Payment Vesting Conditions and Cancellations (revised January2008) IFRS 3 Business Combinations (revised January 2008) IFRIC11 IFRS2 Group and Treasury Share Transactions IFRIC 12 Service Concession Arrangements IFRIC 13 Customer Loyalty Programmes IFRIC 14 IAS 19 The limit on a defined benefit asset, minimum fundingrequirements and their interaction Reconciliations and descriptions of the effect of the transition from UKGAAP toIFRS on the Group's equity and net income and cash flows are shown in Note 27.The implementation of IFRS has had no material impact on the cash flow statementof the Group. The preparation of financial statements in accordance with IFRS requires the useof certain accounting estimates. It also requires management to exercisejudgement in the process of applying the Company's accounting policies. Theareas involving a high degree of judgement or complexity, or areas where theassumptions and estimates are significant to the consolidated financialstatements, are disclosed in Note 22. 2. Accounting policies (a) Revenue Revenue represents net sales of services, commissions and interest excludingvalue added tax. Management fees charged in arrears are accrued pro-rata for theexpired period of each charging interval. Interest is accrued on cash depositspro-rata for the expired period of the deposit. Commission income is recognisedas earned (b) Basis of consolidation Subsidiaries are all entities over which the Group has the power to govern thefinancial and operating policies generally accompanying a shareholding of morethan half of the voting rights. The existence and effect of potential votingrights that are currently exercisable or convertible are considered whenassessing whether the Group controls another entity. Subsidiaries are fullyconsolidated from the date on which control is transferred to the Group. Theyare deconsolidated from the date on which control ceases. The group financialstatements consolidate the financial statements of Jarvis Securities plc, JarvisInvestment Management plc, Sharegain Limited, JIM Nominees Limited, GalleonNominees Limited and Dudley Road Nominees Limited made up to 31 December 2007. The Group uses the purchase method of accounting for the acquisition ofsubsidiaries. The cost of an acquisition is measured as the fair value of theassets given, equity instruments issued and liabilities incurred or assumed atthe date of exchange, plus costs directly attributable to the acquisition.Identifiable assets acquired and liabilities and contingent liabilities assumedin a business combination are measured initially at their fair values at theacquisition date, irrespective of the extent of any minority interest. The costof acquisition over the fair value of the Group's share of identifiable netassets acquired is recorded as goodwill. If the cost of acquisition is less thanthe fair value of the Group's share of the net assets of the subsidiaryacquired, the difference is recognised in the income statement. Intra-group sales and profits are eliminated on consolidation and all sales andprofit figures relate to external transactions only. No profit and loss accountis presented for Jarvis Securities plc as provided by S230(3) of the CompaniesAct 1985. (c) Property, plant and equipment All property, plant and equipment is shown at cost less subsequent depreciationand impairment. Cost includes expenditure that is directly attributable to theacquisition of the items. Depreciation is provided on cost in equal annualinstalments over the lives of the assets at the following rates: Leasehold improvements - 33% on costMotor vehicles - 15% on costOffice equipment - 20% on cost The assets' residual values and useful lives are reviewed, and adjusted ifappropriate, at each balance sheet date. Gains and losses on disposals aredetermined by comparing proceeds with carrying amount. These are included in theincome statement. (d) Intangible assets Intangible assets are capitalised at their fair value on acquisition and carriedat cost less accumulated amortisation. Amortisation is provided on cost in equalannual instalments over the lives of the assets at the following rates: Databases - 4% on costSoftware developments - 33% on costWebsite - 33% on cost (e) Goodwill Goodwill represents the excess of the fair value of the consideration given overthe aggregate fair values of the net identifiable assets of the acquired tradeand assets at the date of acquisition. Goodwill is tested annually forimpairment and carried at cost less accumulated impairment losses. (f) Deferred income tax Deferred income tax is provided in full, using the liability method, ontemporary differences arising between the tax bases of assets and liabilitiesand their carrying amounts in the consolidated financial statements. Thedeferred income tax is not accounted for if it arises from initial recognitionof an asset or liability in a transaction, other than a business combination,that at the time of the transaction affects neither accounting or taxable profitor loss. Deferred income tax is determined using tax rates that have beenenacted or substantially enacted by the balance sheet date and are expected toapply when the related deferred income tax asset is realised or the deferredincome tax liability is settled. Deferred income tax assets are recognised to the extent that it is probable thatfuture taxable profit will be available against which the temporary differencescan be utilised. Deferred income tax is provided on temporary differences arising on investmentsin subsidiaries except where the timing of the reversal of the timing differenceis controlled by the Group and it is probable that the temporary differenceswill not reverse in the foreseeable future. (g) Segmental reporting A business segment is a group of assets and operations engaged in providingproducts or services that are subject to risks and returns that are differentfrom those of other business segments. The directors regard the operations ofthe Group as a single segment. (h) Pensions The group operates a defined contribution pension scheme. Contributions payablefor the year are charged to the income statement. (i) Stockbroking balances The gross assets and liabilities of the group relating to stockbrokingtransactions on behalf of clients are included in trade receivables, tradepayables and cash and cash equivalents. (j) Operating leases and finance leases Costs in respect of operating leases are charged on a straight line basis overthe lease term in arriving at the profit before income tax. Where the companyhas entered into finance leases, the obligations to the lessor are shown as partof borrowings and the rights in the corresponding assets are treated in the sameway as owned fixed assets. Leases are regarded as finance leases where theirterms transfer to the lessee substantially all the benefits and burdens ofownership other than right to legal title. (k) Finance lease interest The finance charge is allocated to each period during the lease term so as toproduce a constant periodic rate of interest on the remaining balance of theliability. (l) Investments The Group classifies its investments in the following categories: investmentsheld to maturity, investments held for trading and available-for-saleinvestments. The classification depends on the purpose for which the investmentswere acquired. Management determines the classification of its investments atinitial recognition and re-evaluates this designation at every reporting date. Investments held to maturity Investments held to maturity are stated at cost. An investment is classified inthis category if acquired principally with the intention of holdingindefinitely. Assets in this category are classified as non-current. Investment held for trading Investments held for trading are stated at fair value. An investment isclassified in this category if acquired principally for the purpose of sellingin 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 innon-current assets unless management intends to dispose of them within 12 monthsof the balance sheet date. Purchases and sales of investments are recognised on the trade-date - the dateon which the Group commits to purchase or sell the asset. Investments areinitially recognised at fair value. Investments are derecognised when the rightsto receive cash flows from the investments have expired or been transferred andthe Group has transferred substantially all the risks and rewards of ownership.Realised and unrealised gains and losses arising from changes in fair value ofinvestments held for trading are included in the income statement in the periodin which they arise. Unrealised gains and losses arising in changes in the fairvalue of available-for-sale investments are recognised in equity. Wheninvestments classified as available-for-sale are sold or impaired, theaccumulated fair value adjustments are included in the income statement as gainsand losses from investment securities. The fair value of quoted investments is based on current bid prices. If themarket for an investment is not active, the Group establishes fair value byusing valuation techniques. These include the use of recent arm's lengthtransactions, reference to other instruments that are substantially the same, ordiscounted cash flow analysis refined to reflect the issuer's specificcircumstances. The Group assesses at each balance sheet date whether there is objectiveevidence that an investment is impaired. In the case of investments classifiedas available-for-sale, a significant or prolonged decline in the fair valuebelow its cost is considered in determining whether the security is impaired. (m) Cashflow statement Cash movements relating to stockbroking balances derived from client trading areexcluded from the cashflow statement on the basis that these amounts do not formpart of the cashflow position of the group. DVP cash is client funds held intrust for delivery versus payment transactions in order to pay marketcounterparties for the purchase of equities and other instruments settled viaCREST, the electronic mechanism for the simultaneous and irrevocable transfer ofcash and securities operated by CRESTCo Limited. Hence such cash and cashequivalents are not readily available of use by the company as they relate toclient transactions. (n) Foreign Exchange The company offers settlement of trades in sterling, US dollars, euros, Canadiandollars, Australian dollars, South African rand and Swiss francs. The companydoes not hold any assets or liabilities other than in sterling and convertsclient currency on matching terms to settlement of trades realising any currencygain or loss immediately in the income statement. Consequently the company hasno foreign exchange risk. (o) Share Capital Incremental costs directly attributable to the issue of new shares or optionsare shown in equity as a deduction from proceeds, net of income tax. Where the company purchases its equity share capital (treasury shares), theconsideration paid, including any directly attributable incremental costs (netof income tax), is deducted from equity attributable to the company's equityholders until the shares are cancelled, reissued or disposed of. Where suchshares are subsequently sold or reissued, any consideration received, net of anydirectly incremental transaction costs and the related income tax effects, isincluded in equity attributable to the company's equity holders. 3. Group revenue The revenue of the group during the year was made in the United Kingdom and therevenue of the group for the year derives from the same class of business asnoted in the Directors' Report. 2007 2006 --------- --------- £ £Interest received on stockbroking accounts net ofinterest paid to clients 1,895,453 1,508,974Fees, commissions, foreign exchange gains and otherrevenue 2,623,663 1,910,684 --------- --------- 4,519,116 3,419,658 ========= =========4. Segmental information All of the reported revenue and operational results for the period derive fromthe group's continuing financial services operations. 5. Finance costs 2007 2006 --------- --------- £ £Interest on bank loans, overdrafts and income tax 26,946 2,605Interest paid to clients on cash savings products 52,664 160,961 --------- --------- 79,610 163,566 ========= ========= Interest paid on cash savings products is included within administrativeexpenses as the holding of client monies and the earning and paying of interestupon these is a core part of the business activities of Jarvis InvestmentManagement plc. 6. Profit before income tax 2007 2006 --------- ---------Profit before income tax is stated after charging: £ £Directors' emoluments 348,331 378,330Depreciation - owned assets 39,564 80,385Amortisation 24,812 20,635Operating lease rentals - hire of machinery 8,657 5,766Operating lease rentals - land and buildings 35,750 26,371Loss on disposal of fixed assets - 749Finance costs 62,185 163,566 ========= ========= Directors' emolumentsFees 325,475 361,050Pension contributions 11,964 10,764Cost of share options 10,892 6,516 --------- --------- 348,331 378,330Details of the highest paid director are as follows:Aggregate emoluments 181,001 141,001Company contributions to personal pension scheme 11,964 10,764Cost of share options 6,206 3,430 --------- --------- 199,171 155,195 Benefits are accruing for one director (2006 one director) under a moneypurchase pension scheme. Staff Costs The average number of persons employed by the group, including directors, duringthe year was as follows: Number NumberManagement and administration 23 22 ========= ========= The aggregate payroll costs of these persons were as £ £follows:Wages and salaries 773,134 766,071Pension contributions 11,964 10,764Social security 85,473 86,787Cost of share options 16,314 8,848 --------- --------- 886,885 872,470 ========= ========= Key personnel The directors 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'sauditors as detailed below: 2007 2006 --------- --------- £ £Fees payable to the company's auditors for the audit ofthe company's annual financial statements 8,700 8,525Fees payable to the company's auditors and itsassociates for other services:The audit of the company's subsidiaries, pursuant tolegislation 7,000 7,000 --------- ---------Total audit fees 15,700 15,525Other services relating to taxation 3,225 3,000All other services 12,235 16,150 --------- --------- 31,160 34,675 ========= ========= The audit costs of the subsidiaries were invoiced to and met by JarvisSecurities plc. 8. Income and deferred tax charges 2007 2006 --------- --------- £ £Based on the adjusted results for the year:UK corporation tax 697,336 350,700Adjustments in respect of prior years (395) 492 --------- ---------Total current income tax 696,941 351,192Deferred income tax:Origination and reversal of timing differences (8,991) 13,130Deferred tax on share options granted (54,240) - --------- ---------Income tax on profit 633,710 364,322 ========= ========= The income tax assessed for the year is lower than the standard rate ofcorporation tax in the UK (30%). The differences are explained below: Profit before income tax 2,281,477 1,161,888 ========= =========Profit before income tax multiplied by the standardrate of corporation tax in the UK of 30% (2006 -30%) 684,443 348,566Effects of:Expenses not deductible for tax purposes 9,593 (6,190)Income not taxable for tax purposes - -Adjustments to tax charge in respect of previousyears (395) 492Marginal relief (1,594) -Cost of share options 4,894 2,654 --------- ---------Current income tax charge for the year 696,941 351,192 ========= ========= Movement in provision:Provision at start of year 13,130 -Deferred income tax charged in the income statementfor the year (63,232) 13,130Deferred income tax charged to equity for the year (29,305) - --------- ---------Provision at end of year (79,407) 13,130 ========= =========Provision for deferred income tax:Accelerated capital allowances 4,138 13,130Share options granted (83,545) - --------- --------- (79,407) 13,130 ========= ========= 9. Earnings per share 2007 2006 --------- --------- £ £Earnings for the purposes of basic and dilutedearnings per share (profit (loss) for the periodattributable to the equity holders of the parent) 1,647,767 797,566 ========= ========= Date Event Number Days-------- --------------------- ----------- -------- ---------- ---------Basic earnings per share:1/1/06 Balance at 1/1/06 11,484,545 8 251,7169/1/06 Cancellation of 11,460,000 173 5,431,726 treasury shares18/9/06 Cancellation of 11,400,000 160 4,997,260 treasury shares7/12/06 Cancellation of 11,350,000 24 746,301 treasury shares1/1/07 Balance at 1/1/07 11,350,000 7 217,6718/1/07 Cancellation of 11,280,000 73 2,256,000 treasury shares21/3/07 Cancellation of 11,200,000 37 1,135,342 treasury shares27/4/07 Cancellation of 11,000,000 124 3,736,986 treasury shares29/8/07 Cancellation of 10,900,000 123 3,673,150 treasury shares31/12/07 Cancellation of 10,800,000 1 29,589 treasury shares ---------- ---------- 11,048,738 11,427,003 ========== ==========Diluted earnings per share:1/1/06 Balance at 1/1/06 12,134,545 8 265,9629/1/06 Cancellation of 12,110,000 173 5,739,808 treasury shares18/9/06 Cancellation of 12,050,000 160 5,282,192 treasury shares7/12/06 Cancellation of 12,000,000 24 789,041 treasury shares1/1/07 Balance at 1/1/07 12,000,000 7 230,1378/1/07 Cancellation of 11,930,000 73 2,386,000 treasury shares21/3/07 Cancellation of 11,850,000 37 1,201,233 treasury shares27/4/07 Cancellation of 11,650,000 124 3,957,808 treasury shares18/5/07 Grant of options 11,880,000 21 683,50729/8/07 Cancellation of 11,780,000 102 3,291,945 treasury shares31/12/07 Cancellation of 11,680,000 1 32,000 treasury shares ---------- ---------- 11,782,630 12,077,003 ========== ========== 10. Property, plant and equipment --------- -------- -------- --------- Leasehold Motor Office Total Improvements Vehicle Equipment --------- -------- -------- --------- £ £ £ £Cost:At 1 January 2007 49,203 24,160 202,484 275,847Additions 7,009 2,897 11,830 21,736Disposals - - - - --------- -------- -------- ---------At 31 December 2007 56,212 27,057 214,314 297,583 --------- -------- -------- ---------Depreciation:At 1 January 2007 31,050 3,926 135,696 170,672Charge for the year 10,141 3,986 25,437 39,564On Disposal - - - - --------- -------- -------- ---------At 31 December 2007 41,191 7,912 161,133 210,236 --------- -------- -------- ---------Net Book Value:At 31 December 2007 15,021 19,145 53,181 87,347 ========= ======== ======== ========= At 31 December 2006 18,153 20,234 66,788 105,175 ========= ======== ======== ========= 11. Intangible assets and goodwill --------- --------- --------- ------- --------- Goodwill Databases Software Website Total Development --------- --------- --------- ------- --------- £ £ £ £ £Cost:At 1 January 2007 342,872 25,000 91,017 70,185 529,074Additions - - 2,504 - 2,504Disposals - - - - - --------- --------- --------- ------- ---------At 31 December 2007 342,872 25,000 93,521 70,185 531,578 --------- --------- --------- ------- ---------Amortisation:At 1 January 2007 - 3,177 76,577 45,655 125,409Charge for the year - 1,250 12,802 10,760 24,812On Disposal - - - - - --------- --------- --------- ------- ---------At 31 December 2007 - 4,427 89,379 56,415 150,221 --------- --------- --------- ------- ---------Net Book Value:At 31 December 2007 342,872 20,573 4,142 13,770 381,357 ========= ========= ========= ======= ========= At 31 December 2006 342,872 21,823 14,440 24,530 403,665 ========= ========= ========= ======= ========= 12. Investments held to maturity Group Company 2007 2006 2007 2006 --------- ---------- --------- ---------Unlisted Investments: £ £ £ £Cost:At 1 January 2007 - - 100,300 100,300Additions 20,000 - 20,000 -Disposals - - - - --------- ---------- --------- ---------As at 31 December 2007 20,000 - 120,300 100,300 ========= ========== ========= ========= Unlisted investments are interests held in the following companies registered inthe United Kingdom: Shareholding Holding Business -------------- --------- ----------Jarvis Investment Management plc 100% 10,030,000 1p Ordinary shares Financial AdministrationAlexander David Holdings Limited 1.3% 200 1p Ordinary shares Stockbrokers 13. Trade and other receivables Group Company Amounts falling due withinone year: 2007 2006 2007 2006 --------- ---------- --------- --------- £ £ £ £ Trade receivables 6,988,801 4,355,025 56,750 36,263Amounts owed by groupundertakings 53,897 254,496 21,000 254,496Other receivables 172,182 163,519 135,089 143,134Income tax - - - 21,000Prepayments and accruedincome 1,078,338 937,419 215,931 17,478 --------- ---------- --------- --------- 8,293,218 5,710,459 428,770 472,371 ========= ========== ========= ========= Trade receivables include £6,914,936 (2006 £4,313,978) in respect of deliveryversus payment transactions for the settlement of client bargains. Amounts owed by group undertakings for the Group includes £53,897 for group taxrelief due from Sion Holdings Limited and £21,000 for the Company relating to apayment for group tax relief due from Jarvis Investment Management plc. Otherreceivables include £ nil (2006 £181) due from Mr A J Grant, a director of thecompany. 14. Investments held for trading Group Company 2007 2006 2007 2006 --------- ---------- --------- ---------Listed Investments:Valuation:At 1 January 2007 34,186 33,177 - -Additions 534,880 716,903 - -Disposals (547,467) (715,894) - - --------- ---------- --------- ---------As at 31 December 2007 21,599 34,186 - - ========= ========== ========= ========= Listed investments are stated at their market value at 31 December 2007. 15. Cash and cash equivalents Group Company 2007 2006 2007 2006 --------- ---------- --------- --------- £ £ £ £Balance at bank and in hand- company 880,591 471,499 4,115 2,905 Balance at bank and in hand- client balances 8,081,596 6,089,765 - - --------- ---------- --------- --------- 8,962,187 6,561,264 4,115 2,905 ========= ========== ========= ========= Cash at bank includes £8,081,596 (2006 £6,089,765) received in the course ofsettlement of bargains. This amount is held by the company in trust on behalf ofclients and is only available to complete the settlement of outstandingbargains. 16. Share capital 2007 2006 --------- --------- £ £Authorised:16,000,000 Ordinary shares of 1p each 160,000 160,000 ========= =========Allotted, issued and fully paid:10,800,000 (2006: 11,350,000) Ordinary shares of 1p each 108,000 113,500 ========= ========= During the year the company repurchased 480,000 of its own ordinary 1p sharesfor cancellation and also cancelled 70,000 shares purchased in the previousyear. A further 1,000 shares purchased were held in Treasury at the year end. A total of 600,000 options were granted to directors and employees on admissionof the company to trading on AIM on 23 December 2004 and a further 50,000 to adirector on 20 January 2006. These options were granted with an exercise priceof 82.5p and are first exercisable on 23 December 2009 and with a last exercisedate of 23 December 2014. In addition, 230,000 options were granted on 18 May2007 to directors and employees with an exercise price of 175p and are firstexercisable on 17 May 2012 and with a last exercise date of 17 May 2017. The following options were granted to directors: at 82.5p at 175p --------- ---------A J Grant 273,500 76,500M J Edmett 175,000 50,000J S Mackay 50,000 - 17. Capital and reserves - Group Share Share Capital Other Retained Own shares Total equity capital premium redemption reserves earnings held reserve in treasury ------- ------- -------- ------- -------- -------- -------- £ £ £ £ £ £ £ At 1 January 2006 114,845 789,834 - 8,848 472,412 (18,879) 1,367,060Profit for the financial year - - - - 797,566 - 797,566Expense of employeeoptions - - - 8,848 - - 8,848Dividends - - - - (458,768) - (458,768)Purchase of own shares - - - - - (333,228) (333,228)Cancellation of own shares (1,345) - 1,345 - (122,324) 122,324 -Sale of shares from treasury - - - - - 159,990 159,990 ------- ------- -------- ------- -------- -------- --------At 31 December 2006 113,500 789,834 1,345 17,696 688,886 (69,793) 1,541,468 ======= ======= ======== ======= ======== ======== ======== Profit for the financial year - - - - 1,647,767 - 1,647,767Expense of employeeoptions - - - 16,314 - - 16,314Deferred tax charged to equity - - - - 29,305 - 29,305Dividends - - - - (730,000) - (730,000)Purchase of own shares - - - - - (1,125,013) (1,125,013)Cancellation of own shares (5,500) - 5,500 - (940,629) 940,629 -Sale of shares from treasury - - - - - 252,247 252,247 ------- ------- -------- ------- -------- -------- --------At 31 December 2007 108,000 789,834 6,845 34,010 695,239 (1,930) 1,632,088 ======= ======= ======== ======= ======== ======== ======== Capital and reserves - company Share Share Capital Other Retained Own shares Total equity capital premium redemption reserves earnings held reserve in treasury ------- ------- -------- ------- -------- -------- -------- £ £ £ £ £ £ £ At 1 January 2006 114,845 779,934 - 8,848 6,446 (18,879) 891,194Profit for the financial year - - - - 731,340 - 731,340Expense of employeeoptions - - - 8,848 - - 8,848Dividends - - - - (458,768) - (458,768)Purchase of own shares - - - - - (333,228) (333,228)Cancellation of own shares (1,345) - 1,345 - (122,324) 122,324 -Sale of shares from treasury - - - - - 159,990 159,990 ------- ------- -------- ------- -------- -------- --------At 31 December 2006 113,500 779,934 1,345 17,696 156,694 (69,793) 999,376 ======= ======= ======== ======= ======== ======== ========Profit for the financial year - - - - 1,580,098 - 1,580,098Expense of employeeoptions - - - 16,314 - - 16,314Deferred tax charged toequity - - - - 29,305 - 29,305Dividends - - - - (730,000) - (730,000)Purchase of own shares - - - - - (1,125,013) (1,125,013)Cancellation of own shares (5,500) - 5,500 - (940,629) 940,629 -Sale of shares from treasury - - - - - 252,247 252,247 ------- ------- -------- ------- -------- -------- --------At 31 December 2007 108,000 779,934 6,845 34,010 95,468 (1,930) 1,022,327 ======= ======= ======== ======= ======== ======== ======== Other reserves relates to the provision for the estimated cost of employee shareoptions. Employee options are expensed equally in each year from issue to thedate of first exercise. The total cost is calculated on issue based on the BlackScholes method with a volatility rate of 30% and a risk free interest rate of3.75%. It is assumed that all current employees with options will still qualifyfor the options at the exercise date. 18. Trade and other payables Group CompanyAmounts falling duewithin 2007 2006 2007 2006one year: --------- ---------- --------- --------- £ £ £ £ Trade payables 15,449,512 10,646,884 57,196 18,323Amounts owed to group companies - - - -Other taxes and socialsecurity 78,512 56,295 - -Other payables andprovisions 28,044 64,860 - 35,562Accruals 53,867 141,412 18,700 18,025 --------- ---------- --------- ---------Trade and other payables 15,609,935 10,909,451 75,896 71,910Income tax 603,092 350,700 3,073 --------- ---------- --------- ---------Total liabilities 16,213,027 11,260,151 78,969 71,910 ========= ========== ========= ========= Trade payables include £14,996,532 (2006 £10,403,742) in respect of deliveryversus payment transactions for the settlement of client bargains. 19. Dividends 2007 2006 --------- --------- £ £ Interim dividends paid on Ordinary 1p shares 448,000 458,768Final dividends paid on Ordinary 1p shares 282,000 - --------- --------- 730,000 458,768 ========= ========= Dividend per Ordinary 1p share 6.5p 4.0p ========= ========= 20. Operating lease commitments At 31 December 2007 the group was committed to making the following paymentsduring the next year in respect of operating leases which expire: Equipment Land & --------- buildings --------- £ £ After more than five years: 10,566 63,500 ========= ========= On 26 September 2007 the company entered into a lease with Sion HoldingsLimited, its parent company, for the rental of Tudor House, a self-containedoffice building. The company also surrendered its existing lease with SionHoldings Limited without penalty to enable it to relocate to Tudor House inearly 2008 following refitting of the premises. The additional floor space isrequired by the company to support its planned expansion. The lease has anannual rental of £63,500, being the market rate on an arm's length basis, andexpires on 26 September 2017. In addition, on 24 October 2007, Jarvis Investment Management plc entered into alease agreement with Neopost Finance for the rental of various items of postmanagement equipment. The equipment is required to support the increasing volumeof post received and sent by the group as a result of the growth of thebusiness. The lease has a term of 6 years. 21. Financial Instruments The group's principal financial instruments comprise cash, short termsborrowings and various items such as trade receivables, trade payables etc. thatarise directly from operations. The main purpose of these financial instrumentsis the funding of the group's trading activities. The only financial asset of the group is cash and cash equivalents which isdenominated in sterling and which is detailed in note 15. The group operates alow risk investment policy and surplus funds are placed on deposit with at leastA rated banks at floating interest rates. Short-term receivables and payables are excluded from these disclosures. 22. Critical accounting estimates and judgements The Group makes estimates and assumptions concerning the future. These estimatesand judgements are based on historical experience and other factors, includingexpectations of future events that are believed to be reasonable under thecircumstances. The resulting accounting estimates will, by definition, seldomequal the related actual results. The estimates and assumptions that have asignificant risk of causing a material adjustment to the carrying amounts ofassets within the next financial year relate to goodwill and the expense ofemployee options. The Group tests annually whether goodwill has suffered any impairment, inaccordance with the accounting policy stated in Note 2 (e). These calculationsrequire the use of estimates. Employee options are expensed equally in each yearfrom issue to the date of first exercise. The total cost is calculated on issuebased on the Black Scholes method with a volatility rate of 30% and a risk freeinterest rate of 3.75%. It is assumed that all current employees with optionswill still qualify for the options at the exercise date. 23. Immediate and ultimate parent undertaking The company's immediate and ultimate parent undertaking is Sion HoldingsLimited, a company registered in England and Wales. The largest set of accountsthat Jarvis Securities plc is consolidated into is that of Sion HoldingsLimited. Sion Holdings Limited is controlled by Mr A J Grant by virtue of hismajority shareholding. 24. Related party transactions At the year end Sion Holdings Limited had an outstanding inter-company loanbalance due to Jarvis Securities plc of £nil (2006 £254,496). Sion HoldingsLimited owed Jarvis Securities plc £5,000 at the year end for invoiced services. On 26 September 2007 the company entered into a lease with Sion HoldingsLimited, its parent company, for the rental of Tudor House, a self-containedoffice building. The lease has an annual rental of £63,500, being the marketrate on an arm's length basis, and expires on 26 September 2017. During the yearthe company made a management charge of £10,000 to Sion Holdings Ltd for officeand administrative services and paid Sion Holdings Limited rent of £19,875 forOxford House, £63,500 being a year's rent in advance for Tudor House and £15,875rent deposit under the terms of the lease of Tudor House. Further the company paid Sion Holdings Limited a premium of £175,000 on theassignment of the new lease of Tudor House. The premium related to the VATposition of the lease. As a financial services business, the group cannotreclaim VAT in full. Sion Holdings Limited opted not to tax on the lease inorder to save the group the costs of the irrecoverable VAT and in return thecompany compensated Sion Holdings Limited for the effect of this decision overthe lease term. In addition, Sion Holdings Limited owed Jarvis Investment Management plc £53,897at the year end for group relief on income tax resulting from the taxcalculations made for the Group and Sion Holdings Limited, the ultimate parentundertaking, for the year ended 31 December 2007. 25. Event after the balance sheet date The Board proposes the payment of a final dividend of 6.0p per Ordinary 1p shareto holders on the register on 1 February 2008 for payment on the 7 March 2008subject to approval at the annual general meeting of the company. 26. Capital commitments The company was committed to making payments totalling £36,700 (2006 £ nil)after the year end for services contracted for at the 31 December 2007. Thesecommitments related to refit costs for the Group's new offices. 27. Reconciliation of amounts reported under previous UK GAAP to IFRS The Group adopted IFRS on 1 January 2007. A reconciliation of equity and profitreported under previous UK GAAP to that stated in the financial statements underIFRS is given below in accordance with the requirements of IFRS 1. 2006 --------- £Total equity reported under UK GAAP 1,520,833IFRS adjustment - amortisation of goodwill 19,385IFRS adjustment - amortisation of intangible assets 1,250 ---------Total equity reported under IFRS 1,541,468 ========= Total profit reported under UK GAAP 776,931IFRS adjustment - amortisation of goodwill 19,385IFRS adjustment - amortisation of intangible assets 1,250 ---------Total profit reported under IFRS 797,566 ========= Business and operating review Strong growth has resulted in the group's revenue rising by 32.2% to £4,519,116.Profit before income tax has also grown to 196.4% of the 31 December 2006 level,with basic earnings per share up by 113.6%. Group total equity is at £1,632,088from £1,541,468 a year earlier, a rise of 5.9%. The Group The principal trading subsidiary of the Group is Jarvis Investment Managementplc. For regulatory reasons relating to administration and cost, JarvisSecurities plc is the AIM traded parent, holds the assets of the Group and isresponsible for activities that fall outside the scope of regulated investmentbusiness. Jarvis Investment Management plc is a Member of The London StockExchange (LSE) and PLUS markets and is authorised and regulated by the FinancialServices Authority (FSA). This status is essential for the trading activities ofthe Group and therefore compliance with the Rules of both the LSE and FSA is ofparamount importance. The Group provides retail execution-only stockbroking;PEP, ISA and SIPP investment wrappers; savings schemes and financialadministration and settlement services in all these areas to other stockbrokersand investment firms as well as individuals. The market There are many stockbroking firms within the UK and a number of outsourcedfinancial administration service providers. Jarvis Investment Management is in ahighly competitive and price-sensitive market for retail execution-only clients.The market for third party administration services is also competitive but witha greater bias towards service than cost. Jarvis has again expandedsignificantly in both these areas during the year under review and expects tocontinue doing so in 2008. Trade volumes clearly have a significant impact onthe fortunes of stockbroking businesses but with a wider spread of activitiesand a different charging model to our competitors we believe that our income isless volatile and of a higher quality than other pure execution-only brokers. Capitalisation and financing Jarvis Securities plc has 10,800,000 Ordinary 1p shares in issue. These sharesare admitted to trading on AIM. The Company has been buying back its shares forcancellation during the year when the Board believed that the share price didnot reflect the value of the business. The Company will continue to repurchaseshares when its cash position allows. Whilst the business is highly cashgenerative, and therefore requires no further debt or other external financing,the Board wish to balance the use of cash between the stated dividend policy andany buy-back of shares. Approximately two-thirds of profit after tax is paid outas a dividend, with the other third being reinvested in the business or used forpurchasing its own shares as appropriate. This results in the Group having noborrowing requirements and the ability to pay an attractive yield. Environmental and social responsibility Jarvis is committed to reducing waste because of the environmental and costimplications. We do not see environmental concerns as negative to our businessprogress but complimentary. To this end we have instigated a number ofinitiatives relating to electronic communication and payment in order to reducepaper usage and the carbon effects of transporting documentation. Jarvis hasbeen storing its client documentation electronically for more than five yearsnow and this significantly reduces wasted space and the resultant costs of rent,light and heat as well as the environmental impact of physical storage. Thisfurther supports our business continuity objectives. Jarvis has supported anumber of charities during the year and we are committed to continuing to do soand to develop new ways to cut our waste and impact upon the environment.Donations made to: • Comic Relief • British Heart Foundation • RSPCA Key Performance Indicators (KPI) The primary goal of the Board is efficiency. We believe this to be at the heartof a successful business and we believe that efficiency is central to pleasingall the stakeholders in the Jarvis Securities plc Group. Efficiency means aconstructive and satisfying work environment for employees, a positiveexperience for clients, reduced environmental impact, reliability for thoseorganisations that trust Jarvis to support them and a robust financialperformance for shareholders. The following measurements, or KPIs, are importantin monitoring and directing the development of the Company: Operating profit margin This is profit before income tax as a percentage of revenue. This is a goodindicator of efficiency, as a high margin tends to suggest that work iscompleted quickly and accurately resulting in a high rate of return for theGroup. The average margin for our competitors is 23.0% (source: ComPeer Q3 2007Peer Group Report). The Board aims to have significantly higher than averagemargins and to keep these above 20%. 2007: 50.49%2006: 33.97% ROCE The return on capital employed is the profit before income tax as a proportionof the fixed capital used in the business, such as assets. A high rate ofreturn, ROCE, indicates the efficient use of the resources of your Group. Giventhe low capital nature of our business model we would expect a relatively highROCE figure. The Board aims to maintain a ROCE figure of double the one-yearTreasury rate, giving a current target of 11.06%. 2007: 139.8%2006: 75.4% Revenue per employee This is revenue per staff member and an increasing rate of revenue per employeerepresents increasing efficiency. Given that the Group's staff is not only itslargest single cost but also its most important resource this measure isfundamental in monitoring performance. The Board's aim is to grow revenue peremployee at a faster rate than payroll costs, excluding any non-recurring items,in order to improve returns to shareholders and increase efficiency each year. 2007: 196,4832006: 155,439 Revenue increase rate: 26.4% vs. payroll cost increase: 1.65% Funds under administration: A growth in stock and cash held for clients by Jarvis indicates growth of thefirm. Whilst this can be due to external factors such as market values which arebeyond the control of the Board this is a useful indicator of the generaldirection of the company. Interest on cash held for clients is a significantproportion of the Group's income and hence this provides a good guide toanticipated earnings in combination with current interest rates. The Board aimsto grow both cash and stock under administration explicitly each year. Total funds under administration at the year end:2007: £432M2006: £309M Client numbers Increasing client numbers is essential in increasing the size of the business inthe future. Increasing revenue per client is also desirable to accelerate thegrowth of the business and hence these two measures are considered together. TheBoard aims to increase client numbers by at least 10% per year and maintainpositive revenue growth per client. In combination this will drive revenuegrowth for the Group into the future. Rate of Increase (Number): 28.0%Rate of Increase (Revenue): 3.27% Complaints ratio Providing a good service to clients is essential for a strong business. Thenumber of formal complaints made per 1,000 accounts is an indicator of how goodthe service provided is. It is essential to keep this figure low to maintainclients and attract new ones. The Board aims to keep the number of formalcomplaints per 1,000 accounts below 2. The average amongst our competitors is5.60 (source: ComPeer annual peer group benchmarking report 2006). Jarvis againhad one of the best ratios in the execution-only industry in the last ComPeerannual benchmarking report and we are very proud of this achievement. 2007: 0.502006: 0.51 Calls answered in three rings Unlike many firms in financial services we still believe in personal attention.Jarvis do not use automated telephone menu systems and we aim to answer 90% ofall telephone calls within three rings. We believe that this differentiates usfrom competitors and makes our firm more attractive to clients: % of calls answered in three rings in 2007: 89.4%% of calls answered in three rings in 2006: 88.5%Total phone calls taken 2007: 129,235Total phone calls taken 2006: 121,469Increase in call volumes: 6.39% These results were adversely affected due to unexpectedly busy periods in theyear. Performance has improved over 2006. Sickness days Our staff are our most important resource and they control the success orotherwise of Jarvis. We aim to provide a happy and positive work environment.This is difficult to measure in strictly numerical terms but an acceptedindication of morale is the proportion of working days lost to illness. This iscalculated by dividing the number of whole working days lost per year for allemployees by the maximum potential number of working days available (assumesaverage number of employees multiplied by 260 days per employee). The Board'saim is to attain a loss of less than 1% per year. 2007: 1.49%2006: 1.85% These results are improved over the prior year but remain behind target. EPS and P/E ratio The principal measures used by investors to compare and rate publicly tradedcompanies are the earnings per share (EPS) and the relative multiple to theseearnings of the current share price (the price earnings or P/E ratio). Thereforethe Board must have regard to these measures in order to maximise returns toinvestors. EPS is a result of dividing profit after tax by the average number ofshares in issue throughout the period. The P/E ratio is the share price dividedby EPS. The P/E ratio is largely a product of the market price of the shares in theCompany and hence is largely beyond the control of the Board. Certain actionscan be taken where this is perceived by your Board to be out of sync withcomparable firms, such as the purchase of shares for cancellation as undertakenin the year. However this is mainly a result of public perception and istherefore difficult to change. These measures are important to investors and hence need to be given highregard. The Board aims to grow EPS by at least 25% per year, which is anaggressive target for expanding Jarvis. The Board will continue its efforts toincrease the P/E ratio to reflect its belief that Jarvis should have a premiumrating to its competitors because of its growth rate, yield and differentiatedbusiness model. 2007 EPS: 14.91p2006 EPS: 6.98pRate of change: 114% 2007 P/E ratio: 10.82006 P/E ratio: 14.0 INDEPENDENT AUDITORS' REPORT TO THE SHAREHOLDERS OF JARVIS SECURITIES PLC We have audited the group and parent company financial statements of JarvisSecurities plc (the "financial statements") which comprise the consolidatedincome statement, consolidated balance sheet, company balance sheet,consolidated statement of recognised income and expense, consolidated statementof changes in equity, consolidated cashflow statement, company cashflowstatement and related notes 1 to 27 of Jarvis Securities plc for the year ended31 December 2007. These financial statements have been prepared under theaccounting policies set out therein. This report is made solely to the company's shareholders, as a body, inaccordance with Section 235 of the Companies Act 1985. Our audit work has beenundertaken so that we might state to the company's shareholders those matters weare required to state to them in an auditors' report and for no other purpose.To the fullest extent permitted by law, we do not accept or assumeresponsibility to anyone other than the company and the company's shareholdersas a body, for our audit work, for this report, or for the opinions we haveformed. RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS The directors' responsibilities for preparing the Annual Report and thefinancial statements in accordance with applicable law and InternationalFinancial Reporting Standards (IFRSs) as adopted by the European Union are setout in the Statement of Directors' Responsibilities. Our responsibility is to audit the financial statements in accordance withrelevant legal and regulatory requirements and International Standards onAuditing (UK and Ireland). We report to you our opinion as to whether the financial statements give a trueand fair view and are properly prepared in accordance with the Companies Act1985. We also report to you whether, in our opinion, the information given inthe Directors' Report is consistent with the financial statements. In additionwe report to you if, in our opinion, the company and group have not kept properaccounting records, if we have not received all the information and explanationswe require for our audit, or if information specified by law regardingdirectors' remuneration and transactions with the company is not disclosed. We read the other information contained in the Annual Report, and considerwhether it is consistent with the audited financial statements. This otherinformation comprises only the Directors' Report, the Financial Highlights andthe Chairman's Statement. We consider the implications for our report if webecome aware of any apparent misstatements or material inconsistencies with thefinancial statements. Our responsibilities do not extend to any otherinformation. BASIS OF AUDIT OPINION We conducted our audit in accordance with International Standards on Auditing(UK and Ireland) issued by the Auditing Practices Board. An audit includesexamination, on a test basis, of evidence relevant to the amounts anddisclosures in the financial statements. It also includes an assessment of thesignificant estimates and judgements made by the directors in the preparation ofthe financial statements, and of whether the accounting policies are appropriateto the group's and company's circumstances, consistently applied and adequatelydisclosed. We planned and performed our audit so as to obtain all the information andexplanations which we considered necessary in order to provide us withsufficient evidence to give reasonable assurance that the financial statementsare free from material misstatement, whether caused by fraud or otherirregularity or error. In forming our opinion we also evaluated the overalladequacy of the presentation of information in the financial statements. UNQUALIFIED OPINION In our opinion: • the group financial statements give a true and fair view, in accordance with IFRSs as adopted by the European Union, of the state of the group's affairs as at 31 December 2007 and of its profit for the year then ended; • the parent company financial statements give a true and fair view, in accordance with IFRSs as adopted by the European Union, as applied in accordance with the Companies Act 1985, of the state of the parent company's affairs as at 31 December 2007; and • the information provided in the Directors' Report is consistent with the financial statements. HORWATH CLARK WHITEHILL LLPChartered Accountants and Registered AuditorsMaidstone Contacts: Jarvis Securities plcAndrew Grant or Mathew Edmett 0870 224 1111 Daniel Stewart & Company plcLindsay Mair or Stewart Dick 020 7776 6550 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Jarvis Securities