Jarvis Securities achieves a record breaking set of results (LON:JIM)

Jarvis Securities plc (LON:JIM) Finance Director Jolyon Christopher Head caught up with DirectorsTalk for an exclusive interview to discuss full year results, how recent uncertainty is affecting the business, the impact of interest rates and what investors can expect from the company in the coming months.

Q1: Jarvis Securities has recently announced full year results for 2021. Jolyon, how did the year unfold in your opinion?

A1: I think overall, it’s been an excellent year for us. We’ve released a record breaking set of results which shows that the company is moving in the right direction.

I think broken down between the two halves of the year, what we saw in the first half was incredibly high volumes, which had continued through from the back end of 2020. We saw that across the retail space and the model B space, which is our institutional business, that carried on to about the end of May. What we saw in the second half was slightly quieter volumes, the retail side of the business continued from strength to strength, but the model B side of the business was a bit quieter.

I think in hindsight, the reason for that was there was a lot of pent up demand from COVID for corporate services in terms of IPOs and placings and that came through in the first half of the year whereas now we’ve reverted to slightly more normal levels.

Q2: Now, there seems to be a lot of uncertainty around at the moment, how is it impacting the company?

A2: At the moment, we’re in a very interesting market and I think uncertainty is the buzzword for most people.

At the beginning of the year, we obviously had the spectrum of inflation coming through and how the central banks across the world would deal with that, and that weighed a little bit on equity prices. Then that’s obviously been followed up by Russia’s invasion of Ukraine, which is ongoing.

Now, that in itself, those two things have caused quite a lot of volatility in the equity markets and normally, for us, volatility is a good thing in that it increases volumes. What we are currently seeing is not what we would usually see in that whilst volumes are good, they are not where we would expect with this level of volatility. We are in a very uncertain time, we do hope for many reasons that the Ukrainian situation resolves itself as soon as possible.

Just looking at this purely from a commercial perspective, it does for feel quite a lot like when we were in the Brexit situation when there was a lot of uncertainty then, where I think a lot of investors were sitting on their hands. As soon as the situation was resolved, we saw a huge spike in volumes coming back into the market and that’s really where it feels like we’re at the moment.

Q3: Your business is impacted by interest rates, will the increases be positive for the business and will there be an immediate impact, do you think?

A3: I think this is an area where we have a little bit more certainty.

So, we have three main revenue streams. We have commission from trading volumes, we have interest income that we earn on client cash that we place on deposit and then we have various fixed fees that we levy on our institutional clients for compliance-type services.

In terms of the interest rate revenue stream, what we’ve seen over the last five years is a continuous decrease in the rates that we were able to obtain. So, we have a large treasury book where we effectively manage a considerable amount of money and it’s broken down into smaller amounts of £5-£10 million which is placed on deposit and comes off periodically. We probably have deposits maturing every couple of weeks, sometimes more regularly than that.

What we have definitely seen since the turn of the year is an increase and this is the first time we’ve seen this for several years, where funds that are maturing are being replaced at a higher rate than the rate that we were getting previously. So, that, for us, is a huge positive step. How much those increases will continue is an uncertain area because obviously it’s for the central banks to decide and it’s quite difficult to second guess exactly where their priorities will lie in terms of inflation, keeping the economy going, etc.

The other thing that we do know for certain is that what we saw in 2021 was a complete flattening of the rates that were available to us. So, a lot of the deposit were put out very short term, there was no benefit to putting money out for two years when the rate at three months was identical.

So, what we do have is a lot of the deposits that were placed in ‘21 will be maturing this year so, everything else being equal as it is at the moment, we will see a fairly immediate benefit to that revenue stream.

Q4: Just looking forward in terms of news flow, what can we expect from Jarvis Securities over the next few months?

A4: Well, hopefully, just the regular stuff that we would normally announce.

So, in terms of the way the business is managed, it’s still highly cash generative, nothing has changed in terms of management philosophy, we are still focusing on returning cash to shareholders as soon as possible.

So, we will have our dividend announcement on the 12th of May or shortly before, for the Q2 dividend, our interim accounts are published on the 14th of July this year and for anyone who is interested, all our information is available on our corporate website which is javissecurities.co.uk

Click to view all articles for the EPIC:
Or click to view the full company profile:
Facebook
Twitter
LinkedIn
Jarvis Securities

More articles like this

Jarvis Securities

Stocks edge up ahead of US CPI

London stocks edged cautiously higher in early trade on Wednesday as investors eyed a key US inflation reading and the latest minutes from the Federal Reserve. At 0830 BST, the FTSE 100 was up 0.3% at

Jarvis Securities

FTSE gains as bank shares recover

London stocks rose in early trade on Monday, with banks pacing the advance following heavy losses at the end of last week. At 0830 BST, the FTSE 100 was up 1.1% at 7,483.23. Sentiment got a

Jarvis Securities

FTSE gains as attention shifts to rate decisions

London stocks rose in early trade on Tuesday as investors mulled the latest UK borrowing figures and turned their attention to upcoming rate decisions from the Federal Reserve, Bank of England and Swiss National Bank. At

Jarvis Securities

UK shares higher at close of trade

U.K. equities were higher at the close on Tuesday, as gains in the Automobiles & Parts, Aerospace & Defense and Industrial Engineering sectors propelled shares higher. At the close in London, the Investing.com United Kingdom 100 added 1.17%. The biggest gainers of the

Jarvis Securities

FTSE rises after Bostic comments and China data

London stocks rose in early trade Friday following solid US and Asian sessions, as comments from a US Federal Reserve official and encouraging Chinese data underpinned the mood. At 0820 GMT, the FTSE 100 was up

Jarvis Securities

London stocks rally

London stocks rose in early trade on Monday following heavy losses last week, helped along by well-received results from Bunzl and a guidance upgrade from Associated British Foods. At 0840 GMT, the FTSE 100 was up

Jarvis Securities

London stocks nudged higher

London stocks nudged higher early on Monday, with trade expected to be fairly quiet as US markets are closed for Presidents’ Day and with little in the way of corporate news to provide direction. At 0825

Jarvis Securities

Stocks edge higher in quiet trade

London stocks edged higher in early trade on Monday amid a dearth of corporate news, as investors eyed the release of the latest US inflation data this week. At 0830 GMT, the FTSE 100 was up

Jarvis Securities

Stocks gain as StanChart surges on bid speculation

London stocks rose in early trade on Thursday as investors sifted through corporate news, with Standard Chartered surging ahead on bid speculation. At 0900 GMT, the FTSE 100 was up 0.6% at 7,932.39. Susannah Streeter, senior

Jarvis Securities

Stocks rise as BP surges on results

London stocks rose in early trade on Tuesday, with BP leading the charge after results, as investors eyed a speech by US Federal Reserve chair Jerome Powell. At 0835 GMT, the FTSE 100 was up 0.6%

Jarvis Securities

FTSE rises ahead of BoE, ECB rate decisions

London stocks rose in early trade on Thursday as investors mulled the latest policy announcement from the Federal Reserve and looked ahead to rate decisions from the Bank of England and European Central Bank. At 0840

Jarvis Securities

FTSE 250 movers: Sweet for Tate & Lyle

FTSE 250: 19,910.13, +0.54% at 1150 GMT. Tate & Lyle backed its full-year guidance on Thursday as it said third-quarter trading was consistent with the first half. In an update for the three months to the end

Jarvis Securities

Stocks rise despite disappointing retail sales

London stocks rose in early trade on Friday following heavy losses in the previous session, despite disappointing retail sales and consumer confidence data. At 0825 GMT, the FTSE 100 was up 0.4% at 7,781.47. Figures out

Jarvis Securities

Pound rallies as inflation eases

London stocks were still treading water by midday on Wednesday as investors mulled the latest UK inflation data. The FTSE 100 was up 0.1% at 7,856.62, while the pound was 0.8% firmer against the dollar at1.2378.

Jarvis Securities

London stocks had extended gains by midday

London stocks had extended gains by midday on Thursday as investors waded through a deluge of retail updates and eyed the latest US inflation data. The FTSE 100 was up 0.7% at 7,781.84. Russ Mould, investment