Jarvis Securities Q&A: Increase in trade volumes resulting in increasing profits (LON:JIM)

Jarvis Securities plc (LON:JIM) Finance Director Jolyon Head caught up with DirectorsTalk to discuss its results for the year ended 31st December 2020, what has driven growth for the company, the outlook for 2021 and what investors should be looking out for in the coming months.

Q1: Jarvis Securities announced results for the year ended 31st of December 2020, can you just talk us through the key points?

A1: I think the main takeaway from the results is that during the year, we’ve seen a substantial increase in our trade volumes and that has translated into an increase in fee and commission income. Due to the business model that we operate, which has a lot of operating gearing around volumes, we have seen an increase in profit.

Q2: So, it is purely the volumes that have driven the growth?

A2: It’s the volumes that’s driven the profitability, yes. The increase in volumes themselves, I would say, have really been driven by three factors:

The first factor is I think the fact that we started from quite a low base in terms of the last few years, we’ve really been dealing with the headwind of Brexit and that has weighed quite heavily on the equity market in terms of the volumes that we’ve bene seeing. So, at the beginning of the year, we turned a corner in that and the political certainty that we began to see I think did help the markets a lot.

I think the second factor would certainly be COVID, I know that volatility does tend to be good for volumes and we obviously saw a lot of volatility in the year. We saw the large fall in market prices in Q1 and then the subsequent recovery although, that being said, we are still seeing very similar volumes or even higher in the market now as we saw back then.

The final thing is the organic growth in the business as well.

Q3: With no signs of organic growth slowing, how do you view the outlook for 2021?

A3: We’re extremely positive at the moment, I think, certainly the way the year has started, we’re seeing no signs of any downturn in terms of volume, we’re seeing organic growth both in terms of client acquisition and also in terms of the growth of our institutional clients whose growth is effectively our growth as well.


Q4: Finally, what should investors be looking out for in terms of new flow from Jarvis Securities in the coming months?

A4: That’s quite a difficult question for me to answer. Certainly, we’ve got our forecasts in the market, we monitor internally our performance against the external broker forecasts to make sure that at no point we are too far from that.

The next official announcement will be our interim results in July.

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