Jarvis Securities Regulatory News (JIM)

25 Jan 2007 07:01

Jarvis Securities plc25 January 2007 JARVIS SECURITIES PLC ('Jarvis' or 'the Company') STATEMENT OF AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2006 CHAIRMAN'S STATEMENT Financial Highlights • Turnover up 29% to £3.42M (December 2005: £2.65M) • Operating profit up 93% to £1.14M (December 2005: £592k) • EPS up 158% to 6.79p (December 2005: 2.63p) • Net assets of the group up 11% to £1.52M (December 2005: £1.37M) • Final dividend proposed of 2.5p (2005: nil final dividend) Commentary In our last interim statement I reported that our strategy to focus on serviceand profits was beginning to deliver considerable financial benefits to thegroup. The results for 2006 show the success that we have enjoyed with turnover,profits, earnings and assets all up significantly. The business continues to expand in all areas and we look forward to 2007 withgreat confidence. Retail client numbers are still increasing at an impressiverate and we have a number of potential commercial contracts awaiting agreement.Whilst general trading volumes are beyond our control we have been growing ourfee income base and the interest rate environment is also moving in our favour. We have put a lot of effort into the new business review requirements an extractof which is set out at the end of this announcement. This is an idea that wesupport as it gives our stakeholders a real insight into how the Board monitorthe progress of the group and whether we are achieving or not. I would urgeshareholders in particular to take a little time to consider these measures soas to fully appreciate the true depth of achievement and strength of thecompany. A quick glance at the highlights above and in the business reviewsection of the fast growth of turnover, profits and funds under administrationgive a good overview of our financial performance. However, it is also importantto consider what underpins that performance and I am pleased to say that youwill see a firm that takes its environmental and social responsibilitiesseriously, that is improving productivity from its staff, that has rapidlygrowing client numbers, that takes quality of service seriously and that has thelowest complaints' ratio in our sector. As a Board we perceive a positiveoutlook for Jarvis over the coming year and I anticipate announcing an improvedfinancial position at the interim stage. I also commented in July 2006 on the disappointing performance of our shareprice. Whilst this has improved over recent months, I still do not believe thatthis sufficiently values the current and future prospects of the business. Sincewe joined AIM in 2004, operating profits are up by more than 67% but at the 31December the share price had only risen 15% to 95p from the introduction priceof 82.5p. This has not gone unnoticed by other firms in our sector and we havereceived a number of informal approaches during 2006. These informal discussionswere not at an attractive level but they support our view on the current lowvaluation of Jarvis. It is also worth noting that our price earnings ratio atthe end of 2006 was 9.5 compared to a selection of other publicly traded brokersat 18.3 for Charles Stanley Group plc*, 19.8 for Fiske plc* and 20.4 for Walker,Cripps, Weddle, Beck plc*. Jarvis Securities plc is fast growing, with anarguably better business model in my view, and this disparity is unsatisfactory.Given these circumstances we shall continue to commit some spare cash tobuying-back further shares for cancellation whilst the Board believe the stockto be undervalued. As I have previously mentioned, this cannot be a long-termanswer for our frustrations and so we shall continue to try and improveawareness of our group with investors. I am delighted that our efforts to strengthen the foundations of the businesshave been successful and that we are now seeing a significant financial benefit.I would like to thank Lionel Grant, who retired this year, for his tirelessservice for more than 20 years in building the business that he helped to found.I would also like to extend my thanks to my colleagues on the Board and to therest of our dedicated team in delivering such an improved performance. Andrew J. GrantChairman *Source RoyalBlue Fidessa 11/1/07 GROUP PROFIT AND LOSS ACCOUNT For the year ended 31 December 2006 -------- -------- 2006 2005 as restated -------- -------- £ £ TURNOVER 3,419,658 2,651,665 Administrative expenses 2,275,800 2,009,766Exceptional administrative expenses - 50,222 -------- -------- 2,275,800 2,059,988 OPERATING PROFIT 1,143,858 591,677 Interest payable 2,605 8,288 -------- -------- PROFIT ON ORDINARY ACTIVITIES BEFORETAXATION 1,141,253 583,389 Tax on profit on ordinary activities 364,322 281,678 -------- -------- PROFIT FOR THE FINANCIAL YEAR 776,931 301,711 ======== ======== EARNINGS PER SHAREBasic earnings per share 6.79p 2.63pDiluted earnings per share 6.43p 2.49p CONTINUING OPERATIONSNone of the group's activities were acquired or discontinued in the currentyear. STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES For the year ended 31 December 2006 2006 2005 as restated -------- -------- £ £ PROFIT FOR THE FINANCIAL YEAR 776,931 301,711 -------- -------- TOTAL RECOGNISED GAINS AND LOSSES RELATINGTO THE YEAR 776,931 301,711 ========Prior year adjustment (8,848) -------- TOTAL GAINS AND LOSSES RECOGNISED SINCELAST FINANCIAL STATEMENTS 768,083 ======== GROUP BALANCE SHEET As at 31 December 2006 -------------- --------------- 2006 2005 as restated -------------- --------------- £ £ £ £ FIXED ASSETSIntangible assets 344,060 364,695Tangible assets 144,145 176,597 --------- -------- 488,205 541,292 CURRENT ASSETSInvestments 34,186 33,177Debtors 5,710,459 3,693,549Cash at bank and 6,561,264 5,130,205in hand --------- -------- 12,305,909 8,856,931 CREDITORS:Amounts falling 11,273,281 8,031,163due within one --------- --------year NET CURRENT ASSETS 1,032,628 825,768 -------- -------- TOTAL ASSETS LESS CURRENT LIABILITES 1,520,833 1,367,060 ======== ======== CAPITAL AND RESERVESCalled up share 113,500 114,845capitalShare premium 789,834 789,834accountProfit and loss 668,251 472,412accountCapital redemption 1,345 -reserveOther reserves 17,696 8,848 -------- -------- 1,590,626 1,385,939Own shares held (69,793) (18,879)for cancellation -------- -------- SHAREHOLDERS' FUNDS - 1,520,833 1,367,060ALL EQUITY ======== ======== GROUP CASH FLOW STATEMENT For the year ended 31 December 2006 --------- --------- 2006 2005 as restated --------- --------- £ £ Reconciliation of operating profit to net cash inflow from operatingactivities Operating profit 1,143,858 591,677Depreciation 80,385 77,822Amortisation 20,635 20,635Loss on disposal of fixed assets 749 13,501(Increase) in debtors (581,828) (319,021)Increase/(decrease) in creditors 50,359 (282,020)Cost of share options 8,848 8,848Interest payable (2,605) (8,288) --------- ---------Net cash inflow from operating 720,401 103,154activities ========= ========= CASH FLOW STATEMENT Cash flow from operating 720,401 103,154activitiesTaxation (201,933) (245,412)Capital expenditure and financial (49,691) (137,874)investmentEquity dividends paid (458,768) (287,114) --------- --------- 10,009 (567,246) Financing (173,240) (29,065) --------- ---------(Decrease) in cash (163,231) (596,311) ========= ========= Reconciliation of net cash flow to movement in net funds 2006 2005 -------------- -------------- £ £ £ £ (Decrease) in cash in the year (163,231) (596,311) -------- --------Movement in net funds in the year (163,231) (596,311) Net funds at 1 January 2006 634,730 1,231,041 -------- --------Net funds at 31 December 2006 471,499 634,730 ======== ======== NOTES FORMING PART OF THE FINANCIAL STATEMENTS For the year ended 31 December 2006 1. ACCOUNTING POLICIES The financial statements have been prepared in accordance with applicableaccounting standards. The following accounting policies have been usedconsistently in dealing with items which are considered material in relation tothe financial statements. (a) Accounting convention The financial statements have been prepared under the historical cost conventionas modified by the revaluation of certain assets. (b) 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 recognisedon receipt. (c) Basis of consolidation The group financial statements consolidate the financial statements of JarvisSecurities plc, Jarvis Investment Management plc, Sharegain Limited, JIMNominees Limited, Galleon Nominees Limited and Dudley Road Nominees Limited madeup to 31 December 2006. Intra-group sales and profits are eliminated onconsolidation and all sales and profit figures relate to external transactionsonly. No profit and loss account is presented for Jarvis Securities plc asprovided by S230(3) of the Companies Act 1985. (d) Tangible fixed assets Depreciation is provided on cost in equal annual instalments over the lives ofthe assets at the following rates: Website - 33% on costLeasehold improvements - 33% on costMotor vehicles - 15% on costOffice equipment - 20% on costSoftware developments - 33% on cost (e) Intangible fixed assets Goodwill represents the excess of the fair value of the consideration given overthe aggregate fair values of the separable net assets. Goodwill is amortisedover 20 years on a straight line basis, being the directors' best estimate ofthe useful economic life, subject to annual impairment reviews. Other intangibleassets are capitalised at their market value on acquisition and are amortised onthe same basis. (f) Deferred taxation Provision is made in full for all taxation deferred in respect of timingdifferences that have originated but not reversed by the balance sheet date,except for gains on disposal of fixed assets which will be rolled over intoreplacement assets. No provision is made for taxation on permanent differences.Deferred tax assets are recognised to the extent that it is more likely than notthat they will be recovered. (g) Segmental reporting No significant segments for reporting purposes exist as required by Statement ofStandard Accounting Practice 25. (h) Pensions The group operates a defined contribution pension scheme. Contributions payablefor the year are charged to the profit and loss account. (i) Stockbroking balances The gross assets and liabilities of the group relating to stockbrokingtransactions on behalf of clients are included in debtors, creditors and cash atbank. (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 operating profit. Where the company hasentered into finance leases, the obligations to the lessor are shown as part ofborrowings 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) Investments Fixed asset investments are stated at cost and current asset investments arestated at current market valuations. (l) 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. (m) Foreign Exchange The company offers settlement of trades in sterling, US dollars, euros, Canadiandollars and Swiss francs. The company does not hold any assets or liabilitiesother than in sterling and converts client currency on matching terms tosettlement of trades realising any currency gain or loss immediately.Consequently the company has no foreign exchange risk. (n) Options Employee options are expensed equally in each year from issue to the date offirst exercise. The total cost is calculated on issue based on the Black Scholesmethod with a volatility rate of 30% and a risk free interest rate of 3.75%. Itis assumed that all current employees with options will still qualify for theoptions at the exercise date. 2. GROUP INCOME The income of the group during the year was made in the United Kingdom and theincome of the group for the year derives from the same class of business asnoted in the Directors' Report. 2006 2005 -------- -------- £ £Interest received 1,508,974 1,280,405Fees, commissions, foreign exchange gains and otherrevenue 1,910,684 1,371,260 -------- -------- 3,419,658 2,651,665 ======== ======== NOTES FORMING PART OF THE FINANCIAL STATEMENTS For the year ended 31 December 2006 (continued) 3. OPERATING PROFIT 2006 2005 --------- --------Operating profit is stated after charging: £ £Directors' emoluments 378,330 247,595Depreciation - owned assets 80,385 77,820Amortisation 20,635 20,635Operating lease rentals - hire of machinery 5,766 786Operating lease rentals - land and buildings 26,371 19,750Auditor's remuneration - audit - parent company 18,525 27,000Auditor's remuneration - interim accounts review -parent company 3,000 3,750Auditor's remuneration - other services - parentcompany 10,150 24,500Auditor's remuneration - other services - subsidiaries - 2,200Loss on disposal of fixed assets 749 13,501Interest payable and similar charges 163,566 213,343Directors' emoluments include a non-recurring retirement payment to Mr L G Grantof £70,000.Benefits are accruing for one director (2005 one director) under a money purchasepension scheme. Staff CostsThe average number of persons employed by the group, including directors, duringthe year was as follows: Number NumberManagement and administration 22 23 ======== ======== The aggregate payroll costs of these persons were as £ £follows:Wages and salaries 766,071 626,883Pension contributions 10,764 9,964Social security 86,787 66,094 -------- -------- 863,622 702,941 ======== ======== 4. EXCEPTIONAL ITEMS Exceptional items derive from the costs relating to the following events:During the previous year a potential acquisition was aborted following duediligence. 5. INTEREST PAYABLE AND SIMILAR CHARGES 2006 2005 -------- -------- £ £Bank loans and overdrafts 2,605 8,288Interest paid to clients 160,961 205,055 -------- -------- 163,566 213,343 ======== ======== Interest paid on client deposits is included within administrative expenses asthe holding of client monies and the earning and paying of interest upon theseis a core part of the business activities of Jarvis Investment Management plc. 6. DIVIDENDS 2006 2005 -------- -------- £ £ Interim dividends paid on Ordinary 1p shares 458,768 287,114 ======== ======== Dividend per Ordinary 1p share 4.0p 2.5p ======== ======== NOTES FORMING PART OF THE FINANCIAL STATEMENTS For the year ended 31 December 2006 (continued) 7. CASH AT BANK & IN HAND Group Company 2006 2005 2006 2005 -------- -------- -------- -------- £ £ £ £Balance at bank and in hand 6,561,264 5,130,205 2,905 4,080 ======== ======== ======== ======== Cash at bank includes £6,089,765 (2005 £4,495,475) 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. 8. RELATED PARTY TRANSACTIONS At the year end Sion Holdings Limited had an outstanding balance due to JarvisSecurities plc of £254,496 (2005 £149,479). The loan is secured and carries aninterest rate of 6.45% p.a. The highest outstanding balance during the year was£576,023 and the loan is due to be repaid in full on conclusion of severalproperty sales made by Sion Holdings Limited that have exchanged and areawaiting legal completion. A further partial repayment of £54,496 was made on 17January 2007. During the year the company made a management charge of £10,000 to Sion HoldingsLtd for office and administrative services and paid rent of £26,371 to SionHoldings Limited. In addition, Jarvis Securities plc charged Sion HoldingsLimited £74,125 for the costs and project management of building an extension toits office premises of which Sion Holdings Limited is the freeholder. 9. EARNINGS PER SHARE The weighted average number of shares in issue during the year for the Earningsper Share calculations are as follows: Date Event No. of shares Days 2006 2005------ ---------------- -------- ------ --------- ---------01/01/ Opening balance 2005 11,484,545 365 - 11,484,54505 01/01/ Opening balance 2006 11,484,545 8 251,716 -06 09/01/ Cancellation of 11,460,000 252 7,912,109 -06 treasury shares 18/09/ Cancellation of 11,400,000 81 2,529,860 -06 treasury shares 07/12/ Cancellation of 11,350,000 24 746,301 -06 treasury shares --------- --------- 11,439,986 11,484,545 The Diluted Earnings per Share calculation is as follows: Date Event No. of shares Days 2006 2005 ---------01/01 Opening balance 2005 12,134,545 365 - 12,134,545/05 01/01 Opening balance 2006 12,134,545 8 265,962 -/06 09/01 Cancellation of 12,110,000 252 8,360,876 -/06 treasury shares 18/09 Cancellation of 12,050,000 81 2,674,109 -/06 treasury shares 07/12 Cancellation of 12,000,000 24 789,041 -/06 treasury shares --------- --------- 12,089,988 12,134,545Earnings pershare beforeexceptionalexpenses 6.79p 3.06p NOTES FORMING PART OF THE FINANCIAL STATEMENTS For the year ended 31 December 2006 (continued) 10. NOTES TO THE CASH FLOW STATEMENT --------- ---------NOTE A - GROSS CASH FLOWS 2006 2005 as restated --------- --------- £ £Capital expenditure andfinancial investmentPayments to acquiretangible fixed assets (64,659) (183,045)Receipts from disposalof fixed assets 15,977 41,999Receipts from disposalof current assetinvestments - 3,172Purchase of currentasset investments (1,009) - --------- --------- (49,691) (137,874) ========= =========FinancingExpenses paid onissue - (10,186)of sharesRepurchase of own (173,240) (18,879)shares --------- --------- (173,240) (29,065) ========= =========NOTE B - ANALYSISOF NET FUNDS At 1.1.06 Cash Flow At 31.12.06 --------- --------- --------- £ £ £Cash in 5,130,205 1,431,059 6,561,264hand, atbankLess DVP (4,495,475) (1,594,290) (6,089,765)cash --------- --------- ---------NET FUNDS 634,730 (163,231) 471,499 --------- --------- --------- DVP cash is client funds held in trust for delivery versus paymenttransactions in order to pay market counterparties for the purchase ofequities and other instruments settled via CREST, the electronic mechanism forthe simultaneous and irrevocable transfer of cash and securities operated byCRESTCo Limited. 11. EVENT AFTER THE BALANCE SHEET DATE The Board proposes the payment of a final dividend of 2.5p per Ordinary 1p shareto holders on the register on 2 February 2007 for payment on the 1 March 2007subject to approval at the annual general meeting of the company. BUSINESS & OPERATING REVIEW Business review Strong growth has resulted in the group's turnover rising by 29.0% to£3,419,658. Profit before tax has also grown to 195.6% of the 31 December 2005level, with basic earnings per share up by 158.2%. Group net assets are at£1,520,833 from £1,367,060 a year earlier, a rise of 11.2%. 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 is authorised and regulated by the Financial ServicesAuthority (FSA). This status is essential for the trading activities of theGroup 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 expanded significantly inboth these areas during the year under review and expects to continue doing soin 2007. Trade volumes clearly have a significant impact on the fortunes ofstockbroking businesses but with a wider spread of activities and a differentcharging model to our competitors we believe that our income is less volatileand of a higher quality that other pure execution-only brokers. Capitalisation and financing Jarvis Securities plc has 11,280,000 Ordinary 1p shares in issue, following thecancellation of 70,000 Ordinary 1p shares on 8 January 2007. These shares areadmitted 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 four 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 have supported anumber of local events, including the Tunbridge Wells Business Awards, where wewere delighted to be a runner-up in the Customer Service section, and we see ourfirm as part of our local community as well as a national service provider.Jarvis has supported a number of charities during the year and we are committedto continuing to do so and to develop new ways to cut our waste and impact uponthe environment. Donations made to: • Comic Relief • British Heart Foundation • Demelza House • Shooting Star Children's Hospice • RSPCA Jarvis also won another Investor's Chronicle award this year. These are awardedon the basis of a public vote, which makes this a real achievement against ourlarger competitors. 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 operating profit as a percentage of turnover. This is a good indicatorof efficiency, as a high margin tends to suggest that work is completed quicklyand accurately resulting in a high rate of return for the Group. The averagemargin for our competitors is 6.77% (source: ComPeer annual benchmarking report2005). The Board aims to have significantly higher than average margins and tokeep these above 20%. 2006: 33.45%2005: 22.31% ROCE The return on capital employed is the operating profit as a proportion of thefixed capital used in the business, such as assets. A high rate of return, ROCE,indicates the efficient use of the resources of your Group. Given the lowcapital nature of our business model we would expect a relatively high ROCEfigure. The Board aims to maintain a ROCE figure of double the one-year Treasuryrate, giving a current target of 11.2%. 2006: 75.2%2005: 43.3% Revenue per employee This is turnover 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. 2006: 155,4392005: 115,290 Revenue increase rate: 34.8% vs. payroll cost increase: 11.2% 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. Cash 2006: £32MCash 2005: £23M Total assets 2006: £309MTotal assets 2005: £233M 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 turnovergrowth for the Group into the future. Rate of Increase (Number): 19.6%Rate of Increase (Revenue): 7.84% 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 is8.92 (source: ComPeer annual benchmarking report 2005). Jarvis had the bestratio in the execution-only industry in the last ComPeer report and we are veryproud of this achievement. 2006: 0.512005: 0.44 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 2006: 88.5%% of calls answered in three rings in 2005: 92.4% These results were adversely affected due to an unexpectedly busy period in thefirst quarter of the year. Performance was improved significantly during theyear with 95.0% of calls answered in three rings by December. 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. 2006: 1.85%2005: 0.75% These results were adversely affected due to a skiing injury and thehospitalisation of a second employee, which are abnormal events. 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 inthe Company and hence is largely beyond the control of the Board. Certainactions can be taken where this is perceived by your Board to be out of syncwith comparable firms, such as the purchase of shares for cancellation asundertaken in the year. However this is mainly a result of public perception andis therefore difficult to change. These measures are important to investors andhence need to be given high regard. The Board aims to grow EPS by at least 25%per year, which is an aggressive target for expanding Jarvis. The Board willcontinue its efforts to increase the P/E ratio to reflect its belief that Jarvisshould have a premium rating to its competitors because of its growth rate,yield and differentiated business model. 2006 EPS: 6.79p2005 EPS: 2.63pRate of change: 158% 2006 P/E ratio: 14.02005 P/E ratio: 29.3 Future developments Jarvis Securities plc continues to seek further acquisition targets that can beintegrated into the operating subsidiary with resultant cost savings andcross-selling opportunities. Jarvis Investment Management plc will continue toactively promote its retail and third party stockbroking and administrationservices. Results and dividends The consolidated profit for the year after taxation amounted to £776,931 (2005£301,711). Ordinary dividends of £458,768 (2005 £287,114) were paid during theyear. The balance on the profit and loss account has been carried forward and afinal dividend of 2.5p per Ordinary 1p share is proposed by the Board subject toapproval at the annual general meeting. For Further Information: Jarvis Securities plcMathew Edmett Tel: 0870 224 1111 Daniel Stewart & Company plcLindsay Mair Tel: 0207 776 6550 This information is provided by RNS The company news service from the London Stock Exchange