Jarvis Securities Plc (AIM:JIM) were jolted 19% lower after the retail stockbroker cut its dividend 15%, reported a 20% decrease in pre-tax profit and said it is severing ties with some clients due to a regulatory process.
It was “definitely been one of the more interesting years at Jarvis since forming the company in 1984”, said chairman Andrew Grant.
Events impinging on the company ranged from the squeezing of share trading volumes to the skilled person review initiated at its Jarvis Investment Management Limited business in September, “the first such event in nearly 40 years of regulated activity”, which was accompanied by a restriction by the Financial Conduct Authority (FCA) on corporate clients for its Model B clearing and settlement business.
The FCA restriction announced in September has led the board to review the business model, leading to ties being severed with “a number of model B clients whose businesses do not meet the risk tolerance at Jarvis and fall outside of our more restricted outsourcing model”.
“Whilst limiting the business activities in the short term, it was felt necessary to ensure that the business would thrive in the longer term.”
Grant said interest earned on client funds saw a “significant upturn” during the year, helping offset the reduction in trading commission and the one off costs associated with the skilled person process.
“We have in the short term been able to capture these rate increases as funds have matured, but there are still further gains to come in the future,” he said.
Revenue of £12.6mln was down 12%, while PBT fell to £6.1mln from £7.7mln.
Shares tumbled to 132p in early morning trading, but came back to 145.5p by mid-morning for a fall of 10.5%.