Darren Turgel MD at DirectorsTalk, caught up with Nick Spoliar Director of Institutional research at WH Ireland to discuss Jarvis Securities plc (LON:JIM) interim results.
Q. Jarvis Securities announced today interim results for the six months ended 30 June 2021. What were the key financial highlights?
A. This was an excellent set of results. PBT was lifted 28% YoY on the back of revenues up 19%. The operating margin was pushed up from 53.1% to 56.8%. Post-settlement cash, the net cash figure stood at £7m, a £3.8m increase.
Q. Do today’s results change your forecasts in any way?
A. Yes. We upgraded our FY2021E PBT forecast from £7.4m to £8.5m, a 15% upgrade. EPS and DPS forecasts were lifted correspodingly. We upgraded FY2022E by a similar degree – we believe the business has achieved the scale and momentum to continue to drive forward, while also benefiting from the adjustments the company has made in recent years to its fee and cost structures.
Q. How do you view the company in terms of an investment?
We set a new price for the shares in fair value terms this morning of 350p (previously: 325p), as against yesterday`s closing price of 245p. We note that Jarvis Securities has now given itself added freedom to distribute more in dividends, having obtained Court approval for the cancellation of the share premium account. There are no particular insights into how or when precisely this might occur; however we note that the last Special DPS distributed by the company was back in FY2019A (3.75p) – in any case, this would be beyond our raised dividend forecast, which itself sees the company yielding over 5% in the current year. We see good underlying drivers for continued positive trading and also note that JIM has the ability to provide a hedge against interest rate increases in due course, since it will be a beneficiary of these, whenever they may occur.
