2nd Apr 2008 14:47
Jelf Group PLC02 April 2008 2 April 2008 Jelf Group plc ("Jelf", the "Company" or the "Group") Acquisition of Argyll Insurance (Holdings) Limited ("Argyll") Jelf Group plc, an independent full-service brokerage that supports businessesand connected individuals, is pleased to announce that it has entered intoagreements to acquire the entire issued share capital of Argyll Insurance(Holdings) Limited ("Argyll"). Highlights o The Argyll Group comprises Argyll Insurance Services Ltd and Argyll Financial Services Ltd and operates from three locations in Worthing, Gillingham (Kent) and Herne Bay. This represents Jelf's first foray into the Kent/Sussex area and Argyll will act as a hub for further organic and acquisition-based growth in this area o The acquisition of Argyll will be satisfied by an initial consideration of £9.94 million to be paid in cash and shares o The acquisition will increase the gross written insurance premiums ("GWP") placed by the Group with insurers from approximately £175 million to approximately £196m (an increase of £21million or 12%). This deal strengthens Jelf's position as one of the leading, independent UK insurance brokers o The range of services currently offered by Argyll is complementary to the Jelf proposition. Jelf will strengthen the core offering of general insurance and wealth management and will provide access to new services, namely employee benefits, healthcare and commercial finance Alex Alway, group chief executive of Jelf said: "I am delighted to announce thisacquisition. It is an important step forward for Jelf as it represents anotherextension of our geographical footprint into Kent / Sussex, and also representsanother "hub for growth" around which we will consolidate small scaleacquisitions. This is entirely in line with our "buy and build" strategy." ENQUIRIES Jelf Group plcAlex Alway, Group Chief Executive 01454 272713Rose Clark, Director of Finance 01454 272853 Cenkos Securities plcIan Soanes/Max Hartley 020 7397 8900 Pelham PRPolly Fergusson 020 7743 6362Damian Beeley 020 3178 2253 Introduction Jelf is an established corporate intermediary with operations in the North-Westand Southern England and South Wales offering a range of financial services tocorporate clients principally in the areas of commercial and personal insurance,healthcare, employee benefits and wealth management. The Board is pleased to announce the acquisition of Argyll, which was completedon 1 April 2008. Jelf has acquired the majority of the issued share capital ofArgyll and entered into a put and call option agreement, to be exercised on orafter 6 April 2008, to acquire the remaining issued shares. Details of the Argyll Acquisition On 1 April 2008, Jelf acquired 68.76 per cent. of the issued share capital ofArgyll and entered into a put and call option agreement, to be exercised on orafter 6 April 2008, to acquire the remaining 31.24 per cent. of the issuedshares. The acquisition of Argyll will enable Jelf to strengthen its strategic positionin the South East by extending the scope of its operations into the counties ofKent and Sussex. This acquisition will act as a hub for the consolidation offuture small-scale acquisitions in the Kent and Sussex area. Kevin Young willretain his position as chairman of Argyll. Initial consideration of £6.26 million has been paid in cash and shares inrespect of the purchase of the majority of the share capital of Argyll and afurther initial consideration of £2.84 million in cash and shares is expected tobe paid in respect of the remainder upon exercise of the put and call option.Jelf has been granted an option to acquire the remaining issued shares in Argyllunder the option agreement and the vendors are entitled to call for their sharesto be acquired if Jelf has not acquired them by the 14 April 2008. The shareswhich are subject to the option are to be acquired on the same terms as themajority of the shares were acquired. It is expected that Jelf will exercise itscall option immediately after the 6 April 2008. The balance of the initial consideration, estimated at £0.84 million, is subjectto adjustment by reference to completion accounts, which will test the level ofnet assets at completion and the income streams of Argyll in the twelve monthspreceding the completion date, and will be paid in cash. Deferred consideration is payable over the twenty-four month period followingthe acquisition of the majority stake, and has two elements. The first partrelates to the maintenance of the existing turnover and may result in thepayment of up to but not exceeding £2.56m in cash. Failure to achieve thesetargets may result in a reduction in the amount paid. An additional amount,estimated at £1.25m, is contingent upon targets being exceeded. This amountwould be payable in cash and is not subject to a maximum limitation. The vendors of Argyll are also incentivised to cross-sell Jelf services to newand existing Argyll clients in the period of 24 months following completion ofthe acquisition. In the year ended 30th April 2007, Argyll reported profit before tax of £1.03million (2006: £0.80 million) on turnover of £5.36 million (2006: £4.60 million)and as at 30th April 2007, Argyll had net assets of £2.55 million (2006: £1.89million). Outlook Gross written premium ("GWP") in the insurance and healthcare sectors is a keyfactor in negotiating commission rates with insurers where scale is an importantdriver of profitability. Argyll takes Jelf's insurance GWP from approximately£175 million (following the recent acquisition of the Manson Insurance Group,Bob Gee & Co. Ltd, Carter & Co. Risk Management Limited and Bartlett, DaviesBicks Ltd) to approximately £196 million. This further strengthens Jelf'sposition as one of the UK's leading independent insurance brokers. Jelf is actively pursuing a policy of growth via organic growth and targetedacquisition of profitable insurance and healthcare brokerages. The Board expectsthe current trend of consolidation to be maintained and plans to continue tocapitalise on the opportunities this creates. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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