Final Results

Jelf Group plc

("Jelf", the "Group" or the "Company")

Final results for the year-ended 30 September 2014

Jelf, an independent consultancy which provides a broad range of insurance, employee benefit and financial planning services to corporates and individuals, announces its results for year ended 30 September 2014.

Financial highlights

Strong financial performance:

· Revenues increased by 8.4% to £82.6m (2013: £76.2m)

· EBITDA increased by 32.4% to £14.6m (2013: £11.0m)

· EBITDA margin increased to 17.6% (2013: 14.4%)

· Profit after tax increased by 40.4% to £6.5m (2013: £4.6m)

· Fully diluted earnings per share increased by 35.0% to 5.4p (2013: 4.0p)

Increased dividend payment declared:

· 2.0p per share to be paid on 30 January 2015 to shareholders on the register on 30 December 2014 (2013: 1.5p).

Acquisitions

· Major acquisition of The Insurance Partnership (TIP) completed in June 2013 is delivering ahead of expectations.

· Two "bolt on" acquisitions acquired in the period for a total consideration of £0.4m.

Operating highlights

· The continued focus on serving our customers has delivered another year of awards:

o Highest '3 Star' rating from the Investor in Customers survey

o National Broker of the Year award from Insurance Times

o Broker of the Year and Customer Service awards from UK Broker Awards

o Pension Scheme Communication Award and At-Retirement Solution Provider of the Year from Pensions Age

· The continued drive for efficiency improvements in the Insurance business and the benefits resulting from the TIP acquisition has increased Insurance EBITDA by 69.3% to £9.4m (2013: £5.6m).

· Employee Benefits continues to generate strong margins as it adapts its business model to the post-RDR world delivering EBITDA of £4.8m.

· Adviser productivity in the Financial Planning business has increased by 8.4% driving increased margins and EBITDA of £0.4m.

· International Healthcare has grown revenues by 29.8% to £1.3m (2013: £1.0m).

Alex Alway, Group Chief Executive, commented:

"I am particularly pleased that the Group has delivered such a strong set of trading results in a year that it celebrates its 25th Anniversary as a business and its 10th year on AIM. We continue to operate in what is an extremely competitive market. Trading since 1 October 2014 is in line with expectations and we look forward to another year of profitable growth."

Enquiries

Jelf Group plc 01454 272727

Alex Alway Group Chief Executive

John Harding Group Finance & Operations Director

finnCap Nomad & Broker 0207 220 0500

Matt Goode Corporate Finance

Grant Bergman Corporate Finance

Stephen Norcross Corporate Broking

Further information is available about Jelf at the Group's website: www.jelfgroup.com

Chairman's statement

2014 has seen Jelf celebrate 25 years in business - advising, servicing and supporting our clients - and the 10th anniversary of our listing on AIM, and so it is particularly pleasing to report that we have delivered a record performance.

Revenues up 8.4% to £82.6m (2013: £76.2m)

EBITDA up 32.4% to £14.6m (2013: £11.0m)

PAT up 40.4% to £6.5m (2013: £4.6m)

Fully diluted EPS up 35.0% to 5.4p (2013: 4.0p)

We continue to generate strong cash flows, operating cash flow was £12.0m (2013: £7.7m) and as at 30 September 2014 net debt was £5.7m (2013 - £13.5m). Reflecting this strong performance, the Board has declared a dividend for the year of 2.0p (2013: 1.5p).

Our clear and focused strategy and strong financial performance continue to generate value for our shareholders. Our share price increased 45.0% from 1 October 2013 to 4 December 2014 which compares favourably with a decrease of 10.5% in the AIM All Share Index and an increase of 3.7% in the FTSE All Share Index.

Jelf Insurance Brokers has delivered further profitable growth. As the economy strengthens we have seen some growth in risk exposures (wage roll/equipment/property) in the SME and mid-market segments. The first full year of results from Jelf Insurance Partnership, acquired in June 2013, has delivered ahead of expectations. We have exceeded the targeted level of synergies and are well on track to achieve the goals set out when we acquired this business. Our focus on our customers was recognised when we won National Broker of the Year from Insurance Times and Broker of the Year and the Customer Service award from UK Broker Awards. Our network for independent brokers, Purple Partnership, also won Broker Network of the Year at the Commercial Insurance Awards in March. Purple delivered strong growth in profit and revenue in 2014, exceeding £1m of turnover for the first time, and delivered its best ever year for member recruitment.

It has been another successful year for Jelf Employee Benefits and Jelf Financial Planning and I am pleased with the way we have adapted our business model to the post RDR world and to the continuing shift in our revenues from commission to fees. The announcements in the Budget, and subsequently, of major changes in the pensions regime, create considerable freedom for individuals to make their own choices regarding their pension savings. It is the most radical change to pensions in almost a century and will provide a significant opportunity for advice-led businesses such as Jelf, as individuals and their employers seek more help and advice in relation to this greater freedom. We continue to manage our existing clients through the auto enrolment process, whilst at the same time winning new client mandates as smaller businesses now start to auto enrol their employees.

Management has developed new, ambitious three year strategic objectives and financial targets and is in the process of communicating them to our people. Our core strategy is not changing. We will continue to focus on providing high quality advice to businesses on their insurance, healthcare and pensions needs, and in giving financial advice to selected individual clients. We continue to develop the cross selling of additional services to existing clients. Our high quality of service has been recognised through once again being awarded a maximum '3 Star' rating from Investor in Customers (IIC).

Jelf places great importance on ensuring we have a strong and effective regulatory, compliance and governance culture and framework. We have a strong, experienced Board and I would like to thank them for their leadership. The Board has been further strengthened through the addition of Chris Hanks as a non executive director and Chairman of the Risk Committee. Chris is also the Chairman of our Purple network and brings a wealth of knowledge and experience from his previous role as General Manager of Allianz UK.

Looking forward, we remain cautiously optimistic as the economy continues to improve. Although markets remain intensely competitive, we believe that continued focus on our core segments, our strong balance sheet and our reputation for client service will enable us to deliver further profitable organic growth. We will continue to look at further acquisition opportunities where we can see good synergies, a cultural fit, sensible prices and value for shareholders.

On behalf of the Board I would like to thank the Group Chief Executive Alex Alway, the senior executive team, and our dedicated and professional staff for all their hard work and the excellent results that have been achieved.

Les Owen

Non-Executive Chairman

Group Chief Executive's report

"Good trading during 2013-2014 has seen our EBITDA increase by 32.4% to £14.6m (2013: £11.0m)."

I am pleased to report that we have achieved another excellent set of trading results in 2014, further improving our margins. Our focus on delivering profitable growth, through organic growth initiatives and selected acquisitions, continues to produce encouraging results.

Alex Alway

Group Chief Executive

Financial results

Our financial performance and strength has continued to improve in this financial year. In the year ended 30 September 2014, our revenue was £82.6m (2013: £76.2m) and EBITDA increased by 32.4% to £14.6m (2013: £11.0m, including £1.5m of exceptional costs). The EBITDA margin was 17.6% (2013: 14.4%). Net profit after tax was £6.5m (2013: £4.6m), an increase of 40.4%.

The improvement in the wider economic environment has seen our clients expand and invest in property, human resources and plant, which in turn provided us with opportunities to advise and secure new mandates.

Basic earnings per share was 6.0p (2013: 4.3p) and fully diluted earnings per share was 5.4p (2013: 4.0p).

Positive cash flow

We continue to generate positive cash flow; taking into account the acquisitions and investments during the year we are now in a net debt position of £5.7m (2013: £13.5m). We are in a strong financial position, ideally positioned to continue investing in organic growth and selected acquisitions in insurance and healthcare broking.

Background

The structural changes to the sectors in which we operate continue apace. The key forces which are reshaping our industry are:

Regulatory pressures: This year we have seen a considerable number of regulatory announcements particularly around Pensions which, in the short term, require fundamental changes to our business model but are also presenting us with some exciting opportunities to expand the range of services we provide to clients.

Customer evolution: Across all our business sectors, customer expectations are growing. More than ever, we see customer understanding, service and engagement as ways in which we will differentiate our services, particularly in the mature and highly competitive healthcare and insurance broking sectors.

Pricing pressure: Economic pressures mean that clients are more price conscious than ever. It has therefore never been more important to keep our focus on quality advice, service and added value.

Product commoditisation: Brokers are now quicker to duplicate the features of competitor services. We need to continue to develop and provide clearly differentiated services that showcase the value of our skills and knowledge.

Our strategy

Our strategy remains consistent but during the latter part of 2014 we fine-tuned this and launched a series of new objectives internally. Clients and client service take centre stage as we focus even more closely on client service and client engagement; part of our vision statement says that we are "striving to exceed our clients' expectations at every opportunity".

An engaged client is one who is an advocate of Jelf and recommends us to their contacts and provides testimonials. We are working pro-actively to identify those who are not yet advocates to understand what we need to do to improve our service proposition to them, in order to bring about a change in their view of us.

We believe successfully applied client engagement is a real differentiator for an advice led business like Jelf, and that a strategy focused on this will enable us to stand out from the competition in a way that is hard to replicate, especially in the mature and highly competitive sectors of insurance and healthcare broking.

The underlying principles that drive our strategy continue to be:

Clients - Listening to our clients, identifying their requirements and working with them to understand their business and/or personal needs and individual circumstances. We want to become the trusted adviser.

People - Our employees are one of our strongest assets and we are keen to promote their skills and experience. We are very supportive of the drive to increase professionalism across the industry.

Stakeholders - Our relationships with our strategic partners, who include insurers as well as the regulators and our shareholders, will always remain key to our continued success.

Highlights of the year

Anniversaries

In 2014 we celebrated our 25th Anniversary as a business and 10 years on AIM.

Investor in Customers - '3 Star' - Exceptional

In February 2014, we were delighted to again receive the highest possible '3 Star' rating from Investor in Customers (IIC). Jelf's clients rated our client services as 'exceptional'. Furthermore, by improving our overall score for the sixth consecutive year, we retained our position as the top-rated broker within the UK.

Awards

During 2014 we have won a number of industry awards including National Broker of the Year from Insurance Times, Insurance Broker of the Year from UK Broker Awards, Pension Scheme Communication Award and At-Retirement Solutions Provider of the Year from Pensions Age, and Network Broker of the Year at the Commercial Insurance Awards.

Acquisitions

We continue to pursue our strategy of targeted acquisitions, and have an active pipeline. We will only acquire where we can be sure that there is both a strong cultural fit and the deal is clearly shareholder value enhancing.

During this financial year we bought a small broker based in Kent and successfully moved the team and book into our local branch. In addition we also purchased a niche retirement workshop firm called Laterlife with the intention of investing additional resources to grow this business. The provision of pre retirement planning education is a valuable addition to our Employee Benefits offering as employers become more aware of the need to help their employees plan for their retirement.

The integration of The Insurance Partnership remains on track and the benefit capture programme is ahead of schedule.

Core business performance

Insurance

Insurance broking is the largest element of the Jelf Group, accounting for 67% of total revenue.

Our insurance broking business primarily provides advice on products and services to the UK SME and corporate sectors, and related individual clients. Revenues increased by 14.4% to £55.2m (2013: £48.3m) EBITDA increased by 69.3% to £9.4m (2013: £5.6m). The EBITDA margin also increased from 11.5% to 17.1% year on year.

Insurance premiums remained flat in terms of rate, but we are seeing increases in cover as our client base invests and expands and as we continue to win new business. We continue to invest in our technology engine providing the capability to reengineer our SME business and deliver benefits. During the year we became members of two global networks which will enhance our capability to take advantage of our Employee Benefits client base.

During 2014 we retained the prestigious 'Chartered' status.

The year saw continued growth of the Purple Partnership (our network for independent brokers, which is included within the insurance business segment). Purple is in its seventh year of operation and continues to expand. Organic revenues increased by 17.0% to £1.1m (2013: £0.94m).

Employee Benefits

Employee Benefits accounts for 25% of Jelf Group's total revenue.

Our Employee Benefits business achieved revenue of £20.8m (2013: £20.8m), EBITDA was £4.8m (2013: £5.2m) a decrease of 7.9%. EBITDA margins remain strong at 23.0% (2013: 24.9%). EBITDA has fallen slightly as we continue to invest in people and systems to take advantage of the advice-led opportunities we believe will arise in this business over the next few years.

The Employee Benefits business comprises a range of services including Corporate Pensions, Group Risk and Healthcare. The Pensions and Group Risk part of the business provides advice and a range of services to small and large businesses in respect of employee benefit design (including risk and pension benefits), benefit communication and implementation; alongside new income streams focused on providing governance advice for employers, and financial education and workshops for employees and senior management in pre and post retirement life-stages.

We have had to reposition our client proposition in light of the regulatory changes around pension advice which has resulted in a short term decline in revenues as we switch from commissions to fees. It is pleasing to note we have seen continued strong new business enquiries during 2013/14 as corporate clients have sought advice on auto enrolment (AE). We expect this to continue through into 2015. We are also generating a considerable number of enquiries from Insurance clients across the group for AE advice.

The Healthcare element of the Employment Benefits business provides advice on health-related employee benefits such as private medical insurance and other non-insurance health based services. Our clients are owner-managed enterprises in England and Wales. We also provide specialist fee-based advice to larger companies, encompassing wider healthcare and employee wellbeing issues such as absence management and occupational health. We have a team providing highly specialist advice in the complex area of international healthcare. This area is achieving good organic growth levels as our corporate and SME clients expand internationally and / or become aware of this service. Overall, this business has achieved very good client retention levels during 2014.

To broaden our offering to our clients we are investing in a new benefits management platform and a dedicated team to take advantage of opportunities for work based advice.

Financial Planning

Financial Planning accounts for 8% of Jelf Group's total revenue.

Jelf Financial Planning provides a full range of financial planning services to owner-managed businesses and other medium/high net worth individuals. Revenues from Financial Planning decreased by 7.1% to £6.6m (2013: £7.1m). This was due to a reduction in sales staff post the Retail Distribution Review and as we continue to ensure we maintain our focus on providing quality advice to our clients. The accumulation of Assets Under Advice (AUA) continues to improve the profitability of the business, and EBITDA increased by 44.7% to £372K (2013: £257K). EBITDA margin is 5.6% (2013: 3.6%). Adviser productivity has increased by 8.4% to £296K per adviser.

We have a total assets under management mandate for over £1billion and of this £585m (2013: £547m) are with our preferred partners.

The recent announcements concerning "Pension Freedom" will create further opportunities, as more people realise that greater flexibility increases the need for high quality professional advice on pre and post retirement planning to ensure that they take full advantage of the changes in legislation. Taking this into account we are aligning our Financial Advisers alongside the Laterlife retirement planning workshops to offer medium/high net worth individuals personal wealth management and planning advice.

We have also invested in a new protection sales team to develop this line of business for both businesses (critical illness, key man cover and "company wills") and individuals.

During 2014 we retained the prestigious 'Chartered' status for the business.

High quality employees

We employed 1,075 people at the end of the 2013-2014 financial year; a slight decrease from 1,077 at the end of 2013. The ratio of male to female staff is 45:55. We offer a comprehensive Employee Benefits package, which is actively promoted across the Group.

We take great pride in the commitment, dedication and expertise of our staff. In return we seek to develop our staff through a wide range of technical and management courses, and a number of development programmes covering sales skills, those aspiring to a sales career, sales management and our operational managers. We pursue a highly pro-active communication programme with staff including regular roadshows, a well-used intranet news service, company audios led by myself and an "Ask Alex" facility for all staff to address questions to myself. We measure staff commitment and satisfaction through annual surveys and the last survey recorded an 82% staff satisfaction and commitment score.

Jelf in the community

We support our employees in recognising the importance of our corporate social responsibility. We believe this encourages a real sense of community and caring within the business.

This year our employees have raised over £26,000 for charities across the UK, and Jelf has been proud to donate a further £18,000.

Looking forward

Our growth and development over our 25 year history is as a result of our commitment to placing client needs at the heart of our business, and our adaptability in the face of a changing regulatory and business environment. We continually seek to evolve and develop the range of propositions we offer to clients as circumstances and conditions change around us. I remain confident that providing we continue to maintain our focus on our strategic objectives, our business will continue to prosper and deliver value to all stakeholders.

Thank you to our employees

Once again I would like to put on record our thanks to our employees for their continued hard work, support and commitment. They have all worked with dedication and enthusiasm throughout 2014.

Alex Alway

Group Chief Executive

Consolidated income statement

For the year ended 30 September 2014

There is no other comprehensive income for the year other than the profit for the year noted above (2013: £nil) and as a result no statement of other comprehensive income has been prepared.

All results are from continuing operations.

* Included within cash and cash equivalents is fiduciary cash of £15,228,419 (2013: £14,493,439)

Consolidated statement of changes in equity

For the year ended 30 September 2014

1 Shown within other reserves on the balance sheet

2 Distributable to the equity holders of the Company

3 The EBT purchased 516,965 (2013: 1,538,423) shares in the year

Consolidated cash flow statement

For the year ended 30 September 2014

1 Included within cash and cash equivalents is fiduciary cash of £15,228,419 (2013: £14,493,439)

Notes to the consolidated financial statements

1. General information

Jelf Group plc is an AIM listed company incorporated and domiciled in the United Kingdom under the Companies Act 2006. The nature of the Group's operations and its principal activities are set out in the Chairman's statement and the Group Chief Executive's report.

The unaudited Preliminary Report has been prepared under the historical cost convention and in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union and interpretations in issue at 30 September 2014.

 The Preliminary Report was approved by the Board of Directors and the Audit Committee on 5 December 2014. The Preliminary Report does not constitute statutory financial statements within the meaning of section 434 of the Companies Act 2006 and has not been audited.

Comparative figures in the Preliminary Report for the year ended 30 September 2013 have been taken from the Group's audited statutory financial statements on which the Group's auditors, PricewaterhouseCoopers LLP, expressed an unqualified opinion.

The accounting policies adopted are consistent with those of the annual financial statements for the year ended 30 September 2013, as described in those financial statements. New standards or interpretations which came into effect for the current reporting period did not have a material impact on the net assets or results of the Group.

The Preliminary Report is presented in pounds sterling because that is the currency of the primary economic environment in which the Group operates.

The Preliminary Report will be announced to all shareholders on the London Stock Exchange and published on the Group's website on 8 December 2014. Copies will be available to members of the public upon application to the Company Secretary at Hillside Court, Bowling Hill, Chipping Sodbury, Bristol, BS37 6JX.

2. Segmental Reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker has been identified as the Board, which is responsible for allocating resources, assessing performance of the operating segments and making strategic decisions. Further information about each operating segment can be found in the Group Chief Executive's Report on pages 4 to 7.

All revenue arose within the United Kingdom. No geographical segment information is therefore given. Segment information about these businesses is presented below.

3. Income tax charge/(credit)

4. Dividends

The final dividend in respect of the year ended 30 September 2013 of 1.5p per share, amounting to a total dividend of £1,614,547, was paid on 25 January 2014.

The final dividend proposed for the year ended 30 September 2014 will be paid on 30 January 2015 to shareholders on the register on 30 December 2014.

5. Earnings per share

6. Goodwill

Impairment tests for goodwill

Goodwill is reviewed at least annually for impairment by comparing the recoverable amount of each cash generating unit ('CGU') with the goodwill, intangible assets and property, plant and equipment allocated to that CGU.

Goodwill has been allocated according to the business segment as follows:

The recoverable amount of a CGU is determined based on value in use calculations. These calculations use risk adjusted cash flow projections based on financial budgets approved by management and growth assumptions covering a four year period. The key assumptions used to prepare the financial budgets are based on past experience, strategic plans and management's expectation for the markets in which they operate. Confidence in the assumptions can be gained from the Group's historical performance against budget and forecast, current trading and industry knowledge and trends.

Cash flows beyond the four year period (2013: five years) are extrapolated using a growth rate of 2% (2013: 1.5%). This growth rate is in line with the expected average UK economy long term growth rate.

The cash flows projections are discounted at a post-tax discount rate of 10.3% (2013: 10.3%). The single discount rate, which is consistently applied for all CGUs, is determined with reference to internal measures and available industry information and reflects specific risks relevant to the Group.

Impairment testing inherently involves a number of judgemental areas, including the preparation of cash flow forecasts for periods that are beyond the normal requirements of management reporting; the assessment of the discount rate appropriate to the Group and the estimation of the future revenue and expenditure of each CGU. Accordingly, management undertook stress testing to understand the key sensitivities and concluded as follows:

• Insurance (where the headroom above carrying value is £6.0m) is the largest CGU and is also the most sensitive to changes in discount rate and growth rate.

·  The discount rate for 2014 would need to increase to 10.7% for an impairment to occur in Insurance.

• A compound average revenue growth rate of 1.0% and a compound average EBITDAE growth rate of 1.1% has been assumed for the first four years in Insurance. If the growth rate were to fall to 0.7% in revenue and (0.2)% in EBITDAE, and management made no compensating changes to the budgeted level of administrative expenses in this period, an impairment would occur.

Further to the impairment review, the Directors concluded that, no impairment has arisen during the year.

7. Intangible assets

Amortisation has been charged to administrative expenses.

8. Borrowings

The main facility of £12 million comprises a loan of £9 million repayable by February 2016 in six biannual instalments and a revolving loan of £3 million fully repayable in February 2016. Scheduled repayments of £3.0m and early repayments of £1.0m were made during the year. At the balance sheet date £6.5m (2013: £10.5m) was available and fully drawn.

The second committed borrowing facility of £10 million is available for acquisitions and is repayable by February 2016 in six biannual instalments. The maximum facility available reduces on a biannual basis over the life of the facility. Repayments of £0.75m were made during the year. At the balance sheet date £7.25m (2013:£8.0m) was available and fully drawn.

The unamortised loan costs are charged to finance costs over the life of the loan on a straight line basis.

The loan facility interest floats at a rate of 2.35% above LIBOR. The loan is secured by an unlimited intercompany composite agreement guarantee over all assets in the trading companies within the Group excluding ring fenced regulatory cash as agreed with the FCA. The facility terms and conditions include cashflow cover, interest cover and leverage covenants.

The exposure of the borrowings of the Group to interest rate changes and the periods in which the cost of borrowings re-price are as follows:

The interest rate on borrowings at the balance sheet date was as follows:

The effective interest rate including initial loan fees at the balance sheet date was as follows:

The Directors consider that the carrying amount of borrowings approximate to their fair value.

9. Called up share capital

During the year 14,360 Ordinary shares of 1p (2013: 3.5m Ordinary shares of 1p) were purchased at market price of 86p (2013: between 80p and 92p). These were then cancelled.

During the year 525,383 Ordinary shares of 1p were issued at 52p in relation to the maturity of the 2011 sharesave (SAYE) scheme. (2013: 3.4m Ordinary shares of 1p were issued at 92p in relation to the acquisition of The Insurance Partnership Holdings Limited).

Treasury shares

During 2013 the Company commenced a share buyback programme. Shares under the buyback programme are either cancelled or retained in issue as treasury shares and represent a deduction from shareholders' funds. During the year the Company purchased 114,360 shares under the programme (2013: 3,455,520) at a cost of £132,000 (2013: £3.2 million) of which 100,000 shares are held in treasury (2013: nil).

10. Cash generated from operations

11. Net debt

1Borrowings are shown gross of amortised loan costs of £110,000 (2013: £188,000). See note 8 for details.

12. Acquisitions

Acquisition related costs for all acquisitions of £34,000 have been charged to administrative expenses.

The contingent consideration arrangements require certain performance related future financial targets to be achieved. The potential undiscounted amount of all future payments that the Group could be required to make under the contingent consideration arrangement is £141,000.

Riverside Insurance Brokers Limited ("Riverside") contributed £0.1m to revenue for the period between the date of acquisition and the balance sheet date. It is not possible to separately identify the profit before income tax related to Riverside as it has been integrated from day one into Jelf Insurance Brokers Limited.

Had Riverside been included within the Group from 1 October 2013, the additional revenue would have been £0.2m. It is not possible to separately identify the profit before income tax related to Riverside as it has been integrated from day one into Jelf Insurance Brokers Limited.