Final Results

Jelf Group plc

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

Final results for the year ended 30 September 2012

Jelf, an independent consultancy which provides a broad range of insurance, financial services and employee benefit services to corporates and individuals, announces its final results.

Financial highlights

Strong financial performance:

• Revenue levels increased by 1.3% to £73.0m (2011: £72.1m)

• EBITDAE increased by 11.6% to £11.3m (2011: £10.1m)

• EBITDAE margin increased to 15.4% (2011: 14.0%)

• Net profit after tax increased by 23.5% to £3.5m (2011: £2.8m)

• Earnings per share increased by 23% to 3.2p (2011: 2.6p)

Continued strengthening of balance sheet:

• Net cash position of £2.8m (2011: net debt of £3.0m)

Maiden dividend payment announced:

• 1.3p per share to be paid on 25 January 2013 to shareholders on the register on 28 December 2012

Share buy back authority being sought for approval by shareholders

Operating highlights

• Investment continues in the business aimed at organic growth and developing people and infrastructure

• Organic sales in the Insurance business are up 3% to £46.1m (2011: £44.8m). The drive for efficiency improvements continues in the business with a 17% increase in its EBITDAE margin

• Organic sales in the Healthcare division of the Employee Benefits business are up by 4.4% to £11.9m (2011: £11.4m)

• The Financial Services division is ready to embrace the forthcoming Retail Distribution Review environment, introduced from 1 January 2013

• Improvements in customer service have been evidenced in the Investing in Customers survey as Jelf yet again achieved an outstanding performance

Alex Alway, Group Chief Executive, commented:

"Strong trading during 2011/12 has enabled us to increase our income whilst the EBTIDAE profit margin has improved to 15% (2011: 14%). Trading since 1 October is in line with the Board's expectations and we look forward to the progression of the business during the financial year ahead."

Enquiries:

Chairman's statement

The last 12 months have been challenging as the hoped for signs of an upturn in the economy have not so far materialised, our clients have continued to face difficult trading conditions, and our markets remain intensely competitive. It is pleasing therefore that we have continued to grow our business, strengthen our balance sheet and position ourselves for further profitable growth when market conditions do improve.

For the year ended 30 September 2012 Group revenue has increased by 1.3% to £73.0m (2011 - £72.1m), EBITDAE has increased by 11.6% to £11.3m (2011 - £10.1m), net profit after tax has increased by 23.5% to £3.5m (2011 - £2.8m) and earnings per share are up 23.1% to 3.2p (2011 - 2.6p). Management have continued to focus on organic growth, cost management and driving further efficiencies and synergies from our three core businesses and I am pleased that this has contributed to strong growth in EBITDAE and earnings per share.

Bearing in mind the continuing soft insurance premium rating environment and intense competition at renewal, the 3% increase in Jelf Insurance Brokers revenue represents a good outcome and compares favourably with market growth in our core segments and with the performance of our key competitors. The new London office has made an encouraging start. Our network - The Purple Partnership - continues to grow strongly and had just under 70 member firms in October this year.

Jelf Employee Benefits continues to perform well and has maintained income levels following a very strong 2010/2011. Increased healthcare and group risk sales have offset a reduction in initial commissions from the corporate pensions business. This reduction was expected as we implement our plans for the new advice regime under the FSA's Retail Distribution Review.

Uncertain and volatile investment markets have adversely affected revenue in Jelf Financial Planning. We have put significant effort into preparing for the introduction of the new fee for advice regime brought in by the Retail Distribution Review.

The business continues to be strongly cash generative and at the year end we had positive cash resources (net of debt) of £2.8m. Our balance sheet is in a healthy position and this, together with the confidence the Board has in our future business prospects, gives us considerable financial flexibility. I indicated in our half year results announcement that during the second half of the year we would consider the possibility of declaring our maiden dividend. We have recently completed a review of our capital management strategy. Our priorities are clear - to at all times maintain a strong position relative to our regulatory capital requirement; to have sufficient flexibility to support attractive organic growth opportunities; and to be in a position to make acquisitions where there is a business fit and the price is right. We are comfortable going forward in holding a prudent level of debt at Group level with the flexibility to raise additional funds should attractive acquisition opportunities be available.

As a result of this review I am pleased to announce that the Board has approved the payment of a dividend for the year ended 30 September 2012 of 1.3p per share. Based on the Board's current view of our prospects we would anticipate paying a dividend annually in the future taking account of our earnings growth and other calls on our cash resources.

In addition we intend to seek the approval of shareholders at the Annual General Meeting to authorise the Company to buy back up to 10% of the Company's issued voting shares. This will be subject to any necessary waiver of any obligations arising under Rule 9 of the Takeover Code to be granted by the Panel on Takeovers and Mergers.

To facilitate this, and to provide us with the flexibility for future potential acquisitions, we are putting in place a new debt facility. The Board will ensure that drawn debt is kept within a prudent level that maintains a strong capital position whilst at the same time enhancing returns on equity.

We place our stakeholders at the core of what we do. We make every effort to ensure we listen to our clients, partners, staff, shareholders, regulators and other stakeholders. Our advice and product offerings are tailored to support our clients' requirements and our success is evidenced by the awards and testimonials we received during the year. For example in this year's Investor in Customers (IIC) survey Jelf once again achieved outstanding feedback, improving our scores across the board for the fourth consecutive year, providing clear, independent evidence that our clients have a high regard for our services. The response rate to our internal staff attitude survey was 87%, 9% up on last year, and the results demonstrate continuing improvement against our internal scorecard and a high level of engagement and satisfaction. We put great effort into ensuring that we have a strong and effective regulatory compliance culture and processes.

Your Board is confident about our future prospects. Jelf has strong positions in our core segments of insurance and advice for the small/medium commercial sector, healthcare and employee benefits, and high value financial planning. We are strongly positioned to take advantage of any upturn in the economy and are well prepared for the introduction of the new automatic enrolment pensions regime and for the major changes being introduced in group pensions and financial planning in 2013 as a result of the Retail Distribution Review. We continue to invest in organic growth opportunities and anticipate that the top and bottom line benefits from these initiatives will grow over the next few years. We have the balance sheet strength and financial flexibility to make business and team acquisitions that will fit well with Jelf and do not involve paying an excessive price.

We are fortunate to have a strong senior management team and professional, dedicated people and I would like to thank them on behalf of the Board for what is a good performance in a difficult environment. We look forward to the future with confidence.

Les Owen

Non-executive Chairman

Group Chief Executive's report

"Strong trading during 2011/12 has enabled us to increase our income whilst the EBTIDAE profit margin has improved to 15% (2011: 14%)."

I am pleased to report that we have achieved another good set of trading results, whilst improving our margins and increasing new business levels. The focus on delivering our strategy is now delivering positive results.

Business Strategy

Our business strategy sets out how we will identify and capture growth for our core businesses, which comprise Insurance, Employee Benefits and Financial Planning whilst at the same time improving margins.

Jelf's core business is the provision of advice and products to the UK SME business sectors and related private individual markets. We already enjoy strong positions in a number of our business areas and we are also looking to establish offerings in related services.

The principles of Jelf's strategy continue to be:

• Clients - Listening to our clients, identifying their requirements and then working alongside them to understand their business needs and individual circumstances.

• People - People are one of our unique selling points and we are keen to promote their skills and experience.

• Provider relationships - Strategic and trading relationships with our provider partners across all sectors are a key factor in our success. These relationships have developed through our joint strategic plans and mutually held objectives.

• Shareholders - The management of Jelf's resources to the benefit of our shareholders.

During this period the Board has once again reviewed a number of corporate M&A opportunities but to date has not identified any that represent good value to the Group. The Group has taken the opportunity to recruit individuals and teams from competitors; this is a feature of the UK broking sector at this point in time.

Growth

The Group seeks organic growth by capitalising on its areas of strength through offering related services to clients and building niche businesses with joint activity across the different sectors of our operations. We will continue to review opportunities to introduce new services and drive organic growth in our existing markets.

Jelf has a strong financial base with good forward visibility of revenues and potential new opportunities which give us every confidence that we will achieve sustained and profitable growth in the future. We have a number of opportunities in each of our businesses focused on capturing attractive growth opportunities. Recognising we are a people business, we continue to invest in talent and look to recruit and retain quality professionals and to develop the potential of the next generation. We have driven down debt and strengthened the balance sheet all of which enhances working capital providing confidence for future growth.

Revenue increased by 1.3% year on year representing a good performance given the market context. The Insurance Brokering business has grown organic sales by 3% to £1.3m (2011: £1.9m) and the Employee Benefits business has maintained strong EBITDAE margins of 25.5% whilst at the same time dealing with the impact of the Retail Distribution Review on its Group Pension business. We consider these results a good indicator of the potential upside for Jelf.

Financial Results

The improvement in Jelf's financial performance and strength has continued in this financial year. In the year ended 30 September 2012, Jelf's revenue was £73.0m (2011: £72.1m) and EBITDAE increased by 11.6% to £11.3m (2011: £10.1m). The EBITDAE margin was 15.4% (2011: 14.0%). The net profit after tax was £3.5m (2011: £2.8m), an increase of 23.5%.

Jelf continues to generate positive cash flow and we are now in a net cash position which stands at £2.8m (2011: £3.0m net debt). Jelf is in a strong financial position, ideally poised to invest in organic growth or look to take opportunities in M&A as they arise.

Basic and diluted earnings per share was 3.2p (2011: 2.6p).

Dividend Policy

I am pleased to announce the payment of our maiden dividend of 1.3p per share. This reflects the next stage of the development of the Group as it matures and grows in financial strength.

Review of Operations

For all of Jelf's businesses we have Executives who have responsibility for the profit and loss account and delegated authorities for the day-to-day running of their business. We have focused on investment and growth in our businesses.

We have put a lot of effort into improving the quality of our client data during 2012.

Key Performance Indicators

Each of the business segments is monitored against key performance indicators (KPIs), which include Revenue, EBITDAE and EBITDAE margin. In addition, we monitor our earnings per share (basic and diluted) and debt/cash position.

The performance of each business segment is included within the following review.

Insurance Broking

This business provides Insurance broking services to the UK SME and Corporate sector and individual clients. It offers advice on all aspects of general insurance including carrying out risk assessments, designing insurance programmes, reviewing existing insurance arrangements and claims management.

Insurance broking is the largest element of the business accounting for 63% of Jelf's total revenue.

Revenues were ahead of 2011 at £46.1m compared to £44.8m. EBITDAE increased from £4.9m in 2011 to £5.9m and the EBITDAE margin also increased from 10.9% to 12.8% year on year.

During 2011/12 the Insurance broking management team have continued to develop new business whilst investing in systems. We have invested in new sales people, teams and prospects at the same time.

The new business efforts within this business have again borne fruit and we have put in place new introductory deals. New business is up by 3.2% and we expect this to continue into 2013.

This year saw continued growth of The Purple Partnership, Jelf's network for independent brokers, which is included within the insurance business segment. It exceeded its targets and continues to build its membership base. Revenue increased by 18.3% to £0.7m in its fifth year of operation. This is a pure organic growth business to date.

Employee Benefits

During 2012 we have further invested in the management of this business to underpin our growth plans. These individuals have settled well and are providing impetus to our growth plans.

This business comprises a range of services including pensions, risk and healthcare. The non-healthcare 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. We have seen continued strong new business levels in this sector during 2011/12 as corporate clients have sought advice in these uncertain times. We expect this to continue through into 2013 as a number of legislation changes come into force such as NEST and auto enrolment.

The healthcare business provides advice on health-related employee benefits such as private medical insurance and other non-insurance services. Core clients are owner-managed enterprises based in England and Wales. The business also provides specialist fee-based advice to larger companies, encompassing wider healthcare related issues such as absence management and occupational health as well as international health insurance cover.

The international healthcare business continues to experience strong organic growth as our corporate clients expand operations.

Employee Benefits accounts for 27% of Jelf's total revenue.

Despite the challenging economic conditions the Employee Benefits business achieved revenue levels of £19.8m, only 0.1% behind last year (2011: £19.9m), EBITDAE was £5.1m (2011: £5.2m) a decrease of 1.9%. EBITDAE margins remain strong at 25.5% (2011: 26.0%).

Financial Planning

This business provides independent Financial Planning services, including investment planning, portfolio management and retirement planning advice to individuals, especially entrepreneurs.

It continues to be a difficult wider environment for investments with all the problems associated with sovereign and private debt. Directly as a result of these trading conditions revenues from Financial Planning have fallen by 5.3% to £7.1m (2011: £7.5m) but EBITDAE has increased to £294k (2011:£18k). EBITDAE margin is a positive 4.2% (2011: 0.2%).

We reported in previous years that the steps being taken to ensure the business model for Financial Planning were suitable for the proposed new regulatory regime (Retail Distribution Review) taking effect within this sector at the start of 2013. We now have a new investment proposition, we have segmented our client base, we have new literature and a new preferred platform provider.

Financial Planning accounts for 10% of Jelf's total revenue.

Jelf's Financial Planning advisers have a mandate for over £490m (2011: £450m) of Funds Under Advice with third party investment (wrap) platforms.

During 2012 we retained the prestigious 'Chartered Financial Planners' status for our Financial Planning business.

Jelf in the Community

Due to the efforts of staff members across Jelf, in excess of £41,000 (2011: £17,000) has been raised to support local charities in England and Wales. This is in addition to over £14,000 (2011: £11,000) contributed by Jelf.

Organisational Development

Our property strategy is to use leased premises and actively manage opportunities to reduce the rent roll and to co-locate teams to maximise cross-referral potential.

As at 30 September 2012, Jelf operated out of 30 offices (2011: 32). This year has seen Jelf move over 270 employees into newer leasehold premises which are intended to act as a catalyst for increased efficiencies and more sales to existing clients.

Systems Infrastructure

A key element of our business model is based on scalable and efficient processes. These can only be delivered if we have and maintain high quality reliable systems. We operate on market leading software packages. It should be noted that Jelf has a disaster recovery plan in place which is regularly tested. This year has also seen significant investment in both hardware and software as we have finalised the system integration.

High Quality Employees

We employed 998 people at the end of 2012, a decrease from 1,022 at the end of 2011. The ratio of male to female employees is 46:54. We have also heavily invested in training our staff and support any member of staff voluntarily seeking to undertake additional study or qualifications relevant to their role. All employees have access to a pension scheme.

Our core values of professionalism, respect, integrity, delivery and enthusiasm (PRIDE) underpin all that we do. They reflect externally how we interact with our customers and internally how we interact with each other and operate as a business. We conducted our annual staff survey in June 2012, in part to test how we measure up against those core values. The results and many positive comments were particularly encouraging. Of particular note was the response to the assertion "I would recommend Jelf to a friend as a good place to work" to which 81% of staff responded either 'agree' or 'strongly agree'.

The outcomes of the staff survey and all the efforts we make to ensure we listen to our employees and support their needs were also reflected in results in the external Investors In Customers survey (IIC).

Industry Memberships

Jelf has always played an active role in the Insurance and Financial Services industry and more widely sought to advance the interests of its clients. It continues to do this, both directly and through active membership of a number of sector bodies, including BIBA, AMII and AIFA.

Founders

Jelf sets itself apart from other industry organisations by continuing to draw on the experience of the founders of those businesses previously acquired. These individuals continue to produce really good performances and during the year we have chosen to highlight these individuals and how they have helped clients in moments of truth.

Awards

I am delighted to confirm that Jelf has again been acknowledged within the Employee Benefits sector by being recognised in the following categories:

·; 2 Star award in Investors in Customers (IIC)

·; Healthcare intermediary of the year

The Future

Jelf remains determined to be responsive to the needs of our clients and to improve the underlying efficiency and quality of the service we deliver. We will continue to test ourselves and remain poised to capitalise on any improvements in the wider economy.

We remain confident that, by meeting the needs of our clients, Jelf will be in a position to prosper over the next 12 months.

This year has again seen much change and on behalf of the Board I would like to put on record our thanks to all our employees for their continued support and commitment. They have all worked with dedication and enthusiasm throughout 2012.

Alex Alway

Group Chief Executive

Consolidated balance sheet

As at 30 September 2012

* Included within cash and cash equivalents is fiduciary cash of £11,592,000 (2011: £14,485,000)

Consolidated income statement

For the year ended 30 September 2012

There is no other comprehensive income for the year other than the profit for the year noted above.

Consolidated statement of changes in equity

For the year ended 30 September 2012

1 Shown within other reserves on the balance sheet

2 The share based payment reserve is distributable to the equity holders of the Company

3 The EBT purchased 992,280 (2011: 400,000) shares in the year

Consolidated cash flow statement

For the year ended 30 September 2012

1 Included within cash and cash equivalents is fiduciary cash of £11,592,000 (2011: £14,485,000)

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 financial information set out in this announcement does not constitute the Group's consolidated financial statements within the meaning of Section 435 of the Companies Act 2006 for the year ended 30 September 2012 and 30 September 2011 but is derived from those statements. This announcement should be read in conjunction with the statutory accounts for the year ended 30 September 2011, which were prepared under International Financial Reporting Standards (IFRSs) and were authorised for issue by the Board of Directors on 13 December 2011 and delivered to the Registrar of Companies. The Independent Auditor's report on those accounts was not qualified, did not include a reference to any matters to which the auditors drew attention by the way of emphasis without qualifying the report and did not contain statements under section 498 (2) or (3) of the Companies Act 2006.

These financial statements are presented in pounds sterling because that is the currency of the primary economic environment in which the Group operates.

While the financial information included in this announcement has been prepared in accordance with IFRSs as adopted by the European Union, IFRIC Interpretations and the Companies Act 2006 applicable to companies reporting under IFRS, this announcement does not itself contain sufficient information to comply with IFRS. The Group intends to publish full financial statements that comply with IFRS.

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.

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

3. Goodwill

Adjustments relate to the revaluation of the Group's estimate of contingent consideration due on acquired businesses.

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 covering a five year period. The key assumptions used to prepare the financial budgets are based on past experience and management's expectation for the markets in which they operate.

Cash flows beyond the five year period (2011: five years) are extrapolated using an average growth rate of 2.25% (2011: 2.25%). 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 10.7% (2011: 10.8%). 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.

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

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 is the largest CGU and is also the most sensitive to changes in discount rate and growth rate.

·; Financial Planning is the smallest CGU and is subject to a new regulatory regime (Retail Distribution Review) taking effect on 1 January 2013, which could create uncertainty in the short term.

• The discount rate for 2012 would need to increase to 13.6% for an impairment to occur in Insurance and 16.5% in Financial Planning.

• A compound average revenue growth rate of 2.8% in Insurance and 2.8% in Financial Planning has been assumed for the first five years. If this growth rate were to fall to 1.5% in Insurance and 1.4% in Financial Planning, and management made no compensating changes to the budgeted level of administrative expenses in this period, an impairment would occur in the CGU.

4. Intangible assets

5. Borrowings

The Group has no undrawn committed borrowing facilities at 30 September 2012 (2011: £nil). The loan was scheduled to be repaid in 15 quarterly instalments by February 2015 but the Directors have made additional voluntary prepayments of £1,500,000 in the year, effectively reducing the term by 12 months and increasing the headroom on the covenants. The unamortised loan costs have been accelerated to reflect the early repayments made during the year.

As at 5 December 2012 the outstanding loan facility was £6,349,000 and unamortised loan costs were £221,000. The Directors consider that the carrying amount of borrowings approximate to their fair value.

6. Called up share capital

 7. Exceptional costs

Exceptional costs are those items the Group considers to be one-off or material in nature that should be brought to the reader's attention in understanding the Group's financial performance. These costs are not associated with the ongoing activities of the Group. Exceptional costs are as follows:

8. Income tax charge

9. Dividends

The final dividend proposed for the year ended 30 September 2012 will be paid on 25 January 2013 to shareholders on the register on 28 December 2012.

10. Earnings per share

11. Cash generated from operations

12. Net cash

1Borrowings are shown gross of amortised loan costs of £251,000 (2011: £438,000). See note 5 for details.