Interim Results

JELF GROUP PLC

Interim results for the 6 months ended 31 March 2014

Jelf, an independent full service UK based brokerage that supports businesses and individuals, announces its interim results.

Financial highlights

Strong financial performance continues:

· Revenues 9.7% ahead of last year at £39.3m (2013: £35.9m)

· EBITDA increased by 25.3% to £5.9m (2013: £4.7m)

· EBITDA margin increased to 15.0% (2013: 13.2%)

· Fully diluted Earnings per Share increased by 85% to 1.48p (2013: 0.80p)

Cash generation continues to be strong:

· Net debt is £13.1m compared to net debt of £1.4m at 31 March 2013 reflecting the acquisition of The Insurance Partnership in June 2013.

Operating highlights

· The Insurance business EBITDA has increased by 41.3% to £4.4m (2013: £3.1m)

· Employee Benefits EBITDA has decreased by 12.1% to £1.4m (2013: £1.5m)

· Financial Planning EBITDA has increased by 261% to £112k (2013: £31k)

· Margins continue to improve whilst at the same time investment continues to be made in both sales capability and infrastructure

· The Insurance Partnership delivered £4.7m of revenues (2013: £nil) and £550k of EBITDA (2013: £nil) which is on track with expectations and capturing the expected synergies of the acquisition

· Awarded Investor in Customers highest '3 Star' accolade for client service for the second year running

Alex Alway, Group Chief Executive said:

"The trading environment in which the Group operates continues to be competitive but there are now some positive signs that the outlook for the wider economy is improving. We continue to invest in the business whilst maintaining a focus on delivering further efficiencies and providing an excellent service to our clients."

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

Ben Thompson Corporate Finance

Stephen Norcross Corporate Banking

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

Group Chief Executive's report

This year we celebrate our 25th anniversary as a business and our 10th year on AIM. On reaching these landmarks, I am pleased to be in a position to be able to report a good performance during the first six months of this financial year. The Group's revenues have increased and we have achieved improvements in both profits and margin.

Our focus for the first six months of this financial year has been on:

· Servicing and retaining existing clients

· Seeking profitable new business

· Looking to achieve efficiency gains from the use of technology

· Continued investment in existing revenue growth initiatives

During the first half of this financial year we have dealt with a considerable number of insurance claims on behalf of our clients due to the poor weather. This has stretched the operations of certain parts of Jelf but has also provided an opportunity to generate client goodwill. I am pleased to be able to report that our service in response to the floods was appreciated by our clients and enabled us to win several new client mandates.

We recently retained the prestigious Exceptional '3 Star' rating in our Investor in Customers (IIC) survey and once again achieved the highest score for IIC within our peer group.

Financial performance

In the six months ending 31 March 2014 our revenues were 9.7% ahead of last year at £39.3m (2013: £35.9m). EBITDA increased by 25.3.% to £5.9m (2013: £4.7m) and diluted Earnings per Share increased by 85.0% to 1.48p (2013: 0.80p). EBITDA margins improved to 15.0% (2013: 13.2 %).

Net debt stands at £13.1m (2013: £1.4m), the increase reflecting the acquisition of The Insurance Partnership in June 2013.

Organisational development

We have continued with our investment in the existing organic growth initiatives highlighted in previous statements. These investments are aimed at increasing both revenues and profitability. Good progress has been made in a number of areas including:

· Revenue and member growth of our Purple network

· Revenue growth of our International PMI business

· Growth in the number of client referrals between Group businesses

Through careful people management we have continued to maintain the strength of our sales and management teams during a period of considerable change. This includes the handing over of clients by the original vendors of businesses we have previously purchased who have retired or moved on.

The Insurance Partnership

The integration of The Insurance Partnership is on track with planned synergies being captured. Rob Worrell and the team have settled in extremely well and we are pleased with the progress made. This business contributed £4.7m of revenues (2013: £nil) and EBITDA of £550k during the first six months which is in line with expectations.

Business Development

Insurance

Revenues for the Insurance business increased in this period by 14.6% to £26.8m (2013: £23.4m) and EBITDA grew by 41.3% to £4.4m (2013: £3.1m). Insurance revenues represent 68% of Group revenues (2013: 65%).

We are hopeful that the current trading environment for our insurance business and our clients will continue to improve in 2014 and we are beginning to see premiums increase where businesses are expanding as confidence grows.

During the first six months we purchased a small Insurance broking business in the south east that complements our existing operations. This acquisition was made from existing cash flows. In addition we have recruited a number of senior sales executive teams and plan to recruit more in light of the disruption caused by the recent round of broker consolidation in this sector.

Employee Benefits

Revenues increased by 4.3% year on year. EBITDA decreased by 12.1% to £1.4m (2012: £1.5m). This is largely due to changes in the mix between salaries and incentives and will even out during the year. Employee Benefits represents 23% of Group revenues (2013: 25%).

The market for quality advice on Employee Benefits continues to remain robust and we have a number of new client opportunities within our pipeline of business prospects. We have enjoyed strong demand for advice from businesses implementing pension Auto Enrolment legislation. The recent announcements concerning pension charge capping and annuities will in the medium / long term provide even more client advice opportunities.

The need for the provision of valued good quality advice on pensions to our clients has led to a strong financial performance in this area. Revenues from the PMI business continue to be weighted towards the second half of the financial year, particularly the 3rd quarter.

The International PMI business continues to produce a strong trading performance and is an area for future strong organic growth. We continue to see increased demand for advice from both larger corporate clients to support cover for employees abroad and from SMEs looking for new markets overseas.

Financial Planning

Revenues decreased by 8.5% to £3.3m ( 2013: £3.6m). EBITDA increased by 261% to £112k (2013: £31k).

The Financial Planning business represented 9% of revenues (2013: 10%).

We continue to see an increase in clients looking for quality financial planning advice. The continuity that we have amongst our client facing staff provides a platform for growth.

The Group has a total mandate for over £575m (September 2013: £547m) of Assets Under Advice (AUA) with third party investment (wrap) platforms. We provide advice on the individual client requirements and outsource the investment management to third parties.

Infrastructure

During this year we have invested in new premises in Wolverhampton and Exeter and are planning to move to a new office in Leeds during 2014.

In addition, to assist in the development of our staff and the client experience we have invested in call recording facilities where relevant.

We continue to see a positive effect where we have upgraded the facilities and working environment.

Share buyback programme

During this period we have bought 14,360 shares as part of the share buyback programme which was instigated last year. We will still look for the opportunity to buy shares where appropriate.

Looking forward

Throughout 2014 we will build upon our first six months performance in order to continue delivering improvements in productivity and margins.

In line with statements made previously we will continue to review acquisition opportunities as they arise but we will retain a disciplined approach to price and value in order to achieve value for Jelf.

People

We were pleased to retain our '3 Star' rating for Investor in Customers which is the highest that can be awarded. This award, along with client testimonials that we received for the claims work we carried out during the bad weather earlier in 2014, leads us to believe that our people are successfully delivering our client centric strategy.

On behalf of the board I would like to thank our staff and management for responding positively to the challenges we have set them and to our clients for their ongoing support.

Alex Alway

Group Chief Executive

Consolidated income statement

For the six months ended 31 March 2014

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

There are no discontinued operations during the period.

Consolidated balance sheet

As at 31 March 2014

* Included within cash and cash equivalents is fiduciary cash of £15,158,992 (31 March 2013: £9,667,000; 30 September 2013: £14,493,439)

The notes on pages 8 to 13 form an integral part of the consolidated financial statements. The financial statements were approved by the Board of Directors and authorised for issue on 12 May 2014. They were signed on its behalf by:

Alex Alway John HardingGroup Chief Executive Group Finance and Operations Director

Consolidated statement of changes in equity

For the six months ended 31 March 2014

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 175,000 (2013: 211,830) shares in the period

Consolidated cash flow statement

For the six months ended 31 March 2014

1 Included within cash and cash equivalents is fiduciary cash of £15,158,992 (31 March 2013: £9,667,000; 30 September 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 address of the registered office is given in note 13.

These unaudited consolidated interim financial statements do not constitute statutory accounts within the meaning of Section 435 of the Companies Act 2006 and should be read in conjunction with consolidated financial statements for the year ended 30 September 2013. These were prepared under International Financial Reporting Standards (IFRSs) and were authorised for issue by the Board of Directors on 9 December 2013 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.

2. Basis of preparation

These consolidated interim financial statements have been prepared using accounting policies consistent with IFRSs as adopted for use in the European Union and the AIM rules as disclosed in the Group's statutory accounts for the year ended 30 September 2013. These consolidated interim financial statements do not comply with all the requirements of IAS 34 'Interim financial reporting' as the Group is not required to adopt this.

3. 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.

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

It is not practicable to separately identify the investment revenues, finance costs and income tax charge for each of the segments. Accordingly, consolidated figures have been presented.

The amounts provided to the Board with respect to total assets and liabilities are measured in a manner consistent with that of the financial statements. These assets and liabilities are allocated based on the operations of the segment. Unallocated segment assets relate to cash held in the parent Company.

 4. 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.

5. Income tax charge

6. 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 27 January 2014.

7. Earnings per share

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 £1.5 million were made during the period together with an early repayment of £1 million, leaving a balance of

£8 million at 31 March 2014 (31 March 2013: £12 million; 30 September 2013: £10.5 million).

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. At the balance sheet date £8 million was available and is fully drawn.

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.

9. Called up share capital

At 31 March 2014, the Company had authorised share capital of 100,000,000 ordinary shares of 1p each (31 March and 30 September 2013: 100,000,000).

10. Cash generated from operations

11. Net debt

1Borrowings are shown gross of amortised loan costs of £148,000 (31 March 2013: £203,000; 30 September 2013: £188,000). See note 8 for details.

12. Acquisitions

On 28 February 2014 the Group acquired 100% of the share capital of Riverside Insurance Brokers Limited, a small independent insurance brokers based in Tonbridge.

13. Copies of the financial statements

Copies of these consolidated interim financial statements are available on the Group's website (www.jelfgroup.com) or from the Company Secretary at the Company's registered office: Hillside Court, Bowling Hill, Chipping Sodbury, Bristol, BS37 6JX.