Interim Results

13 May 2013

JELF GROUP PLC

Interim Results for the six months ended 31 March 2013

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

Financial highlights

Strong financial performance continues:

·; Revenues 1.9% ahead of last year at £35.9m (2012: £35.2m)

·; EBITDAE increased by 14.3% to £5.1m (2012: £4.4m)

·; EBITDAE margin increased to 14.1% (2012: 12.6%)

·; Earnings per Share down to 0.8p (2012: 1.0p) due to timing differences from a deferred tax credit which is expected to be received in the second half of the current financial period

Cash generation continues to be strong:

·; Net debt is £1.4m compared to net debt of £1.1m at 31 March 2012

Operating highlights

·; Revenues in the Insurance business up 0.7% to £23.4m (2012: £23.3m)

·; Employee Benefits revenues up 4.7% to £8.8m (2012: £8.4m)

·; Financial Planning revenues up 2.9% to £3.6m (2012: £3.5m)

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

·; Awarded Investor in Customers highest "3 star" accolade for customer service

·; Awarded Corporate Adviser of the Year for 2013 for Healthcare and Group Risk

Alex Alway, Group Chief Executive said:

"The trading environment in which the Group operates is challenging and competitive. It reflects the wider UK economic problems. Our clients are predominately owner managed businesses and related individuals. Our performance reflects their situation. The outlook in the short to medium term continues to look challenging.

We are continuing to invest in growth initiatives and in further efficiencies."

Enquiries:

Jelf Group plc 01454 272727

Alex Alway Group Chief Executive

John Harding Group Finance and Operations Director

finnCap Nomad & Broker 0207 220 0500

Matt Goode Corporate Finance

Ben Thompson Corporate Finance

Stephen Norcross Corporate Broking

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

Group Chief Executive's report

The business has produced a solid performance during the first six months of this financial year. Revenues have increased and we have achieved improvements in both profitability and EBITDAE margin.

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

·; Servicing and renewing existing clients

·; Seeking profitable new business

·; Continued investment in growth initiatives and achieving further efficiencies from operations

·; Negotiating a new loan facility of £22m to be used to support our growth initiatives and selective acquisitions

There have been some increases in Group Risk premium ratings and to a lesser extent Medical Insurance but these continue to remain the exception and we are not predicting any significant hardening of rates in 2013/14.

We recently attained the prestigious 3 star rating in our Investor in Customers (IIC) survey along with being awarded "Corporate Adviser of the Year". We achieved the highest score for IIC within our peer group.

Financial performance

In the six months ending 31 March 2013 our revenues were 1.9% ahead of last year at £35.9m (2012: £35.2m). EBITDAE increased by 14.3% to £5.1m (2012: £4.4m) and Earnings per Share was down to 0.8p (2012: 1.0p). This was due to a tax credit in 2012 reflecting the change in corporation tax rates. Profit before tax is 12.8% up on last year at £1.3m (2012: £1.1m). Despite further investment in organic growth initiatives EBITDAE margins improved by 12.2% to 14.1% (2012: 12.6%).

The Group has put in place a new banking facility with Barclays to pay down existing debt and provide funds for future investment. Net debt as at 31 March 2013 is £1.4m (2012: £1.1m). The interest rate payable on this debt is less than half that which it replaced.

We have incurred £336k of exceptional costs relating to the share buy back facility and acquisition related work. There will be further exceptional costs in the second half of the year in relation to acquisition opportunities.

Organisational development

We have continued to invest in a number of organic growth initiatives during the financial year aimed at increasing revenues in future years. The highlights of these are:

The development of an integrated on line Insurance service offering which will help Jelf to attract affinity related business and more efficiently service some segments of our existing client base. We have enjoyed some early success with new client mandates.

We have also invested heavily in the first half of 2012/13 in the training and development of our client facing staff through the "Trusted Adviser" programme. This investment will improve our ability to interact with our clients and increase sales opportunities across all our services.

Our Chartered Financial Planning business has emerged from the changes presented by the Retail Distribution Review (RDR) with a solid first half performance.

Through careful people management we have maintained the continuity of sales and management teams during a period of considerable change.

Infrastructure

The upgrade and integration of our systems and infrastructure has gone to plan with refurbished leasehold premises at Evesham, Hereford, Ross-on-Wye and Worcester and new premises at Worthing. We have taken the opportunity to consolidate a number of Bristol locations into a new leased office in Chipping Sodbury. Where we have upgraded the facilities and working environment we have seen improvements in the business performance. The main investment into our infrastructure will largely complete by the end of this year.

Business Development

Insurance

Revenues for the Insurance business increased slightly in this period by 0.7% to £23.4m (2012: £23.3m) and EBITDAE grew by 18.5% to £3.4m (2011: £2.9m). Insurance revenues represent 65% of Group revenues (2012: 66%).

Trading in this market is competitive and price sensitive. We are looking to develop new markets and also develop and enhance relationships with existing clients. To help us to achieve this, we are investing in training of client facing staff through our "Trusted Adviser" programme.

We have not seen any detectable rate movements within the Insurance markets that we operate and we are not predicting any movement in 2013. We anticipate that the current trading environment for our Insurance business will continue into 2014.

We are investing in our Insurance affinity business and have enjoyed early success with some new business wins, and incremental sales from existing arrangements.

We have now fully completed the integration of systems within the Insurance business and have delivered the planned cost efficiencies.

During the first six months we purchased a small Insurance broking business in Stoke on Trent that complements our existing operations. This acquisition was made from existing cash flows.

We plan to continue to improve our margins despite a lack of improvement in the rating environment.

Employee Benefits

Revenues increased by 4.7% year on year. EBITDAE increased by 2.5% to £1.6m (2012: £1.5m) and margins have been maintained at 18% whilst we have been investing in management and systems. Employee Benefits represents 25% of Group revenues (2012: 24%).

The new Employee Benefits management team which was put in place last year has started to deliver some elements of the forecast organic growth.

The market for quality advice on Employee Benefits continues to remain strong and we can see a number of new client opportunities and have a strong pipeline of business. Several new corporate client mandates have been secured.

The Group Risk market continues to benefit from re-rating increases which, when coupled with new business growth, has delivered positive results ahead of plan. We have recruited a small number of new sales executives who will produce growth in 2013/14.

Increases in rates for Private Medical Insurance (PMI) have been offset by stiff competition between both insurers and other brokers. Revenues from the PMI business continue to be weighted towards the second half of the financial year, particularly the 3rd quarter. Retention of clients in this area is in line with targets.

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 SMEs looking for new markets overseas.

The Employee Benefits team again won industry awards in 2012/13 for the fourth year in a row, including the Corporate Adviser awards "Healthcare Adviser of the Year" and "Group Risk Adviser of the Year".

Financial Planning

The Financial Planning business represented 10% of revenues (2012: 10%).

Revenues for the Financial Planning business have been robust increasing 2.9% to £3.6m (2011: £3.5m). The underlying recurring income as a percentage of this has again improved. A small EBITDAE profit of £47k compares to a loss for the same period last year (2012: £13k loss). This has been achieved at the same time we have invested in preparing for the Regulatory Distribution Review (RDR).

The business has gone through a period of considerable change preparing for RDR. The number of advisers has remained steady. We are seeing a number of emerging trading opportunities as we re-position our advice proposition. All advisers are qualified for the new regulatory regime.

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

The Group has £666m (2012: £483m) in third-party funds on wrap and discretionary management mandates producing fund-based income. We provide advice on the individual client requirements and outsource the investment management to third parties.

We also provide financial planning advice on an additional £574million of client funds not currently on platforms. We are overseeing a migration programme on to the new style platforms that will take time to complete as it must align with customer requirements and sound advice.

Investment markets remain uncertain making it difficult to predict investment sentiment through the rest of 2013. It is difficult to predict an upturn whilst we operate in this challenging business environment.

Share buy back programme

It is our intention to commence a share buyback programme, utilising the authority granted by Jelf's shareholders on 21 February 2013 to acquire up to 10% of the Group's issued share capital as and when Jelf shares become available at volumes and prices that, from time to time, the Board considers appropriate.

Any shares acquired pursuant to the buyback programme will be held in treasury or cancelled and the acquisition will be notified to a Regulatory Information Service in accordance with the AIM Rules for Companies.

Any acquisitions will be effected within certain pre-set parameters, including that the maximum price paid per share is to be no more than 105 per cent of the average middle market closing price of a Jelf share for the five business days preceding the date of acquisition.

In addition, given the level of liquidity in the Company's shares, the Company may buy back in any one day more than 25 per cent of the average daily volume over the preceding 20 business days.

Looking forward

The focus throughout 2013 will be on:

·; Strong client engagement and retention

·; Achieving new client wins

·; Continued investment in organic growth initiatives

·; Continued investment in skills for our client facing staff

·; Delivering improvements in productivity and margins.

We continue to review acquisition opportunities as they arise but we will retain a disciplined approach to price and value.

People

I was delighted to receive on behalf of the Group the IIC award. On behalf of the Board I would like to thank staff and management for responding positively to this and other challenges we have set them.

Alex Alway

Group Chief Executive

Consolidated balance sheet

As at 31 March 2013

* Included within cash and cash equivalents is fiduciary cash of £9,667,000 (31 March 2012: £11,433,000; 30 September 2012: £11,592,000)

The financial statements were approved by the Board of Directors and authorised for issue on 13 May 2013. They were signed on its behalf by:

Alex Alway John HardingGroup Chief Executive Group Finance and Operations Director

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 six months ended 31 March 2013

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 211,830 (2012: 322,280) shares in the period

1 Included within cash and cash equivalents is fiduciary cash of £9,667,000 (31 March 2012: £11,433,000; 30 September 2012: £11,592,000)

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 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 2012. These were prepared under International Financial Reporting Standards (IFRSs) and were authorised for issue by the Board of Directors on 5 December 2012 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 2012. 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. Borrowings

During the period the Group repaid its existing borrowings and put in place two new borrowing facilities. The main facility of £12 million comprises a loan of £9 million repayable by February 2016 in 6 biannual instalments and a revolving loan of £3 million fully repayable in February 2016.

The second undrawn committed borrowing facility of £10 million is available for acquisitions and is fully repayable by February 2016.

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.

5. Called up share capital

At 31 March 2013, the Company had authorised share capital of 100,000,000 (31 March and 30 September 2012: 100,000,000) ordinary shares of 1p each.

 6. 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.

7. Income tax charge

8. Dividends

A final dividend in respect of the year ended 30 September 2012 of 1.3p per share, amounting to a total dividend of £1,406,658, was paid on 25 January 2013.

9. Earnings per share

10. Cash generated from operations

11. Net (debt)/cash

1Borrowings are shown gross of amortised loan costs of £203,000 (31 March 2012: £366,000; 30 September 2012: £251,000). See note 4 for details.

12. Acquisitions

On 31 January 2013 the Group acquired 100% of the share capital of Howell Shone Insurance Brokers Limited, a small independent insurance brokers based in Stoke on Trent.

On 4 February 2013 the Group acquired the remaining 20% of the share capital of The Purple Partnership Limited. The Group now owns 100% of the share capital of The Purple Partnership Limited.

13. Copies of the financial statements

Copies of these consolidated 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.

14. Events after the reporting date

The Group announced the acquisition of The Insurance Partnership Holdings Limited on 13 May 2013 for a maximum total consideration of up to £15.5 million plus a payment for the tangible net assets. The initial cash consideration of £8.9 million is payable upon completion (subject to adjustment on the basis of completion accounts) together with £3.1 million of shares that will be satisfied by the allotment and issue of new shares. A further deferred amount is payable based on future performance of up to a maximum of £3.5 million. Completion is conditional upon the relevant change of control approval being granted by the FCA.

Company information

Registered Company name Jelf Group plc

Directors Les Owen (Non-Executive Chairman)

Christopher Jelf (Deputy Chairman)

Alex Alway (Group Chief Executive)

Phil Barton (Chief Executive (Insurance))

John Harding (Group Finance and Operations Director)

Alex Rowe (Non-Executive)

Jonathan Kelly (Non-Executive)

Grahame Stott (Non-Executive)

Company secretary John Harding

Registered number 2975376

Registered office Hillside Court

Bowling Hill

Chipping Sodbury

Bristol

BS37 6JX

Nominated adviser finnCap

60 New Broad Street

London

EC2M 1JJ

Brokers finnCap

60 New Broad Street

London

EC2M 1JJ

Independent auditors PricewaterhouseCoopers LLP

Chartered Accountants and Statutory Auditors

31 Great George Street

Bristol

BS1 5QD

Solicitors HowardKennedyFsi LLP BPE Solicitors

179 Great Portland Street St James' Square

London Cheltenham

W1W 5LS GL50 3PR

Registrars Capita Registrars Ltd

Northern House

Woodsome Park

Fenay Bridge

Huddersfield

HD8 0LA

Principal bankers Barclays Bank plc

Park House

Newbrick Road

Stoke Gifford

Bristol

BS34 8TN