5th Jun 2007 14:55
Jelf Group PLC05 June 2007 Jelf Group plc ('Jelf Group' or 'The Group') Interim Report and Accounts For the six months ended 31 March 2007 This statement adds the 2006 comparatives for balance sheet and cash flow to theresults for the six months to 31 March 2007, as reported on Wednesday 30 May2007 at 07:00 under RNS No 3932X. Jelf Group plc, a corporate intermediary focused on delivering advice oninsurance, healthcare, employee benefits, commercial finance and wealthmanagement, today announces its interim results for the six months ended 31March 2007. FINANCIAL HIGHLIGHTS Turnover up 128% to £17.1m (2006: £7.5m) • EBITDA up 119% to £1.8m (2006: £0.8m) • Underlying organic turnover growth of 24% • Net operating cash inflow of £2.4m • Growth programme continues - six acquisitions made in six months • Normalised diluted Earnings Per Share (EPS) 3.9p (2006: 3.8p) OPERATING HIGHLIGHTS • Growth programme continues - six acquisitions made in six months • Employee benefits and healthcare market particularly buoyant • Industry consolidation continuing to drive markets • Substantial investment in infrastructure to support growth • Key month of April shown strong performance Commenting on the results, Group Chief Executive Alex Alway says: "Our strategy of expanding the business, through both the acquisition of wellrun brokerages and by offering a wider range of services to drive organicgrowth, continues to deliver value and the trading outlook for the Group remainsfavourable for the rest of 2007. "The full year will include the beneficial effects of recent acquisitions; wehave successfully integrated the Goss team into the Group and have also acquiredSPS Wellbeing to enhance our healthcare and employee benefits teams. Theintegration of this recent acquisition is going well and we have been pleasedwith its performance over the key month of April. "The results of the Group are always biased to the key months of the thirdquarter due to the start of the tax year in April and the significant amount ofbusiness conducted in this period. The interim results reflect this bias. I ampleased to be in a position to report strong trading in April across the Group. "The trends in consolidation have increased over the last six months. Theconsolidation of small brokerages allows the Group to take advantage ofeconomies of scale and cross-selling opportunities. The Jelf Group's ability torun an advice-based, multi-channel distribution business will enable it toextract greater value than others. "We would like to put on record our thanks to all our staff for their dedicationand professionalism. They continue to face considerable change within thebusiness and have constantly risen to the challenge. "The results for the first half of the Group's financial year give us confidencethat 2007 is going to be another year of real progress." ENQUIRIESJelf GroupAlex Alway, Group Chief Executive 01454 272713Rose Clark, Group Financial Controller 01454 272853 Pelham PRPolly Fergusson 020 7743 6362 Notes to Editors: Jelf Group was founded by Chris Jelf in 1989. Today, the Jelf Group operatesfrom a number of premises in the South of England & Wales and offers anextensive range of corporate services; The Group advises over 17,500 corporate clients across a range of disciplines.These clients cover the spectrum from significant public companies to smallowner-managed businesses. Core Jelf clients are medium-sized owner-managedbusinesses, typically employing up to 250 staff; The Group has developed a corporate support infrastructure that has enabled itto make a number of acquisitions over the last few years. These acquisitionsspan all core areas of the Group's business and have been made to eithersupplement existing operations or to acquire a corporate client base that can beutilised by the enlarged Group. The acquisitions made since the start of thisperiod are as follows: October 2006: Hern Waters & Co. - Acquisition of a Herefordshire basedcommercial insurance intermediary October 2006: North Cotswold Insurance Services - Acquisition of a book ofcommercial business from an Oxfordshire based commercial insurance intermediary November 2006: Haines Wallace (Insurance Brokers) Ltd - Acquisition of aPlymouth based commercial insurance intermediary December 2006: John Wason (Insurance Brokers) - Acquisition of a book ofcommercial business from a Reading based commercial insurance intermediary January 2007: SPS Wellbeing Ltd - Acquisition of a major corporate healthcareintermediary based in Ringwood February 2007: Lloyd & Whyte (South West) - Acquisition of a book of commercialinsurance business from a Somerset based intermediary April 2007: Sunninghill Insurance Brokers Ltd - Acquisition of an Aldershotbased insurance intermediary Further information is available on Jelf Group at the Group's website:www.jelfgroup.com. Chairman's Statement I am delighted to report another set of strong results for the Group. Ourorganic turnover growth continues to outperform the market with areas such asemployee benefits producing notable success. We continue to invest in people and systems to enable the business to developour declared growth strategy. Financial performance In the six-month period ending 31 March 2007, the Group increased its turnoverby 128% to £17.1m (2006: £7.5m), EBITDA was increased by 119% to £1.8m (2006:£0.8m). Operating margins prior to charging goodwill were 8.7% (2006: 9.6%) due toinvestment in organisational development. Net cash inflow from operating activities was £2.4m. The consideration paymentsfor acquisitions made in the last six months amounted to £8.2m.Performance-based deferred consideration payments on previous acquisitionsamounted to £0.7m for the period. Total loan debt as at 31 March 2007 amounted to £9.95m, £9.45m of which isrepayable by January 2012. This increased from £6.75m since 30 September 2006 tofund acquisitions made in the current financial year. Organisational development Investment in infrastructure has continued with substantial investment in IT andcore areas such as human resources, finance, compliance and marketing. Thisinfrastructure investment in technology and front-line support will always be apriority as the Group has a declared strategy of ensuring that expansion takesplace in a controlled environment. The roll out of the Acturis IT system across all our insurance areas commencedin late 2006 and will continue throughout the current year. The Group's intranet has now been expanded to nearly all our locations and formsan integral part of our programme of responses to FSA initiatives such asTreating Customers Fairly ('TCF'). Business Development Employee benefits The market for advice on employee benefits and healthcare is particularlybuoyant and the Group continues to enjoy strong organic sales growth in theseareas. Wealth management The market for independent advice on wealth management remains strong after therecent changes in pension legislation, particularly in areas such as SelfInvested Pension Plans ('SIPPs'). This is expected to continue throughout 2007. Insurance The soft insurance market continues to provide a competitive environment. Ourclient-focused approach has enabled us to meet retention targets and to addvalue for all our partners. We are forecasting the extension of the soft marketinto 2008. SPS Wellbeing Ltd ('SPS') The completion of the acquisition of SPS in January 2007 has provided the Groupwith a substantial presence in the corporate healthcare insurance market,placing over £125m of premiums on behalf of its clients. Provision of the fullrange of Group services to the clients of SPS is underway and early indicationsare very encouraging. Healthcare The private medical insurance market continues to enjoy a hard market due toinflationary pressures driven by the cost of resources and higher claims costsas a result of advances in medical technology and the introduction of new,expensive drugs. The establishment of a new team in our Reading office is producing good earlyresults by cross-selling into the Goss client bank. Acquisitions The active programme of acquisitions has continued through this half year withsix being completed prior to the half-year and another prior to thisannouncement. The Group has a healthy pipeline of planned acquisitions and recruitment thatare only completed if they offer Jelf Group enhanced shareholder value. TheGroup's strategy of multi-channel distribution, with a geographical focus onsouthern England, has enabled it to avoid overpaying when acquiring due to thesizeable number of targets available and our strong local infrastructure. Ithas, on a number of occasions, not continued preliminary discussions if theprice being asked is deemed excessive. People During the course of the last six months we have made a number of acquisitionsand I would like to extend a warm welcome to the management and employees ofthese businesses. We have continued to recruit and motivate key employees by utilising theEmployee Benefit Trust and share option awards, whilst strengthening the seniormanagement team with appointments and promotions. We have designed and are in the process of implementing a bespoke trainingprogramme for staff and management. The employees and management continue to deliver value to our clients,shareholders and our strategic partners in the market. They have delivered asubstantial uplift in the value of the Group and I would like to again take thisopportunity to thank them for their dedication and support. They remain our keyasset. Future The Group will continue with its strategy of strengthening its position withinits chosen sectors and providing a wider range of enhanced services to itsclients. I am genuinely excited by the opportunities available within the market andbelieve the Jelf Group is in a great position as the market moves towardsgreater emphasis on customer service and client focus. Christopher Jelf Group Chairman 30 May 2007 Consolidated profit and loss account For the six months ended 31 March 2007 Six months ended Six months ended Year ended 30 31 Mar 2007 31 Mar 2006 Sep 2006 (Unaudited) (Unaudited) (Audited) RESTATED1 RESTATED1 £'000 £'000 £'000 Turnover 17,064 7,487 25,095 - Continuing 16,117 6,934 15,995- Acquired 947 553 9,100 Cost of sales (1,920) (330) (3,167) Gross profit 15,144 7,157 21,928 - Continuing 14,197 6,604 14,041- Acquired 947 553 7,887 Administrative expenses (13,382) (6,353) (18,407)Depreciation of tangible fixed assets (283) (87) (275)Amortisation of intangible fixed assets (1,288) (252) (1,194) Operating profit 191 465 2,052 Interest receivable 55 6 123Interest payable (240) - (102) Profit on ordinary activities before taxation 6 471 2,073 Taxation on profit on ordinary activities (312) (157) (921) (Loss) / profit on ordinary activities after taxation (306) 314 1,152 EBITDA 1,762 804 3,521 1. As restated - note 3 Consolidated balance sheet As at 31 March 2007 31 Mar 2007 31 Mar 2006 30 Sep 2006 (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000 Fixed assets Intangible fixed assets 28,686 17,012 19,204Tangible fixed assets 2,291 1,820 2,201Investments 45 41 43 31,022 18,873 21,448 Current assets Debtors 17,220 12,590 12,839Cash at bank and in hand 7,369 4,322 5,226 24,589 16,912 18,065 Creditors: amounts falling due within one year (25,775) (17,649) (17,697) Net current (liabilities) / assets (1,186) (737) 368 Total assets less current liabilities 29,836 18,136 21,816 Creditors: amounts falling due after more than one year (13,172) (2,144) (5,377) Provisions for liabilities (108) (141) (112) Net assets 16,556 15,851 16,327 Capital and reserves Called up share capital 246 244 244Share premium account 14,105 13,855 13,807Capital reserve 13 13 13Capital redemption reserve 1 1 1Share based payment reserve 562 60 106Own shares held (581) (30) (360)Profit and loss account 2,210 1,708 2,516 Shareholders' funds - all equity 16,556 15,851 16,327 Consolidated cash flow statement For the six months ended 31 March 2007 Six months ended Six months Year ended 30 31 Mar 2007 ended 31 Mar Sep 2006 (Unaudited) 2006 (Audited) (Unaudited) RESTATED1 RESTATED1 £'000 £'000 £'000 Net cash inflow from operating activities (below) 2,426 496 2,535 Returns on investments and servicing of financeInterest received 55 6 123Interest paid (240) - (102) Net cash inflow from returns on investment (185) 6 21and servicing of finance Taxation (100) - (921) Capital expenditure and financial investmentPurchase of tangible fixed assets (640) (178) (889)Purchase of own shares (222) (30) (360)Purchase of investments (5) - (9)Sale of investments 3 - -Sale of tangible fixed assets 525 - 150 Net cash outflow for capital expenditure (339) (208) (1,108) Acquisitions and disposalsPurchase of undertakings (incl. costs) (8,164) (7,244) (9,687)Net cash / (debt) acquired 2,168 (1,777) (1,131) Net cash outflow from acquisitions and disposals (5,996) (9,021) (10,818) Cash outflow before use of liquid resources and financing (4,194) (8,727) (10,291) FinancingIssue of ordinary shares (net of expenses) 300 11,038 11,038Capital element of finance lease rental payments (7) - (10)Draw down loan funding 9,050 500 3,200Draw down finance lease funding - - 49Repayment of loans and deferred consideration (3,006) (435) (706) Net cash inflow from financing 6,337 11,103 13,571 Increase in cash in the period 2,143 2,376 3,280 Reconciliation of operating profit to net cash inflow from operating activities Operating profit 191 465 2,052Amortisation of intangible fixed assets 1,288 252 1,194Depreciation of tangible fixed assets 283 87 275(Profit) on disposal of tangible fixed assets (31) - (148)Share based payment charges 32 19 38Cost of shares awarded to staff 62 - 27Decrease / (Increase) in debtors (3,009) (25) 246(Decrease) / Increase in creditors 3,613 (297) (1,084)(Decrease) / Increase in provisions (3) (5) (65) Net cash inflow from operating activities 2,426 496 2,535 1. As restated - note 3 Consolidated statement of total recognised gains and losses For the six months ended 31 March 2007 Six months Six months Year ended 30 ended 31 Mar ended 31 Mar Sep 2006 2007 2006 (Audited) (Unaudited) (Unaudited) RESTATED1 RESTATED1 £'000 £'000 £'000 (Loss) / profit for the financial period (306) 314 1,152Share based payment charges 32 19 38Cost of shares awarded to staff 62 - 27 Total recognised gains and losses (212) 333 1,217 1. As restated - note 3 Reconciliations of movements in shareholders' funds For the six months ended 31 March 2007 Six months Six months Year ended 30 ended 31 Mar ended 31 Mar Sep 2006 2007 2006 (Audited) (Unaudited) (Unaudited) RESTATED1 RESTATED1 £'000 £'000 £'000 Total recognised gains and losses (212) 333 1,217 Issue of new shares 2 110 110Premium on issue of new shares 298 11,430 11,430Costs of share issue - (426) (502)Cost of share options granted on acquisitions 233 - -Cost of shares awarded on acquisitions 129 - -Net movement of shares in EBT (221) (28) (360) Net addition to shareholders' funds 229 11,419 11,895 Opening shareholders' funds 16,327 4,432 4,432 Closing shareholders' funds 16,556 15,851 16,327 1. As restated - note 3 Notes to the financial statements For the six months ended 31 March 2007 Accounting policies 1.1 Basis of preparation The interim financial statements have been prepared on the basis of theaccounting policies set out in the Group's Annual Report and Accounts for theyear ended 30 September 2006, except as noted below. The Group's Annual Reportand Accounts for the year ended 30 September 2006 has been filed with theRegistrar of Companies and received an unqualified audit opinion. The financialinformation contained in this interim report does not constitute statutoryaccounts as defined in section 240 of the Companies Act 1985 and has not beenaudited. 1.2 Share based payments Where share options are granted and are conditional upon completion of a numberof years service, the fair value of those options is recognised as an expense ona straight-line basis over that period of service. Where the options aregranted as part of the consideration for an acquisition, the fair value iscapitalised. For share option agreements where the number of options isdependent on performance, an estimate is made of the number of options that willbe granted at the end of the performance period. This estimate is reviewed eachaccounting period. The fair value of share options granted by the Company ismeasured using the Black-Scholes model. Segmental analysis Six months Ended Six months ended Year ended 31 Mar 2007 31 Mar 2006 30 Sep 2006 (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000 Turnover by business sectorInsurance 7,232 2,368 10,509Healthcare 1,714 1,203 2,925Employee benefits 3,315 1,639 3,675Commercial finance 180 28 109Wealth management 4,623 2,249 7,877 17,064 7,487 25,095 Prior year adjustment The Company has adopted Financial Reporting Standard 20 "Share Based Payments"('FRS20') for the six months ended 31 March 2007. Comparative figures for thesix months ended 31 March 2006 and for the year ended 30 September 2006 havebeen restated following the application of FRS20. Six months ended Year ended 31 Mar 2006 30 Sep 2006 (Unaudited) (Unaudited) £'000 £'000 Operating profit as previously stated 484 2,090 Share based payment charges (19) (38) Operating profit as restated 465 2,052 The corresponding adjustment to reserves at 1 October 2005 created an openingentry in the Share Based Payment Reserve of £41,000, with an equal reduction inthe Profit and Loss Account reserve to £1,364,000. The Group has also restated the Consolidated Cash Flow Statement for the sixmonths ended 31 March 2006 following the discovery of a misstatement in theoperational cash flow impact of the Goss acquisition. Reconciliation of net cash flow to movement in net (debt) / funds Six months Ended Six months ended Year ended 31 Mar 2007 31 Mar 2006 30 Sep 2006 (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000 Increase in cash in the period 2,143 2,376 3,280 Cash inflow from increase in debt and lease financing (6,037) (40) (2,533)New deferred consideration (3,636) (3,321) (4,346)Revision of deferred consideration (6) - 91 Change in net debt resulting from cash flows (9,679) (3,361) (6,788) Movement in net debt in the period (7,536) (985) (3,508) Net funds / (debt) at start of the period (2,935) 573 573 Net debt at end of the period (10,471) (412) (2,935) Analysis of net debt Other At 31 Mar At 1 Oct 2006 Cash Flow changes 2007 (Audited) (Unaudited) (Unaudited) (Unaudited) £'000 £'000 £'000 £'000 Net cash:Cash at bank and in hand 5,226 2,143 - 7,369 Debt:Deferred consideration (4,922) 706 (3,642) (7,858)Obligations under finance lease (39) 7 - (32)Bank loans (3,200) (6,750) - (9,950) (8,161) (6,037) (3,642) (17,840) Net debt (2,935) (3,894) (3,642) (10,471) Acquisitions During the period, the Group has made the following acquisitions:Book of business from Hern Waters & Co 2 October 2006 Insurance BrokersBook of business from North Cotswold Insurance 31 October 2006 Insurance BrokersHaines Wallace (Insurance Brokers) Ltd 30 November 2006 Insurance BrokersBook of business from John Wason (Insurance Brokers) Ltd 30 November 2006 Insurance BrokersSPS Wellbeing Ltd 24 January 2007 HealthcareBook of business from Lloyd & Whyte (South West) Ltd 28 February 2007 Insurance Brokers The net assets acquired, fair value adjustments, consideration and goodwill forthese acquisitions are summarised below: Book value Fair value Fair value acquired adjustments acquired (Unaudited) (Unaudited) (Unaudited) £'000 £'000 £'000 Fixed assets 230 (3) 227Debtors 1,373 - 1,373Bank / other loans 1,037 - 1,037Designated insurance broking account 1,131 - 1,131Creditors (3,193) 823 (2,370) Net assets acquired 578 820 1,398 Consideration (cash) 7,514Consideration (shares, share options and share awards) 566Consideration (deferred) 3,636Costs 464 Goodwill 10,782 Included in the above summary is the acquisition of SPS Wellbeing Limited whichis summarised below: Book value Fair value Fair value acquired adjustments acquired (Unaudited) (Unaudited) (Unaudited) £'000 £'000 £'000 Fixed assets 210 (3) 207Debtors 1,227 - 1,227Bank / other loans 796 - 796Designated insurance broking account 1,131 - 1,131Creditors (2,459) 823 (1,636) Net assets acquired 905 820 1,725 Consideration (cash) 6,248Consideration (shares, share options and share awards) 516Consideration (deferred) 2,694Costs 368 Goodwill 8,101 Acquisitions post period end Subsequent to the period end, the Group has made the following acquisition: Sunninghill Insurance Brokers Ltd 30 April 2007 Insurance Brokers Company information Registered company name Jelf Group plc Directors: Chris Jelf (Group Chairman) Alex Alway (Group Chief Executive) Michael King (Deputy Chairman) John Harding (Group Finance and Operations Director) Phil Barton (Group Commercial Director) David Walker (Senior Non-Executive) Alex Rowe (Non-Executive) Secretary John Harding Company number 2975376 Registered office: Fromeforde House Church Road Yate Bristol BS37 5JB This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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