Issue of Equity

Jelf Group plc

("Jelf" or "the Company")

Conditional Placing by Cenkos Securities of up to 27,713,939 new Ordinary Shares and 25,063,838 new Non-Voting Convertible Shares to raise approximately £19 million (before expenses)

The Board is pleased to announce that the Company proposes to raise up to £19 million, before expenses, by way of the Placing undertaken by Cenkos Securities. The Placing consists of a conditional placing by the issue of 27,713,939 Placing Shares to institutional and other investors, including Cap Z Partners III L.P. ("CapZ") and by the issue of 25,063,838 new Non-Voting Convertible Shares to CapZ. In addition to subscribing for the Placing Shares and the 25,063,838 new Non-Voting Convertible Shares Cap Z has entered into an agreement to acquire the entire shareholding of 3i Group Plc. Following its acquisition of Placing Shares and the shareholding of 3i Group Plc, Cap Z will hold a minimum of 25.01 per cent. but less than 30 per cent. of the Company's Enlarged Ordinary Share Capital. A key feature of the fundraising is the investment by Cap Z and other institutional investors and their endorsement of the Company's strategy.

The Placing is conditional, inter alia, upon resolutions being passed at the General Meeting of the Company to be held on 12 March 2010. The Placing Shares are expected to be admitted to trading on 15 March 2010.

Background to and reasons for the Placing

As noted in the Company's preliminary results announced today, market conditions have remained challenging and have had a corresponding impact on Group's margins and profits. Nonetheless, the Board has continued to focus on reducing costs through rationalising structures and improving efficiencies and was pleased to be able to announce on 12 February 2010 that the Company had entered into new secured senior debt facilities of £24 million with a five year term with a small group of lenders replacing the previous facility in full.

The net Placing proceeds will be used for three key purposes: firstly to reduce the net debt of the Group, in line with the facility agreement announced on 12 February 2010. The Board considers that the reduction of net debt is a priority for the Company given the current economic, trading and banking environment and further believes that reducing the level of indebtedness significantly will increase Shareholder's confidence in the Company. Secondly, the net Placing proceeds will be used to enable the Group to better capitalise on organic and, where appropriate, inorganic growth opportunities and thirdly, to strengthen the working capital and cash flow position of the Company over the coming 12 months, as the remaining deferred consideration payments fall due.

The Board considers that it is in the best interests of the Company and Shareholders, as a whole, for the funds to be raised by way of the Placing. The Placing of the Placing Shares and the Non-Voting Convertible Shares to Cap Z allows the Company to benefit not only from Cap Z's capital but also from its considerable strategic, operational and financial advice and experience.

Current trading and prospects

Today, the Company reported its preliminary results for the year ended 30 September 2009 and, in a period of challenging trading conditions, the Company generated revenues of £70.3 million. Earnings before interest, taxation, depreciation, amortisation and exceptional costs ("EBITDAE") were £8.1 million and the EBITDAE margin was 11 per cent. The operating loss was £9.7 million after deduction of £4.8 million reorganisation and rationalisation costs and £7.5 million goodwill impairment. As part of the reorganisation substantial efforts were made during the year to improve

operating efficiency and reduce the Company's cost base, resulting in significant exceptional costs associated with restructuring charges and the clearance of old legacy system balances. It is pleasing to note that the Company produced operating cashflow of £8.7 million during the period.

On 12 February, the Group was pleased to announce that it had signed new senior debt facilities of £24 million with a five year term. The margin on this facility will be 6 per cent. above 12 month LIBOR once the debt has been reduced by £8 million. If no reduction is made then the margin will be 8 per cent. above 12 month LIBOR. Deferred consideration liabilities, stood at £8.6 million at 30 September 2009 and it is expected that this will have been paid down to below £1 million by the end of this year. Some £2.9 million of the reduction in the current year is expected to be effected by the issue of new Ordinary Shares in satisfaction of certain of the Company's deferred consideration obligations with the remainder paid in cash.

Annualised cost efficiencies of approximately £2.8 million have been achieved, of which approximately£1 million is included in the results for the year ending 30 September 2009. Whilst the majority of the associated exceptional costs of this streamlining fell into the year ended 30 September 2009, approximately £0.5 million of associated exceptional costs will fall in this year. The benefits of these efficiencies will continue to be felt and, although the current economic conditions mean that the Board remains cautious for the current year, the Board is encouraged that the year to date is slightly ahead of management's expectations.

The Placing

The Company is proposing to raise approximately £17 million net of expenses by way of the conditional Placing to institutional and other investors, including Cap Z, through the issue of 27,713,939 new Ordinary Shares to placees (including CapZ) and, in addition, by the issue of  25,063,838 new Non-Voting Convertible Shares to Cap Z , each at a price of 36 pence per Share.

The following directors intend to subscribe for Placing Shares in the Placing at the Placing Price:

The integration of the Company's major acquisitions is progressing to plan. The Board is pleased to announce that as a reflection of his continued commitment to the Company and his confidence in the strategy and expected beneficial impact of the Company's deleveraging plan, Jon Manson has agreed that all the deferred consideration which has become due and payable to him and all the deferred consideration (based on performance) which is to be agreed or determined due to him pursuant to the Manson Share Acquisition Agreement will be satisfied (up to a maximum of £2.8 million) in new Ordinary Shares at the Placing Price per share and the remainder (if any) will be satisfied in cash.

Related Party Transactions

As referred to above Jon Manson, a director of the Company, has agreed with the Company that the all the deferred consideration which has already become due to him but remains unpaid pursuant to the Manson Share Acquisition Agreement and all deferred consideration (based on performance), and which is to be agreed or determined to be due to him, pursuant to the Manson Share Acquisition Agreement, will be satisfied (up to a maximum of £2.8 million) by the allotment and issue of new Ordinary Shares of the Company at a Placing Price. By virtue of him being a Director of the Company Jon Manson is deemed to be a related party for the purposes of the AIM Rules. The Independent Directors consider, having consulted with Cenkos Securities, the Company's nominated adviser, that the terms of this related party transaction are fair and reasonable insofar as the Shareholders are concerned.  

 A circular containing details of the Placing is being posted to shareholders today and will be available on the Company's website: www.jelfgroup.com.

Commenting on today's news, Chief Executive, Alex Alway, said;

"It is pleasing to see that we have strong support from existing and new institutional investors. This is a very clear signal of confidence in our strategy."

Commenting on today's news, Managing Partner of Cap Z, Bob Spass, said:

"Jelf possesses the ideal platform to capitalize on the significant opportunity in the UK insurance brokerage, healthcare/employee benefits consulting, and wealth management spaces. We are impressed with their team, infrastructure and strategic vision and are looking forward to partnering with them."