Notice of GM and Proposed Share Buy Back

Jelf Group plc

('Jelf' or 'the Group')

Notice of General Meeting, Proposed Share Buy Back and Rule 9 Waiver

Jelf, an independent consultancy which provides a broad range of insurance, financial services and employee benefit services to corporates and individuals, has today announced it has posted a Circular to Shareholders giving Notice of a General Meeting, to be held at 9.15am on 21 February 2013.

The Company proposes to seek Shareholder approval to have the authority to buy back up to 10% of the Company's issued share capital.

As a result of the buy back, the Company's largest shareholder, Capital Z Partners, III L.P., and persons acting in concert with it may own up to 32.9% of the voting rights in the Company. Therefore the Independent Shareholders will be asked to waive an obligation on the Concert Party which may arise under Rule 9 of the Takeover Code as a result of the Company purchasing its Ordinary Shares. 

The full Circular to Shareholders will be made available on Jelf's website, www.jelfgroup.com. Defined terms used in this announcement are the same as those defined in the Circular unless the context requires otherwise.

Enquiries:

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

Disclaimer

finnCap Ltd, which is authorised and regulated by the Financial Services Authority, is acting as Nominated and Financial Adviser to the Company in connection with the matters described in this announcement. finnCap Ltd will not be responsible to anyone other than the Company for providing the protections afforded to clients of finnCap Ltd or for advising any other person on the Buy-Back Authority and the Waiver or any other arrangements described in this announcement. finnCap Ltd has not authorised the contents of, or any part of, this announcement and no liability whatsoever is accepted by finnCap Ltd for the accuracy of any information or opinions contained in this announcement or for the omission of any information.

Shareholder Circular

1. Introduction

The Circular sets out the background to, and reasons why the Board believes it to be in the best interests of the Shareholders as a whole for the Company to have authority to purchase its Ordinary Shares in the market. In addition, the Independent Shareholders will be asked to waive an obligation on the Concert Party which may arise under Rule 9 of the Takeover Code as a result of the Company purchasing its Ordinary Shares.

The Circular sets out details of the proposed buy back authority and contains the Notice of GM to be held at The Celtic Manor Resort, Coldra Woods, The Usk Valley, Newport, South Wales NP18 1HQ to consider the Resolutions necessary to approve the Buy-Back Authority and to approve the Waiver. The Company's annual general meeting, notice of which will shortly be sent to Shareholders together with the Company's accounts for the year ended 30 September 2012, will be held at 9.00 a.m. on 21 February 2013 at the same location as the GM.

2. Background to and reasons for the recommendation

The Board (acting through the Independent Directors) has considered a number of options, consulted with its advisers, and having taken into account the views of a number of existing Shareholders, believes it to be in the best interests of Shareholders as a whole for the Company to have authority to purchase its Ordinary Shares in the market.

Overall market liquidity has substantially reduced across the London Stock Exchange over the past few years, as the average daily value of secondary trading on the London Stock Exchange has declined from £8,529.0 million in 2007 to £4,785.7 million per day in 2011, a reduction of 44 per cent. If compared to the average daily volumes traded in the Ordinary Shares over the same time period, average daily volumes have declined from 43,184 Ordinary Shares traded per day to 35,790 Ordinary Shares per day, a decline of 17 per cent.

The Board is mindful of the financial impact a share buy-back may have on the Company. It has conducted a thorough exercise with regards to the capital requirements of the Group, its prospects and its funding available, whilst also taking into account the merits of providing greater short term liquidity for Ordinary Shares. The Board will only proceed to make market purchases at prices which make sense for the Company as a whole and there can be no certainty that any of the buy-back authority sought under the Resolution 1 will be utilised. The Directors have confirmed that none of them will, nor do they have any current intention to, sell any of the Ordinary Shares which they beneficially own to the Company should the Company utilise the Buy-Back Authority.

3. General Buy-Back Authority

The Board would, in appropriate circumstances, like for the Company to buy-back Ordinary Shares in the market. The Board proposes to seek Shareholder approval to have the authority to buy-back Ordinary Shares, up to a maximum of 8,533,352 Ordinary Shares representing 10 per cent. of the issued ordinary share capital of the Company as at 4 December 2012, in the future. If approved by Shareholders, the Buy-Back Authority would be exercisable until 18 months after the date of the GM and it is the current intention of the Board to thereafter renew this authority annually subject to any considerations of the Takeover Code. The maximum price payable for the purchase by the Company of its Ordinary Shares will be limited to 5 per cent. above the average of the middle market quotations of such Ordinary Shares, as derived from the Daily Official List of the London Stock Exchange, for the five Business Days prior to the purchase. The minimum price permitted to be paid by the Company for the purchase of any Ordinary Shares will be 1p per share (being the amount equal to the nominal value of an Ordinary Share).

The Directors would use the Buy-Back Authority with discretion and purchases would only be made from the Company's distributable reserves not required for other purposes and in the light of market conditions prevailing at the relevant time. In reaching a decision to purchase any Ordinary Shares, the Directors would take account of the Company's cash resources and capital requirements and the effect of such purchases on the Company's business. Additionally, the Directors would only make market purchases if satisfied that any such purchases would be in the interests of Shareholders generally. No announcement will be made by the Company in advance of market purchases, but any purchases made by the Company would be announced by 7.30 a.m. on the Business Day next following any buy-back transaction.

Any Ordinary Shares which are bought back by the Company pursuant to any exercise of the Buy-Back Authority will be financed from the Company's cash resources or through bank facilities available at such time.

Pursuant to section 724 of the Act the Company is entitled, on buying back its own shares, to hold such shares in treasury for subsequent sale, transfer for the purposes of or pursuant to employee share schemes, or cancellation as an alternative to cancelling them immediately. The Directors currently intend to hold any Ordinary Shares purchased under the Buy-Back Authority in treasury pursuant to such powers.

4. City Code on Takeovers and Mergers

Under Rule 9 of the Takeover Code, any person who acquires, whether by a series of transactions over a period of time or not, an interest (as defined in the Takeover Code) in shares which (taken together with shares in which he is already interested and in which persons acting in concert with him are interested) carry 30 per cent. or more of the voting rights of a company which is subject to the Takeover Code, is normally required to make a general offer to all the remaining shareholders to acquire their shares.

Similarly, when any person, together with persons acting in concert with him, is interested in shares which in aggregate carry not less than 30 per cent. of the voting rights of such a company but does not hold shares carrying more than 50 per cent. of such voting rights, a general offer will normally be required if a further interest in shares is acquired by any such person or any person acting in concert with him.

An offer under Rule 9 must be in cash and at the highest price paid for any interest in shares of the Company by the person required to make the offer or any person acting in concert with him within the 12 months prior to the announcement of the offer.

Under Rule 37 of the Takeover Code, when a company purchases its own voting shares, any resulting increase in the percentage of shares carrying voting rights in which a person or group of persons acting in concert is interested will be treated as an acquisition for the purpose of Rule 9.

The Company's largest shareholder, Cap Z, is currently interested in 29.5 per cent. of the Ordinary Shares, and Robert A. Spass, a founding partner of Cap Z, is interested in a further 0.1 per cent. of the Ordinary Shares as detailed below. Cap Z and Robert A. Spass are deemed to be continuing to act in concert for the purposes of the Takeover Code.

The current interests in Ordinary Shares of the Concert Party and the percentages of the voting rights in the Company attributable to such interests are as follows:

If the Company buys-back shares under the Buy-Back Authority and at the time the voting rights attributable to the interests in Ordinary Shares of the Concert Party exceeds more than 30 per cent. of such voting rights, an obligation under Rule 9 of the Takeover Code would arise on one or more of the Concert Party to make a cash offer for the issued shares of the Company not already owned by them.

The Panel has agreed, however, to waive the obligation to make a general offer that would otherwise arise on the Concert Party as a result of the buy-back by the Company of any Ordinary Shares and under the Buy-Back Authority subject to approval on a poll by the Independent Shareholders of Resolution 2 as set out in the Notice of GM.

Following completion of the Transaction, the Concert Party will between them be interested in shares carrying more than 30 per cent. of the Company's voting share capital but will not hold shares comprising more than 50 per cent. of such voting rights, and, for as long as they continue to be treated as acting in concert, any further increase in that aggregate interest in shares will be subject to the provisions of Rule 9 of the Takeover Code.

Waiver

The Waiver described in Resolution 2, which is conditional upon the passing of Resolution 1, applies only in respect of increases in the percentage interest of the Concert Party resulting from purchases by the Company of its own shares under the Buy-Back Authority and not in respect of other increases in the Concert Party's interests in Ordinary Shares.

Potential interests in Ordinary Shares of the Concert Party following exercise of the Buy-Back Authority

If the Buy-Back Authority set out in Resolution 1 of the Notice of GM is exercised in full and assuming no disposals of Ordinary Shares by any member of the Concert Party and no issues of Ordinary Shares by the Company in the meantime, the interests in Ordinary Shares of the Concert Party and the percentage of the voting rights in the Company attributable to such interests would be as follows:

The intentions of the Concert Party

The members of the Concert Party have each confirmed to the Company that they are not proposing, following any increase in their percentage interests in Ordinary Shares or voting rights as a result of any buy-back of its Ordinary Shares by the Company to seek any change in the composition of the Board or the general nature of the Company's business.

The members of the Concert Party have also each confirmed that they have no intention to make any changes regarding the future of the Company's business, the locations of the Company's places of business and the continued employment of its employees and management (and those of its subsidiaries) as a result of any increase in their percentage interests in Ordinary Shares or voting rights as a result of a buy-back of its Ordinary Shares by the Company nor will there be any redeployment of the fixed assets of the Company as a result of such an increase.

The Company intends to remain quoted on AIM in the event the Buy-Back Authority is exercised in whole or in part at any point within the authority being requested.

5. Current Trading and Outlook

The Company published its financial results for the year ended 30 September 2012 on 5 December 2012. The Company's Annual Report and Accounts are available on the Company's website, www.jelfgroup.com. Trading since 1 October 2012 has been in line with the Board's expectations and the Board looks forward to the progression of the business during the rest of the current financial period.

6. Action to be taken

A Form of Proxy for use in connection with the GM is also enclosed with the Circular. Shareholders are asked to complete and return the Form of Proxy in accordance with the instructions thereon as soon as possible and, in any event, so that it is received not later than 48 hours before the time of the GM. The completion and return of the Form of Proxy will not preclude Shareholders from attending the GM and voting in person if they so wish. Shareholders should return the Form of Proxy to Capita Registrars, PXS, 34 Beckenham Road, Beckenham, Kent BR3 4TU.

7. Irrevocable Undertakings

The Company has received undertakings from Cap Z and Robert A. Spass: (i) to vote in favour of Resolution 1 (being the Resolution to authorise the Buy-Back Authority); and (ii) not to vote on Resolution 2 (being the Resolution to approve the Waiver), who together have an aggregate beneficial holding of 25,250,000 Ordinary Shares amounting to 29.6 per cent. of the issued ordinary share capital of the Company. 

The Independent Directors have undertaken to vote in favour of the Resolutions in respect of their aggregate beneficial holding of 5,228,585 Ordinary Shares amounting to 6.1 per cent. of the issued ordinary share capital of the Company.

The Company has therefore received undertakings to vote in favour of Resolution 1 in respect of beneficial holdings amounting to 30,478,585 Ordinary Shares representing 35.7 per cent. of the issued ordinary share capital of the Company and to vote in favour of Resolution 2 in respect of beneficial holdings amounting to 5,228,585 Ordinary Shares representing 6.1 per cent. of the issued ordinary share capital of the Company.

8. Recommendation

Jonathan Kelly, who is a partner of Cap Z, and therefore connected within the meaning of the Act, and a Director of the Company, has not taken part in any decision of the Board relating to the proposal to seek the Waiver from the Panel since the Concert Party (of which Cap Z is a member) is subject to the Waiver, nor will any member of the Concert Party vote on Resolution 2.

The Independent Directors, who have received financial advice from finnCap, believe that the market purchase by the Company of its Ordinary Shares under the Buy-Back Authority is in the best interests of Shareholders as a whole and that it may be appropriate in the future for the Company to buy-back its Ordinary Shares under the Buy-Back Authority. However, the Board would not be prepared to recommend the buy-back of any Ordinary Shares pursuant to the Buy-Back Authority granted by the passing of Resolution 1 without the passing of Resolution 2 to approve the Waiver.

The Independent Directors, who have been so advised by finnCap, believe that the proposed Transaction is fair and reasonable and in the best interests of the Independent Shareholders and the Company as a whole. In providing advice to the Independent Directors, finnCap has taken into account the Independent Directors' commercial assessments.

The Independent Directors therefore unanimously recommend that Shareholders vote in favour of the Resolutions in the Notice of GM as they intend to do in respect of their own interests in 5,228,585 Ordinary Shares in aggregate, representing approximately 6.1 per cent. of the Ordinary Shares currently in issue.