Jelf: a thriving services firm Jelf Group is a provider of financial services and advice to businesses and individuals. Jelf provides insurance broking services, alongside employee benefits and financial planning. This is achieved through a network of more than 30 offices across Great Britain. Jelf was brought into being more than twenty-five years ago and its shares have been quoted on AIM for over a decade. Some of Jelf’s growth along the way has been due to acquisitions of similar businesses. Jelf integrates these firms, typically realising significant synergies. In the past, this has been achieved using cash and/or shares.
thrives when businesses are forced to outsource all or part of their pension/benefits Its activities make Jelf easily compared with other stocks such as Mattioli Woods and Brooks Macdonald: two of AIM’s most successful companies of recent years. Jelf thrives when businesses are forced to outsource all or part of their pension/benefits provision. In a growing economy, the requirements of SMEs in particular grow quickly. Jelf profits as its services are typically required for the long term. Jelf’s offering is also ‘sticky’ as the upheaval involved in moving to another supplier would be a significant distraction for a business. Jelf’s most recent results, announced in December of last year (Jelf has a 10
September year end), showed a big advance on the previous year. Although revenues were ahead just 8%, a significant margin increase led to profit after tax surging 40% to £6.5m, with fully diluted EPS 35% ahead at 5.4p. The total dividend for the year was increased from 1.5p to 2.0p — the third successive year of increases. Debt came down fast, assisted by strong cash flows. In the twelve months, net debt fell from £13.5m to £5.7m. Jelf’s 2014 performance was boosted by the first full year’s contribution from 2013 acquisition The Insurance Partnership. However, the are signs that further strong growth is still to come.
margin increase led to profit after tax surging 40% to £6.5m Jelf is particularly bullish about the possibilities offered by pension changes, with final results declaring “major changes in the pensions regime, create considerable freedom for individuals to make their own choices regarding their pension savings. It is the most radical change to pensions in almost a century and will provide a significant opportunity for advice-led businesses such as Jelf” Consensus market forecasts reflect
underlying EPS projected to increase by 85% in 2015 this expectation, with underlying EPS projected to increase by 85% in 2015 before moderating in 2016. The company remains on the acquisition trail. At the end of December, Jelf announced the acquisition of Beaumonts Insurance, a deal that is expected to see gross written premiums increase by around 25% and immediately enhance earnings. Shares in Jelf have risen significantly since results were announced. On a P/E basis, the current valuation is ahead of the market. However, Jelf is a successful company with several economic and industry changes already working in its favour. Jelf Group (LON:JLF) FOR Well-positioned for change Longstanding success AGAINST Competitive marketplace High valuation Market cap Bid:offer NAVps Yield (forecast) 52week low:high
£153m 177p:183p 18 1.20% 110p:188p
Published on Apr 6, 2015