Chiefs whose firms were snapped up in consolidator’s boom years are now winners
Jelf paid around £8.7m in deferred payments to broker bosses last year following the share issue that raised £17.7m, it has emerged.
Jelf paid the broker bosses, whose businesses were snapped up during the consolidator’s growth years, in a combination of cash and shares, the 2010 annual report reveals.
The payouts made Jon Manson, who sold his Manchester-based brokerage Manson in January 2008, the largest individual shareholder in the business, with a 9.71% stake.
The payouts helped Jelf to trim net debt from £30.7m in September 2009 to £7.3m as of March 2011.
- The biggest winner was Jon Manson who, with his partners, received £2.57m in Jelf shares and payments of £232,000.
- Jelf paid £2.57m to the owners of John Lampier and Sons Limited, after buying the firm three years earlier.
- The Bristol-based business handed over £2.5m to Clarke Roxburgh shareholders, who only a year earlier received £1.8m.
- Argyll Insurance received £665,000 plus a share issue of £100,000.
In order to help make the deferred payments, Jelf issued shares to private equity firm Cap Z and a range of institutional investors.
Cap Z bought out 3i’s investment and now holds a 28.9% stake in Jelf, making it the largest shareholder. Allianz also holds a significant stake worth 7.2%.
The annual report shows that closing shareholder funds increased from £57.6m to £88.3m.
In 2009, Jelf took a £7.4m impairment charge, a writedown on the value of its assets, but last year there were no impairment charges.
Jelf made an after-tax profit of £883,000 for the year to 30 September 2010, a notable improvement on the £9.8m loss it made in the previous financial year. Administrative expenses were slashed 20%.
During the past six months Jelf has integrated all its acquisitions into three businesses: Jelf Brokers, Jelf Employee Benefits and Jelf Financial Planning.
Last year, Jelf negotiated a £24m debt facility with its lenders, with a repayment timetable set over the next five years.
Non-executive chairman Les Owen said: “Despite difficult trading conditions and an uncertain and fragile economy, which continues to badly affect our core SME clients, Jelf has performed in line with forecasts.
“We have maintained income at £70m and delivered a 21% increase in earnings before interest, taxes, debt and amortisation from £8.1m in 2009 to £9.8m this year.”
Chief executive Alex Alway added: “These results reflect our clear focus on clients. We fought hard to retain existing clients and to win new business, and kept a focus on cost management. This mantra will continue through 2011.”
Talking points
- Can Jelf's management satisfy its new investors that they will receive an adequate return on their investments?
- Having paid high prices for acquisitions pre-2008,
will Jelf be planning to take a much tougher stance
on acquisitions in 2011 and 2012?
- Jelf's management, who are on a share incentive reward plan, will be keen to see the share price rise as much as possible. The consolidator's share price has risen from around 45p to 60p in a year. Can it move further?
