Alex Alway

It has been a taxing week for Alex Alway. The Jelf Group chief executive is spending his fourth consecutive day in London meeting investors who want to analyse the Alternative Investment Market-listed company’s full-year results. The biggest concern for Alway and Jelf’s shareholders, however, is the company’s share price, which has fallen by more than 70% over the past year (chart, below). Alway prefers to accentuate the positive, insisting it is now a fantastic value stock.

The week did not get off to the best of starts, he says. His journey from the company’s Bristol base, accompanied by group financial director John Harding, was sidetracked by snow.

Meeting Insurance Times in the lobby of the Westbury hotel in Mayfair, Alway is looking forward to heading home, but rues his luck when he hears more snow has fallen in the South West.

There was some good news in Jelf’s results for the year to 30 September 2008. Group revenue rose 59% to £63.1m, aided by three hefty acquisitions: Manson, Clarke Roxburgh and Argyll. One of the highlights for Alway was 5% organic growth across the group. “Generally, we have had a positive response to what we have done,” he says. The group’s pre-tax profit fell from £4.2m to £3.5m, but Alway is defiant. “The market around us – the AIM and the economy – is pretty tight, pretty tough. Against that backdrop, I think we have had a reasonable response.”

But what of the share price? Jelf was trading at 275.50p in April and is now closer to 70p – including a small rally after the results were published. Alway admits the decline has not been easy to watch. “It has been painful,” he says. “But a lot of our staff and management have bought shares over the last year, so I think they can see the fantastic value there. If you can see staff and management buying shares, it gives you confidence that you are doing something right.”

Jelf, which has 1,100 employees, has been on the stock market for four-and-a-half years – and Alway is in no doubt that the past 12 months have been the most challenging. “Apart from the last year, we have had four good years of being on AIM and an awful lot of people in Jelf that have made money,” he says. He has no regrets, he claims, because his company is “doing better than most”.

Running a listed business has taught him a lot, notably how to dodge questions by referring to stock market rules. “That’s the difference between me and the others [Jelf’s rivals]. Anything I do is in the public arena,” he quips.

Asked whether the company might delist, he hesitates – then brandishes his get-out-of-jail card. “I would have to declare intention to the stock market.” But he adds: “The reality is, we have a job to do, which is to deliver the profits and also look after the clients and staff.”

Jelf’s biggest shareholder is private equity firm 3iQPE, which owns a 28% stake. 3i, which owns 40% of 3iQPE, has its own financial worries, but insists it is committed to Jelf. Other investors include Allianz, Norwich Union and Artemis.

Alway’s own stake in the business is just over 2%. He calls this share “comfortable”, but is in no rush to increase it. “The great thing about Jelf shares is you can buy and sell them on the stock market. If as an individual I wanted to buy more, I could just go to the stock market and buy them,” he says.

“I don’t know if you noticed but I did buy some the other day. I think Jelf is a great business and I have no problem investing my own money in it.”

His holding is small compared to many other broker chief executives, whose businesses are mostly privately owned. He doesn’t see this as a disadvantage, however. “Because I have a decent stake, the other shareholders know I’m working on their behalf, so there is no disparity.

“If there was a bigger holding, say 90%, and a small minority, the minority would feel perhaps I am working against them. But my interests are closely aligned to the other shareholders.”

Alway says comparisons between his business and other consolidators such as Giles, Towergate and Oval are way off. “Trying to compare us with some of the proprietor-owned businesses out there is a mistake because, realistically, we are a totally different animal,” he says.

“I see myself being lucky to be able to switch between different markets. In insurance, you might consider those names [the consolidators] to be in your peer group – but we have a very big healthcare and employee benefits business so I would see Aon as a competitor in that market. We look to try to benchmark ourselves against those firms. But on a day-to-day basis, I don’t give it any thought at all.”

What he does give a lot of thought to is the wider economy. The company is keen to turn revenue into profit and to cut costs, but he knows that the strain could soon be felt by its clients.

“If I look outwards the concerns we have are our clients’ concerns. We are in a difficult economic climate and we say to ourselves, ‘What is going to happen to our clients?’ We are seeing so many businesses in trouble but we feel confident about our own set of numbers because we are spread across so many areas.”

These areas include financial services and wealth management, as well as healthcare and employee benefits. Alway is now searching for organic growth through cross-selling. “The biggest thing that drives the organic growth in Jelf is the cross-sales. We are slightly different to our competitors in that we have four or five different areas where we offer it to the client and that provides us with a real opportunity to get good solid organic growth.”

According to the Jelf boss, the AIM is in the midst of a “buyers’ strike”. So does he think he will need to sell the business to get the best value? “People have asked me, am I selling Jelf? I was at a meeting and I said, ‘Hands up all those people that have bought and sold Jelf shares’, and everybody in the room did. So the reality is everybody’s buying and selling Jelf all the time.”

Only Alway knows the final answer – but don’t expect to hear it before the stock exchange.