Jelf: firing on all cylinders

Alex Alway has every right to be delighted with Jelf’s full-year results.

The numbers would make Alway’s rivals at companies such as Towergate, Oval and Giles green with envy.

Unlike some of its peers, Jelf is profitable on both a statutory profit after tax basis and when measured using the broking world’s preferred metric of earnings before interest, tax, depreciation, amortisation and exceptional items (EBITDAE).

Cost-cutting was not a big factor. Administrative expenses at Jelf were up slightly on the previous year.

Jelf’s 15% EBITDAE margin –  earnings as a percentage of revenues  – may not be up there with Oval’s 17% or Towergate’s market-beating 36.4%, but Jelf has the extra costs and infrastructure that come with being a listed company.

Also, the company is not laden with debt. Thanks to some early repayments, the broking group ended its 2012 financial year, which runs to September 30, with a net cash position of £2.8m, compared with the previous year’s net debt position of £3m.

This, in turn, has allowed it to pay its first ever dividend, which could attract new types of shareholders. Moreover, it now has a share buy-back allowance in place to allow it to smooth volatility in stock price that is common to smaller, less frequently traded AIM-listed companies.

More impressive still is that the company has achieved all this without making an acquisition for four years. Its last acquisition was in 2008, when it bought brokers Manson and Godfrey Moore.

With its performance, Jelf has shown not need to do acquisitions to continue grow and be profitable. However, the net cash position and early repayment also shows that Jelf has the financial muscle to make acquisitions, if it finds something it likes.  

Like many of its rivals, Jelf has diversity, so it is not relying on any one area and has the opportunity to cross-sell between divisions.

Its Purple Partnership network, from the information available, seems to be going from strength to strength and attracting members.

Jelf cannot afford to rest on its laurels, and Alway knows this. Times are tough for brokers. Clients and insurers are putting them under pressure to reduce commissions because of the challenging economic climate and new business opportunities are thin on the ground as businesses cut back on their insurance spend.

However, Jelf is firing on all cylinders and has an array options to help it combat the tough conditions. Not many UK brokers can say this.