Jelf reports £0.4m operating loss

Jelf has made an operating loss of £0.4m from the £1.6m it made last year in the six months ending 31 March 2009. Group chief executive Alex Alway said this was due to ‘the impact of restructuring costs and increased amortization’.

Financial highlights of the results include:

• 40% growth in revenue to £35.0m (2008: £25.0m)

• 11% growth in EBITDAE to £3.5m (2008: £3.1m)

• 5% organic revenue growth in Employee Benefits

• Cash generated from operations of £8.3m (2008: £6.5m)

• 10% EBITDAE margin (2008: 12%)

"Market conditions remain extremely difficult and I do not expect that to change this year. Furthermore we have yet to see the benefits of a hardening of insurance rates in the market. Despite these external factors, the overall growth in our revenues and profits highlights the resilience of the business. However, I do expect the economic downturn to continue into next year and this will present fresh challenges to both our clients and the Group which will have to be addressed,” said Alway.

Jelf revealed that its organic growth (ex-acquisitions) had declined in the first half as a result of the economic downturn. “We achieved positive organic growth in Employee Benefits and Commercial Finance, but Insurance and in particular Wealth Management experienced negative organic growth due to the difficult economic and investment climate. Our overall organic growth was negative (-6%), but remained largely flat excluding Wealth Management,” said group chairman David Walker.

The group said the market for advice on employee benefits remains resilient and the Group continues to enjoy a strong competitive position in this area. But it added that the market for wealth management advice had been ‘extremely difficult in the current economic environment.’

Jelf said it would not invest in more acquisitions during this period due to lack of value.

Earlier this year 3i QPE, which holds a 28% stake in Jelf Group, was acquired by parent company 3i. There was speculation that 3i would sell its stake in Jelf but Alway said 3i remained committed. Bruce Carnegie-Brown, managing partner of 3i QPE left the private equity giant ahead of the acquisition.

“I would also like to record our thanks to Bruce Carnegie-Brown, who retired from the Board in April 2009 following the acquisition of 3i QPE by the wider 3i Group. Bruce has made a valuable contribution to the Group in the last year, and we wish him well for the future,” added Walker.