Jelf

Interims to March from corporate and financial consultant Jelf, which advises on insurance, healthcare and employee benefits, made pleasing reading for investors.

On turnover lifted 128% to £17.1m, the deal-hungry group, which also advises on commercial finance and wealth management, grew its EBITDA by 120% to £1.8m, driving adjusted pre-tax profits 80% higher to £1.3m. Though earnings growth was a modest 3% to 3.9p, this reflected a large increase in the average number of diluted shares in issue.

Jelf reported strong sales growth across all divisions, with the organic growth rate a respectable 24%. ‘We were particularly pleased with the organic growth in employee benefits and wealth management,’ remarked chief executive Alex Alway, whose strategy is to create shareholder value by acquiring well-run small brokerages at sensible prices. The group is then able to take advantage of economies of scale and cross-selling opportunities, while organic growth is captured through the ability to offer a wider range of services. Alway insists that recent acquisition SPS Wellbeing, a specialist healthcare and group risk intermediary bought for up to £10m, is performing ahead of expectations.

Investors should note Jelf’s results are significantly biased towards the second half, since April is a key month due to the start of the tax year and this year’s latter half will also reflect the benefits of recent acquisitions. For the year, Daniel Stewart’s Justin Bates expects Jelf to deliver adjusted profits of £6m and 16.2p of earnings, rising to £7.2m and 19.4p for 2008, placing the shares on forward ratings of 16.7 and 14. Undemanding for a company that is handsomely placed for growth as an independent and that could also prove attractive to a corporate predator over the longer term. Add.