SUBSTANTIAL ACQUISITION OF SPS WELLBEING
25 January 2007
Jelf Group plc ("Jelf" or "the Group"), the leading corporate and financial consultancy group, is pleased tannounce that it has acquired the entire issued share capital of Hampshire based SPS Wellbeing Ltd ("SPS Wellbeing"), a market-leading specialist healthcare and group risk intermediary, for a maximum consideration of £10.0m (subject tcompletion accounts and the achievement in full of performance targets).
Highlights:
- As acquisition prospects in this market diminish, the deal represents one of the few remaining opportunities tacquire a large and successful privately-owned specialist healthcare intermediary.
- Between them, Jelf and SPS Wellbeing now place c. £125m of premiums with healthcare and group risk insurers, positioning Jelf in a dominant market position as one of the top UK healthcare intermediaries.
- The SPS Wellbeing client list includes around 1,600 SME corporate clients, 160 larger corporate clients, around 2,250 schemes and 3,000 individuals. These clients will benefit from the full range of Jelf Group services, including the Group's market-leading on-line flexible benefits offering.
- The market for employee benefits, and especially healthcare services, is expected tcontinue tgrow, reflecting the increasing importance temployers of private medical provision as part of an attractive and motivational remuneration package for employees:
- Over 60% of large corporates now offer employee benefits packages treward staff
- The UK is 2nd only tthe Netherlands in terms of corporate spend on benefits in Europe
- Flexible benefits, where employees can select their 'rewards', are gaining in popularity; these can include PMI, dental treatment, gym membership, life assurance and childcare vouchers
- The continuing series of acquisitions in the general insurance sector means that, in addition, Jelf is now placing c.£100m of premiums with insurance providers, consolidating Jelf's position as a top ten intermediary in this sector.
Terms of the acquisition:
- The maximum consideration of the acquisition is £10.0m, subject tcompletion accounts and the achievement in full of performance targets.
- The initial consideration is £6.40m with £6.22m in cash and £0.18m in shares, and is tbe satisfied by the issue and allotment of new ordinary shares in Jelf (being 76,133 shares at an issue price of 245p per share).
- There is further consideration, payable in cash, depending on the retention of the existing client base and the resulting revenue stream generated by SPS Wellbeing during the twyears following completion. The projected payments are in year one £1.87m and £0.83m in year two. Any additional consideration up tthe maximum consideration of £10m will be subject tfinal audited completed accounts.
- Jelf has today applied 76,133 new ordinary shares tbe admitted tAIM. Admission is expected ttake place on 31 January 2007. These consideration shares have been issued entirely tAndrew Grigg, whwill remain on the board of SPS Wellbeing Ltd; he is joining the senior management team of the Jelf Group and will continue as Managing Director trun SPS Wellbeing.
- The initial consideration has been financed out of a new £20m facility entered intwith the Royal Bank of Scotland.
- The remaining founders will stay with the business in a consultancy capacity tensure a smooth transition.
- In the last audited accounts of SPS Wellbeing Ltd. dated 31 March 2006, the company achieved normalised profit before tax of £0.5m on turnover of £3.86m, and net assets of £0.65m. Over the last three years turnover has increased from £3.1m in 2004 t£3.86 in 2006.
- Agreed cost savings and financial restructuring will generate significantly higher profits going forward.
- SPS Wellbeing will remain as a stand-alone operating company within the Jelf Group.
Alex Alway, Group Chief Executive of the Jelf Group, comments: "The case for acquiring SPS Wellbeing is compelling in terms of the quality of the people, the clients and the opportunity tengineer future profits. The acquisition will position Jelf as a real powerhouse in the healthcare market, complementing our existing strong position in the insurance market. In addition, the Hampshire location fits with our objective of becoming the premier corporate consultancy in the South of England and Wales".
Andrew Grigg, Managing Director of SPS Wellbeing, comments: "We have developed steadily over the last 25 years, but it is now time tmove ontthe next stage of growth. Joining forces with a group as like-minded as Jelf will be extremely advantageous for both our clients and employees. The fact that our clients will benefit from the Jelf Group's innovative on-line benefits solution is very exciting."
ENQUIRIES
Jelf Group
Alex Alway, Group Chief Executive
01454 272713
Rose Clark, Group Financial Controller
01454 272853
Pelham PR
Polly Fergusson
020 7743 6362
Philip Dennis
020 7743 6363