Acquisition of Kelquota Limited and its Subsidiaries ("Clarke Roxburgh")
03 April 2008
Jelf Group plc, the Bristol-based independent full-service brokerage which supports businesses and related individuals, is pleased to announce that it has acquired the entire issued share capital of Clarke Roxburgh and its subsidiaries; Clarke Roxburgh Insurance Brokers Ltd ("CRIB"), Clarke Roxburgh Financial Planning Ltd and Clarke Roxburgh Mortgages Ltd.
Highlights
- Substantial increase in Gross Written Premium ("GWP"): the acquisition of Clarke Roxburgh together with the recently-announced acquisition of Argyll Insurance Holdings Limited ("Argyll"), will increase the GWP placed by the Group with insurers from approximately £175 million to approximately £242 million (an increase of £67 million or 38%). CRIB represents £46 million of this growth. In addition, Jelf places approximately £150 million GWP with healthcare providers, taking the overall total of insurance and healthcare GWP to £392 million Increased geographical footprint: Clarke Roxburgh operates from ten locations across the West Midlands from Redditch to Ross on Wye
- Complementary services: the range of services offered by Clarke Roxburgh is complementary to the Jelf proposition. Jelf will strengthen the core offering of general insurance and wealth management and provide access to new services, including employee benefits, healthcare and commercial finance
- Funding: the acquisition of Clarke Roxburgh will be satisfied by an initial consideration of £18.34 million to be paid in cash and shares. The acquisition will be partially funded by bank debt (from the existing £40 million facility with RBS)
Alex Alway, group chief executive of Jelf Group plc, says:
"We are delighted with this acquisition. Clarke Roxburgh is one of the leading regional insurance brokers with a strong reputation in the market. Our corporate activity continues and the acquisitions of Clarke Roxburgh and Argyll represent nearly a 40% increase in our insurance GWP, taking us to £242 million."
ENQUIRIES:
Jelf Group plc
Alex Alway, Group Chief Executive
01454 272713
Rose Clark, Director of Finance
01454 272853
Cenkos Securities plc
Ian Soanes/Max Hartley
020 7397 8900
Pelham PR
Polly Fergusson
020 7743 6362
Damian Beeley
020 3178 2253
Introduction
Jelf is an established corporate intermediary with operations in the North West and Southern England and South Wales, offering a range of financial services to corporate clients principally in the areas of commercial insurance, healthcare, employee benefits, wealth management and commercial finance.
Clarke Roxburgh
On 2 April 2008, Jelf acquired the entire issued share capital of Clarke Roxburgh and its subsidiaries (Clarke Roxburgh Insurance Brokers Ltd, Clarke Roxburgh Financial Planning Ltd and Clarke Roxburgh Mortgages Ltd). Clarke Roxburgh, based in the West Midlands, comprises a general insurance broker and a financial services and mortgage broker.
Besides adding significant GWP (2007: approximately £46 million) to Jelf's core general insurance income, the Clarke Roxburgh acquisition will also extend Jelf's geographical footprint as Clarke Roxburgh operates from ten locations across the West Midlands.
The first payment of the initial consideration of £16.51 million in cash and shares was paid at completion, and comprises £15.79 million in respect of the business of Clarke Roxburgh and £0.72 million in respect of its estimated net assets. From this initial consideration, £8 million is subject to retention arrangements and certain specified conditions of release.
The balance of the initial consideration, estimated at £1.83 million, is subject to adjustment by reference to the completion accounts, which will test the level of net assets at completion and the income streams of Clarke Roxburgh in the 12 months preceding the completion date, and will be paid in cash.
Deferred consideration in relation to the 24-month period following completion has two elements. The first element relates to the maintenance of the existing turnover and may result in the payment of up to but not exceeding £8.61 million in cash. Failure to achieve these targets may result in a reduction in the amount paid. An additional amount estimated at £0.86 million is contingent upon these targets being exceeded. This amount would be payable in cash and is not subject to maximum limitation.
The vendors are also incentivised to introduce Jelf services to new and existing clients of Clarke Roxburgh in the period of 24 months following completion of the acquisition.
For the year ended 31 March 2007, Clarke Roxburgh reported profit before tax of £0.60 million (2006: £0.59 million) on turnover of £10.76 million (2006: £10.06 million) and as at 31 March 2007, Clarke Roxburgh had net assets of £2.33 million as at 31 March 2007 (2006: £1.84 million).
Outlook
GWP in the insurance and healthcare sectors is a key factor in negotiating commission rates with insurers where scale is an important driver of profitability. Clarke Roxburgh takes Jelf's insurance GWP from approximately £196 million (following the recent acquisition of Argyll Insurance Holdings Limited) to £242 million. This further establishes Jelf's position as one of the UK's leading independent insurance brokers.
Jelf is actively pursuing a growth policy via organic development and targeted acquisitions of profitable insurance and healthcare brokerages. The Board expects the current trend of consolidation to be maintained and plans to continue to capitalise on the opportunities this creates.