Insurer has reduced debt by £17m in past year
Jelf insurance chief executive Phil Barton claims the consolidator is in much better financial health than many of its rivals and is likely to return to acquisitions next year.
Barton said Jelf had worked hard at building the balance sheet and trimming debt – last reported at £13.6m, compared to £30.6m this time a year ago.
He said acquisitions would probably be bolt-ons, pointing out that the 15,000-sq-ft office in Manchester had plenty of space to fit in new buys.
“Because we’ve worked so hard in building our balance sheet and reducing our debt, our deferred consideration is minimal now. We’re in great shape to take advantage of the debt finance markets, unlike many of our peer group who are grappling with very, very significant debt finance issues,” said Barton, who reports to Jelf’s group chief executive, Alex Alway.
Barton explained that Jelf could fund acquisitions through debt, equity finance or both.
He said: “We are very keen to get back on the acquisition trail in 2011. We believe there’s still opportunity out there. Obviously, prices have come off from the high of 2007 and 2008.
“New investor Cap Z is very supportive of that idea, it is clearly one of the attractions it saw in our business, that we have the capability to make acquisitions.”
Barton said the FSA had signalled its approval of Jelf’s changes to its client money handling.
Following the lessons learned from the financial crisis, and the demise of Lehman Brothers, the FSA is demanding that brokers separate client money from the day-to-day activities of the rest of the company. Barton said it was a “huge amount of work”.
He said: “We have agreed a process that has enabled us to gain client consent to move our client money accounts from one limited company into the new limited company.
“It’s a particular challenge for anyone who has acquired businesses, but we are at the forefront of businesses that have resolved the issue, so we have no legacy around client money.”