The Directors’ strategy is to differentiate the Group from larger organisations by creating a profitable corporate niche that we believe will produce a platform to enable the Group’s employees and services to succeed. It is the Directors’ intention that the Group act as a ‘consolidator’ in the market and to pursue this strategy using both organic and acquisitional growth.

The Board has identified a number of internal pressures relating to the sectors of the financial and insurance market in which the Group operates which are seen as providing business opportunities. The Board believes that these fall into the following categories: 

Regulation

The minimum levels of solvency requirements are, in the opinion of the Directors, unlikely alone to be a barrier to new entrants. The Directors believe that increasing regulatory requirements dictate that a certain scale must be attained before it becomes economically viable for a new, directly regulated, firm or individual to establish a start up.

The Directors believe that the increased focus on solvency will inhibit those intermediaries without access to significant equity capital from acquiring other firms. The goodwill associated with these acquisitions will be disallowed for solvency calculations from 2008. On the assumption that most “people businesses” are likely to have an enterprise value largely consisting of goodwill, unless a purchasing firm has an otherwise strong balance sheet the large proportion of goodwill compared with assets allowable for the purposes of satisfactory solvency requirements will, in the Directors opinion, be likely to inhibit purchases. The Directors believe that this will reduce the number of serious purchasers in the market and restrict price inflation over the medium term.

The Directors also believe that it will be the middle tier of provincial brokers, who have embarked previously on a consolidation process without long term access to significant equity capital, which will be most affected by this market pressure. Jelf Group will look to provide a business framework for consolidation of certain of these brokerages.

Ageing population

A substantial number of brokers within the sector are in their late 50s and accordingly a significant number may need to put in place succession plans for their businesses. The Directors believe that the principals of these businesses would, in the main, prefer to hand their business over to those with similar aspirations. Jelf Group provides an exit proposition that offers professional management, access to funds and a broking team known to these principals.

Skill shortage

The Directors believe that a lack of individuals with both technical and client management skills in the sector makes it difficult for service businesses to grow. The Group’s strategy to overcome this human resource issue is to focus on recruitment and training.

Training and Development

The Group has appointed a training and competency manager with the objective of developing the skills of its existing employees. The development of its staff and the attainment of relevant industry qualification by the Group’s employees is a key goal for the Group. The Jelf Group has a proven track record of recruiting and retaining qualified individuals which the Directors believe will be of significant use as it becomes a consolidator.