JLF.L Regulatory News (JLF)

26 Jan 2006 07:21

Jelf Group PLC26 January 2006 JELF GROUP plc PRELIMINARY RESULTS FOR THE YEAR TO 30 SEPTEMBER 2005 2005 2004 % Turnover £11.5m £ 8.46m +36% Operating margin (pre goodwill) 11.2% 9.3% +20% EBITDA £1.42m £0.88m +62% EPS 5.0p 3.2p +56% Highlights: • Strong organic growth from the Group's 3 main business areas; healthcare, general insurance and financial services • Successful integration of a number of acquisitions - Managed Healthcare Ltd and A Wills & Co Ltd • Business development - Recruitment of a team to develop commercial insurance business in Cardiff and launch of a service providing commercial finance advice • Increasing opportunities to cross sell all services to its corporate client base of 6500 • Good acquisition opportunities available caused by changes in the regulatory regime • Market position strengthened by consolidating effect of acquisitions and continued organic growth • 2006 expected to be another year of significant progress Christopher Jelf, Chairman, says: "I am delighted to be able to report another year of strong trading performancefor the Group in all its core markets. I am particularly pleased that we havecontinued to develop a Group wide culture of referring clients internally whennew services are required. This approach has underpinned strong organic growthacross the Group, generating healthy cash flows this year. In addition we have made a number of acquisitions including Managed HealthcareLtd, A Wills & Co Ltd and the South West based commercial insurance operationsof a competitor. This activity is in line with our strategy of growing bothorganically and by complementary acquisitions". Enquiries:Alex Alway, Group Chief Executive, Jelf GroupJohn Harding, Group Finance and Operations Director, Jelf GroupTel: 01454 272799Ian Seaton, Bankside Consultants0207 367 8891 Chairman's statement I am delighted to be able to report another year of strong trading performancefor the Group in all of its core markets. I am particularly pleased that we havecontinued to develop a group-wide culture of referring clients internally whennew services are required. This developing approach has underpinned strongorganic growth across the Group, generating healthy cashflows this year. In addition, we have made a number of acquisitions including Managed HealthcareLtd, A Wills & Co Ltd and the South West commercial insurance operations of acompetitor. This activity is in line with our strategy of growing both organically and bycomplementary acquisitions. Financial results In the year ending 30th September 2005, the Group increased its turnover by 36%to £11.50m (2004: £8.46m) and achieved earnings before interest, tax,depreciation and amortisation (EBITDA) of £1.42m (2004: £0.88m). This representsa 62% increase. Operating margin, before goodwill, was 11.2% (2004: 9.3%); representing furtherprogress despite continuing internal investment. Consolidated shareholders' funds as at 30th September 2005 amounted to £4.43m(2004: £1.87m) representing an increase of 137%. The basic earnings per shareamounted to 5.0p (2004: 3.2p) In line with the Group's stated dividend policy, the Directors intend tocommence payment of dividends only when it becomes commercially prudent to doso, having regard to the availability of the Company's distributable profit andthe retention of funds required to finance future growth. As a result, the Boardis not recommending the payment of a dividend. Operations Our strong trading performance is reflected across healthcare, general insuranceand financial services; the Group's three main business areas. Healthcare The healthcare business provides advice on health related employee benefitissues and has increased its turnover by 14% to £2.44m (2004: £2.13m). Itachieved EBITDA earnings of £293k (2004: £167k) an increase of 75%. This growth has largely been achieved through acquiring new customers, asignificant number of whom have come through the Group's cross-selling strategy.In addition, the performance was assisted by a small acquisition early in 2005. Overall, the market for healthcare insurance providers has continued toconsolidate despite new providers, such as PruHealth, coming into the market.This consolidation has driven through to healthcare intermediaries; leavinglarge players, such as Jelf Corporate Healthcare, well placed to continue todevelop its business. Commercial insurance The general insurance business provides commercial insurance broking services tocorporate clients. It gives independent advice on all aspects of commercialinsurance, from research, design and provision of cover, to auditing, reviewingand enhancing clients' existing insurance provision. Turnover in this business has increased by 35% to £3.83m (2004: £2.83m), whilstEBITDA has increased by 27% to £581k (2004: £458k). 2005 has seen a year of softening premiums as more capital from existing and newinsurance carriers has been introduced into the market. This, in turn, hasserved to generally reduce earnings for insurance brokerages. However, the Grouphas continued to win new customer mandates which, coupled with a significantacquisition and establishing an insurance business in Cardiff, have resulted ina strong increase in earnings. Financial services An increase in investor confidence, in addition to a number of businessdevelopment initiatives and the acquisition of A Wills & Co Ltd, has generatedan increase in turnover for this business of 49% to £5.23m (2004: £3.50m).EBITDA has increased by 126% to £589k (2004: £261k). This business, which provides employee benefits advice to companies and wealthmanagement services to private clients, especially entrepreneurs, remains firmlyindependent following changes to the regulatory environment effective from 1stJune 2005. It will continue to develop its services in these key markets throughfocusing on provision of high quality advice. Organisational development A fourth business was established in the final quarter of the Group's tradingyear, offering commercial finance services (commercial mortgages, assetfinancing, debtor financing etc) to existing and new customers. We believe thiscompletes another stage in our strategy of being able to service all of ourclients' needs. The Group, as at 30th September 2005, operated out of eight locations and staffnumbers had increased by 26% to 185. It continues to invest in itsinfrastructure to ensure the business is properly supported, whilst alsocreating capacity for future growth. This investment includes: 1. Installation of a Wide Area Network to provide security and consistency of systems across all branches and Head Office. 2. Creation of a group-wide intranet facility to improve communications with all staff. 3. Strengthening core support functions to underpin the Group's growth strategy. Business development The highlights of the financial year include: • Strong organic growth across all three main operating areas • Strong operating cash-flows • Acquisition and integration of the client bank of Managed Healthcare Ltd • Acquisition and integration of the staff, management and client bank of A Wills & Co Ltd • Purchase of the South West commercial insurance operations of a competitor • Acquisition of the financial services client bank from accountants Crowther Beard • Recruitment and establishment of a team of commercial insurance account executives for our Cardiff operations • Launch of a commercial finance service These highlights are in line with our declared strategy of: • Acting as a consolidator within our core markets • Offering a broad range of services to corporate clients Acquisitions The Group continues to explore and develop a pipeline of acquisition andrecruitment opportunities. Changes in the regulatory environment for insurancebroking, which occurred in the early part of 2005, and included new reportingand solvency requirements have now started to take full effect within themarketplace. Whilst the effect of these changes has taken longer thananticipated to materialise we have recently detected a considerable increase inthe number of businesses putting themselves up for sale. In response to theseopportunities, the Group has appointed a Distribution Development Director toresearch and identify appropriate acquisition targets. The acquisitions this year have contributed to approximately £1m of the £3mincrease in turnover and yielded a margin of approximately 20%. Regulation The Group has embraced the new regulatory environment put in place whenregulation of the general insurance and healthcare markets was moved to be underthe remit of the Financial Services Authority (FSA). In addition, the Group welcomes the FSA's "Treating Customers Fairly" (TCF)initiative and has sought to integrate the key themes within the group-wideclient strategy currently under development. People The performance of the Group reflects the quality and professionalism of all itsemployees. The staff and management of the Jelf Group, along with theircommitment to, and relationships with, our clients, remain our biggest assets. The future The Group will continue with its strategy of strengthening its market positionby both acquiring and consolidating businesses, and creating value throughorganic growth activities. The challenges facing the Group from within our markets and the regulatoryenvironment will continue to demand high levels of professionalism from all ourpeople. The results for 2005 and the initiatives that we have put in place give usconfidence that 2006 is going to be another year of significant progress. Consolidated profit and loss account For year ending 30th September 2005 Notes 2005 2004 £'000 £'000 Turnover 1,2 11,501 8,461 - Continuing 10,529 7,807- Acquired 972 654Cost of sales (661) (372) Gross profit 10,840 8,089 - Continuing 8,938 7,436- Acquired 932 653Administrative expenses (9,870) (7,533) Operating profit 3 970 556 Income from other investments - 7Interest receivable 6 86 10Interest payable 7 (45) (50) Profit on ordinary activities beforetaxation 1,011 523 Taxation on profit on ordinaryactivities 8 (348) (199) Profit on ordinary activities after taxation 663 324 Dividends - - Retained profit for the year 18 663 324 Earnings per share: Basic 20 5.0p 3.2p Diluted 20 4.8p 3.2p All amounts relate to continuing operations. There are no recognised gains and losses other than those reported in the profitand loss account. Consolidated balance sheet As at 30th September 2005 2005 2004 Notes £'000 £'000 £'000 £'000 Fixed assets Intangible fixed assets 10 3,340 1,736 Tangible fixed assets 11 678 414 Investments 12 35 35 4,053 2,185 Current assets Debtors 13 6,159 3,178Cash at bank and in hand 1,946 1,401 8,105 4,579 Creditors: amounts falling duewithin one year 14 (6,975) (3,893) Net current assets 1,130 686 Total assets less current liabilities 5,183 2,871 Creditors : amounts falling dueafter more than one year 15 (605) (903) Provisions for liabilities and charges 16 (146) (98) Net assets 4,432 1,870 Capital and reserves Called up share capital 17 134 103Share premium account 18 2,879 1,011Capital reserve 18 13 13Capital redemption reserve 18 1 1Profit and loss account 18 1,405 742 Shareholders' funds - all equity 19 4,432 1,870 The financial statements were approved by the board on 25th January 2006 andsigned on its behalf Alex Alway John HardingGroup Chief Executive Group Finance and Operations Director Company balance sheet As at 30th September 2005 2005 2004 Notes £'000 £'000 £'000 £'000 Fixed assets Investments 12 1,271 1,406 Current assets Debtors 13 1,331 940Cash at bank and in hand 511 161 1,842 1,101 Creditors: amounts fallingdue within one year 14 (33) (1,003) Net current assets 1,809 98 Total assets less current liabilities 3,080 1,504 Creditors: amounts falling dueafter more than one year 15 - (379) Net assets 3,080 1,125 Capital and reserves Called up share capital 17 134 103Share premium account 18 2,849 981Capital redemption reserve 18 1 1Profit and loss account 18 96 40 Shareholders' funds - all equity 19 3,080 1,125 The financial statements were approved by the board on 25th January 2006 andsigned on its behalf Alex Alway John HardingGroup Chief Executive Group Finance and Operations Director Consolidated cash flow statement For year ending 30th September 2005 2005 2004 Note £'000 £'000 Net cash inflow from operatingactivities (below) 1,185 854 Returns on investments andservicing of finance 21 41 (33) Taxation (204) (179) Capital expenditure and financialinvestment 21 (378) (129) Acquisitions and disposals (1,049) (373) Cash (outflow)/inflow before use ofliquid resources and financing (405) 140 Financing:Net cash inflow/(outflow) fromfinancing 21 950 (4) Increase in cash in the period 545 136 Consolidated cash flow statement information For year ending 30th September 2005 2005 2004 Note £'000 £'000 £'000 £'000 Reconciliation of operating profitto net cash inflow from operatingactivities Operating profit 970 556Amortisation of intangible assets 321 231Depreciation of tangible fixed assets 125 89Loss on disposal of tangible fixedassets 10 8(Increase) in debtors (2,925) (629)Increase in creditors 2,662 600Increase/(decrease) in provisions 22 (1) Net cash inflow from operating activities 1,185 854Reconciliation of net cash flow tomovement in net debt 22 Increase in cash in the period 545 136 Cash outflow from decrease in debtand lease financing 949 28New deferred consideration (920) (548)Revision of deferred consideration 9 23 Change in net debt resulting from cash flows 38 (497) Movement in net debt in the period 583 (361) Net (debt)/funds at 1st October 2004 (10) 351 Net funds/(debt) at 30th September 2005 573 (10) Notes to the financial statements For year ending 30th September 2005 1. Accounting policies The financial statements have been prepared in accordance with applicableaccounting standards in the United Kingdom. 1.1 Basis of accounting The financial statements have been drawn up using the historical cost conventionand include the results of the company's operations which are described in theDirectors' Report, all of which are continuing. 1.2 Basis of consolidation The group financial statements consolidate the financial statements of JelfGroup plc and all its subsidiary undertakings drawn up to 30th September 2005.Intra-group transactions are eliminated on consolidation and all figures relateto external transactions only. 1.3 Investments Investments are stated at cost less any impairment. 1.4 Tangible fixed assets and depreciation Tangible fixed assets are stated at cost or valuation less depreciation.Depreciation is provided at rates calculated to write off the cost or valuationof fixed assets, less their estimated residual value, over their expected usefullives on the following basis: Leasehold buildings - 100% In year of purchaseMotor vehicles - 25% Reducing balanceFixtures & Fittings - 15% Reducing balanceComputer equipment - 20% Straight line 1.5 Goodwill Goodwill arising on acquisitions is being amortised on a straight line basisover its estimated useful economic life of ten years. 1.6 Leasing and hire purchase Assets obtained under hire purchase contracts and finance leases are capitalisedas tangible fixed assets. Assets acquired by finance lease are depreciated overthe shorter of the lease term and their useful lives. Assets acquired by hirepurchase are depreciated over their useful lives. Finance leases are those wheresubstantially all of the benefits and risks of ownership are assumed by thecompany. Obligations under such agreements are included in creditors net of thefinance charge allocated to future periods. The finance element of the rentalpayment is charged to the profit and loss account so as to produce a constantperiodic rate of charge on the net obligation outstanding in each period. 1.7 Operating leases Rentals applicable to operating leases where substantially all of the benefitsand risks of ownership remain with the lessor are charged to profit and lossaccount as incurred. 1.8 Turnover - Income recognition Income is recognised on a receivable basis. General insurance business brokerageis treated as earned on the basis of when an invoice is raised for the premium,and by reference to the period of cover provided. It is transferred to theoffice bank account: (i) when net premiums are paid to the insurers, or (ii) when commission is received from the insurer in those cases where clients pay premiums directly to the insurer. A clawback provision is made for commissions repayable to insurance companieswhere it has been received and receivable on indemnity terms during the year. 1.9 Acquisitions Following acquisition, businesses are fully integrated into the existingactivities of the Group. As a result of this the Directors do not consider itpracticable to analyse the results of acquired entities beyond the level ofcontribution to overhead expenditure. In accordance with Financial Reporting Standard No.3 the turnover andcontribution to overhead expenditure of acquisitions is shown separately for theyear in which the acquisition occurred. 1.10 Pensions The group operates a defined contribution pension scheme for certain of itsdirectors and the pension charge represents the amounts payable by the companyto the fund in respect of the year. The group also makes contributions to the personal pension plans of permanentemployees. These are charged to the profit and loss account as they arise. 1.11 Deferred taxation Provision is made in full for all taxation deferred in respect of timingdifferences that have originated but not reversed by the balance sheet date,except for timing differences arising on revaluations of fixed assets which arenot intended to be sold and gains on disposal of fixed assets which will berolled over into replacement assets. No provision is made for taxation onpermanent differences. Deferred tax assets are recognised to the extent that it is more likely than notthat they will be recovered. 2. Segmental analysis The directors have identified four business sectors; insurance brokerage,financial planning, corporate healthcare and commercial finance. An analysis ofturnover, profit before taxation and interest and net assets by business sectoris set out below. Business sector data includes an allocation of corporate coststo the sector. There are no sales between business sectors. All turnover arose within the United Kingdom. 2005 2004 £'000 £'000Turnover by business sector Insurance broking - Continuing 3,221 2,825 - Acquired 607 -Financial planning - Continuing 4,921 3,503 - Acquired 310 -Corporate healthcare - Continuing 2,387 1,479 - Acquired 55 654 11,501 8,461 Profit before tax by business sector Insurance broking 429 340Financial planning 456 181Corporate healthcare 132 35Commercial finance (47) - Operating profit 970 556 Investment income - 7Net interest receivable/(payable) 41 (40) Profit before taxation 1,011 523 Taxation (348) (199) Earnings 663 324 Net assets by business sector Insurance broking 2,287 1,333Financial planning 957 526Corporate healthcare 725 447Commercial finance (47) - 3,922 2,306Unallocated group net funds/(debt) 510 (436) Group net assets 4,432 1,870 3. Operating Profit The operating profit is stated after charging: 2005 2004 £'000 £'000 Amortisation of intangible assets 321 231 Depreciation of tangible fixed assets- owned by the company 125 88- held under finance leases and hire purchase contracts - 1 Auditors' remuneration- audit fees 33 28- taxation services 6 6 - advisory services - 33- AIM float services - (costs charged against share premium) 138 - Operating lease rentals- hire of plant & machinery 39 58 - other 242 189 4. Staff costs Staff costs, including directors' remuneration, were as follows: 2005 2004 £'000 £'000 Wages and salaries 5,680 4,279Social security costs 645 472Other pension costs 221 204 6,546 4,955 The average monthly number of employees, including directors, during the yearwas as follows: 2005 2004 No. No. Sales 54 46Administration 90 72 Group Core 22 16 166 134 5. Directors' remuneration 2005 2004 £'000 £'000 Aggregate emoluments 547 644Company pension contributions to money purchase schemes 39 87 586 731 During the year, retirement benefits were accruing to 4 directors (2004 - 7) inrespect of money purchase pension schemes. Included in the above are emoluments, excluding pension contributions paid to: Highest paid director 214 189 The accrued retirement benefits to the highest paid director are 16 21 6. Interest receivable 2005 2004 £'000 £'000 Bank interest 83 7 Other interest receivable 3 3 86 10 7. Interest payable 2005 2004 £'000 £'000 On bank loans and overdrafts 42 23 On other loans 3 27 45 50 8. Taxation 2005 2004 £'000 £'000Analysis of tax charge in year Current tax (see note below)UK corporation tax on profits of the year 318 196Adjustments in respect of prior periods 4 (7) Total current tax 322 189 Deferred tax Origination and reversal of timing differences 26 10 Total deferred tax (see note 16) 26 10 Tax on profit on ordinary activities 348 199 Factors affecting tax charge for year The tax assessed for the year is higher than the standard rate of corporationtax in the UK (30%). The differences are explained below: 2005 2004 £'000 £'000 Profit on ordinary activities before tax 1,011 523 Profit on ordinary activities multiplied by standard rate of Corporation tax in the UK of 30% (2003: 30%) 303 157 Effects of: Expenses not deductible for tax purposes 29 62Capital allowances for period in excess of depreciation (2) (9)Marginal relief (12) (14)Adjustments to tax charge in respect of prior periods 4 (7) Current tax charge for year (see note above) 322 189 There were no material factors that may affect future charges. 9. Profit for the financial year As permitted by Section 230 of the Companies Act 1985, the profit and loss ofthe company is not presented as part of these financial statements. The consolidated profit for the financial year of £663,192 (2004 - £323,503)includes a profit of £55,589 (2004 - profit of £5,597), which is dealt with inthe financial statements of the company 10. Intangible fixed assets Group Negative Goodwill Goodwill Total £'000 £'000 £'000 CostAt 1st October 2004 (28) 2,491 2,463Additions - 1,934 1,934Permanent diminution in value - (9) (9) At 30th September 2005 (28) 4,416 4,388 AmortisationAt 1st October 2004 (6) 733 727Charge/(credit) for the year (3) 324 321 At 30th September 2005 (9) 1,057 1,048 Net Book ValueAt 30th September 2005 (19) 3,359 3,340 At 30th September 2004 (22) 1,758 1,736 The negative goodwill arose on the acquisition of the minority holding in JelfCorporate Healthcare Limited in the year ended 30th September 2002. 11. Tangible fixed assets Land & Fixtures & Motor Computer Buildings Fittings Vehicles Equipment TotalGroup £'000 £'000 £'000 £'000 £'000CostAt 1st October 2004 25 328 10 322 685Additions - 123 - 278 401Disposals (25) (15) (10) (2) (52) At 30th September 2005 - 436 - 598 1,034 DepreciationAt 1st October 2004 25 120 6 120 271Charge for the year - 40 - 85 125Disposals (25) (8) (6) (1) (40) At 30th September 2005 - 152 - 204 356 Net book valueAt 30th September 2005 - 284 - 394 678 At 30th September 2004 - 208 4 202 414 The net book value of assets held under finance leases or hire purchasecontracts, included above, are asfollows: 2005 2004 £'000 £'000 Motor vehicles - -Computer equipment - 3 - 3 Company The company held no tangible fixed assets in 2005 or 2004. 12. Fixed asset investments 2005 2004 £'000 £'000 Group Other investments 35 35 The aggregate market value of listed investments at 30th September 2005, shownat cost above, was £30,127 (2004 - £24,836). Company Shares in group undertakings £'000CostAt 1st October 2004 1,406Disposals (135) At 30th September 2005 1,271 Net book valueAt 30th September 2005 1,271 At 30th September 2004 1,406 Details of the investments, all of which are held by Jelf Group plc, where thecompany holds more than 20% of the nominal value of any class of share capitalare as follows, or where the company is the ultimate parentcompany: Name of company Holding % holding Nature of business Jelf Financial Planning Limited £1 Ordinary shares 100% Independent Financial AdvisersJelf Insurance Brokers Limited £1 Ordinary shares 100% Insurance BrokersJelf Insurance Brokers (Wessex) Limited £1 Ordinary shares 100% Insurance BrokersJelf Corporate Healthcare Limited £1 Ordinary shares 100% Healthcare Financial ServicesJelf Commercial Finance Limited £1 Ordinary shares 100% Commercial FinanceKallender Walwyn Limited £1 Ordinary shares 100% DormantBath Financial Planning Limited £1 Ordinary shares 100% DormantJelf Corporate Consultancy Limited £1 Ordinary shares 100% DormantJelf Credit Insurance Services Limited £1 Ordinary shares 100% DormantJelf Private Clients Limited £1 Ordinary shares 100% DormantManaged Healthcare Limited £1 Ordinary shares 100% DormantA Wills & Co Limited £1 Ordinary shares 100% DormantCrowther Beard Financial Planning Limited £1 Ordinary shares 100% Dormant The holding in each subsidiary undertaking represents that both for the companyand the group as a whole. All of the subsidiary undertakings shown above havebeen included in the group consolidation. Each of the above shown subsidiaryundertakings is such by virtue of the company's holding in their issued sharecapital. The disposals in the year represent the investment value of a number of dormantsubsidiary companies which were struck off during the year. 13. Debtors 2005 2004 £'000 £'000 Group Due within one year Trade debtors 5,424 2,110 Other debtors 279 138Prepayments and accrued income 456 930 6,159 3,178 2005 2004 £'000 £'000 Company Due within one year Other debtors 1,298 350Prepayments and accrued income 33 590 1,331 940 Included within other debtors due within one year are loans of £1,685 (2004 -£nil) to directors of the Group. The maximum amount outstanding during the year was £1,685 (2004 - £111). 14. Creditors: Amounts falling due within one year 2005 2004 £'000 £'000 Group Bank loans and overdrafts 61 246Trade creditors 4,963 1,931Corporation tax 330 194Social security and other taxes 213 150Other creditors 846 333Accruals and deferred income 562 1,039 6,975 3,893 Company Bank loans and overdrafts - 121Amounts owed to group undertakings 23 314Other creditors 10 568 33 1,003 15. Creditors: Amounts falling due after more than one year 2005 2004 £'000 £'000 GroupBank loans and overdrafts 46 493Other creditors 559 410 605 903 2005 2004 £'000 £'000CompanyBank loans and overdrafts - 379 2005 2004 £'000 £'000Group Included within the above are amounts falling due as follows: In 1 - 2 years:Loan instalments 16 183 In 2 - 5 years:Loan instalments 30 310 In more than 5 years:Loan instalments - - Loan instalments include a loan, originally for £179,000, repayable in monthlyinstalments by March 2009. Interest is payable at 2% above the Base Rate. Theloan is unsecured. Further loans, originally for £200,000, £280,000 and £350,000 respectively wererepaid during the year. 2005 2004 £'000 £'000 CompanyIncluded within the above are amounts falling due as follows: In 1-2 years:Loan instalments - 127 In 2-5 years:Loan instalments - 252 In more than 5 years:Loan instalments - - 16. Provisions for liabilities and charges Deferred Clawback Tax provisions Total £'000 £'000 £'000Group At 1st October 2004 30 68 98Additions 26 22 48Reversal - - - At 30th September 2005 56 90 146 Deferred Tax The deferred tax provision is made in respect of accelerated capital allowances.Clawback provision Provision is made for commissions repayable to insurance companies where it hasbeen received and receivable on indemnity terms during the year. 17. Called up share capital 2005 2004 £'000 £'000 Authorised100,000,000 Ordinary shares of £0.01 each 1,000 1,000 1,000 1,000 Allotted, called up and fully paid 13,370,120 Ordinary shares of £0.01 each 134 103 On 21st October 2004, the Company issued 3,086,420 ordinary shares of 1p eachfor cash with a total premium of £2,469,136 on the issue before deduction of expenses relating to the issue. On 6th October 2004, the Company issued warrants to subscribe for a total of571,841 ordinary shares. Each warrant entitles the warrant holder to subscribe for one ordinary share at the price of 81 pence per share commencing on the date of Admission and ending on the fourth anniversary of Admission. On 15th October 2004, the Company granted Enterprise Management Incentive (EMI)options to subscribe for a total of 150,000 ordinary shares to certain of theexecutive Directors and employees of the Group at an exercise price of 81 penceper share. These options were cancelled and replacement options, together withnew options, to subscribe for a total of 205,625 ordinary shares at an exerciseprice of 96 pence per share were issued on 27th September 2005. 18. Reserves Group Company £'000 £'000 Share Premium Account At 1st October 2004 1,011 981Premium on shares issued 2,469 2,469Costs of share issue (601) (601) At 30th September 2005 2,879 2,849 Group Company £'000 £'000 Capital ReserveAt 1st October 2004 13 13At 30th September 2005 13 13 Capital Redemption ReserveAt 1st October 2004 1 1At 30th September 2005 1 1 Profit and Loss AccountAt 1st October 2004 742 40 Profit for the year 663 56 At 30th September 2005 1,405 96 19. Reconciliation of movements in shareholders' funds 2005 2004 £'000 £'000GroupProfit for the year 663 324Shares issued in the year 31Share premium on shares issued 2,469 24Costs of share issue (601) (-) 2,562 348 Opening shareholders' funds 1,870 1,522 Closing shareholders' funds 4,432 1,870 2005 2004 £'000 £'000CompanyProfit/(loss) for the year 56 (6) Shares issued in the year 31 -Share premium on shares issued 2,469 24Costs of share issue (601) - 1,955 18 Opening shareholders' funds 1,125 1,107 Closing shareholders' funds 3,080 1,125 20. Earnings per share 2005 2004Computation of EPS NumeratorEarnings - £'000 663 324Denominator Weighted average number of ordinary shares - Basic 13,201,001 10,264,555Weighted average number of ordinary shares - Diluted 13,909,865 10,264,555 Basic EPS 5.0p 3.2p Diluted EPS 4.8p 3.2p The calculation of the weighted average number of ordinary shares takes accountof the new shares issued in October 2004. Details are set out in note 17. 21. Analysis of cash flows for headings netted in the cash flow statement 2005 2004 £'000 £'000 Returns on investments and servicing of financeInterest received 86 10Interest paid (45) (50)Income received from investments - 7 Net cash inflow/(outflow) for returns on investments andservicing of finance 41 (33) Capital expenditure and financial investmentPurchase of tangible fixed assets (380) (139)Sale of tangible fixed assets 2 10 Net cash outflow for capital expenditure (378) (129) Acquisitions and disposalsPurchase of undertakings (1,072) (373)Net cash acquired 23 - Net cash outflow for acquisitions and disposals (1,049) (373) FinancingIssue of ordinary shares (net of expenses) 1,899 24 Issue of shares 1,899 24New loans - 350Repayments of loans and deferred consideration (949) (365)Capital element of finance lease rentals (-) (13) (Decrease) in debt (949) (28) Net cash inflow/(outflow) from financing 950 (4) 22. Analysis of net (debt)/funds At At 1st October Other 30th September 2004 Cash Flow changes 2005 £'000 £'000 £'000 £'000Net cash:Cash at bank and in hand 1,401 545 - 1,946 Debt:Deferred consideration (672) 317 (911) (1,266)Bank loans (739) 632 - (107) (1,411) 949 (911) (1,373) Net (debt)/funds (10) 1,494 (911) 573 23. Other commitments At 30th September 2004 there were annual commitments under non-cancellableoperating leases as follows: Land and buildings Other 2005 2004 2005 2004 £'000 £'000 £'000 £'000GroupExpiry date:Within 1 year 8 8 - -Between 2 and 5 years 23 14 16 21After more than 5 years 194 153 - - 24. Related parties During the year, group companies paid a total of £118,737 (2004 - £115,000) toJelf Insurance Group Directors' Retirement and Death Benefit Scheme for rent ofthe buildings from which they operate. The Pension Scheme is deemed to be arelated party because the Scheme's only members are certain directors ofcompanies within the Group. At the year end, an amount of £nil (2004 - £nil) wasowed by the Group to Jelf Insurance Group Directors' Retirement and DeathBenefit Scheme. 25. Acquisitions Jelf Group plc has made the following acquisitions: Managed Healthcare Limited 31st December 2004 Corporate HealthcareA Wills & Co Limited 31st January 2005 Financial PlanningR K Harrison (Taunton Operations) 18th May 2005 Insurance BrokingCrowther Beard Financial Planning Limited 30th June 2005 Financial Planning The fair value tables in respect of these acquisitions are summarised asfollows: 2005 2004 £'000 £'000Net assets acquiredFixed assets 21 20Investments - 10Debtors 56 -Cash at bank 23 -Creditors (42) - 58 30 Satisfied byCash 1,072 373Deferred consideration 920 525Acquisition costs - - 1,992 898 Goodwill 868 608 In all cases the directors considered the book values of assets in the acquiredentities not to be materially different to the fair value of the assets acquired. Deferred consideration is dependent upon a number of criteria including futureturnover levels and is to be satisfied in cash. The directors have provided for deferred consideration at their best estimate of the liability which is reasonably expected to be payable. Due to the nature of deferred consideration final amounts paid may be reduced with a resulting adjustment to goodwill. 26. Derivatives and other financial instruments Derivatives and financial instruments have not been used during the year increating or changing the risks Jelf Group faces. As permitted by FRS 13, shortterm debtors and creditors have been excluded from thedisclosures. Interest rate profile The interest rate profile of group financial liabilities is as follows: Currency No Fixed Floating interest rate rate Total £'000 £'000 £'000 £'00030th September 2005Sterling borrowings - - 107 107Deferred consideration 1,266 - - 1,266 1,266 - 107 1,373 30th September 2004Sterling borrowings - - 739 739Deferred consideration 672 - - 672 672 - 739 1,411 The no interest financial liabilities comprise the deferred consideration inrespect of acquisitions made by the group. The weighted average period untilmaturity of these liabilities is 1.5 years (2004 - 1.5 years). The floating rate financial liabilities comprise denominated bank borrowingsthat bear interest at rates detailed in note 15. Maturity of financial liabilities The maturity profile of group financial liabilities is detailed in note 15. Currency exposures Jelf Group operations are handled almost entirely in sterling. This information is provided by RNS The company news service from the London Stock Exchange