Source - RNS
RNS Number : 2545K
Personal Group Holdings PLC
20 September 2016
 



Press Release

20 September 2016

 

 

PERSONAL GROUP HOLDINGS PLC

 

("Personal Group" or "the Group")

                                                                          

Interim Results

 

Personal Group Holdings Plc (AIM: PGH), a leading provider of employee benefits and employee related insurance products in the UK, is pleased to report its results for the six months ended 30 June 2016:

 

Highlights

 

·     Revenue increased by 10.2% to £21.0m (2015: £19.0m)

·     New insurance business generation increased 12.5% to £6.3m (2015: £5.6m)

·    Major contract wins secured including Samworth Brothers, Pendragon, Euro Car Parts and multiple health care sector companies

·     Investment has commenced in developing the Sage employee benefits product    

·     EBITDA* decreased by 29.9% to £3.2m (2015: £4.5m)

·     Profit before tax decreased by 33.5% to £1.9m (2015: £2.9m)

·     Basic EPS decreased by 38.1% to 4.8p (2015: 7.8p)

·     Dividends per share paid in the period up 5.3% to 11.0 pence per share (2015: 10.45 pence)

·   Group balance sheet remains strong with total equity (shareholders' funds) of £30.3m (31 December 2015: £31.9m) and no debt

·     Decision made post period end not to progress with MVNO PG Mobile, full closure by December 2016

 

* EBITDA is defined as earnings before interest, tax, depreciation, amortisation of intangible assets, goodwill impairment, share-based payment expenses, acquisition costs, restructuring costs, write back of contingent consideration and release of tax provision. This definition applies to all references to EBITDA within these interim results. A reconciliation from PBT to this adjusted EBITDA has been included in note 3.

 

 

Mark Scanlon, Chief Executive of Personal Group, commented: 

"Our core business, which now includes the Lets Connect business, continues to perform consistently well with continued growth in new sales and top line revenue. 

 

2016 is an investment year for the Group with this year's performance affected by investment in the Sage program particularly. This new and innovative product is planned to go live before the end of the year and we believe that the market opportunity here is large. Other investments have also been made in our brand and hapi platform, further strengthening our market proposition.

The Group has taken the decision that the Mobile Virtual Network Operator ("MVNO") named Personal Group Mobile ("PG Mobile"), which provides smartphones and airtime on a salary sacrifice basis is no longer viable in the current market and so the decision has been taken to run down this activity by the end of 2016. Though this is disappointing the Group feels it is important to act quickly in these situations which I believe we have done.

 

We remain optimistic about the Group's future prospects. "

 

 

- ENDS -

 

 

 

 For more information please contact:

 

Personal Group Holdings Plc

 

Mark Scanlon / Mike Dugdale

+44 (0)1908 605 000

 

Cenkos Securities Plc

 

Max Hartley / Stephen Keys (Nomad)

+44 (0)20 7397 8900

Russell Kerr (Sales)

 

 

 Media enquiries:

 

Abchurch Communications

 

Alex Shaw / Julian Bosdet / Tim Thompson

Personalgp@abchurch-group.com

 

 

 

Notes to Editors

With over 30 years' experience, Personal Group Holdings Plc (AIM: PGH) is a leading provider of employee services, benefits and employee related insurance products, covering an employee base of over two million across the UK.

 

Personal Group has a unique approach to delivering employee engagement, by combining technology with its face-to-face method of communicating with employees. This approach assists clients with the attraction, retention and motivation of their employees. Included in this approach is the delivery of a range of insurance products and services including hospital and convalescence plans, death benefit and income protection, in addition to lifestyle benefits including High Street savings and discounts, retail offers, travel and holiday promotions and health and wellbeing services.

 

Hapi, Personal Group's leading edge Employee Services platform allows clients to build bespoke engagement, benefit and communications programmes, which are made available to employees through both websites and mobile apps. This platform allows for a broader range of services, including holiday booking, electronic payslips, reward and recognition and Employee Assistance programmes to be accessed by employees in a simple and effective interface.

 

The Group also supplies clients with home technology and smartphone handsets via salary reduction schemes, offering the latest computers, laptops, tablets, smartphones and other home technology products through Lets Connect.

 

Personal Group has a strong client base across a wide range of sectors, with particular expertise in transport, logistics, domiciliary care, motor, retail, food production and manufacturing. Over 520 clients, including Network Rail, DHL, JCT600, Four Seasons, Two Sisters and Stagecoach, work with Personal Group in delivering effective benefits, engagement and communications programmes.

 

For further information, go to www.personalgroup.com.

 

 

 

 

Chairman's Statement

 

Summary

Personal Group has demonstrated robust and innovative responses to the challenges and opportunities in 2016.  In our core markets, the Group continued to perform well in the first half of 2016 with revenue up 10% on the equivalent period in 2015 and record new business generation. EBITDA, excluding PG Mobile, decreased by 17% which reflects the increased investment we have made in the wider business; highlights include an overdue Group rebrand and significant additions to our infrastructure and people in the core business to develop a new Sage employee benefits platform. It is expected that the Sage product, for a new market to Personal Group, will be launched before the end of this year.

 

It should be noted that shortly after the half year, we concluded that the PG Mobile business should cease active trading and fully wind down by the end of 2016.  Also in February, we announced the changing customer relationship with Royal Mail Group (RMG) as our insurance relationship changes and the Lets Connect opportunity develops.  Both of these will feature in our full-year results.

 

Financial Performance

Total Group revenue for the six months ended 30 June 2016 increased by 10% to £21.0m (2015: £19.0m).  This reflects a 13% increase in earned premiums net of reinsurance, a full 6 months trading of PG Mobile and increased revenue contribution from Let's Connect.

 

Annualised new business premiums written during the period from the Group's core employee benefits and insurance activities were once again a half-year record, at £6.3m, 13% ahead of 2015 (£5.6m). This was despite the cessation of new insurance business with RMG from March 2016.

 

Underlying EBITDA was £3.2m (2015: £4.5m) which represents a 30% reduction on the equivalent period in 2015. The Group's performance excluding the impact of setting up and running PG Mobile, our own MVNO, was a decrease of 17% due to the impact of increased investment in the infrastructure and rebranding of the Group.

 

Group Profit before tax was £1.9m (2015: £2.9m).  This includes £0.3m of reorganisation costs for PG Mobile incurred in 2016.  There were £0.9m of reorganisation and acquisition costs associated with the establishment of PG Mobile in the six months to June 2015.

 

Total equity at 30 June 2016 was £30.3m (31 December 2015: £31.9m). 

 

 

 

Business Review

 

Our core business continues to operate in a consistent manner, with a steady increase in sales and topline performance.  The business continues to improve its core profitability but this has been masked, in the six-month period under review, by significant expenditure in rebranding and infrastructure to prepare the Group for the expected increase in business following the launch of the Sage platform.

 

Our core products continue to be attractive to employers, evidenced by the high proportion of sales in the first half from entirely new host company clients: more than 21.5% of total new sales were to employees of companies which were new to the Group.

 

Our like-for-like sales in Lets Connect were up 14% on the equivalent period last year.  The turnover of Lets Connect is, as always, very strongly weighted to the fourth quarter of the year.

 

The establishment of PG Mobile was intended to develop further our strategy by broadening the Group's offering to include additional mobile airtime products. It has become apparent during the first half of 2016 that the potential market has changed and is no longer receptive to the product offering of PG Mobile.   Consequently, we decided on 7th July 2016 to close the PG Mobile business by the end of 2016.

 

The hapi platform, which was completed in 2015, continues to be rolled out to our existing customer base to very positive reviews.  This has led to increased product penetration into our existing clients. Moreover, this technology is at the heart of the proposed Sage employee benefits platform which is being built for the extensive SME market. This is a market that our current distribution model does not, in the first instance, suit and both Sage and we are confident that the proposition will prove popular with SME's when the product is launched.

 

We have seen Insurance Premium Tax ("IPT") increase twice in the last year, from 6% to 9.5% in November 2015 and, following the budget this year, a further increase to 10% effective in October 2016. Our premium collection method through payroll deduction makes it difficult to adjust premiums retrospectively and so to date we have adjusted our pricing for new insurance business only.

 

HMRC recently launched a consultation on Salary Sacrifice and associated Benefits in Kind (BIKs) which proposes to limit the range of BIKs that will attract Income Tax and NIC advantages. We welcome this consultation which seeks to clarify the currently ad hoc treatment of such arrangements. However, the uncertainty caused by the consultation, at one of the busiest times for our Lets Connect business, may impact our full year results. The possible effect for our clients is that they could lose any employer National Insurance savings and their employees lose any income tax savings, they currently experience; the schemes would remain efficient for employee National Insurance savings. Whatever the outcome of the consultation, which is due to be announced at the end of November, we are confident our Lets Connect offering remains attractive to employees, not just for tax savings, but also for access it provides to credit, credit costs and our comprehensive insurance cover.

 

Dividends

The first two dividends of 2016, each of 5.5p per share, were paid in March and June, with the third dividend of the same amount being paid on 23rd September 2016.  The Directors expect that the fourth and final dividend for 2016 of the same amount will be paid in December.  This would give a total for the year of 22.0p per share (2015: 20.9p per share), an increase of 5%.

 

The Board

As announced earlier in the year, Chris Curling retired from his Non-executive position as Chairman of the Board in May 2016 and I took over as Chairman.  The Board is pleased to welcome Bob Head as a new Non-Executive director.  Bob has a wide experience in financial services including knowledge of their digital delivery.  He has also worked as an advisor to the tax authorities in South Africa.  All-in-all a very useful addition to the Board.

 

Outlook

The Group's core business continues to perform strongly and grow steadily.  We are relentless in seeking to improve the business we have and to seek out new opportunities.

 

The year on year expansion of Lets Connect and the forthcoming partnership with Sage reflect the Group's intention to widen the range of our employee benefits offering and to make available to a wider base of host company clients, products and services which complement our core insurance products. The PG Mobile initiative was not successful and the board took speedy action when that became apparent.  Nevertheless, we continue to look for other opportunities, including acquisitions if appropriate.

 

We have a much broader and stronger foundation on which to deliver profitable business and to withstand challenges thrown our way. We remain confident about the value which this strategy will continue to generate for the benefit of our shareholders.

 

 

M Winlow

Non-Executive Chairman

19 September 2016

 

Consolidated income statement

 

 

 

6 months

ended 30

June 2016

Unaudited

6 months

ended 30

June 2015 Unaudited

12 months

ended 31

December 2015 Audited

 

 Note

£'000

£'000

£'000

 

 

 

 

 

Gross premiums written

 

15,654

13,872

29,463 

Outward reinsurance premiums

 

(138)

(79)

(259)

Change in unearned premiums

 

1

5

204

Change in reinsurers' share of unearned premiums

 

(19)

(30)

(38) 

 

 

________

________

________

Earned premiums net of reinsurance

 

15,498

13,768

29,370

Other insurance related income

 

264

1,352

1,778

Non - insurance related income - IT Salary Sacrifice

 

3,196

2,803

25,460

Non - insurance related income - Mobile

 

1,165

405

1,524

Other non-insurance related income

 

749

587

1,243

Investment property

 

30

33

63

Investment income

 

61

83

121

 

 

________

________

________

Revenue

 

20,963

19,031

59,559

 

 

________

________

________

 

 

 

 

 

Claims incurred

 

(3,739)

(3,440)

(7,451)

Insurance operating expenses

 

(5,961)

(5,504)

(10,834)

Other insurance related expenses

 

(819)

(765)

(1,577)

Non - insurance related expenses - IT Salary Sacrifice

 

(3,616)

(3,060)

(23,142)

Non - insurance related expenses - Mobile

 

(2,346)

(1,590)

(3,817)

Other non-insurance related expenses

 

(1,691)

(1,176)

(2,682)

Share based payment expenses

 

(540)

(291)

(1,289)

Charitable donations

 

(50)

(50)

(100)

Amortisation of intangible assets

 

(253)

(285)

(796)

Impairment of non-financial assets

 

-

-

(986)

 

 

________

________

________

Expenses

 

(19,015)

(16,161)

(52,674)

 

 

________

________

________

 

 

 

 

 

Results of operating activities

 

1,948

2,870

6,885

Contingent consideration write - back

 

-

-

2,684

Release of provision

 

-

-

825

Share of profit of equity-accounted investee net of tax

 

(12)

41

55

 

 

________

________

________

Profit before tax

 

1,936

2,911

10,449

Tax

4

(473)

(556)

(1,148)

 

 

________

________

________

Profit for the period after tax

 

1,463

2,355

9,301

 

 

________

________

________

 

Earnings per share as arising from total and continuing operations

 

 Pence

Pence

Pence

Basic

5

4.8

7.8

30.8

Diluted

5

4.5

7.5

28.5

 

 

 

 

 

As at 30 June 2016 all operations are considered to be continuing.

 

 

 

Consolidated statement of comprehensive income

 

 

 

6 months

ended 30

June 2016

Unaudited

6 months

ended 30

June 2015

Unaudited

12 months

ended 31

December 2015

Audited

 

 

 

 

 

 

 

£'000

£'000

£'000

 

 

 

 

 

Profit for the period

 

1,463

2,355

9,301

 

 

 

 

 

Other comprehensive income

 

 

 

 

Available for sale financial assets:

 

 

 

 

 Valuation changes taken to equity

 

(81)

31

62

 Reclassification of gain on available for s  sale financial assets on derecognition

 

19

(5)

(13)

 

 

 

 

 

Income tax on unrealised valuation
changes taken to equity

 

8

(6)

(5)

 

 

 

 

 

 

 

_______

_______

_______

Total comprehensive income for the period

 

1,409

2,375

9,345

 

 

_______

_______

_______

 

 

 

 

 

 

 

 

Consolidated balance sheet at 30 June 2016

 

 

 

 

At 30

June 2016

Unaudited

At 30

June 2015

Unaudited

At 31

December 2015

Audited

 

 

 

 

 

 

 

 

Note

£'000

£'000

£'000

 

ASSETS

 

 

 

 

 

Non-current assets

 

 

 

 

 

Goodwill

10,12

10,575

10,670

10,575

 

Intangible assets

11,12

1,321

2,691

1,360

 

Property, plant and equipment

6

5,080

4,696

5,007

 

Investment property

 

1,070

1,070

1,070

 

Equity-accounted investee

9

634

631

646

 

Financial assets

7

8,139

10,724

9,182

 

Deferred tax

 

550

-

781

 

 

 

________

________

________

 

 

 

27,369

30,482

28,621

 

 

 

________

________

________

Current assets

 

 

 

 

 

Trade and other receivables

 

9,711

8,149

21,975

 

Reinsurance assets

 

307

329

307

 

Inventories

 

1,304

289

390

 

Cash and cash equivalents

 

7,608

4,330

5,591

 

 

 

________

________

________

 

 

 

18,930

13,097

28,263

 

 

 

________

________

________

 

Total assets

 

46,299

43,579

56,884

 

 

 

________

________

________

 

 

 

 

 

 

           

 

 

 

Consolidated balance sheet at 30 June 2016

 

 

 

At 30

June 2016

Unaudited

At 30

June 2015

Unaudited

At 31

December 2015

Audited

 

 

 

 

 

 

 

£'000

£'000

£'000

 

 

 

 

 

EQUITY

 

 

 

 

 

 

 

 

 

Equity attributable to equity holders of Personal Group Holdings plc

 

 

 

 

Share capital

 

1,527

1,517

1,518

Capital redemption reserve

 

24

24

24

Amounts recognised directly into equity relating to non-current assets held for sale

 

(34)

(4)

20

Other reserve - own shares

 

(309)

(476)

(386)

Profit and loss reserve

 

29,070

25,513

30,687

 

 

________

________

________

Total equity

 

30,278

26,574

31,863

 

 

________

________

________

LIABILITIES

 

 

 

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

Deferred tax liabilities

 

-

219

-

 

 

________

________

________

Current liabilities

 

 

 

 

Provisions

 

2,190

23

2,190

Trade and other payables

 

10,589

13,296

19,408

Insurance contract liabilities

 

3,143

2,918

3,140

Current tax liabilities

 

99

549

283

 

 

________

________

________

 

 

16,021

16,786

25,021

 

 

________

________

________

 

 

 

 

 

 

 

________

________

________

Total liabilities

 

16,021

17,005

25,021

 

 

________

________

________

 

 

 

 

 

 

 

________

________

________

Total equity and liabilities

 

46,299

43,579

56,884

 

 

________

________

________

                 

Consolidated statement of changes in equity for the six months ended 30 June 2016

                           

 

 

 

 

Share capital

Capital

redemption

reserve

Available for sale financial assets

Other reserve

Profit & loss reserve

Total equity

 

£'000

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

Balance as at 1 January 2016

1,518

24

20

(386)

30,687

31,863

 

________

________

________

________

________

________

Dividends

-

-

-

-

(3,338)

(3,338)

Employee share-based compensation

-

-

-

-

296

296

Proceeds of AESOP* share sales

-

-

-

-

66

66

Cost of AESOP shares sold

-

-

-

95

(95)

-

Cost of AESOP shares purchased

-

-

-

(18)

-

(18)

Nominal value of LTIP** shares issued

9

-

-

-

(9)

-

 

________

________

________

________

________

________

Transactions with owners

9

-

-

77

(3,080)

(2,994)

 

________

________

________

________

________

________

Profit for the period

-

-

-

-

1,463

1,463

Other comprehensive income

 

 

 

 

 

 

Available for sale financial assets:

 

 

 

 

 

 

Valuation changes taken to equity

-

-

(81)

-

-

(81)

Transfer to income statement

-

-

19

-

-

19

Current tax on unrealised valuation changes taken to
equity

 

-

 

-

 

8

 

-

 

-

8

 

________

________

________

________

________

________

Total comprehensive income for the period

-

-

 

(54)

-

1,463

1,409

 

________

_______

_______

_______

_______

_______

 

 

 

 

 

 

 

Balance as at 30 June 2016

1,527

24

(34)

(309)

29,070

30,278

 

________

________

________

________

________

________

 

 

* All Employee Share Option Plan (AESOP)

** Long Term Incentive Plan (LTIP)

 

 

 

Consolidated statement of changes in equity for the year ended 31 December 2015

 

 

 

 

 

Share capital

Capital

redemption

reserve

Available for sale financial assets

Other reserve

Profit & loss reserve

Total equity

 

£'000

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

Balance as at 1 January 2015

1,516

24

(24)

(548)

26,814

27,782

 

________

________

________

________

________

________

Dividends

-

-

-

-

(6,325)

(6,325)

Employee share-based compensation

-

-

-

-

988

988

Proceeds of AESOP* share sales

-

-

-

-

195

195

Cost of AESOP shares sold

-

-

-

287

(287)

-

Cost of AESOP shares purchased

-

-

-

(125)

-

(125)

Nominal value of LTIP** shares issued

2

-

-

-

(2)

-

 

________

________

________

________

________

________

Transactions with owners

2

-

-

162

(5,431)

(5,267)

 

________

________

________

________

________

________

Profit for the period

-

-

-

-

9,301

9,301

Deferred tax reserve movement

-

-

-

-

3

3

Other comprehensive income

 

 

 

 

 

 

Available for sale financial assets:

 

 

 

 

 

 

Valuation changes taken to equity

-

-

62

-

-

62

Transfer to income statement

-

-

(13)

-

-

(13)

Current tax on unrealised

valuation changes taken to
 equity

 

-

 

-

 

(5)

 

-

 

-

(5)

 

________

________

________

________

________

________

Total comprehensive income for the period

-

-

 

44

-

9,304

9,348

 

________

________

________

________

________

________

 

 

 

 

 

 

 

Balance as at 31 December 2015

1,518

24

20

(386)

30,687

31,863

 

________

________

________

________

________

________

 

 

 

Consolidated statement of changes in equity for the six months ended 30 June 2015

                                                                                                                                          

 

 

 

 

Share capital

Capital

redemption

reserve

Available for sale financial assets

Other reserve

Profit & loss reserve

Total equity

 

£'000

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

Balance as at 1 January 2015

1,516

24

(24)

(548)

26,080

27,048

 

________

________

________

________

________

________

Dividends

-

-

-

-

(3,160)

(3,160)

Employee share-based compensation

-

-

-

-

291

291

Proceeds of AESOP* share sales

-

-

-

-

90

90

Cost of AESOP shares sold

-

-

-

142

(142)

-

Cost of AESOP shares purchased

-

-

-

(70)

-

(70)

Nominal value of LTIP shares issued

1

-

-

-

(1)

-

 

________

________

________

________

________

________

Transactions with owners

1

-

-

72

(2,922)

(2,849)

 

________

________

________

________

________

________

Profit for the period

-

-

-

-

2,355

2,355

Other comprehensive income

 

 

 

 

 

 

Available for sale financial assets:

 

 

 

 

 

 

Valuation changes taken to equity

-

-

31

-

-

31

Transfer to income statement

 

-

 

-

 

(5)

 

-

 

-

(5)

Current tax on unrealised

valuation changes taken to equity

 

-

 

-

 

(6)

 

-

 

-

(6)

 

________

________

________

________

________

________

Total comprehensive income for the period

-

-

 

20

-

2,355

2,375

 

________

________

________

________

________

________

 

 

 

 

 

 

 

Balance as at 30 June 2015

1,517

24

(4)

(476)

25,513

26,574

 

________

________

________

________

________

________

 

 

 

Consolidated cash flow statement

 

 

 

6 months

ended 30

June 2016

Unaudited

6 months

ended 30

June 2015

Unaudited

12 months

ended 31

December 2015

Audited

 

 

 

 

 

Net cash from operating activities (see opposite)

 

4,810

3,745

7,151

 

 

______

______

______

Investing activities

 

 

 

 

Additions to property, plant and equipment

 

(412)

(105)

(669)

Additions to intangible assets

 

(214)

(221)

(318)

Proceeds from disposal of property, plant and equipment

117

3

80

Purchase of financial assets

 

(35)

(75)

(97)

Proceeds from disposal of financial assets

 

984

1,002

2,540

Interest received

 

47

66

92

Dividends received

 

10

12

24

 

 

______

______

______

Net cash from investing activities

497

682

1,652

 

 

______

______

______

Acquisition and disposal activities

 

 

 

 

Payment to acquire trade and assets of shebang

 

-

(1,390)

(1,390)

 

 

______

______

______

Net cash from acquisition and disposal activities

 

-

(1,390)

(1,390)

 

 

______

______

______

Financing activities

 

 

 

 

Purchase of own shares by the AESOP

 

(18)

(70)

(125)

Proceeds from disposal of own shares by the AESOP

 

66

90

195

Dividends paid

 

(3,338)

(3,160)

(6,325)

 

 

______

______

______

Net cash used in financing activities

 

(3,290)

(3,140)

(6,255)

 

 

______

______

______

Net change in cash and cash equivalents

 

2,017

(103)

1,158

Cash and cash equivalents, beginning of period

5,591

4,433

4,433

 

 

_______

_______

_______

Cash and cash equivalents, end of period

7,608

4,330

5,591

 

 

 

 

Consolidated cash flow statement

 

 

 

6 months

ended 30

June 2016

Unaudited

6 months

ended 30

June 2015

Unaudited

12 months

ended 31

December 2015

Audited

 

 

 

 

 

Operating activities

 

£'000

£'000

£'000

Profit after tax

 

1,463

2,355

9,301

Adjustment for:

 

 

 

 

  Depreciation

 

215

165

349

  Intangible impairment

 

-

-

942

  Goodwill impairment

 

-

-

45

  Amortisation of intangible assets

 

253

310

796

  Profit on disposal of property, plant and     equipment

7

-

(11)

  Realised and unrealised net investment losses/(profits)

31

(15)

6

  Interest received

 

(47)

(66)

(92)

  Dividends received

 

(10)

(12)

(24)

  Share of (profit) / loss of equity-accounted investee, net of tax

12

(41)

(55)

  Share-based payments

 

296

291

1,289

  Taxation expense recognised in income statement

474

556

1,148

Changes in working capital:

 

 

 

 

  Trade and other receivables

 

12,264

8,676

(5,078)

  Trade and other payables

 

(8,816)

(7,978)

220

  Inventories

 

(914)

388

288

Taxes paid

 

(418)

(884)

(1,973)

 

 

______

______

______

Net cash from operating activities

 

4,810

3,745

7,151

 

 

______

______

______

 

 

 

Notes to the consolidated financial statements

 

 

1          General information

 

The principal activities of Personal Group Holdings Plc ('the Company') and subsidiaries (together 'the Group') include transacting short-term accident and health insurance and providing employee benefits related business in the UK.

 

The Company is a limited liability company incorporated and domiciled in England.  The address of its registered office is John Ormond House, 899 Silbury Boulevard, Milton Keynes MK9 3XL.

 

The Company is listed on the Alternative Investment Market of the London Stock Exchange.

 

The condensed consolidated financial statements do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group as at and for the year ended 31 December 2015.

 

The financial information for the year ended 31 December 2015 set out in this interim report does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006.  The statutory financial statements for the year ended 31 December 2015 have been filed with the Registrar of Companies.  The auditor's report on those financial statements was unqualified and did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006.

 

These interim financial statements are unaudited and have not been reviewed by the auditors under International Standard on Review Engagements (UK and Ireland) 2410.

 

These consolidated interim financial statements have been approved for issue by the board of directors on 19 September 2016.

 

2          Accounting policies

 

These June 2016 interim consolidated financial statements of Personal Group Holdings Plc are for the six months ended 30 June 2016.  These interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting.  They do not include all the information required for a complete set of IFRS financial statements.  However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and performance since the last annual consolidated financial statements as at and for the year ended 31 December 2015.

 

 

Notes to the consolidated financial statements

 

 

These financial statements have been prepared on the basis of the recognition and measurement requirements of those IFRS standards and IFRIC interpretations as adopted by the EU, issued and effective or issued and early adopted in respect of periods beginning on or after 1 January 2014. 

 

The principal accounting policies have remained unchanged from the year ended 31 December 2015.

 

3          Segment analysis

 

The Group operates the following four operating segments:

 

1)         Core Insurance
 

Personal Assurance Plc (PA), a subsidiary within the Group, is a PRA regulated general insurance company and is authorised to transact accident and sickness insurance. It was established in 1984 and has been underwriting business since 1985. In 1997 Personal Group Holdings Plc (PGH) was created and became the ultimate parent undertaking of the Group.

 

This operating segment derives the majority of its revenue from the underwriting by PA of insurance policies that have been bought by employees of host companies via bespoke benefit programmes.

 

Up until March 2015 insurance related income represented commission receivable for death benefit policies underwritten by 3rd parties. From March 2015 these policies have been underwritten by the Group's subsidiary Personal Assurance Guernsey Limited (PAGL) and, as such, their income now falls within earned premium.

 

2)         IT Salary Sacrifice

 

IT salary sacrifice refers to the trade of Lets Connect, a salary sacrifice technology company purchased in 2014.



3)          Mobile

 

Mobile refers to the trade of Personal Group Mobile, a mobile phone salary sacrifice company set up from the trade and assets of shebang Technologies purchased in 2015.

 

4)          Other

 

The other operating segment consists exclusively of revenue generated by Berkeley Morgan Group (BMG) and its subsidiary undertakings and Personal Management Solutions (PMS).

 

BMG was acquired by PGH in January 2005 and generates income via financial services and private medical insurance. On 9 February 2016 the Group signed an agreement with AXA PPP healthcare to transfer the PMI business over to them in a phased approach between July 2016 and June 2017. The group will continue to underwrite policies until each policy's renewal date, from which date AXA PPP healthcare will provide continuous cover.

 

PMS is an employee benefit company that offers a variety of employee incentive schemes.

 

 

Notes to the consolidated financial statements

 

The revenue and net result generated by each of the Group's operating segments are summarised as follows,

Operating segments

Core Insurance

£'000

IT Salary Sacrifice

£'000

 

Mobile

£'000

Other

£'000

Group

£'000

 

 

 

 

 

 

6 months to June 2016

 

 

 

 

 

Revenue

 

 

 

 

 

Earned premiums net of reinsurance

Other income:

15,498

 

 

 

15,498

   Insurance related

(5)

-

-

270

265

   Non-insurance related

-

3,196

1,165

749

5,110

   Investment property

-

-

-

30

30

Investment income

-

-

-

60

60

 

 

 

 

 

 

 

_________

_________

_________

_________

_________

Total revenue

 

15,493

3,196

1,165

1,109

20,963

_________

_________

_________

_________

_________

Net result for year before tax

3,769

(426)

(1,227)

(179)

1,937

PG mobile - Reorganisation costs

-

-

260

-

260

LC - Amortisation of intangibles

-

165

-

-

165

Share based payments

-

-

-

540

540

Depreciation

177

9

19

10

215

Amortisation (other)

82

6

-

-

88

 

 

 

 

 

 

EBITDA

4,028

(246)

(948)

371

3,205

 

_________

_________

_________

_________

_________

Segment assets

24,370

6,219

1,136

14,573

46,299

 

_________

_________

_________

_________

_________

Segment liabilities

7,406

6,069

705

1,809

15,989

 

_________

_________

_________

_________

_________

Depreciation and amortisation

259

180

19

10

471

 

_________

_________

_________

_________

_________

 

 

 

 

 

 

 

Operating segments

Core Insurance

£'000

IT Salary Sacrifice

£'000

 

Mobile

£'000

Other

£'000

Group

£'000

 

 

 

 

 

 

2015

 

 

 

 

 

Revenue

 

 

 

 

 

Earned premiums net of reinsurance

Other income:

29,370

 

 

 

29,370

   Insurance related

1,135

-

-

643

1,778

   Non-insurance related

-

25,460

1,524

1,243

28,227

   Investment property

-

-

-

63

63

Investment income

-

-

-

121

121

 

 

 

 

 

 

 

_________

_________

_________

_________

_________

Total revenue

 

30,505

25,460

1,524

2,070

59,559

_________

_________

_________

_________

_________

Net result for year before tax

9,098

2,803

(3,648)

2,196

10,449

PG mobile - Reorganisation costs

-

-

856

-

856

 

 

Notes to the consolidated financial statements

 

 

PG mobile - Acquisition costs

-

-

341

-

341

PG mobile - Intangible amortisation

-

-

369

-

369

PG mobile - Intangible asset write down

-

-

 

986

 

-

986

LC - Consideration write-down

-

-

-

(2,684)

(2,684)

LC - Tax provision

-

(825)

-

-

(825)

LC - Amortisation of intangibles

-

330

-

-

330

Share based payments

-

-

-

1,289

1,289

Depreciation

294

16

21

17

348

Amortisation (other)

87

10

-

-

97

 

 

 

 

 

 

EBITDA

9,479

2,334

(1,075)

818

11,556

 

_________

_________

_________

_________

_________

Segment assets

23,843

17,810

734

14,497

56,884

 

_________

_________

_________

_________

_________

Segment liabilities

6,447

16,795

563

1,216

25,021

 

_________

_________

_________

_________

_________

Depreciation and amortisation

383

355

390

17

1,145

 

_________

_________

_________

_________

_________

 

Operating segments

Core Insurance

£'000

IT Salary Sacrifice

£'000

 

Mobile

£'000

Other

£'000

Group

£'000

 

 

 

 

 

 

6 months to June 2015

 

 

 

 

 

Revenue

 

 

 

 

 

Earned premiums net of reinsurance

Other income:

13,768

 

 

 

13,768

   Insurance related

1,121

-

-

231

1,352

   Non-insurance related

-

2,803

405

587

3,795

   Investment property

-

-

-

33

33

Investment income

-

-

-

83

83

 

 

 

 

 

 

 

_________

_________

_________

_________

_________

Total revenue

 

14,889

2,803

405

934

19,031

_________

_________

_________

_________

_________

Net result for year before tax

4,926

(425)

(1,425)

(165)

2,911

PG mobile - Reorganisation costs

-

-

520

-

520

PG mobile - Acquisition costs

-

-

337

-

337

PG mobile - Intangible amortisation

-

-

120

-

120

LC - Amortisation of intangibles

-

165

-

-

165

Share based payments

-

-

-

328

328

Depreciation

146

9

1

9

165

Amortisation (other)

23

3

-

-

26

 

 

 

 

 

 

EBITDA

5,095

(248)

(447)

172

4,572

 

_________

_________

_________

_________

_________

Segment assets

24,158

3,066

1,814

14,769

43,807

 

_________

_________

_________

_________

_________

Segment liabilities

12,608

2,059

435

2,131

17,233

 

_________

_________

_________

_________

_________

Depreciation and amortisation

169

177

121

9

476

 

_________

_________

_________

_________

_________

 

Notes to the consolidated financial statements

 

 

Income is derived from the UK and Guernsey

 

4          Taxation

 

Tax expense is recognised based on the weighted-average annual income tax rate expected for the full financial year multiplied by management's best estimate of the taxable profit of the interim reporting period.

 

The Group's consolidated effective tax rate in respect of continuing operations for the six months ended 30 June 2016 was 24.3% (six months ended 30 June 2015: 19.4%).

 

 

5          Earnings per share and dividends

 

The weighted average numbers of outstanding shares used for basic and diluted earnings per share are as follows:

 

 

6 months

ended 30

June 2016

EPS

Pence

6 months

ended 30

June 2015

EPS

Pence

12 months

ended 31

December 2015

EPS

Pence

 

 

 

 

 

 

 

Basic

30,350,608

4.8

30,229,332

7.8

30,200,755

30.8

Diluted

32,790,147

4.5

31,280,284

7.5

32,598,684

28.5

 

 

During the first six months of 2016, Personal Group Holdings Plc paid dividends of £3,338,000 to its equity shareholders (six months to 30 June 2015: £3,160,000, twelve months to 31 December 2015: £6,343,000). This represents a payment of 11.00p per share (six months to 30 June 2015: 10.45p, twelve months to 31 December 2015: 20.90p). 

 

In the statement of changes in equity and the cash flow statement dividends are stated net of amounts paid on treasury shares and unallocated shares held by Personal Group Trustees Limited as follows:

 

 

Notes to the consolidated financial statements

 

 

 

6 months ended 30 June 2016

6 months ended 30 June 2015

12 months ended 31 December 2015

6 months ended 30 June 2016

 

6 months ended 30 June 2015

12 months ended 31 December 2015

 

 

 

 

 

 

 

 

Pence per share

£'000

£'000

£'000

Equity dividends

 

 

 

 

 

 

Ordinary shares paid in period

 

 

 

 

 

 

 

 

 

 

 

 

 

March

5.500

5.225

5.225

1,670

1,585

1,585

June

5.500

5.225

5.225

1,675

1,585

1,585

September

-

-

5.225

-

-

1,586

December

-

-

5.225

-

-

1,587

 

 

 

 

______

______

______

 

 

 

 

3,345

3,170

6,343

Less: amounts paid on own shares

 

 

 

 

 

(7)

 

(10)

 

(18)

 

_____

_____

______

______

______

______

 

11.00

10.45

20.90

3,338

3,160

6,325

 

_____

_____

______

______

______

______

 

 

6          Property, plant and equipment

 

For the six months ended 30 June 2016

 

Freehold land and properties

£'000

Motor vehicles

£'000

Computer

equipment

£'000

Furniture fixtures & fittings

£'000

Leasehold improve-

ments

 £'000

Total

£'000

Cost

 

 

 

 

 

 

At 1 January 2016

5,478

243

922

1,250

15

7,908

Additions

-

179

120

112

-

411

Disposals

-

(145)

(5)

(3)

-

(153)

 

______

______

______

______

______

______

At 30 June 2016

5,478

277

1,037

1,359

15

8,166

 

______

______

______

______

______

______

Depreciation

 

 

 

 

 

 

At 1 January 2016

1,410

33

660

786

12

2,901

Provided in the period

47

25

94

48

2

216

Eliminated on disposals

-

(28)

(2)

(1)

-

(31)

 

______

______

______

______

______

______

At 30 June 2016

1,457

30

752

833

14

3,086

 

______

______

______

______

______

______

 

 

 

 

 

 

 

Net book amount at 30 June 2016

4,021

247

285

526

1

5,080

 

______

______

______

______

______

______

 

 

 

 

 

 

 

Net book amount at 31 December 2015

4,068

210

262

464

3

5,007

 

______

______

______

______

______

______

 

 

Notes to the consolidated financial statements

 

 

7   Financial assets

 

 

At 30 June

2016

Unaudited

At 30 June

2015

Unaudited

At 31 December

2015

Audited

 

£'000

£'000

£'000

 

 

 

 

Bank deposits

7,449

9,914

8,421

Investment Bond

100

100

100

Financial assets:

 

 

 

  Available for sale

590

710

661

 

________

________

________

 

8,139

10,724

9,182

 

_________

_________

_________

 

IFRS 13 Fair Value Measurement establishes a fair value hierarchy that categorises into three levels the inputs to valuation techniques used to measure fair value. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1 inputs) and the lowest priority to unobservable inputs (Level 3 inputs)

·      Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities

·      Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices)

·      Level 3: inputs for the asset or liability that are not based on observable market data (unobservable input).

The available for sale financial assets are stated at their bid market price, these are all based on level 1 inputs.

 

Bank deposits, also held at amortised cost, are due within 6 months.

 

Trade receivables arising out of direct insurance operations and other receivables are also held at amortised cost and the carrying amount is a reasonable approximation of fair value.

 

The investment bond subscribed to during 2014 is held in Criticaleye Investments plc and has a fixed three-year initial term. Interest is paid at 8% gross per annum. The bond was acquired late in 2014 and the carrying value is a reasonable approximation of fair value.

 

 

Notes to the consolidated financial statements

 

 

8         Long Term Incentive Plan (LTIP)

 

LTIP 1:

During 2012 the company adopted a discretionary Long Term Incentive Plan (LTIP 1) for the benefit of selected Directors and senior employees of Personal Group. 

 

The Plan provided for the grant of awards, entitling participants to the payment of a bonus relating to the percentage increase in the market capitalisation of the company over a specified period. The awards are satisfied in shares or at the discretion of the Remuneration Committee, wholly or partly in cash in accordance with the Plan rules. It is the Remuneration Committee's intention to settle these awards in shares.

 

A participant is entitled to a payment in respect of their award on each of the second, third, fourth and fifth anniversary of their commencement date in the plan or if there is an exit event such as a sale before the fifth anniversary date.  Each participant was awarded a specified percentage of the value increase in the market capitalisation. If there is no increase in market capitalisation at the award dates then no payment is made.

 

Where the market capitalisation has increased the level of payment will be 10%, 30%, 60% and 100% cumulatively on the second, third, fourth and fifth anniversary respectively of the relevant % entitlement. The number of shares awarded will be determined by dividing the amount of appropriate payment by the market value (as defined by the Plan rules) of the shares on the relevant anniversary date.

 

As LTIP 1 will start to mature at the end of 2016, in July 2015 a further scheme (LTIP 2) was put in place from 30 July 2015 (see below). In conjunction with the introduction of this scheme LTIP 1 was amended to:

-   Include a maximum cap on market capitalisation of £183.7m

-   Grant options rather than shares at each vesting date such that the PAYE and NI liabilities will only arise at the date of the exercise of the option.

 

An amount of £296,000 has been charged to the profit and loss account for this scheme in the six months ended 30 June 2016 (six months ended 30 June 2015: £271,000) based on estimating the future share price of the company over the duration of the plan. Estimates of future share prices have been used for the remaining payments to calculate the expense for each individual under their remaining tranches, taking into account the maximum cap on the payout to all individuals in the scheme. The corresponding credit is taken to equity. No liabilities were recognised as this is an equity settled share-based payment.

 

Given that the estimate is highly sensitive to share price movement, the following scenarios have been considered:

 

-   If the share price were to increase at a quicker rate than assumed the charge for the period would have reduced by £33K

-   If the share price were to increase at a slower rate than assumed the charge for the period would have increased by £57K

 

 

Notes to the consolidated financial statements

-  

 

LTIP 2:

As with LTIP 1, LTIP 2 is designed to reward Directors and certain other senior employees in a way that aligns the interest of the LTIP participants with the interests of shareholders, as well as with the Group's long term strategic plan. As is the case with LTIP 1, LTIP 2 is Market Capitalisation based and becomes reward bearing above a Company Market Capitalisation of £183.7m. It also has a yearly EPS performance criterion through its life which can be adjusted by the Remuneration Committee.

 

Under the LTIP2 incentive arrangements 36,000 employee shareholder status shares in Personal Group Limited were awarded during 2015 (ESS Shares). Participants had immediate PAYE and NIC charges on the associated market value of the ESS Shares. A further 4,000 shares are available for allocation.

 

The ESS Shares are split equally into four classes, namely A,B,C and D shares, each of which carry a put option which allows the participants to exchange their ESS Shares for Personal Group Holdings Plc ordinary shares in tranches on reaching or exceeding the hurdles of market capitalisation and Annual EPS. Awards can be made annually starting in March 2017 (A shares) through to March 2020 (D shares) based on market capitalisation growth of the Company up to a market capitalisation of £350m and upon achieving the Annual EPS growth targets. The awards will be paid out as 20%, 40%, 70% and 100% cumulatively of the eligible share of growth in market capitalisation for A, B, C and D shares respectively.

 

An amount of £90,000 has been charged to the profit and loss account in the six months ended June 2016 (six months ended June 2015: £nil) for this scheme based on the fair values determined by using a Log-normal Monte-Carlo stochastic model. Significant inputs to the model include the closing share price at grant date, a risk free rate of return of 1.32%, a dividend yield of 4.49% and a share price volatility of 15.78%. 10,000 iterations of the model were run to accurately represent the log-normal nature of returns to equity investments. The corresponding credit is taken to equity. No liabilities were recognised as this is an equity settled share based payment.

 

In addition to the charges above the related employers national insurance charge has been classified as share based expenses on the face of the profit and loss account.

 

 

Notes to the consolidated financial statements

 

 

9         Equity-accounted investment

 

During 2004 the Company entered into a joint venture agreement with Abbeygate Developments Limited to construct a freehold joint office and residential property development on land adjacent to John Ormond House. A joint venture company called Abbeygate Developments (Marlborough Gate 2) Limited was established to construct the property. This company is owned equally by Personal Group Holdings Plc and Abbeygate Developments Limited.

 

The development was funded by way of a loan from Personal Group Holdings Plc until 2014 when the loan was fully repaid.

 

The profit and loss account and balance sheet for this joint venture company are as follows:

 

Profit and loss account

 

6 months ended 30

June 2016

6 months ended 30

June 2015

12 months

ended 31 December 2015

 

 

Unaudited

Unaudited

Audited

 

 

£'000

£'000

£'000

Rent receivable

 

11

81

134

Profit on disposal of apartments

 

-

35

35

Administration expenses

 

(35)

(15)

(31)

 

 

________

________

________

Operating profit

 

(24)

101

138

 

 

________

________

________

Profit on ordinary activities before taxation

 

(24)

101

138

Tax on profit on ordinary activities

 

-

(20)

(28)

 

 

________

________

________

Profit for the financial period retained

 

(24)

81

110

 

 

________

________

________

Personal Group Holdings share of profit

 

(12)

41

55

 

 

________

________

________

 

 

Notes to the consolidated financial statements

 

 

Balance sheet

 

6 months ended 30

June 2016

6 months ended 30

June 2015

12 months

ended 31 December 2015

 

 

Unaudited

Unaudited

Audited

 

 

£'000

£'000

£'000

Current assets

 

 

 

 

Inventories

 

1,126

1,058

1,058

Debtors

 

314

375

280

Cash at bank and in hand

 

24

18

-

 

 

________

________

________

 

 

1,464

1,451

1,338

 

 

 

 

 

Creditors: amounts falling due within one year

 

(197)

(190)

(47)

 

 

________

________

________

Net current assets

 

1,267

1,261

1,291

 

 

________

________

________

Capital and reserves

 

 

 

 

Called up share capital

 

-

-

-

Profit and loss account

 

1,267

1,261

1,291

 

 

________

________

________

Shareholders' funds

 

1,267

1,261

1,291

 

 

________

________

________

Personal Group Holdings share of net assets

 

634

631

646

 

 

________

________

________

 

10         Goodwill

 

For the six months ending 30 June 2016

 

 

BMG

PGM

Let's Connect

Total

 

£'000

£'000

£'000

£'000

Cost

 

 

 

 

At 1 January 2016

9,433

44

10,575

20,052

Additions in the year 

-

-

-

-

 

      ________

     _________

     _________

________

At 30 June 2016

9,433

44

10,575

20,052

 

________

________

________

________

 

 

 

 

 

Amortisation and impairment

 

 

 

 

At 1 January 2016

9,433

44

-

9,477

Impairment charge for year

-

-

-

-

 

      ________

            _________

            _________

            _________

At 30 June 2016

9,433

44

-

9,477

 

      ________

________

________

________

 

 

 

 

 

Net book value at 30 June 2016

-

-

10,575

10,575

 

      ________

________

________

________

 

 

 

 

 

Net book value at 31 December 2015

-

-

10,575

10,575

 

      ________

________

________

________

 

 

Notes to the consolidated financial statements

 

 

11        Intangible assets

 

For the six months ending 30 June 2016

 

LC Customer Value

PG Mobile Software

PG Mobile Licence agreements

PG Mobile Customer Value

Computer software and website development

Total

 

£'000

£'000

£'000

£'000

£'000

£'000

Cost

 

 

 

 

 

 

At 1 January 2016

1,648

506

703

102

470

3,429

Additions in the year 

-

-

-

-

214

214

 

________

________

________

________

________

________

At 30 June 2016

1,648

506

703

102

684

3,643

 

________

________

________

________

________

________

 

 

 

 

 

 

 

Amortisation and impairment

 

 

 

 

 

 

At 1 January  2016

605

506

703

102

153

2,069

Amortisation charge for year

165

-

-

-

88

253

 

________

________

________

________

________

________

At 30 June 2016

770

506

703

102

241

2,322

 

________

________

________

________

________

________

Net book value at 30 June 2016

878

-

-

-

443

1,321

 

________

________

________

________

________

________

Net book value at 31 December 2015

1,043

-

-

-

317

1,360

 

________

________

________

________

________

________

 

 

12         Acquisitions of business

 

Acquisitions in the prior period

 

On 1 April 2015 Personal Group Mobile Limited (PGM) was incorporated as a new subsidiary within the Group and on 17 April 2015 PGM purchased the trade and certain assets and liabilities of shebang Technology Group Limited (shebang) out of administration for a total consideration of £1.4m. £0.7m was paid to the administrator of shebang and a further £0.7m was paid to Hutchison 3G UK Limited (Three UK) in respect of novation of a Mobile Virtual Network Operator Services agreement

 

 

Notes to the consolidated financial statements

 

 

Effect of acquisition

 

The acquisition had the following effect on the Group's assets and liabilities.

 

 

 

*Recognised Values on Acquisition

 

 

£'000

Net assets acquired:

 

 

Licence agreement (intangible)

 

703

Software (intangible)

 

506

Customer value (intangible)

 

102

Property, plant and equipment

 

5

Inventories

 

55

Trade and other receivables

 

20

Trade and other payables

 

(96)

 

 

_________

Net identifiable assets and liabilities

 

1,295

 

 

_________

Consideration paid

 

1,390

 

 

_________

Goodwill on acquisition

 

95

 

 

_________

 

 

 

*The recognised values above were determined on a fair value basis.

 

At 31 December 2015 the intangible assets and goodwill were reviewed for impairment. As the business had not managed to meet the revenue stream targets originally envisaged and given the future uncertainty and relative immaturity of the business, both the goodwill and intangible asset values were fully impaired at 31 December 2015.

 

On 7 July 2016 the Group announced the intention to close down PG Mobile by the end of 2016. It is anticipated that the Group will incur an additional £1m cost in the current financial year in respect of this.

 

13         Post Balance Sheet Events

As detailed in note 12, on 7 July 2016 the Group announced the intention to close down PG Mobile by the end of the year. As the decision was made and communicated post period end no provision has been included in these interim statements for this closure.

 

 

Financial calendar for the year ending 31 December 2016

 

The company announces the following dates in its financial calendar for the year ending 31 December 2016:

·    Preliminary results for the year ending 31 December 2016

-   March 2017

·    Publication of Report and Accounts for 2016

-   March 2017

·    AGM

-   April 2017

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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