Source - LSE Regulatory
RNS Number : 0827O
Personal Group Holdings PLC
29 September 2023
 

29 September 2023

 

PERSONAL GROUP HOLDINGS PLC

("Personal Group", "Company" or "Group")

Interim Results & Interim Dividend for the six months ended 30 June 2023


Positive first half performance, driven by strong growth in Insurance contribution

 

Financial Highlights

 

·   

Total revenue for the six months to 30 June 2023 increased 34% to £46.4m (H1 2022: £34.7m). Whilst driven primarily by voucher resales through the benefits platform of £24.6m (H1 2022: £13.8m), growth has also been seen across other key areas

·   

Adjusted EBITDA* increased 75% to £2.7m (H1 2022: £1.5m), in line with management expectations for H1, driven primarily by continued growth of the insurance book

·   

Profit before tax increased to £1.6m (H1 2022: £0.5m) in line with adjusted EBITDA growth

·   

Basic EPS increased to 4.5p (H1 2022: 1.7p)

·   

Strong balance sheet and liquidity with cash and deposits at period end of £22.6m (Dec 2022: £18.7m), and debt free

·   

Interim dividend increased by 10% to 5.85p (H1 2022: 5.3p), reflecting the Board's continued confidence in the Group's prospects

 

Operational Highlights

 

·   

Strong growth in Affordable Insurance, driven by an increase in new sales and high retention rates - new annualised insurance sales in the first six months rose by 34% to £5.8m (H1 2022: £4.3m)

·   

Continued growth in recurring revenue streams providing increased visibility for H2 2023 and 2024:


Annualised Premium Income (API) increased by 6% to £29.6m (31 Dec 22: £28.0m)


Annualised Recurring Revenue (ARR) from our Benefits platform grew 10%, ending the period with Hapi ARR of £2.2m and Sage Employee Benefits ARR of £3.3m respectively (31 Dec 2022: £2.0m and £3.0m respectively)


ARR from Innecto Digital products grew to £0.6m (31 Dec 22: £0.5m)

·   

52 new client wins (HY22: 52) with the award of a place on the Crown Commercial Services framework serving as an endorsement of the Group's offering

·   

Paula Constant assumed the role of Group CEO on 1 August 2023

·   

Strong new insurance sales have continued at the start of H2 with retention rates remaining robust

·   

Next generation Hapi 2.0 successfully launched internally, enabling future roll out to customers and partners

·   

Trading remains in line to meet market's full year expectations

·   

The Board is confident in the long-term outlook for the business

 

*Adjusted EBITDA is defined as earnings before interest, tax, depreciation, amortisation of intangible assets, goodwill impairment, share-based payment expenses, corporate acquisition costs and restructuring costs.

 

 

-ENDS-

 

 

 

For more information please contact:

Personal Group Holdings Plc


Paula Constant / Sarah Mace

+44 (0)1908 605 000



Cavendish Securities plc


Camilla Hume / Callum Davidson (Nominated Adviser)

+44 (0)20 7397 8900

Jasper Berry (Sales)

 




Alma


Caroline Forde / Joe Pederzolli / Kinvara Verdon

+44 (0)20 3405 0205

personalgroup@almapr.co.uk

 

Notes to Editors

 

Personal Group Holdings Plc (AIM: PGH) is a workforce benefits and services provider. The Group enables employers across the UK to improve employee engagement and support their people's physical, mental, social and financial wellbeing. Its vision is to create a brighter future for the UK workforce.

 

Personal Group provides health insurance services and a broad range of employee benefits, engagement, and wellbeing products. Its offerings can also be delivered through its proprietary app, Hapi.

 

The Group's growth strategy is centred around widening the footprint of the business into the SME, talent-led & Public Sectors, thereby expanding the addressable customer base. In addition, it aims to grow in its existing industrial heartlands, to re-invigorate growth in insurance policyholders and to drive the use of its SaaS offerings.

 

Group Clients include: Airbus, B & Q, Barchester Healthcare, British Transport Police, Merseyrail, Randstad, Royal Mail Group, The Royal Mint, the Sandwell & Birmingham NHS Trust, Stagecoach Group plc, and The University of York.

 

For further information on the Group please see www.personalgroup.com

 

 



 

CEO STATEMENT

 

conclude on this quantitative evaluation of commercial, operations and technology to identify and shape our strategic direction in terms of expanding our Insurance offering, monetising our Hapi 2.0 platform, with a core focus on the growth of partnerships, and streamlining the organisation around the areas in which there are the greatest opportunities to grow value for shareholders.

The Board and I would like to thank Deborah Frost, the Group's previous CEO, for her leadership of Personal Group in recent years. Her reinvigoration of the insurance offering and investment in the Sage partnership have, I believe, placed the business in an excellent position for further expansion.

Divisional H1 Segmental Analysis

Affordable Insurance

Benefits platform

Revenue from digital platform subscriptions and commissions from third party benefit suppliers which sit on the benefits platform rose to £2.9m (H1 2022: £2.2m) with a resulting growth in EBITDA of 35% to £1.8m (H1 2022: £1.3m).

Continued growth was seen in recurring subscription income, across both Enterprise clients, taking Hapi, and Sage Employee Benefits, which ended the half year with ARR of £2.2m and £3.3m respectively (31 Dec 2022: £2.0m and £3.0m).

Income from voucher resales through the benefits platform rose to £24.6m (H1 2022: £13.8m). Whilst the EBITDA contribution from this remains minimal this significant growth in revenue reinforces the relevance of our product to our clients, enabling them to address cost of living issues with their employees, who collectively saved over £1.3m through use of the discount vouchers on the platform in the six months to June.

Our investment in the next generation of the platform, Hapi 2.0, will provide us with opportunities to both enhance the quality of our provision and to put us in a position to actively seek out and continue discussions with additional external partners, to widen our reach, and build further ARR streams.

Pay and Reward

The contribution from Pay & Reward, comprising Innecto and Quintige Consulting Group, has remained steady with revenue of £1.1m (H1 2022: £0.9m) and EBITDA of £0.2m (H1 2022: £0.3m). This division has shown resilience despite the attention of their normal audience of HR Directors being diverted to the tactical focus of dealing with the cost-of-living crisis for their employees and significant growth in the pipeline towards the end of the period gives confidence for improved performance in H2.

Other Owned Benefits

(Let's Connect)

 

£3.6m (H1 2022: £5.4) and an EBITDA loss of (£0.3m) (H1 2022: 0.0m)

Interim Dividend

The Company is pleased to announce that an interim dividend for 2023 of 5.85p, representing a 10% increase on the previous year, will be paid on 16 November 2023 to members on the register as at 13 October 2023 (the record date). Shares will be marked ex-dividend on 12 October 2023. The Board has considered the level of dividend in the context of the full year results and the level reflects their continued confidence in the Group's business model and prospects.

Current Trading and Outlook

Trading into Q3 has remained robust. The Group is trading in line with management's expectations to date and this underpins the Board's confidence in meeting market expectations for the full year.

The market opportunity is, I believe, considerable and I look forward to updating shareholders on strategic progress in the coming months.

Paula Constant

Group Chief Executive

29 September 2023


Consolidated Income Statement

 

 

 

 


 

6 months

ended

30 June 2023

Unaudited

 

6 months

ended

30 June 2022

Unaudited

(*Restated)


Note

£'000

£'000

 








Insurance revenue


13,848

12,301

Employee benefits and services


7,568

8,436

Voucher resale income


24,648

13,848

Other income


69

128

Investment income


295

29

 


________

________

Revenue


46,428

34,742

 


________

________

 


 

 

Insurance service expenses

4

(7,230)

(6,890)

Net expenses from reinsurance contracts held


(57)

(77)

Employee benefits and services expenses


(7,359)

(8,268)

Voucher resale expenses


(24,660)

(13,872)

Other expenses


(41)

(38)

Group administration expenses


(5,346)

(4,679)

Share based payment expenses


(110)

(152)

Charitable donations


(50)

(50)

 


________

________

Expenses


(44,853)

(34,026)



________

________





Operating profit


1,575

716

Finance costs


(22)

(13)

Unrealised profit / (loss) on equity investments


77

(244)

 


________

________

Profit before tax


1,630

459

Tax

5

(221)

73

 


________

________

Profit for the period after tax


1,409

532

 


________

________

Total comprehensive income for the period


1,409

532

 


________

________


Earnings per share


 Pence

Pence

Basic


4.5

1.7

Diluted


4.5

1.7

 

 

 

 

 

 

The total comprehensive income for the period is attributable to equity holders of Personal Group Holdings Plc.

 

 

* With the transition to IFRS 17, certain comparative amounts have been re-stated as if the standard had always been in effect. See Note 11 for full details.


Consolidated Balance Sheet

 

 


 

                                                                                                                                                                                                                                                                                                                                            


At 30 June 2023

Unaudited

At 31 Dec 2022

Audited

 


Note

£'000

£'000

 

ASSETS




 

Non-current assets




 

Goodwill

7

2,684

2,684

 

Intangible assets

8

                     2,858

                     2,384

 

Property, plant and equipment

9

                     5,064

4,639

 



_______

_______

 



10,606

9,707

 



________

________

Current assets




 

Financial assets

10

3,137

3,031

 

Trade and other receivables


                     7,434

                  15,863

 

Reinsurance contracts held


                        55

                        95

 

Inventories


                     467

                        726

 

Cash and cash equivalents


                  20,827

                  16,958

 

Current tax assets


                        312

                        229

 



________

________

 



32,232

36,902

 



________

________

 

Total assets


42,838

46,609

 



________

________

 

 









 

 


Consolidated Balance Sheet

 

 




At 30 June 2023

Unaudited

At 31 Dec 2022

Audited


Note

£'000

£'000

 




EQUITY








Equity attributable to equity holders of Personal Group Holdings plc




Share capital


1,562

                     1,562

Share premium


1,134

                     1,134

Capital redemption reserve


24

                          24

Other reserve


(48)

(55)

Share based payment reserve

  

477

367

Profit and loss reserve


27,694

27,946



________

________

Total equity


30,843

30,978

 


________

________

                                                                                               

 

LIABILITIES




Non-current liabilities




Deferred tax liabilities


781

681

Trade and other payables


522

130



________

________

 


1,303

811

 


________

________

 




Current liabilities




Trade and other payables


7,725

11,346

Insurance contract liabilities


2,967

3,474



________

________

 


10,692

14,820



________

________

 




 


________

________

Total liabilities


11,995

15,631

 


________

________



 

 



________

________

Total equity and liabilities


42,838

46,609



________

________

 

 

 


Consolidated Statement of Changes in Equity for the six months ended 30 June 2023

 


                                   

 

 

 

Share capital

Share Premium

Capital

redemption

reserve

Other reserve

Share Based Payment Reserve

Profit & loss reserve

Total equity


£'000

£'000

£'000

£'000

£'000

£'000

£'000


 

 

 

 

 

 

 

Balance as at 1 January 2023

1,562

1,134

24

(55)

367

27,946

30,978

 

________

________

________

________

________

________

________

Dividends

                  -  

                            -  

                            -  

-

                      -  

(1,656)

(1,656)

Employee share-based compensation

                  -  

                            -  

                            -  

-

110

-

110

Proceeds of SIP* share sales

                  -  

                            -  

                            -  

-

-

12

12

Cost of SIP shares sold

                  -  

                            -  

                            -  

17

-

(17)

-

Cost of SIP shares purchased

                  -  

                            -  

                            -  

(10)

-

-

(10)

 

________

________

________

________

________

________

________

Transactions with owners

-

-

-

7

110

(1,661)

(1,544)


________

________

________

________

________

________

________

Profit for the period

                  -  

                            -  

                            -  

-

                      -  

1,409

1,409

 

________

________

________

________

________

________

________

Total comprehensive income for the period

-

-

-

-

-

1,409

1,409

 

________

________

_______

_______

_______

_______

_______

Balance as at 30 June 2023

1,562

1,134

24

(48)

477

27,694

30,843

 

________

________

________

________

________

________

________

 

 

* PG Share Ownership Plan (SIP)


Consolidated Statement of Changes in Equity for the six months ended 30 June 2022

                                    

   

 

 

 

Share capital

Share Premium

Capital

redemption

reserve

Other reserve

Share Based Payment Reserve

Profit & loss reserve

Total equity


£'000

£'000

£'000

£'000

£'000

£'000

£'000


 

 

 

 

 

 

 

Balance as at 1 January 2022

1,561

1,134

24

(32)

158

38,436

41,281

 

________

________

________

________

________

________

________

Dividends

                  -  

                            -  

                            -  

-

                      -  

(1,654)

(1,654)

Employee share-based compensation

                  -  

                            -  

                            -  

-

152

-

152

Proceeds of SIP* share sales

                  -  

                            -  

                            -  

-

-

11

11

Cost of SIP shares sold

                  -  

                            -  

                            -  

9

-

(9)

-

Cost of SIP shares purchased

                  -  

                            -  

                            -  

(18)

-

-

(18)

Purchase of New shares


                            -  

                            -  

(20)

-

-

(20)

Shares issued in year - LTIP exercise

1

                            -  

                            -  

-

(63)

63

1

 

________

________

________

________

________

________

________

Transactions with owners

1

-

-

(29)

89

(1,589)

(1,528)


________

________

________

________

________

________

________

Profit for the period

                  -  

                            -  

                            -  

-

                      -  

532

532

 

________

________

________

________

________

________

________

Total comprehensive income for the period

-

-

-

-

-

532

532

 

________

________

_______

_______

_______

_______

_______

Balance as at 30 June 2022

1,562

1,134

24

(61)

247

37,379

40,285

 

________

________

________

________

________

________

________

 

 

 

* PG Share Ownership Plan (SIP)


Consolidated Statement of Cash Flows

 



6 months

ended

30 June 2023

Unaudited

6 months

ended

30 June 2022

Unaudited


£'000

£'000




Net cash from operating activities (see opposite)

6,442

3,023


______

______

Investing activities

 

 

Additions to property, plant and equipment

(99)

(222)

Additions to intangible assets

(872)

(473)

Purchase of financial assets

(29)

(1,509)

Sale of financial assets

-

871

Interest received

295

29


______

______

Net cash from investing activities

(705)

(1,304)


______

______

Financing activities



Proceeds from issue of shares

-

1

Purchase of own shares by the SIP

(6)

(31)

Proceeds from disposal of own shares by the SIP

12

6

Interest paid

-

(4)

Payment of lease liabilities

(218)

(226)

Dividends paid

(1,656)

(1,654)


______

______

Net cash used in financing activities

(1,868)

(1,908)


______

______

Net change in cash and cash equivalents

3,869

(189)

Cash and cash equivalents, beginning of period

16,958

20,291

 

_______

_______

Cash and cash equivalents, end of period

20,827

20,102

 

________

________

 


Consolidated Statement of Cash Flows

 



6 months

ended

30 June 2023

Unaudited

6 months

ended

30 June 2022

Unaudited


£'000

£'000

Operating activities



Profit after tax

1,409

532

Adjustment for:



Depreciation

506

493

Amortisation of intangible assets

398

364

Loss on disposal of property, plant and equipment

14

24

Interest received

(295)

(29)

Realised and unrealised investment losses

(77)

244

Interest charge

22

13

Share-based payment expenses

117

152

Taxation expense recognised in income statement


Changes in working capital:



Trade and other receivables

8,469

5,675

Trade and other payables

(4,385)

(4,129)

Inventories

259

(161)

Taxes paid

(209)

(82)


________

________

Net cash from operating activities


________

________

 


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 services 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 the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 December 2022.

 

The financial information for the year ended 31 December 2022 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 2022 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 29 September 2023.

 

2              Accounting policies

 

These June 2023 interim consolidated financial statements of Personal Group Holdings Plc are for the six months ended 30 June 2023.  These interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting as endorsed for use in the UK.

 

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 2022.

 

These financial statements have been prepared in accordance with IFRS standards and IFRIC interpretations as adopted by the UK, issued and effective as at 30 June 2023.

 

Changes in accounting policies and new standards

Personal Group has initially applied IFRS 17 including any consequential amendments to other standards, from 1 January 2023. There are no other new or amended IFRS standards, that have a material effect, that have become effective during the period ended 30 June 2023.

 

IFRS 17 has had a significant impact on accounting for insurance contracts. As a result, Personal Group has re-stated certain comparative amounts particularly in the presentation of its Income Statement. Personal Group's updated accounting policies for reinsurance contracts are set out below. Disclosures relating to the transition to IFRS 17 have been set out in note 12.

 

Insurance contracts

IFRS 17 sets out the classification, measurement and presentation and disclosure requirements for insurance contracts. It requires insurance contracts to be measured using current estimates and assumptions that reflect the timing of cash flows and recognition of profits as insurance services are delivered. The standard provides two main measurement models which are the General Measurement Model ("GMM") and the Premium Allocation Approach ("PAA").

 

The PAA simplifies the measurement of insurance contracts for remaining coverage in comparison to the GMM. The PAA is very similar to Personal Group's previous accounting policies under IFRS 4 for calculating revenue, however there are some presentation changes.

 

The GMM is used for the measurement of the liability for incurred claims.

Notes to the Consolidated Financial Statements

 

 


PAA eligibility

Under IFRS 17, Personal Group's insurance contracts issued and are all eligible to be measured by applying the PAA, due to meeting the following criteria:

 

·           Insurance contracts with coverage period of one year or less are automatically eligible. This covers all hospital, convalescence, and death benefit insurance contracts.

·           Modelling of contracts with a coverage period greater than one year (employee default policies) produces a measurement for the group of reinsurance contracts that does not differ materially from that which would be produced applying the GMM.

Level of aggregation

Personal Group manages all insurance contracts as one portfolio within the insurance operating segment as they are subject to similar risks.

 

Onerous contracts

Under the PAA, it is assumed there are no contracts in the portfolio that are onerous at initial recognition, unless there are facts and circumstances that may indicate otherwise. Given the short-tailed nature of policies issued be Personal Group, management do not consider there to be any material circumstance under which policies in issue would be onerous.

 

Modification and derecognition

Personal Group derecognises insurance contracts when the rights and obligations relating to the contract are extinguished (meaning discharged, cancelled, or expired) or the contract is modified such that the modification results in a change in the measurement model or the applicable standard for measuring the contract.

 

Contract boundaries

The measurement of insurance contracts includes all future cash flows expected to arise within the boundary of each contract. Cash flows are within the boundary of an insurance contract if they arise from substantive rights and obligations that exist during the reporting period in which Personal Group can compel the policyholder to pay premiums or in which it has a substantive obligation to provide the policyholder with services.

 

Personal Group assesses the contract boundary at initial recognition and at each subsequent reporting date to include the effects of changes in circumstances on the Group's substantive rights and obligations. The assessment of the contract boundary, which defines the future cash flows that are included in the measurement of the contract, requires judgement and consideration.

 

Personal Group primarily issues insurance contracts which provide coverage to policyholders in the event of hospitalisation, convalescence, or death. While the contracts are typically weekly or monthly in their term length, the contract boundary is assessed with consideration of the delayed timing around claims of this nature and the timing of expected future claims payments with reference to the covered loss event.

 

Measurement - Liability for remaining coverage

On initial recognition of insurance contract, the carrying amount of the liability for remaining coverage is measured as the premiums received on initial recognition, if any, minus any reinsurance acquisition expense cash flows allocated to the contracts and any amounts arising from the derecognition of the prepaid reinsurance acquisition expense cash flows asset. Personal Group has chosen not to expense insurance acquisition expense cash flows as incurred on its contracts as they have coverage of less than one year.

 

Subsequently, at the end of each reporting period, the liability for remaining coverage is increased by any additional premiums received in the period and decreased for the amounts of expected premium cash flows recognised as reinsurance revenue for the services provided in the period.

 

Personal Group has elected not to adjust the liability for remaining coverage for the time value of money as its insurance contracts do not contain a significant financing component.



Notes to the Consolidated Financial Statements

 

 


Measurement - Liability for incurred claims

The liability for incurred claims represents the estimated ultimate cost of settling all insurance claims arising from events that have occurred up to the end of the reporting period, including the operating costs that are expected to be incurred in the course of settling such claims. The liability for claims is derived from the estimated fulfilment cash flows relating to expected claims. The fulfilment cash flows incorporate, in an unbiased way, all reasonable and supportable information available, without undue cost of effort, about the amount, timing and uncertainty of those future cash flows. They also include an explicit risk adjustment. Estimates of future cash flows for incurred claims are not discounted on initial recognition due to the immateriality of the impact of the time value of money as discussed in Note 12.

 

               

3              Segment analysis

 

The segments used by management to review the operations of the business are disclosed below.

 

1)            Affordable 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.

 

Personal Assurance (Guernsey) Limited (PAGL), a subsidiary within the Group, is regulated by the Guernsey Financial Services Commission and has been underwriting death benefit policies since March 2015.

 

This operating segment derives the majority of its revenue from the underwriting by PA and PAGL of insurance policies that have been bought by employees of host companies via bespoke benefit programmes. During 2020 PAGL began underwriting employee default insurance for a proportion of LC customers.

 

2)            Other Owned Benefits

 

This segment constitutes any goods or services in the benefits platform supply chain which are owned by the Group. At present this is made up of a technology salary sacrifice business trading as PG Let's Connect, purchased by the Group in 2014.

 

3)            Benefits Platform

 

Revenue in this segment relates to the annual subscription income and other related income arising from the licensing of Hapi, the Group's employee benefit platform. This includes sales to both the large corporate and SME sectors.

 

4)            Pay and Reward

 

Pay and Reward refers to the trade of the Group's pay and reward consultancy Company Innecto, purchased in 2019, and QCG, purchased in 2022. Revenue in this segment relates to consultancy, surveys, and licence income derived from selling digital platform subscriptions.

 

5)            Other

 

The other operating segment includes revenue generated from the resale of vouchers. This segment also consists of revenue generated by Berkeley Morgan Group (BMG) and its subsidiary undertakings along with any investment and rental income obtained by the Group.

 



Notes to the Consolidated Financial Statements

 

 


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

 


6 months

ended

30 June 2023

         Unaudited

6 months

ended

30 June 2022

   Unaudited

 

£'000

£'000

Revenue by Segment



Affordable Insurance

13,848

12,301

Other Owned Benefits

3,563

5,387

Benefits Platform

4,356

3,574

Platform - Group Elimination

(1,425)

(1,425)

Pay & Reward

1,074

900

Other Income:



Voucher resale

24,648

13,848

Other

69

128

Investment income

            295

            29

Group Revenue

46,428

34,742

 

 

 

Adjusted EBITDA contribution by segment

 

 

Affordable Insurance

5,143

3,970

Other Owned Benefits

(287)

(32)

Benefits Platform

1,750

1,298

Pay & Reward

172

282

Other

387

(149)

Group admin and central costs

(4,449)

(3,798)

Charitable donations

(50)

(50)

Adjusted EBITDA

2,666

1,521

Depreciation

(506)

(493)

Amortisation

(398)

(364)

Interest

(22)

(13)

Share based payments expenses

(110)

(152)

Corporate acquisition costs

-

(40)

Profit before tax

1,630

459


 

 

 

All income was derived from customers that are based in the UK.

 

 

4              Insurance service expenses

 

 

 

6 months ended

30 June 2023

6 months ended

30 June 2022

 


£'000

 

£'000

Claims incurred

3,750

3,663

Insurance operating expenses

3,480

3,227


________

________


7,230

6,890


________

________

 

 

 

 

 

Notes to the Consolidated Financial Statements

 

 


5              Taxation

 

The tax expense recognised is based on the weighted average annual 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-month period ended 30 June 2023 was 13.6% (six-month period ended 30 June 2022: 15.9% credit). The tax charge recognised in the period continues to benefit from the application of the super-deduction capital allowances tax relief, eligible until 31 March 2023.

 

 

6              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 2023

EPS

Pence

6 months ended

30 June 2022

EPS

Pence

 





Basic

31,230,807

4.5

31,210,686

1.7

Diluted

31,230,807

4.5

31,218,953

1.7

 

During the first six months of 2023 Personal Group Holdings Plc paid dividends of £1,654,000 to its equity shareholders (2022: £1,592,000). This represents a payment of 5.30p per share (2022: 5.10p).           

 

 

 

6 months ended

30 June 2023

6 months ended

30 June 2022


                              £'000

                              £'000




Dividends paid or provided for during the period

1,656

1,654


   _____

   _____

 

7         Goodwill

 


PG Let's Connect

Innecto

QCG

Total


£'000

£'000

£'000

£'000

Cost





At 1 January 2023

10,575

2,121

563

13,259

Additions in the year 

-

-

-

-


________     _________

________     _______

________     _______

________

At 30 June 2023

10,575

2,121

563

13,259


________     _________

________     _________

________     _________

________

Amortisation and impairment





At 1 January 2023

10,575

-

-

10,575

Impairment charge for year

-

-

-

-


      ________      _________

      ________      _________

      ________      _________

      ________      _________

At 30 June 2023

10,575

-

-

10,575


________

________

________

________

Net book value at 30 June 2023

-

2,121

563

2,684

 

________

________

________

________

Net book value at 31 December 2022

-

2,121

563

2,684

 

________

________

________

________



Notes to the Consolidated Financial Statements

 

 


8        Intangible assets

 


Customer Value

Computer software and development

Innecto Technology

Internally Generated Computer Software

Work in Progress

Total


£'000

£'000

£'000

£'000

£'000

£'000

Cost

 






At 1 January 2023

2,711

2,678

298

506

1,003

7,196

Transfers

-

-

-

-

-

-

Additions

-

52

-

-

820

872

Disposals

-

-

-

-

-

-


________

________

________

________

________

________

At 30 June 2023

2,711

2,730

298

506

1,823

8,068


________

________

________

________

________

________

Amortisation

 






At 1 January 2023

2,238

1,838

230

506

-

4,812

Amortisation charge for the year

106

262

30

-

-

398

Disposals in the period

-

-

-

-

-

-


________

________

________

________

________

________

At 30 June 2023

2,234

2,100

260

506

-

5,210


________

________

________

________

________

________

Net book amount at 30 June 2023

367

630

38

-

1,823

2,858

 

________

________

________

________

________

________

Net book amount at 31 December 2022

473

840

68

-

1,003

2,384

 

________

________

________

________

________

________

 

9              Property, plant and equipment

 


Freehold land and properties

Motor vehicles

Computer

equipment

Furniture fixtures & fittings

Leasehold improve-

ments

Right of use Assets

Total


£'000

£'000

£'000

£'000

£'000

£'000

£'000

Cost








At 1 January 2023

5,037

157

1,443

2,318

38

1,139

10,132

Additions

-

-

69

30

-

845

944

Disposals

-

(104)

-

-

-

(210)

(314)


______

______

______

______

______

______

______

At 30 June 2023

5,037

53

1,512

2,348

38

1,774

10,762


______

______

______

______

______

______

______

Depreciation








At 1 January 2023

1,916

134

1,058

1,474

38

873

5,493

Provided in the period

43

5

127

105

-

226

506

Disposals

-

(104)

-

-

-

(197)

(301)


______

______

______

______

______

______

______

At 30 June 2023

1,959

35

1,185

1,579

38

902

5,698


______

______

______

______

______

______

______

Net book amount at

30 June 2023

3,078

18

327

769

-

872

5,064


______

______

______

______

______

______

______

Net book amount at

31 December 2022

3,121

23

385

844

-

266

4,639


______

______

______

______

______

______

______

 



Notes to the Consolidated Financial Statements

 

 


10   Financial Investments

 

 

At 30 June 2023

Unaudited

At 31 December 2022

Audited


£'000

£'000

Bank deposits

1,771

1,742

Equity investments

1,366

1,289


________

________


3,137

3,031


_________

_________

 

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).

 

Bank deposits, held at amortised cost, are due within 6 months and the amortised cost is a reasonable approximation of the fair value. These would be included within Level 2 of the fair value hierarchy.

 

Equity Investments are held at fair value and are considered Level 1 financial assets.

 

11         Long Term Incentive Plan (LTIP)

 

During the period, the Remuneration Committee approved a third tranche of share awards under the existing LTIP approved on 6 April 2021. Further details of the award can be found in the RNS announcement from 21 June 2023.

 

Under the scheme share options of Personal Group Holdings Plc are granted to senior executives with an Exercise Price of 5p (nominal value of the shares). The share options have various market and non-market performance conditions which are required to be achieved for the options to vest. The options also contain service conditions that require option holders to remain in employment of the Group. The market and non-market performance conditions are set out below.

 

Total Shareholder Return (Market condition)

 

42.5% of the awards vest under this condition. Subject to Compound Annual Growth Rate (CAGR) of the Total Shareholder Return (TSR) over the Performance Period.

 

EBITDA Targets (Non-market condition)

 

42.5% of the awards vest under this condition. Subject to cumulative EBITDA over the Performance Period.

 

Environmental, social and governance targets ("ESG") Targets (Non-market condition)

 

Up to 15% of the awards vest under this condition. The awards shall vest upon the Remuneration Committee determining that all ESG targets have been met.

 

The fair value of the of the share options is estimated at the grant date using a Monte-Carlo binomial option pricing model for the market conditions, and a Black-Scholes pricing model for non-market conditions.



 

Notes to the Consolidated Financial Statements

 

 

 


However, the above performance condition is only considered in determining the number of instruments that will ultimately vest.

 

There are no cash settlements alternatives. The Group does not have a past practice of cash settlement for these share options. The Group accounts for the LTIP as an equity-settled plan.

 

In total, £118,000 of employee share-based compensation has been included in the consolidated income statement to 30 June 2023 (2022: £142,000). The corresponding credit is taken to equity. No liabilities were recognised from share-based transactions. The remaining £10,000 (2022: £10,000) of share-based compensation expense relates to the Company Share Option Plan (CSOP).

 

 

12           Transition to IFRS 17

 

IFRS 17, Insurance Contracts

IFRS 17 replaces IFRS 4 Insurance Contracts for annual periods on or after 1 January 2023. In addition to the

updated accounting policies discussed in Note 2, some of the key differences between IFRS 17 and the accounting policies previously adopted by Personal Group under IFRS 4 are outlined below.

 

Changes to classification and measurement

The adoption of IFRS 17 did not change the classification of Personal Group's insurance contracts issued. Under IFRS 17, Personal Group's insurance contracts are all eligible to be measured by applying the Premium Allocation Approach ("PAA").

 

The measurement principles of the PAA are very similar to accounting policies previously applied under IFRS 4 but are different in the following key areas:

 

·       Under IFRS 4 gross premiums written were recognised at the top of the consolidated income statement with an adjustment for the change in unearned premium liability and outward reinsurance premiums. IFRS 17 defines insurance revenue as the expected premium cash flows net of any deductions that are paid to reinsurance providers, excluding any investment components. As such, the new Income Statements consolidates those previous balances into one insurance income figure for the period.

·       If contracts are assessed as being onerous, a loss component is recognised. Previously these may have formed an unexpired risk reserve provision determine through the liability adequacy test. No onerous contracts have been identified and, as a result, there has been no transition adjustment for this.

·       Under IFRS 4, contract specific acquisition cash flows were deferred and amortised. Under IFRS 17, the recognition of insurance acquisition expense cash flows includes an allocation of acquisition-related operating expenses incurred in the period. The deferral and amortisation of these expenses, under both IFRS 4 and IFRS 17, is spread over the life of insurance contracts. As the vast majority of Personal Group's insurance contracts are weekly or monthly in length, there is no deferral and amortisation of acquisition costs performed.

·       In the measurement of the insurance contract liability, under IFRS 4, losses and loss adjustment expenses were required to be undiscounted without an explicit need for an adjustment for non-financial risk. Under IFRS 17, the liability for incurred claims is typically determined on a discounted expected value basis and includes an explicit risk adjustment for non-financial risk. Personal Group has assessed the impact of discounting of expected future insurance losses and, due to the majority of losses being paid in the first 12 months following a loss event, this impact was insignificant. In addition to this, Personal Group has always included a risk adjustment into its chain-ladder method for calculating its insurance contract liability. As a result, there has been no change in calculation method on transition to IFRS 17.

 

 

 

 

Changes to presentation and disclosure

Under IFRS 4, separate assets and liabilities were recognised for premium receivables, deferred acquisition costs, unearned premiums, and loss and loss adjustment reserves. These assets and liabilities were shown aggregated for all insurance contracts. While IFRS 17 groups the insurance assets and liabilities by portfolio, as defined by Personal Group's level of aggregation accounting policy (see Note 2), all insurance contracts are treated as one aggregate class so there has been no impact of the change on transition.

 

The Group Income Statement has also changed in its presentation. Previously, Personal Group reported items such as gross premiums written, movement in unearned provisions and the reinsurer's share of these. Under IFRS 17, the standard defines and requires distinct presentation of insurance revenue and insurance service expenses.

 

 

Transition to IFRS 17

Changes in accounting policies resulting from the adoption of IFRS 17 have been applied using a full retrospective approach. Under the full retrospective approach, as at 1 January 2022 Personal Group identified, recognised, and measured each group of reinsurance contracts as if IFRS 17 had always applied.

 

Were they to have arisen, Personal Group would have derecognised any existing balances that would not exist had IFRS 17 always applied and recognised any resulting net difference in equity. There were adjustments to the calculations on the balance sheet recognised on the transition to IFRS 17.

 

 

13           Post balance sheet events

 

There have been no post balance sheet events.

 

 

14           Financial calendar for the year ending 31 December 2023

 

The Company announces the following dates in its financial calendar for the year ending 31 December 2022:

 

·      Preliminary results for the year ending 31 December 2023                               -               March 2024

·      Publication of Report and Accounts for 2023                                                        -               March 2024

·      AGM                                                                                                                              -               April/May 2024

 

 

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