REG - Personal Group - Interim Results <Origin Href="QuoteRef">PGH.L</Origin> - Part 1

Personal groupAnnouncement

29/10/2014 13:58

RNS Number : 4320S
Personal Group Holdings PLC
24 September 2014
Press Release 
24 September 2014
PERSONAL GROUP HOLDINGS PLC
 ("Personal Group" or "the Group")
Interim Results
Personal Group Holdings Plc (AIM: PGH), a leading provider of employee benefits, employee related insurance products and financial services in the UK, is pleased to report its interim results for the six months ended 30 June 2014:
Highlights
Revenue increased by 24.8% to 17.4m (2013: 13.9m)
New core business generation increased 4.6% to 5.1m (2013: 4.9m)
Underlying EBITDA* increased by 10.6% to 4.4m (2013: 4.0m), driven largely by core business
Key financials:

H1 2014
H1 2013
Profit before tax
3.5m
3.3m
Interest
-
-
Depreciation
0.2m
0.3m
Amortisation of intangible assets
0.0m
-
Share based expenses
0.4m
0.4m
Acquisition costs
0.3m
-
EBITDA*
4.4m
4.0m
* Earnings before interest, tax, depreciation, amortisation, share based expenses and acquisition costs
Profit before tax increased by 4.4% to 3.5m (2013: 3.3m) 
Group balance sheet remains strong with total equity (shareholders' funds) of 24.7m (31 December 2013: 25.2m) and no debt
Dividends per share paid in the period up 5.4% to 9.8 pence per share (2013: 9.3 pence)
Basic EPS increased by 3.6% to 8.62p (2013: 8.32p)
Acquisition of Lets Connect IT Solutions Limited completed in March 2014
Major contract wins secured in the period including Four Seasons Health Care, Translink and Oak Furniture Land
 
Mark Scanlon, Chief Executive of Personal Group, commented: 
"2014 is a year in which we expect to see the positive results of our extensive investment and change programs over the past two years. The strong performance during the period gives us confidence that we will indeed fulfil this aspiration set out two years ago. Return on the investment is coming through in top line as well as bottom line growth. Our new business sales continue to accelerate whilst at the same time the Group is achieving cost efficiencies.
"We continue to execute against our stated strategy and our recent acquisition of Lets Connect is now integrated and operating ahead of our expectations. Our core business is in a strong position and we have a firm platform upon which to continue to grow and expand the Group."
-Ends-
Enquiries:
Personal Group Holdings Plc
Tel: +44 (0) 207 398 7716 (on 24/09/14) 
Mark Scanlon / Mike Dugdale
Tel:+44 (0) 1908 605000 (thereafter) 
Abchurch Communications

Quincy Allan / Stephanie Watson
Tel: +44 (0) 207 398 7716
Cenkos Securities Plc

Max Hartley (Nomad)/Russell Kerr (Sales)
Tel: +44 (0) 20 7397 8900
Notes to editors:
With a 30 year track record of looking after its customers' employees, Personal Group Holdings Plc (AIM: PGH) is a leading provider of employee benefits and employee related insurance products, offering benefits programmes to over 2 million employees across the UK.
Personal Group's innovative approach to using technology to deliver its programmes, combined with its face-to-face method of communicating with employees, makes its offering compelling to blue chip clients across the UK as a way of attracting, retaining and motivating employees. Personal Group's benefits offer employees an effective way of making their pay-packet stretch further. The Group tailors its packages to include insurance products such as hospital and convalescence plans, death benefit and income protection plans, as well as lifestyle benefits such as holiday and retail discounts, health and wellbeing benefits and a range of tax efficient benefits.
In March 2014, the Group acquired Lets Connect, a leader in the home technology salary sacrifice market which focuses on large enterprises in the private and public sector. 
Personal Group has a strong client base across a range of sectors including transport, where it works with the likes of Network Rail and Stagecoach, healthcare, where clients include Priory Group and Spire Healthcare and logistics, with companies such as TNT Express. The Group also has a strong presence in food manufacturing and service and clients include 2 Sisters Food Group and Young's Seafood. 
With over 550 clients the Group has grown considerably and provides engaging and effective benefits packages across a breadth of sectors. 
For further information, go to www.personal-group.com.


Chairman's Statement
Summary
The Group continued to perform strongly in the first half of 2014, with core revenue up 9.9% on the equivalent period in 2013 and record new business generation. Underlying EBITDA increased by 10.6%. We are encouraged by the performance and prospects of Lets Connect, the business which we acquired in March 2014.
Financial Performance
Total Group revenue for the six months ended 30 June 2014 increased by 24.8% to 17.4m (2013: 13.9m). This reflects a 9.9% increase in earned premiums net of reinsurance and the revenue contribution from Lets 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 5.1m, 4.5% ahead of 2013 (4.9m).
Underlying EBITDA (earnings before interest, tax, depreciation, amortisation of intangibles, share based expenses and acquisition costs) was 4.4m (2013: 4.0m). Although this represents a 10.6% improvement on the equivalent period in 2013 the Group's performance would have been strongerin the period but for legal costs incurred whilst seeking to restrain what the Group is advised are unlawful activities of a company which employs three former Personal Group employees. A High Court hearing took place in July and the outcome should be known in October 2014, following the end of the legal summer vacation. 
Group Profit before tax is 3.5m (2013: 3.3m). This reflects 0.3m of costs incurred in the acquisition of Lets Connect.
Total equity at 30 June 2014 was 24.7m (31 December 2013 25.2m). The structure of the balance sheet at 30 June 2014 reflects the acquisition of Lets Connect.
Business Review
The Group's investment and growth strategy continues its positive impact on financial performance. Organic growth is strong in our core product areas: the first half of 2014 included a record week, month and quarter for new business generation and again resulted in a record half year. Our pipeline of new and existing host company launches remains strong.
Our investment in technology has continued, with further refinements to our iPad "front-end" sales process and work on an enhanced digital offering for our customers with the intention both of increasing customer loyalty and of opening up the possibility of additional income streams.
The integration of Lets Connect into Personal Group has proceeded well. Lets Connect is an employee benefits specialist providing technology products through salary sacrifice. Historically a very significant proportion of Lets Connect business is transacted in November and December each year. In the period to 30 June 2014 Lets Connect has performed ahead of expectations and the developing pipeline for delivery towards the end of the year looks promising. Lets Connect provides the Group with an enhancement to our existing salary sacrifice offering as well as an opportunity to sell the Personal Group core products into Lets Connect's blue chip customer base of more than 100 companies.
Dividends
The first two dividends of 2014, each of 4.9p per share, were paid in March and June, with the third dividend of the same amount being paid on 25th September 2014. The Directors expect that the fourth and final dividend for 2014 of the same amount will be paid in December. This would give a total for the year of 19.6p per share (2013: 18.6p per share), an increase of 5.4%.
The Board
As announced earlier in the year John Barber retired in June. As Finance Director for over 20 years he had overall responsibility for the Group's financial and company secretarial areas until the appointment of Mike Dugdale as Chief Financial Officer in January 2013. We thank him for his very considerable contribution to the success of the Group.
It was recently announced that Ken Rooney would be retiring from his executive position as Chief Operating Officer in June 2015. We are delighted that he will remain on the Board as a Non-executive Director thereafter.
Outlook
In my Statement in the Annual Report for 2013 I referred to 2014 as a year in which we would start to see the benefits of our investment programme. This is now being reflected in the increasing levels of new business written, a strong pipeline for our core business, and increased profits. We are delighted to report that Lets Connect has made a strong start as part of Personal Group. Overall trading remains in line with expectations.
C J Curling
Non-Executive Chairman
24 September 2014
Personal Group Holdings Plc
For the 6 months ended 30 June 2014
Consolidated income statement


6 months
ended 30
June 2014
Unaudited
6 months
ended 30
June 2013
Unaudited
12 months
ended 31
December 2013
Audited 






Note
'000
'000
'000





Gross premiums written

11,915
11,208
22,997
Outward reinsurance premiums

(176)
(235)
(358)
Change in unearned premiums

242
184
266
Change in reinsurers' share of unearned premiums

(20)
(276)
 (333)





Earned premiums net of reinsurance

11,961
10,881
 22,572
Other income:




 Insurance related

2,137
1,966
4,024
 Non-insurance related

3,082
855
1,363
 Investment property

33
69
103
Investment income

195
173
332





Revenue

17,408
13,944
28,394







Claims incurred

(3,384)
(2,786)
(5,820)
Insurance operating expenses

(5,478)
(4,751)
(11,368)
Impairment of non-financial assets

-
-
(2,100)
Other expenses:




 Insurance related

(735)
(950)
(1,296)
 Non-insurance related

(3,923)
(1,728)
(2,504)
Share based payment expenses

(446)
(410)
(1,474)
Investment property

-
-
(128)
Charitable donations

(50)
(50)
(100)
Amortisation of intangible assets

(39)
-
-





Expenses

(14,055)
(10,675)
(24,790)










Results of operating activities

3,353
3,269
3,604
Finance costs

-
(1)
(1)
Share of profit of equity-accounted investee net of tax

106
44
127





Profit before tax

3,459
3,312
3,730
Tax
4
(868)
(826)
(1,632)





Profit for the period after tax

2,591
2,486
2,098





Earnings per share as arising from total and continuing operations

Pence
Pence
Pence
Basic
5
8.62
8.32
7.0
Diluted
5
8.60
8.31
7.0
All operations are considered to be continuing.
Personal Group Holdings Plc
For the 6 months ended 30 June 2014
Consolidated statement of comprehensive income


6 months
ended 30
June 2014
Unaudited
6 months
ended 30
June 2013
Unaudited 
12 months
ended 31
December 2013
Audited 







'000
'000
'000





Profit for the period

2,591
2,486
2,098





Other comprehensive income




Available for sale financial assets:




Valuation changes taken to equity

(21)
54
110
Reclassification of gain on available for sale
financial assets on derecognition

(22)
(3)
(3)
 




Income tax on unrealised valuation
changes taken to equity

5
(12)
 (25)
 









Total comprehensive income for the period

2,553
2,525
2,180










PersonalGroup Holdings Plc
For the 6 months ended 30 June 2014
Consolidated balance sheet at 30 June 2014
      

At 30
June 2014
Unaudited
At 30
June 2013
Unaudited
At 31
December 2013
Audited 






Note
'000
'000
'000
ASSETS




Non-current assets




Goodwill

11,189
2,100
-
Customer value
11
666
-
-
Property, plant and equipment
6
5,063
5,483
4,790
Investment property

1,070
1,068
940
Equity-accounted investee
10
505
316
399
Financial assets
7
13,422
16,574
15,038







31,915
25,541
21,167





Current assets
Cash and cash equivalents

1,835
3,474
6,991
Trade and other receivables

7,051
4,388
4,200
Reinsurance assets

393
494
325
Inventories

288
-
-







9,567
8,356
11,516





Total assets

41,482
33,897
32,683










Personal Group Holdings Plc
For the 6 months ended 30 June 2014
Consolidated balance sheet at 30 June 2014


At 30
June 2014
Unaudited
At 30
June 2013
Unaudited 
At 31
December 2013
Audited 







'000
'000
'000





EQUITY









Equity attributable to equity holders of Personal Group Holdings plc




Share capital

1,507
1,503
1,507
Capital redemption reserve

24
24
24
Amounts recognised directly into equity




relating to available for sale financial assets

23
18
61
Other reserve - own shares

(627)
(616)
(264)
Profit and loss reserve

23,772
25,938
23,835




Total equity

24,699
26,867
25,163




 
LIABILITIES









Non-current liabilities




Deferred tax liabilities

118
152
111





Current liabilities




Provisions

33
63
34
Trade and other payables

12,837
3,118
3,667
Insurance contract liabilities

2,996
2,809
2,854
Current tax liabilities

799
865
854
Borrowings
8
-
23
-







16,665
6,878
7,409















Total liabilities

16,783
7,030
7,520












Total equity and liabilities

41,482
33,897
32,683





Personal Group Holdings Plc
For the 6 months ended 30 June 2014
Consolidated statement of changes in equity for the six months ended 30 June 2014
 
   
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 2014
1,507
24
61
(264)
23,835
25,163







Dividends
-
-
-
-
(2,947)
(2,947)
Employee share-based compensation
-
-
-
-
446
446
Proceeds of AESOP share sales
-
-
-
-
288
288
Cost of AESOP shares sold
-
-
-
441
(441)
-
Cost of AESOP shares purchased
-
-
-
(804)
-
(804)





Transactions with owners
-
-
-
(363)
(2,654)
(3,017)





Profit for the period
-
-
-
-
2,591
2,591
Other comprehensive income






Available for sale financial assets:






 Valuation changes taken to equity
-
-
(21)
-
-
(21)
 Reclassification adjustment on
 derecognition
-
-
(22)
-
-
(22)
 Current tax on unrealised
 valuation changes taken to
 equity
-
-
5
-
-
5






Total comprehensive income for the period
-
-
(38)
-
2,591
2,553







Balance as at 30 June 2014
1,507
24
23
(627)
23,772
24,699






Personal Group Holdings Plc
For the 6 months ended 30 June 2014
Consolidated statement of changes in equity for the year ended 31 December 2013
   
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 2013
1,503
24
(21)
(619)
25,805
26,692





Dividends
-
-
-
-
(5,556)
(5,556)
Employee share-based compensation
-
-
-
-
1,474
1,474
Proceeds of AESOP share sales
-
-
-
-
630
630
Cost of AESOP shares sold
-
-
-
612
(612)
-
Cost of AESOP shares purchased
Nominal value of LTIP** shares issued
-
4
-
-
-
-
(257)
-
-
(4)
(257)
 -





Transactions with owners
4
-
-
355
(4,068)
(3,709)





Profit for the period
-
-
-
-
2,098
2,098
Other comprehensive income






Available for sale financial assets:






 Valuation changes taken to equity
-
-
110
-
-
110
 Reclassification adjustment on
 derecognition
-
-
(3)
-
-
(3)
 Current tax on unrealised
 valuation changes taken to
 equity
-
-
(25)
-
-
(25)






Total comprehensive income for the period
-
-
82
-
2,098
2,180







Balance as at 31 December 2013
1,507
24
61
(264)
23,835
25,163






 
Personal Group Holdings Plc
For the 6 months ended 30 June 2014
Consolidated statement of changes in equity for the six months ended 30 June 2013
   
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 2013
1,503
24
(21)
(619)
25,805
26,692





Dividends
-
-
-
-
(2,776)
(2,776)
Employee share-based compensation
-
-
-
-
410
410
Proceeds of AESOP share sales
-
-
-
-
101
101
Cost of AESOP shares sold
-
-
-
88
(88)
-
Cost of AESOP shares purchased
-
-
-
(85)
-
(85)





Transactions with owners
-
-
-
3
(2,353)
(2,350)





Profit for the period
-
-
-
-
2,486
2,486
Other comprehensive income






Available for sale financial assets:






 Valuation changes taken to equity
-
-
54
-
-
54
 Reclassification adjustment on
 derecognition
-
-
(3)
-
-
(3)
 Current tax on unrealised
 valuation changes taken to
 equity
-
-
(12)
-
-
(12)






Total comprehensive income for the period
-
-
39
-
2,486
2,525







Balance as at 30 June 2013
1,503
24
18
(616)
25,938
26,867






Personal Group Holdings Plc
For the 6 months ended 30 June 2014
Consolidated cash flow statement


6 months
ended 30
June 2014
Unaudited
6 months
ended 30
June 2013
Unaudited
12 months
ended 31
December 2013
Audited





Operating activities

'000
'000
'000
Profit after tax

2,591
2,486
2,098
 Depreciation

191
291
529
 Goodwill impairment

39
-
2,100
 Impairment of investment property

-
-
128
 Profit on disposal of property, plant and equipment 
(30)
(10)
(42)
 Realised and unrealised net investment losses/(profits)
(19)
5
-
 Interest received

(140)
(124)
(222)
 Dividends received

(9)
(8)
(19)
 Interest paid

-
1
1
 Share of profit of equity-accounted investee, net of tax
(106)
(44)
(127)
 Share-based payments

446
410
1,474
 Taxation expense recognised in income statement
868
826
1,632
Changes in working capital:




 Trade and other receivables

(2,842)
93
489
 Trade and other payables

2,393
437
1,004
 Inventories

(137)
-
 -
Taxes paid

(912)
(1,042)
(1,913)





Net cash from operating activities

2,333
3,321
7,132





Investing activities

Additions to property, plant and equipment

(415)
(200)
(248)
Proceeds from disposal of property, plant and equipment
52
43
537
Purchase of own shares by the AESOP

(804)
(85)
(257)
Proceeds from disposal of own shares by the AESOP

288
101
630
Purchase of financial assets

(136)
(3,848)
(5,842)
Proceeds from disposal of financial assets

1,730
3,808
7,399
Additions to investment property

(130)
-
-
Interest received

140
124
222
Dividends received

9
8
19





Net cash from investing activities
734
(49)
2,460





Acquisition and disposal activities




Payment to acquisition

(6,000)
-
-
Net cash acquired with trading

724
-
-





Net cash from acquisition and disposal activities

(5,276)
-
-





Financing activities




Proceeds from bank loans

-
85
257
Repayment of bank loans

-
(121)
(316)
Interest paid

-
(1)
(1)
Dividends paid

(2,947)
(2,776)
(5,556)





Net cash used in financing activities

(2,947)
(2,813)
(5,616)





Net change in cash and cash equivalents

(5,156)
459
3,976
Cash and cash equivalents, beginning of period
6,991
3,015
3,015





Cash and cash equivalents, end of period
1,835
3,474
6,991





Notes to the consolidated financial statements
1 General information
The principal activities of Personal Group Holdings Plc ('the company') and subsidiaries ('the group') include transacting short-term accident and health insurance and providing employee benefits related business and financial services in the UK. 
The company is a public limited 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's shares trade on the AIM 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 2013.
The financial information for the year ended 31 December 2013 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 2013 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 24 September 2014.
2 Accounting policies 
These June 2014 interim consolidated financial statements of Personal Group Holdings Plc are for the six months ended 30 June 2014. 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 2013.
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 2013. 
The principal accounting policies have remained unchanged from the year ended 31 December 2013.
3 Segment analysis
The group operates two trading operating segments, namely employee benefits insurance and consultancy; and financial services offered by Berkeley Morgan Group Limited (BMG) and its subsidiary undertakings.
1) Employee benefits insurance and consultancy

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.
Insurance related income includes insurance and reinsurance brokerage commission. Insurance brokerage commission includes that derived from voluntary group income protection plan sales.

Non-insurance related income includes income derived from the sale of benefit books, consultancy services and property rental income.
Notes to the consolidated financial statements
2) Financial services

The financial services operating segment consists exclusively of revenue generated by BMG and its subsidiary undertakings. BMG was acquired by PGH in January 2005.

Financial services revenue consists mainly of commission generated by financial advisers and commission generated from insurance underwriting agencies.
The revenue and net result generated by each of the group's operating segments are summarised as follows:

Employee
benefits
'000
Financial services
'000
Unallocated
'000
Consolidation
adjustments
'000
Group
'000






Operating segments











For the 6 months ended 30 June 2014





Revenue





Earned premiums net of reinsurance
Other income:
11,961
-
-
-
11,961
 Insurance related
1,853
284
-
-
2,137
 Non-insurance related
3,082
-
-
-
3,082
 Investment property
-
-
33
-
33
Investment income
195
-
-
-
195



Total revenue
17,091
284
33
-
17,408
Net result for period before tax
3,535
216
33
(431)
3,353






Segment assets
27,795
892
940
11,855
41,482






Segment liabilities
16,173
610
-
-
16,783






Depreciation and amortisation of tangible fixed assets
230
-
-
-
230












Notes to the consolidated financial statement

Employee
benefits
'000
Financial services
'000
Unallocated
'000
Consolidation
adjustments
'000
Group
'000












For the 6 months ended 30 June 2013





Revenue





Earned premiums net of reinsurance
Other income:
10,881
-
-
-
10,881
 Insurance related
1,647
319
-
-
1,966
 Non-insurance related
855
-
-
-
855
 Investment property
-
-
69
-
69
Investment income
173
-
-
-
173



Total revenue
13,556
319
69
-
13,944
Net result for period before tax
3,429
184
69
(414)
3,268





Segment assets
29,773
640
1,068
2,100
33,581





Segment liabilities
6,365
665
-
-
7,030






Depreciation and goodwill impairment
285
2
4

291






All income is derived from the UK.
The figures shown above for employee benefits and financial services are from the management accounts that are not prepared under IFRS. Unallocated amounts relate to the investment properties.
4 Taxation
Tax expense is recognised based on management's best estimate of the weighted-average annual income tax rate expected for the full financial year multiplied by the pre-tax income of the interim reporting period.
The Group's consolidated effective tax rate in respect of continuing operations for the six months ended 30 June 2014 was 25.9% (six months ended 30 June 2013: 25.3%).

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 2014
6 months 
ended 30 
June 2013
12 months 
ended 31 
December 2013




Basic
30,066,146
29,864,405
29,886,673
Diluted
30,102,976
29,931,423
29,931,267
During the first six months of 2014, Personal Group Holdings Plc paid dividends of 2,954,000 to its equity shareholders (six months to 30 June 2013: 2,796,000, twelve months to 31 December 2013: 5,592,000). This represents a payment of 9.8p per share (six months to 30 June 2013: 9.3p, twelve months to 31 December 2013: 18.6p). 
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:

6 months ended 30 June 2014
6 months ended 30 June 2013
12 months ended 31 December 2013
6 months ended 30 June 2014
6 months ended 30 June 2013
12 months ended 31 December 2013








Pence per share
'000
'000
'000
Equity dividends






Ordinary shares paid in period













March
4.90
-
-
1,477
-
-
April
-
4.65
4.65
-
1,398
1,398
June
4.90
4.65
4.65
1,477
1,398
1,398
September
-
-
4.65
-
-
1,398
December
-
-
4.65
-
-
1,398











2,954
2,796
5,592
Less: amounts paid on own shares


(7)
(20)
(36)








9.80
9.30
18.60
2,947
2,776
5,556
 






6 Property, plant and equipment
For the six months ended 30 June 2014

Freehold land and properties
'000
Motor vehicles
'000
Computer
equipment
'000
Furniture fixtures & fittings
'000
Leasehold improve-
ments
'000
Other
'000
Total
'000
Cost







At 1 January 2014
5,478
145
841
931
-
-
7,395
Additions
-
92
299
24
-
-
415
Acquisitions
-
-
15
3
10
42
70
Disposals
-
(119)
-
-
-
-
(119)






At 30 June 2014
5,478
118
1,155
958
10
42
7,761






Depreciation







At 1 January 2014
1,222
103
536
744
-
-
2,605
Provided in the period
49
7
112
17
-
-
185
Acquisitions
-
-
2
-
1
3
6
Eliminated on disposals
-
(98)
-
-
-
-
(98)






At 30 June 2014
1,271
12
650
761
1
3
2,698














Net book amount at 30 June 2014
4,207
106
505
197
9
39
5,063














Net book amount at 31 December 2013
4,256
42
305
187
-
-
4,790






For the year ended 31 December 2013

Freehold land and properties
'000
Motor vehicles
'000
Computer
equipment
'000
Furniture fixtures & fittings
'000
Leasehold improve-
ments
'000
Other
'000
Total
'000
Cost







At 1 January 2013
5,478
1,088
823
1,045
-
-
8,434
Additions
-
81
126
2
-
-
209
Acquisitions
-
-
-
-
-
-
-
Disposals
-
(1,024)
(108)
(116)
-
-
(1,248)






At 31 December 2013
5,478
145
841
931
-
-
7,395






Depreciation







At 1 January 2013
1,128
433
448
820
-
-
2,829
Provided in the year
94
201
194
40
-
-
529
Acquisitions
-
-
-
-
-
-
-
Eliminated on disposals
-
(531)
(106)
(116)
-
-
(753)








At 31 December 2013
1,222
103
536
744
-
-
2,605
















Net book amount at 31 December 2013
4,256
42
305
187
-
-
4,790














Net book amount at 31 December 2012
4,350
655
375
225
-
-
5,605






For the six months ended 30 June 2013

Freehold land and properties
'000
Motor vehicles
'000
Computer
equipment
'000
Furniture fixtures & fittings
'000
Leasehold improve-
ments
'000
Other
'000
Total
'000
Cost







At 1 January 2013
5,478
1,088
823
1,045
-
-
8,434
Additions
-
81
119
2
-
-
202
Acquisitions
-
-
-
-
-
-
-
Disposals
-
(89)
-
-
-
-
(89)








At 30 June 2013
5,478
1,080
942
1,047
-
-
8,547








Depreciation







At 1 January 2013
1,128
433
448
820
-
-
2,829
Provided in the period
47
133
89
22
-
-
291
Acquisitions
-
-
-
-
-
-
-
Eliminated on disposals
-
(56)
-
-
-
-
(56)








At 30 June 2013
1,175
510
537
842
-
-
3,064
















Net book amount at 30 June 2013
4,303
570
405
205
-
-
5,483












Net book amount at 31 December 2012
4,350
655
375
225
-
-
5,605








7 Financial assets

At 30 June 
2014
Unaudited
At 30 June 
2013
Unaudited
At 31 December 
2013
Audited

'000
'000
'000




Bank deposits
11,802
12,612
11,743
Loans & receivables
922
3,328
2,596
Financial assets:



 designated at fair value through profit & loss
-
60
-
 available for sale
698
574
699





13,422
16,574
15,038




The loans and receivables are secured by a charge over the Milton Keynes property.
Quoted financial assets designated at fair value through profit or loss and available for sale assets are stated at their bid market price and are level 1 assets. There are no level 2 or 3 assets.
Unquoted financial assets designated at fair value through profit or loss are valued using an expected future cash flow basis. At 30 June 2014, 31 December 2013 and 30 June 2013 all unquoted financial assets were valued at nil. 

8 Borrowings
The borrowings shown in the consolidated balance sheet as at 30 June 2013 were in respect of the Personal Group Trustees Limited AESOP bank loan.
9 Long Term Incentive Plan (LTIP)
During 2012 the company adopted a discretionary LTIP for the benefit of selected directors and senior employees of Personal Group. The Plan provides for the grant of awards, entitling participants to the payment of a bonus related to the percentage increase in the market capitalisation of the company over a 5 year period. The awards will be satisfied in shares or in the discretion of the remuneration committee wholly or partly in cash in accordance with the plan rules. It is the directors' intention to settle these awards in shares.
A participant will be entitled to a payment in respect of their award on each of the second, third, fourth and fifth anniversaries of their commencement date in the plan or earlier if there is an exit event such as a sale before the fifth anniversary date. Each participant has been 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 will be made.
Where the market capitalisation has increased the level of payment will be 10%, 30%, 60% and 100% cumulatively of the participant's specified percentage of value increase on the second, third, fourth and fifth anniversaries respectively. The number of shares awarded will be determined by dividing the amount of the appropriate payment by the average of the closing bid price for the 20 business days immediately preceding the date of issue.
An amount of 431,000 has been charged to the profit and loss account for this scheme in the six months ended 30 June 2014 (six months ended 30 June 2013: 398,000) 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 future payments to calculate the expense for each individual under each of the future tranches of the LTIP period. 
The estimate is highly sensitive to share price movement. A maximum cap on the pay out to all individuals in the scheme of 10,000,000 has been applied
10 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 is funded by way of a loan from Personal Group Holdings Plc. 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 2014
6 months ended 30 
June 2013
12 months 
ended 31 December 2013


Unaudited
Unaudited
Audited


'000
'000
'000





Turnover

1,476
-
1,058
Cost of sales

(1,250)
-
(899)





Gross profit

226
-
159





Rent receivable 

127
193
354
Administration expenses

(58)
(25)
(100)





Operating profit

295
168
413
Interest payable

(25)
(52)
(95)


Profit on ordinary activities before taxation

270
116
318





Tax on profit on ordinary activities

(58)
(28)
(65)


Profit for the financial period retained

212
88
253




10 Equity-accounted investment cont.
Balance sheet

6 months ended 30 
June 2014
6 months ended 30 
June 2013
12 months 
ended 31 December 2013


Unaudited
Unaudited
Audited


'000
'000
'000





Current assets 




Inventories

2,091
4,242
3,341
Debtors

(6)
-
156
Cash at bank and in hand

12
-
12




2,097
4,242
3,509





Creditors: amounts falling due within one year

(1,088)
(3,610)
(2,712)


Net current assets

1,009
632
797




Capital and reserves

Called up share capital

-
-
-
Profit and loss account

1,009
632
797


Shareholders' funds

1,009
632
797




11 Acquisitions of business
Acquisitions in the current period
On 7 March 2014 the Group acquired Lets Connect IT Solutions Limited for 6m satisfied in cash plus a further contingent consideration (see below). Lets Connect IT Solutions Limited is an Employee Benefits leader, specialising in salary sacrifice technology products. The acquisition provides the Group with an enhancement to its existing salary sacrifice offering as well as an opportunity to cross sell its own products to Lets Connect's blue chip customer base of over 100 companies. In the period to 30 June 2014 the business contributed net profit of 39k. If the acquisition had occurred on 1 January 2014 revenue would have been an estimated 3.1m and net loss would have been an estimated 57k. In determining these amounts, management has assumed that the fair value adjustments that arose on the date of acquisition would have been the same if the acquisition had occurred on 1 January 2014
The Group has agreed to pay the vendors additional consideration of up to 6m based on achieving certain profit targets over the period to 31 December 2015 plus a bonus additional consideration should these targets be exceeded. As the acquisition is only a few months into this period, the Group has included 6m as contingent consideration. 
Effect of acquisition
The acquisition had the following effect on the Company's assets and liabilities.


*Recognised Values on Acquisition


'000
Acquiree's net assets at the acquisition date:


Customer value

705
Property, plant and equipment

70
Inventories

151
Trade and other receivables

77
Cash and cash equivalents

724
Trade and other payables

(900)
Deferred tax liabilities

(16)


Net identifiable assets and liabilities

811


Consideration paid:


Initial cash price paid

6,000
Contingent consideration at fair value

6,000


Total consideration

12,000


Goodwill on acquisition

11,189






*The recognised values above have been determined on a book basis with the exception of customer value which represents a provisional assessment of fair value. A complete assessment of fair values will be completed for the year end.
Goodwill has arisen because the consideration paid reflects management expectations of the future profitability of this rapidly growing business, which provides the Group with an enhancement to the existing salary sacrifice offering as well as an opportunity to sell the Personal Group core products into Lets Connect's blue chip customer base of more than 100 companies.
The customer value is being amortised through the consolidated income statement over a 6 year period; the charge for the 6 months to 30 June 2014 was 39k.
The Group incurred acquisition related costs of 0.3m related to due diligence and advisers fees. These costs have been included in administrative expenses in the Group's consolidated income statement.
Financial calendar for the year ending 31 December 2014
The company announces the following dates in its financial calendar for the year ending 31 December 2014:
 Preliminary results for the year ending 31 December 2014- March 2015
 Publication of Report and Accounts for 2014  - March 2015
 AGM - April 2015
- Ends -

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