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

Personal groupAnnouncement

26/09/2017 07:06

RNS Number : 7658R
Personal Group Holdings PLC
26 September 2017
26 September 2017
PERSONAL GROUP HOLDINGS PLC
("Personal Group", "Company" or "Group")
 
Interim Results
Six Months ended 30 June 2017
Personal Group Holdings Plc, a leading provider of employee services in the UK announces its interim results for the six months ended 30 June 2017. The Company has made a solid start to the year, with the Group performing in-line with management's expectations. 
Highlights
Financial
 Group revenue of 19.6m (2016: 19.8m)
 EBITDA* from continuing operations of 3.7m (2016: 4.1m)
 Profit before tax from continuing operations of 3.0m (2016: 3.1m)
 Basic EPS from continuing operations of 8.2p (2016: 8.9p)
 Balance sheet remains strong with cash and deposits of 16.5m and no debt 
 Dividends per share paid in the period up 3.2% to 11.35p (2016: 11.0p), maintaining progressive dividend policy
Operational
 Encouraging start to rollout of Sage Employee Benefits under a refined offer
 Core insurance income remained strong 
 Hapi platform revenue increased to 0.9m (2016: 0.7m)
 Clarity of technology salary sacrifice offer post Finance Bill ratification
* 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.
Commenting, Mark Scanlon, Chief Executive of Personal Group, said:
"We have seen a solid start to the year with the Company performing in-line with management's expectations. We now have greater clarity regarding the outlook of the salary sacrifice market, which has enabled us to clarify our customer offering to deliver a better client experience. The insurance business performed well and delivered solid new sales KPIs and core insurance revenue remained strong and slightly ahead of the first half last year. We are seeing an encouraging start to the roll out of our SME offer, under the refined strategy with Sage, with in excess of 1,200 additional corporate customers having access to our platform."
- ENDS -
For more information please contact:
Personal Group Holdings Plc
Mark Scanlon / Mike Dugdale
+44 (0)1908 605 000
Philip Dennis (Investor Relations)
+44 (0)7947 868 206
Cenkos Securities Plc
Max Hartley / Callum Davidson (Nomad)
+44 (0)20 7397 8900
Russell Kerr (Sales)
Hudson Sandler
Nick Lyon / Sophie Lister / Lucy Wollam
+44 (0)20 7796 4133
Notes to editors:
Personal Group Holdings Plc (AIM: PGH) is a technology enabled employee services business, working with employers to drive productivity though better employee engagement and a more motivated workforce. With over 30 years' experience, the Company provides employee benefits and services to over 2 million employees across the UK.
Personal Group's offer comprises 8,000 in-house and third party products and services, from c.60 supply lines. In-house services include employee insurance products (hospital, convalescence plans and death benefit) and the provision of home technology via salary sacrifice (iPads, computers, laptops, smart phones and smart TVs). Third party services include retail discounts, e-payslips, employee assistance programmes, wellbeing programmes and salary sacrifice cars and bikes. 
The offer is provided via the Company's proprietary technology platform, Hapi. The platform is intuitive, designed primarily for app deployment and also accessible via web and tablet, driving better engagement, communication and value recognition. Hapi is flexible and can quickly integrate additional services, such as existing employee services and partner platforms. Hapi is a SaaS product. 
Through technology and select acquisitions, the Company has grown its addressable market from 6m to over 30m UK employees; including 15.6m SME employees targeted via its partnership with Sage, the UK's largest software company. 
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 offer compelling to blue chip clients across the UK as a way of attracting, retaining and motivating employees. 
Personal Group has a strong client base across a range of sectors including passenger transport, healthcare, logistics and food manufacturing. Clients include: Stagecoach, Four Seasons Health Care, Priory Group, Spire Healthcare, Bibby, 2 Sisters Food Group and Young's Seafood. 
For further information, please see www.personalgroup.com.
Interim Results Statement
Introduction
The first six months of 2017 have been as we forecast, with the business performing in-line with management's expectations. The Group's core insurance income continued to perform well, complemented by a solid performance from PG Let's Connect and an encouraging start to the SME offer under the Group's extended strategy. 
Through recent investments, particularly in the Hapi technology platform, the Company remains well placed to extend its products into a much wider market. With our combined market proposition, including SME, public sector and large corporate, we believe that our serviceable market has expanded from 6 million to 30 million employees in the U.K. alone. 
The Hapi platform not only simplifies Personal Group's product offering through a single portal, making it easier to use for the customer, it has also enabled us to evolve into a technologically enabled employee services provider. This offering is underpinned by a long-standing, solid insurance business, with a delivery system and a flexibility that allows us to continue to meet ever-changing market demands.
Business Review 
The insurance business performed well, delivering solid new sales KPIs, despite a lower number of sales executives in the field. The core insurance revenue remained strong and slightly ahead of the first half last year. The number of sales executives was increased as we entered the second half of the year.
PG Let's Connect product proposition experienced uncertainty last year as a consequence of HMRC's consultation regarding the salary sacrifice market. During this period of uncertainty, the Group focused on minimising the potential adverse impact to the PG Let's Connect business. With the ratification of the Finance Bill in April, there is now clarity around the HMRC's tax treatment for salary sacrifice technology. The treatment is also now far simpler, which supports a better client experience and understanding. PG Let's Connect has quickly adjusted its systems and product offer to reflect the changes resulting from the Finance Bill and is now fully certified with a clearer offering to customers.
The Company's SME product began an additional rollout, through Sage's standard payroll product, in early June. This was based on further development of Hapi and the expansion of the relationship with Sage. We are seeing greater penetration of the Sage Employees Benefits (SEB) product across Sage's extensive payroll client base with in excess of 1,200 additional corporate customers now having SEB in place. This process provides a portion of the Sage client's employees with SEB and with an option to extend it to all. This process of extending the offer to all employees is not due to begin until next year but the initial deployment is well under way. 
The first half of the year also saw a marked increase in direct SaaS sales of the Hapi platform, up 28% on last year. This result is due to a growing recognition across corporate clients of the value provided by the platform to support productivity and reduce costs across their business, through a happier and better engaged workforce.
As part of our drive to keep the wider offer relevant and up to date, we have expanded our wellness offer to include a financial education and well-being product. This includes fairer rate loans, typically with a 3.9% to 9.9% APR. We have begun our first roll out of these products, with more customers in the pipeline.
Financial Performance
As expected, revenue was broadly in-line with the first half of last year at 19.6m. This was driven by a solid top line performance across the business, with both the insurance business and PG Let's Connect performing consistent with the first half of 2016, supported by a small but growing contribution from SME and the SaaS subscriptions business units.
The Company continues to closely monitor costs, which during the six months were broadly in-line with last year, despite the broadening of the product offer through the launch of the SEB product. With the addition of new recruits joining the business, to support both sales and back office functions, the headcount, as planned, will increase in the second half of the year. 
EBITDA was in-line with management's expectations at 3.7m. This result was driven by the impact of early losses in the ramp up of the SME product and a lower contribution from Let's Connect.
Profit before tax was in line with the same period last year at 3.0m. 
In-line with its progressive dividend policy, the Company again increased its dividend by 3.2% to 11.35p per share during the first half. The third dividend for the year, of 5.675p, will be paid on the 28th of September 2017. 
Market
The market need for employee services is continuing to evolve. This is being driven by an increased recognition, particularly amongst corporates, of the value that an employee services programme can bring to their businesses. 
This evolution is creating demand for well thought through, well managed and appealing programmes that drive direct business benefits, supporting improved productivity and reducing cost through better employee retention and engagement.
Reflecting this change, we are seeing a continued fall in 'single offer' providers, in favour of those looking to offer a more comprehensive 'one stop' solution. Furthermore, the Company is also seeing the traditional approach to customer engagement changing, with greater focus on the buyer experience and the flexibility to access the product whilst on the go through the Hapi app. The manifestation of this has been to make the products and offer far easier to understand, compare and access; more akin to a traditional consumer product. 
We believe that Personal Group is well placed to take advantage of this change. Having invested ahead of the market and getting that investment right in the Hapi technology platform, we are able to offer the 'one-stop' solution to corporates. The platform also provides the flexibility needed to ensure our offer remains up to date and relevant. 
Outlook
Personal Group's H1 2017 was in-line with management's expectations. The insurance and Let's Connect businesses have performed well and we have had an encouraging start to the SME offer as part of continuing relationship with Sage. The board has confidence that the Group continues to trade in-line with market expectations for the full year.
Looking beyond 2017, we expect the market to continue to evolve, which, given the breadth and flexibility built into our offer, places Personal Group in a strong position to make continued solid progress as the leading provider of employee services in the UK.
Mark Winlow
Non-Executive Chairman
Mark Scanlon 
Chief Executive 
26 September 2017
Consolidated income statement
6 months
ended 30
June 2017
Unaudited
6 months
ended 30
June 2016 Unaudited
12 months
ended 31
December 2016 Audited 
Note
'000
'000
'000
Continuing Operations
Gross premiums written
15,033
15,654
31,393
Outward reinsurance premiums
(146)
(138)
(310)
Change in unearned premiums
442
1
 160 
Change in reinsurers' share of unearned premiums
(8)
(19)
(20)
________
________
________
Earned premiums net of reinsurance
15,321
15,498
31,223
Other insurance related income
159
264
555
IT salary sacrifice income
3,141
3,196
20,069
Platform subscriptions and other income
949
749
1,621
SME income
14
-
-
Investment property
-
30
59
Investment income
60
61
93
________
________
________
Revenue
19,644
19,798
53,620
________
________
________
Claims incurred
(3,738)
(3,739)
(7,318)
Insurance operating expenses
(6,471)
(6,428)
(12,689)
Other insurance related expenses
(174)
(352)
(712)
IT salary sacrifice expenses
(3,908)
(3,616)
(18,281)
Platform subscriptions and other expenses
(1,433)
(1,691)
(2,795)
SME operating expenses
(341)
-
(741)
Share based payment expenses
(156)
(540)
(222)
Charitable donations
(50)
(50)
(100)
Amortisation of intangible assets
(329)
(253)
(505)
________
________
________
Expenses
(16,600)
(16,669)
(43,363)
________
________
________
Operating profit from continuing operations
3,044
3,129
10,257
Release of provision
-
-
270
Share of profit/(loss) of equity-accounted investee net of tax
 (17)
(12)
(6)
________
________
________
Profit before tax from continuing operations
3,027
3,117
10,521
Tax
4
(516)
(473)
(1,479) 
________
________
________
Profit for the period from continuing operations
2,511
2,644
9,042
Profit/(loss) from discontinued operation
23
(1,181)
(1,758)
________
________
________
Profit for the period after tax
2,534
1,463
7,284
________
________
________
Consolidated income statement (continued)
6 months
ended 30
June 2017
Unaudited
6 months
ended 30
June 2016 Unaudited
12 months
ended 31
December 2016 Audited 
Earnings per share as arising from total operations
Pence
Pence
Pence
Basic
8.2
4.8
23.9
Diluted
8.1
4.5
23.4
Earnings per share as arising from continuing operations
Basic
8.2
8.9
29.7
Diluted
8.0
8.2
29.0
Consolidated statement of comprehensive income
6 months
ended 30
June 2017
Unaudited
6 months
ended 30
June 2016
Unaudited 
12 months
ended 31
December 2016
Audited 
'000
'000
'000
Profit for the period
2,534
1,463
7,284
Other comprehensive income
Available for sale financial assets:
Valuation changes taken to equity
56
 (81)
(6)
Reclassification of (gains)/losses on available for sale financial assets on derecognition
 (26)
19
24
 
Income tax on unrealised valuation
changes taken to equity
 (6)
8
(8)
 
_______
_______
_______
Total comprehensive income for the period
2,558
1,409
7,294
_______ 
_______ 
_______
Consolidated balance sheet at 30 June 2017
      
At 30
June 2017
Unaudited
At 30
June 2016
Unaudited
At 31
December 2016
Audited 
Note
'000
'000
'000
ASSETS
Non-current assets
Goodwill
6
10,575
10,575
10,575
Intangible assets
7
1,233
1,321
1,478
Property, plant and equipment
8
4,921
5,080
5,096
Investment property
 
1,070
1,070
1,070
Equity-accounted investee
11
627
634
639
Financial assets
9
6,219
8,139
6,137
Deferred tax asset
27
550
3
________
________
________
24,672
27,369
24,998
________
________
________
Current assets
Trade and other receivables
6,029
9,711
20,200
Reinsurance assets
290
307
310
Inventories
169
1,304
428
Cash and cash equivalents
11,112
7,608
7,206
________
________
________
17,600
18,930
28,144
________
________
________
Total assets
42,272
46,299
53,142
________
________
________
Consolidated balance sheet at 30 June 2017
At 30
June 2017
Unaudited
At 30
June 2016
Unaudited 
At 31
December 2016
Audited 
'000
'000
'000
EQUITY
Equity attributable to equity holders of Personal Group Holdings plc
Share capital
1,540
1,527
1,540
Capital redemption reserve
24
24
24
Amounts recognised directly into equity relating to non-current assets held for sale
 54
 (34)
 30
Other reserve
(303)
(309)
(330)
Profit and loss reserve
30,166
29,070
31,061
________
________
________
Total equity
31,481
30,278
32,325
________
________
________
 
LIABILITIES
Current liabilities
Provisions
1,905
2,190
1,912
Trade and other payables
5,681
10,589
15,426
Insurance contract liabilities
2,721
3,143
3,239
Current tax liabilities
484
99
240
________
________
________
10,791
16,021
20,817
________
________
________
________
________
________
Total liabilities
10,791
16,021
20,817
________
________
________
________
________
________
Total equity and liabilities
42,272
46,299
53,142
________
________
________
Consolidated statement of changes in equity for the six months ended 30 June 2017
 
  
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 2017
1,540
24
30
(330)
31,061
32,325
________
________
________
________
________
________
Dividends
-
-
-
-
(3,490)
(3,490)
Employee share-based compensation
-
-
-
-
85
85
Proceeds of AESOP* share sales
-
-
-
-
28
28
Cost of AESOP shares sold
-
-
-
52
(52)
-
Cost of AESOP shares purchased
-
-
-
(25)
-
(25)
Nominal value of LTIP** shares issued
-
-
-
-
-
-
________
________
________
________
________
________
Transactions with owners
-
-
-
27
(3,429)
(3,402)
________
________
________
________
________
________
Profit for the period
-
-
-
-
2,534
2,534
Other comprehensive income
Available for sale financial assets:
Change in fair value of assets classified as held for sale
-
-
56
-
-
56
Transfer to income statement
-
-
(26)
-
-
(26)
Current tax on unrealised valuation changes taken to
equity
-
-
(6)
-
-
(6)
________
________
________
________
________
________
Total comprehensive income for the period
-
-
24
-
2,534
2,558
________
_______
_______
_______
_______
_______
Balance as at 30 June 2017
1,540
24
54
(303)
30,166
31,481
________
________
________
________
________
________
* All Employee Share Option Plan (AESOP) 
** Long Term Incentive Plan (LTIP)
Consolidated statement of changes in equity for the year ended 31 December 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
-
-
-
-
(6,697)
(6,697)
Employee share-based compensation
-
-
-
-
213
213
Proceeds of AESOP* share sales
-
-
-
-
103
103
Cost of AESOP shares sold
-
-
-
95
(95)
-
Cost of AESOP shares purchased
-
-
-
(39)
-
(39)
Nominal value of LTIP** shares issued
22
-
-
-
(22)
-
________
________
________
________
________
________
Transactions with owners
22
-
-
56
(6,498)
(6,420)
________
________
________
________
________
________
Profit for the year
-
-
-
-
7,284
7,284
Deferred tax reserve movement
-
-
-
-
(412)
(412)
Other comprehensive income
Available for sale financial assets:
Change in fair value of assets classified as held for sale
-
-
(6)
-
-
(6)
Transfer to income statement
-
-
24
-
-
24
Current tax on unrealised
valuation changes taken to
equity
-
-
(8)
-
-
(8)
________
________
________
________
________
________
Total comprehensive income for the year
-
-
10
-
6,872
6,882
________
________
________
________
________
________
Balance as at 31 December 2016
1,540
24
30
(330)
31,061
32,325
________
________
________
________
________
________
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:
Change in fair value of assets classified as held for sale
-
-
(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 cash flow statement
6 months
ended 30
June 2017
Unaudited
6 months
ended 30
June 2016
Unaudited
12 months
ended 31
December 2016
Audited
'000
'000
'000
Net cash from operating activities (see opposite)
7,489
4,810
6,395
______
______
______
Investing activities
Additions to property, plant and equipment
(70)
(412)
(828)
Additions to intangible assets
(85)
(214)
(624)
Proceeds from disposal of property, plant and equipment
17
117
231
Purchase of financial assets
(97)
(35)
(139)
Proceeds from disposal of financial assets
105
984
3,177
Interest received
14
47
53
Dividends received
20
10
20
______
______
______
Net cash from investing activities
(96)
497
1,890
______
______
______
Financing activities
Purchase of own shares by the AESOP
(25)
(18)
(39)
Proceeds from disposal of own shares by the AESOP
28
66
66
Dividends paid
(3,490)
(3,338)
(6,697)
______
______
______
Net cash used in financing activities
(3,487)
(3,290)
(6,670)
______
______
______
Net change in cash and cash equivalents
3,906
2,017
1,615
Cash and cash equivalents, beginning of period
7,206
5,591
5,591
_______
_______
_______
Cash and cash equivalents, end of period
11,112
7,608
7,206
Consolidated cash flow statement
6 months
ended 30
June 2017
Unaudited
6 months
ended 30
June 2016
Unaudited
12 months
ended 31
December 2016
Audited
'000
'000
'000
Operating activities
Profit after tax
2,534
1,463
7,284
Adjustment for: 
 Depreciation
225
215
448
 Amortisation of intangible assets
329
253
505
 Profit on disposal of property, plant and equipment 
2
7
61 
 Realised and unrealised net investment losses/(profits)
(60)
31
17 
 Interest received
(14)
(47)
(53)
 Dividends received
(20)
(10)
(20)
 Share of (profit) / loss of equity-accounted investee, net of tax
12
12
6
 Share-based payments
85
296
222
 Taxation expense recognised in income statement
516
474
1,479
Changes in working capital:
 Trade and other receivables
14,191
12,264
1,772
 Trade and other payables
(10,269)
(8,816)
(4,171)
 Inventories
259
(914)
(38)
Taxes paid
(301)
(418)
(1,117)
______
______
______
Net cash from operating activities
7,489
4,810
6,395
______
______
______


Notes to the consolidated financial statements
1 General information
The Group is principally engaged in transaction employee services, including insurance products and the provision of salary sacrifice technology products 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 2016.
The financial information for the year ended 31 December 2016 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 2016 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 25 September 2017.
2 Accounting policies 
These June 2017 interim consolidated financial statements of Personal Group Holdings Plc are for the six months ended 30 June 2017. 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 2016.
Notes to the consolidated financial statements
These financial statements have been prepared in accordance with IFRS standards and IFRIC interpretations as adopted by the EU, issued and effective as at 31 December 2016. 
The principal accounting policies have remained unchanged from the year ended 31 December 2016.
3 Segment analysis
The Group operates the following four continuing 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.
2) IT Salary Sacrifice
IT salary sacrifice refers to the trade of Lets Connect, a salary sacrifice technology company purchased in 2014.

3) SME
SME has been classified as a separate segment as the development and expansion into the SME market is currently managed and maintained as a separate activity to Core Insurance and Other. Revenue in this sector is based on a SaaS model for products that combines insurance and employee benefit platform income or employee benefit platform income only.
4)  Other
The other operating segment consists exclusively of revenue generated by Personal Management Solutions (PMS) and Berkeley Morgan Group (BMG) and its subsidiary undertakings.
PMS is an employee benefit company that offers a variety of employee incentive schemes normally via annual subscriptions and includes income generated from the Hapi platform.
BMG was acquired by PGH in January 2005 and generates commission 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 continued to underwrite policies until each policy's renewal date, from which date AXA PPP healthcare now provides continuous cover.
Notes to the consolidated financial statements
The discontinued segment is:
Mobile 
Mobile refers to the trade of Personal Group Mobile Limited, a mobile phone salary sacrifice company set up from the trade and assets of shebang Technologies purchased in 2015.
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
SME 
'000
Other
'000
Group Continuing Operations
'000
Discontinued - Mobile
'000
6 months to June 2017
Revenue
Earned premiums net of reinsurance
15,321
-
-
-
15,321
-
Other insurance related income
 (28)
-
-
187
159
-
Non-insurance related income
-
3,141
14
949
4,104
56
Investment property
-
-
-
-
-
-
Investment income
-
-
-
60
60
-
_________
_________
_________
_________
_________
_________
Total revenue
15,293
3,141
14
1,196
19,644
56
_________
_________
_________
_________
_________
_________
Net result for period before tax
3,641
 (949)
 (340)
675
3,027
23
LC - Amortisation of intangibles
-
165
-
-
165
-
Share based payments
-
-
-
156
156
-
Depreciation
127
14
75
9
225
-
Amortisation (other)
147
17
-
-
164
-
EBITDA 
3,915
 (753)
 (265)
840
3,737
23
_________
_________
_________
_________
_________
_________
Segment assets
22,748
4,707
-
14,788
42,243
29
_________
_________
_________
_________
_________
_________
Segment liabilities
6,190
3,113
-
1,223
10,526
265
_________
_________
_________
_________
_________
_________
Depreciation and amortisation
274
196
75
9
554
-
_________
_________
_________
_________
_________
_________
Notes to the consolidated financial statements
Operating segments
Core Insurance
'000
IT Salary Sacrifice
'000
SME 
'000
Other
'000
Continuing - Group
'000
Discontinued - Mobile
'000
2016
Revenue
Earned premiums net of reinsurance
31,223
-
-
-
31,223
-
Other insurance related income
 (14)
-
-
569
555
-
Non-insurance related income
-
20,069
-
1,621
21,690
2,024
Investment property
-
-
-
59
59
-
Investment income
-
-
-
93
93
-
_________
_________
_________
_________
_________
_________
Total revenue
31,209
20,069
-
2,342
53,620
2,024
_________
_________
_________
_________
_________
_________
Net result for year before tax
8,399
1,712
(741)
1,151
10,521
 (1,758)
PG mobile - Reorganisation costs
-
-
-
-
-
571
LC - Tax provision
-
 (270)
-
-
 (270)
-
LC - Amortisation of intangibles
-
330
-
-
330
-
Share based payments
-
-
-
222
222
-
Depreciation
376
18
4
21
419
30
Amortisation (other)
136
16
22
-
174
-
EBITDA 
8,911
1,806
(715)
1,394
11,396
 (1,157)
_________
_________
_________
_________
_________
_________
Segment assets
21,931
16,345
521
14,320
53,117
125
_________
_________
_________
_________
_________
_________
Segment liabilities
6,483
13,353
-
899
20,735
139
_________
_________
_________
_________
_________
_________
Depreciation and amortisation
512
364
26
21
923
30
_________
_________
_________
_________
_________
_________
Notes to the consolidated financial statements
Operating segments
Core Insurance
'000
IT Salary Sacrifice
'000
SME 
'000
Other
'000
Continuing - Group
'000
Discontinued - 
Mobile 
'000
6 months to June 2016
Revenue
Earned premiums net of reinsurance
15,498
-
-
-
15,498
-
Other insurance related income
 (5)
-
-
269
264
-
Non-insurance related income
-
3,196
-
749
3,945
1,165
Investment property
-
-
-
30
30
-
Investment income
-
-
-
61
61
-
_________
_________
_________
_________
_________
_________
Total revenue
15,493
3,196
-
1,109
19,798
1,165
_________
_________
_________
_________
_________
_________
Net result for period before tax
3,769
 (426)
-
 (226)
3,117
 (1,181)
PG mobile - Reorganisation costs
-
-
-
-
-
260
LC - Amortisation of intangibles
-
165
-
-
165
-
Share based payments
-
-
-
540
540
-
Depreciation
177
9
-
10
196
19
Amortisation (other)
82
6
-
-
88
-
EBITDA 
4,028
 (246)
-
324
4,106
(902)
_________
_________
_________
_________
_________
_________
Segment assets
24,371
6,219
-
14,573
45,163
1,136
_________
_________
_________
_________
_________
_________
Segment liabilities
7,406
6,069
-
1,809
15,284
705
_________
_________
_________
_________
_________
_________
Depreciation and amortisation
259
180
-
10
449
19
_________
_________
_________
_________
_________
_________
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 period ended 30 June 2017 was 17.0% (six months period ended 30 June 2016: 15.2%).
Notes to the consolidated financial statements
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 2017
EPS
Pence
6 months 
ended 30 
June 2016
EPS
Pence
12 months 
ended 31 
December 2016
EPS
Pence
Basic
30,741,056
8.2
30,350,608
4.8
30,442,426
23.9
Diluted
31,397,670
8.1
32,790,147
4.5
31,189,872
23.4
During the first six months of 2017, Personal Group Holdings Plc paid dividends of 3,490,000 to its equity shareholders (six months to 30 June 2016: 3,338,000, twelve months to 31 December 2016: 6,697,090). This represents a payment of 11.35p per share (six months to 30 June 2016: 11.00p, twelve months to 31 December 2016: 22.00p). 
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 2017
6 months ended 30 June 2016
12 months ended 31 December 2016
6 months ended 30 June 2017
6 months ended 30 June 2016
12 months ended 31 December 2016
Pence per share
'000
'000
'000
Equity dividends
Ordinary shares paid in period
March
5.675
5.500
5.50
1,748
1,670
1,671
June
5.675
5.500
5.50
1,748
1,675
1,674
September
-
-
5.50
-
-
1,683
December
-
-
5.50
-
-
1,683
______
______
______
3,496
3,345
6,711
Less: amounts paid on own shares
(6)
(7)
(14)
_____
_____
______
______
______
______
11.35
11.00
22.00
3,490
3,338
6,697
 
_____
_____
______
______
______
______
Notes to the consolidated financial statements
6 Goodwill
For the six months ending 30 June 2017
BMG
Let's Connect
Total
'000
'000
'000
Cost
At 1 January 2017
9,433
10,575
20,008
Additions in the year 
-
-
-
 ________
________
________
At 30 June 2017
9,433
10,575
20,008
________
________
________
Amortisation and impairment
At 1 January 2017
9,433
-
9,433
Impairment charge for year
-
-
-
________
________
________
At 30 June 2017
9,433
-
9,433
 ________
________
________
Net book value at 30 June 2017
-
10,575
10,575
 ________
________
________
Net book value at 31 December 2016
-
10,575
10,575
 ________
________
________
7 Intangible assets
For the six months ending 30 June 2017
LC Customer Value 
Computer software and website development 
Internally Generated Computer Software
Total 
'000
'000
'000
'000
Cost
At 1 January 2017
1,648
665
428
2,741
Additions in the year 
-
85
-
85
Disposals
-
(89)
-
(89)
________
________
________
________
At 30 June 2017
1,648
661
428
2,737
________
________
________
________
Amortisation and impairment
At 1 January 2017
935
316
12
1,263
Amortisation charge for period
165
93
71
329
Disposals in the Period
-
(88)
-
(88)
________
________
________
________
At 30 June 2017
1,100
321
83
1,504
________
________
________
________
Net book value at 30 June 2017
548
340
345
1,233
________
________
________
________
Net book value at 31 December 2016
713
349
416
1,478
________
________
________
________
Notes to the consolidated financial statements
8 Property, plant and equipment
For the six months ended 30 June 2017
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 2017
5,478
214
1,090
1,179
31
7,992
Additions
-
-
26
44
-
70
Disposals
-
-
(272)
(12)
-
 (284)
______
______
______
______
______
______
At 30 June 2017
5,478
214
844
 1,211
31
7,778
______
______
______
______
______
______
Depreciation
At 1 January 2017
1,505
42
754
580
15
2,896
Provided in the period
47
18
95
63
2
225
Eliminated on disposals
-
-
(255)
(9)
-
(264)
______
______
______
______
______
______
At 30 June 2017
1,552
60
594
634
17
2,857
______
______
______
______
______
______
Net book amount at 30 June 2017
3,926
154
250
577
14
4,921
______
______
______
______
______
______
Net book amount at 31 December 2016
3,973
172
336
599
16
 5,096
______
______
______
______
______
______
Notes to the consolidated financial statements
9 Financial assets
At 30 June 
2017
Unaudited
At 30 June 
2016
Unaudited
At 31 December 
2016
Audited
'000
'000
'000
Bank deposits
5,386
7,449
5,365
Investment Bond
100
100
100
Financial assets:
 Available for sale
733
590
672
________
________
________
6,219
8,139
6,137
_________
_________
_________
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
 
10 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 started 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.
A further amendment to the scheme was made in November 2016 when the duration was extended from 5 years to 6 years for Mark Scanlon and Andy Lothian, who had entered the scheme in November 2011. In addition, during 2017, the end date of the scheme was extended to 30 April 2018 for both Andy Lothian and a further senior employee who entered the scheme in July 2012.
An amount of nil has been charged to the profit and loss account for this scheme in the six months ended 30 June 2017 (six months ended 30 June 2016: 296,000) 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.
Notes to the consolidated financial statements
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 147,000
- If the share price were to increase at a slower rate than assumed the charge for the period would have increased by nil
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 76K has been charged to the profit and loss account in the six months ended June 2017 (six months ended June 2016: 90,000) 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
11 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 profit and loss account and balance sheet for this joint venture company are as follows:
Profit and loss account
6 months ended 30 
June 2017
6 months ended 30 
June 2016
12 months 
ended 31 December 2016
Unaudited
Unaudited
Audited
'000
'000
'000
Rent receivable 
24
11
38
Administration expenses
 (58)
 (35)
 (55)
________
________
________
Operating loss
 (34)
 (24)
(17)
________
________
________
Loss on ordinary activities before taxation
 (34)
 (24)
(17)
Tax on profit on ordinary activities
-
-
4
________
________
________
Loss for the financial period retained
 (34)
 (24)
(13)
________
________
________
Personal Group Holdings share of loss
 (17)
 (12)
(6)
________
________
________
Notes to the consolidated financial statements
Balance sheet
6 months ended 30 
June 2017
6 months ended 30 
June 2016
12 months 
ended 31 December 2016
Unaudited
Unaudited
Audited
'000
'000
'000
Current assets 
Inventories
1,082
1,126
1,123
Debtors
198
338
183
________
________
________
1,280
1,464
1,306
Creditors: amounts falling due within one year
(27)
(197)
(28)
________
________
________
Net current assets
1,253
1,267
1,278
________
________
________
Capital and reserves
Called up share capital
-
-
-
Profit and loss account
1,253
1,267
1,278
________
________
________
Shareholders' funds
1,253
1,267
1,278
________
________
________
Personal Group Holdings share of net assets
627
634
639
________
________
________
12 Financial calendar for the year ending 31 December 2017
The company announces the following dates in its financial calendar for the year ending 31 December 2017:
 Preliminary results for the year ending 31 December 2017 - March 2018
 Publication of Report and Accounts for 2017 - March 2018
 AGM - April 2018

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