REG - Personal Group - Interim Results <Origin Href="QuoteRef">PGH.L</Origin> - Part 2
29/10/2014 13:58
- Part 2: For the preceding part double click ID:nRSX4320Sa
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:
Employeebenefits£'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 reinsuranceOther 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
Employeebenefits£'000 Financial services£'000 Unallocated £'000 Consolidation adjustments£'000 Group £'000
For the 6 months ended 30 June 2013
Revenue
Earned premiums net of reinsuranceOther 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 Computerequipment £'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 Computerequipment £'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 Computerequipment £'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 2014Unaudited At 30 June 2013Unaudited At 31 December 2013Audited
£'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
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