REG - Personal Group - Interim Results <Origin Href="QuoteRef">PGH.L</Origin> - Part 2
29/09/2015 07:01
- Part 2: For the preceding part double click ID:nRSc4649Aa
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 2014 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 28 September 2015.
2 Accounting policies
These June 2015 interim consolidated financial statements of Personal Group
Holdings Plc are for the six months ended 30 June 2015. 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 2014.
These financial statements have been prepared on the basis of the recognition
and measurement requirements of those IFRS standards and IFRIC interpretations
as adopted by the EU, issued and effective or issued and early adopted in
respect of periods beginning on or after 1 January 2014.
The principal accounting policies have remained unchanged from the year ended
31 December 2014.
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, the provision of salary sacrifice technology
products and property rental income. Non-insurance related expenses include
costs relating to those sales, and also acquisition costs. Non-insurance
income and expenses have increased in 2015 due to the additional sales and
purchases made subsequent to the acquisition of the trade and assets of
Shebang.
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 Consolidationadjustments£'000 Group£'000
Operating segments
For the 6 months ended 30 June 2015
Revenue
Earned premiums net of reinsuranceOther income: 13,768 - - - 13,768
Insurance related 1,154 198 - - 1,352
Non-insurance related 3,795 - - - 3,795
Investment property - - 33 - 33
Investment income 83 - - - 83
________ ________ ________ ________ ________
Total revenue 18,880 _______ 198______ 33______ -______ 19,031_______
Net result for period before tax 2,976 132 33 (271) 2,870
_______ _______ _______ _______ _______
Segment assets 28,756 799 940 13,084 43,579
_______ _______ _______ _______ _______
Segment liabilities 16,398 607 - - 17,005
_______ _______ _______ _______ _______
Depreciation and amortisation 190 - - 285 475
_______ _______ _______ _______ _______
Notes to the consolidated financial statements
Employeebenefits£'000 Financial services£'000 Unallocated£'000 Consolidationadjustments£'000 Group£'000
For the year ended 31 December 2014
Revenue
Earned premiums net of reinsuranceOther income: 24,054 - - - 24,054
Insurance related 4,007 494 - - 4,501
Non-insurance related 18,202 - - - 18,202
Investment property - - 67 - 67
Investment income 210 - - - 210
_______ _______ _______ _______ _______
Total revenue 46,473_______ 494_______ 67_______ -_______ 47,034_______
Net result for year before tax 9,361 347 67 (770) 9,005
_______ _______ _______ _______ _______
Segment assets 38,694 677 940 11,948 52,259
_______ _______ _______ _______ _______
Segment liabilities 24,829 382 - - 25,211
_______ _______ _______ _______ _______
Depreciation and amortisation 376 - - 284 660
_______ _______ _______ _______ _______
Employeebenefits£'000 Financial services£'000 Unallocated£'000 Consolidation adjustments£'000 Group£'000
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 230 - - - 230
_______ _______ _______ _______ _______
Income is derived from the UK and Guernsey (Dec 2014 all income was derived
from UK)
The figures shown above for employee benefits and financial services are from
the group's management accounts. Unallocated amounts relate to the group's
investment property.
Notes to the consolidated financial statements
4 Taxation
Tax expense is recognised based on the weighted-average annual income tax rate
expected for the full financial year multiplied by management's best estimate
of the taxable profit of the interim reporting period.
The Group's consolidated effective tax rate in respect of continuing
operations for the six months ended 30 June 2015 was 19.4% (six months ended
30 June 2014: 25.9%).
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 2015 EPSPence 6 months ended 30 June 2014 EPSPence 12 months ended 31 December 2014 EPSPence
Basic 30,229,332 7.79 30,066,146 8.62 30,066,390 25.1
Diluted 31,280,284 7.53 30,102,976 8.60 30,901,027 24.4
During the first six months of 2015, Personal Group Holdings Plc paid
dividends of £3,160,000 to its equity shareholders (six months to 30 June
2014: £2,954,000, twelve months to 31 December 2014: £5,916,000). This
represents a payment of 10.45p per share (six months to 30 June 2014: 9.8p,
twelve months to 31 December 2014: 19.6p).
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 2015 6 months ended 30 June 2014 12 months ended 31 December 2014 6 months ended 30 June 2015 6 months ended 30 June 2014 12 months ended 31 December 2014
Pence per share £'000 £'000 £'000
Equity dividends
Ordinary shares paid in period
March 5.225 4.90 4.90 1,580 1,477 1,477
June 5.225 4.90 4.90 1,580 1,477 1,477
September - - 4.90 - - 1,477
December - - 4.90 - - 1,485
______ ______ ______
3,160 2,954 5,916
Less: amounts paid on own shares - (7) (17)
_____ _____ ______ ______ ______ ______
10.45 9.80 19.60 3,160 2,947 5,899
_____ _____ ______ ______ ______ ______
Notes to the consolidated financial statements
6 Property, plant and equipment
For the six months ended 30 June 2015
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 2015 5,478 169 1,060 970 15 59 7,751
Acquisition - - - 5 - - 5
Additions - - 309 17 - - 326
Disposals - - (3) (2) - - (5)
______ ______ ______ ______ ______ ______ ______
At 30 June 2015 5,478 169 1,366 990 15 59 8,077
______ ______ ______ ______ ______ ______ ______
Depreciation
At 1 January 2015 1,316 17 755 778 8 27 2,901
Acquisition - - - - - - -
Provided in the period 47 14 101 21 2 5 190
Eliminated on disposals - - (1) (1) - - (2)
______ ______ ______ ______ ______ ______ ______
At 30 June 2015 1,363 31 855 798 10 32 3,089
______ ______ ______ ______ ______ ______ ______
Net book amount at 30 June 2015 4,115 138 511 192 5 27 4,988
______ ______ ______ ______ ______ ______ ______
Net book amount at 31 December 2014 4,162 152 305 192 7 32 4,850
______ ______ ______ ______ ______ ______ ______
For the year ended 31 December 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
Acquisition - 1 29 7 15 59 111
Additions - 168 206 38 - - 412
Disposals - (145) (16) (6) - - (67)
_____ _____ _____ _____ _____ _____ _____
At 31 December 2014 5,478 169 1,060 970 15 59 7,751
_____ _____ _____ _____ _____ _____ _____
Depreciation
At 1 January 2014 1,222 103 536 744 - - 2,605
Acquisition - 1 13 4 4 19 41
Provided in the year 94 22 221 36 4 8 385
Eliminated on disposals - (109) (15) (6) - - (130)
_____ _____ _____ _____ _____ _____ _____
At 31 December 2014 1,316 17 755 778 8 27 2,901
_____ _____ _____ _____ _____ _____ _____
Net book amount at 31 December 2014 4,162 152 305 192 7 32 4,850
______ ______ ______ ______ ______ ______ ______
Net book amount at 31 December 2013 4,256 42 305 187 - - 4,790
______ ______ ______ ______ ______ ______ ______
Notes to the consolidated financial statements
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
Acquisition - - 15 3 10 42 70
Additions - 92 299 24 - - 415
Disposals - (119) - - - - (119)
______ ______ ______ ______ ______ ______ ______
At 30 June 2014 5,478 118 1,155 958 10 - 7,761
______ ______ ______ ______ ______ ______ ______
Depreciation
At 1 January 2014 1,222 103 536 744 - - 2,605
Acquisition - - 2 - 1 3 6
Provided in the period 49 7 112 17 - - 185
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
______ ______ ______ ______ ______ ______ ______
7 Financial assets
At 30 June 2015Unaudited At 30 June 2014Unaudited At 31 December 2014Audited
£'000 £'000 £'000
Bank deposits 9,914 11,802 10,859
Loans & receivables - 922 -
Investment Bond 100 - 100
Financial assets:
Available for sale 710 698 651
________ ________ ________
10,724 13,422 11,610
_________ _________ _________
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.
Notes to the consolidated financial statements
Loans and receivables (as at 30 June 2014), held at amortised cost, were
short-term trade receivables and the carrying amount is a reasonable
approximation of fair value. The loans and receivables were secured by a
charge over the Milton Keynes property shown within note 9.
Bank deposits, also held at amortised cost, are due within 6 months and the
carrying amount is a reasonable approximation of fair value.
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.
8 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 relating to the percentage increase in the market
capitalisation of the company over a specified 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 management's
intention to settle these awards in shares.
A participant would be 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 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 on the second, third, fourth and fifth
anniversary respectively. The number of shares awarded will be determined by
dividing the amount of appropriate payment by the average of the closing bid
price for the 20 business days immediately preceding the date of issue.
An amount of £271,000 has been charged to the profit and loss account for this
scheme in the six months ended 30 June 2015 (six months ended 30 June 2014:
£431,000) 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 of £10,000,000.
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 increased by £43,000
- If the share price were to remain static for the remainder of the plan or
if the share price were to reduce over the remainder of the plan there would
have been no charge for the period.
As at 30 July 2015 the above scheme was amended to:
- Include a maximum cap on market capitalisation of £183.7m; this will have
the impact of reducing the maximum cap on the payout to individuals on the
scheme to £7,987,000.
- Grant options rather than shares at each vesting date; this change will
not have any impact on the charge to the profit and loss account.
A further LTIP scheme ("LTIP2") was then put in place to take effect from 30
July 2015:
- The current 5 Year Senior Management LTIP ("LTIP1") will mature at the end
of 2016. As with LTIP1, LTIP2 is designed to reward directors and certain
other senior employees in a way that aligns the interests of LTIP participants
with the interests of shareholders, as well as with the Group's long-term
strategic plan.
Notes to the consolidated financial statements
9 Equity-accounted investment
During 2004 the company entered into a joint venture agreement with Abbeygate
Developments Limited to construct a freehold joint office and residential
property development on land adjacent to John Ormond House. A joint venture
company called Abbeygate Developments (Marlborough Gate 2) Limited was
established to construct the property. This company is owned equally by
Personal Group Holdings Plc and Abbeygate Developments Limited.
The development was funded by way of a loan from Personal Group Holdings Plc.
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 2015 6 months ended 30 June 2014 12 months ended 31 December 2014
Unaudited Unaudited Audited
£'000 £'000 £'000
Rent receivable 81 127 210
Profit on disposal of apartments 35 226 388
Administration expenses (15) (58) (84)
________ ________ ________
Operating profit 101 295 514
Interest payable - (25) (30)
________ ________ ________
Profit on ordinary activities before taxation 101 270 484
Tax on profit on ordinary activities (20) (58) (99)
________ ________ ________
Profit for the financial period retained 81 212 385
________ ________ ________
Personal Group Holdings share of profit 41 106 192
________ ________ ________
Balance sheet 6 months ended 30 June 2015 6 months ended 30 June 2014 12 months ended 31 December 2014
Unaudited Unaudited Audited
£'000 £'000 £'000
Current assets
Inventories 1,058 2,091 1,236
Debtors 375 (6) 98
Cash at bank and in hand 18 12 18
________ ________ ________
1,451 2,097 1,352
Creditors: amounts falling due within one year (190) (1,088) (170)
________ ________ ________
Net current assets 1,261 1,009 1,182
________ ________ ________
Capital and reserves
Called up share capital - - -
Profit and loss account 1,261 1,009 1,182
________ ________ ________
Shareholders' funds 1,261 1,009 1,182
________ ________ ________
Personal Group Holdings share of net assets 631 505 591
________ ________ ________
Notes to the consolidated financial statements
10 Goodwill
PGM Let's Connect Total
£'000 £'000 £'000
Cost
At 1 January 2015 - 10,575 10,575
Additions in the year 95 - 95
_________ _________ ________
At 30 June 2015 95 10,575 10,670
_________ _________ ________
Amortisation and impairment
At 1 January 2015 - - -
Impairment charge for year - - -
_________ _________ _________
At 30 June 2015 0 0 0
_________ _________ _________
Net book value at 30 June 2015 95 10,575 10,670
_________ _________ _________
11 Intangible assets
Customer Value Software Licence agreements Customer Contracts Total
Let's Connect PGM PGM PGM
£'000 £'000 £'000 £'000 £'000
Cost
At 1 January 2015 1,648 - - - 1,648
Additions in the year - 506 703 102 1,311
________ ________ ________ ________ ________
At 30 June 2015 1,648 506 703 102 2,959
________ ________ ________ ________ ________
Amortisation and impairment
At 1 January 2015 275 - - - 275
Amortisation charge for year 165 60 51 9 285
_________ _________ _________ ________ _________
At 30 June 2015 440 60 51 9 560
_________ _________ _________ ________ _________
Net book value at 30 June 2015 1,208 446 652 93 2,399
_________ _________ _________ ________ _________
Notes to the consolidated financial statements
12 Acquisitions of business
Acquisitions in the current period
On 1 April 2015 Personal Group Mobile Limited (PGM) was incorporated as a new
subsidiary within the Group and on 17 April 2015 PGM purchased the trade and
certain assets and liabilities of shebang Technology Group Limited (shebang)
out of administration for a total consideration of £1.4m. £0.7m was paid to
the administrator of shebang and a further £0.7m was paid to Hutchison 3G UK
Limited (Three UK) in respect of novation of a Mobile Virtual Network Operator
Services agreement. PGM is a Mobile Virtual Network Operator ("MVNO") aimed at
providing salary sacrifice phones and airtime to its established and new
customers through the Group's subsidiary Let's Connect in addition to
shebang's existing distribution channels. The acquisition is highly
complementary to the Group's salary sacrifice product offering and customer
base, and it provides the Group with another reason to engage and rollout
employee benefit programmes, which can include its core insurance products. It
has also brought with it over 20 years' of experience in the mobile industry,
an established relationship with Three UK and an experienced team of 40 people
based in Daventry already serving its customers with over 10,000 connections.
In the period to 30 June 2015 the business contributed net loss of £0.9m
including acquisition costs of £0.3m and re-organisation costs of £0.4m.
Effect of acquisition
The acquisition had the following effect on the Group's assets and
liabilities.
*Recognised Values on Acquisition
£'000
Net assets acquired:
Licence agreement (intangible) 703
Software (intangible) 506
Customer value (intangible) 102
Property, plant and equipment 5
Inventories 55
Trade and other receivables 20
Trade and other payables (96)
_________
Net identifiable assets and liabilities 1,295
_________
Consideration paid 1,390
_________
Goodwill on acquisition 95
_________
*The recognised values above have been determined on a book basis with the
exception of licence agreement, software and customer value which represent a
provisional assessment of fair value. A complete assessment of fair values
will be completed for the year end.
A minimal amount of goodwill has arisen because the consideration paid
reflects management expectations of the future profitability of the business,
whilst recognising that the majority of this future profitability will derive
from new income streams.
The licence agreement, software and customer value are being amortised through
the consolidated income statement over 3 year, 2 year and 3 year periods
respectively; the combined charge for the 6 months to 30 June 2015 was £105k.
Notes to the consolidated financial statements
Financial calendar for the year ending 31 December 2015
The company announces the following dates in its financial calendar for the
year ending 31 December 2015:
· Preliminary results for the year ending 31 December 2015
- March 2016
· Publication of Report and Accounts for 2015
- March 2016
· AGM
- April 2016
This information is provided by RNS
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