REG - Personal Group - Interim Results <Origin Href="QuoteRef">PGH.L</Origin> - Part 2
20/09/2016 07:05
- Part 2: For the preceding part double click ID:nRST2545Ka
Notes to the consolidated financial statements
1 General information
The principal activities of Personal Group Holdings Plc ('the Company') and
subsidiaries (together 'the Group') include transacting short-term accident
and health insurance and providing employee benefits related business 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 2015.
The financial information for the year ended 31 December 2015 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 2015 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 19 September 2016.
2 Accounting policies
These June 2016 interim consolidated financial statements of Personal Group
Holdings Plc are for the six months ended 30 June 2016. 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 2015.
Notes to the consolidated financial statements
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 2015.
3 Segment analysis
The Group operates the following four 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.
Up until March 2015 insurance related income represented commission receivable
for death benefit policies underwritten by 3rd parties. From March 2015 these
policies have been underwritten by the Group's subsidiary Personal Assurance
Guernsey Limited (PAGL) and, as such, their income now falls within earned
premium.
2) IT Salary Sacrifice
IT salary sacrifice refers to the trade of Lets Connect, a salary sacrifice
technology company purchased in 2014.
3) Mobile
Mobile refers to the trade of Personal Group Mobile, a mobile phone salary
sacrifice company set up from the trade and assets of shebang Technologies
purchased in 2015.
4) Other
The other operating segment consists exclusively of revenue generated by
Berkeley Morgan Group (BMG) and its subsidiary undertakings and Personal
Management Solutions (PMS).
BMG was acquired by PGH in January 2005 and generates income 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 will continue to
underwrite policies until each policy's renewal date, from which date AXA PPP
healthcare will provide continuous cover.
PMS is an employee benefit company that offers a variety of employee incentive
schemes.
Notes to the consolidated financial statements
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 Mobile £'000 Other£'000 Group£'000
6 months to June 2016
Revenue
Earned premiums net of reinsuranceOther income: 15,498 15,498
Insurance related (5) - - 270 265
Non-insurance related - 3,196 1,165 749 5,110
Investment property - - - 30 30
Investment income - - - 60 60
_________ _________ _________ _________ _________
Total revenue 15,493 3,196 1,165 1,109 20,963
_________ _________ _________ _________ _________
Net result for year before tax 3,769 (426) (1,227) (179) 1,937
PG mobile - Reorganisation costs - - 260 - 260
LC - Amortisation of intangibles - 165 - - 165
Share based payments - - - 540 540
Depreciation 177 9 19 10 215
Amortisation (other) 82 6 - - 88
EBITDA 4,028 (246) (948) 371 3,205
_________ _________ _________ _________ _________
Segment assets 24,370 6,219 1,136 14,573 46,299
_________ _________ _________ _________ _________
Segment liabilities 7,406 6,069 705 1,809 15,989
_________ _________ _________ _________ _________
Depreciation and amortisation 259 180 19 10 471
_________ _________ _________ _________ _________
Operating segments Core Insurance£'000 IT Salary Sacrifice£'000 Mobile £'000 Other£'000 Group£'000
2015
Revenue
Earned premiums net of reinsuranceOther income: 29,370 29,370
Insurance related 1,135 - - 643 1,778
Non-insurance related - 25,460 1,524 1,243 28,227
Investment property - - - 63 63
Investment income - - - 121 121
_________ _________ _________ _________ _________
Total revenue 30,505 25,460 1,524 2,070 59,559
_________ _________ _________ _________ _________
Net result for year before tax 9,098 2,803 (3,648) 2,196 10,449
PG mobile - Reorganisation costs - - 856 - 856
Notes to the consolidated financial statements
PG mobile - Acquisition costs - - 341 - 341
PG mobile - Intangible amortisation - - 369 - 369
PG mobile - Intangible asset write down - - 986 - 986
LC - Consideration write-down - - - (2,684) (2,684)
LC - Tax provision - (825) - - (825)
LC - Amortisation of intangibles - 330 - - 330
Share based payments - - - 1,289 1,289
Depreciation 294 16 21 17 348
Amortisation (other) 87 10 - - 97
EBITDA 9,479 2,334 (1,075) 818 11,556
_________ _________ _________ _________ _________
Segment assets 23,843 17,810 734 14,497 56,884
_________ _________ _________ _________ _________
Segment liabilities 6,447 16,795 563 1,216 25,021
_________ _________ _________ _________ _________
Depreciation and amortisation 383 355 390 17 1,145
_________ _________ _________ _________ _________
Operating segments Core Insurance£'000 IT Salary Sacrifice£'000 Mobile £'000 Other£'000 Group£'000
6 months to June 2015
Revenue
Earned premiums net of reinsuranceOther income: 13,768 13,768
Insurance related 1,121 - - 231 1,352
Non-insurance related - 2,803 405 587 3,795
Investment property - - - 33 33
Investment income - - - 83 83
_________ _________ _________ _________ _________
Total revenue 14,889 2,803 405 934 19,031
_________ _________ _________ _________ _________
Net result for year before tax 4,926 (425) (1,425) (165) 2,911
PG mobile - Reorganisation costs - - 520 - 520
PG mobile - Acquisition costs - - 337 - 337
PG mobile - Intangible amortisation - - 120 - 120
LC - Amortisation of intangibles - 165 - - 165
Share based payments - - - 328 328
Depreciation 146 9 1 9 165
Amortisation (other) 23 3 - - 26
EBITDA 5,095 (248) (447) 172 4,572
_________ _________ _________ _________ _________
Segment assets 24,158 3,066 1,814 14,769 43,807
_________ _________ _________ _________ _________
Segment liabilities 12,608 2,059 435 2,131 17,233
_________ _________ _________ _________ _________
Depreciation and amortisation 169 177 121 9 476
_________ _________ _________ _________ _________
Notes to the consolidated financial statements
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 ended 30 June 2016 was 24.3% (six months ended
30 June 2015: 19.4%).
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 2016 EPSPence 6 months ended 30 June 2015 EPSPence 12 months ended 31 December 2015 EPSPence
Basic 30,350,608 4.8 30,229,332 7.8 30,200,755 30.8
Diluted 32,790,147 4.5 31,280,284 7.5 32,598,684 28.5
During the first six months of 2016, Personal Group Holdings Plc paid
dividends of £3,338,000 to its equity shareholders (six months to 30 June
2015: £3,160,000, twelve months to 31 December 2015: £6,343,000). This
represents a payment of 11.00p per share (six months to 30 June 2015: 10.45p,
twelve months to 31 December 2015: 20.90p).
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:
Notes to the consolidated financial statements
6 months ended 30 June 2016 6 months ended 30 June 2015 12 months ended 31 December 2015 6 months ended 30 June 2016 6 months ended 30 June 2015 12 months ended 31 December 2015
Pence per share £'000 £'000 £'000
Equity dividends
Ordinary shares paid in period
March 5.500 5.225 5.225 1,670 1,585 1,585
June 5.500 5.225 5.225 1,675 1,585 1,585
September - - 5.225 - - 1,586
December - - 5.225 - - 1,587
______ ______ ______
3,345 3,170 6,343
Less: amounts paid on own shares (7) (10) (18)
_____ _____ ______ ______ ______ ______
11.00 10.45 20.90 3,338 3,160 6,325
_____ _____ ______ ______ ______ ______
6 Property, plant and equipment
For the six months ended 30 June 2016
Freehold land and properties£'000 Motor vehicles£'000 Computerequipment£'000 Furniture fixtures & fittings£'000 Leasehold improve-ments £'000 Total£'000
Cost
At 1 January 2016 5,478 243 922 1,250 15 7,908
Additions - 179 120 112 - 411
Disposals - (145) (5) (3) - (153)
______ ______ ______ ______ ______ ______
At 30 June 2016 5,478 277 1,037 1,359 15 8,166
______ ______ ______ ______ ______ ______
Depreciation
At 1 January 2016 1,410 33 660 786 12 2,901
Provided in the period 47 25 94 48 2 216
Eliminated on disposals - (28) (2) (1) - (31)
______ ______ ______ ______ ______ ______
At 30 June 2016 1,457 30 752 833 14 3,086
______ ______ ______ ______ ______ ______
Net book amount at 30 June 2016 4,021 247 285 526 1 5,080
______ ______ ______ ______ ______ ______
Net book amount at 31 December 2015 4,068 210 262 464 3 5,007
______ ______ ______ ______ ______ ______
Notes to the consolidated financial statements
7 Financial assets
At 30 June 2016Unaudited At 30 June 2015Unaudited At 31 December 2015Audited
£'000 £'000 £'000
Bank deposits 7,449 9,914 8,421
Investment Bond 100 100 100
Financial assets:
Available for sale 590 710 661
________ ________ ________
8,139 10,724 9,182
_________ _________ _________
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
8 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 will start 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.
An amount of £296,000 has been charged to the profit and loss account for this
scheme in the six months ended 30 June 2016 (six months ended 30 June 2015:
£271,000) 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.
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 £33K
- If the share price were to increase at a slower rate than assumed the
charge for the period would have increased by £57K
Notes to the consolidated financial statements
-
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 £90,000 has been charged to the profit and loss account in the
six months ended June 2016 (six months ended June 2015: £nil) 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
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
until 2014 when the loan was fully repaid.
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 2016 6 months ended 30 June 2015 12 months ended 31 December 2015
Unaudited Unaudited Audited
£'000 £'000 £'000
Rent receivable 11 81 134
Profit on disposal of apartments - 35 35
Administration expenses (35) (15) (31)
________ ________ ________
Operating profit (24) 101 138
________ ________ ________
Profit on ordinary activities before taxation (24) 101 138
Tax on profit on ordinary activities - (20) (28)
________ ________ ________
Profit for the financial period retained (24) 81 110
________ ________ ________
Personal Group Holdings share of profit (12) 41 55
________ ________ ________
Notes to the consolidated financial statements
Balance sheet 6 months ended 30 June 2016 6 months ended 30 June 2015 12 months ended 31 December 2015
Unaudited Unaudited Audited
£'000 £'000 £'000
Current assets
Inventories 1,126 1,058 1,058
Debtors 314 375 280
Cash at bank and in hand 24 18 -
________ ________ ________
1,464 1,451 1,338
Creditors: amounts falling due within one year (197) (190) (47)
________ ________ ________
Net current assets 1,267 1,261 1,291
________ ________ ________
Capital and reserves
Called up share capital - - -
Profit and loss account 1,267 1,261 1,291
________ ________ ________
Shareholders' funds 1,267 1,261 1,291
________ ________ ________
Personal Group Holdings share of net assets 634 631 646
________ ________ ________
10 Goodwill
For the six months ending 30 June 2016
BMG PGM Let's Connect Total
£'000 £'000 £'000 £'000
Cost
At 1 January 2016 9,433 44 10,575 20,052
Additions in the year - - - -
________ _________ _________ ________
At 30 June 2016 9,433 44 10,575 20,052
________ ________ ________ ________
Amortisation and impairment
At 1 January 2016 9,433 44 - 9,477
Impairment charge for year - - - -
________ _________ _________ _________
At 30 June 2016 9,433 44 - 9,477
________ ________ ________ ________
Net book value at 30 June 2016 - - 10,575 10,575
________ ________ ________ ________
Net book value at 31 December 2015 - - 10,575 10,575
________ ________ ________ ________
Notes to the consolidated financial statements
11 Intangible assets
For the six months ending 30 June 2016
LC Customer Value PG Mobile Software PG Mobile Licence agreements PG Mobile Customer Value Computer software and website development Total
£'000 £'000 £'000 £'000 £'000 £'000
Cost
At 1 January 2016 1,648 506 703 102 470 3,429
Additions in the year - - - - 214 214
________ ________ ________ ________ ________ ________
At 30 June 2016 1,648 506 703 102 684 3,643
________ ________ ________ ________ ________ ________
Amortisation and impairment
At 1 January 2016 605 506 703 102 153 2,069
Amortisation charge for year 165 - - - 88 253
________ ________ ________ ________ ________ ________
At 30 June 2016 770 506 703 102 241 2,322
________ ________ ________ ________ ________ ________
Net book value at 30 June 2016 878 - - - 443 1,321
________ ________ ________ ________ ________ ________
Net book value at 31 December 2015 1,043 - - - 317 1,360
________ ________ ________ ________ ________ ________
12 Acquisitions of business
Acquisitions in the prior 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
Notes to the consolidated financial statements
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 were determined on a fair value basis.
At 31 December 2015 the intangible assets and goodwill were reviewed for
impairment. As the business had not managed to meet the revenue stream targets
originally envisaged and given the future uncertainty and relative immaturity
of the business, both the goodwill and intangible asset values were fully
impaired at 31 December 2015.
On 7 July 2016 the Group announced the intention to close down PG Mobile by
the end of 2016. It is anticipated that the Group will incur an additional £1m
cost in the current financial year in respect of this.
13 Post Balance Sheet Events
As detailed in note 12, on 7 July 2016 the Group announced the intention to
close down PG Mobile by the end of the year. As the decision was made and
communicated post period end no provision has been included in these interim
statements for this closure.
Financial calendar for the year ending 31 December 2016
The company announces the following dates in its financial calendar for the
year ending 31 December 2016:
· Preliminary results for the year ending 31 December 2016 - March 2017
· Publication of Report and Accounts for 2016 - March 2017
· AGM - April 2017
This information is provided by RNS
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