REG - Personal Group - Interim Results <Origin Href="QuoteRef">PGH.L</Origin> - Part 2
26/09/2017 07:06
- Part 2: For the preceding part double click ID:nRSZ7658Ra
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 EPSPence 6 months ended 30 June 2016 EPSPence 12 months ended 31 December 2016 EPSPence
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 Computerequipment£'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 2017Unaudited At 30 June 2016Unaudited At 31 December 2016Audited
£'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
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