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REG - Personal Group - Interim Results

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RNS Number : 7105A  Personal Group Holdings PLC  27 September 2022

 27 September 2022

 

PERSONAL GROUP HOLDINGS PLC

("Personal Group", "Company" or "Group")

 

Interim Results & Interim Dividend for the six months ended 30 June 2022

 

Underlying growth, a strong balance sheet, and products that resonate in a
challenging market for both employers and their employees, positions the Group
well for future uplift in EBITDA. On track to meet full year market
expectations.

 

Personal Group Holdings Plc (AIM: PGH), the workforce benefits and services
provider is pleased to announce its interim results for the six months ended
30 June 2022.

 

Financial Highlights

·    Group revenue increased 5.8% to £34.7m (H1 2021: £32.8m)

·    Annualised Premium Income for the Group's largest division,
Affordable Insurance, rebuilding post-pandemic, up 7% to £26.2m, providing a
strong basis for future growth

·    Adjusted EBITDA* of £1.5m (H1 2021: £4.1m), in line with management
expectations reflecting the anticipated reduced contribution from insurance
due to investment in policyholder acquisition and increased claims costs,
offset by strong growth from other divisions

·    Profit before tax of £0.5m (H1 2021: £3.2m) in line with adjusted
EBITDA

·    Basic EPS of 1.7p (H1 2021: 8.4p)

·    Strong balance sheet and liquidity with cash and deposits at period
end of £21.8m (Dec 2021: £22.9m), and debt free

·    Interim dividend of 5.3p (H1 2021: 5.3p) to be paid, reflecting
continued confidence in the Group's business model and prospects

 

Operational Highlights

·    52 new client wins secured in the period including Vinci,
Renfrewshire Council and BSI Group

·    Strong retention and new insurance sales across Affordable Insurance
segment, successfully building back towards pre-pandemic levels

·    Continued substantial increase in contribution from SME channel via
Sage Employee Benefits; Annual Recurring Revenue of £2.1m at 30 June 22
(£1.6m at 31 December 21, £1.2m at June 21)

·    Hapi platform subscriptions showing growth; ARR of £1.7m at 30 June
22 (£1.5m at 31 December 21), with significant investment into the platform,
driving immediate and ongoing cost savings

·    Strong organic growth in Pay & Reward

 

Post-Period Trading and Outlook

·    New client gains continue with notable wins with Secure Trust Bank
and Aston University choosing HapiFlex as their benefit platform

·    Insurance sales and retention rates in H2 to date remain positive
despite the macroeconomic environment and cost of living crisis, demonstrating
the continued relevance of the Group's product offering in the current
economic environment

·    Strategic acquisition of Quintige Consulting Group ("QCG") post
period end brings new clients to the Group with cross-sell opportunities for
Hapi, Insurance and Innecto Digital products

·    Trading remains in line to meet market's full year expectations

·    Board is confident in longer-term outlook for the business

 

*Adjusted EBITDA is defined as earnings before interest, tax, depreciation,
amortisation of intangible assets, goodwill impairment, share-based payment
expenses, corporate acquisition costs and restructuring costs.

 

 Deborah Frost, Chief Executive of Personal Group, commented:

 

"These half-year results are a demonstration of the resilience of our business
model and product offering. We have made significant progress in executing our
strategy and meeting the goals we set ourselves in the first six months of the
year and we are starting to see new sales driving future growth.

 

Despite the challenges in the economic environment the Group has continued to
successfully rebuild the Affordable Insurance side of the business, which will
drive growth in a weighted second half, underpinning our confidence in meeting
full-year targets for FY 2022.

 

Our relationship with Sage has gathered further momentum and gives us access
to the previously untapped market of the UK's SME sector. We have also
maintained significant investment into the business to support further
innovation across our offering, including the new and improved Hapi 2.0 which,
once launched, we expect will add significant value for clients and their
employees.

 

Whilst we are cognisant of the macro environment and potential challenges it
may bring, we believe that our products are valued by customers, as evidenced
by the retention rates we've seen so far, across all of our product set, and
which assures us that the million-plus employees using them share our
views. We are seeing growth across the breadth of the business, which
reinforces our belief in the relevance and importance of our product in these
difficult times. These results are a credit to the hard work of our dedicated
team and the Board is excited to see what we can achieve over the next twelve
months."

 

An overview of the interim results from Deborah Frost, Chief Executive, is
available to watch here:

www.fmp-tv.co.uk/2022/09/27/personal-group-interim-results-tv-interview/
(http://www.fmp-tv.co.uk/2022/09/27/personal-group-interim-results-tv-interview/)

 

 

Personal Group Holdings will be hosting a webinar for private investors on
Friday 30 September at 12.00. If you would like to register for the webinar,
please follow this link:
https://www.investormeetcompany.com/personal-group-holdings-plc/register-investor
(https://www.investormeetcompany.com/personal-group-holdings-plc/register-investor)

 

-ENDS-

 

 

For more information please contact:

 Personal Group Holdings Plc
 Deborah Frost / Sarah Mace                          +44 (0)1908 605 000

 Cenkos Securities Plc
 Camilla Hume / Callum Davidson (Nominated Adviser)  +44 (0)20 7397 8900
 Russell Kerr (Sales)

 Alma PR
 Caroline Forde / Lily Soares Smith /                +44 (0)20 3405 0205

 Joe Pederzolli                                      personalgroup@almapr.co.uk

 

Notes to Editors

 

Personal Group Holdings Plc (AIM: PGH) is a workforce benefits and services
provider. The Group enables employers across the UK to improve employee
engagement and support their people's physical, mental, social and financial
wellbeing. Its vision is to create a brighter future for the UK workforce.

 

Personal Group provides health insurance services and a broad range of
employee benefits, engagement, and wellbeing products. Its offerings can also
be delivered through its proprietary app, Hapi, and the recently developed
extension to the platform, Hapiflex.

 

The Group's growth strategy is centred around widening the footprint of the
business into the SME, talent-led & Public Sectors, thereby expanding the
addressable customer base. In addition, it aims to grow in its existing
industrial heartlands, to re-invigorate growth in insurance policyholders and
to drive the use of its SaaS offerings.

 

Group Clients include: Airbus, B & Q, Barchester Healthcare, British
Transport Police, The Prince's Trust, Randstad, Royal Mail Group, The Royal
Mint, the Sandwell & Birmingham NHS Trust, Stagecoach Group plc, and The
University of York.

 

For further information on the Group please see www.personalgroup.com
(http://www.personalgroup.com)

 

 

 

 

 

 

 

 

 

 

 

 

CEO STATEMENT

I am pleased to report that over the first six months we have seen all our
underlying growth drivers moving in the right direction and we reflect on a
period of good momentum and clear strategic progress.

 

As anticipated, year-on-year profit comparison is lower, reflecting the lagged
impact of the pandemic and 17 months of lockdowns on the insurance business.
However this comparison masks the underlying growth and important
achievements, at an operational level, across the Group and which will
underpin future profitable growth.

 

Over the period I am particularly pleased to have seen the insurance book
re-building substantially, a very strong period for Pay & Reward, and
acceleration in our offering to the small and mid-sized business market. All
of this reflects the continued high demand for workforce benefits and services
and the relevance of our product offering.

With workers throughout the country becoming increasingly exposed to
challenging macroeconomic trends, such as the cost-of-living crisis, the value
of our offering has never been more apparent as is demonstrated by new client
wins and positive insurance sales and retention rates during the period. We
continue to enable employers across the UK to improve employee engagement and
support their people's physical, mental, social and financial wellbeing,
priorities which have all become more important in times of uncertainty.

Performance against Growth Strategy

Our overarching strategy is to build workforce resilience for clients, helping
employees thrive in work and in life. With our preliminary results, I
announced our refreshed strategy, focusing on three core pillars:

·    Driving insurance

·    Transforming Reward & Benefits

·    Accelerating our SME offer

 

In H1 we've made clear progress against each of these pillars. Our insurance
book continues to build back towards pre-Pandemic levels, with Annualised
Premium Income seeing real growth from the end of last year. Subscriptions for
our market-leading employee engagement platform, Hapi, also grew across the
first six months of the year, and we are planning significant investment into
the platform. This investment into 'Hapi 2.0' is expected to further drive
growth, with immediate and ongoing savings across the platform and a better
user experience for clients. The acquisition of QCG, alongside organic growth
for Innecto, strengthens our strategic reward offer and allows for cross-sell
of Innecto Digital products and other benefit products. Our strategic
development into the SME sector continues to show significant growth in terms
of Annualised Recurring Revenue.

Divisional H1 Segmental Analysis

Affordable Insurance

Our traditional face-to-face insurance sales' model was significantly affected
by the series of lockdowns seen in 2020 and 2021 and we have witnessed the
expected lagged impact of this over the past few reporting periods. However,
with the field sales team now up to full strength, we continue to successfully
rebuild the insurance book and in June 2022 we recorded the highest amount of
new business signed in a single month since November 2018. This, combined with
retention rates remaining above the Group's historical averages, has helped to
drive the Annualised Premium Income (API) value up to £26.2m (December 2021:
£24.4m).

 

The level of claims in H1, and particularly in Q1, was higher than
anticipated, although this has subsequently returned to projected levels.
This, in combination with a smaller insurance book and the increased
policy-holder acquisition costs associated with having a full sales team out
in the field, resulted in an adjusted EBITDA contribution of £4.0m (H1 2021:
£6.5m), which should now continue to build in line with our increasing API.

 

Pay and Reward

(Innecto)

Pay & Reward delivered strong organic growth during the period with
overall revenue up 73%, consultancy fee income up 93% and annual subscription
income from Innecto Digital products up 24% versus H1 2021. The acquisition of
QCG and early wins achieved in H2 are anticipated to drive growth throughout
the remainder of the year.

Benefits platform

Organic growth was seen in the period across the Company's Benefits Platform
with the combined Annualised Recurring Revenue (ARR) standing at £3.8m as of
June 2022 (December 2021: £3.2m). This growth was largely driven by the
substantial contribution from the Group's partnership with Sage, where ARR via
Sage Employee Benefits increased to £2.1m at the end of the period (December
2021: £1.6m), and where we continue to see good momentum. We are now also
exploring further routes to market including reaching SMEs directly, as well
as through other potential partnerships.

Other Owned Benefits

(Let's Connect)

 

Revenue for Let's Connect is down year-on-year, largely due to comparison with
a strong H1 2021, where schemes were deferred from 2020. The division proves
to be a popular benefit for employees, with order numbers up 10% on H1 2021,
and one that we expect to remain highly relevant against the current macro
backdrop as it moves into its peak period in Q4.

Interim Dividend

The Company is pleased to announce that an interim dividend for 2022 of 5.3p
will be paid on 15 November 2022 to members on the register as at 7 October
2022 (the record date). Shares will be marked ex-dividend on 6 October 2022.
The last day for elections will be on 25 October 2022. The Board has
considered the level of dividend in the context of the full year results,
reflecting continued confidence in the Group's business model and prospects.

Board Changes

As detailed in the RNS dated 1 June 2022, Liam McGrath stepped down from the
Board, and left the Company, on 30 August 2022.

Current Trading and Outlook

Trading into July and August has remained robust, and in line with
management's expectations, giving the Board confidence in meeting market
expectations for the full year.

Operationally, the Company is full of activity, with the core business
delivering well and new opportunities being driven forward by an energised
workforce.

Despite the confidence and positivity that currently surrounds the business we
are very aware of the difficult and uncertain macro-environment in which we
are all living. Whilst we continually monitor our lead indicators for signs of
impact to the business, we are pleased that, to date, all indicators remain
positive thereby supporting the Board's current confidence in the full year
outcome. We are mindful, too, of industrial action by unions which could
become more widespread and affect our client base and will also continue to
monitor this. That said, our insurance offer is good value and gives peace of
mind, qualities which are highly sought after in the current challenging
climate and our Benefits and Pay & Reward products are becoming ever more
important as employers look at how they can best remunerate teams against an
inflationary backdrop.

We will continue to monitor events carefully and remain committed to executing
on our growth strategy and look forward to delivering for shareholders going
forward.

 

Deborah Frost

Group Chief Executive

27 September 2022

Consolidated Income Statement

 

 

                                                         6 months       Restated*

                                                         ended          6 months

                                                         30 June 2022   ended

                                                         Unaudited      30 June 2021

                                                                        Unaudited
                                                   Note  £'000          £'000

 Gross premiums written                                  12,360         12,752
 Outward reinsurance premiums                            (70)           (79)
 Change in unearned premiums                             (59)           (186)
 Change in reinsurers' share of unearned premiums        (7)            (8)
                                                         (________)     (________)
 Earned premiums net of reinsurance                      12,224         12,479

 Employee benefits and services                          8,436          8,108
 Voucher resale income                                   13,848         12,082
 Other income                                            128            135
 Investment income                                       29             13
                                                         (________)     (________)
 Revenue                                                 34,665         32,817
                                                         (________)     (________)
                                                         ( )            ( )
 Claims incurred                                         (3,663)        (2,713)
 Insurance operating expenses                            (3,227)        (1,888)
 Employee benefits and services expenses                 (8,268)        (8,417)
 Voucher resale expenses                                 (13,872)       (12,135)
 Other expenses                                          (38)           119
 Group administration expenses                           (4,679)        (4,410)
 Share based payment expenses                            (152)          (81)
 Charitable donations                                    (50)           (35)
                                                         (________)     (________)
 Expenses                                                (33,949)       (29,560)
                                                         (________)     (________)

 Operating profit                                        716            3,257
 Finance costs                                           (13)           (17)
 Loss on equity investments                              (244)          -
                                                         (________)     (________)
 Profit before tax                                       459            3,240
 Tax                                               4     73             (602)
                                                         (________)     (________)
 Profit for the period after tax                         532            2,638
                                                         (________)     (________)
 Total comprehensive income for the period               532            2,638
                                                         (________)     (________)

 Earnings per share     Pence   Pence
 Basic                 1.7      8.4
 Diluted               1.7      8.4

 

 

 

 

 

The total comprehensive income for the period is attributable to equity
holders of Personal Group Holdings Plc.

 

*While the results remain unchanged, the presentation of the prior year has
been restated to add clarity to the reader. For further details on the nature
and rationale of the restatement, please refer to the consolidated financial
statements of the Group for the year ended 31 December 2021.

Consolidated Balance Sheet

 

 

                                                                                                                                                                                          At 30 June 2022                                     At 31 Dec 2021

                                                                                                                                                                                          Unaudited                                           Audited

                                                                                                                                                                                    Note  £'000                                               £'000
           ASSETS
           Non-current assets
           Goodwill                                                                                                                                                                 6                       12,696                                              12,696
           Intangible assets                                                                                                                                                        7                          1,746                                               1,637
           Property, plant and equipment                                                                                                                                            8                          4,988                                               5,033
                                                                                                                                                                                          (_______)                                           (_______)
                                                                                                                                                                                          19,430                                              19,366
                                                                                                                                                                                          (________)                                          (________)
 Current assets
           Financial assets                                                                                                                                                         9                          2,989                                               2,596
           Trade and other receivables                                                                                                                                                                         8,361                                            14,035
           Reinsurance assets                                                                                                                                                                                     107                                                 108
           Inventories                                                                                                                                                                                         1,059                                                  898
           Cash and cash equivalents                                                                                                                                                                        20,102                                              20,291
           Current tax assets                                                                                                                                                                                     441                                                 310
                                                                                                                                                                                          (________)                                          (________)
                                                                                                                                                                                          33,059                                              38,238
                                                                                                                                                                                          (________)                                          (________)
           Total assets                                                                                                                                                                   52,489                                              57,604
                                                                                                                                                                                          (________)                                          (________)

 

 

Consolidated Balance Sheet

 

 

                                                                             At 30 June 2022  At 31 Dec 2021

                                                                             Unaudited        Audited
                                                                       Note  £'000            £'000

 EQUITY

 Equity attributable to equity holders of Personal Group Holdings plc
 Share capital                                                               1,562                                 1,561
 Share premium                                                               1,134                                 1,134
 Capital redemption reserve                                                  24                                         24
 Other reserve                                                               (61)             (32)
 Share based payment reserve                                                 247              158
 Profit and loss reserve                                                     37,379           38,436
                                                                             (________)       (________)
 Total equity                                                                40,285           41,281
                                                                             (________)       (________)

 

 

 LIABILITIES
 Non-current liabilities
 Deferred tax liabilities          455         478
 Trade and other payables          254         402
                                   (________)  (________)
                                   709         880
                                   (________)  (________)

 Current liabilities
 Trade and other payables          8,272       12,356
 Insurance contract liabilities    3,223       3,087
                                   (________)  (________)
                                   11,495      15,443
                                   (________)  (________)

                                   (________)  (________)
 Total liabilities                 12,204      16,323
                                   (________)  (________)
                                   ( )         ( )
                                   (________)  (________)
 Total equity and liabilities      52,489      57,604
                                   (________)  (________)

 

 

 

Consolidated Statement of Changes in Equity for the six months ended 30 June
2022

 

 

                                            Share capital                             Share Premium                                                 Capital                                                       Other reserve  Share Based Payment Reserve                       Profit & loss reserve      Total equity

                                                                                                                                                    redemption

                                                                                                                                                    reserve
                                            £'000                                     £'000                                                         £'000                                                         £'000          £'000                                             £'000                      £'000

 Balance as at 1 January 2022               1,561                                     1,134                                                         24                                                            (32)           158                                               38,436                     41,281
                                            (________)                                (________)                                                    (________)                                                    (________)     (________)                                        (________)                 (________)
 Dividends                                                    -                                                   -                                                             -                                 -                                    -                           (1,654)                    (1,654)
 Employee share-based compensation                            -                                                   -                                                             -                                 -              152                                               -                          152
 Proceeds of SIP* share sales                                 -                                                   -                                                             -                                 -              -                                                 11                         11
 Cost of SIP shares sold                                      -                                                   -                                                             -                                 9              -                                                 (9)                        -
 Cost of SIP shares purchased                                 -                                                   -                                                             -                                 (18)           -                                                 -                          (18)
 Purchase of New shares                                                                                           -                                                             -                                 (20)           -                                                 -                          (20)
 Shares issued in year - LTIP exercise      1                                                                     -                                                             -                                 -              (63)                                              63                         1
                                            (________)                                (________)                                                    (________)                                                    (________)     (________)                                        (________)                 (________)
 Transactions with owners                   1                                         -                                                             -                                                             (29)           89                                                (1,589)                    (1,528)
                                            (________)                                (________)                                                    (________)                                                    (________)     (________)                                        (________)                 (________)
 Profit for the period                                        -                                                   -                                                             -                                 -                                    -                           532                        532
                                            (________)                                (________)                                                    (________)                                                    (________)     (________)                                        (________)                 (________)
 Total comprehensive income for the period  -                                         -                                                             -                                                             -              -                                                 532                        532
                                            (________)                                (________)                                                    (_______)                                                     (_______)      (_______)                                         (_______)                  (_______)
 Balance as at 30 June 2022                 1,562                                     1,134                                                         24                                                            (61)           247                                               37,379                     40,285
                                            (________)                                (________)                                                    (________)                                                    (________)     (________)                                        (________)                 (________)

 

 

* PG Share Ownership Plan (SIP)

Consolidated Statement of Changes in Equity for the six months ended 30 June
2021

 

 

 

                                            Share capital  Share Premium  Capital      Other reserve  Share Based Payment Reserve  Profit & loss reserve      Total equity

                                                                          redemption

                                                                          reserve
                                            £'000          £'000          £'000        £'000          £'000                        £'000                      £'000

 Balance as at 1 January 2021               1,561          1,134          24           (21)           -                            38,076                     40,774
                                            (________)     (________)     (________)   (________)     (________)                   (________)                 (________)
 Dividends                                  -              -              -            -              -                            (1,592)                    (1,592)
 Employee share-based compensation          -              -              -            -              76                           5                          81
 Proceeds of SIP* share sales               -              -              -            -              -                            19                         19
 Cost of SIP shares sold                    -              -              -            13             -                            (13)                       -
 Cost of SIP shares purchased               -              -              -            (24)           -                            -                          (24)
                                            (________)     (________)     (________)   (________)     (________)                   (________)                 (________)
 Transactions with owners                   -              -              -            (11)           76                           (1,581)                    (1,516)
                                            (________)     (________)     (________)   (________)     (________)                   (________)                 (________)
 Profit for the period                      -              -              -            -              -                            2,638                      2,638
                                            (________)     (________)     (________)   (________)     (________)                   (________)                 (________)
 Total comprehensive income for the period  -              -              -            -              -                            2,638                      2,638
                                            (________)     (________)     (_______)    (_______)      (_______)                    (_______)                  (_______)
 Balance as at 30 June 2021                 1,561          1,134          24           (32)           76                           39,133                     41,896
                                            (________)     (________)     (________)   (________)     (________)                   (________)                 (________)

 

 

 

* PG Share Ownership Plan (SIP)

Consolidated Statement of Cash Flows

 

                                                    6 months       6 months

                                                    ended          ended

                                                    30 June 2022   30 June 2021

                                                    Unaudited      Unaudited
                                                    £'000          £'000

 Net cash from operating activities (see opposite)  3,023          3,930
                                                    (______)       (______)
 Investing activities                               ( )            ( )
 Additions to property, plant and equipment         (222)          (69)
 Additions to intangible assets                     (473)          (122)
 Purchase of financial assets                       (1,509)        (1)
 Sale of financial assets                           871            -
 Interest received                                  29             13
                                                    (______)       (______)
 Net cash from investing activities                 (1,304)        (179)
                                                    (______)       (______)
 Financing activities
 Proceeds from issue of shares                      1              -
 Purchase of own shares by the SIP                  (31)           (16)
 Proceeds from disposal of own shares by the SIP    6              8
 Interest paid                                      (4)            (2)
 Payment of lease liabilities                       (226)          (233)
 Dividends paid                                     (1,654)        (1,592)
                                                    (______)       (______)
 Net cash used in financing activities              (1,908)        (1,835)
                                                    (______)       (______)
 Net change in cash and cash equivalents            (189)          1,916
 Cash and cash equivalents, beginning of period     20,291         17,589
                                                    (_______)      (_______)
 Cash and cash equivalents, end of period           20,102         19,505
                                                    (________)     (________)

 

Consolidated Statement of Cash Flows

 

                                                    6 months       6 months

                                                    ended          ended

                                                    30 June 2022   30 June 2021

                                                    Unaudited      Unaudited
                                                    £'000          £'000
 Operating activities
 Profit after tax                                   532            2,638
 Adjustment for:
 Depreciation                                       493            480
 Amortisation of intangible assets                  364            266
 Loss on disposal of property, plant and equipment  24             -
 Interest received                                  (29)           (13)
 Realised and unrealised investment losses          244            -
 Interest charge                                    13             17
 Share-based payment expenses                       152            81
 Taxation expense recognised in income statement    (73)           602

 Changes in working capital:
 Trade and other receivables                        5,675          4,658
 Trade and other payables                           (4,129)        (4,420)
 Inventories                                        (161)          64
 Taxes paid                                         (82)           (443)
                                                    (________)     (________)
 Net cash from operating activities                 3,023          3,930
                                                    (________)     (________)

 

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 services 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 the
information required for full annual financial statements and should be read
in conjunction with the consolidated financial statements of the Group for the
year ended 31 December 2021.

 

The financial information for the year ended 31 December 2021 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 2021 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 27 September 2022.

 

2          Accounting policies

 

These June 2022 interim consolidated financial statements of Personal Group
Holdings Plc are for the six months ended 30 June 2022.  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 2021.

 

These financial statements have been prepared in accordance with IFRS
standards and IFRIC interpretations as adopted by the EU, issued and effective
as at 30 June 2022.

 

The principal accounting policies remain unchanged from the year ended 31
December 2021. No new standards have become applicable for accounting periods
commencing on or after 1 January 2022.

 

Notes to the Consolidated Financial Statements

 

 

3          Segment analysis

 

The format of the segmental analysis was changed in for the year ended 31
December 2022 and a full explanation of this change can be found in those
financial statements. The segments used by management to review the operations
of the business are disclosed below.

 

1)         Affordable 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.

 

Personal Assurance (Guernsey) Limited (PAGL), a subsidiary within the Group,
is regulated by the Guernsey Financial Services Commission and has been
underwriting death benefit policies since March 2015.

 

This operating segment derives the majority of its revenue from the
underwriting by PA and PAGL of insurance policies that have been bought by
employees of host companies via bespoke benefit programmes. During 2020 PAGL
began underwriting employee default insurance for a proportion of LC
customers.

 

2)         Other Owned Benefits

 

This segment constitutes any goods or services in the benefits platform supply
chain which are owned by the Group. At present this is made up of a technology
salary sacrifice business trading as PG Let's Connect, purchased by the Group
in 2014.

 

3)         Benefits Platform

 

Revenue in this segment relates to the annual subscription income and other
related income arising from the licensing of Hapi, the Group's employee
benefit platform. This includes sales to both the large corporate and SME
sectors.

 

4)         Pay and Reward

 

Pay and Reward refers to the trade of Innecto, a pay and reward consultancy
Company purchased in 2019. Revenue in this segment relates to consultancy and
license income derived from selling Innecto digital platform subscriptions.

 

5)         Other

 

The other operating segment includes revenue generated from the resale of
vouchers. This segment also consists of revenue generated by Berkeley Morgan
Group (BMG) and its subsidiary undertakings along with any investment and
rental income obtained by the Group.

 

Notes to the Consolidated Financial Statements

 

 

The revenue and net result generated by each of the Group's operating segments
are summarised as follows,

 

                                          6 months                     6 months

                                          ended                        ended

                                          30 June 2022                 30 June 2021

                                                   Unaudited              Unaudited
                                          £'000                        £'000
 Revenue by Segment
 Insurance (Earned Premium)               12,224                       12,477
 IT Salary Sacrifice                      5,387                        6,203
 Benefits Platform                        3,574                        2,759
 Platform - Group Elimination             (1,425)                      (1,374)
 Pay & Reward                             900                          520
 Other Income:
 Voucher resale                           13,848                       12,082
 Other                                    128                          135
 Investment income                                    29               13
 Group Revenue                            34,665                       32,815

 Adjusted EBITDA contribution by segment
 Insurance (Earned Premium)               3,970                        6,514
 IT Salary Sacrifice                      (32)                         (40)
 Benefits Platform                        1,298                        1,003
 Pay & Reward                             282                          107
 Other                                    (149)                        214
 Administrative Expenses                  (3,798)                      (3,683)
 Charitable donations                     (50)                         (35)
 Adjusted EBITDA                          1,521                        4,080
 Depreciation                             (493)                        (479)
 Amortisation                             (364)                        (266)
 Interest                                 (13)                         (17)
 Share Based Payments Expenses            (152)                        (81)
 Acquisition Costs (Note 11)              (40)                         -
 Profit before tax                        459                          3,237

 

All 2022 income was derived from customers that are based in the UK.

Notes to the Consolidated Financial Statements

 

 

4          Taxation

 

The tax expense recognised is based on the weighted average annual 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-month period ended 30 June 2022 was a credit of 15.9%
(six-month period ended 30 June 2021: 18.6% charge). The tax income recognised
in the period is mostly as a result of the application of the super-deduction
capital allowances tax relief, eligible until 31 March 2023.

 

 

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  EPS     6 months ended  EPS

          30 June 2022    Pence   30 June 2021    Pence

 Basic    31,210,686      1.7     31,213,128      8.4
 Diluted  31,218,953      1.7     31,214,981      8.4

 

During the first six months of 2022 Personal Group Holdings Plc paid dividends
of £1,654,000 to its equity shareholders (2021: £1,592,000). This represents
a payment of 5.30p per share (2021: 5.10p).

 

                                                   6 months ended                                                     6 months ended

                                                   30 June 2022                                                       30 June 2021
                                                                                 £'000                                                              £'000

 Dividends paid or provided for during the period  1,654                                                              1,592
                                                   (   _____)                                                         (   _____)

 

6         Goodwill

 

                                     PG Let's Connect                           Innecto                                    Total
                                     £'000                                      £'000                                      £'000
 Cost
 At 1 January 2022                   10,575                                     2,121                                      12,696
 Additions in the year               -                                          -                                          -
                                     (________)     _________                   (________)     _______                     (________)
 At 30 June 2022                     10,575                                     2,121                                      12,696
                                     (________)     _________                   (________)     _________                   (________)
 Amortisation and impairment
 At 1 January 2022                   -                                          -                                          -
 Impairment charge for year          -                                          -                                          -
                                           (________)      _________                  (________)      _________                  (________)      _________
 At 30 June 2022                     -                                          -                                          -
                                     (________)                                 (________)                                 (________)
 Net book value at 30 June 2022      10,575                                     2,121                                      12,696
                                     (________)                                 (________)                                 (________)
 Net book value at 31 December 2021  10,575                                     2,121                                      12,696
                                     (________)                                 (________)                                 (________)

Notes to the Consolidated Financial Statements

 

 

7        Intangible assets

 

                                      Customer Value  Computer software and development  Innecto Technology  Internally Generated Computer Software  Work in Progress        Total
                                      £'000           £'000                              £'000               £'000                                   £'000                   £'000
 Cost
 At 1 January 2022                    2,374           2,287                              298                 506                                     198                     5,663
 Transfers                            -               -                                  -                   -                                       -                       -
 Additions                            -               191                                -                   -                                                 282           473
 Disposals                            -               -                                  -                   -                                       -                       -
                                      (________)      (________)                         (________)          (________)                              (________)              (________)
 At 30 June 2022                      2,374           2,478                              298                 506                                     480                     6,136
                                      (________)      (________)                         (________)          (________)                              (________)              (________)
 Amortisation
 At 1 January 2021                    2,059           1,293                              170                 504                                     -                       4,026
 Amortisation charge for the year     73              259                                30                  2                                       -                       364
 Provided in the period               -               -                                  -                   -                                       -                       -
 Disposals in the period              -               -                                  -                   -                                       -                       -
                                      (________)      (________)                         (________)          (________)                              (________)              (________)
 At 30 June 2022                      2,132           1,552                              200                 506                                     -                       4,390
                                      (________)      (________)                         (________)          (________)                              (________)              (________)
 Net book amount at 30 June 2022      242             926                                98                  -                                       480                     1,746
                                      (________)      (________)                         (________)          (________)                              (________)              (________)
 Net book amount at 31 December 2021  315             994                                128                 2                                       198                     1,637
                                      (________)      (________)                         (________)          (________)                              (________)              (________)

 

8          Property, plant and equipment

 

                         Freehold land and properties  Motor vehicles  Computer    Furniture fixtures & fittings      Leasehold improve-  Right of use Assets  Total

                                                                       equipment                                      ments
                         £'000                         £'000           £'000       £'000                              £'000               £'000                £'000
 Cost
 At 1 January 2022       5,037                         157             1,112       2,310                              38                  1,204                9,858
 Additions               -                             -               221         1                                  -                   250                  472
 Disposals               -                             -               -           -                                  -                   (36)                 (36)
                         (______)                      (______)        (______)    (______)                           (______)            (______)             (______)
 At 30 June 2022         5,037                         157             1,333       2,311                              38                  1,418                10,294
                         (______)                      (______)        (______)    (______)                           (______)            (______)             (______)
 Depreciation
 At 1 January 2022       1,828                         125             786         1,265                              37                  784                  4,825
 Provided in the period  43                            5               131         108                                1                   205                  493
 Disposals               -                             -               -           -                                  -                   (12)                 (12)
                         (______)                      (______)        (______)    (______)                           (______)            (______)             (______)
 At 30 June 2022         1,871                         130             917         1,373                              38                  977                  5,306
                         (______)                      (______)        (______)    (______)                           (______)            (______)             (______)
 Net book amount at      3,166                         27              416         938                                -                   441                           4,988

 30 June 2022
                         (______)                      (______)        (______)    (______)                           (______)            (______)             (______)
 Net book amount at      3,209                         32              326         1,045                              1                   420                  5,033

 31 December 2021
                         (______)                      (______)        (______)    (______)                           (______)            (______)             (______)

 

Notes to the Consolidated Financial Statements

 

 

9   Financial Investments

 

                     At 30 June 2022  At 31 December 2021

                     Unaudited        Audited
                     £'000            £'000
 Bank deposits       1,733            2,596
 Equity Investments  1,256            -
                     (________)       (________)
                     2,989            2,596
                     (_________)      (_________)

 

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).

 

Bank deposits, held at amortised cost, are due within 6 months and the
amortised cost is a reasonable approximation of the fair value. These would be
included within Level 2 of the fair value hierarchy.

 

Equity Investments are held at fair value and are considered Level 1 financial
assets.

 

10         Long Term Incentive Plan (LTIP)

 

LTIP 2021

 

During the period, the Remuneration Committee approved a second tranche of
share awards under the existing LTIP approved on 6 April 2021. Further details
of the award can be found in the RNS announcement from 20 April 2022.

 

Under the scheme share options of Personal Group Holdings Plc are granted to
senior executives with an Exercise Price of 5p (nominal value of the shares).
The share options have various market and non-market performance conditions
which are required to be achieved for the options to vest. The options also
contain service conditions that require option holders to remain in employment
of the Group. The market and non-market performance conditions are set out
below.

 

Total Shareholder Return (Market condition)

 

50% of the awards vest under this condition. Subject to Compound Annual Growth
Rate (CAGR) of the Total Shareholder Return (TSR) over the Performance Period.

 

EBITDA Targets (Non-market condition)

 

35% of the awards vest under this condition. Subject to cumulative EBITDA over
the Performance Period.

 

Environmental, social and governance targets ("ESG") Targets (Non-market
condition)

 

Up to 15% of the awards vest under this condition. The awards shall vest upon
the Remuneration Committee determining that all ESG targets have been met.

 

The fair value of the of the share options is estimated at the grant date
using a Monte-Carlo binomial option pricing model for the market conditions,
and a Black-Scholes pricing model for non-market conditions.

 

Notes to the Consolidated Financial Statements

 

 

 

However, the above performance condition is only considered in determining the
number of instruments that will ultimately vest.

 

There are no cash settlements alternatives. The Group does not have a past
practice of cash settlement for these share options. The Group accounts for
the LTIP as an equity-settled plan.

 

In total, £142,000 of employee share-based compensation has been included in
the consolidated income statement to 30 June 2022 (2021: £76,000). The
corresponding credit is taken to equity. No liabilities were recognised from
share-based transactions. The remaining £10,000 of share-based compensation
expense relates to the Company Share Option Plan (CSOP).

 

11         Post balance sheet events

 

On 1(st) July 2022 Personal Group Holdings Plc acquired 100% of Quintige
Consulting Group Limited ("QCG") for £965,652.

 

Included within the half year financial statements are £40,000 of acquisition
costs incurred in the purchase of QCG.

 

 

12         Financial calendar for the year ending 31 December 2022

 

The Company announces the following dates in its financial calendar for the
year ending 31 December 2022:

 

·      Preliminary results for the year ending 31 December
2022                 -           March 2023

·      Publication of Report and Accounts for 2022
                      -           March 2023

·      AGM
 
      -           April/May 2023

 

 

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