REG - Personal Group - Interim Results
29/09/2023 07:00
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RNS Number : 0827O Personal Group Holdings PLC 29 September 2023
29 September 2023
PERSONAL GROUP HOLDINGS PLC
("Personal Group", "Company" or "Group")
Interim Results & Interim Dividend for the six months ended 30 June 2023
Positive first half performance, driven by strong growth in Insurance
contribution
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 2023.
Financial Highlights
· Total revenue for the six months to 30 June 2023 increased 34% to £46.4m (H1
2022: £34.7m). Whilst driven primarily by voucher resales through the
benefits platform of £24.6m (H1 2022: £13.8m), growth has also been seen
across other key areas
· Adjusted EBITDA* increased 75% to £2.7m (H1 2022: £1.5m), in line with
management expectations for H1, driven primarily by continued growth of the
insurance book
· Profit before tax increased to £1.6m (H1 2022: £0.5m) in line with
adjusted EBITDA growth
· Basic EPS increased to 4.5p (H1 2022: 1.7p)
· Strong balance sheet and liquidity with cash and deposits at period end
of £22.6m (Dec 2022: £18.7m), and debt free
· Interim dividend increased by 10% to 5.85p (H1 2022: 5.3p), reflecting the
Board's continued confidence in the Group's prospects
Operational Highlights
· Strong growth in Affordable Insurance, driven by an increase in new sales and
high retention rates - new annualised insurance sales in the first six months
rose by 34% to £5.8m (H1 2022: £4.3m)
· Continued growth in recurring revenue streams providing increased visibility
for H2 2023 and 2024:
o Annualised Premium Income (API) increased by 6% to £29.6m (31 Dec 22:
£28.0m)
o Annualised Recurring Revenue (ARR) from our Benefits platform grew 10%, ending
the period with Hapi ARR of £2.2m and Sage Employee Benefits ARR of £3.3m
respectively (31 Dec 2022: £2.0m and £3.0m respectively)
o ARR from Innecto Digital products grew to £0.6m (31 Dec 22: £0.5m)
· 52 new client wins (HY22: 52) with the award of a place on the Crown
Commercial Services framework serving as an endorsement of the Group's
offering
· Paula Constant assumed the role of Group CEO on 1 August 2023
Post-Period Trading and Outlook
· Strong new insurance sales have continued at the start of H2 with retention
rates remaining robust
· Next generation Hapi 2.0 successfully launched internally, enabling future
roll out to customers and partners
· Trading remains in line to meet market's full year expectations
· The Board is confident in the long-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.
Paula Constant, Chief Executive of Personal Group, commented: "Personal
Group has enjoyed a positive start to the year, with a particularly strong
performance in our core Affordable Insurance business alongside steady growth
in our Benefits platform revenue. Following the successful internal launch
of Hapi 2.0, our enhanced platform, we look forward to the subsequent roll out
to our customers and partners. It is clear to me that Personal Group is a
great business with a base of strong offerings on which to build increased
shareholder value and I am extremely excited about the opportunity to develop
a strategy to accelerate profitable growth over the coming months."
-ENDS-
Change of Nominated Adviser and Broker
The Company also announces that its Nominated Adviser and Broker, Cenkos
Securities plc, has now changed its name to Cavendish Securities plc following
completion of its own corporate merger.
For more information please contact:
Personal Group Holdings Plc
Paula Constant / Sarah Mace +44 (0)1908 605 000
Cavendish Securities plc
Camilla Hume / Callum Davidson (Nominated Adviser) +44 (0)20 7397 8900
Jasper Berry (Sales)
Alma
Caroline Forde / Joe Pederzolli / Kinvara Verdon +44 (0)20 3405 0205
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.
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, Merseyrail, 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
Having assumed the position of the Company's new CEO, post the half year end,
on 1 August 2023, I am delighted to be presenting this set of interim results
to shareholders. The team achieved a positive first half of 2023, delivering
year on year growth across key metrics. I am particularly pleased to have seen
the insurance book continue to grow substantially - a result of strong new
insurance sales, operational effectiveness and efficiency as well as continued
high retention rates.
It is clear to me that the business is built on very solid foundations. The
strength of our face-to-face insurance sales capability, we believe, is
unmatched across the markets we serve. Our Benefits platform, Hapi, will
deliver enhanced capabilities through the launch of Hapi 2.0. Furthermore, the
strength of our relationship with Sage has brought a growing new revenue
stream for the Group and opened up the wider SME market as a strategic
priority.
Since being appointed CEO in August I have commenced a quantitative review of
our operations in order to identify the greatest available opportunities to
improve profitability and drive longer term growth in the business to increase
shareholder value. In the initial phase of this review we have commenced a
detailed customer segmentation analysis, prioritising our Insurance and
Benefits offerings, in order to identify optimal segments, price points and
specific offerings. Alongside this we are scrutinising our lead generation
effectiveness and the distribution of our external marketing spend. We
anticipate the introduction of more granular KPIs across our sales processes
and pipeline and we are examining how to maximise the opportunity to visit
lower penetrated existing customer sites in the field. We are focussed on
launching Hapi 2.0 at scale and being able to onboard clients at pace. We have
employed external technology auditors to carry out a rigorous technical review
of Hapi 2.0 to stress test this ability before an external rollout of the
platform. We continue to penetrate the existing, vast segment of Sage SME
customers, with increased focus at a senior level both of Sage and Personal
Group on the effectiveness of customer welcome calls whilst progressing
discussions with future partners.
My priorities in H2 are to conclude on this quantitative evaluation of
commercial, operations and technology to identify and shape our strategic
direction in terms of expanding our Insurance offering, monetising our Hapi
2.0 platform, with a core focus on the growth of partnerships, and
streamlining the organisation around the areas in which there are the greatest
opportunities to grow value for shareholders.
The Board and I would like to thank Deborah Frost, the Group's previous CEO,
for her leadership of Personal Group in recent years. Her reinvigoration of
the insurance offering and investment in the Sage partnership have, I believe,
placed the business in an excellent position for further expansion.
Divisional H1 Segmental Analysis
Affordable Insurance
New annualised insurance sales in the first six months rose by 34% to £5.8m
(H1 2022: £4.3m), a result of the growth in the size of the field sales team
alongside improved productivity and we recorded new 'best' performances for
'day' and 'week' both collectively and by individual. This, together with
strong retention levels, which remain above pre-pandemic averages, helped to
drive up the Annualised Premium Income value to £29.6m (31 Dec 2022: £28.0m)
and led to a 14% increase in insurance revenue for the period to £13.8m (H1
2022: £12.3m).
As anticipated, claims levels for the first half remained higher than historic
norms on Hospital Cash plans, as activity to address NHS backlogs continued.
These combined factors resulted in a 31% increase in adjusted EBITDA
contribution to £5.1m (H1 2022: £3.9m).
Benefits platform
Revenue from digital platform subscriptions and commissions from third party
benefit suppliers which sit on the benefits platform rose to £2.9m (H1 2022:
£2.2m) with a resulting growth in EBITDA of 35% to £1.8m (H1 2022: £1.3m).
Continued growth was seen in recurring subscription income, across both
Enterprise clients, taking Hapi, and Sage Employee Benefits, which ended the
half year with ARR of £2.2m and £3.3m respectively (31 Dec 2022: £2.0m and
£3.0m).
Income from voucher resales through the benefits platform rose to £24.6m (H1
2022: £13.8m). Whilst the EBITDA contribution from this remains minimal this
significant growth in revenue reinforces the relevance of our product to our
clients, enabling them to address cost of living issues with their employees,
who collectively saved over £1.3m through use of the discount vouchers on the
platform in the six months to June.
Alongside the growth of our existing customer base, we have been developing
the second generation of the Hapi platform, with considerably enhanced
capabilities. These include improved Reward and Recognition functionality,
simpler navigation and search capability, modularisation for tiered and
self-serve offers, and slicker onboarding processes.
Our investment in the next generation of the platform, Hapi 2.0, will provide
us with opportunities to both enhance the quality of our provision and to put
us in a position to actively seek out and continue discussions with additional
external partners, to widen our reach, and build further ARR streams.
Pay and Reward
The contribution from Pay & Reward, comprising Innecto and Quintige
Consulting Group, has remained steady with revenue of £1.1m (H1 2022: £0.9m)
and EBITDA of £0.2m (H1 2022: £0.3m). This division has shown resilience
despite the attention of their normal audience of HR Directors being diverted
to the tactical focus of dealing with the cost-of-living crisis for their
employees and significant growth in the pipeline towards the end of the period
gives confidence for improved performance in H2.
Other Owned Benefits
(Let's Connect)
Contribution from Other Owned Benefits (Let's Connect) was in line with
management's expectations post cessation of the long-term scheme with a major
client in March 2023, as previously announced, delivering revenue of £3.6m
(H1 2022: £5.4) and an EBITDA loss of (£0.3m) (H1 2022: 0.0m). Contribution
from this business remains heavily second half weighted.
Interim Dividend
The Company is pleased to announce that an interim dividend for 2023 of 5.85p,
representing a 10% increase on the previous year, will be paid on 16 November
2023 to members on the register as at 13 October 2023 (the record date).
Shares will be marked ex-dividend on 12 October 2023. The Board has considered
the level of dividend in the context of the full year results and the level
reflects their continued confidence in the Group's business model and
prospects.
Current Trading and Outlook
Trading into Q3 has remained robust. The Group is trading in line with
management's expectations to date and this underpins the Board's confidence in
meeting market expectations for the full year.
The market opportunity is, I believe, considerable and I look forward to
updating shareholders on strategic progress in the coming months.
Paula Constant
Group Chief Executive
29 September 2023
Consolidated Income Statement
6 months 6 months
ended ended
30 June 2023 30 June 2022
Unaudited Unaudited
(*Restated)
Note £'000 £'000
Insurance revenue 13,848 12,301
Employee benefits and services 7,568 8,436
Voucher resale income 24,648 13,848
Other income 69 128
Investment income 295 29
(________) (________)
Revenue 46,428 34,742
(________) (________)
( ) ( )
Insurance service expenses 4 (7,230) (6,890)
Net expenses from reinsurance contracts held (57) (77)
Employee benefits and services expenses (7,359) (8,268)
Voucher resale expenses (24,660) (13,872)
Other expenses (41) (38)
Group administration expenses (5,346) (4,679)
Share based payment expenses (110) (152)
Charitable donations (50) (50)
(________) (________)
Expenses (44,853) (34,026)
(________) (________)
Operating profit 1,575 716
Finance costs (22) (13)
Unrealised profit / (loss) on equity investments 77 (244)
(________) (________)
Profit before tax 1,630 459
Tax 5 (221) 73
(________) (________)
Profit for the period after tax 1,409 532
(________) (________)
Total comprehensive income for the period 1,409 532
(________) (________)
Earnings per share Pence Pence
Basic 4.5 1.7
Diluted 4.5 1.7
The total comprehensive income for the period is attributable to equity
holders of Personal Group Holdings Plc.
* With the transition to IFRS 17, certain comparative amounts have been
re-stated as if the standard had always been in effect. See Note 11 for full
details.
Consolidated Balance Sheet
At 30 June 2023 At 31 Dec 2022
Unaudited Audited
Note £'000 £'000
ASSETS
Non-current assets
Goodwill 7 2,684 2,684
Intangible assets 8 2,858 2,384
Property, plant and equipment 9 5,064 4,639
(_______) (_______)
10,606 9,707
(________) (________)
Current assets
Financial assets 10 3,137 3,031
Trade and other receivables 7,434 15,863
Reinsurance contracts held 55 95
Inventories 467 726
Cash and cash equivalents 20,827 16,958
Current tax assets 312 229
(________) (________)
32,232 36,902
(________) (________)
Total assets 42,838 46,609
(________) (________)
Consolidated Balance Sheet
At 30 June 2023 At 31 Dec 2022
Unaudited Audited
Note £'000 £'000
EQUITY
Equity attributable to equity holders of Personal Group Holdings plc
Share capital 1,562 1,562
Share premium 1,134 1,134
Capital redemption reserve 24 24
Other reserve (48) (55)
Share based payment reserve 477 367
Profit and loss reserve 27,694 27,946
(________) (________)
Total equity 30,843 30,978
(________) (________)
LIABILITIES
Non-current liabilities
Deferred tax liabilities 781 681
Trade and other payables 522 130
(________) (________)
1,303 811
(________) (________)
Current liabilities
Trade and other payables 7,725 11,346
Insurance contract liabilities 2,967 3,474
(________) (________)
10,692 14,820
(________) (________)
(________) (________)
Total liabilities 11,995 15,631
(________) (________)
( ) ( )
(________) (________)
Total equity and liabilities 42,838 46,609
(________) (________)
Consolidated Statement of Changes in Equity for the six months ended 30 June
2023
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 2023 1,562 1,134 24 (55) 367 27,946 30,978
(________) (________) (________) (________) (________) (________) (________)
Dividends - - - - - (1,656) (1,656)
Employee share-based compensation - - - - 110 - 110
Proceeds of SIP* share sales - - - - - 12 12
Cost of SIP shares sold - - - 17 - (17) -
Cost of SIP shares purchased - - - (10) - - (10)
(________) (________) (________) (________) (________) (________) (________)
Transactions with owners - - - 7 110 (1,661) (1,544)
(________) (________) (________) (________) (________) (________) (________)
Profit for the period - - - - - 1,409 1,409
(________) (________) (________) (________) (________) (________) (________)
Total comprehensive income for the period - - - - - 1,409 1,409
(________) (________) (_______) (_______) (_______) (_______) (_______)
Balance as at 30 June 2023 1,562 1,134 24 (48) 477 27,694 30,843
(________) (________) (________) (________) (________) (________) (________)
* PG Share Ownership Plan (SIP)
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 Cash Flows
6 months 6 months
ended ended
30 June 2023 30 June 2022
Unaudited Unaudited
£'000 £'000
Net cash from operating activities (see opposite) 6,442 3,023
(______) (______)
Investing activities ( ) ( )
Additions to property, plant and equipment (99) (222)
Additions to intangible assets (872) (473)
Purchase of financial assets (29) (1,509)
Sale of financial assets - 871
Interest received 295 29
(______) (______)
Net cash from investing activities (705) (1,304)
(______) (______)
Financing activities
Proceeds from issue of shares - 1
Purchase of own shares by the SIP (6) (31)
Proceeds from disposal of own shares by the SIP 12 6
Interest paid - (4)
Payment of lease liabilities (218) (226)
Dividends paid (1,656) (1,654)
(______) (______)
Net cash used in financing activities (1,868) (1,908)
(______) (______)
Net change in cash and cash equivalents 3,869 (189)
Cash and cash equivalents, beginning of period 16,958 20,291
(_______) (_______)
Cash and cash equivalents, end of period 20,827 20,102
(________) (________)
Consolidated Statement of Cash Flows
6 months 6 months
ended ended
30 June 2023 30 June 2022
Unaudited Unaudited
£'000 £'000
Operating activities
Profit after tax 1,409 532
Adjustment for:
Depreciation 506 493
Amortisation of intangible assets 398 364
Loss on disposal of property, plant and equipment 14 24
Interest received (295) (29)
Realised and unrealised investment losses (77) 244
Interest charge 22 13
Share-based payment expenses 117 152
Taxation expense recognised in income statement 221 (73)
Changes in working capital:
Trade and other receivables 8,469 5,675
Trade and other payables (4,385) (4,129)
Inventories 259 (161)
Taxes paid (209) (82)
(________) (________)
Net cash from operating activities 6,442 3,023
(________) (________)
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 2022.
The financial information for the year ended 31 December 2022 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 2022 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 29 September 2023.
2 Accounting policies
These June 2023 interim consolidated financial statements of Personal Group
Holdings Plc are for the six months ended 30 June 2023. These interim
financial statements have been prepared in accordance with IAS 34 Interim
Financial Reporting as endorsed for use in the UK.
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 2022.
These financial statements have been prepared in accordance with IFRS
standards and IFRIC interpretations as adopted by the UK, issued and effective
as at 30 June 2023.
Changes in accounting policies and new standards
Personal Group has initially applied IFRS 17 including any consequential
amendments to other standards, from 1 January 2023. There are no other new or
amended IFRS standards, that have a material effect, that have become
effective during the period ended 30 June 2023.
IFRS 17 has had a significant impact on accounting for insurance contracts. As
a result, Personal Group has re-stated certain comparative amounts
particularly in the presentation of its Income Statement. Personal Group's
updated accounting policies for reinsurance contracts are set out below.
Disclosures relating to the transition to IFRS 17 have been set out in note
12.
Insurance contracts
IFRS 17 sets out the classification, measurement and presentation and
disclosure requirements for insurance contracts. It requires insurance
contracts to be measured using current estimates and assumptions that reflect
the timing of cash flows and recognition of profits as insurance services are
delivered. The standard provides two main measurement models which are the
General Measurement Model ("GMM") and the Premium Allocation Approach ("PAA").
The PAA simplifies the measurement of insurance contracts for remaining
coverage in comparison to the GMM. The PAA is very similar to Personal Group's
previous accounting policies under IFRS 4 for calculating revenue, however
there are some presentation changes.
The GMM is used for the measurement of the liability for incurred claims.
Notes to the Consolidated Financial Statements
PAA eligibility
Under IFRS 17, Personal Group's insurance contracts issued and are all
eligible to be measured by applying the PAA, due to meeting the following
criteria:
· Insurance contracts with coverage period of one year or
less are automatically eligible. This covers all hospital, convalescence, and
death benefit insurance contracts.
· Modelling of contracts with a coverage period greater
than one year (employee default policies) produces a measurement for the group
of reinsurance contracts that does not differ materially from that which would
be produced applying the GMM.
Level of aggregation
Personal Group manages all insurance contracts as one portfolio within the
insurance operating segment as they are subject to similar risks.
Onerous contracts
Under the PAA, it is assumed there are no contracts in the portfolio that are
onerous at initial recognition, unless there are facts and circumstances that
may indicate otherwise. Given the short-tailed nature of policies issued be
Personal Group, management do not consider there to be any material
circumstance under which policies in issue would be onerous.
Modification and derecognition
Personal Group derecognises insurance contracts when the rights and
obligations relating to the contract are extinguished (meaning discharged,
cancelled, or expired) or the contract is modified such that the modification
results in a change in the measurement model or the applicable standard for
measuring the contract.
Contract boundaries
The measurement of insurance contracts includes all future cash flows expected
to arise within the boundary of each contract. Cash flows are within the
boundary of an insurance contract if they arise from substantive rights and
obligations that exist during the reporting period in which Personal Group can
compel the policyholder to pay premiums or in which it has a substantive
obligation to provide the policyholder with services.
Personal Group assesses the contract boundary at initial recognition and at
each subsequent reporting date to include the effects of changes in
circumstances on the Group's substantive rights and obligations. The
assessment of the contract boundary, which defines the future cash flows that
are included in the measurement of the contract, requires judgement and
consideration.
Personal Group primarily issues insurance contracts which provide coverage to
policyholders in the event of hospitalisation, convalescence, or death. While
the contracts are typically weekly or monthly in their term length, the
contract boundary is assessed with consideration of the delayed timing around
claims of this nature and the timing of expected future claims payments with
reference to the covered loss event.
Measurement - Liability for remaining coverage
On initial recognition of insurance contract, the carrying amount of the
liability for remaining coverage is measured as the premiums received on
initial recognition, if any, minus any reinsurance acquisition expense cash
flows allocated to the contracts and any amounts arising from the
derecognition of the prepaid reinsurance acquisition expense cash flows asset.
Personal Group has chosen not to expense insurance acquisition expense cash
flows as incurred on its contracts as they have coverage of less than one
year.
Subsequently, at the end of each reporting period, the liability for remaining
coverage is increased by any additional premiums received in the period and
decreased for the amounts of expected premium cash flows recognised as
reinsurance revenue for the services provided in the period.
Personal Group has elected not to adjust the liability for remaining coverage
for the time value of money as its insurance contracts do not contain a
significant financing component.
Notes to the Consolidated Financial Statements
Measurement - Liability for incurred claims
The liability for incurred claims represents the estimated ultimate cost of
settling all insurance claims arising from events that have occurred up to the
end of the reporting period, including the operating costs that are expected
to be incurred in the course of settling such claims. The liability for claims
is derived from the estimated fulfilment cash flows relating to expected
claims. The fulfilment cash flows incorporate, in an unbiased way, all
reasonable and supportable information available, without undue cost of
effort, about the amount, timing and uncertainty of those future cash flows.
They also include an explicit risk adjustment. Estimates of future cash flows
for incurred claims are not discounted on initial recognition due to the
immateriality of the impact of the time value of money as discussed in Note
12.
3 Segment analysis
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 the Group's pay and reward consultancy
Company Innecto, purchased in 2019, and QCG, purchased in 2022. Revenue in
this segment relates to consultancy, surveys, and licence income derived from
selling 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 2023 30 June 2022
Unaudited Unaudited
£'000 £'000
Revenue by Segment
Affordable Insurance 13,848 12,301
Other Owned Benefits 3,563 5,387
Benefits Platform 4,356 3,574
Platform - Group Elimination (1,425) (1,425)
Pay & Reward 1,074 900
Other Income:
Voucher resale 24,648 13,848
Other 69 128
Investment income 295 29
Group Revenue 46,428 34,742
Adjusted EBITDA contribution by segment
Affordable Insurance 5,143 3,970
Other Owned Benefits (287) (32)
Benefits Platform 1,750 1,298
Pay & Reward 172 282
Other 387 (149)
Group admin and central costs (4,449) (3,798)
Charitable donations (50) (50)
Adjusted EBITDA 2,666 1,521
Depreciation (506) (493)
Amortisation (398) (364)
Interest (22) (13)
Share based payments expenses (110) (152)
Corporate acquisition costs - (40)
Profit before tax 1,630 459
All income was derived from customers that are based in the UK.
4 Insurance service expenses
6 months ended 6 months ended
30 June 2023 30 June 2022
£'000 £'000
Claims incurred 3,750 3,663
Insurance operating expenses 3,480 3,227
(________) (________)
7,230 6,890
(________) (________)
Notes to the Consolidated Financial Statements
5 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 2023 was 13.6% (six-month
period ended 30 June 2022: 15.9% credit). The tax charge recognised in the
period continues to benefit from the application of the super-deduction
capital allowances tax relief, eligible until 31 March 2023.
6 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 2023 Pence 30 June 2022 Pence
Basic 31,230,807 4.5 31,210,686 1.7
Diluted 31,230,807 4.5 31,218,953 1.7
During the first six months of 2023 Personal Group Holdings Plc paid dividends
of £1,654,000 to its equity shareholders (2022: £1,592,000). This represents
a payment of 5.30p per share (2022: 5.10p).
6 months ended 6 months ended
30 June 2023 30 June 2022
£'000 £'000
Dividends paid or provided for during the period 1,656 1,654
( _____) ( _____)
7 Goodwill
PG Let's Connect Innecto QCG Total
£'000 £'000 £'000 £'000
Cost
At 1 January 2023 10,575 2,121 563 13,259
Additions in the year - - - -
(________) _________ (________) _______ (________) _______ (________)
At 30 June 2023 10,575 2,121 563 13,259
(________) _________ (________) _________ (________) _________ (________)
Amortisation and impairment
At 1 January 2023 10,575 - - 10,575
Impairment charge for year - - - -
(________) _________ (________) _________ (________) _________ (________) _________
At 30 June 2023 10,575 - - 10,575
(________) (________) (________) (________)
Net book value at 30 June 2023 - 2,121 563 2,684
(________) (________) (________) (________)
Net book value at 31 December 2022 - 2,121 563 2,684
(________) (________) (________) (________)
Notes to the Consolidated Financial Statements
8 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 2023 2,711 2,678 298 506 1,003 7,196
Transfers - - - - - -
Additions - 52 - - 820 872
Disposals - - - - - -
(________) (________) (________) (________) (________) (________)
At 30 June 2023 2,711 2,730 298 506 1,823 8,068
(________) (________) (________) (________) (________) (________)
Amortisation
At 1 January 2023 2,238 1,838 230 506 - 4,812
Amortisation charge for the year 106 262 30 - - 398
Disposals in the period - - - - - -
(________) (________) (________) (________) (________) (________)
At 30 June 2023 2,234 2,100 260 506 - 5,210
(________) (________) (________) (________) (________) (________)
Net book amount at 30 June 2023 367 630 38 - 1,823 2,858
(________) (________) (________) (________) (________) (________)
Net book amount at 31 December 2022 473 840 68 - 1,003 2,384
(________) (________) (________) (________) (________) (________)
9 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 2023 5,037 157 1,443 2,318 38 1,139 10,132
Additions - - 69 30 - 845 944
Disposals - (104) - - - (210) (314)
(______) (______) (______) (______) (______) (______) (______)
At 30 June 2023 5,037 53 1,512 2,348 38 1,774 10,762
(______) (______) (______) (______) (______) (______) (______)
Depreciation
At 1 January 2023 1,916 134 1,058 1,474 38 873 5,493
Provided in the period 43 5 127 105 - 226 506
Disposals - (104) - - - (197) (301)
(______) (______) (______) (______) (______) (______) (______)
At 30 June 2023 1,959 35 1,185 1,579 38 902 5,698
(______) (______) (______) (______) (______) (______) (______)
Net book amount at 3,078 18 327 769 - 872 5,064
30 June 2023
(______) (______) (______) (______) (______) (______) (______)
Net book amount at 3,121 23 385 844 - 266 4,639
31 December 2022
(______) (______) (______) (______) (______) (______) (______)
Notes to the Consolidated Financial Statements
10 Financial Investments
At 30 June 2023 At 31 December 2022
Unaudited Audited
£'000 £'000
Bank deposits 1,771 1,742
Equity investments 1,366 1,289
(________) (________)
3,137 3,031
(_________) (_________)
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.
11 Long Term Incentive Plan (LTIP)
During the period, the Remuneration Committee approved a third 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 21 June 2023.
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)
42.5% 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)
42.5% 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, £118,000 of employee share-based compensation has been included in
the consolidated income statement to 30 June 2023 (2022: £142,000). The
corresponding credit is taken to equity. No liabilities were recognised from
share-based transactions. The remaining £10,000 (2022: £10,000) of
share-based compensation expense relates to the Company Share Option Plan
(CSOP).
12 Transition to IFRS 17
IFRS 17, Insurance Contracts
IFRS 17 replaces IFRS 4 Insurance Contracts for annual periods on or after 1
January 2023. In addition to the
updated accounting policies discussed in Note 2, some of the key differences
between IFRS 17 and the accounting policies previously adopted by Personal
Group under IFRS 4 are outlined below.
Changes to classification and measurement
The adoption of IFRS 17 did not change the classification of Personal Group's
insurance contracts issued. Under IFRS 17, Personal Group's insurance
contracts are all eligible to be measured by applying the Premium Allocation
Approach ("PAA").
The measurement principles of the PAA are very similar to accounting policies
previously applied under IFRS 4 but are different in the following key areas:
· Under IFRS 4 gross premiums written were recognised at the top
of the consolidated income statement with an adjustment for the change in
unearned premium liability and outward reinsurance premiums. IFRS 17 defines
insurance revenue as the expected premium cash flows net of any deductions
that are paid to reinsurance providers, excluding any investment components.
As such, the new Income Statements consolidates those previous balances into
one insurance income figure for the period.
· If contracts are assessed as being onerous, a loss component is
recognised. Previously these may have formed an unexpired risk reserve
provision determine through the liability adequacy test. No onerous contracts
have been identified and, as a result, there has been no transition adjustment
for this.
· Under IFRS 4, contract specific acquisition cash flows were
deferred and amortised. Under IFRS 17, the recognition of insurance
acquisition expense cash flows includes an allocation of acquisition-related
operating expenses incurred in the period. The deferral and amortisation of
these expenses, under both IFRS 4 and IFRS 17, is spread over the life of
insurance contracts. As the vast majority of Personal Group's insurance
contracts are weekly or monthly in length, there is no deferral and
amortisation of acquisition costs performed.
· In the measurement of the insurance contract liability, under
IFRS 4, losses and loss adjustment expenses were required to be undiscounted
without an explicit need for an adjustment for non-financial risk. Under IFRS
17, the liability for incurred claims is typically determined on a discounted
expected value basis and includes an explicit risk adjustment for
non-financial risk. Personal Group has assessed the impact of discounting of
expected future insurance losses and, due to the majority of losses being paid
in the first 12 months following a loss event, this impact was insignificant.
In addition to this, Personal Group has always included a risk adjustment into
its chain-ladder method for calculating its insurance contract liability. As a
result, there has been no change in calculation method on transition to IFRS
17.
Changes to presentation and disclosure
Under IFRS 4, separate assets and liabilities were recognised for premium
receivables, deferred acquisition costs, unearned premiums, and loss and loss
adjustment reserves. These assets and liabilities were shown aggregated for
all insurance contracts. While IFRS 17 groups the insurance assets and
liabilities by portfolio, as defined by Personal Group's level of aggregation
accounting policy (see Note 2), all insurance contracts are treated as one
aggregate class so there has been no impact of the change on transition.
The Group Income Statement has also changed in its presentation. Previously,
Personal Group reported items such as gross premiums written, movement in
unearned provisions and the reinsurer's share of these. Under IFRS 17, the
standard defines and requires distinct presentation of insurance revenue and
insurance service expenses.
Transition to IFRS 17
Changes in accounting policies resulting from the adoption of IFRS 17 have
been applied using a full retrospective approach. Under the full retrospective
approach, as at 1 January 2022 Personal Group identified, recognised, and
measured each group of reinsurance contracts as if IFRS 17 had always applied.
Were they to have arisen, Personal Group would have derecognised any existing
balances that would not exist had IFRS 17 always applied and recognised any
resulting net difference in equity. There were adjustments to the calculations
on the balance sheet recognised on the transition to IFRS 17.
13 Post balance sheet events
There have been no post balance sheet events.
14 Financial calendar for the year ending 31 December 2023
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
2023
- March 2024
· Publication of Report and Accounts for 2023
-
March 2024
· AGM
-
April/May 2024
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