31st Mar 2008 08:00
PERSONAL GROUP HOLDINGS PLC PRELIMINARY ANNOUNCEMENT OF RESULTS FOR THE YEAR ENDED 31 DECEMBER 2007 The board of directors of Personal Group Holdings Plc, providers of employeebenefits, insurance and consultancy, are pleased to announce the group'sresults as follows: HIGHLIGHTS 2007 2006 % ‚£m ‚£m Headline EBITD * 9.4 10.1 - 7 Profit before tax 8.6 9.3 - 8 Revenue 26.4 27.5 - 4 2007 2006 % Pence Pence EBITD per share (basic) 30.9 33.6 - 8 Earnings per share (basic) 21.0 22.1 - 5
Dividends per share paid in year 12.0 11.1 + 8
* EBITD is defined as earnings before interest, tax and depreciation.
** The directors have declared a dividend of 3.3 pence per share payable on 27 June 2008 to
shareholders on the register at the close of business on 13 June 2008. Shareswill be marked ex-dividend on 11 June 2008. The AGM will be held on 29 April2008.
Ken Rooney, Chief Executive, commented:
"During 2007 we launched 21 new benefit programmes, including schemes for Somerfields, the Intercontinental Hotel Group, Pirelli and The Belfry.
73 employers with more than 300,000 employees are now using our PERFLEX employee benefit software platform allowing access to both internet and intranet voluntary and employer paid benefit selections. This is a substantial increase on last year but those preferring to use their computers to select benefits still represent a minority within our customer base.
The relocation of the Berkeley Morgan Ltd, Universal Provident and Rapidinsureoperation from Blackburn to our Head Office in Milton Keynes proceeded smoothlyand was completed before the end of 2007.
2008 has got off to a great start with all time record new business production in both January and February."
CHAIRMAN'S STATEMENT
BUSINESS REVIEW
I am pleased to report that the group's financial result for 2007, which is nowprepared under IFRS, demonstrated continuing strong performance and was in linewith market expectations. Group profit before tax (PBT) decreased by ‚£0.7m to ‚£8.6m (2006: ‚£9.3m) and earnings before interest, tax and depreciation (EBITD)decreased by ‚£0.7m to ‚£9.4m (2006: ‚£10.1m).As I mentioned in my review last year our lower new business production in 2006has had an impact on repeat premium volumes and profit in 2007. 2006 was a `badyear' for new business production but a `good year' for profits; conversely2007 has been a `good year' for new business production but not such a `goodyear' for profits. Our policy of charging all our selling and relatedadministration costs in the year they are incurred results in expensesexceeding the income those sales generate in the first year, these being fullyrecovered at some point in the second year. The effect of this policy is toeliminate what can become large `deferred acquisition costs' on the balancesheet, reduce the impact of a poor year for sales on profits and leave thevalue of the annual premium `bank' unimpaired.After provision for taxation, there was a surplus of ‚£6.4m which was added toreserves. Equity stood at ‚£26.7m (2006: ‚£23.8m) on 31 December 2007, which is87 pence (2006: 78 pence) per share.Our Personal Hospital Plan (PHP), Supplementary Sick Pay, Death Benefit (DB)and related policies have now accumulated a ‚£12.9m annual premium `bank' ofbusiness that has been in force for more than two years and where all originalsales costs have been recovered.Our PHP and DB new business production during 2007 was 37.6% ahead of 2006.What was particularly gratifying was that total sales costs rose by only 2.1%.When translated into new business acquisition cost ratios the comparatives showthat the cost of enrolling ‚£100 of new annual premium in 2007 was ‚£82.50compared with ‚£114.50 in 2006, a 27.9% saving. This improved efficiency willhelp bring 2007 new business into profit earlier.In keeping with our commitment to treating our customers fairly enhancementswere made to the terms and benefits provided by our PHP during 2007 at no extracost to our policyholders. 25,992(2006: 24,312) claims were processed, of which fewer than 1% were deniedbenefit, with the great majority paid in full by return of post. 2007 was thefifth year in succession when no policyholder had their benefit curtailedbecause their hospital stay exceeded the maximum period payable. No PersonalAssurance Plc claims were referred to the Financial Ombudsman Service duringthe year.Our collaboration with Unum to market Voluntary Group Income Protection (VGIP)to our host employers got off to an encouraging start in April 2007. Asexpected this new approach to the provision of extended sick pay arrangementsby employers, where the cost is borne only by those employees who wish toparticipate, is proving popular. We have launched six schemes to date and haveexperienced improved take up levels as we have identified areas for improvementand changes to the procedures and terms have been implemented. One of our mostrecent schemes resulted in a 40% enrolment level from 592 qualifying employees.
I believe VGIP has the potential to grow into a major profit contributor to the group.
During the financial year Berkeley Morgan Group (BMG) companies contributed ‚£1.1m (2006: ‚£1.3m) of PBT. This represented approximately 11.7% of the EBITD ofthe group and is after making full provision for the costs, amounting to ‚£0.3m,directly related to the closure of the former BMG head office at Blackburn andmoving all functions to John Ormond House in Milton Keynes.
Our investment income, including realised and recycled unrealised gains and losses and related expenses, was marginally down from a net income of ‚£0.9m in 2006 to a net income of ‚£0.8m in 2007.
At 31 December 2007 our government fixed interest securities and cash depositsamounted to ‚£10.7m (2006: ‚£12.5m). During 2007 we reduced our outstandingborrowings, which were taken out to help fund the acquisition of BMG in 2005,by a further ‚£4.0m, reducing our outstanding debt to ‚£2.0m.The group's joint venture with Abbeygate Developments Limited, of additionaloffice space and residential units on the site adjacent to John Ormond House,is fully let and generated a gross income of ‚£0.4m in 2007 (2006: ‚£0.4m) ofwhich 50% is receivable by the group.As stated in Personal Assurance Plc's annual return to the Financial ServicesAuthority the capital resources requirement at 31 December 2007 was ‚£2.9m(2006: ‚£2.9m). Personal Assurance Plc's capital resources available to coverthis requirement were ‚£7.2m (2006: ‚£7.6m).
DIVIDENDS AND DIVIDEND POLICY
The directors have decided to cease paying three dividends a year and move tothe practice of paying four dividends a year as commonly used in the USA. Wehave taken this decision as we believe that this change in policy will provebeneficial to shareholders and that the company, which has enjoyed atransparent and steady history of profitability, is well positioned to takethis step.The first of our new quarterly dividends will be 3.3 pence a share and will bepayable in June 2008. Provided business continues as expected we anticipatepaying the same amounts in September 2008, December 2008 and March 2009.Dividends paid in 2007 totalled 12 pence, an increase of 8.1% compared with2006. The effect of the move to quarterly dividends is to make the probabledividend during 2008 a total of 16.5 pence per share. This will include thelast of the larger second interim dividends that was paid in March. It istherefore unlikely that dividends in 2009 will equal those expected to be paidin 2008.THE BOARDI'm sad to report the death on 1 March 2008 of John Swarbrick, who served asour chairman from 1994 to 2003. John was the first non-executive director ofPersonal Assurance Plc appointed in December 1984 by our outside investors astheir nominee. Starting as a monitor he quickly became a mentor. John was afirst class `insurance' man who had spent most of his working life with RefugeAssurance Group and eventually retired as general manager (general insurance)so he knew the business we are in as well as anyone could. We could not havehad a more capable and eloquent advocate with our investors and a more valuableadviser. It has now been five years since he left our board and we continue tomiss him.Having served as a non-executive director of Personal Assurance Plc since 1993,and additionally of Personal Group Holdings Plc since it was formed in 1997,Sidney Donald will be retiring at the end of April 2008. On behalf of everyoneat Personal Group who has had the pleasure of working with him, I wish himevery happiness in his retirement. Sidney has always been a staunch supporterof our business and will be greatly missed.Subject to FSA approval the board anticipate appointing Harry Driver asnon-executive director. Harry was at the Royal & Sun Alliance Insurance Groupfor over thirty-five years, where he held a wide range of roles including beinga member of their UK board for two years. He is a non-executive director ofCongregational & General Insurance Plc.
PROSPECTS FOR 2008
Current trading is in line with directors' expectations. Our worksite team islarger than it has ever been and is performing well ahead of the same periodlast year. We anticipate their continued utilisation at optimum levels duringthe year.
My thanks to all our policyholders, host employers, employees and associates for their contribution to our continuing success.
Christopher W T JohnstonChairman28 March 2008Enquiries:Personal Group Holdings Plc Tel: 0207 367 8888 (on 31/3/08).Christopher Johnston, Chairman 01908 605000 ext 235
(thereafter)
Ken Rooney, Chief ExecutiveJohn Barber, Finance DirectorBankside ConsultantsSimon Rothschild Tel: 0207 367 8871Cenkos Securities plcStephen Keys Tel: 020 7397 8926
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2007
Note 2007 2006 ‚£000 ‚£000 Gross premiums written 16,007 15,933 Change in unearned premiums 31 20 ________ ________ Net premiums written 16,038 15,953Other income: Insurance related 7,769 9,227 Non-insurance related 1,746 1,502Investment income 848 867 ________ ________ Revenue 26,401 27,549 ________ ________ Claims incurred (3,080) (2,908)Insurance operating expenses (7,084) (7,328)Other expenses: Insurance related (5,495) (5,918) Non-insurance related (1,736) (1,585)Charitable donations (80) (80) ________ ________ Expenses (17,475) (17,819) ________ ________ Results of operating activities 8,926 9,730Finance costs (355) (424) ________ ________ Profit before tax 8,571 9,306 Tax 1 (2,213) (2,626) ________ ________ Profit for the year 6,358 6,680 ________ ________ ________ ________ The profit for the period is attributable to equity holders of Personal Group Holdings Plc Earnings per share as arising from total and continuing operations Pence Pence Basic 2 21.0 22.1 Diluted 2 21.0 22.0
Included within other insurance related income is ‚£nil (2006: ‚£184,000), otherinsurance related expenses is ‚£nil(2006: ‚£140,000), and tax on profit on ordinary activities is ‚£nil (2006: ‚£12,000), all relating to a disposal in the prior year. All other operations are considered to be continuing.
PERSONAL GROUP HOLDINGS PLC
CONSOLIDATED BALANCE SHEET AT 31 DECEMBER 2007
2007 2006 ‚£000 ‚£000 ASSETS Non-current assets Goodwill 9,433 9,433Property, plant and equipment 5,449 6,654Investment property 2,091 2,073Financial assets 6,075 6,238 ________ ________ 23,048 24,398 ________ ________Current assets Trade and other receivables 3,570 4,035Cash and cash equivalents 7,728 9,486 ________ ________ 11,298 13,521 ________ ________
Non-current assets classified as held for sale Property, plant and equipment 1,068
- ________ ________ ________ ________ Total assets 35,414 37,919 ________ ________ ________ ________ EQUITY
Equity attributable to equity holders of Personal Group Holdings Plc
Share capital 1,527 1,528Shares to be issued - 298Other reserves (570) (685)Treasury shares reserve - (298)Profit and loss reserve 25,752 22,957 ________ ________ Total equity 26,709 23,800 ________ ________ ________ ________ LIABILITIES Non-current liabilities Deferred tax liabilities 143 308 ________ ________ Current liabilities Provisions 345 256Trade and other payables 5,020 5,915Current tax liabilities 1,092 1,355Borrowings 2,105 6,285 ________ ________ 8,562 13,811 ________ ________ ________ ________ Total liabilities 8,705 14,119 ________ ________ ________ ________ ________ ________ Total equity and liabilities 35,414 37,919 ________ ________ ________ ________
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2007
2007 2006 ‚£000 ‚£000 Operating activities Profit after tax 6,358 6,680 Adjustments for Depreciation 439 416
Profit on disposal of property, plant and equipment (14) (19)
Realised and unrealised net investment gains/(losses) 25 (221) Interest received (847) (716) Dividends received (18) (40) Interest paid 366 430 Share based payments 43 106
Loss on disposal of subsidiary undertaking -
30
Taxation expense recognised in income statement 2,213 2,626 Changes in working capital Trade and other receivables 464 317 Trade and other payables (793) (516) Taxes paid (2,641) (2,805) _______ _______
Net cash from operating activities 5,595 6,288
_______ _______ Investing activities Additions to property, plant and equipment (362) (364) Additions to investment property (18) -
Proceeds from disposal of property plant and equipment 62 68 Purchase of own shares
(415) (29) Proceeds from disposal of own shares 555 135 Purchase of treasury shares - (298) Disposal (net of cash) of subsidiary undertaking - (40) Purchase of financial assets (95) (230) Proceeds from disposal of financial assets 228 563 Interest received 847 716 Dividends received 18 40 _______ _______ Net cash gained in investing activities 820 561 _______ _______ Financing activities Proceeds from bank loans 415 29 Repayment of bank loans (4,595) (2,179) Interest paid (366) (430) Dividends paid (3,627) (3,347) _______ _______ Net cash used in financing activities (8,173) (5,927) _______ _______ Net change in cash and cash equivalents (1,758) 922 Cash and cash equivalents, beginning of year 9,486 8,564 ________ ________ Cash and cash equivalents, end of year 7,728 9,486 ________ ________ ________ ________Notes
1. Taxation comprises United Kingdom corporation tax of ‚£2,379,000 (2006:
‚£2,688,000), and deferred taxation credit of ‚£166,000 (2006: ‚£62,000).
2. The basic and diluted earnings per share are based on the profit for the
financial year of ‚£6,358,000 (2006: ‚£6,680,000) and on 30,260,729 basic
(2006: 30,182,627), 30,297,146 diluted (2006: 30,400,618) ordinary shares,
the weighted average number of shares in issue during the year. The EBITD
per share are based on the earnings before interest, tax, depreciation for
the financial year of ‚£9,365,000 (2006: ‚£10,146,000).
3. The directors have declared a dividend of 3.3 pence per share payable on 27
June 2008 to share holders on the register at the close of business on 13
June 2008. Shares will be marked ex-dividend on 11 June 2008. The total
dividend paid in the year was ‚£3,627,000 (2006: ‚£3,347,000), which is
equivalent to 12.0 pence (2006: 11.1 pence) per share.
The preliminary statement which has been agreed with the auditors and approvedby the Board on 28 March 2008 is not the Company's statutory accounts. Thestatutory accounts for each of the two years to 31 December 2006 and 31December 2007 received audit reports, which were unqualified and did notcontain statements under section 237 (2) or (3) of the Companies Act 1985. The2006 accounts have been filed with the Registrar of Companies but the 2007accounts are not yet filed.
PERSONAL GROUP HOLDINGS PLCRelated Shares:
Personal Group