Half Yearly Report

28th Sep 2009 07:00



Personal Group Holdings Plc

Interim statement for the six months to 30 June 2009

The board of directors of Personal Group Holdings Plc, specialist providers of employee benefits, insurance and consultancy, are pleased to announce the group's results as follows:

 

Nigel Brittle, Group Managing Director, commented:

"The first half of 2009 has been an exciting time to join Personal Group with opportunities for increased revenue and growth being created following the withdrawal of key competitors from our section of the voluntary employee benefits marketplace. We launched fourteen new benefit programmes during the first half of this year, an increase in number on the same period in 2008. In tough trading conditions, this has helped us deliver new business in line with our record first half of 2008 including record months in January, March and June this year. This new business will contribute significantly to our strong revenue stream as we progress through the rest of this year and into 2010.

As the company celebrates its 25th anniversary at the end of 2009, the potential for the group to grow is as clear cut as ever, building on a strong financial platform and well positioned to take advantage of the new market opportunities that exist. We are building on the robust, sound principles of a transparent, conservatively financed and highly cash generative business model and we will continue to develop the business consistently based on these same principles.

In the current economically challenging times when employers have been grappling to keep their staff costs under control, they tell us that the opportunity provided by Personal Group's voluntary benefits offering is more attractive than ever. While our increased claims costs have dampened profits this year to date, the increase in claims benefit payments positively demonstrates our customer focused approach and emphasises to our host companies and their employees the importance of health insurance when people need it most."

 

Enquiries to:

 

Personal Group Holdings Plc  

Nigel Brittle, Managing Director Tel: 01908 605000 ext 279 

Ken Rooney, Deputy Chairman

John Barber, Finance Director

Cenkos Securities

Stephen Keys Tel: 0207 397 8900

Bankside Consultants 

Simon Rothschild Tel: 0207 367 8888

Chairman's Statement

Group profit before tax (PBT) for the period was £4.0m (2008: £4.4m).

Revenues from our core insurance business improved by approximately £0.5m when compared to the first half of 2008 but claims incurred for our hospital plan policy increased by a similar amount. 

This increase in our payments to policyholders was not unexpected as we have been implementing improvements to the cover we provide for some time now. During 2008 we increased the maximum premium and benefits on offer. In addition we introduced a concession for policyholders who did not use their out-patient benefit in prior years that allows them to carry forward up to three years of entitlement to this benefit. 

The impact of these improvements has been to boost the average premium paid by new policyholders but also increase our out-patient claims by more than 30% when compared with 2008. Claims experience has been adversely affected because our sales of new policies in 2008 and the first half of 2009 have been at much higher levels than achieved for the same periods in earlier years. Claims tend to be much higher in the first year policies are in force and level off in succeeding years.

The swine flu pandemic has received widespread publicity and we have been monitoring its effect on our claims. We currently process approximately 2,500 claims each month and had no claims for swine flu in the period from January to May. We had only one claim in June, eight claims in July and four claims in August where the reason for out-patient or in-patient treatment has been stated as 'swine flu'. Despite the current negligible impact of swine flu, we will continue to monitor closely this disease in relation to our business. 

We continue to develop our Voluntary Group Income Protection (VGIP) policy which is progressing steadily. Income from VGIP increased to £48,000 in the first half of 2009 but as yet does not exceed related costs.

The last £2.0m of the loan taken to fund our purchase of Berkeley Morgan Group (BMG) in 2005 was repaid in June 2009 leaving us with £9.3m in cash deposits at 30th June 2009. Due mainly to the substantial drop in interest rates our investment income fell to £184,000 (2008: £392,000) contributing £208,000 to our reduction in half yearly revenue.

As expected and reflected in our goodwill write down last year, our BMG subsidiary contributed £454,000 less revenue to the group but still made £501,000 PBT (2008: £693,000).

After provision for taxation there is a surplus for the period of £3.1m (2008: £3.1m) which has been added to equity. Shareholders' funds, excluding goodwill, at 30th June 2009 were £17.8m (2008: £17.1m). 

The first two quarterly dividends of 4.15p per share were paid in March 2009 and June 2009. The third dividend of 4.15p per share will be paid today, 25th September 2009, making a total of 12.45p per share paid so far this year. Provided the 4th quarterly dividend is paid as expected in December 2009, the total for the year will amount to 16.6p per share compared with 16.5p per share for 2008.

The group has been able to increase core sales and revenues during the first half of 2009 and these will be the drivers of increased net income in the years to come. We accept the extra cost involved as we improve the benefits we provide to policyholders as the price of increasing our reputation for service and treating customers fairly. 

On a personal note, shareholders may recall that in the last annual report I announced my intention to reduce my day to day involvement with the management of the company. As planned I shall relinquish all my executive responsibilities at the end of November 2009 and will remain as a non-executive director of Personal Group Holdings Plc. Chris Curling, who has served as a non-executive director since 2002, has agreed to take over the role of non-executive chairman of the board. 

In the absence of unforeseen circumstances, I shall maintain my shareholding in the company. I am confident that Nigel Brittle together with his executive team will continue to build on what has been achieved in the last 25 years. Together with all my fellow shareholders I look forward to seeing Personal Group continue to go from strength to strength.

The group remains highly profitable and is in a good position to grow during these tougher economic times and continues to trade in line with the directors' expectations.

My thanks to all policyholders, employees, agents, consultants and host employers who have all helped make this business successful.

Christopher W T Johnston

Chairman

25 September 2009

 

Consolidated income statement

 

				6 months ended 30 June 2009 Unaudited		6 months ended 30 June 2008 Unaudited		12 months ended 31 December 2008 Audited
		Note		£000		£000		£000
Gross premiums written				8,550		8,081		16,379
Change in unearned premiums				(29)		(28)		82
				________		________		________
Net premiums written				8,521		8,053		16,461
Other income:
Insurance related				3,444		3,850		8,006
Non-insurance related				738		772		1,572
Investment property				146		95		234
Investment income				184		392		508
				________		________		________
Revenue				13,033		13,162		26,781
				________		________		________
Claims incurred				(2,174)		(1,611)		(3,448)
Insurance operating expenses				(3,658)		(3,655)		(7,235)
Impairment of non-financial assets				-		-		(3,433)
Other expenses:
Insurance related				(2,256)		(2,504)		(5,408)
Non-insurance related				(820)		(792)		(1,614)
Investment property				(54)		(90)		(211)
Charitable donations				(40)		(40)		(80)
				________		________		________
Expenses				(9,002)		(8,692)		(21,429)
				________		________		________
Results of operating activities				4,031		4,470		5,352
Finance costs				(18)		(67)		(125)
				________		________		________
Profit before tax				4,013		4,403		5,227
Tax				(960)		(1,320)		(2,456)
				________		________		________
Profit for the period after tax				3,053		3,083		2,771
				________		________		________

 

The profit for the period after tax is attributable to equity holders of Personal Group Holdings Plc.
Earnings per share as arising from total and continuing operations				Pence		Pence		Pence
Basic		4		10.2		10.2		9.2
Diluted		4		10.2		10.2		9.1

All operations are considered to be continuing.

  Consolidated statement of comprehensive income 

		6 months ended 30 June 2009 Unaudited	6 months ended 30 June 2008 Unaudited	12 months ended 31 December 2008 Audited
		£000	£000	£000
Profit for the period		3,053	3,083	2,771
Other comprehensive income
Available for sale financial assets:
Valuation changes taken to equity		14	(48)	(193)
Reclassification to profit or loss		-	2	4
Income tax on unrealised valuation changes
taken to equity		(4)	-	54
		______	______	______
Total comprehensive income for the period		3,063	3,037	2,636
		______	______	______

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

  Consolidated balance sheet at 30 June 2009

				At 30 June 2009 Unaudited		At 30 June 2008 Unaudited		At 31 December 2008 Audited
		Note		£000		£000		£000
ASSETS
Non-current assets Goodwill				6,000		9,433		6,000
Property, plant and equipment		5		5,494		5,389		5,556
Investment property				3,185		2,091		3,159
Financial assets				2,659		6,230		5,620
				________		________		________
				17,338		23,143		20,335
Current assets				________		________		________
Trade and other receivables				3,067		3,354		3,234
Cash and cash equivalents				9,265		7,383		7,478
				________		________		________
				12,332		10,737		10,712
Non-current assets classified as held for sale				________		________		________
Property, plant and equipment				-		1,068		-
				________		________		________
				________		________		________
Total assets				29,670		34,948		31,047
				________		________		________
LIABILITIES
Current liabilities
Provisions				85		376		135
Trade and other payables				4,285		4,260		4,265
Current tax liabilities				1,064		1,207		994
Borrowings		6		221		2,315		2,268
				________		________		________
				5,655		8,158		7,662
Non-current liabilities				________		________		________
Deferred tax liabilities				221		256		226
				________		________		________
Total liabilities				5,876		8,414		7,888
				________		________		________
				________		________		________
Net assets				23,794		26,534		23,159
				________		________		________
EQUITY
Equity attributable to equity holders of
Personal Group Holdings plc
Share capital				1,503		1,527		1,503
Capital redemption reserve				24		-		24
Amounts recognised directly in equity
relating to non-current assets held for sale				(108)		(29)		(118)
Other reserve				(747)		(819)		(772)
Profit and loss account				23,122		25,855		22,522
				________		________		________
Total equity				23,794		26,534		23,159
				________		________		________

  Consolidated statement of changes in equity for the six months ended 30 June 2009

Equity attributable to equity holders of Personal Group Holdings Plc

	Share capital	Capital redemption reserve	Non-current assets held for sale	Other reserve	Profit & loss account	Total equity
	£000	£000	£000	£000	£000	£000
Balance as at 1 January 2009	1,503	24	(118)	(772)	22,522	23,159
	______	___	____	____	________	________
Dividends	-	-	-	-	(2,473)	(2,473)
Employee share-based compensation	-	-	-	-	20	20
Proceeds of AESOP share sales	-	-	-	-	39	39
Cost of AESOP shares sold	-	-	-	39	(39)	-
Cost of AESOP shares purchased	-	-	-	(14)	-	(14)
	______	___	____	____	________	________
Transactions with owners	-	-	-	25	(2,453)	(2,428)
	______	___	____	____	________	________
Profit for the period	-	-	-	-	3,053	3,053
Other comprehensive income
Available for sale financial assets:
Valuation changes taken to equity	-	-	14	-	-	14
Reclassification to profit or loss	-	-	-	-	-	-
Current tax on unrealised valuation changes taken to equity	-	-	(4)	-	-	(4)
	______	___	____	____	________	________
Total comprehensive income for  the period	-	-	10	-	3,053	3,063
	______	___	____	____	________	________
Balance as at 30 June 2009	1,503	24	(108)	(747)	23,122	23,794
	______	___	____	____	________	________

  Consolidated statement of changes in equity for the year ended 31 December 2008

Equity attributable to equity holders of Personal Group Holdings Plc

		Share capital	Capital redemption reserve	Non-current assets held for sale	Other reserve	Profit & loss account	Total equity
		£000	£000	£000	£000	£000	£000
Balance as at 1 January 2008		1,527	-	17	(587)	25,752	26,709
		______	___	_____	____	________	________
Dividends		-	-	-	-	(4,993)	(4,993)
Employee share-based compensation		-	-	-	-	45	45
Buy back and cancellation of shares		(24)	24	-	-	(1,028)	(1,028)
Proceeds of AESOP share sales		-	-	-	-	177	177
Cost of AESOP shares sold		-	-	-	202	(202)	-
Cost of AESOP shares purchased		-	-	-	(387)	-	(387)
		______	___	_____	____	________	________
Transactions with owners		(24)	24	-	(185)	(6,001)	(6,186)
		______	___	_____	____	________	________
Profit for the year		-	-	-	-	2,771	2,771
Other comprehensive income
Available for sale financial assets:
Current year losses		-	-	(193)	-	-	(193)
Reclassification to profit or loss		-	-	4	-	-	4
Current tax on unrealised valuation changes taken to equity		-	-	54	-	-	54
		______	___	____	____	________	________
Total comprehensive income for  the year		-	-	(135)	-	2,771	2,636
		______	______	______	______	_____	______
Balance as at 31 December 2008		1,503	24	(118)	(772)	22,522	23,159
		______	___	____	____	________	________

  Consolidated statement of changes in equity for the six months ended 30 June 2008

Equity attributable to equity holders of Personal Group Holdings Plc

		Share capital	Non-current assets held for sale	Other reserve	Profit & loss account	Total equity
		£000	£000	£000	£000	£000
Balance as at 1 January 2008		1,527	17	(587)	25,752	26,709
		______	___	____	________	________
Dividends		-	-	-	(2,996)	(2,996)
Employee share-based compensation		-	-	-	22	22
Proceeds of AESOP share sales		-	-	-	108	108
Cost of AESOP shares sold		-	-	114	(114)	-
Cost of AESOP shares purchased		-	-	(346)	-	(346)
		______	___	____	________	________
Transactions with owners		-	-	(232)	(2,980)	(3,212)
		______	___	____	________	________
Profit for the period		-	-	-	3,083	3,083
Other comprehensive income
Available for sale financial assets:
Valuation changes taken to equity		-	(48)	-	-	(48)
Reclassification to profit or loss		-	2	-	-	2
Current tax on unrealised valuation changes taken to equity		-	-	-	-	-
		______	___	____	________	________
Total comprehensive income for  the period		-	(46)	-	3,083	3,037
		______	______	______	______	______
Balance as at 30 June 2008		1,527	(29)	(819)	25,855	26,534
		______	___	____	________	________

  

Consolidated cash flow statement 

				6 months ended 30 June 2009 Unaudited		6 months ended 30 June 2008 Unaudited		12 months ended 31 December 2008 Audited
				£000		£000		£000
Operating activities
Profit after tax				3,053		3,083		2,771
Adjustments for: Depreciation				238		223		452
Goodwill impairment				-		-		3,433
Loss/(profit) on disposal of property, plant and equipment				1		(3)		(5)
Realised and unrealised net investment (gains)/losses				(25)		12		275
Interest received				(195)		(389)		(705)
Dividends received				(7)		(27)		(37)
Interest paid				23		73		136
Share-based payments				20		22		45
Taxation expense recognised in income statement				960		1,320		2,456
Changes in working capital:
Trade and other receivables				167		212		331
Trade and other payables				(30)		(728)		(970)
Taxes paid				(899)		(1,092)		(2,417)
				______		______		______
Net cash from operating activities				3,306		2,706		5,765
				______		______		______
Investing activities
Additions to property, plant and equipment				(204)		(177)		(575)
Additions to investment property				(26)		-		-
Proceeds from disposal of property plant and equipment				27		20		30
Purchase of own shares				(14)		(346)		(387)
Proceeds from disposal of own shares				39		108		177
Purchase of own shares for cancellation				-		-		(1,028)
Purchase of financial assets				(20)		(225)		(103)
Proceeds from disposal of financial assets				3,020		12		95
Interest received				195		389		705
Dividends received				7		27		37
				______		______		______
Net cash gained/(used) in investing activities				3,024		(192)		(1,049)
				______		______		______
Financing activities
Proceeds from bank loans				14		346		387
Repayment of bank loans				(2,061)		(136)		(224)
Interest paid				(23)		(73)		(136)
Dividends paid				(2,473)		(2,996)		(4,993)
				______		______		______
Net cash used in financing activities				(4,543)		(2,859)		(4,966)
				______		______		______
Net change in cash and cash equivalents				1,787		(345)		(250)
Cash and cash equivalents, beginning of period				7,478		7,728		7,728
				______		______		______
Cash and cash equivalents, end of period				9,265		7,383		7,478
				______		______		______

Consolidated cash flow statement

 

1 General information

 

The principal activities of Personal Group Holdings Plc ('the company') and subsidiaries ('the group') include transacting short-term accident and health insurance, and providing employee benefits related business and financial services in the UK. 

The company is a public limited 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's shares trade on the Alternative Investment Market of the London Stock Exchange.

The condensed consolidated financial statements do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the group 

as at and for the year ended 31 December 2008.

The financial information for the year ended 31 December 2008 set out in this interim report does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. The group's statutory financial statements for the year ended 31 December 2008 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 237 (2) or (3) of the Companies Act 1985.

These consolidated interim financial statements have been approved for issue by the board of directors on 

25 September 2009.

2 Accounting policies 

These June 2009 interim consolidated financial statements of Personal Group Holdings Plc are for the six months ended 30 June 2009. They have been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting. These financial statements have been prepared on the basis of the recognition and measurement requirements of those IFRS standards and IFRIC interpretations as adopted by the EU, issued and effective or issued and early adopted in respect of periods beginning on or after 1 January 2009. The principal accounting policies have remained unchanged from the year ended 31 December 2008 except for the adoption of IAS 1 Revised and IFRS 8 "Operating Segments".

 

3 Segment analysis

The group operates two trading operating segments as follows:

Employee benefits insurance and consultancy; and financial services offered by Berkeley Morgan Group Limited (BMG) and its subsidiary undertakings.

A brief description of how the two operating segments operate is presented below:

1) Employee benefits insurance and consultancy

Personal Assurance Plc, (PA) a subsidiary within the group is an FSA regulated general insurance company and is authorised to transact accident and sickness insurance. It was established in 1984 and has been underwriting business since 1985. In 1997 Personal Group Holdings Plc (PGH) was created and became the ultimate parent undertaking of the group.

This operating segment derives the majority of its revenue from the underwriting by PA of insurance policies that have been bought by employees of host companies via bespoke benefit programmes.

Insurance related income includes insurance and reinsurance brokerage commission.

Non-insurance related income includes income derived from the sale of benefit books, consultancy services, and property rental income.

Investment property income relates entirely to the groups investment property joint venture located in Milton Keynes.

2) Financial services

The financial services operating segment consists exclusively of revenue generated by BMG and its subsidiary undertakings. BMG was acquired by PGH in January 2005.

Financial services revenue consists mainly of commission generated by financial advisers and commission generated from insurance underwriting agencies.

Investment property income relates entirely to rental income derived from the BMG freehold office property located in Blackburn. As this office is no longer occupied by BMG it has been designated as an investment property.

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

Operating segments						Employee benefits £000		Financial services £000		Group £000
6 months to 30 June 2009
Revenue
Net premiums written						8,521		-		8,521
Other income:
Insurance related						1,229		2,215		3,444
Non-insurance related						738		-		738
Investment property						95		51		146
Investment income						180		4		184
						________		______		________
Total revenue						10,763		2,270		13,033
Net result for period before tax						3,489		524		4,013
6 months to 30 June 2008
Revenue
Net premiums written						8,053		-		8,053
Other income:
Insurance related						1,130		2,720		3,850
Non-insurance related						772		-		772
Investment property						95		-		95
Investment income						340		52		392
						________		______		________
Total revenue						10,390		2,772		13,162
Net result for period before tax						3,698		705		4,403

All income is derived from the UK.

 

4 Earnings per share and dividends

The weighted average numbers of outstanding shares used for basic and diluted earnings per share are as follows:

		Six months to 30 June 2009		Six months to 30 June 2008		Twelve months to 31 December 2008
Basic		29,817,366		30,289,858		30,268,462
Diluted		29,829,069		30,310,421		30,286,410

During the first six months of 2009, Personal Group Holdings Plc paid dividends of £2,496,000 to its equity shareholders (six months to 30 June 2008: £3,024,000, twelve months to 31 December 2008: £5,040,000). This represents a payment of 8.3p per share (six months to 30 June 2008: 9.9p, twelve months to 31 December 2008: 16.5p).

In the statement of changes in equity and the cash flow statement dividends are stated net of amounts paid on treasury shares and unallocated shares held by Personal Group Trustees Limited as follows:

 

 

				2009		2008		2009		2008
				Pence per share				£000		£000
Equity dividends
Ordinary shares paid in year
March				4.15		6.60		1,248		2,016
June				4.15		3.30		1,248		1,008
								_______		_______
								2,496		3,024
Less: amounts paid on own shares								(23)		(28)
				_____		_____		______		______
				8.30		9.90		2,473		2,996
				_____		_____		______		______

 

5 Additions and disposals of property, plant and equipment

For the six months period ended 30 June 2009

		Freehold land and properties £000		Motor vehicles £000		Computer equipment £000		Furniture fixtures & fittings £000		Total £000
Cost
At 1 January 2009		5,478		621		438		2,051		8,588
Additions		-		192		10		3		205
Disposals		-		(65)		-		-		(65)
		______		____		____		______		______
At 30 June 2009		5,478		748		448		2,054		8,728
		______		____		____		______		______
Depreciation
At 1 January 2009		749		283		385		1,615		3,032
Provided in the period		47		87		40		64		238
Eliminated on disposals		-		(36)		-		-		(36)
		______		____		____		______		______
At 30 June 2009		796		334		425		1,679		3,234
		______		____		____		______		______
Net book amount at 30 June 2009		4,682		414		23		375		5,494
		______		____		____		______		______
Net book amount at 1 January 2009		4,729		338		53		436		5,556
		______		____		____		______		______

For the year ended 31 December 2008

		Freehold land and properties £000			Motor vehicles £000		Computer equipment £000		Furniture fixtures & fittings £000		Total £000
Cost
At 1 January 2008		5,225		530		452		1,935		8,142
Additions		253		184		21		122		580
Disposals		-		(93)		(35)		(6)		(134)
		______		____		____		______		______
At 31 December 2008		5,478		621		438		2,051		8,588
		______		____		____		______		______
Depreciation
At 1 January 2008		657		207		330		1,499		2,693
Provided in the year		92		148		90		122		452
Eliminated on disposals		-		(72)		(35)		(6)		(113)
		______		____		____		______		______
At 31 December 2008		749		283		385		1,615		3,032
		______		____		____		______		______
Net book amount at 31 December 2008		4,729		338		53		436		5,556
		______		____		____		______		______
Net book amount at 1 January 2008		4,568		323		122		436		5,449
		_______		____		____		______		______

For the six months period ended 30 June 2008

		Freehold land and properties £000		Motor vehicles £000		Computer equipment £000		Furniture fixtures & fittings £000		Total £000
Cost
At 1 January 2008		5,225		530		452		1,935		8,142
Additions		-		94		14		68		176
Disposals		-		(37)		(1)		-		(38)
		______		____		____		______		______
At 30 June 2008		5,225		587		465		2,003		8,280
		______		____		____		______		______
Depreciation
At 1 January 2008		657		207		330		1,499		2,693
Provided in the period		44		68		55		56		223
Eliminated on disposals		-		(24)		(1)		-		(25)
		______		____		____		______		______
At 30 June 2008		701		251		384		1,555		2,891
		______		____		____		______		______
Net book amount at 30 June 2008		4,524		336		81		448		5,389
		______		____		____		______		______
Net book amount at 1 January 2008		4,568		323		122		436		5,449
		______		____		____		______		______

 

6 Borrowings

On 17 June 2009 the £2,000,000 balance on the Royal Bank of Scotland revolving credit facility was repaid in full.

At 30 June 2009 the borrowings shown in the consolidated balance sheet are in respect of the Personal Group Trustees Limited AESOP bank loan.

Financial calendar for the year ending 31 December 2009

The company announces the following dates in its financial calendar for the year ending 31 December 2009:

 

·; Preliminary results for the year ending 31 December 2009	-	March 2010
·; Publication of Report and Accounts for 2009	-	March 2010
·; AGM	-	April 2010

ENDIR CKPKKABKDBCB

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Personal Group