Personal Group Regulatory News (PGH)

PERSONAL GROUP HOLDINGS PLC

("Personal Group" or "the Group")

ANNOUNCEMENT OF RESULTS

FOR THE YEAR ENDED 31 DECEMBER 2010

Personal Group Holdings plc (AIM:PGH), a leading provider of employee benefits and financial services, reports its results for the year ended 31 December 2010.

Highlights

The Annual General Meeting will be held on 26 April 2011 at 1:00pm at Milton Keynes Theatre, Marlborough Gate, Central Milton Keynes, MK9 3NZ.

Nigel Brittle, Group Chief Executive of Personal Group, commented: "This has been a period of significant growth for the group, and the board is pleased to report a year of record profits. Having achieved both record new business and record profitable growth over the last three years, the board believes that the time is now also right to invest in building an even stronger platform for the next phase of growth.

"This will be achieved by broadening our network of strong client relationships to drive future new business growth and also through focusing on technological and procedural efficiencies to drive future cost reductions. We expect to maintain our performance at the current record levels whilst simultaneously investing in the group's growth and believe that the group is well placed for the future."

Enquiries:

Notes to editors:

Personal Group Holdings Plc (AIM: PGH) is a leading provider of employee benefits and financial services, established in 1984 and with offices and clients across the UK.

The group primarily provides tailored employee benefits programmes to businesses throughout the UK. These programmes include insurance products such as hospital and convalescence plans, death benefit and income protection plans; lifestyle benefits such as holiday and retail discounts; flexible benefit programmes; a range of tax efficient benefits such as childcare vouchers; and employee assistance programmes. The group generates the majority of its revenue through the underwriting of hospital and convalescence plans. Through its expertise in producing, communicating and implementing successful benefit solutions, the group has helped over 400 leading UK companies recruit, retain and motivate the best people. In total the group provides benefits for 1.2 million employees, and clients include Hermes Parcelnet, Brake Bros, Starwood Hotels and Northumbrian Water.

In addition the group offers financial planning and broking services and through its Berkeley Morgan, Universal Provident and Rapidinsure brands provides access to private medical insurance as well as home, contents and travel insurance.

The group boasts considerable financial strength, with a 25 year track record of profitable growth since 1986. For the year to 31 December 2010 the group reported revenue of £27 million. With a strong balance sheet and a progressive dividend policy, Personal Group's vision is to be the provider of choice in employee benefits and financial services. The group's development to date has been achieved principally through strong organic growth.

Personal Group is headquartered in Milton Keynes, was floated on AIM in 2000 and today employs over 170 people.

For further information, go to www.personal-group.com.

Chairman's statement

Business review

The group achieved record profit before tax (PBT) for the year ended 31 December 2010 of £9.4m, an increase of 10% over 2009's PBT before goodwill impairment, and £0.7m above the group's previous record PBT before goodwill impairment, in 2008. EBITDA per share was also at a record 32.9p, an increase of 9% over the 2009 figure. No goodwill impairment was required in 2010.

After provision for taxation there is a surplus of £6.8m which has been added to reserves. Shareholders' funds at 31 December 2010 were £23.5m (2009: £21.7m) representing 78p (2009: 72p) per share.

The results for the year reflect the consistently strong new business generation in our personal hospital, convalescence, death benefit and Voluntary Group Income Protection (VGIP) plans through 2008, 2009 and into 2010. Annualised new business of these core products written in 2010 was £7.2m, marginally up on our previous record year in 2009.

Annual commission income for our death benefit plan increased in 2010 by 14% to £2.7m, reflecting improvements introduced at the beginning of the year to the premium and benefit levels. The group's profit from this product should increase further in 2011 following the negotiation of enhanced terms with our underwriters.

VGIP continues to make progress, although not at the rates previously anticipated. This is due to the growth in numbers of host company VGIP programmes being slower than expected, although in those workplaces where the product is being offered there are high take-up levels. Interest in VGIP remains high from prospective host companies attracted by the beneficial rates and tax efficiencies offered by this scheme. The board remains confident that the product is capable of reaching significant volumes in the future. A focused marketing strategy significantly increasing the number of presentations of this product to prospective host companies, together with the further development of strategic alliances with third party introducers, is designed to drive new business growth in VGIP through 2011.

During the year our underwriting subsidiary, Personal Assurance PLC (PA), handled 29,511 (2009: 34,585) claims, with over 97% being accepted, of which the vast majority were settled by return of post. This reflects the attractive simplicity of our policies - a major factor in their appeal to customers - and our commitment to treating customers fairly. Following a slight increase in our claims ratio in 2009, claims in 2010 have settled back to levels traditionally experienced in previous years.

Berkeley Morgan Group, our IFA and broker subsidiary, has performed in line with our expectations while levels of renewal business within Universal Provident and Rapidinsure have been ahead of target throughout 2010 and into 2011.

Group net investment income continued at a low level in the current low-interest climate, generating £0.3m (2009: £0.2m). This is further put into context when one considers that in 2005 our investment income was in excess of £1.0m.

The group's joint venture with Abbeygate Developments Limited of office space and residential units on the site adjacent to our John Ormond House head office continues to be substantially let and generated a gross income of £0.4m in 2010 (2009: £0.4m), half of which is receivable by the group. The development is funded by way of a loan from Personal Group Holdings Plc. During the year interest receivable totalled £0.1m (2009: £0.1m).

In December 2010 a ten year lease (with a break option after five years) was signed with the property agents Bidwells in respect of the second floor of John Ormond House, which had been empty for most of 2010.

Dividends and dividend policy

We have already announced our first quarterly dividend for 2011 of 4.35p per share. If business continues as anticipated we expect to pay dividends of the same amount in June, September and December 2011. This would make dividends paid in 2011 of 17.4p (2010: 17.0p) per share, an increase of 2%.

Director retirement

Robert Pease, who had been a director since 1997, retired in December 2010. He had been managing director of the group's small insurance and reinsurance subsidiary Personal Insurance and Reinsurance Brokers Limited (PIRB). Robert's association with Personal Group dates from the establishment of the business 26 years ago, when he was involved in putting in place the original underwriting arrangements for the first PA policies sold. On behalf of the board I thank Robert for his significant contribution to the group over many years.

Prospects for 2011

The group enters the new decade with in force hospital plan, convalescence, VGIP and death benefit policies having a total annualised premium of £24.5m (2009: £22.9m); a strong order book with good levels of new host company availability which have continued through the first quarter of 2011 and look set to continue; a debt free balance sheet (except for a small loan to fund the group's employee share schemes); and qualifying capital resources of £9.4m to cover an FSA capital resources requirement at 31 December 2010 of £3.3m. In October 2010 PA participated in the FSA led Solvency II project and submitted a QIS5 report. This report indicates that PA's minimum capital resource requirement should not change materially under Solvency II and that PA is able to underwrite significantly larger volumes of business without having to increase its regulatory capital.

In consequence of the increase from 5% to 6% in Insurance Premium Tax (IPT) the premium and benefit levels of our hospital plan and convalescence plan products have been revised for new policies sold with effect from 4 January 2011. The directors have decided not to risk the disruption which might result from increasing premiums or changing benefits in respect of existing policies and our decision to absorb this cost is estimated to have a likely negative effect on PBT in 2011 of approximately £175,000.

In addition to the increase in IPT described above, the group also faces an increase in its expenses as a result of the recent VAT rate increase and the planned rise in April of Employers' National Insurance contributions. As an insurance group our ability to recover VAT is severely restricted and therefore the increase in VAT to 20% will have a direct impact on PBT in 2011.

Organic growth of our core benefit programmes remains a priority together with the implementation of specific strategic initiatives linked to technological and procedural improvements which will take the group through the next phase of growth over the next couple of years.

The group's core business continues to perform well, with an encouraging number of actual and projected launches in new and existing host companies in the first part of 2011, together with strong average daily new business production. The group is in a strong position to capitalise on the current opportunities in the employee benefits and financial services sector and the board is excited by the prospects for future growth.

On behalf of the board I thank all those who contribute to the success of the group for their continuing support and loyalty.

Chris Curling

Chairman

25 March 2011

PERSONAL GROUP HOLDINGS PLC

CONSOLIDATED INCOME STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2010

The profit for the year is attributable to equity holders of Personal Group Holdings Plc.

All operations are considered to be continuing.

PERSONAL GROUP HOLDINGS PLC

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2010

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

PERSONAL GROUP HOLDINGS PLC

CONSOLIDATED BALANCE SHEET AT 31 DECEMBER 2010

PERSONAL GROUP HOLDINGS PLC

CONSOLIDATED BALANCE SHEET AT 31 DECEMBER 2010

PERSONAL GROUP HOLDINGS PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2010

Equity attributable to equity holders of Personal Group Holdings Plc 

PERSONAL GROUP HOLDINGS PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2009

Equity attributable to equity holders of Personal Group Holdings Plc

PERSONAL GROUP HOLDINGS PLC

CONSOLIDATED CASH FLOW STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2010

Notes

1. The group operates two trading operating segments, namely employee benefits insurance and consultancy; and financial services offered by Berkeley Morgan Group Limited (BMG) and its subsidiary undertakings.

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. Insurance brokerage commission includes that derived from voluntary group income protection plan sales.

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

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.

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

All income is derived from the UK.

2. Taxation comprises United Kingdom corporation tax of £2,698,000 (2009: £2,249,000), and deferred taxation credit of £76,000 (2009: £47,000).

3. The basic and diluted earnings per share are based on the profit for the financial year of £6,759,000 (2009: £3,319,000) and on 29,870,303 basic (2009: 29,830,021), 29,874,448 diluted (2009: 29,845,832) ordinary shares, the weighted average number of shares in issue during the year. The EBITDA per share are based on the earnings before interest, tax, depreciation and goodwill impairment for the financial year of £9,833,000 (2009: £9,015,000).

4. The total dividend paid in the year was £5,074,000 (2009: £4,948,000), which is equivalent to 17.0 pence (2009: 16.6 pence) per share.

This preliminary statement has been extracted from the 2010 audited financial statements that will be posted to shareholders in due course. The statutory accounts for each of the two years to 31 December 2009 and 31 December 2010 received audit reports, which were unqualified and did not contain statements under section 498 (2) or (3) of the Companies Act 2006. The 2009 accounts have been filed with the Registrar of Companies but the 2010 accounts are not yet filed.

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