Personal Group Regulatory News (PGH)

PERSONAL GROUP HOLDINGS PLC

("Personal Group" or "the Group")

Interim Results

Personal Group Holdings Plc (AIM: PGH), a leading provider of employee benefits, employee related insurance products and financial services in the UK, is pleased to report its results for the six months ended 30 June 2015:

Highlights

Mark Scanlon, Chief Executive of Personal Group, commented:

"Our core business continues to perform consistently well with continued growth in new sales, top line revenue and bottom line profit. In addition our Let's Connect business, operating alongside our core business, has given us the strength of conviction to develop it further by investing in our own Mobile Virtual Network Operator ("MVNO") named Personal Group Mobile ("PG Mobile") to provide smartphones and airtime on a salary sacrifice basis to our customer base. This offers a 32-47% reduction in cost of a phone with airtime to our customers.

The first half of 2015 has seen the release of 'hapi' our new software platform on which all of our propositions reside. This is now live with more than ten of our customers with many more rollouts planned. This is a major step forward for us and fundamental to the development of our company."

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Notes to Editors

With over 30 years' experience of looking after its customers' employees, Personal Group Holdings Plc (AIM: PGH) is a leading provider of employee benefits and employee related insurance products, offering benefits programmes to over 2 million employees across the UK.

Personal Group's innovative approach to using technology to deliver its programmes, combined with its face-to-face method of communicating with employees, makes its offering compelling to blue chip clients across the UK as a way of attracting, retaining and motivating employees. The Group tailors its packages to include insurance products such as hospital and convalescence plans, death benefit and income protection plans, as well as lifestyle benefits such as holiday and retail discounts, health and wellbeing benefits and a range of tax efficient benefits.

Personal Group can also supply home technology via salary sacrifice through its subsidiary Let's Connect. Offering the latest iPads and other tablets, home computers and laptops, smart phones and smart TVs is a highly engaging benefit from which both the employer and employee can profit. In April 2015 the Group established its own Mobile Virtual Network Operator (MVNO) called Personal Group Mobile Ltd. which was achieved through the acquisition of the assets of shebang Technologies Ltd. This means that home technology, including handsets and airtime, can be provided via salary sacrifice with a reduction of c10-47% on costs to its client's employees.

Personal Group has a strong client base across a range of sectors including transport, where it works with the likes of Network Rail, Stagecoach and EYMS Group Ltd, and healthcare, where clients include Four Seasons Health Care, Priory Group and Spire Healthcare. The Group also covers logistics, with companies such as TNT Express and Bibby, and motoring with Manheim and JCT600 as clients. In addition the Group also has a strong presence in food manufacturing and service and clients include 2 Sisters Food Group and Young's Seafood.

With over 520 clients the Group has grown considerably and provides engaging and effective benefits packages across a breadth of sectors.

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

Chairman's Statement

Summary

The Group continued to perform well in the first half of 2015, with like for like revenue up 4.2% on the equivalent period in 2014 and record new business generation. Underlying EBITDA increased by 2.1%. During the first half we acquired certain assets and the trade of an existing mobile virtual network operator (MVNO) and established PG Mobile, aimed at providing salary sacrifice phones and airtime to our established and new customers. We are pleased with the early indications of the development of this business both alongside Let's Connect and as an additional offering to the employees in our core business host company clients.

Financial Performance

Total Group revenue for the six months ended 30 June 2015 increased by 9.3% to £19.0m (2014: £17.4m). This reflects a 15.1% increase in earned premiums net of reinsurance and the revenue contribution from Let's Connect.

Annualised new business premiums written during the period from the Group's core employee benefits and insurance activities were once again a half-year record, at £5.6m, 8.4% ahead of 2014 (£5.1m).

Underlying EBITDA was £4.5m (2014: £4.4m) and whilst this represents only a 2.1% improvement on the equivalent period in 2014, the Group's performance on a like for like basis (excluding the impact of setting up our own MVNO) was an increase of 9.5%.

Group Profit before tax was £2.9m (2014: £3.5m). This reflects £0.3m of acquisition costs and £0.5m of restructuring costs associated with the establishment of PG Mobile.

Total equity at 30 June 2015 was £26.6m (31 December 2014: £27.0m). The structure of the balance sheet at 30 June 2015 reflects the acquisition of the MVNO assets and trade described above.

Business Review

Our core business continues to operate in a consistent manner, with a steady increase in sales and topline performance. This is reflected in the continued improvement in our profitability as we constrain our cost levels and as our claims ratio continues to stabilise.

The continuing attraction of our core products is evidenced by the particularly high proportion of sales in the first half which came from entirely new host company clients: more than 35% of total new sales were to employees of companies which were new to the Group.

Our like for like sales in Let's Connect were up 29% on the equivalent period last year. The turnover of Let's Connect is as always very strongly weighted to the fourth quarter of the year.

The establishment of PG Mobile is a further development of our strategy to broaden the Group's offering to include additional products of appeal to our policyholders, to other employees in our host company clients, and to our Let's Connect customers. The Group acquired in April certain assets and the trade of shebang Technologies, an existing MVNO, and we have incorporated this business into PG Mobile so as to be able to offer airtime tax efficiently, both as part of our smartphone Let's Connect package and as a standalone benefit for our wider customer base. Airtime provisioning is increasingly becoming a form of utility rather than an occasional purchase, and as such its cost-effective provision should appeal to anyone who pays for a mobile phone.

Our new technology platform called 'hapi' is now released for use by our customers. This is a state-of-the-art platform which is very customer-friendly: simple to navigate and use. The system gives us a strong digital connection with the end user and for the first time enables us to offer our full product range. Smaller as well as larger companies will find this attractive, and so it is expected to open up access to the growing SME market. The system also offers far greater visibility and management information reporting, which is of great attraction to our host company clients. In addition it significantly reduces our dependency on third parties.

Through the budget announcement recently we have seen Insurance Premium Tax ("IPT") increase from 6% to 9.5%, due to be implemented in November this year. Our premium collection method through payroll deduction makes it difficult to adjust premiums retrospectively and we have decided as part of our annual price review to adjust our pricing for new business only.

Dividends

The first two dividends of 2015, each of 5.225p per share, were paid in March and June, with the third dividend of the same amount being paid on 24th September 2015. The Directors expect that the fourth and final dividend for 2015 of the same amount will be paid in December. This would give a total for the year of 20.9p per share (2014: 19.6p per share), an increase of 6.6%.

The Board

As announced earlier in the year Ken Rooney retired from his executive position as Chief Operating Officer in June 2015. We are pleased that he will remain on the Group Board as a Non-executive Director.

Outlook

The Group's core business continues to perform strongly and grow steadily.

The acquisition last year of Let's Connect and the establishment this year of PG Mobile reflect the Group's intention to widen the range of its own products forming part of our employee benefits offering and to make available to our host company clients and to others products and services which are complementary to our core products.

We remain confident about the added value which this strategy will continue to generate for the benefit of our shareholders.

C J Curling

Non-Executive Chairman

29 September 2015

Consolidated income statement

All operations are considered to be continuing.

Consolidated statement of comprehensive income

Consolidated balance sheet at 30 June 2015

Consolidated balance sheet at 30 June 2015

Consolidated statement of changes in equity for the six months ended 30 June 2015

· All Employee Share Option Plan (AESOP) ** Long Term Incentive Plan (LTIP)

Consolidated statement of changes in equity for the year ended 31 December 2014

Consolidated statement of changes in equity for the six months ended 30 June 2014

Consolidated cash flow statement

Consolidated cash flow statement

 Notes to the consolidated financial statements

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 AIM 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 2014.

The financial information for the year ended 31 December 2014 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 2014 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 28 September 2015.

2 Accounting policies

These June 2015 interim consolidated financial statements of Personal Group Holdings Plc are for the six months ended 30 June 2015. These interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting. They do not include all the information required for a complete set of IFRS financial statements. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and performance since the last annual consolidated financial statements as at and for the year ended 31 December 2014.

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 2014.

The principal accounting policies have remained unchanged from the year ended 31 December 2014.

3 Segment analysis

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 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.

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, the provision of salary sacrifice technology products and property rental income. Non-insurance related expenses include costs relating to those sales, and also acquisition costs. Non-insurance income and expenses have increased in 2015 due to the additional sales and purchases made subsequent to the acquisition of the trade and assets of Shebang.

Notes to the consolidated financial statements

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:

Notes to the consolidated financial statements

Income is derived from the UK and Guernsey (Dec 2014 all income was derived from UK)

The figures shown above for employee benefits and financial services are from the group's management accounts. Unallocated amounts relate to the group's investment property.

Notes to the consolidated financial statements

4 Taxation

Tax expense is recognised based on the weighted-average annual income 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 months ended 30 June 2015 was 19.4% (six months ended 30 June 2014: 25.9%).

5 Earnings per share and dividends

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

During the first six months of 2015, Personal Group Holdings Plc paid dividends of £3,160,000 to its equity shareholders (six months to 30 June 2014: £2,954,000, twelve months to 31 December 2014: £5,916,000). This represents a payment of 10.45p per share (six months to 30 June 2014: 9.8p, twelve months to 31 December 2014: 19.6p).

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:

Notes to the consolidated financial statements

6 Property, plant and equipment

For the six months ended 30 June 2015

For the year ended 31 December 2014