Final Results

26 March 2007 PERSONAL GROUP HOLDINGS PLC PRELIMINARY ANNOUNCEMENT OF RESULTS FOR THE YEAR ENDED 31 DECEMBER 2006 The board of directors of Personal Group Holdings Plc, providers of employee benefits, insurance and consultancy, are pleased to announce the group's results as follows: HIGHLIGHTS 2006 2005 % Â£m Â£m Headline EBITDA * 10.1 9.7 + 4 Pre-tax profit 8.3 7.7 + 8 Trading income** 23.8 24.2 - 2 2006 2005 % Pence Pence EBITDA per share (basic) 33.6 32.1 + 5 Earnings per share (basic) 18.7 16.9 + 11 Dividends per share paid in 2006 11.1 10.6 + 5 2007 2006 % Pence Pence Dividend per share payable May 3.5 3.3 + 6 2007*** * EBITDA is defined as earnings before interest, tax, depreciation and amortisation. ** Trading income comprises earned premiums, net of claims incurred and other income from the ongoing business representing commission and fees earned on financial products and other related services. *** The directors have declared a dividend of 3.5p (2006: 3.3p) per share payable on 9 May 2007 to shareholders on the register at the close of business on 10 April 2007. Shares will be marked ex-dividend on 4 April 2007. The AGM will be held on 24 April 2007. Ken Rooney, Chief Executive, commented: "The group has had another profitable year with EBITDA over Â£10.0m for the first time at Â£10.1m (2005: Â£9.7m). During 2006 we launched 18 new benefit programmes. All new programmes are now on our Perflex employee benefit software platform where employees have use of one or more of the modules available. We currently have 52 employers using the system and it is available to more than 195,000 employees. Our voluntary group death benefit plan, which provides life insurance to employees and their families on a fixed premium basis regardless of sex, age up to 65 or previous medical history, was withdrawn from sale for the first three quarters of 2006 whilst new arrangements with the underwriters were put in place. New sales were successfully restarted in the last quarter of 2006." CHAIRMAN'S STATEMENT BUSINESS REVIEW I am pleased to report that the group has achieved another record year. Profit before tax increased by Â£0.6m to Â£8.3m (2005: Â£7.7m) and EBITDA increased by Â£ 0.4m to Â£10.1m (2005: Â£9.7m). After provision for taxation, there was a surplus of Â£5.6m which was added to reserves. Shareholders' funds stood at Â£22.8m (2005: Â£20.6m) on the 31st December 2006, which is 75p (2005: 67p) per share. The directors have declared a May 2007 dividend of 3.5p (2006: 3.3p) per share. Dividends paid in 2006 totalled 11.1p per share, an increase of 4.7% compared with 2005. The board expects to continue its policy of three dividends per year for the foreseeable future. As a result of lower new sales activity by our worksite team during the year savings of approximately Â£0.5m were made compared with 2005, which were partly offset by an increase in our regulatory compliance costs. Our Personal Hospital Plan, Supplementary Sick Pay, Death Benefit and related policies have now accumulated a Â£11.6m annual premium `bank' of business that has been in place for more than 2 years and where all original sales costs have been recovered. More than 24,000 claims were notified and processed in 2006. Over 99% were paid, the vast majority by return of post. No Personal Assurance Plc claims were referred to the Financial Ombudsman Service during the year. This reflects not only the efficiency of the claims handling procedures we have in place but also the simplicity of the policies, a major factor in their appeal to customers, which is part of our ongoing commitment to treating customers fairly. During the financial year Berkeley Morgan Group companies (BMG) contributed Â£ 1.3m (2005: Â£1.7m) of pre-tax profit. This represented a contribution of just over 12.8% (2005: 17.2%) of the EBITDA of the group. These figures are stated after making full provision for the costs directly related to the departure of BMG's former managing director. Restructuring of the three main operating profit centres of BMG under their own sales management has commenced. This is expected to increase costs during 2007 with the anticipated benefits beginning to flow through in 2008. The performance of our investments including investment income, realised and unrealised gains and losses and related expenses fell from a net income of Â£ 1.0m in 2005 to a net income of Â£0.9m in 2006. At 31 December 2006, our Government fixed interest securities and cash deposits amounted to Â£12.5m (2005: Â£11.5m). Having borrowed Â£12m to help fund our Â£13m acquisition of BMG in January 2005 we had, by 31st December 2006, reduced the debt to Â£6m. The group's joint venture with Abbeygate Developments Limited, of additional office space and residential units on the site adjacent to John Ormond House is fully let and generated a gross income of Â£0.4m in 2006 (2005: Â£0.2m) of which 50% is receivable by the group. As stated in Personal Assurance Plc's annual return to the Financial Services Authority the capital resources requirement at 31 December 2006 was Â£2,884,000 (2005: Â£2,809,000). Capital resources available to cover general insurance business capital resources requirement were Â£7,600,000 (2005: Â£7,508,000). PROSPECTS FOR 2007 Current trading is in line with directors' expectations. Our worksite team is at full strength and is performing well ahead of the same period last year, and we anticipate their continued utilisation at optimum levels during the year. A second employed sales team, backed by our Â£0.5m sales development programme, has been established for the "white collar" market with the first new sales having been made in February 2007. This team is also involved in the introduction of our new Voluntary Group Income Protection scheme to employees which provides a supplement to their existing sick pay. My thanks to all our employees and associates for their individual contributions that together made this our most successful year to date. Christopher W T Johnston Chairman 23 March 2007 Enquiries: Personal Group Holdings Plc Tel: 0207 367 8888 (on 26/3/07) Christopher Johnston, Chairman 01908 605000 ext 235 (thereafter) Ken Rooney, Chief Executive John Barber, Finance Director Bankside Consultants Simon Rothschild Tel: 0207 367 8871 PERSONAL GROUP HOLDINGS PLC CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 DECEMBER 2006 2006 2005 Â£000 Â£000 Â£000 Â£000 TECHNICAL ACCOUNT - GENERAL BUSINESS Premiums written 15,933 15,638 Change in the gross provision 20 (191) for unearned premiums _________ ________ Earned premiums 15,953 15,447 Claims paid (2,987) (2,941) Change in the provision for 79 121 claims ________ ________ Claims incurred (2,908) (2,820) Net operating expenses (7,328) (7,314) ________ ________ Balance on the technical 5,717 5,313 account for general business ________ ________ ________ ________ NON-TECHNICAL ACCOUNT Balance on the general 5,717 5,313 business technical account Investment income 845 967 Unrealised gains on 68 107 investments Investment expenses and (23) (36) charges _______ _______ Net investment return 890 1,038 Other income 1 10,729 11,617 Other charges 1 (8,946) (10,182) Charitable donations (80) (126) _______ _______ Profit on ordinary activities 8,310 7,660 before tax Tax on profit on ordinary 2 (2,667) (2,557) activities _______ _______ Profit for the financial year 5,643 5,103 ________ ________ ________ ________ Earnings per share (basic) 3 18.7p 16.9p Earnings per share (diluted) 3 18.6p 16.8p There are no recognised gains or losses for the period other than the profit for the financial year. Included within other income is Â£184,000 (2005: Â£299,000), other charges is Â£ 140,000 (2005: Â£217,000), and tax on profit on ordinary activities is Â£12,000 (2005: Â£1,000) all relating to disposals in the year. All other operations are considered to be continuing. PERSONAL GROUP HOLDINGS PLC CONSOLIDATED BALANCE SHEET AT 31 DECEMBER 2006 2006 2005 Â£000 Â£000 Â£000 Â£000 Assets Intangible assets Goodwill 8,219 9,247 Investments Investment in joint venture Share of gross assets 2,204 2,214 Share of gross liabilities (2,210) (2,250) ________ ________ Net investment (6) (36) Other financial investments 8,446 8,564 Debtors Debtors arising out of direct 1,383 1,501 insurance operations Other debtors due within one year 1,539 1,196 ________ ________ 2,922 2,697 Other assets Tangible assets 6,555 6,638 Cash at bank and in hand 9,486 8,564 ________ ________ 16,041 15,202 Prepayments and accrued income Accrued interest and rent 47 48 Deferred acquisition costs 68 75 Other prepayments and accrued 1,020 1,554 income ________ ________ 1,135 1,677 _________ _________ Total assets 36,757 37,351 _________ _________ _________ _________ Liabilities Capital and reserves Called up share capital 1,528 1,528 Shares to be issued 289 298 Other reserve (707) (763) Treasury shares reserve (298) - Profit and loss account 21,950 19,498 ________ ________ Shareholders' funds 22,762 20,561 Technical provisions Provision for unearned premiums 397 417 Claims outstanding 895 982 _______ _______ 1,292 1,399 Provisions for liabilities 403 422 Creditors Current taxation 1,355 1,452 Other creditors including other 1,211 867 taxation and social security Bank loans 6,285 8,435 _______ _______ 8,851 10,754 Accruals and deferred income 3,449 4,215 _________ _________ Total liabilities 36,757 37,351 _________ _________ _________ _________ PERSONAL GROUP HOLDINGS PLC CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2006 2006 2005 Â£000 Â£000 Â£000 Â£000 Net cash inflow from operating 9,974 10,177 activities Loan interest paid (430) (605) Taxation paid (2,805) (2,441) Capital expenditure Purchase of fixed assets (364) (237) Sale of fixed assets 68 71 Purchase of own shares (28) (220) Sale of own shares 84 15 Purchase of treasury shares (298) - _______ _______ (538) (371) Acquisitions and disposals Disposal/(acquisition (net of cash acquired)) in subsidiary undertakings (40) (10,795) Equity dividends paid (3,347) (3,191) Financing Additions to bank loans 28 12,243 Repayments of bank loans (2,178) (4,111) _______ _______ (2,150) 8,132 _______ _______ Net cash flows 664 906 Cash flows were invested as follows: Increase/(decrease) in cash holdings 922 (372) Net portfolio investment Ordinary shares, loans, finance (258) 1,278 leases, treasury loan stock _______ _______ Net investment of cash flows 664 906 _______ _______ _______ _______ Notes 1. Other income comprises insurance related business Â£9,227,000 (2005: Â£ 10,606,000) and other business Â£1,502,000 (2005: Â£1,011,000). Other charges comprises insurance related business Â£6,946,000 (2005: Â£8,232,000) and other business Â£2,000,000 (2005: Â£1,950,000). 2. Taxation comprises United Kingdom corporation tax of Â£2,688,000 (2005: Â£ 2,582,000), and deferred taxation credit of Â£21,000 (2005: Â£25,000). 3. The basic and diluted earnings per share are based on the profit for the financial year of Â£5,643,000 (2005: Â£5,103,000) and on 30,182,627 basic (2005: 30,185,071), 30,400,618 diluted (2005: 30,377,285) 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 amortisation for the financial year of Â£10,120,000 (2005: Â£9,679,000). 4. The directors have declared a dividend of 3.5p (2006: 3.3p) per share payable on 9 May 2007 to share holders on the register at the close of business on 10 April 2007. Shares will be marked ex-dividend on 4 April 2007. The total dividend paid in the year was Â£3,347,000 (2005: Â£ 3,191,000), which is equivalent to 11.1p (2005: 10.6p) per share. The preliminary statement which has been agreed with the auditors and approved by the Board on 23 March 2007 is not the Company's statutory accounts. The statutory accounts for each of the two years to 31 December 2005 and 31 December 2006 received audit reports, which were unqualified and did not contain statements under section 237 (2) or (3) of the Companies Act 1985. The 2005 accounts have been filed with the Registrar of Companies but the 2006 accounts are not yet filed.

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