Preliminary Announcement

PERSONAL GROUP HOLDINGS PLC PRELIMINARY ANNOUNCEMENT OF RESULTS FOR THE YEAR ENDED 31 DECEMBER 2009 The board of directors of Personal Group Holdings Plc, providers of employee benefits, insurance, consultancy and financial services, are pleased to announce the group's results as follows: * Gross premiums written up 7.3% to Â£17.6m (2008: Â£16.4m) * Revenue steady at Â£26.4m (2008: Â£26.8m) * Profit before tax up 5.8% to Â£5.5m (2008: Â£5.2m) * EPS up 20.7% to 11.1p per share (2008: 9.2p) * New business written in core business at record levels for the second successive year. * Berkeley Morgan impacted by economic downturn: goodwill reduced in the consolidated balance sheet by a further Â£3.0m leaving a carrying amount of Â£3.0m for Berkeley Morgan. The AGM will be held on 27 April 2010. Nigel Brittle, Group Chief Executive, commented: 2009 was a year of continuing strong performance for the group despite the economic downturn. 26 new benefit programmes were launched during the year, underpinning a second successive year of record new business production, which augurs well for our future profitability. Our hospital plan and death benefit products continue to be valued both by our host companies and their employees, whilst our new Voluntary Group Income Protection plan is making positive progress and winning increasing customer confidence. Our customers continue to emphasise the importance of communication, engagement and involvement for their staff in voluntary employee benefit programmes. The face to face service that Personal Group delivers in the workplace continues to achieve levels of participation that more remote product or service offerings struggle to replicate. Enquiries: Personal Group Holdings Plc Tel: 0207 367 8888 (on 22/3/09) Nigel Brittle 01908 605000 (thereafter) Ken Rooney John Barber Bankside Consultants Simon Rothschild Tel: 0207 367 8871 Cenkos Securities plc Stephen Keys Tel: 020 7397 8926 Chairman's statement INTRODUCTION I must start my first statement as your group's new chairman by paying tribute to my predecessor Christopher Johnston. Christopher founded Personal Assurance Plc (PA) 25 years ago and under his exceptional stewardship the business has developed and prospered. His close association with, and commitment to, the group continues and he has become a non-executive director of the company and remains as the major shareholder. BUSINESS REVIEW Despite the harsh economic climate the group has performed strongly in 2009. The group's profit before tax and goodwill impairment reduced slightly in 2009 to Â£8.5m (2008: Â£8.7m). After providing for goodwill impairment of Â£3.0m, profit before tax (PBT) increased to Â£5.5m (2008: Â£5.2m), a rise of 6%. Group profit before interest, tax, depreciation and goodwill impairment was Â£9.0m (2008: Â£9.2m). In particular and for the second successive year, new business written in the group's core business was a record, showing an increase of almost 5% on 2008. Gross premiums written were more than 7% up on the previous year, again at a record level. At 31 December 2009 the total number of PA policies in force was 221,792 (2008: 221,314) with a total annualised premium value of Â£18.8m (2008: Â£17.8m). Changes as part of an upgrade of our Personal Hospital Plan, demonstrating our commitment to treating customers fairly, were responsible for a slight increase in our claims ratio in the year. The group experienced no material impact from swine flu and only 33 claims were attributed to this. During the year the group handled 34,585 (2008: 29,698) claims. No PA claims were referred to the Financial Ombudsman Service during the year. Voluntary Group Income Protection (VGIP) commission increased strongly, albeit from a low base, in 2009. This product has encouragingly high take-up levels in workplaces where it is being offered. While the growth of host company VGIP programmes has been slower than anticipated in 2009, efforts are focused on expanding the number of programmes launched during 2010, in order to achieve the breakthrough in sales volumes of which we are confident the product is capable. In addition to our continuing strong relationship with Unum Provident in respect of VGIP, we are delighted to have launched an additional version of VGIP in partnership with BUPA at the end of 2009. The group's underwriting subsidiary, PA, continues to maintain high levels of available qualifying assets, providing a margin of solvency which allows it to write further significant increases in premium income without the requirement for new capital. As at 31 December 2009 available qualifying assets were Â£7.8m (2008: Â£7.8m) to cover a capital resources requirement at that date of Â£3.2m (2008: Â£3.0m). PA continues to maintain high liquidity with over 59% of its total assets held as cash deposits. The economic downturn impacted on BMG which made a PBT of Â£0.9m (2008: Â£1.4m). Part of this reduction in PBT resulted from a shortfall of Â£0.1m in BMG's investment income in comparison with 2008. An impairment review has been undertaken and the conclusion reached that the BMG goodwill should be reduced in the group balance sheet by a further Â£3.0m, leaving a carrying amount of Â£ 3.0m. Given the operating climate the core IFA team in BMG performed creditably in 2009. Group investment income was adversely affected by the continuing low level of interest rates. Net investment income reduced to Â£0.2m from Â£0.5m in 2008. Our small equity portfolio increased in value by Â£0.1m during the year. DIVIDENDS AND DIVIDEND POLICY The significantly increased (by 37.5%) dividend payments in 2008 were marginally enhanced in 2009, and provided business continues as anticipated we expect to pay in aggregate slightly higher dividends in 2010. As already announced, our cash resources have enabled us to increase our first dividend for 2010 to 8.5p per share, which was paid today. The board currently expects that, subject to satisfactory trading conditions and in the absence of any unforeseen circumstances, further dividends in 2010 will be paid in September and December, each at 4.25p per share. THE BOARD As stated in last year's chairman's statement Christopher Johnston substantially reduced his involvement in the day to day management of the group and relinquished his role as chairman in November 2009. He continues as a non-executive director. As anticipated in last year's chairman's statement Nigel Brittle formally took over the role as group chief executive following the AGM in April 2009. PROSPECTS FOR 2010 The group has performed strongly in the economic downturn, with excellent new business volumes and a continuing strong balance sheet. Current trading continues to be in line with the directors' expectations. My own association with Personal Group Holdings Plc goes back seven years, during which time I have been a non-executive director of the company. I am well aware of the strong support and loyalty which the group enjoys from many host companies, policyholders, employees and associates. My thanks to you all for your contribution to the group's continuing success. Chris Curling Chairman 19 March 2010 PERSONAL GROUP HOLDINGS PLC CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2009 Note 2009 2008 Â£'000 Â£'000 Gross premiums written 17,550 16,379 Change in unearned premiums 61 82 _______ _______ Net premiums written 1 17,611 16,461 Other income: Insurance related 1 6,814 8,006 Non-insurance related 1 1,454 1,572 Investment property 1 287 234 Investment income 238 508 _______ _______ Revenue 26,404 26,781 _______ _______ Claims incurred (3,844) (3,448) Insurance operating expenses (7,831) (7,235) Impairment of non-financial (3,000) (3,433) assets Other expenses: Insurance related (4,318) (5,444) Non-insurance related (1,679) (1,578) Investment property (111) (211) Charitable donations (80) (80) _______ _______ Expenses (20,863) (21,429) _______ _______ Results of operating activities 5,541 5,352 Finance costs (20) (125) _______ _______ Profit before tax 5,521 5,227 Tax 2 (2,202) (2,456) _______ _______ Profit for the year 3,319 2,771 ======= ======= The profit for the year is attributable to equity holders of Personal Group Holdings Plc. Earnings per share as arising Pence Pence from total and continuing operations Basic 3 11.1 9.2 Diluted 3 11.1 9.1 All operations are considered to be continuing. PERSONAL GROUP HOLDINGS PLC CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2009 2009 2008 Â£'000 Â£'000 Profit for the year 3,319 2,771 Other comprehensive income Available for sale financial assets: Valuation changes taken to equity 107 (193) Transfer to income statement 36 4 Income tax on unrealised valuation changes taken to (40) 54 equity _______ _______ Total comprehensive income for the year 3,422 2,636 ======= ======= 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 2009 2009 2008 Â£'000 Â£'000 ASSETS Non-current assets 3,000 6,000 Goodwill Property, plant and equipment 5,421 5,556 Investment properties 3,185 3,159 Financial assets 5,702 5,620 _______ _______ 17,308 20,335 _______ _______ Current assets 2,688 3,234 Trade and other receivables Cash and cash equivalents 7,300 7,478 _______ _______ 9,988 10,712 _______ _______ Total assets 27,296 31,047 ======= ======= PERSONAL GROUP HOLDINGS PLC CONSOLIDATED BALANCE SHEET AT 31 DECEMBER 2009 2009 2008 Â£'000 Â£'000 EQUITY Equity attributable to equity holders of Personal Group Holdings Plc Share capital 1,503 1,503 Capital redemption reserve 24 24 Amounts recognised directly into equity relating to non-current assets (15) (118) held for sale Other reserve (714) (772) Profit and loss reserve 20,940 22,522 _______ _______ Total equity 21,738 23,159 ======= ======= LIABILITIES Non-current liabilities Deferred tax liabilities 189 226 _______ _______ Current liabilities Provisions 120 135 Trade and other payables 3,825 4,265 Current tax liabilities 1,258 994 Borrowings 166 2,268 _______ _______ 5,369 7,662 _______ _______ _______ _______ Total liabilities 5,558 7,888 ======= ======= _______ _______ Total equity and liabilities 27,296 31,047 ======= ======= 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 Share Capital Non-current Other Profit Total capital assets held reserve & loss equity redemption for sale account reserve Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Balance as at 1 January 1,503 24 (118) (772) 22,522 23,159 2009 ______ ______ ______ ______ ______ ______ Dividends - - - - (4,948) (4,948) Employee share-based - - - - 46 46 compensation Proceeds of AESOP share - - - - 81 81 sales Cost of AESOP shares - - - 80 (80) - sold Cost of AESOP shares - - - (22) - (22) purchased ______ ______ ______ ______ ______ ______ Transactions with - - - 58 (4,901) (4,843) owners ______ ______ ______ ______ ______ ______ Profit for the year - - - - 3,319 3,319 Other comprehensive income Available for sale financial assets: Current year profits - - 107 - - 107 Transfer to income - - 36 - - 36 statement Current tax on - - (40) - - (40) unrealised valuation changes taken to equity ______ ______ ______ ______ ______ ______ Total comprehensive income - - 103 - 3,319 3,422 for the year ______ ______ ______ ______ ______ ______ Balance as at 31 1,503 24 (15) (714) 20,940 21,738 December 2009 ====== ====== ====== ====== ====== ====== PERSONAL GROUP HOLDINGS PLC 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 Non-current Other Profit Total capital assets held reserve & loss equity redemption for sale account reserve Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Balance as at 1 January 1,527 - 17 (587) 25,752 26,709 2008 ______ ______ ______ ______ ______ ______ Dividends - - - - (4,993) (4,993) Employee share-based - - - - 45 45 compensation Buy back and (24) 24 - - (1,028) (1,028) cancellation of shares Proceeds of AESOP share - - - - 177 177 sales Cost of AESOP shares - - - 202 (202) - sold Cost of AESOP shares - - - (387) - (387) purchased ______ ______ ______ ______ ______ ______ Transactions with (24) 24 - (185) (6,001) (6,186) owners ______ ______ ______ ______ ______ ______ Profit for the year - - - - 2,771 2,771 Other comprehensive income Available for sale financial assets: Current year losses - - (193) - - (193) Transfer to income - - 4 - - 4 statement Current tax on - - 54 - - 54 unrealised valuation changes taken to equity ______ ______ ______ ______ ______ ______ Total comprehensive income - - (135) - 2,771 2,636 for the year ______ ______ ______ ______ ______ ______ Balance as at 31 1,503 24 (118) (772) 22,522 23,159 December 2008 ====== ====== ====== ====== ====== ====== PERSONAL GROUP HOLDINGS PLC CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2009 2009 2008 Â£'000 Â£'000 Operating activities Profit after tax 3,319 2,771 Adjustments for 474 452 Depreciation Goodwill impairment 3,000 3,433 Profit on disposal of property, plant (7) (5) and equipment Realised and unrealised net investment 61 275 losses Interest received (377) (705) Dividends received (16) (37) Interest paid 25 136 Share-based payments 46 45 Taxation expense recognised in income 2,202 2,456 statement Changes in working capital Trade and other receivables 541 331 Trade and other payables (455) (970) Taxes paid (2,015) (2,417) ______ ______ Net cash from operating activities 6,798 5,765 ______ ______ Investing activities Additions to property, plant and (398) (575) equipment Additions to investment properties (26) - Proceeds from disposal of property plant and 71 30 equipment Purchase of own shares by the AESOP (22) (387) Proceeds from disposal of own shares 81 177 by the AESOP Purchase of own shares for - (1,028) cancellation Purchase of financial assets (3,119) (103) Proceeds from disposal of financial 3,119 95 assets Interest received 377 705 Dividends received 16 37 ______ ______ Net cash realised from/(used in) 99 (1,049) investing activities ______ ______ Financing activities Proceeds from bank loans 22 387 Repayment of bank loans (2,124) (224) Interest paid (25) (136) Dividends paid (4,948) (4,993) ______ ______ Net cash used in financing activities (7,075) (4,966) ______ ______ Net change in cash and cash (178) (250) equivalents Cash and cash equivalents, beginning 7,478 7,728 of year ______ ______ Cash and cash equivalents, end of year 7,300 7,478 ====== ====== 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. 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: Employee Financial Unallocated FRS Group services adjustments benefits Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Operating segments 2009 Revenue Net premiums 17,611 - - - 17,611 written Other income: Insurance related 2,522 4,292 - - 6,814 Non-insurance 1,454 - - - 1,454 related Investment - - 287 - 287 property Investment income 232 6 - - 238 _______ _______ _______ _______ _______ Total revenue 21,819 4,298 287 - 26,404 ======= ======= ======= ======= ======= Net result for 7,538 818 175 (3,010) 5,521 year before tax ======= ======= ======= ======= ======= Segment assets 18,596 2,515 3,185 3,000 27,296 ======= ======= ======= ======= ======= Segment 4,152 1,379 27 - 5,558 liabilities ======= ======= ======= ======= ======= 2008 Revenue Net premiums 16,461 - - - 16,461 written Other income: Insurance related 2,173 5,833 - - 8,006 Non-insurance 1,572 - - - 1,572 related Investment - - 234 - 234 property Investment income 407 101 - - 508 _______ _______ _______ _______ _______ Total revenue 20,613 5,934 234 - 26,781 ======= ======= ======= ======= ======= Net result for 7,357 1,289 23 (3,442) 5,227 year before tax ======= ======= ======= ======= ======= Segment assets 18,719 3,169 3,159 6,000 31,047 ======= ======= ======= ======= ======= Segment 6,247 1,631 10 - 7,888 liabilities ======= ======= ======= ======= ======= All income is derived from the UK. 2. Taxation comprises United Kingdom corporation tax of Â£2,249,000 (2008: Â£2,366,000), and deferred taxation credit of Â£47,000 (2008: Â£90,000 charge). 3. The basic and diluted earnings per share are based on the profit for the financial year of Â£3,319,000 (2008: Â£2,771,000) and on 29,830,021 basic (2008: 30,268,462), 29,845,832 diluted (2008: 30,286,410) 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 Â£9,015,000 (2008: Â£9,237,000). 4. The total dividend paid in the year was Â£4,948,000 (2008: Â£4,993,000), which is equivalent to 16.6 pence (2008: 16.5 pence) per share. This preliminary statement has been extracted from the 2009 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 2008 received audit reports, which were unqualified and did not contain statements under section 498 (2) or (3) of the Companies Act 2006 or section 237 (2) or (3) of the Companies Act 1985. The 2008 accounts have been filed with the Registrar of Companies but the 2009 accounts are not yet filed. Personal Group Holdings Plc - Annual Report - for the year ended 31 December 2008

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