Interim Results

RNS Number : 4320S

Personal Group Holdings PLC

24 September 2014

 



Press Release

24 September 2014

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 interim results for the six months ended 30 June 2014:

Highlights

●	Revenue increased by 24.8% to £17.4m (2013: £13.9m)
●	New core business generation increased 4.6% to £5.1m (2013: £4.9m)
●	Underlying EBITDA* increased by 10.6% to £4.4m (2013: £4.0m), driven largely by core business
●	Key financials: H1 2014 H1 2013 Profit before tax £3.5m £3.3m Interest - - Depreciation £0.2m £0.3m Amortisation of intangible assets £0.0m - Share based expenses £0.4m £0.4m Acquisition costs £0.3m - EBITDA* £4.4m £4.0m * Earnings before interest, tax, depreciation, amortisation, share based expenses and acquisition costs
●	Profit before tax increased by 4.4% to £3.5m (2013: £3.3m)
●	Group balance sheet remains strong with total equity (shareholders' funds) of £24.7m (31 December 2013: £25.2m) and no debt
●	Dividends per share paid in the period up 5.4% to 9.8 pence per share (2013: 9.3 pence)
●	Basic EPS increased by 3.6% to 8.62p (2013: 8.32p)
●	Acquisition of Lets Connect IT Solutions Limited completed in March 2014
●	Major contract wins secured in the period including Four Seasons Health Care, Translink and Oak Furniture Land

Mark Scanlon, Chief Executive of Personal Group, commented: 

"2014 is a year in which we expect to see the positive results of our extensive investment and change programs over the past two years. The strong performance during the period gives us confidence that we will indeed fulfil this aspiration set out two years ago.  Return on the investment is coming through in top line as well as bottom line growth.  Our new business sales continue to accelerate whilst at the same time the Group is achieving cost efficiencies.

"We continue to execute against our stated strategy and our recent acquisition of Lets Connect is now  integrated and operating ahead of our expectations.  Our core business is in a strong position and we have a firm platform upon which to continue to grow and expand the Group."

-Ends-

Enquiries:

Personal Group Holdings Plc	Tel: [phone] (on 24/09/14)
Mark Scanlon / Mike Dugdale	Tel:[phone] (thereafter)
Abchurch Communications
Quincy Allan / Stephanie Watson	Tel: [phone]
Cenkos Securities Plc
Max Hartley (Nomad)/Russell Kerr (Sales)	Tel: [phone]

Notes to editors:

With a 30 year track record 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.  Personal Group's benefits offer employees an effective way of making their pay-packet stretch further.  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.

In March 2014, the Group acquired Lets Connect, a leader in the home technology salary sacrifice market which focuses on large enterprises in the private and public sector. 

Personal Group has a strong client base across a range of sectors including transport, where it works with the likes of Network Rail and Stagecoach, healthcare, where clients include Priory Group and Spire Healthcare and logistics, with companies such as TNT Express. 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 550 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 strongly in the first half of 2014, with core revenue up 9.9% on the equivalent period in 2013 and record new business generation.  Underlying EBITDA increased by 10.6%. We are encouraged by the performance and prospects of Lets Connect, the business which we acquired in March 2014.

Financial Performance

Total Group revenue for the six months ended 30 June 2014 increased by 24.8% to £17.4m (2013: £13.9m).  This reflects a 9.9% increase in earned premiums net of reinsurance and the revenue contribution from Lets 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 £5.1m, 4.5% ahead of 2013 (£4.9m).

Underlying EBITDA (earnings before interest, tax, depreciation, amortisation of intangibles, share based expenses and acquisition costs) was £4.4m (2013: £4.0m). Although this represents a 10.6% improvement on the equivalent period in 2013 the Group's performance would have been strongerin the period but for legal costs incurred whilst seeking to restrain what the Group is advised are unlawful activities of a company which employs three former Personal Group employees.  A High Court hearing took place in July and the outcome should be known in October 2014, following the end of the legal summer vacation.  

Group Profit before tax is £3.5m (2013: £3.3m). This reflects £0.3m of costs incurred in the acquisition of Lets Connect.

Total equity at 30 June 2014 was £24.7m (31 December 2013 £25.2m).  The structure of the balance sheet at 30 June 2014 reflects the acquisition of Lets Connect.

Business Review

The Group's investment and growth strategy continues its positive impact on financial performance. Organic growth is strong in our core product areas: the first half of 2014 included a record week, month and quarter for new business generation and again resulted in a record half year.  Our pipeline of new and existing host company launches remains strong.

Our investment in technology has continued, with further refinements to our iPad "front-end" sales process and work on an enhanced digital offering for our customers with the intention both of increasing customer loyalty and of opening up the possibility of additional income streams.

The integration of Lets Connect into Personal Group has proceeded well.  Lets Connect is an employee benefits specialist providing technology products through salary sacrifice.  Historically a very significant proportion of Lets Connect business is transacted in November and December each year.  In the period to 30 June 2014 Lets Connect has performed ahead of expectations and the developing pipeline for delivery towards the end of the year looks promising.  Lets Connect provides the Group with an enhancement to our existing salary sacrifice offering as well as an opportunity to sell the Personal Group core products into Lets Connect's blue chip customer base of more than 100 companies.

Dividends

The first two dividends of 2014, each of 4.9p per share, were paid in March and June, with the third dividend of the same amount being paid on 25^th September 2014.  The Directors expect that the fourth and final dividend for 2014 of the same amount will be paid in December.  This would give a total for the year of 19.6p per share (2013: 18.6p per share), an increase of 5.4%.

The Board

As announced earlier in the year John Barber retired in June.  As Finance Director for over 20 years he had overall responsibility for the Group's financial and company secretarial areas until the appointment of Mike Dugdale as Chief Financial Officer in January 2013.  We thank him for his very considerable contribution to the success of the Group.

It was recently announced that Ken Rooney would be retiring from his executive position as Chief Operating Officer in June 2015.  We are delighted that he will remain on the Board as a Non-executive Director thereafter.

Outlook

In my Statement in the Annual Report for 2013 I referred to 2014 as a year in which we would start to see the benefits of our investment programme.  This is now being reflected in the increasing levels of new business written, a strong pipeline for our core business, and increased profits.  We are delighted to report that Lets Connect has made a strong start as part of Personal Group. Overall trading remains in line with expectations.

C J Curling

Non-Executive Chairman

24 September 2014

Personal Group Holdings Plc

For the 6 months ended 30 June 2014

Consolidated income statement

			6 months ended 30 June 2014 Unaudited		6 months ended 30 June 2013 Unaudited	12 months ended 31 December 2013 Audited
	Note		£'000		£'000	£'000
Gross premiums written			11,915		11,208	22,997
Outward reinsurance premiums			(176)		(235)	(358)
Change in unearned premiums			242		184	266
Change in reinsurers' share of unearned premiums			(20)		(276)	(333)
Earned premiums net of reinsurance			11,961		10,881	22,572
Other income:
Insurance related			2,137		1,966	4,024
Non-insurance related			3,082		855	1,363
Investment property			33		69	103
Investment income			195		173	332
Revenue			17,408		13,944	28,394
Claims incurred			(3,384)		(2,786)	(5,820)
Insurance operating expenses			(5,478)		(4,751)	(11,368)
Impairment of non-financial assets			-		-	(2,100)
Other expenses:
Insurance related			(735)		(950)	(1,296)
Non-insurance related			(3,923)		(1,728)	(2,504)
Share based payment expenses			(446)		(410)	(1,474)
Investment property			-		-	(128)
Charitable donations			(50)		(50)	(100)
Amortisation of intangible assets			(39)		-	-
Expenses			(14,055)		(10,675)	(24,790)
Results of operating activities			3,353		3,269	3,604
Finance costs			-		(1)	(1)
Share of profit of equity-accounted investee net of tax			106		44	127
Profit before tax			3,459		3,312	3,730
Tax	4		(868)		(826)	(1,632)
Profit for the period after tax			2,591		2,486	2,098
Earnings per share as arising from total and continuing operations				Pence	Pence	Pence
Basic		5		8.62	8.32	7.0
Diluted		5		8.60	8.31	7.0

All operations are considered to be continuing.

Personal Group Holdings Plc

For the 6 months ended 30 June 2014

Consolidated statement of comprehensive income

		6 months ended 30 June 2014 Unaudited	6 months ended 30 June 2013 Unaudited	12 months ended 31 December 2013 Audited
		£'000	£'000	£'000
Profit for the period		2,591	2,486	2,098
Other comprehensive income
Available for sale financial assets:
Valuation changes taken to equity		(21)	54	110
Reclassification of gain on available for sale  financial assets on derecognition		(22)	(3)	(3)
Income tax on unrealised valuation changes taken to equity		5	(12)	(25)
Total comprehensive income for the period		2,553	2,525	2,180

Personal Group Holdings Plc

For the 6 months ended 30 June 2014

Consolidated balance sheet at 30 June 2014

			At 30 June 2014 Unaudited	At 30 June 2013 Unaudited	At 31 December 2013 Audited
		Note	£'000	£'000	£'000
	ASSETS
	Non-current assets
	Goodwill		11,189	2,100	-
	Customer value	11	666	-	-
	Property, plant and equipment	6	5,063	5,483	4,790
	Investment property		1,070	1,068	940
	Equity-accounted investee	10	505	316	399
	Financial assets	7	13,422	16,574	15,038
			31,915	25,541	21,167
Current assets Cash and cash equivalents			1,835	3,474	6,991
	Trade and other receivables		7,051	4,388	4,200
	Reinsurance assets		393	494	325
	Inventories		288	-	-
			9,567	8,356	11,516
	Total assets		41,482	33,897	32,683

Personal Group Holdings Plc

For the 6 months ended 30 June 2014

Consolidated balance sheet at 30 June 2014

		At 30 June 2014 Unaudited	At 30 June 2013 Unaudited	At 31 December 2013 Audited
		£'000	£'000	£'000
EQUITY
Equity attributable to equity holders of Personal Group Holdings plc
Share capital		1,507	1,503	1,507
Capital redemption reserve		24	24	24
Amounts recognised directly into equity
relating to available for sale financial assets		23	18	61
Other reserve - own shares		(627)	(616)	(264)
Profit and loss reserve		23,772	25,938	23,835
Total equity		24,699	26,867	25,163

LIABILITIES
Non-current liabilities
Deferred tax liabilities		118	152	111
Current liabilities
Provisions		33	63	34
Trade and other payables		12,837	3,118	3,667
Insurance contract liabilities		2,996	2,809	2,854
Current tax liabilities		799	865	854
Borrowings	8	-	23	-
		16,665	6,878	7,409
Total liabilities		16,783	7,030	7,520
Total equity and liabilities		41,482	33,897	32,683

Personal Group Holdings Plc

For the 6 months ended 30 June 2014

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

	Share capital	Capital redemption reserve	Available for sale financial assets	Other reserve		Profit & loss reserve	Total equity
	£'000	£'000	£'000		£'000	£'000	£'000
Balance as at 1 January 2014	1,507	24	61		(264)	23,835	25,163
Dividends	-	-	-		-	(2,947)	(2,947)
Employee share-based compensation	-	-	-		-	446	446
Proceeds of AESOP share sales	-	-	-		-	288	288
Cost of AESOP shares sold	-	-	-		441	(441)	-
Cost of AESOP shares purchased	-	-	-		(804)	-	(804)
Transactions with owners	-	-	-		(363)	(2,654)	(3,017)
Profit for the period	-	-	-		-	2,591	2,591
Other comprehensive income
Available for sale financial assets:
Valuation changes taken to equity	-	-	(21)		-	-	(21)
Reclassification adjustment on   derecognition	-	-	(22)		-	-	(22)
Current tax on unrealised   valuation changes taken to   equity	-	-	5		-	-	5
Total comprehensive income for the period	-	-	(38)		-	2,591	2,553
Balance as at 30 June 2014	1,507	24	23		(627)	23,772	24,699

Personal Group Holdings Plc

For the 6 months ended 30 June 2014

Consolidated statement of changes in equity for the year ended 31 December 2013

	Share capital	Capital redemption reserve	Available for sale financial assets	Other reserve	Profit & loss reserve	Total equity
	£'000	£'000	£'000	£'000	£'000	£'000
Balance as at 1 January 2013	1,503	24	(21)	(619)	25,805	26,692
Dividends	-	-	-	-	(5,556)	(5,556)
Employee share-based compensation	-	-	-	-	1,474	1,474
Proceeds of AESOP share sales	-	-	-	-	630	630
Cost of AESOP shares sold	-	-	-	612	(612)	-
Cost of AESOP shares purchased Nominal value of LTIP** shares issued	- 4	- -	- -	(257) -	- (4)	(257)       -
Transactions with owners	4	-	-	355	(4,068)	(3,709)
Profit for the period	-	-	-	-	2,098	2,098
Other comprehensive income
Available for sale financial assets:
Valuation changes taken to equity	-	-	110	-	-	110
Reclassification adjustment on   derecognition	-	-	(3)	-	-	(3)
Current tax on unrealised   valuation changes taken to   equity	-	-	(25)	-	-	(25)
Total comprehensive income for the period	-	-	82	-	2,098	2,180
Balance as at 31 December 2013	1,507	24	61	(264)	23,835	25,163

Personal Group Holdings Plc

For the 6 months ended 30 June 2014

Consolidated statement of changes in equity for the six months ended 30 June 2013

	Share capital	Capital redemption reserve	Available for sale financial assets	Other reserve	Profit & loss reserve	Total equity
	£'000	£'000	£'000	£'000	£'000	£'000
Balance as at 1 January 2013	1,503	24	(21)	(619)	25,805	26,692
Dividends	-	-	-	-	(2,776)	(2,776)
Employee share-based compensation	-	-	-	-	410	410
Proceeds of AESOP share sales	-	-	-	-	101	101
Cost of AESOP shares sold	-	-	-	88	(88)	-
Cost of AESOP shares purchased	-	-	-	(85)	-	(85)
Transactions with owners	-	-	-	3	(2,353)	(2,350)
Profit for the period	-	-	-	-	2,486	2,486
Other comprehensive income
Available for sale financial assets:
Valuation changes taken to equity	-	-	54	-	-	54
Reclassification adjustment on   derecognition	-	-	(3)	-	-	(3)
Current tax on unrealised   valuation changes taken to   equity	-	-	(12)	-	-	(12)
Total comprehensive income for the period	-	-	39	-	2,486	2,525
Balance as at 30 June 2013	1,503	24	18	(616)	25,938	26,867

Personal Group Holdings Plc

For the 6 months ended 30 June 2014

Consolidated cash flow statement

		6 months ended 30 June 2014 Unaudited	6 months ended 30 June 2013 Unaudited	12 months ended 31 December 2013 Audited
Operating activities		£'000	£'000	£'000
Profit after tax		2,591	2,486	2,098
Depreciation		191	291	529
Goodwill impairment		39	-	2,100
Impairment of investment property		-	-	128
Profit on disposal of property, plant and equipment		(30)	(10)	(42)
Realised and unrealised net investment losses/(profits)		(19)	5	-
Interest received		(140)	(124)	(222)
Dividends received		(9)	(8)	(19)
Interest paid		-	1	1
Share of profit of equity-accounted investee, net of tax		(106)	(44)	(127)
Share-based payments		446	410	1,474
Taxation expense recognised in income statement		868	826	1,632
Changes in working capital:
Trade and other receivables		(2,842)	93	489
Trade and other payables		2,393	437	1,004
Inventories		(137)	-	-
Taxes paid		(912)	(1,042)	(1,913)
Net cash from operating activities		2,333	3,321	7,132
Investing activities
Additions to property, plant and equipment		(415)	(200)	(248)
Proceeds from disposal of property, plant and equipment		52	43	537
Purchase of own shares by the AESOP		(804)	(85)	(257)
Proceeds from disposal of own shares by the AESOP		288	101	630
Purchase of financial assets		(136)	(3,848)	(5,842)
Proceeds from disposal of financial assets		1,730	3,808	7,399
Additions to investment property		(130)	-	-
Interest received		140	124	222
Dividends received		9	8	19
Net cash from investing activities		734	(49)	2,460
Acquisition and disposal activities
Payment to acquisition		(6,000)	-	-
Net cash acquired with trading		724	-	-
Net cash from acquisition and disposal activities		(5,276)	-	-
Financing activities
Proceeds from bank loans		-	85	257
Repayment of bank loans		-	(121)	(316)
Interest paid		-	(1)	(1)
Dividends paid		(2,947)	(2,776)	(5,556)
Net cash used in financing activities		(2,947)	(2,813)	(5,616)
Net change in cash and cash equivalents		(5,156)	459	3,976
Cash and cash equivalents, beginning of period		6,991	3,015	3,015
Cash and cash equivalents, end of period		1,835	3,474	6,991

 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 2013.

The financial information for the year ended 31 December 2013 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 2013 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 24 September 2014.

2          Accounting policies

These June 2014 interim consolidated financial statements of Personal Group Holdings Plc are for the six months ended 30 June 2014.  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 2013.

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 2013. 

The principal accounting policies have remained unchanged from the year ended 31 December 2013.

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 and property rental income.

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:

	Employee benefits £'000	Financial services £'000	Unallocated £'000	Consolidation  adjustments £'000	Group £'000
Operating segments
For the 6 months ended 30 June 2014
Revenue
Earned premiums net of reinsurance Other income:	11,961	-	-	-	11,961
Insurance related	1,853	284	-	-	2,137
Non-insurance related	3,082	-	-	-	3,082
Investment property	-	-	33	-	33
Investment income	195	-	-	-	195
Total revenue	17,091	284	33	-	17,408
Net result for period before tax	3,535	216	33	(431)	3,353
Segment assets	27,795	892	940	11,855	41,482
Segment liabilities	16,173	610	-	-	16,783
Depreciation and amortisation of tangible fixed assets	230	-	-	-	230

Notes to the consolidated financial statement

	Employee benefits £'000	Financial services £'000	Unallocated £'000	Consolidation  adjustments £'000	Group £'000
For the 6 months ended 30 June 2013
Revenue
Earned premiums net of reinsurance Other income:	10,881	-	-	-	10,881
Insurance related	1,647	319	-	-	1,966
Non-insurance related	855	-	-	-	855
Investment property	-	-	69	-	69
Investment income	173	-	-	-	173
Total revenue	13,556	319	69	-	13,944
Net result for period before tax	3,429	184	69	(414)	3,268
Segment assets	29,773	640	1,068	2,100	33,581
Segment liabilities	6,365	665	-	-	7,030
Depreciation and goodwill impairment	285	2	4		291

All income is derived from the UK.

The figures shown above for employee benefits and financial services are from the management accounts that are not prepared under IFRS. Unallocated amounts relate to the investment properties.

4          Taxation

Tax expense is recognised based on management's best estimate of the weighted-average annual income tax rate expected for the full financial year multiplied by the pre-tax income of the interim reporting period.

The Group's consolidated effective tax rate in respect of continuing operations for the six months ended 30 June 2014 was 25.9% (six months ended 30 June 2013: 25.3%).

5          Earnings per share and dividends

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

	6 months ended 30 June 2014	6 months ended 30 June 2013	12 months ended 31 December 2013
Basic	30,066,146	29,864,405	29,886,673
Diluted	30,102,976	29,931,423	29,931,267

During the first six months of 2014, Personal Group Holdings Plc paid dividends of £2,954,000 to its equity shareholders (six months to 30 June 2013: £2,796,000, twelve months to 31 December 2013: £5,592,000). This represents a payment of 9.8p per share (six months to 30 June 2013: 9.3p, twelve months to 31 December 2013: 18.6p).      

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:

	6 months ended 30 June 2014	6 months ended 30 June 2013	12 months ended 31 December 2013	6 months ended 30 June 2014	6 months ended 30 June 2013	12 months ended 31 December 2013
		Pence per share		£'000	£'000	£'000
Equity dividends
Ordinary shares paid in period
March	4.90	-	-	1,477	-	-
April	-	4.65	4.65	-	1,398	1,398
June	4.90	4.65	4.65	1,477	1,398	1,398
September	-	-	4.65	-	-	1,398
December	-	-	4.65	-	-	1,398
				2,954	2,796	5,592
Less: amounts paid on own shares				(7)	(20)	(36)
	9.80	9.30	18.60	2,947	2,776	5,556

6          Property, plant and equipment

For the six months ended 30 June 2014

	Freehold land and properties £'000	Motor vehicles £'000	Computer equipment £'000	Furniture fixtures & fittings £'000	Leasehold improve- ments  £'000	Other £'000	Total £'000
Cost
At 1 January 2014	5,478	145	841	931	-	-	7,395
Additions	-	92	299	24	-	-	415
Acquisitions	-	-	15	3	10	42	70
Disposals	-	(119)	-	-	-	-	(119)
At 30 June 2014	5,478	118	1,155	958	10	42	7,761
Depreciation
At 1 January 2014	1,222	103	536	744	-	-	2,605
Provided in the period	49	7	112	17	-	-	185
Acquisitions	-	-	2	-	1	3	6
Eliminated on disposals	-	(98)	-	-	-	-	(98)
At 30 June 2014	1,271	12	650	761	1	3	2,698
Net book amount at 30 June 2014	4,207	106	505	197	9	39	5,063
Net book amount at 31 December 2013	4,256	42	305	187	-	-	4,790

For the year ended 31 December 2013

	Freehold land and properties £'000	Motor vehicles £'000	Computer equipment £'000	Furniture fixtures & fittings £'000	Leasehold improve- ments  £'000	Other £'000	Total £'000
Cost
At 1 January 2013	5,478	1,088	823	1,045	-	-	8,434
Additions	-	81	126	2	-	-	209
Acquisitions	-	-	-	-	-	-	-
Disposals	-	(1,024)	(108)	(116)	-	-	(1,248)
At 31 December 2013	5,478	145	841	931	-	-	7,395
Depreciation
At 1 January 2013	1,128	433	448	820	-	-	2,829
Provided in the year	94	201	194	40	-	-	529
Acquisitions	-	-	-	-	-	-	-
Eliminated on disposals	-	(531)	(106)	(116)	-	-	(753)
At 31 December 2013	1,222	103	536	744	-	-	2,605
Net book amount at 31 December 2013	4,256	42	305	187	-	-	4,790
Net book amount at 31 December 2012	4,350	655	375	225	-	-	5,605

For the six months ended 30 June 2013

	Freehold land and properties £'000	Motor vehicles £'000	Computer equipment £'000	Furniture fixtures & fittings £'000	Leasehold improve- ments  £'000	Other £'000	Total £'000
Cost
At 1 January 2013	5,478	1,088	823	1,045	-	-	8,434
Additions	-	81	119	2	-	-	202
Acquisitions	-	-	-	-	-	-	-
Disposals	-	(89)	-	-	-	-	(89)
At 30 June 2013	5,478	1,080	942	1,047	-	-	8,547
Depreciation
At 1 January 2013	1,128	433	448	820	-	-	2,829
Provided in the period	47	133	89	22	-	-	291
Acquisitions	-	-	-	-	-	-	-
Eliminated on disposals	-	(56)	-	-	-	-	(56)
At 30 June 2013	1,175	510	537	842	-	-	3,064
Net book amount at 30 June 2013	4,303	570	405	205	-	-	5,483
Net book amount at 31 December 2012	4,350	655	375	225	-	-	5,605

7         Financial assets

	At 30 June 2014 Unaudited		At 30 June 2013 Unaudited	At 31 December 2013 Audited
		£'000	£'000	£'000
Bank deposits		11,802	12,612	11,743
Loans & receivables		922	3,328	2,596
Financial assets:
designated at fair value through profit & loss		-	60	-
available for sale		698	574	699
		13,422	16,574	15,038

The loans and receivables are secured by a charge over the Milton Keynes property.

Quoted financial assets designated at fair value through profit or loss and available for sale assets are stated at their bid market price and are level 1 assets. There are no level 2 or 3 assets.

Unquoted financial assets designated at fair value through profit or loss are valued using an expected future cash flow basis. At 30 June 2014, 31 December 2013 and 30 June 2013 all unquoted financial assets were valued at £nil.  

8         Borrowings

The borrowings shown in the consolidated balance sheet as at 30 June 2013 were in respect of the Personal Group Trustees Limited AESOP bank loan.

9         Long Term Incentive Plan (LTIP)

During 2012 the company adopted a discretionary LTIP for the benefit of selected directors and senior employees of Personal Group. The Plan provides for the grant of awards, entitling participants to the payment of a bonus related to the percentage increase in the market capitalisation of the company over a 5 year period. The awards will be satisfied in shares or in the discretion of the remuneration committee wholly or partly in cash in accordance with the plan rules. It is the directors' intention to settle these awards in shares.

A participant will be entitled to a payment in respect of their award on each of the second, third, fourth and fifth anniversaries of their commencement date in the plan or earlier if there is an exit event such as a sale before the fifth anniversary date. Each participant has been awarded a specified percentage of the value increase in the market capitalisation. If there is no increase in market capitalisation at the award dates then no payment will be made.

Where the market capitalisation has increased the level of payment will be 10%, 30%, 60% and 100% cumulatively of the participant's specified percentage of value increase on the second, third, fourth and fifth anniversaries respectively. The number of shares awarded will be determined by dividing the amount of the appropriate payment by the average of the closing bid price for the 20 business days immediately preceding the date of issue.

An amount of £431,000 has been charged to the profit and loss account for this scheme in the six months ended 30 June 2014 (six months ended 30 June 2013: £398,000) based on estimating the future share price of the company over the duration of the plan. Estimates of future share prices have been used for future payments to calculate the expense for each individual under each of the future tranches of the LTIP period.

The estimate is highly sensitive to share price movement.  A maximum cap on the pay out to all individuals in the scheme of £10,000,000 has been applied

10         Equity-accounted investment

During 2004 the company entered into a joint venture agreement with Abbeygate Developments Limited to construct a freehold joint office and residential property development on land adjacent to John Ormond House. A joint venture company called Abbeygate Developments (Marlborough Gate 2) Limited was established to construct the property. This company is owned equally by Personal Group Holdings Plc and Abbeygate Developments Limited.

The development is funded by way of a loan from Personal Group Holdings Plc. The profit and loss account and balance sheet for this joint venture company are as follows:

Profit and loss account		6 months ended 30 June 2014	6 months ended 30 June 2013	12 months ended 31 December 2013
		Unaudited	Unaudited	Audited
		£'000	£'000	£'000
Turnover		1,476	-	1,058
Cost of sales		(1,250)	-	(899)
Gross profit		226	-	159
Rent receivable		127	193	354
Administration expenses		(58)	(25)	(100)
Operating profit		295	168	413
Interest payable		(25)	(52)	(95)
Profit on ordinary activities before taxation		270	116	318
Tax on profit on ordinary activities		(58)	(28)	(65)
Profit for the financial period retained		212	88	253

10         Equity-accounted investment cont.

Balance sheet		6 months ended 30 June 2014	6 months ended 30 June 2013	12 months ended 31 December 2013
		Unaudited	Unaudited	Audited
		£'000	£'000	£'000
Current assets
Inventories		2,091	4,242	3,341
Debtors		(6)	-	156
Cash at bank and in hand		12	-	12
		2,097	4,242	3,509
Creditors: amounts falling due within one year		(1,088)	(3,610)	(2,712)
Net current assets		1,009	632	797
Capital and reserves
Called up share capital		-	-	-
Profit and loss account		1,009	632	797
Shareholders' funds		1,009	632	797

11        Acquisitions of business

Acquisitions in the current period

On 7 March 2014 the Group acquired Lets Connect IT Solutions Limited for £6m satisfied in cash plus a further contingent consideration (see below).  Lets Connect IT Solutions Limited is an Employee Benefits leader, specialising in salary sacrifice technology products. The acquisition provides the Group with an enhancement to its existing salary sacrifice offering as well as an opportunity to cross sell its own products to Lets Connect's blue chip customer base of over 100 companies.  In the period to 30 June 2014 the business contributed net profit of £39k.  If the acquisition had occurred on 1 January 2014 revenue would have been an estimated £3.1m and net loss would have been an estimated £57k.  In determining these amounts, management has assumed that the fair value adjustments that arose on the date of acquisition would have been the same if the acquisition had occurred on 1 January 2014

The Group has agreed to pay the vendors additional consideration of up to £6m based on achieving certain profit targets over the period to 31 December 2015 plus a bonus additional consideration should these targets be exceeded. As the acquisition is only a few months into this period, the Group has included £6m as contingent consideration.

Effect of acquisition

The acquisition had the following effect on the Company's assets and liabilities.

		*Recognised Values on Acquisition
		£'000
Acquiree's net assets at the acquisition date:
Customer value		705
Property, plant and equipment		70
Inventories		151
Trade and other receivables		77
Cash and cash equivalents		724
Trade and other payables		(900)
Deferred tax liabilities		(16)
Net identifiable assets and liabilities		811
Consideration paid:
Initial cash price paid		6,000
Contingent consideration at fair value		6,000
Total consideration		12,000
Goodwill on acquisition		11,189

*The recognised values above have been determined on a book basis with the exception of customer value which represents a provisional assessment of fair value. A complete assessment of fair values will be completed for the year end.

Goodwill has arisen because the consideration paid reflects management expectations of the future profitability of this rapidly growing business, which provides the Group with an enhancement to the existing salary sacrifice offering as well as an opportunity to sell the Personal Group core products into Lets Connect's blue chip customer base of more than 100 companies.

The customer value is being amortised through the consolidated income statement over a 6 year period; the charge for the 6 months to 30 June 2014 was £39k.

The Group incurred acquisition related costs of £0.3m related to due diligence and advisers fees. These costs have been included in administrative expenses in the Group's consolidated income statement.

Financial calendar for the year ending 31 December 2014

The company announces the following dates in its financial calendar for the year ending 31 December 2014:

·      Preliminary results for the year ending 31 December 2014                               -           March 2015

·      Publication of Report and Accounts for 2014                                                   -           March 2015

·      AGM                                                                                                           -           April 2015

- Ends -

 

END

 

 

IR EAXNDASSLEFF