PERSONAL GROUP HOLDINGS PLC

Earnings Release • Mar 26, 2015

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RNS Number : 4943I

Personal Group Holdings PLC

26 March 2015

Press Release	26 March 2015

PERSONAL GROUP HOLDINGS PLC

("Personal Group" or the "Group")

ANNOUNCEMENT OF RESULTS

FOR THE YEAR ENDED 31 DECEMBER 2014

Personal Group Holdings Plc (AIM: PGH), a leading provider of employee benefits, employee related insurance products and financial services in the UK, reports its results for the year ended 31 December 2014.

2014 Performance Highlights	2014	2013	%
	£m	£m	change
Total Group Revenue	47.0	28.4	+65
EBITDA**	11.0	8.8	+25
Underlying PBT *	10.6	8.3	+28
Profit before tax (PBT)	9.2	3.7	+149
	2014	2013
			%
Earnings per share (basic)	25.1p	7.0p	+258.6
Dividends per share paid in year	19.6p	18.6p	+5.0

* Underlying PBT is defined as profit before interest, tax, amortisation of intangible assets, goodwill impairment, share-based payment expenses, acquisition costs and reorganisation costs.

** EBITDA is defined as earnings before interest, tax, depreciation, amortisation of intangible assets, goodwill impairment, share-based payment expenses, acquisition costs and reorganisation costs.

Mark Scanlon, Chief Executive of Personal Group, commented: 

"2014 is the year in which we saw the recovery in our profitability in line with our plan. We are now well positioned for our next level of growth and I look forward to the years ahead as we continue this upward progression."

Chairman's Statement

In 2014 we have delivered both a strong financial performance and achieved our key strategic objectives for the year.

Dividends

The Board has recommended an increase in the dividend payable in 2015 of 7%, to 20.9p (2014: 19.6p) per share. This reflects a progressive dividend policy in line with the growth and development of the Group's business. In 2013, 2014 and 2015 dividends paid or now proposed to be paid will have increased by 4%, 5% and 7% respectively.

Business Review

The past three years have seen significant investment, strengthening and restructuring of almost every aspect of the Group's operation. This has continued in 2014, but one of the key objectives for the year was to deliver a step increase in Group EBITDA. This was achieved, with Group EBITDA increasing by 25% to £11.0m (2013: £8.8m). Profit before tax increased by 149% to £9.2m (2013: £3.7m).

A second objective for the year was to deliver a strong performance from the Group's core employee benefits and insurance activities. EBITDA from these activities increased by 9% to £9.6m (2013: £8.8m). Annualised new business premiums written from these same activities grew by 9% to a record £10.2m (2013: £9.4m). As we continue to expand the range of the Group's employee benefits offering we make no concession to our concentration on the organic growth of our traditional core areas: the hospital cash, convalescence, and death benefit plans.

A further objective for the year was to expand the Group's activities through the acquisition and integration of a business which would complement and strengthen our existing core employee benefits offering, and to deliver indicated profit from it. Lets Connect was acquired in March 2014. This is an employee benefits specialist business providing technology enabled products to employees through salary sacrifice. We have already been able to sell Lets Connect products into our core Personal Group clients. In addition it gives us the opportunity to sell core Personal Group products into Lets Connect's blue chip customer base of more than 100 companies. There is more work to be done to achieve full integration within the Group, but progress in this exercise is well in line with plans.  EBITDA from Lets Connect in the nine months since acquisition was £1.4m, slightly above market expectations.

Our final objective for the year has been to bring close to completion the development of our state of the art digital employee benefits platform (which we are internally calling Zeus) which can be instantly customised to meet the requirements of our host company clients and gives employees far greater ease of access to the benefits themselves. This enables customers more readily to make savings on purchases, and it improves customer loyalty; in consequence it opens up the possibility of additional income streams to the Group.

The Board

Harry Driver retired in November 2014, having been a non-executive Director of the Group since 2008. He brought to the Board exceptional experience from a lifetime's distinguished career in the insurance industry, along with wise and sound counsel.

I am delighted to report that Deborah Rees has agreed to join our Board as a non-executive Director, subject to FCA confirmation as an Approved Person. Deborah Karen Rees, aged 48, was the founder and is the CEO of Innecto People Consulting Limited, a specialist HR consulting practice. Deborah is currently director of Shipstar Limited, and was non-executive director of recruitment consultancy Artemis Partners Limited until March 2015. She brings to the Board both wide experience across the HR agenda, including in particular extensive engagement in the rewards and incentives area, and an entrepreneurial background.

Outlook

Our core employee benefits and insurance activities remain the bedrock of our business, and demand for these products remains strong from existing, as well as from potential new, host company clients. The deployment of our Zeus digital platform into some of our host company clients will start shortly.

The performance of Lets Connect in 2014 under our ownership has confirmed its potential both as a standalone business and as an addition to the Group's suite of salary sacrifice products. The Group has been reviewing a number of opportunities for further expanding our product range within our employee benefits programmes, and this work will continue in 2015. In short, the strength of our core activities together with the opportunities to complement and expand our employee benefits offering, both through Lets Connect and potentially through other means, make Personal Group a compelling business proposition.

Chris Curling

Non-Executive Chairman

25 March 2015

Chief Executive's Business Overview

2014 was a transformational year for Personal Group. We said we were well placed for growth and we are now delivering that growth. It was our 30th year and it marks a significant progression in the Group's development.

As I have mentioned in previous reports, we invested heavily in 2012 and particularly in 2013 to ready the business for its next stage of development. The past year was the time in which these investments have delivered the anticipated results. Our performance exceeded expectations and saw our group EBITDA grow by 25% with the corresponding profit before tax growing by 149%. Our core business had a 9% increase in profitability (2013: 11% decrease) with the remainder coming from our strategic acquisition of Lets Connect. Our revenue went ahead by 65% to £47.0m (2013: £28.4m) mainly driven by Lets Connect but also includes a 6% rise in the core business revenue. We continued to introduce new customers, (12 new customers throughout the year) as well as re-contracting and expanding many existing relationships. Our sales performance was again a record with £10.2m of new annualised premium (2013: £9.4m) achieved in the period. It is especially pleasing that 25% (2013:17%) of this business was written with completely new customers which outperforms last year. At the same time we have seen a sustained improvement in productivity and a record low cost of new business acquisition of £0.66 per £1 of new sales (2013: £0.78). Having seen an increase in 2013, our claims cost in 2014 came in where we expected it to be. The claims loss ratio increased to 27% (2013: 26%). This reflects a minimal increase in our core hospital and convalescence business coupled with Personal Assurance (PA) fully underwriting Private Medical Insurance (PMI) business sold by Universal Provident Limited (UP).

Our Lets Connect acquisition had a strong performance in the year with EBITDA moving up 40% on the comparable period last year to £1.4m (2013: £1m) and is £100k ahead of expectations. Having identified, measured and acquired the business we have now successfully integrated it into the wider business. David Walker our Chief Commercial Officer has additionally taken on the role of Managing Director for Lets Connect since the beginning of 2015. We have already had success in cross selling this product portfolio into core Personal Group customers with 5 schemes delivered by the year end. From a cold start in March this is a strong performance and bodes well for future business opportunities. We have been able to bring our financial strength to bear in exploiting opportunities as they arose. As an endorsement of Lets Connects' performance Apple Inc took the decision in September last year to allow us to sell their iPhone product without airtime. This is a direct relationship and means that we are the only employee benefits business in the UK who can sell an iPhone 'sim-free' apart from Apple Inc themselves. Lets Connect is a very strong strategic fit for our business and offers huge attractiveness to our current and potential customers. There are also opportunities to further extend the product range with airtime being a big potential opportunity.

Strategy

We set out our strategy in 2012 and following two strategic reviews since, we remain committed to the path we are on. There is clear evidence that the strategy is working and has the potential to serve us well into the future. From a growth perspective there are three mechanism of growth for us and they are:

·     Organic growth

·     Technology

·     Inorganic growth

People

One of the most pleasing observations of 2014 is the number of opportunities we have been able to offer our employees with more than 10% of the workforce changing role in the year to new and exciting jobs. This recognises those with the opportunity to progress but keeps the great level of knowledge gained by them within the business. We, as usual, measured our employee engagement and saw an improvement in our score. We also entered the Times 100 Best Places to work and received a star rating which is an enormous improvement on our last entry which saw us as "one to watch".

In the past three years we have been able to attract, incentivise and develop some very talented people. This ability to drive performance through people will stand us in good stead as we continue to expand our business both organically and inorganically. This is a key strength in our business. As part of the Senior Management Team, Rebekah Tapping our new HR Director, will help us drive this people agenda. Without the dedication, ingenuity and hard work of all our team we couldn't have achieved the levels of success we have achieved in the past twelve months. I sincerely thank them for their effort. I believe the opportunities we have ahead of us are great indeed and I look forward to delivering these with the best team I have ever worked with.

Mark Scanlon

Chief Executive Officer

25 March 2015

For more information please contact:

Personal Group Holdings Plc
Mike Dugdale - Chief Financial Officer	+44 (0)1908 605 000

Cenkos Securities Plc
Max Hartley / Stephen Keys (Nomad)	+44 (0)20 7397 8900
Russell Kerr (Sales)

Media enquiries:

Abchurch Communications
Quincy Allan / Alex Shaw	+44 (0)20 7398 7710
quincy.allan@abchurch-group.com	www.abchurch-group.com

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

PERSONAL GROUP HOLDINGS PLC

CONSOLIDATED INCOME STATEMENT

		Note	2014	2013
			£'000	£'000
Gross premiums written			24,189	22,997
Outward reinsurance premiums			(359)	(358)
Change in unearned premiums			233	266
Change in reinsurers' share of unearned premiums			(9)	(333)
			_________	_________
Earned premiums net of reinsurance		1	24,054	22,572
Other income:
Insurance related		1	4,501	4,024
Non-insurance related		1	18,202	1,363
Investment property		1	67	103
Investment income			210	332
			_________	_________
Revenue			47,034	28,394
			_________	_________
Claims incurred			(6,551)	(5,820)
Insurance operating expenses			(10,525)	(11,368)
Impairment of non-financial assets			-	(2,100)
Other expenses:
Insurance related			(1,599)	(1,296)
Non-insurance related			(18,182)	(2,504)
Share-based payment expenses			(797)	(1,474)
Investment property			-	(128)
Charitable donations			(100)	(100)
Amortisation of intangible assets			(275)	-
			___________	___________
Expenses			(38,029)	(24,790)
			___________	___________
Results of operating activities			9,005	3,604
Finance costs			-	(1)
Share of profit of equity-accounted investee net of tax			192	127
			_________	_________
Profit before tax			9,197	3,730
Tax		2	(1,653)	(1,632)
			_________	_________
Profit for the year			7,544	2,098
			_________	_________

FOR THE YEAR ENDED 31 DECEMBER 2014

The profit for the year is attributable to equity holders of Personal Group Holdings Plc.
Earnings per share as arising from total and continuing operations			Pence	Pence
Basic		3	25.1	7.0
Diluted		3	24.4	7.0

PERSONAL GROUP HOLDINGS PLC

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2014

	2014	2013
	£'000	£'000
Profit for the year	7,544	2,098
Items that may be reclassified subsequently to the income statement
Available for sale financial assets:
Valuation changes taken to equity	(65)	110
Reclassification of gains and (losses) on available for sale financial assets on derecognition	(34)	(3)
Income tax on unrealised valuation changes taken to equity	14	(25)
	________	________
Total comprehensive income for the year	7,459	2,180
_________	_________

PERSONAL GROUP HOLDINGS PLC

CONSOLIDATED BALANCE SHEET AT 31 DECEMBER 2014

			2014	2013
			£'000	£'000
ASSETS
Non-current assets Goodwill			10,575	-
Intangible assets - Customer value			1,373	-
Property, plant and equipment			4,850	4,790
Investment property			1,070	940
Equity-accounted investee			591	399
Financial assets			11,610	15,038
			_________	_________
			30,069	21,167
			_________	_________
Current assets Trade and other receivables			16,783	4,200
Reinsurance assets			351	325
Inventories			623	-
Cash and cash equivalents			4,433	6,991
			_________	_________
			22,190	11,516
			_________	_________
Total assets			52,259	32,683
			_________	_________

PERSONAL GROUP HOLDINGS PLC

CONSOLIDATED BALANCE SHEET AT 31 DECEMBER 2014

			2014	2013
			£'000	£'000
EQUITY
Equity attributable to equity holders
of Personal Group Holdings Plc
Share capital			1,516	1,507
Capital redemption reserve			24	24
Amounts recognised directly into equity
relating to non-current assets held for sale			(24)	61
Other reserve			(548)	(264)
Profit and loss reserve			26,080	23,835
			_________	_________
Total equity			27,048	25,163
			_________	_________
LIABILITIES
Non-current liabilities
Deferred tax liabilities			255	111
			_______	_______
Current liabilities
Provisions			23	34
Trade and other payables			21,313	3,667
Insurance contract liabilities			2,784	2,854
Current tax liabilities			836	854
			_________	_________
			24,956	7,409
			_________	_________
			_________	_________
Total liabilities			25,211	7,520
			_________	_________
			_________	_________
Total equity and liabilities			52,259	32,683
			_________	_________

The financial statements were approved by the board on 25 March 2015.

M I Dugdale

M W Scanlon

Company number: 3194991

PERSONAL GROUP HOLDINGS PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2014

Equity attributable to equity holders of Personal Group Holdings Plc

		Share capital	Capital redemption reserve	Available for sale financial assets	Other reserve	Profit and 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		-	-	-	-	(5,899)	(5,899)
Employee share-based  compensation		-	-	-	-	797	797
Proceeds of AESOP* share sales		-	-	-	-	349	349
Cost of AESOP shares sold		-	-	-	537	(537)	-
Cost of AESOP shares purchased		-	-	-	(821)	-	(821)
Nominal value of LTIP** shares issued		9	-	-	-	(9)	-
		________	________	________	________	________	________
Transactions with owners		9	-	-	(284)	(5,299)	(5,574)
		________	________	________	________	________	________
Profit for the year		-	-	-	-	7,544	7,544
Other comprehensive income
Available for sale financial assets:
Valuation changes taken to equity		-	-	(65)	-	-	(65)
Transfer to income statement		-	-	(34)	-	-	(34)
Current tax on unrealised valuation   changes taken to equity		-	-	14	-	-	14
		________	________	________	________	________	________
Total comprehensive income for the year		-	-	(85)	-	7,544	7,459
		________	_______	________	________	________	________
Balance as at 31 December 2014		1,516	24	(24)	(548)	26,080	27,048
		________	______	______	________	__________	_________

*All Employee Share Option Plan (AESOP)

**Long Term Incentive Plan (LTIP)

PERSONAL GROUP HOLDINGS PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2013

Equity attributable to equity holders of Personal Group Holdings Plc

		Share capital	Capital redemption reserve	Available for sale financial assets	Other reserve	Profit and 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		-	-	-	(257)	-	(257)
Nominal value of LTIP** shares issued		4	-	-	-	(4)	-
		________	________	________	________	________	________
Transactions with owners		4	-	-	355	(4,068)	(3,709)
		________	________	________	________	________	________
Profit for the year		-	-	-	-	2,098	2,098
Other comprehensive income
Available for sale financial assets:
Valuation changes taken to equity		-	-	110	-	-	110
Transfer to income statement		-	-	(3)	-	-	(3)
Current tax on unrealised valuation changes taken to equity		-	-	(25)	-	-	(25)
		________	________	________	________	________	________
Total comprehensive income for the year		-	-	82	-	2,098	2,180
		________	_______	________	________	________	________
Balance as at 31 December 2013		1,507	24	61	(264)	23,835	25,163
		________	______	______	________	__________	________

PERSONAL GROUP HOLDINGS PLC

CONSOLIDATED CASH FLOW STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2014

			2014	2013
			£'000	£'000
Net cash from operating activities (see below)			5,998	7,132
			__________	__________
Investing activities
Additions to property, plant and equipment			(412)	(248)
Proceeds from disposal of property plant and equipment			72	537
Purchase of own shares by the AESOP			(821)	(257)
Proceeds from disposal of own shares by the AESOP			349	630
Purchase of financial assets			(246)	(5,842)
Proceeds from disposal of financial assets			3,655	7,399
Additions to investment property			(130)	-
Interest received			131	222
Dividends received			21	19
			__________	__________
Net cash used in investing activities			2,619	2,460
			__________	__________
Acquisition and disposal activities
Payment to acquire Lets Connect			(6,000)	-
Net cash acquired with trading			724	-
			__________	__________
Net cash from acquisition and disposal activities			(5,276)	-
			__________	__________
Financing activities
Proceeds from bank loans			-	257
Repayment of bank loans			-	(316)
Interest paid			-	(1)
Dividends paid			(5,899)	(5,556)
			__________	__________
Net cash used in financing activities			(5,899)	(5,616)
			__________	__________
Net change in cash and cash equivalents			(2,558)	3,976
Cash and cash equivalents, beginning of year			6,991	3,015
Cash and cash equivalents, end of year			4,433	6,991
			_________	__________

Consolidated cash flow statement			2014	2013
			£'000	£'000
Operating activities
Profit after tax			7,544	2,098
Adjustments for   Depreciation			385	529
Goodwill impairment			-	2,100
Amortisation of intangible assets			275	-
Impairment of investment property			-	128
Profit on disposal of property, plant and equipment			(34)	(42)
Realised and unrealised net investment losses			(31)	-
Interest received			(131)	(222)
Dividends received			(21)	(19)
Interest paid			-	1
Share of profit of equity-accounted investee, net of tax			(192)	(127)
Share-based payment expenses			797	1,474
Taxation expense recognised in income statement			1,653	1,632
Changes in working capital
Trade and other receivables			(12,283)	489
Trade and other payables			10,366	1,004
Inventories			(472)	-
Taxes paid			(1,858)	(1,913)
			__________	__________
Net cash from operating activities			5,998	7,132
			__________	__________

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, the provision of salary sacrifice products 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 benefits £'000	Financial services £'000	Unallocated £'000	Consolidation adjustments £'000	Group £'000
Operating segments
2014
Revenue
Earned premiums net of reinsurance Other income:	24,054	-	-	-	24,054
Insurance related	4,007	494	-	-	4,501
Non-insurance related	18,202	-	-	-	18,202
Investment property	-	-	67	-	67
Investment income	210	-	-	-	210
	_________	_________	_________	_________	_________
Total revenue	46,473	494	67	-	47,034
_________	_________	_________	_________	_________
Net result for year before tax	9,361	347	67	(770)	9,005
	_________	_________	_________	_________	_________
Segment assets	38,694	677	940	11,948	52,259
	_________	_________	_________	_________	_________
Segment liabilities	24,829	382	-	-	25,211
	_________	_________	_________	_________	_________
Depreciation and amortisation	376	-	-	284	660
	_________	_________	_________	_________	_________
2013
Revenue
Earned premiums net of reinsurance Other income:	22,572	-	-	-	22,572
Insurance related	3,460	564	-	-	4,024
Non-insurance related	1,363	-	-	-	1,363
Investment property	-	-	103	-	103
Investment income	332	-	-	-	332
	_________	_________	_________	_________	_________
Total revenue	27,727	564	103	-	28,394
	_________	_________	_________	_________	_________
Net result for year before tax	6,666	417	(25)	(3,455)	3,603
	_________	_________	_________	_________	_________
Segment assets	29,147	2,596	940	-	32,683
	_________	_________	_________	_________	_________
Segment liabilities	7,146	351	23	-	7,520
	_________	_________	_________	_________	_________
Depreciation and amortisation	518	2	-	9	529
	_________	_________	_________	_________	_________

All income is derived from the UK.

The figures shown above for employee benefits and financial services are from the group's management accounts that are not prepared under IFRS. Unallocated amounts relate to the group's investment property, including the impairment, but excluding the results for the equity-accounted investee.

2.   Taxation comprises United Kingdom corporation tax of £1,855,000 (2013: £1,722,000), and deferred taxation credit of £202,000 (2013: £90,000).

3.   The basic and diluted earnings per share are based on the profit for the financial year of £7,544,000 (2013: £2,098,000) and on 30,066,390 basic (2013: 29,886,673), 30,901,027 diluted (2013: 29,931,267) ordinary shares, the weighted average number of shares in issue during the year.

4.   The total dividend paid in the year was £5,899,000 (201: £5,556,000), which is equivalent to 19.6 pence (2013: 18.6 pence) per share.

This preliminary statement has been extracted from the 2014 audited financial statements that will be posted to shareholders in due course.  The statutory accounts for each of the two years to 31 December 2013 and 31 December 2012 received audit reports, which were unqualified and did not contain statements under section 498 (2) or (3) of the Companies Act 2006.  The 2013 accounts have been filed with the Registrar of Companies but the 2014 accounts are not yet filed.

This information is provided by RNS

The company news service from the London Stock Exchange

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