TIDMPGH
RNS Number : 0827O
Personal Group Holdings PLC
29 September 2023
29 September 2023
PERSONAL GROUP HOLDINGS PLC
("Personal Group", "Company" or "Group")
Interim Results & Interim Dividend for the six months ended
30 June 2023
Positive first half performance, driven by strong growth in
Insurance contribution
Personal Group Holdings Plc (AIM: PGH), the workforce benefits
and services provider, is pleased to announce its interim results
for the six months ended 30 June 2023.
Financial Highlights
-- Total revenue for the six months to 30 June 2023 increased 34% to GBP46.4m (H1 2022: GBP34.7m).
Whilst driven primarily by voucher resales through the benefits platform of GBP24.6m (H1 2022:
GBP13.8m), growth has also been seen across other key areas
-- Adjusted EBITDA* increased 75% to GBP2.7m (H1 2022: GBP1.5m), in line with management expectations
for H1, driven primarily by continued growth of the insurance book
-- Profit before tax increased to GBP1.6m (H1 2022: GBP0.5m) in line with adjusted EBITDA growth
-- Basic EPS increased to 4.5p (H1 2022: 1.7p)
-- Strong balance sheet and liquidity with cash and deposits at period end of GBP22.6m (Dec 2022:
GBP18.7m), and debt free
-- Interim dividend increased by 10% to 5.85p (H1 2022: 5.3p), reflecting the Board's continued
confidence in the Group's prospects
Operational Highlights
-- Strong growth in Affordable Insurance, driven by an increase in new sales and high retention
rates - new annualised insurance sales in the first six months rose by 34% to GBP5.8m (H1
2022: GBP4.3m)
-- Continued growth in recurring revenue streams providing increased visibility for H2 2023 and
2024:
o Annualised Premium Income (API) increased by 6% to GBP29.6m (31 Dec 22: GBP28.0m)
o Annualised Recurring Revenue (ARR) from our Benefits platform grew 10%, ending the period
with Hapi ARR of GBP2.2m and Sage Employee Benefits ARR of GBP3.3m respectively (31 Dec 2022:
GBP2.0m and GBP3.0m respectively)
o ARR from Innecto Digital products grew to GBP0.6m (31 Dec 22: GBP0.5m)
-- 52 new client wins (HY22: 52) with the award of a place on the Crown Commercial Services framework
serving as an endorsement of the Group's offering
-- Paula Constant assumed the role of Group CEO on 1 August 2023
Post-Period Trading and Outlook
-- Strong new insurance sales have continued at the start of H2 with retention rates remaining
robust
-- Next generation Hapi 2.0 successfully launched internally, enabling future roll out to customers
and partners
-- Trading remains in line to meet market's full year expectations
-- The Board is confident in the long-term outlook for the business
* Adjusted EBITDA is defined as earnings before interest, tax,
depreciation, amortisation of intangible assets, goodwill
impairment, share-based payment expenses, corporate acquisition
costs and restructuring costs.
Paula Constant, Chief Executive of Personal Group, commented:
"Personal Group has enjoyed a positive start to the year, with a
particularly strong performance in our core Affordable Insurance
business alongside steady growth in our Benefits platform revenue.
Following the successful internal launch of Hapi 2.0, our enhanced
platform, we look forward to the subsequent roll out to our
customers and partners. It is clear to me that Personal Group is a
great business with a base of strong offerings on which to build
increased shareholder value and I am extremely excited about the
opportunity to develop a strategy to accelerate profitable growth
over the coming months."
-S-
Change of Nominated Adviser and Broker
The Company also announces that its Nominated Adviser and
Broker, Cenkos Securities plc, has now changed its name to
Cavendish Securities plc following completion of its own corporate
merger.
For more information please contact:
Personal Group Holdings Plc
Paula Constant / Sarah Mace +44 (0)1908 605 000
Cavendish Securities plc
Camilla Hume / Callum Davidson (Nominated
Adviser) +44 (0)20 7397 8900
Jasper Berry (Sales)
Alma
Caroline Forde / Joe Pederzolli / Kinvara +44 (0)20 3405 0205
Verdon personalgroup@almapr.co.uk
Notes to Editors
Personal Group Holdings Plc (AIM: PGH) is a workforce benefits
and services provider. The Group enables employers across the UK to
improve employee engagement and support their people's physical,
mental, social and financial wellbeing. Its vision is to create a
brighter future for the UK workforce.
Personal Group provides health insurance services and a broad
range of employee benefits, engagement, and wellbeing products. Its
offerings can also be delivered through its proprietary app,
Hapi.
The Group's growth strategy is centred around widening the
footprint of the business into the SME, talent-led & Public
Sectors, thereby expanding the addressable customer base. In
addition, it aims to grow in its existing industrial heartlands, to
re-invigorate growth in insurance policyholders and to drive the
use of its SaaS offerings.
Group Clients include: Airbus, B & Q, Barchester Healthcare,
British Transport Police, Merseyrail, Randstad, Royal Mail Group,
The Royal Mint, the Sandwell & Birmingham NHS Trust, Stagecoach
Group plc, and The University of York.
For further information on the Group please see
www.personalgroup.com
CEO STATEMENT
Having assumed the position of the Company's new CEO, post the
half year end, on 1 August 2023, I am delighted to be presenting
this set of interim results to shareholders. The team achieved a
positive first half of 2023, delivering year on year growth across
key metrics. I am particularly pleased to have seen the insurance
book continue to grow substantially - a result of strong new
insurance sales, operational effectiveness and efficiency as well
as continued high retention rates.
It is clear to me that the business is built on very solid
foundations. The strength of our face-to-face insurance sales
capability, we believe, is unmatched across the markets we serve.
Our Benefits platform, Hapi, will deliver enhanced capabilities
through the launch of Hapi 2.0. Furthermore, the strength of our
relationship with Sage has brought a growing new revenue stream for
the Group and opened up the wider SME market as a strategic
priority.
Since being appointed CEO in August I have commenced a
quantitative review of our operations in order to identify the
greatest available opportunities to improve profitability and drive
longer term growth in the business to increase shareholder value.
In the initial phase of this review we have commenced a detailed
customer segmentation analysis, prioritising our Insurance and
Benefits offerings, in order to identify optimal segments, price
points and specific offerings. Alongside this we are scrutinising
our lead generation effectiveness and the distribution of our
external marketing spend. We anticipate the introduction of more
granular KPIs across our sales processes and pipeline and we are
examining how to maximise the opportunity to visit lower penetrated
existing customer sites in the field. We are focussed on launching
Hapi 2.0 at scale and being able to onboard clients at pace. We
have employed external technology auditors to carry out a rigorous
technical review of Hapi 2.0 to stress test this ability before an
external rollout of the platform. We continue to penetrate the
existing, vast segment of Sage SME customers, with increased focus
at a senior level both of Sage and Personal Group on the
effectiveness of customer welcome calls whilst progressing
discussions with future partners.
My priorities in H2 are to conclude on this quantitative
evaluation of commercial, operations and technology to identify and
shape our strategic direction in terms of expanding our Insurance
offering, monetising our Hapi 2.0 platform, with a core focus on
the growth of partnerships, and streamlining the organisation
around the areas in which there are the greatest opportunities to
grow value for shareholders.
The Board and I would like to thank Deborah Frost, the Group's
previous CEO, for her leadership of Personal Group in recent years.
Her reinvigoration of the insurance offering and investment in the
Sage partnership have, I believe, placed the business in an
excellent position for further expansion.
Divisional H1 Segmental Analysis
Affordable Insurance
New annualised insurance sales in the first six months rose by
34% to GBP5.8m (H1 2022: GBP4.3m), a result of the growth in the
size of the field sales team alongside improved productivity and we
recorded new 'best' performances for 'day' and 'week' both
collectively and by individual. This, together with strong
retention levels, which remain above pre-pandemic averages, helped
to drive up the Annualised Premium Income value to GBP29.6m (31 Dec
2022: GBP28.0m) and led to a 14% increase in insurance revenue for
the period to GBP13.8m (H1 2022: GBP12.3m).
As anticipated, claims levels for the first half remained higher
than historic norms on Hospital Cash plans, as activity to address
NHS backlogs continued. These combined factors resulted in a 31%
increase in adjusted EBITDA contribution to GBP5.1m (H1 2022:
GBP3.9m).
Benefits platform
Revenue from digital platform subscriptions and commissions from
third party benefit suppliers which sit on the benefits platform
rose to GBP2.9m (H1 2022: GBP2.2m) with a resulting growth in
EBITDA of 35% to GBP1.8m (H1 2022: GBP1.3m).
Continued growth was seen in recurring subscription income,
across both Enterprise clients, taking Hapi, and Sage Employee
Benefits, which ended the half year with ARR of GBP2.2m and GBP3.3m
respectively (31 Dec 2022: GBP2.0m and GBP3.0m).
Income from voucher resales through the benefits platform rose
to GBP24.6m (H1 2022: GBP13.8m). Whilst the EBITDA contribution
from this remains minimal this significant growth in revenue
reinforces the relevance of our product to our clients, enabling
them to address cost of living issues with their employees, who
collectively saved over GBP1.3m through use of the discount
vouchers on the platform in the six months to June.
Alongside the growth of our existing customer base, we have been
developing the second generation of the Hapi platform, with
considerably enhanced capabilities. These include improved Reward
and Recognition functionality, simpler navigation and search
capability, modularisation for tiered and self-serve offers, and
slicker onboarding processes.
Our investment in the next generation of the platform, Hapi 2.0,
will provide us with opportunities to both enhance the quality of
our provision and to put us in a position to actively seek out and
continue discussions with additional external partners, to widen
our reach, and build further ARR streams.
Pay and Reward
The contribution from Pay & Reward, comprising Innecto and
Quintige Consulting Group, has remained steady with revenue of
GBP1.1m (H1 2022: GBP0.9m) and EBITDA of GBP0.2m (H1 2022:
GBP0.3m). This division has shown resilience despite the attention
of their normal audience of HR Directors being diverted to the
tactical focus of dealing with the cost-of-living crisis for their
employees and significant growth in the pipeline towards the end of
the period gives confidence for improved performance in H2.
Other Owned Benefits
(Let's Connect)
Contribution from Other Owned Benefits (Let's Connect) was in
line with management's expectations post cessation of the long-term
scheme with a major client in March 2023, as previously announced,
delivering revenue of GBP3.6m (H1 2022: GBP5.4) and an EBITDA loss
of (GBP0.3m) (H1 2022: 0.0m) . Contribution from this business
remains heavily second half weighted.
Interim Dividend
The Company is pleased to announce that an interim dividend for
2023 of 5.85p, representing a 10% increase on the previous year,
will be paid on 16 November 2023 to members on the register as at
13 October 2023 (the record date). Shares will be marked
ex-dividend on 12 October 2023. The Board has considered the level
of dividend in the context of the full year results and the level
reflects their continued confidence in the Group's business model
and prospects.
Current Trading and Outlook
Trading into Q3 has remained robust. The Group is trading in
line with management's expectations to date and this underpins the
Board's confidence in meeting market expectations for the full
year.
The market opportunity is, I believe, considerable and I look
forward to updating shareholders on strategic progress in the
coming months.
Paula Constant
Group Chief Executive
29 September 2023
Consolidated Income Statement
6 months
6 months ended
ended 30 June 2022
30 June 2023 Unaudited
Unaudited (*Restated)
Note GBP'000 GBP'000
Insurance revenue 13,848 12,301
Employee benefits and services 7,568 8,436
Voucher resale income 24,648 13,848
Other income 69 128
Investment income 295 29
(________) (________)
Revenue 46,428 34,742
(________) (________)
Insurance service expenses 4 (7,230) (6,890)
Net expenses from reinsurance
contracts held (57) (77)
Employee benefits and services
expenses (7,359) (8,268)
Voucher resale expenses (24,660) (13,872)
Other expenses (41) (38)
Group administration expenses (5,346) (4,679)
Share based payment expenses (110) (152)
Charitable donations (50) (50)
(________) (________)
Expenses (44,853) (34,026)
(________) (________)
Operating profit 1,575 716
Finance costs (22) (13)
Unrealised profit / (loss) on
equity investments 77 (244)
(________) (________)
Profit before tax 1,630 459
Tax 5 (221) 73
(________) (________)
Profit for the period after tax 1,409 532
(________) (________)
Total comprehensive income for
the period 1,409 532
(________) (________)
Earnings per share Pence Pence
Basic 4.5 1.7
Diluted 4.5 1.7
The total comprehensive income for the period is attributable to
equity holders of Personal Group Holdings Plc.
* With the transition to IFRS 17, certain comparative amounts
have been re-stated as if the standard had always been in effect.
See Note 11 for full details.
Consolidated Balance Sheet
At 30 June 2023 At 31 Dec 2022
Unaudited Audited
Note GBP'000 GBP'000
ASSETS
Non-current assets
Goodwill 7 2,684 2,684
Intangible assets 8 2,858 2,384
Property, plant and equipment 9 5,064 4,639
(_______) (_______)
10,606 9,707
(________) (________)
Current assets
Financial assets 10 3,137 3,031
Trade and other receivables 7,434 15,863
Reinsurance contracts held 55 95
Inventories 467 726
Cash and cash equivalents 20,827 16,958
Current tax assets 312 229
(________) (________)
32,232 36,902
(________) (________)
Total assets 42,838 46,609
(________) (________)
Consolidated Balance Sheet
At 30 June 2023 At 31 Dec 2022
Unaudited Audited
Note GBP'000 GBP'000
EQUITY
Equity attributable to equity
holders of Personal Group Holdings
plc
Share capital 1,562 1,562
Share premium 1,134 1,134
Capital redemption reserve 24 24
Other reserve (48) (55)
Share based payment reserve 477 367
Profit and loss reserve 27,694 27,946
(________) (________)
Total equity 30,843 30,978
(________) (________)
LIABILITIES
Non-current liabilities
Deferred tax liabilities 781 681
Trade and other payables 522 130
(________) (________)
1,303 811
(________) (________)
Current liabilities
Trade and other payables 7,725 11,346
Insurance contract liabilities 2,967 3,474
(________) (________)
10,692 14,820
(________) (________)
(________) (________)
Total liabilities 11,995 15,631
(________) (________)
(________) (________)
Total equity and liabilities 42,838 46,609
(________) (________)
Consolidated Statement of Changes in Equity for the six months
ended 30 June 2023
Share Share Capital Other Share Profit Total
capital Premium redemption reserve Based & loss equity
reserve Payment reserve
Reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance as at
1 January
2023 1,562 1,134 24 (55) 367 27,946 30,978
(________) (________) (________) (________) (________) (________) (________)
Dividends - - - - - (1,656) (1,656)
Employee
share-based
compensation - - - - 110 - 110
Proceeds of
SIP*
share sales - - - - - 12 12
Cost of SIP
shares
sold - - - 17 - (17) -
Cost of SIP
shares
purchased - - - (10) - - (10)
(________) (________) (________) (________) (________) (________) (________)
Transactions
with owners - - - 7 110 (1,661) (1,544)
(________) (________) (________) (________) (________) (________) (________)
Profit for the
period - - - - - 1,409 1,409
(________) (________) (________) (________) (________) (________) (________)
Total
comprehensive
income for
the
period - - - - - 1,409 1,409
(________) (________) (_______) (_______) (_______) (_______) (_______)
Balance as at
30 June 2023 1,562 1,134 24 (48) 477 27,694 30,843
(________) (________) (________) (________) (________) (________) (________)
* PG Share Ownership Plan (SIP)
Consolidated Statement of Changes in Equity for the six months
ended 30 June 2022
Share Share Capital Other Share Profit Total
capital Premium redemption reserve Based & loss equity
reserve Payment reserve
Reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance as at
1 January
2022 1,561 1,134 24 (32) 158 38,436 41,281
(________) (________) (________) (________) (________) (________) (________)
Dividends - - - - - (1,654) (1,654)
Employee
share-based
compensation - - - - 152 - 152
Proceeds of
SIP*
share sales - - - - - 11 11
Cost of SIP
shares
sold - - - 9 - (9) -
Cost of SIP
shares
purchased - - - (18) - - (18)
Purchase of
New
shares - - (20) - - (20)
Shares issued
in year -
LTIP
exercise 1 - - - (63) 63 1
(________) (________) (________) (________) (________) (________) (________)
Transactions
with owners 1 - - (29) 89 (1,589) (1,528)
(________) (________) (________) (________) (________) (________) (________)
Profit for the
period - - - - - 532 532
(________) (________) (________) (________) (________) (________) (________)
Total
comprehensive
income for
the
period - - - - - 532 532
(________) (________) (_______) (_______) (_______) (_______) (_______)
Balance as at
30 June 2022 1,562 1,134 24 (61) 247 37,379 40,285
(________) (________) (________) (________) (________) (________) (________)
* PG Share Ownership Plan (SIP)
Consolidated Statement of Cash Flows
6 months
6 months ended
ended 30 June 2022
30 June 2023 Unaudited
Unaudited
GBP'000 GBP'000
Net cash from operating activities (see
opposite) 6,442 3,023
(______) (______)
Investing activities
Additions to property, plant and equipment (99) (222)
Additions to intangible assets (872) (473)
Purchase of financial assets (29) (1,509)
Sale of financial assets - 871
Interest received 295 29
(______) (______)
Net cash from investing activities (705) (1,304)
(______) (______)
Financing activities
Proceeds from issue of shares - 1
Purchase of own shares by the SIP (6) (31)
Proceeds from disposal of own shares
by the SIP 12 6
Interest paid - (4)
Payment of lease liabilities (218) (226)
Dividends paid (1,656) (1,654)
(______) (______)
Net cash used in financing activities (1,868) (1,908)
(______) (______)
Net change in cash and cash equivalents 3,869 (189)
Cash and cash equivalents, beginning
of period 16,958 20,291
(_______) (_______)
Cash and cash equivalents, end of period 20,827 20,102
(________) (________)
Consolidated Statement of Cash Flows
6 months
6 months ended
ended 30 June 2022
30 June 2023 Unaudited
Unaudited
GBP'000 GBP'000
Operating activities
Profit after tax 1,409 532
Adjustment for:
Depreciation 506 493
Amortisation of intangible assets 398 364
Loss on disposal of property, plant and equipment 14 24
Interest received (295) (29)
Realised and unrealised investment losses (77) 244
Interest charge 22 13
Share-based payment expenses 117 152
Taxation expense recognised in income statement 221 (73)
Changes in working capital:
Trade and other receivables 8,469 5,675
Trade and other payables (4,385) (4,129)
Inventories 259 (161)
Taxes paid (209) (82)
(________) (________)
Net cash from operating activities 6,442 3,023
(________) (________)
Notes to the Consolidated Financial Statements
1 General information
The principal activities of Personal Group Holdings Plc ('the
Company') and subsidiaries (together 'the Group') include
transacting short-term accident and health insurance and providing
employee services in the UK.
The Company is a limited liability 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 is listed on the Alternative Investment Market of
the London Stock Exchange.
The condensed consolidated financial statements do not include
all the information required for full annual financial statements
and should be read in conjunction with the consolidated financial
statements of the Group for the year ended 31 December 2022.
The financial information for the year ended 31 December 2022
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 2022
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 29 September
2023.
2 Accounting policies
These June 2023 interim consolidated financial statements of
Personal Group Holdings Plc are for the six months ended 30 June
2023. These interim financial statements have been prepared in
accordance with IAS 34 Interim Financial Reporting as endorsed for
use in the UK.
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 2022.
These financial statements have been prepared in accordance with
IFRS standards and IFRIC interpretations as adopted by the UK,
issued and effective as at 30 June 2023.
Changes in accounting policies and new standards
Personal Group has initially applied IFRS 17 including any
consequential amendments to other standards, from 1 January 2023.
There are no other new or amended IFRS standards, that have a
material effect, that have become effective during the period ended
30 June 2023.
IFRS 17 has had a significant impact on accounting for insurance
contracts. As a result, Personal Group has re-stated certain
comparative amounts particularly in the presentation of its Income
Statement. Personal Group's updated accounting policies for
reinsurance contracts are set out below. Disclosures relating to
the transition to IFRS 17 have been set out in note 12.
Insurance contracts
IFRS 17 sets out the classification, measurement and
presentation and disclosure requirements for insurance contracts.
It requires insurance contracts to be measured using current
estimates and assumptions that reflect the timing of cash flows and
recognition of profits as insurance services are delivered. The
standard provides two main measurement models which are the General
Measurement Model ("GMM") and the Premium Allocation Approach
("PAA").
The PAA simplifies the measurement of insurance contracts for
remaining coverage in comparison to the GMM. The PAA is very
similar to Personal Group's previous accounting policies under IFRS
4 for calculating revenue, however there are some presentation
changes.
The GMM is used for the measurement of the liability for
incurred claims.
Notes to the Consolidated Financial Statements
PAA eligibility
Under IFRS 17, Personal Group's insurance contracts issued and
are all eligible to be measured by applying the PAA, due to meeting
the following criteria:
-- Insurance contracts with coverage period of one year or less
are automatically eligible. This covers all hospital,
convalescence, and death benefit insurance contracts.
-- Modelling of contracts with a coverage period greater than
one year (employee default policies) produces a measurement for the
group of reinsurance contracts that does not differ materially from
that which would be produced applying the GMM.
Level of aggregation
Personal Group manages all insurance contracts as one portfolio
within the insurance operating segment as they are subject to
similar risks.
Onerous contracts
Under the PAA, it is assumed there are no contracts in the
portfolio that are onerous at initial recognition, unless there are
facts and circumstances that may indicate otherwise. Given the
short-tailed nature of policies issued be Personal Group,
management do not consider there to be any material circumstance
under which policies in issue would be onerous.
Modification and derecognition
Personal Group derecognises insurance contracts when the rights
and obligations relating to the contract are extinguished (meaning
discharged, cancelled, or expired) or the contract is modified such
that the modification results in a change in the measurement model
or the applicable standard for measuring the contract.
Contract boundaries
The measurement of insurance contracts includes all future cash
flows expected to arise within the boundary of each contract. Cash
flows are within the boundary of an insurance contract if they
arise from substantive rights and obligations that exist during the
reporting period in which Personal Group can compel the
policyholder to pay premiums or in which it has a substantive
obligation to provide the policyholder with services.
Personal Group assesses the contract boundary at initial
recognition and at each subsequent reporting date to include the
effects of changes in circumstances on the Group's substantive
rights and obligations. The assessment of the contract boundary,
which defines the future cash flows that are included in the
measurement of the contract, requires judgement and
consideration.
Personal Group primarily issues insurance contracts which
provide coverage to policyholders in the event of hospitalisation,
convalescence, or death. While the contracts are typically weekly
or monthly in their term length, the contract boundary is assessed
with consideration of the delayed timing around claims of this
nature and the timing of expected future claims payments with
reference to the covered loss event.
Measurement - Liability for remaining coverage
On initial recognition of insurance contract, the carrying
amount of the liability for remaining coverage is measured as the
premiums received on initial recognition, if any, minus any
reinsurance acquisition expense cash flows allocated to the
contracts and any amounts arising from the derecognition of the
prepaid reinsurance acquisition expense cash flows asset. Personal
Group has chosen not to expense insurance acquisition expense cash
flows as incurred on its contracts as they have coverage of less
than one year.
Subsequently, at the end of each reporting period, the liability
for remaining coverage is increased by any additional premiums
received in the period and decreased for the amounts of expected
premium cash flows recognised as reinsurance revenue for the
services provided in the period.
Personal Group has elected not to adjust the liability for
remaining coverage for the time value of money as its insurance
contracts do not contain a significant financing component.
Notes to the Consolidated Financial Statements
Measurement - Liability for incurred claims
The liability for incurred claims represents the estimated
ultimate cost of settling all insurance claims arising from events
that have occurred up to the end of the reporting period, including
the operating costs that are expected to be incurred in the course
of settling such claims. The liability for claims is derived from
the estimated fulfilment cash flows relating to expected claims.
The fulfilment cash flows incorporate, in an unbiased way, all
reasonable and supportable information available, without undue
cost of effort, about the amount, timing and uncertainty of those
future cash flows. They also include an explicit risk adjustment.
Estimates of future cash flows for incurred claims are not
discounted on initial recognition due to the immateriality of the
impact of the time value of money as discussed in Note 12.
3 Segment analysis
The segments used by management to review the operations of the
business are disclosed below.
1) Affordable Insurance
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.
Personal Assurance (Guernsey) Limited (PAGL), a subsidiary
within the Group, is regulated by the Guernsey Financial Services
Commission and has been underwriting death benefit policies since
March 2015.
This operating segment derives the majority of its revenue from
the underwriting by PA and PAGL of insurance policies that have
been bought by employees of host companies via bespoke benefit
programmes. During 2020 PAGL began underwriting employee default
insurance for a proportion of LC customers.
2) Other Owned Benefits
This segment constitutes any goods or services in the benefits
platform supply chain which are owned by the Group. At present this
is made up of a technology salary sacrifice business trading as PG
Let's Connect, purchased by the Group in 2014.
3) Benefits Platform
Revenue in this segment relates to the annual subscription
income and other related income arising from the licensing of Hapi,
the Group's employee benefit platform. This includes sales to both
the large corporate and SME sectors.
4) Pay and Reward
Pay and Reward refers to the trade of the Group's pay and reward
consultancy Company Innecto, purchased in 2019, and QCG, purchased
in 2022. Revenue in this segment relates to consultancy, surveys,
and licence income derived from selling digital platform
subscriptions.
5) Other
The other operating segment includes revenue generated from the
resale of vouchers. This segment also consists of revenue generated
by Berkeley Morgan Group (BMG) and its subsidiary undertakings
along with any investment and rental income obtained by the
Group.
Notes to the Consolidated Financial Statements
The revenue and net result generated by each of the Group's
operating segments are summarised as follows,
6 months 6 months
ended ended
30 June 2023 30 June 2022
Unaudited Unaudited
GBP'000 GBP'000
Revenue by Segment
---------------------------------------- -------------- -------------
Affordable Insurance 13,848 12,301
Other Owned Benefits 3,563 5,387
Benefits Platform 4,356 3,574
Platform - Group Elimination (1,425) (1,425)
Pay & Reward 1,074 900
---------------------------------------- -------------- -------------
Other Income:
Voucher resale 24,648 13,848
Other 69 128
Investment income 295 29
---------------------------------------- -------------- -------------
Group Revenue 46,428 34,742
---------------------------------------- -------------- -------------
Adjusted EBITDA contribution by segment
---------------------------------------- -------------- -------------
Affordable Insurance 5,143 3,970
Other Owned Benefits (287) (32)
Benefits Platform 1,750 1,298
Pay & Reward 172 282
---------------------------------------- -------------- -------------
Other 387 (149)
Group admin and central costs (4,449) (3,798)
Charitable donations (50) (50)
---------------------------------------- -------------- -------------
Adjusted EBITDA 2,666 1,521
---------------------------------------- -------------- -------------
Depreciation (506) (493)
Amortisation (398) (364)
Interest (22) (13)
Share based payments expenses (110) (152)
Corporate acquisition costs - (40)
---------------------------------------- -------------- -------------
Profit before tax 1,630 459
---------------------------------------- -------------- -------------
All income was derived from customers that are based in the
UK.
4 Insurance service expenses
6 months ended 6 months ended
30 June 2023 30 June 2022
GBP'000 GBP'000
Claims incurred 3,750 3,663
Insurance operating expenses 3,480 3,227
(________) (________)
7,230 6,890
(________) (________)
Notes to the Consolidated Financial Statements
5 Taxation
The tax expense recognised is based on the weighted average
annual tax rate expected for the full financial year multiplied by
management's best estimate of the taxable profit of the interim
reporting period.
The Group's consolidated effective tax rate in respect of
continuing operations for the six-month period ended 30 June 2023
was 13.6% (six-month period ended 30 June 2022: 15.9% credit). The
tax charge recognised in the period continues to benefit from the
application of the super-deduction capital allowances tax relief,
eligible until 31 March 2023.
6 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 EPS 6 months ended EPS
30 June 2023 Pence 30 June 2022 Pence
Basic 31,230,807 4.5 31,210,686 1.7
-------------- ------ -------------- ------
Diluted 31,230,807 4.5 31,218,953 1.7
-------------- ------ -------------- ------
During the first six months of 2023 Personal Group Holdings Plc
paid dividends of GBP1,654,000 to its equity shareholders (2022:
GBP1,592,000). This represents a payment of 5.30p per share (2022:
5.10p).
6 months ended 6 months ended
30 June 2023 30 June 2022
GBP'000 GBP'000
Dividends paid or provided for
during the period 1,656 1,654
(_____) (_____)
7 Goodwill
PG Let's Innecto QCG Total
Connect
GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 1 January 2023 10,575 2,121 563 13,259
Additions in the year - - - -
(________) (________) (________)
_________ _______ _______ (________)
At 30 June 2023 10,575 2,121 563 13,259
(________) (________) (________)
_________ _________ _________ (________)
Amortisation and impairment
At 1 January 2023 10,575 - - 10,575
Impairment charge for year - - - -
(________) (________) (________) (________)
_________ _________ _________ _________
At 30 June 2023 10,575 - - 10,575
(________) (________) (________) (________)
Net book value at 30 June 2023 - 2,121 563 2,684
(________) (________) (________) (________)
Net book value at 31 December
2022 - 2,121 563 2,684
(________) (________) (________) (________)
Notes to the Consolidated Financial Statements
8 Intangible assets
Customer Computer Innecto Internally Work Total
Value software Technology Generated in Progress
and development Computer
Software
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 1 January 2023 2,711 2,678 298 506 1,003 7,196
Transfers - - - - - -
Additions - 52 - - 820 872
Disposals - - - - - -
(________) (________) (________) (________) (________) (________)
At 30 June 2023 2,711 2,730 298 506 1,823 8,068
(________) (________) (________) (________) (________) (________)
Amortisation
At 1 January 2023 2,238 1,838 230 506 - 4,812
Amortisation charge
for the year 106 262 30 - - 398
Disposals in the - - - - - -
period
(________) (________) (________) (________) (________) (________)
At 30 June 2023 2,234 2,100 260 506 - 5,210
(________) (________) (________) (________) (________) (________)
Net book amount
at 30 June 2023 367 630 38 - 1,823 2,858
(________) (________) (________) (________) (________) (________)
Net book amount
at 31 December
2022 473 840 68 - 1,003 2,384
(________) (________) (________) (________) (________) (________)
9 Property, plant and equipment
Freehold Motor vehicles Computer Furniture Leasehold Right of Total
land and equipment fixtures improve- use Assets
properties & fittings ments
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 1 January 2023 5,037 157 1,443 2,318 38 1,139 10,132
Additions - - 69 30 - 845 944
Disposals - (104) - - - (210) (314)
(______) (______) (______) (______) (______) (______) (______)
At 30 June 2023 5,037 53 1,512 2,348 38 1,774 10,762
(______) (______) (______) (______) (______) (______) (______)
Depreciation
At 1 January 2023 1,916 134 1,058 1,474 38 873 5,493
Provided in the
period 43 5 127 105 - 226 506
Disposals - (104) - - - (197) (301)
(______) (______) (______) (______) (______) (______) (______)
At 30 June 2023 1,959 35 1,185 1,579 38 902 5,698
(______) (______) (______) (______) (______) (______) (______)
Net book amount
at
30 June 2023 3,078 18 327 769 - 872 5,064
(______) (______) (______) (______) (______) (______) (______)
Net book amount
at
31 December 2022 3,121 23 385 844 - 266 4,639
(______) (______) (______) (______) (______) (______) (______)
Notes to the Consolidated Financial Statements
10 Financial Investments
At 30 June At 31 December
2023 2022
Unaudited Audited
GBP'000 GBP'000
Bank deposits 1,771 1,742
Equity investments 1,366 1,289
(________) (________)
3,137 3,031
(_________) (_________)
IFRS 13 Fair Value Measurement establishes a fair value
hierarchy that categorises into three levels the inputs to
valuation techniques used to measure fair value. The fair value
hierarchy gives the highest priority to quoted prices (unadjusted)
in active markets for identical assets or liabilities (Level 1
inputs) and the lowest priority to unobservable inputs (Level 3
inputs)
-- Level 1: quoted prices (unadjusted) in active markets for
identical assets or liabilities
-- Level 2: inputs other than quoted prices included within
Level 1 that are observable for the asset or liability, either
directly (i.e., as prices) or indirectly (i.e., derived from
prices)
-- Level 3: inputs for the asset or liability that are not based
on observable market data (unobservable
input).
Bank deposits, held at amortised cost, are due within 6 months
and the amortised cost is a reasonable approximation of the fair
value. These would be included within Level 2 of the fair value
hierarchy.
Equity Investments are held at fair value and are considered
Level 1 financial assets.
11 Long Term Incentive Plan (LTIP)
During the period, the Remuneration Committee approved a third
tranche of share awards under the existing LTIP approved on 6 April
2021. Further details of the award can be found in the RNS
announcement from 21 June 2023.
Under the scheme share options of Personal Group Holdings Plc
are granted to senior executives with an Exercise Price of 5p
(nominal value of the shares). The share options have various
market and non-market performance conditions which are required to
be achieved for the options to vest. The options also contain
service conditions that require option holders to remain in
employment of the Group. The market and non-market performance
conditions are set out below.
Total Shareholder Return (Market condition)
42.5% of the awards vest under this condition. Subject to
Compound Annual Growth Rate (CAGR) of the Total Shareholder Return
(TSR) over the Performance Period.
EBITDA Targets (Non-market condition)
42.5% of the awards vest under this condition. Subject to
cumulative EBITDA over the Performance Period.
Environmental, social and governance targets ("ESG") Targets
(Non-market condition)
Up to 15% of the awards vest under this condition. The awards
shall vest upon the Remuneration Committee determining that all ESG
targets have been met.
The fair value of the of the share options is estimated at the
grant date using a Monte-Carlo binomial option pricing model for
the market conditions, and a Black-Scholes pricing model for
non-market conditions.
Notes to the Consolidated Financial Statements
However, the above performance condition is only considered in
determining the number of instruments that will ultimately
vest.
There are no cash settlements alternatives. The Group does not
have a past practice of cash settlement for these share options.
The Group accounts for the LTIP as an equity-settled plan.
In total, GBP118,000 of employee share-based compensation has
been included in the consolidated income statement to 30 June 2023
(2022: GBP142,000). The corresponding credit is taken to equity. No
liabilities were recognised from share-based transactions. The
remaining GBP10,000 (2022: GBP10,000) of share-based compensation
expense relates to the Company Share Option Plan (CSOP).
12 Transition to IFRS 17
IFRS 17, Insurance Contracts
IFRS 17 replaces IFRS 4 Insurance Contracts for annual periods
on or after 1 January 2023. In addition to the
updated accounting policies discussed in Note 2, some of the key
differences between IFRS 17 and the accounting policies previously
adopted by Personal Group under IFRS 4 are outlined below.
Changes to classification and measurement
The adoption of IFRS 17 did not change the classification of
Personal Group's insurance contracts issued. Under IFRS 17,
Personal Group's insurance contracts are all eligible to be
measured by applying the Premium Allocation Approach ("PAA").
The measurement principles of the PAA are very similar to
accounting policies previously applied under IFRS 4 but are
different in the following key areas:
-- Under IFRS 4 gross premiums written were recognised at the
top of the consolidated income statement with an adjustment for the
change in unearned premium liability and outward reinsurance
premiums. IFRS 17 defines insurance revenue as the expected premium
cash flows net of any deductions that are paid to reinsurance
providers, excluding any investment components. As such, the new
Income Statements consolidates those previous balances into one
insurance income figure for the period.
-- If contracts are assessed as being onerous, a loss component
is recognised. Previously these may have formed an unexpired risk
reserve provision determine through the liability adequacy test. No
onerous contracts have been identified and, as a result, there has
been no transition adjustment for this.
-- Under IFRS 4, contract specific acquisition cash flows were
deferred and amortised. Under IFRS 17, the recognition of insurance
acquisition expense cash flows includes an allocation of
acquisition-related operating expenses incurred in the period. The
deferral and amortisation of these expenses, under both IFRS 4 and
IFRS 17, is spread over the life of insurance contracts. As the
vast majority of Personal Group's insurance contracts are weekly or
monthly in length, there is no deferral and amortisation of
acquisition costs performed.
-- In the measurement of the insurance contract liability, under
IFRS 4, losses and loss adjustment expenses were required to be
undiscounted without an explicit need for an adjustment for
non-financial risk. Under IFRS 17, the liability for incurred
claims is typically determined on a discounted expected value basis
and includes an explicit risk adjustment for non-financial risk.
Personal Group has assessed the impact of discounting of expected
future insurance losses and, due to the majority of losses being
paid in the first 12 months following a loss event, this impact was
insignificant. In addition to this, Personal Group has always
included a risk adjustment into its chain-ladder method for
calculating its insurance contract liability. As a result, there
has been no change in calculation method on transition to IFRS
17.
Changes to presentation and disclosure
Under IFRS 4, separate assets and liabilities were recognised
for premium receivables, deferred acquisition costs, unearned
premiums, and loss and loss adjustment reserves. These assets and
liabilities were shown aggregated for all insurance contracts.
While IFRS 17 groups the insurance assets and liabilities by
portfolio, as defined by Personal Group's level of aggregation
accounting policy (see Note 2), all insurance contracts are treated
as one aggregate class so there has been no impact of the change on
transition.
The Group Income Statement has also changed in its presentation.
Previously, Personal Group reported items such as gross premiums
written, movement in unearned provisions and the reinsurer's share
of these. Under IFRS 17, the standard defines and requires distinct
presentation of insurance revenue and insurance service
expenses.
Transition to IFRS 17
Changes in accounting policies resulting from the adoption of
IFRS 17 have been applied using a full retrospective approach.
Under the full retrospective approach, as at 1 January 2022
Personal Group identified, recognised, and measured each group of
reinsurance contracts as if IFRS 17 had always applied.
Were they to have arisen, Personal Group would have derecognised
any existing balances that would not exist had IFRS 17 always
applied and recognised any resulting net difference in equity.
There were adjustments to the calculations on the balance sheet
recognised on the transition to IFRS 17.
13 Post balance sheet events
There have been no post balance sheet events.
14 Financial calendar for the year ending 31 December 2023
The Company announces the following dates in its financial
calendar for the year ending 31 December 2022:
-- Preliminary results for the year ending 31 December 2023 - March 2024
-- Publication of Report and Accounts for 2023 -
March 2024
-- AGM
- April/May 2024
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END
IR LPMMTMTBTTRJ
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September 29, 2023 02:00 ET (06:00 GMT)
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