TIDMPGH

RNS Number : 3797M

Personal Group Holdings PLC

21 September 2021

 
 21 September 2021 
 
 

PERSONAL GROUP HOLDINGS PLC

("Personal Group", "Company" or "Group")

Interim Results & Interim Dividend for the six months ended 30 June 2021

Personal Group Holdings Plc, a digitally enabled workforce benefits and services provider, announces its interim results for the six months ended 30 June 2021.

It has been a positive first half across all divisions with the Company trading in-line with management expectations notwithstanding the impact of the Covid-19 related restrictions during the period. Positive momentum has built incrementally across the six months as restrictions eased and this has accelerated further into the current trading period such that we look to the second half of the year with increased confidence.

Financial highlights

-- Group revenue rose 12.2% to GBP34.2m (2020: GBP30.4m), driven primarily by increased pass-through transactional spend via the Hapi platform of GBP13.4m (2020: GBP8.5m);

-- Adjusted EBITDA* declined 17.7% to GBP4.1m as anticipated (2020: GBP5.0m), reflecting the change in revenue mix driven by Covid-19 related restrictions on face-to-face insurance sales over the last 18 months;

   --      Profit before tax decreased 22.6% to GBP3.2m (2020: GBP4.2m); 
   --      Basic EPS of 8.4p (2020: 11.0p), in line with Covid-related profit impact; 
   --      Balance sheet remains strong with cash and deposits of GBP22.1m and no debt; and 
   --      Interim dividend of 5.3p per share to be paid 5 November 2021. 

Operational highlights

-- 40 new client wins secured, including home goods retailer Homebase, University of York and The Royal Mint;

   --      Accessible potential policyholder employee pool remains strong, underpinning future growth; 

-- New insurance policyholder conversion rates equalling or exceeding pre-Covid levels where face-to-face meetings have recommenced, whilst retention rates for existing policyholders remain strong;

   --      Claims ratio in insurance business remains stable at 22.5% (2020: 23.0%); and 

-- Pleasing levels of trial Sage Employee Benefits users (SME employees) converting to the paid offering.

Current trading and Outlook

-- Positive first half performance alongside current trading gives increased confidence in full year trading;

-- Group well placed to capitalise on opportunities that are emerging from an increased awareness and focus on employee health and wellbeing;

   --      Face-to-face sales meetings for insurance products booked until the end of FY21 

-- New Benefit Management System technology 'HapiFlex' successfully launched with University of York;

   --      Healthy pipeline of new business opportunities building across all divisions; and 

-- As at 1 September 2021 Sage Employee Benefits was generating over GBP1.5m gross annualised recurring revenues, with c1,100 paying companies, up 50% vs 1 March 2021.

* Adjusted EBITDA is defined as earnings before interest, tax, depreciation, amortisation of intangible assets, goodwill impairment, share-based expense payment and corporate acquisition costs. This definition applies to all references to Adjusted EBITDA within these interim results. A reconciliation from PBT to this Adjusted EBITDA has been included in Note 3.

Deborah Frost, Chief Executive of Personal Group, commented:

"We have made good strategic progress across all divisions in the first half of the year. We have achieved a number of key contract wins, made good progress with our Sage partnership and developed our offering significantly. Towards the end of the period, we were able to recommence face-to-face insurance sales, and have recorded great results so far, with our teams booked for the remainder of the year. This represents an important inflection point for our Group as we begin to re-build our insurance book.

Alongside the progress made against our strategic initiatives, demand for our offering has never been stronger, as we have seen more and more people appreciating the risks of living without health and life insurance and wanting peace of mind in these uncertain times. Additionally, the impact of wage inflation and the competitive market for talent means employers need to consider what their holistic proposition offers to their workforces more carefully than they have previously.

As businesses from all sectors increasingly acknowledge their responsibility to support their employees and address their needs, we believe that our unique offering, combining insurance and other employee wellbeing support and benefits, will continue to resonate with the market and our clients' employees alike. Notwithstanding the ongoing impact of lower insurance sales last year, as in-person meetings were halted in line with pandemic restrictions, I am extremely encouraged by the progress we have made in the first half of 2021 and post-period end. I look to the future with confidence."

An overview of the interim results from Deborah Frost, Chief Executive, is available to watch here:

https://youtu.be/Hx60-Vptg_8

Personal Group Holdings will be hosting a webinar for private investors on Friday 24 September at 14.00. If you would like to register for the webinar, please follow this link: https://bit.ly/PGH_H121

-S -

For more information please contact:

 
Personal Group Holdings Plc 
Deborah Frost / Sarah Mace                           +44 (0)1908 605 000 
 
Cenkos Securities Plc 
Camilla Hume / Callum Davidson (Nominated Adviser)   +44 (0)20 7397 8900 
Russell Kerr (Sales) 
Alma PR 
Susie Hudson/Caroline Forde/Harriet Jackson          +44 (0)20 3405 0205 
                                                      personalgroup@almapr.co.uk 
 

Notes to Editors

Personal Group Holdings Plc (AIM: PGH) is a digitally enabled 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. Many of these services are 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: Arsenal FC, Barchester Healthcare, DHL Supply Chain Limited, Merseyrail, Randstad, Royal Mail Group, the Sandwell & Birmingham NHS trust and Stagecoach Group plc. c.40% of clients are served by two or more Personal Group companies.

For further information, please see www.personalgroup.com

Interim Results Statement

I am pleased to report on a period where we have seen strategic progress across all the Group's divisions.

Whilst our top line financials reflect the impact of Covid-19 restrictions over the last 18 months, and will continue to do so into FY22, the underlying business is progressing well. We are profitable and in a strong financial position with an excellent team and quality technology. We are now also seeing many of our growth initiatives beginning to flourish.

The marketplace in which we operate is expanding with workforce benefits and services a substantial growth area for the UK. Employees are expecting more from their employers, and with wage inflation, increases to National Insurance costs and a shortage of talent, employers are having to be more flexible and imaginative in their provision of benefits. Supporting health and wellbeing is increasingly understood to be a vital offering, with health issues that may once have been considered a distant future possibility brought to the forefront of young adults' minds, with a realisation that such events could happen 'any day'.

Our proposition has never been more relevant, and we are seeing this reflected in our increasing new business pipeline.

Sales and Operational review

In our Insurance benefits business, whilst we remained unable to conduct face-to-face sales meeting with potential policyholders for the majority of the first half, retention rates for existing policyholders remained strong and pleasingly claims ratios (including COVID-19 related) were broadly in line with previous years. As in 2020, this reflected a slightly higher claims ratio for our death benefit plan offset by a lower claims ratio for our hospital plan, in comparison to pre-Covid levels. We anticipate seeing the balance on this start to swing back as the NHS starts to address its well-publicised waiting lists. Premium income declined to GBP12.5m, and the number of policies reduced to 236,000 as at 30 June 2021, as expected, primarily a result of the restrictions placed on face-to-face meetings. However, with the resumption of face-to-face, the Insurance benefits business has reached an inflection point and from July we have started to see growth in our policyholder numbers. We expect the re-building of our insurance book to continue into the second half and into 2022.

Our SaaS employee engagement and benefits products have been in demand during the period. P ass-through transactional spend through the Hapi platform on products such as e-vouchers and reloadable cards was particularly strong in H1, up 41.9% on the same period in 2020, reflecting increased usage of the platform by registered card users. Recurring revenue from platform subscriptions has remained stable. Sage Employee Benefits has also continued to generate revenues with growth particularly notable post-period end when the latest round of free trials converted to paid.

Innecto, our reward consultancy, delivered a strong H1 performance with retention rates of 92% on their digital products and several new clients signed in the period including Avanti West Coast, Newcastle University and Norfolk Care Association. This, together with an upward trend in consultancy income, supports our expectation that momentum will continue into the second half of the year.

Let's Connect, our salary sacrifice consumer technology benefits business, has also performed well, with revenue up significantly on the previous year helped by schemes deferred from 2020 and continued strong sales from Royal Mail Group's 'always on' scheme. The employee penetration rate of schemes at end of H1 was also ahead of H1 2020, although margin continues to be impacted by supply chain disruption, in particular the global computer chip shortage.

Financial summary

Our adjusted EBITDA performance in the period reflects the impact of our inability to conduct face-to-face sales of insurance products over the majority of the first half and most of the prior year, which has resulted in reduced premium income levels. This decline has been partly offset by continued insurance acquisition cost savings together with growth in adjusted EBITDA across the Group's other divisions.

We maintain a strong balance sheet with cash and deposits of GBP22.1m and no debt.

Dividend

In line with the Group's updated dividend payment profile announced on 5 November 2020, the Company announces that an interim dividend for 2021 of 5.3p will be paid on 5 November 2021 to members on the register as at 1 October 2021 (the record date). Shares will be marked ex-dividend on 30 September 2021. The last day for elections will be on 15 October 2020.

Performance against growth strategy

Our growth strategy is focused on widening our footprint across a broader range of industries as part of our vision to create a brighter future for the UK workforce.

We aim to ensure the insurance, employee benefits and wellbeing services we provide can be delivered in an appropriate, easy-to-access and cost effective medium. To this end we are pursuing the greater use of technology across the business, including through our proprietary platform and app, Hapi. This means that the Group will increasingly benefit from a growing level of recurring revenue and high margins. We also intend to accelerate cross-selling across the Group.

Driving insurance sales through existing and new channels

We have seen success in further increasing our pipeline of employees to sell to in future, with new contract wins in the period, including home goods retailer Homebase, and significant extensions of our reach with existing clients such as Cranswick.

In addition, since we have been able to restart our face-to-face activity towards the end of H1 2021, we have seen face-to-face conversion rates equalling or exceeding pre-COVID levels and a change in the mix of demand for our products with death benefit sales up from 22% to 31% as a proportion of total sales. We believe this is due to the pandemic having brought health risks into focus which will, in turn, drive incremental growth.

Our insurance sales team is now booked with face-to-face meetings until the end of FY21, and in some cases beyond. We have started to add new members to the team in the first half and anticipate hiring further in the second half to help satisfy the strong demand in the market. We continue to supplement our face-to-face meetings with virtual visits and telesales channels and also have digital insurance solution trials underway.

Scaling up the SME offer

Sage Employee Benefits ('SEB'), the Group's workforce engagement platform for SMEs created and sold in partnership with Sage, continued to gain traction in the period with to p line contribution starting to increase as conversions became more significant at the end of H1. This has built further post-period end and as at 1 September 2021 SEB was generating over GBP1.5m gross annualised recurring revenues with c1,100 companies now paying, a c50% increase from six months earlier.

Given the success of this offering, the Sage client acquisition process is now in full operation with free trial client recruitment having re-started in March 2021. The Group anticipates revenue generated by the division will grow steadily across the second half.

Maximising return on Hapi through client and end-user monetisation

The Group's employee engagement app 'Hapi' is a core part of the product offering. It differs from competitors' products through the strength of the technology, in particular in relation to its mobile App, and the breadth of its capabilities.

We have been focused on improving the offering in the first half, building our new Benefit Management System, HapiFlex, an enhanced proposition which will allow us to compete in a broader range of industries as well as providing services and products to employees with more disposable income. This has now been successfully launched with the University of York and we believe the Benefit Management System will open doors in key public-sector frameworks as well as private sector companies. Going forward, we will continue to invest in this offering.

New client acquisition activity increased with new clients onboarded including ATS Euromaster, Royal Mint, B Braun, Screwfix, B&Q, Homebase and The Caravan Club. In addition, a new partnership with The Retail Trust has been signed, providing access to over half a million retail workers.

Activated employees across Hapi and SEB grew to 489,000 as at 30 June 2021 (31 Dec 2020: 488,000).

Current trading and Outlook

Trading post-period end has continued to build momentum and supports our confidence going forward.

Looking ahead, our focus will be on three key strategic priorities:

   --      Maximising the opportunity for our insurance products; 
   --      Accelerating the digital transformation of our offering across all divisions; and 
   --      Driving growth of our enhanced SaaS offer across all sectors. 

Whilst the financial impact of 18 months of Covid-restrictions will continue to flow through in H2 2021 and into 2022 our pipeline of new business, not only in insurance but across all the Group's divisions, is growing and underpins our positive medium-term outlook.

With our strong balance sheet, we are well-placed to invest for growth, whilst capitalising on market demand and the increased focus by employers on their employees' health and financial wellbeing. We are looking forward to executing on our strategy across the second half and beyond, building our business and creating a brighter future for the UK workforce.

 
 Martin Bennett               Deborah Frost 
  Non-Executive Chairman    Chief Executive 
 
 21 September 2021 
 

Consolidated Income Statement

 
                                                     6 months            6 months 
                                                        ended               ended 
                                                 30 June 2021        30 June 2020 
                                                    Unaudited           Unaudited 
                                     Note             GBP'000             GBP'000 
 
 
Gross premiums written                                 12,752              15,132 
Outward reinsurance premiums                             (79)                (89) 
Change in unearned premiums                             (186)               (168) 
Change in reinsurers' share of 
 unearned premiums                                        (8)                 (9) 
                                                   (________)          (________) 
Earned premiums net of reinsurance                     12,479              14,866 
 
Other insurance related income                             85                  74 
IT salary sacrifice income                              6,203               5,241 
SaaS income                                            15,326              10,147 
Other non-insurance income                                 50                  49 
Investment income                                          13                  57 
                                                   (________)          (________) 
Revenue                                                34,156              30,434 
                                                   (________)          (________) 
 
Claims incurred                                       (2,810)             (3,341) 
Insurance operating expenses                          (6,765)             (7,210) 
Other insurance related expenses                          115                (62) 
IT salary sacrifice expenses                          (6,291)             (5,535) 
SaaS costs                                           (14,766)             (9,782) 
Share-based payment expenses                             (81)                 (6) 
Charitable donations                                     (35)                (50) 
Amortisation of intangible assets                       (266)               (216) 
                                                   (________)          (________) 
Expenses                                             (30,899)            (26,202) 
                                                   (________)          (________) 
 
Operating profit                                        3,257               4,232 
Finance costs                                            (17)                (44) 
                                                   (________)          (________) 
Profit before tax                                       3,240               4,188 
Tax                                   4                 (602)               (756) 
                                                   (________)          (________) 
Profit for the period after tax                         2,638               3,432 
                                                   (________)          (________) 
Total comprehensive income for 
 the period                                             2,638               3,432 
                                                   (________)          (________) 
 
 
Earnings per share     Pence  Pence 
Basic                    8.4   11.0 
Diluted                  8.4   11.0 
 

The total comprehensive income for the period is attributable to equity holders of Personal Group Holdings Plc.

Consolidated Balance Sheet

 
                                       At 30 June 2021  At 31 Dec 2020 
                                             Unaudited         Audited 
 
                                 Note          GBP'000         GBP'000 
 ASSETS 
 Non-current assets 
 Goodwill                         6             12,696          12,696 
 Intangible assets                7              1,110           1,254 
 Property, plant and equipment    8              5,242           5,456 
                                             (_______)       (_______) 
                                                19,048          19,406 
                                            (________)      (________) 
Current assets 
 Financial assets                 9              2,587           2,587 
 Trade and other receivables                    13,705          18,346 
 Reinsurance assets                                 61              78 
 Inventories                                       797             861 
 Cash and cash equivalents                      19,505          17,589 
 Current tax assets                                  -              55 
                                            (________)      (________) 
                                                36,655          39,516 
                                            (________)      (________) 
 Total assets                                   55,703          58,922 
                                            (________)      (________) 
 
 
 

Consolidated Balance Sheet

 
                                              At 30 June 2021  At 31 Dec 2020 
                                                    Unaudited         Audited 
                                        Note          GBP'000         GBP'000 
 
EQUITY 
 
Equity attributable to equity holders 
 of Personal Group Holdings plc 
Share capital                                           1,561           1,561 
Share premium                                           1,134           1,134 
Capital redemption reserve                                 24              24 
Other reserve                                            (32)            (21) 
Share based payment reserve               10               76               - 
Profit and loss reserve                                39,133          38,076 
                                                   (________)      (________) 
Total equity                                           41,896          40,774 
                                                   (________)      (________) 
 
 
LIABILITIES 
Non-current liabilities 
Deferred tax liabilities                 349         399 
Trade and other payables                 254         352 
                                  (________)  (________) 
                                         603         751 
                                  (________)  (________) 
 
Current liabilities 
Trade and other payables              10,320      14,274 
Insurance contract liabilities         2,728       3,123 
Current tax liabilities                  156           - 
                                  (________)  (________) 
                                      13,204      17,397 
                                  (________)  (________) 
 
                                  (________)  (________) 
Total liabilities                     13,807      18,148 
                                  (________)  (________) 
 
                                  (________)  (________) 
Total equity and liabilities          55,703      58,922 
                                  (________)  (________) 
 

Consolidated Statement of Changes in Equity for the six months ended 30 June 2021

 
                                                                                      Share 
                                                          Capital                     Based       Profit 
                              Share                    redemption        Other      Payment       & loss        Total 
                            capital   Share Premium       reserve      reserve      Reserve      reserve       equity 
                            GBP'000         GBP'000       GBP'000      GBP'000      GBP'000      GBP'000      GBP'000 
 
 Balance as at 
  1 January 2021              1,561           1,134            24         (21)            -       38,076       40,774 
                         (________)      (________)    (________)   (________)   (________)   (________)   (________) 
 Dividends                        -               -             -            -            -      (1,592)      (1,592) 
 Employee share-based 
  compensation                    -               -             -            -           76            5           81 
 Proceeds of SIP* 
  share sales                     -               -             -            -            -           19           19 
 Cost of SIP shares 
  sold                            -               -             -           13            -         (13)            - 
 Cost of SIP shares 
  purchased                       -               -             -         (24)            -            -         (24) 
                         (________)      (________)    (________)   (________)   (________)   (________)   (________) 
 Transactions 
  with owners                     -               -             -         (11)           76      (1,581)      (1,516) 
                         (________)      (________)    (________)   (________)   (________)   (________)   (________) 
 Profit for the 
  period                          -               -             -            -            -        2,638        2,638 
                         (________)      (________)    (________)   (________)   (________)   (________)   (________) 
 Total comprehensive 
  income for the 
  period                          -               -             -            -            -        2,638        2,638 
                         (________)      (________)     (_______)    (_______)    (_______)    (_______)    (_______) 
 Balance as at 
  30 June 2021                1,561           1,134            24         (32)           76       39,133       41,896 
                         (________)      (________)    (________)   (________)   (________)   (________)   (________) 
 

* PG Share Ownership Plan (SIP)

Consolidated Statement of Changes in Equity for the six months ended 30 June 2020

 
                                                          Capital                    Profit 
                                 Share        Share    redemption        Other       & loss        Total 
                               capital      Premium       reserve      reserve      reserve       equity 
                               GBP'000      GBP'000       GBP'000      GBP'000      GBP'000      GBP'000 
 
 Balance as at 1 January 
  2020                           1,561        1,134            24        (230)       35,526       38,015 
                            (________)   (________)    (________)   (________)   (________)   (________) 
 Dividends                           -            -             -            -      (2,307)      (2,307) 
 Employee share-based 
  compensation                       -            -             -            -            6            6 
 Proceeds of SIP* share 
  sales                              -            -             -            -            3            3 
 Cost of SIP shares 
  sold                               -            -             -           14         (14)            - 
 Cost of SIP shares 
  purchased                          -            -             -          (4)            -          (4) 
                            (________)   (________)    (________)   (________)   (________)   (________) 
 Transactions with 
  owners                             -            -             -           10      (2,312)      (2,302) 
                            (________)   (________)    (________)   (________)   (________)   (________) 
 Profit for the period               -            -             -            -        3,432        3,432 
                            (________)   (________)    (________)   (________)   (________)   (________) 
 Total comprehensive 
  income for the period              -            -             -            -        3,432        3,432 
                            (________)   (________)     (_______)    (_______)    (_______)    (_______) 
 Balance as at 30 June 
  2020                           1,561        1,134            24        (220)       36,646       39,145 
                            (________)   (________)    (________)   (________)   (________)   (________) 
 
 

* PG Share Ownership Plan (SIP)

Consolidated Statement of Cash Flows

 
                                                  6 months       6 months 
                                                     ended          ended 
                                              30 June 2021   30 June 2020 
                                                 Unaudited      Unaudited 
                                                   GBP'000        GBP'000 
 
Net cash from operating activities (see 
 opposite)                                           3,930          4,564 
                                                  (______)       (______) 
Investing activities 
Additions to property, plant and equipment            (69)          (197) 
Additions to intangible assets                       (122)          (205) 
Proceeds from disposal of property, plant 
 and equipment                                           -            336 
Purchase of financial assets                           (1)          (503) 
Interest received                                       13             42 
                                                  (______)       (______) 
Net cash from investing activities                   (179)          (527) 
                                                  (______)       (______) 
Financing activities 
Purchase of own shares by the SIP                     (16)            (2) 
Proceeds from disposal of own shares 
 by the SIP                                              8             11 
Interest paid                                          (2)            (1) 
Payment of lease liabilities                         (233)          (275) 
Dividends paid                                     (1,592)        (2,307) 
                                                  (______)       (______) 
Net cash used in financing activities              (1,835)        (2,574) 
                                                  (______)       (______) 
Net change in cash and cash equivalents              1,916          1,463 
Cash and cash equivalents, beginning 
 of period                                          17,589         14,476 
                                                 (_______)      (_______) 
Cash and cash equivalents, end of period            19,505         15,939 
                                                (________)     (________) 
 

Consolidated Statement of Cash Flows

 
                                                       6 months       6 months 
                                                          ended          ended 
                                                   30 June 2021   30 June 2020 
                                                      Unaudited      Unaudited 
                                                        GBP'000        GBP'000 
Operating activities 
Profit after tax                                          2,638          3,432 
Adjustment for: 
Depreciation                                                480            509 
Amortisation of intangible assets                           266            216 
(Profit)/Loss on disposal of property, plant 
 and equipment                                                -          (130) 
Interest received                                          (13)           (42) 
Interest charge                                              17             44 
Share-based payment expenses                                 81              6 
Taxation expense recognised in income statement             602            756 
 
Changes in working capital: 
Trade and other receivables                               4,658          8,288 
Trade and other payables                                (4,420)        (6,969) 
Inventories                                                  64          (149) 
Taxes paid                                                (443)        (1,397) 
                                                     (________)     (________) 
Net cash from operating activities                        3,930          4,564 
                                                     (________)     (________) 
 

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 2020.

The financial information for the year ended 31 December 2020 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 2020 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 21 September 2021.

   2          Accounting policies 

These June 2021 interim consolidated financial statements of Personal Group Holdings Plc are for the six months ended 30 June 2021. 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 2020.

These financial statements have been prepared in accordance with IFRS standards and IFRIC interpretations as adopted by the EU, issued and effective as at 30 June 2021.

The principal accounting policies remain unchanged from the year ended 31 December 2020. No new standards have become applicable for accounting periods commencing on or after 1 January 2021.

   3          Segment analysis 

The segments used by management to review the operations of the business are disclosed below.

   1)         Core 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)         IT Salary Sacrifice 

IT salary sacrifice refers to the trade of PG Let's Connect, a salary-sacrifice technology company purchased in 2014.

   3)         SaaS 

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. Also included in this segment, from 1 March 2020, is consultancy and license income derived from selling Innecto digital platform subscriptions.

   4)          Other 

The other operating segment consists exclusively of revenue generated by Berkeley Morgan Group (BMG) and its subsidiary undertakings along with any investment and rental income obtained by the Group.

The revenue and net result generated by each of the Group's operating segments are summarised as follows,

 
Operating segments                                        IT Salary 
                                        Core Insurance    Sacrifice         SaaS        Other        Total 
                                               GBP'000      GBP'000      GBP'000      GBP'000      GBP'000 
 
6 months to June 2021 
 
Earned premiums net of reinsurance              12,479            -            -            -       12,479 
Other insurance related income                       -            -            -           85           85 
Non-insurance related income - 
 IT Salary Sacrifice                                 -        6,203            -            -        6,203 
Non-insurance related income - 
 Platform                                            -            -        1,905            -        1,905 
Non-insurance related income - 
 Transactional and commission                        -            -       13,421            -       13,421 
Non-insurance related income - 
 Other                                               -            -            -           50           50 
Investment income                                    -            -            -           13           13 
 
                                           (_________)  (_________)  (_________)  (_________)  (_________) 
                                                12,479        6,203       15,326          148       34,156 
Total revenue                              (_________)  (_________)  (_________)  (_________)  (_________) 
 
Net result for period before tax                 2,773     (122)             443          146        3,240 
Innecto - amortisation of intangibles                -            -          103            -          103 
Interest                                            12            2            3            -           17 
Share-based payment expenses                         -            -            -           81           81 
Depreciation                                       266           49          160            5          480 
Amortisation (other)                               125           32            6            -          163 
 
Adjusted EBITDA                                  3,176     (39)             715           232        4,084 
                                           (_________)  (_________)  (_________)  (_________)  (_________) 
Segment assets                                  28,964        7,092        5,214       14,433       55,703 
                                           (_________)  (_________)  (_________)  (_________)  (_________) 
Segment liabilities                              7,078        2,113        4,651            5       13,807 
                                           (_________)  (_________)  (_________)  (_________)  (_________) 
Depreciation and amortisation                      391           81          269            5          746 
                                           (_________)  (_________)  (_________)  (_________)  (_________) 
 
 

All 2021 income was derived from customers that are based in the UK.

Notes to the Consolidated Financial Statements

 
Operating segments                                       IT Salary 
                                       Core Insurance    Sacrifice         SaaS        Other        Total 
                                              GBP'000      GBP'000      GBP'000      GBP'000      GBP'000 
 
6 months to June 2020 
 
Earned premiums net of reinsurance             14,863            -            3            -       14,866 
Other insurance related income                      -            -            -           74           74 
Non-insurance related income - 
 IT Salary Sacrifice                                -        5,241            -            -        5,241 
Non-insurance related income - 
 Platform                                           -            -        1,646            -        1,646 
Non-insurance related income - 
 Transactional and commission                       -            -        8,501            -        8,501 
Non-insurance related income - 
 Other                                              -            -            -           49           49 
Investment income                                   -            -            -           57           57 
 
                                          (_________)  (_________)  (_________)  (_________)  (_________) 
                                               14,863        5,241       10,150          180       30,434 
Total revenue                             (_________)  (_________)  (_________)  (_________)  (_________) 
 
Net result for period before tax                4,083     (333)           247            191        4,188 
Innecto- amortisation of intangibles                -            -          103            -          103 
Interest                                           30            8            6            -           44 
Share-based payment expenses                        -            -            -            6            6 
Depreciation                                      280           55          169            5          509 
Amortisation (other)                               70           30           13            -          113 
 
Adjusted EBITDA                                 4,463        (240)        538            202        4,963 
                                          (_________)  (_________)  (_________)  (_________)  (_________) 
Segment assets                                 27,367        6,173        1,648       14,562       49,780 
                                          (_________)  (_________)  (_________)  (_________)  (_________) 
Segment liabilities                             6,867        2,577        1,185            6       10,635 
                                          (_________)  (_________)  (_________)  (_________)  (_________) 
Depreciation and amortisation                     350           85          285            5          725 
                                          (_________)  (_________)  (_________)  (_________)  (_________) 
 
 
   4          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 2021 was 18.6% (six-month period ended 30 June 2020: 18.1%).

   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     EPS  6 months ended     EPS 
            30 June 2021   Pence    30 June 2020   Pence 
 
Basic         31,213,128     8.4      31,171,543    11.0 
          --------------  ------  --------------  ------ 
Diluted       31,214,981     8.4      31,171,543    11.0 
          --------------  ------  --------------  ------ 
 

During the first six months of 2021 Personal Group Holdings Plc paid dividends of GBP1,592,000 to its equity shareholders (2020: GBP2,307,000). This represents a payment of 5.10p per share (2020: 7.40p).

 
                                                       6 months ended            6 months ended 
                                                         30 June 2021              30 June 2020 
                                                              GBP'000                   GBP'000 
 
Dividends paid or provided for 
 during the period                                              1,592                     2,307 
                                                              (_____)                   (_____) 
 
 
   6         Goodwill 
 
                                              PG Let's           Innecto             Total 
                                               Connect 
                                               GBP'000           GBP'000           GBP'000 
 Cost 
 At 1 January 2021                              10,575             2,121            12,696 
 Additions in the year                               -                 -                 - 
                                            (________)        (________) 
                                             _________           _______        (________) 
 At 30 June 2021                                10,575             2,121            12,696 
                                            (________)        (________) 
                                             _________         _________        (________) 
 Amortisation and impairment 
 At 1 January 2021                                   -                 -                 - 
 Impairment charge for year                          -                 -                 - 
                                            (________)        (________)        (________) 
                                             _________         _________         _________ 
 At 30 June 2021                                     -                 -                 - 
                                            (________)        (________)        (________) 
 Net book value at 30 June 2021                 10,575             2,121            12,696 
                                            (________)        (________)        (________) 
 Net book value at 31 December 2020             10,575             2,121            12,696 
                                            (________)        (________)        (________) 
 
   7        Intangible assets 
 
                                                                          Internally 
                                                 Computer                  Generated 
                              Customer           software       Innecto     Computer 
                                 Value    and development    Technology     Software        Total 
                               GBP'000            GBP'000       GBP'000      GBP'000      GBP'000 
 Cost 
 At 1 January 2021               2,374              1,520           298          506        4,698 
 Transfers                           -                  -             -            -            - 
 Additions                           -                122             -            -          122 
 Disposals                           -                  -             -            -            - 
                            (________)         (________)    (________)   (________)   (________) 
 At 30 June 2021                 2,374              1,642           298          506        4,820 
                            (________)         (________)    (________)   (________)   (________) 
 Amortisation 
 At 1 January 2021               1,914                922           110          498        3,444 
 Amortisation charge for 
  the year                          73                151            30           12          266 
 Provided in the period              -                  -             -            -            - 
 Disposals in the period             -                  -             -            -            - 
                            (________)         (________)    (________)   (________)   (________) 
 At 30 June 2021                 1,987              1,073           140          510        3,710 
                            (________)         (________)    (________)   (________)   (________) 
 Net book amount at 30 
  June 2021                        387                569           158            4        1,110 
                            (________)         (________)    (________)   (________)   (________) 
 Net book amount at 31 
  December 2020                    460                598           188            8        1,254 
                            (________)         (________)    (________)   (________)   (________) 
 
   8          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 2021         5,037             157       1,085        2,303         38        1,459    10,079 
Additions                     -               -          51           18          -          197       266 
Disposals                     -               -       (180)         (20)          -        (438)     (638) 
                       (______)        (______)    (______)     (______)   (______)     (______)  (______) 
At 30 June 2021           5,037             157         956        2,301         38        1,218     9,707 
                       (______)        (______)    (______)     (______)   (______)     (______)  (______) 
Depreciation 
At 1 January 2021         1,742             102         774        1,064         34          907     4,623 
Provided in the 
 period                      43              14          93          112          2          216       480 
Disposals                     -               -       (180)         (20)          -        (438)     (638) 
                       (______)        (______)    (______)     (______)   (______)     (______)  (______) 
At 30 June 2021           1,785             116         687        1,156         36          685     4,465 
                       (______)        (______)    (______)     (______)   (______)     (______)  (______) 
Net book amount 
 at 
 30 June 2021             3,252              41         269        1,145          2          533     5,242 
                       (______)        (______)    (______)     (______)   (______)     (______)  (______) 
Net book amount 
 at 
 31 December 2020         3,295              55         311        1,239          4          552     5,456 
                       (______)        (______)    (______)     (______)   (______)     (______)  (______) 
 
   9   Financial Investments 
 
                   At 30 June   At 31 December 
                         2021             2020 
                    Unaudited          Audited 
                      GBP'000          GBP'000 
 Bank deposits          2,587            3,067 
                   (________)       (________) 
                        2,587            3,067 
                  (_________)      (_________) 
 

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.

   10         Long Term Incentive Plan (LTIP) 

LTIP2021

The Remuneration Committee approved a new LTIP on 6 April 2021. 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)

50% 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)

35% 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. 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.

On 23 July 2020 the Remuneration Committee approved the grant of a one-off share award of GBP75,000 to the Chief Executive in recognition of the fact that no LTIP had been made available to her since joining the Group. This award was issued under the new LTIP mechanism introduced on 6 April 2021 and will be subject to forfeiture up to March 2022 but does not have performance conditions attached.

In total, GBP76,000 of employee share-based compensation has been included in the consolidated income statement to 30 June 2021 (2020: GBPnil). The corresponding credit is taken to equity. No liabilities were recognised from share-based transactions. The remaining GBP5,000 of share-based compensation expense relates to the Company Share Option Plan (CSOP).

   11         Financial calendar for the year ending 31 December 2021 

The Company announces the following dates in its financial calendar for the year ending 31 December 2021:

-- Preliminary results for the year ending 31 December 2021 - March 2022

-- Publication of Report and Accounts for 2021 - March 2022

-- AGM - April/May 2022

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September 21, 2021 02:00 ET (06:00 GMT)

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