TIDMPGH
RNS Number : 5229M
Personal Group Holdings PLC
17 September 2019
17 September 2019
PERSONAL GROUP HOLDINGS PLC
("Personal Group", "Company" or "Group")
Interim Results for the six months ended 30 June 2019
Solid progress in line with management's expectations.
Personal Group Holdings Plc, a leading provider of employee
services in the UK, announces its interim results for the six
months ended 30 June 2019. The Company has continued to make solid
progress, performing in line with management's expectations at the
half year.
Highlights
Financial
-- Group revenue rose 42.4% to GBP30.0m (2018: GBP21.1m),
including a GBP6.3m increase in transactional spend and commission
on Hapi to GBP7.4m (2018: GBP1.1m)
-- Adjusted EBITDA* down 5.0% to GBP4.5m (2018: GBP4.8m)
-- Profit before tax increased 5.6% to GBP4.1m (2018: GBP3.9m)
-- Basic EPS of 11.4p (2018: 10.5p), an increase of 8.6%
-- Balance sheet remains strong with cash and deposits of GBP19.2m and no debt
-- Dividends per share paid in the period up 1.3% to 11.65p
(2018: 11.50p), maintaining progressive dividend policy
Operational
-- Solid start to the year, with trading in line with
management's expectations at the half year
-- Core insurance business continued to perform well, although
new client acquisition has been slower than expected
-- Substantial increase in SaaS revenue, growing 341% to GBP8.8m
(2018: GBP2.0m) demonstrating increased utilisation of Hapi and
volumes generated through reloadable cards and e-vouchers
-- Strong PG Let's Connect performance generated revenue of GBP5.8m (2018: GBP3.3m)
-- Successful acquisition of Innecto in February 2019 already
benefitting the Group - cross-selling opportunities and 53% growth
in new business wins
* Adjusted EBITDA is defined as earnings before interest, tax,
depreciation, amortisation of intangible assets, goodwill
impairment, share-based expense payments, corporate acquisition
costs, restructuring costs and the release of tax provisions. 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:
"Personal Group has performed in line with management's
expectations during the first half of the year. Recent market
testing of our proposition, following my appointment as Chief
Executive, has confirmed that our comprehensive offering strongly
resonates with our target customers. This, combined with the
Company's solid foundation and the evolution of our strategy,
assures me of the opportunity for the future growth of the
business. The Board remains confident in the long-term outlook and,
whilst EBITDA is expected to be reduced as a result of the delayed
timing of the launch of the next iteration of Sage Employee
Benefits, revenue and reported profit before tax remain in line
with market forecasts for the full year."
-S -
For more information please contact:
Personal Group Holdings Plc
Deborah Frost / Mike Dugdale +44 (0)1908 605 000
Cenkos Securities Plc
Max Hartley / Callum Davidson (Nominated Adviser) +44 (0)20 7397 8900
Russell Kerr (Sales)
Hudson Sandler
Nick Lyon / Toby Andrews +44 (0)20 7796 4133
Notes to Editors:
Personal Group Holdings Plc (AIM: PGH) is a technology enabled
employee services business, working with employers to drive
productivity though better employee engagement and a more motivated
workforce. With over 30 years' experience, the Company provides
employee benefits and services to a large number of employees
across the UK.
Personal Group's offer comprises in-house services, including
employee insurance products (hospital, convalescence plans and
death benefit), the provision of home technology via salary
sacrifice (iPads, computers, laptops, smart phones and smart TVs),
the provision of e-payslips, and pay and reward consulting via
Innecto, the leading independent UK consultancy acquired in 2019.
Third party services include retail discounts, employee assistance
programmes, wellbeing programmes and salary sacrifice cars and
bikes.
The product offer is provided via the Company's proprietary
technology platform, Hapi. The platform is intuitive, designed
primarily for app deployment and also accessible via web and
tablet, driving better engagement, communication and value
recognition. Hapi is flexible and can quickly integrate additional
services, such as existing employee services and partner platforms.
Hapi is a digital SaaS product.
Through technology and select acquisitions, the Company has
grown its addressable market to the majority of the working
population in the UK; including 15.6m SME employees targeted via
its partnership with Sage, the UK's largest software company.
Personal Group's innovative approach to using technology to
deliver its programmes, in combination with its face-to-face method
of communicating with employees, delivers a compelling offer to
blue-chip clients across the UK as a way of attracting, retaining
and motivating employees. The acquisition of Innecto in February
2019 allows Personal Group to engage with clients earlier in their
thinking around Pay and Reward, and to interact with a new base of
blue-chip and fast growth clients typically at HR Director and CEO
level.
Personal Group has a strong client base across a range of
sectors including passenger transport, healthcare, logistics and
food manufacturing. Clients include: Stagecoach, Four Seasons
Health Care, DHL, and 2 Sisters Food Group.
For further information, please see www.personalgroup.com
Interim Results Statement
Introduction
The Group has made a solid start to the year with trading during
the six-month period in line with management's expectations and
with pre-tax profit up 5.6% on last year. The Company's core
insurance business continued to perform well, although new sales
have been slower than expected. There was strong performance from
both PG Let's Connect, our salary sacrifice business, and Innecto.
Revenue from SaaS saw a further strong increase as utilisation of
Hapi by customers increased and from the impact of bringing the
provisioning of reloadable cards and e-vouchers in house.
The Company continues to deliver on its strategy and has evolved
this strategy following the appointment of Deborah Frost as its new
Chief Executive. Following the Innecto acquisition, the Company has
further breadth and experience from which to draw but will continue
to have a focus on further profitable growth across all
divisions.
Financial Performance
Group revenue for the six months to 30 June 2019 increased 42.4%
to GBP30.0m (2018: GBP21.1m). This increase was driven by a strong
performance in the SaaS business, including Innecto, and PG Let's
Connect, alongside a slightly weaker performance from the insurance
business.
During the period, EBITDA from continuing operations decreased
by 5.0% to GBP4.5m (2018: GBP4.8m). This was predominantly driven
by increased costs, including in sales and marketing
activities.
Profit before tax was up 5.6% to GBP4.1m (2018: GBP3.9m), whilst
earnings per share increased 8.6% to 11.4p (2018: 10.5p). During
the period the Company maintained its progressive dividend policy,
with dividends per share paid up 1.3% to 11.65p (2018: 11.50p). As
previously announced, the Company's third dividend for 2019 of
5.825p per share will be paid on 20 September 2019 to members on
the register on 9 August 2019.
The Company's balance sheet remained strong with total cash and
deposits increasing to GBP19.2m and no debt at the period end.
Business Review
The core insurance division again produced a solid PBT
performance with revenue slightly below last year. The slowing down
of new business wins over the last 12 months will impact revenue
further in the latter part of this year and into 2020. We have
invested in front line sales and marketing to address this and
recent market testing and benchmarking of our products confirmed
that our proposition still strongly resonates.
PG Let's Connect, the Company's salary sacrifice business, had a
very encouraging start to the year, with trading significantly
ahead of this time last year and in line with management's
expectations. The business continues to benefit from Royal Mail's
decision to run its salary sacrifice offer to its employees on a
continuous basis.
PG Let's Connect remains a Q4 weighted business due to the
natural heightened interest in its offer in the run up to Christmas
but at this stage we remain positive for the full year. A new
proposition for the NHS has been developed and tested with positive
feedback, which is encouraging and presents a sizeable market
opportunity for the future.
The Company's SaaS business saw a strong first half, with
revenues increasing by 341% over the corresponding period last
year. This was driven primarily by revenues generated from the
users of Hapi spending more through Hapi and the fact that the
provision of products such as reloadable cards, e-vouchers and
cinema tickets are now serviced largely in house but does also
represent a GBP0.5m (53%) increase in paid for subscriptions and
consultancy income predominantly as a result of the acquisition of
Innecto which has experienced 53% growth in new business wins and
45% increase in pipeline from the comparable period last year.
The relationship with Sage is progressing and the latest
campaign to cross-sell into part of their existing client base went
live on 2 September, supported by extensive marketing and sales
activity. A further launch to potential Sage customers is planned
to follow shortly.
Innecto Acquisition
The acquisition of Innecto has been particularly pleasing, not
only in delivering its own significant revenue growth but also
introducing several new opportunities with cross-selling potential.
Innecto has now been well integrated into the wider Group and the
Company expects to continue generating growth opportunities that
will further strengthen the Group's position as one of the leading
comprehensive providers of Employee Services in the UK.
Market
As we progress through 2019, the market for employee benefits
remains strong. Looking ahead as a UK centric business we believe
that the increased pressure to retain and hire labour and
associated costs created by Brexit will reinforce the value of our
proposition.
Strategy
Following Deborah's appointment earlier this year, the Company
has undergone a review of its strategy and has identified new
market areas and opportunities to evolve the existing strategy. As
a result, the aspirations of the business are to double EBITDA by
2025 with 1 million users of our Hapi platform.
We intend to grow the insurance business by widening our
accessible market to include the 'gig' economy for current and new
clients, improving attractiveness of our offer to employers and
policyholders and retaining more policyholders for longer.
This is expected to be delivered by disrupting core markets and
driving profitable growth by growing the lower cost of acquisition
segments with new products and cross-selling across the Group. We
intend to increase client / customer penetration and retention
across all markets.
We will seek to build a more balanced and broader portfolio that
focusses on long-term profit and dividend growth, with less
reliance on existing core markets.
Outlook
Personal Group's trading was solid during the first half of the
year and in line with management's expectations. Following the
recent review of strategy, there will be an increased focus on
restoring the insurance business to growth and investment in
developing sales opportunities across all areas of business.
Personal Group remains well placed to benefit from the continued
growth and development of the employee services market, with the
strength of its proprietary technology platform, Hapi, offering a
flexible means of distributing owned and third-party products and
services to an established, sizeable and growing client base and
their employees.
The Board has confidence that whilst EBITDA is anticipated to be
reduced, the Group's revenue and reported profit before tax
continue to trade in line with expectations for the full year.
Mark Winlow Deborah Frost
Non-Executive Chairman Chief Executive
17 September 2019
Consolidated Income Statement
6 months 6 months
ended ended
30 June 2019 30 June 2018
Unaudited Unaudited
Note GBP'000 GBP'000
Gross premiums written 15,311 15,795
Outward reinsurance premiums (100) (117)
Change in unearned premiums (45) (59)
Change in reinsurers' share of
unearned premiums (10) (8)
(________) (________)
Earned premiums net of reinsurance 15,156 15,611
Other insurance related income 100 120
IT salary sacrifice income 5,830 3,264
SaaS income 8,834 2,004
Other non-insurance income 51 58
Investment income 59 32
(________) (________)
Revenue 30,030 21,089
(________) (________)
Claims incurred (3,397) (3,730)
Insurance operating expenses (8,290) (7,665)
Other insurance related expenses (60) (106)
IT salary sacrifice expenses (5,637) (3,570)
SaaS costs (8,547) (1,602)
Other non-insurance expenses (177) -
Share-based payment expenses (9) (76)
Charitable donations (50) (50)
Amortisation of intangible assets (252) (336)
(________) (________)
Expenses (26,242) (17,135)
(________) (________)
Operating profit 3,611 3,954
Finance costs (68) (72)
Release of Provision 12 542 -
Share of profit/(loss) of equity-accounted
investee net of tax 7 (8)
(________) (________)
Profit before tax 4,092 3,874
Tax 4 (547) (646)
(________) (________)
Profit for the period after tax 3,545 3,228
(________) (________)
Total comprehensive income for
the period 3,545 3,228
(________) (________)
Earnings per share Pence Pence
Basic 11.4 10.5
Diluted 11.4 10.3
The total comprehensive income for the period is attributable to
equity holders of Personal Group Holdings Plc.
Consolidated Balance Sheet
At At
30 June 2019 31 Dec 2018
Unaudited Audited
Note GBP'000 GBP'000
ASSETS
Non-current assets
Goodwill 6 12,616 10,575
Intangible assets 7 1,233 500
Property, plant and equipment 8 6,190 6,040
Investment property 130 130
Deferred tax asset 14 -
(_______) (________)
20,183 17,245
(________) (________)
Current assets
Financial assets 9 2,792 2,530
Trade and other receivables 9,996 16,532
Equity-accounted investee 11 58 50
Reinsurance assets 138 187
Inventories 902 643
Cash and cash equivalents 16,399 15,148
(________) (________)
30,285 35,090
(________) (________)
Total assets 50,468 52,335
(________) (________)
Consolidated Balance Sheet
At At
30 June 2019 31 Dec 2018
Unaudited Audited
Note GBP'000 GBP'000
EQUITY
Equity attributable to equity
holders of Personal Group Holdings
plc
Share capital 1,561 1,544
Share premium 1,134 -
Capital redemption reserve 24 24
Other reserve (225) (210)
Profit and loss reserve 33,888 33,937
(________) (________)
Total equity 36,382 35,295
(________) (________)
LIABILITIES
Non-current liabilities
Deferred tax liabilities - 102
Trade and other payables 403 356
Current liabilities
Provisions 12 717 1,259
Trade and other payables 10,148 12,233
Insurance contract liabilities 2,180 2,376
Current tax liabilities 638 714
(________) (________)
13,683 16,582
(________) (________)
(________) (________)
Total liabilities 14,086 17,040
(________) (________)
(________) (________)
Total equity and liabilities 50,468 52,335
(________) (________)
Consolidated Statement of Changes in Equity for the six months
ended 30 June 2019
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
2019 1,544 - 24 (210) 33,937 35,295
(________) (________) (________) (________) (________) (________)
Dividends - - - - (3,613) (3,613)
Employee share-based
compensation - - - - 9 9
Proceeds of SIP* share
sales - - - - 38 38
Cost of SIP shares
sold - - - 28 (28) -
Cost of SIP shares
purchased - - - (43) - (43)
Purchase of new shares 17 1,134 - - - 1,151
(________) (________) (________) (________) (________) (________)
Transactions with
owners 17 1,134 - (15) (3,594) (2,458)
(________) (________) (________) (________) (________) (________)
Profit for the period - - - - 3,545 3,545
(________) (________) (________) (________) (________) (________)
Total comprehensive
income for the period - - - - 3,545 3,545
(________) (________) (_______) (_______) (_______) (_______)
Balance as at 30 June
2019 1,561 1,134 24 (225) 33,888 36,382
(________) (________) (________) (________) (________) (________)
* PG Share Ownership Plan (SIP)
Consolidated Statement of Changes in Equity for the six months
ended 30 June 2018
Available
Capital for sale Profit
Share redemption financial Other & loss Total
capital reserve assets reserve reserve equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance as at 1 January
2018 1,540 24 85 (310) 32,417 33,756
Adjustment on initial
adoption of IFRS 9 - - (85) - 85 -
Restated balance as
at 1 January 2018 1,540 24 - (310) 32,502 33,756
(________) (________) (________) (________) (________) (________)
Dividends - - - - (3,541) (3,541)
Employee share-based
compensation - - - - 53 53
Proceeds of SIP* share
sales - - - - 32 32
Cost of SIP shares sold - - - 40 (40) -
Cost of SIP shares purchased - - - (25) - (25)
Nominal value of LTIP**
shares issued 4 - - - (4) -
(________) (________) (________) (________) (________) (________)
Transactions with owners 4 - - 15 (3,500) (3,481)
(________) (________) (________) (________) (________) (________)
Profit for the year - - - - 3,228 3,228
Balance as at 30 June
2018 1,544 24 - (295) 32,230 33,503
(________) (________) (________) (________) (________) (________)
* PG Share Ownership Plan (SIP)
** Long Term Incentive Plan (LTIP)
Consolidated Statement of Cash Flows
6 months 6 months
ended ended
30 June 2019 30 June 2018
Unaudited Unaudited
GBP'000 GBP'000
Net cash from operating activities (see
opposite) 7,301 5,009
(______) (______)
Investing activities
Additions to property, plant and equipment (420) (90)
Additions to intangible assets (56) (46)
Proceeds from disposal of property, plant
and equipment 45 67
Purchase of financial assets (262) (874)
Proceeds from disposal of financial assets - 994
Interest received 43 30
Dividends received - 8
Payment on acquisition of Innecto, net
of cash acquired (2,714) -
(______) (______)
Net cash from investing activities (3,364) 89
(______) (______)
Financing activities
Purchase of own shares by the SIP (10) (25)
Proceeds from disposal of own shares
by the SIP 15 32
Payment of lease liabilities (229) (182)
Dividends paid (3,613) (3,541)
Share issue 1,151 -
(______) (______)
Net cash used in financing activities (2,686) (3,716)
(______) (______)
Net change in cash and cash equivalents 1,251 1,382
Cash and cash equivalents, beginning
of period 15,148 12,641
(_______) (_______)
Cash and cash equivalents, end of period 16,399 14,023
(________) (________)
Consolidated Statement of Cash Flows
6 months 6 months
ended ended
30 June 2019 30 June 2018
Unaudited Unaudited
GBP'000 GBP'000
Operating activities
Profit after tax 3,545 3,228
Adjustment for:
Depreciation 460 396
Amortisation of intangible assets 252 336
Loss on disposal of property, plant and equipment 57 -
Realised and unrealised net investment losses
/ (profits) - 21
Interest received (43) (30)
Dividends received - (8)
Interest charge 68 72
Share of (profit)/loss of equity-accounted
investee, net of tax (7) 8
Share-based payment expenses 9 53
Taxation expense recognised in income statement 547 646
Changes in working capital:
Trade and other receivables 7,033 5,746
Trade and other payables (3,108) (4,957)
Provisions (542) -
Inventories (259) 184
Taxes paid (711) (686)
(________) (________)
Net cash from operating activities 7,301 5,009
(________) (________)
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 2018.
The financial information for the year ended 31 December 2018
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 2018
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 16 September
2019.
2 Accounting policies
These June 2019 interim consolidated financial statements of
Personal Group Holdings Plc are for the six months ended 30 June
2019. 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 2018.
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 2019.
The principal accounting policies remain unchanged from the year
ended 31 December 2018. No new standards have become applicable for
accounting periods commencing on or after 1 January 2019.
Notes to the Consolidated Financial Statements
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.
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 2019, is consultancy and license income derived from
selling Innecto digital platform subscriptions.
4) Other
The other operating segment consists of revenue generated by
Berkeley Morgan Group (BMG) and its subsidiary undertakings along
with any investment and rental income obtained by the Group.
During the period, the allocation of costs within the operating
segments has been amended in order to offer a clearer and more
representative view of the performance of the relevant areas of the
business.
Notes to the Consolidated Financial Statements
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 2019
Earned premiums net of reinsurance 15,151 - 5 - 15,156
Other insurance related income 1 - - 99 100
Non-insurance related income -
IT Salary Sacrifice - 5,830 - - 5,830
Non-insurance related income -
Platform - - 1,425 - 1,425
Non-insurance related income -
Transactional and commission - - 7,409 - 7,409
Non-insurance related income -
Other - - - 51 51
Investment income - - - 59 59
(_________) (_________) (_________) (_________) (_________)
15,152 5,830 8,839 209 30,030
Total revenue (_________) (_________) (_________) (_________) (_________)
Net result for period before tax 3,378 101 152 461 4,092
PG Let's Connect - amortisation
of intangibles - 53 - - 53
Interest 48 14 6 - 68
Share-based payment expenses - - - 9 9
Provision release - - - (542) (542)
Acquisition costs - - - 177 177
Depreciation 394 57 4 5 460
Amortisation (other) 39 27 133 - 199
Adjusted EBITDA 3,859 252 295 110 4,516
(_________) (_________) (_________) (_________) (_________)
Segment assets 26,282 6,672 2,971 14,543 50,468
(_________) (_________) (_________) (_________) (_________)
Segment liabilities 7,630 3,400 2,853 203 14,086
(_________) (_________) (_________) (_________) (_________)
Depreciation and amortisation 433 137 137 5 712
(_________) (_________) (_________) (_________) (_________)
Of the above, GBP8,000 of SaaS income has been generated from
customers based in the EU. All other income is derived from
customers that are based in the UK.
Notes to the Consolidated Financial Statements
IT Salary
Core Insurance Sacrifice SaaS Other Total
Operating segments GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
6 months to June 2018
Earned premiums net of reinsurance 15,607 - 4 - 15,611
Other insurance related income (2) - - 122 120
Non-insurance related income
- IT Salary Sacrifice - 3,264 - - 3,264
Non-insurance related income
- Platform - - 932 - 932
Non-insurance related income
- Transactional and commission - - 1,072 - 1,072
Non-insurance related income
- Other - - - 58 58
Investment income - - - 32 32
(_________) (_________) (_________) (_________) (_________)
Total revenue 15,605 3,264 2,008 212 21,089
(_________) (_________) (_________) (_________) (_________)
Net result for period before
tax 4,160 (515) 257 (28) 3,874
PG Let's Connect - amortisation
of intangibles - 165 - - 165
Interest 54 14 4 - 72
Share-based payment expenses - - - 76 76
Depreciation 337 51 4 4 396
Amortisation (other) 72 29 71 - 172
Adjusted EBITDA 4,623 (256) 336 52 4,755
(_________) (_________) (_________) (_________) (_________)
Segment assets 25,197 6,051 1,269 12,730 45,247
(_________) (_________) (_________) (_________) (_________)
Segment liabilities 6,668 3,710 1,188 178 11,744
(_________) (_________) (_________) (_________) (_________)
Depreciation and amortisation 409 245 75 4 733
(_________) (_________) (_________) (_________) (_________)
All income is derived from customers that are based in the
UK.
Notes to the Consolidated Financial Statements
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 2019
was 13.4% (six-month period ended 30 June 2018: 16.7%).
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 2019 Pence 30 June 2018 Pence
Basic 31,064,583 11.4 30,785,383 10.5
-------------- ------ -------------- ------
Diluted 31,064,583 11.4 31,205,704 10.3
-------------- ------ -------------- ------
During the first six months of 2019 Personal Group Holdings Plc
paid dividends of GBP3,613,000 to its equity shareholders (2018:
GBP3,541,000). This represents a payment of 11.65p per share (2018:
11.50p).
6 months ended 6 months ended
30 June 2019 30 June 2018
GBP'000 GBP'000
Dividends paid or provided for
during the period 3,613 3,541
(_____) (_____)
6 Goodwill
PG Let's Innecto* Total
Connect
GBP'000 GBP'000 GBP'000
Cost
At 1 January 2019 10,575 - 10,575
Additions in the year - 2,041 2,041
(________) (________)
_________ _______ (________)
At 30 June 2019 10,575 2,041 12,616
(________) (________)
_________ _________ (________)
Amortisation and impairment
At 1 January 2019 - - -
Impairment charge for year - - -
(________) (________) (________)
_________ _________ _________
At 30 June 2019 - - -
(________) (________) (________)
Net book value at 30 June 2019 10,575 2,041 12,616
(________) (________) (________)
Net book value at 31 December 2018 10,575 - 10,575
(________) (________) (________)
* See Note 13 for further details
Notes to the Consolidated Financial Statements
7 Intangible assets
Internally
Computer Other Innecto Generated
Customer software Intangibles Computer
Value and development Software Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 1 January 2019 1,648 855 - 506 3,009
Acquisition 471 - 458 - 929
Additions - 56 - - 56
Disposals - (25) - - (25)
(________) (________) (________) (________) (________)
At 30 June 2019 2,119 886 458 506 3,969
(________) (________) (________) (________) (________)
Amortisation
At 1 January 2019 1,595 602 - 312 2,509
Acquisition - - - - -
Provided in the period 84 53 31 84 252
Disposals in the period - (25) - - (25)
(________) (________) (________) (________) (________)
At 30 June 2019 1,679 630 31 396 2,736
(________) (________) (________) (________) (________)
Net book amount at 30 June
2019 440 256 427 110 1,233
(________) (________) (________) (________) (________)
Net book amount at 31
December
2018 53 253 - 194 500
(________) (________) (________) (________) (________)
8 Property, plant and equipment
Freehold Motor Computer Furniture Leasehold Right WIP Assets Total
land and vehicles equipment fixtures improve- of use
properties & fittings ments Assets
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 1 January
2019 5,478 213 716 1,022 38 1,088 844 9,399
Acquisition - - 13 - - - - 13
Additions - - 44 14 - 285 362 705
Disposals - (110) (13) - - (81) - (204)
Transfers 44 - (37) 1,199 - - (1,206) -
(______) (______) (______) (______) (______) (______) (______) (______)
At 30 June 2019 5,522 103 723 2,235 38 1,292 - 9,913
(______) (______) (______) (______) (______) (______) (______) (______)
Depreciation
At 1 January
2019 1,694 115 536 640 22 352 - 3,359
Acquisition - - 5 - - - - 5
Provided in the
period 47 12 65 121 3 212 - 460
Disposals - (59) (6) - - (36) - (101)
(______) (______) (______) (______) (______) (______) (______) (______)
At 30 June 2019 1,741 68 600 761 25 528 - 3,723
(______) (______) (______) (______) (______) (______) (______) (______)
Net book amount
at
30 June 2019 3,781 35 123 1,474 13 764 - 6,190
(______) (______) (______) (______) (______) (______) (______) (______)
Net book amount
at
31 December
2018 3,784 98 180 382 16 736 844 6,040
(______) (______) (______) (______) (______) (______) (______) (______)
Notes to the Consolidated Financial Statements
9 Financial Investments
At 30 June At 31 December
2019 2018
Unaudited Audited
GBP'000 GBP'000
Bank deposits 2,792 2,530
(________) (________)
2,792 2,530
(_________) (_________)
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)
LTIP2
LTIP2 is designed to reward Directors and certain other senior
employees in a way that aligns the interests of LTIP participants
with the interests of shareholders, as well as with the Group's
long-term strategic plan. LTIP2 is based on Market Capitalisation
and becomes reward bearing as Company Market Capitalisation exceeds
GBP183.7m. It also has a yearly EPS performance criterion through
its life which can be adjusted by the Remuneration Committee.
No awards have been made under this scheme to date.
Under the LTIP2 incentive arrangements 36,000 employee
shareholder status shares in Personal Group Limited were awarded
during 2015 (ESS Shares). Participants had immediate PAYE and NIC
charges on the associated UK tax-market value of the ESS Shares. A
further 4,000 shares are available for allocation.
The ESS Shares are split equally into four classes, namely A, B,
C and D shares, each of which carry a put option which allows the
participants to exchange their ESS Shares for Personal Group
Holdings Plc ordinary shares in tranches on reaching or exceeding
the hurdles of market capitalisation and Annual EPS. Awards can be
made annually starting in March 2017 (A shares) through to March
2020 (D shares) based on market capitalisation growth of the
Company up to a market capitalisation of GBP350m and upon achieving
the Annual EPS growth targets. The awards will be paid out as 20%,
40%, 70% and 100% cumulatively of the eligible share of growth in
market capitalisation for A, B, C and D shares respectively.
An amount of GBP9,000 (2018: GBP54,500) has been charged to the
profit and loss account in the six months ended 30 June 2019 for
this scheme, based on the fair values determined by using a
Log-normal Monte-Carlo stochastic model. Significant inputs to the
model include the closing share price at grant date, a risk-free
rate of return of 1.32%, a dividend yield of 4.49% and a share
price volatility of 15.78%. 10,000 iterations of the model were run
to accurately represent the log-normal nature of returns to equity
investments. The corresponding credit is taken to equity. No
liabilities were recognised as this is an equity settled
share-based payment.
In addition to the charges above any related employer's national
insurance charge has been classified as share-based payment
expenses on the face of the profit and loss account.
Notes to the Consolidated Financial Statements
11 Equity-accounted investment
During 2004 the Company entered into a joint venture agreement
with Abbeygate Developments Limited to construct a freehold joint
office and residential property development on land adjacent to
John Ormond House. A joint venture company called Abbeygate
Developments (Marlborough Gate 2) Limited was established to
construct the property.
This Company is owned equally by Personal Group Holdings Plc and
Abbeygate Developments Limited.
During 2018, the property was sold to a third party. The joint
venture no longer has any principal trade and is due to be
liquidated in 2019. Following the sale of the joint venture,
dividends of GBP750,000 were paid to both owners and further
dividends are expected in the second half of 2019 prior to the
liquidation of the Company.
The profit and loss account and balance sheet for this joint
venture company are as follows:
Profit and loss account 6 months ended 6 months ended 12 months ended
30 June 2019 30 June 2018 31 Dec 2018
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Profit on disposal of property - - 418
Rent receivable - 30 44
Administration expenses 15 (46) (57)
(________) (________) (________)
Profit / (Loss) on ordinary activities
before taxation 15 (16) 405
Tax on profit/loss on ordinary activities - - (77)
(________) (________) (________)
Profit / (Loss) for the financial
period retained 15 (16) 328
(________) (________) (________)
Personal Group Holdings share of
profit / (loss) 7 (8) 164
(________) (________) (________)
Balance sheet At 30 June 2019 At 30 June 2018 At 31 Dec 2018
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Current assets
Inventories - 1,078 -
Debtors 194 239 188
(________) (________) (________)
194 1,317 188
Creditors: amounts falling due within
one year (79) (61) (88)
(________) (________) (________)
Net current assets 115 1,256 100
(________) (________) (________)
Capital and reserves
Called up share capital - - -
Profit and loss account 115 1,256 100
(________) (________) (________)
Shareholders' funds 115 1,256 100
(________) (________) (________)
Personal Group Holdings' share of
net assets 58 628 50
(________) (________) (________)
Notes to the Consolidated Financial Statements
12 Provisions
As at 30 June 2019, the PG Let's Connect PAYE tax provision has
been reduced to GBP717,000, which represents the directors' best
estimate of the potential amount payable to HMRC. The movement in
the period has been summarised below;
PG Let's Connect
2019 PAYE
GBP'000
At 1 January 2019 1,259
Movement in provisions credited to income
statement (542)
Utilised during the year -
(________)
At 31 June 2019 717
(________)
PG Let's Connect
2018 PAYE
GBP'000
At 1 January 2018 1,905
Movement in provisions credited to income
statement (646)
Utilised during the year -
(________)
At 31 December 2018 1,259
(________)
The previous directors of PG Let's Connect have provided
assurance that, should any liability arise, they will honour any
amounts due, however, as no legal agreement is in place for this,
the directors have held the provision on the balance sheet. No
payments have been made to HMRC during 2019 in respect of these
schemes (2018: GBPnil), however, the Company is aware that these
schemes are currently in the final settlement stages and the final
position on them is expected to be known by the year end.
13 Acquisition of Innecto
Summary of acquisition
On 28 February 2019, the Group acquired 100% of the issued share
capital of Innecto People Consulting Limited, a leading UK
independent pay and reward consultancy. The acquisition has
increased the Group's offering in the employee benefits market and
complements the Group's existing SaaS division.
Subject to audit and external review, details of the purchase
consideration, the net assets acquired, and goodwill are as
follows:
2019
GBP'000
Purchase consideration
Cash paid 3,189
(_____--____)
Total purchase consideration 3,189
(_________)
Notes to the Consolidated Financial Statements
The assets and liabilities recognised as a result of the
acquisition are as follows:
Fair Value
GBP'000
Intangible assets - Customer relationships 471
Intangible assets - Technology platforms 232
Intangible assets - Innecto trade name 160
Intangible assets - Technology trademarks 42
Intangible assets - Innecto website 24
Tangible fixed assets 8
Cash 475
Trade debtors 420
Other debtors 11
Trade creditors (29)
Other creditors and accruals (508)
Deferred income (185)
Deferred tax 27
(______)
Net identifiable assets acquired 1,148
(______)
Goodwill 2,041
(______)
Net assets acquired 3,189
(______)
The goodwill is attributable to the workforce, the high
profitability of the acquired business and the future synergies
expected within the wider SaaS business of the Group. It will not
be deductible for tax purposes.
There were no acquisitions in the year ending 31 December
2018.
Acquired Receivables
The fair value of acquired trade receivables is GBP420,000. The
gross contractual amount for trade receivables due is GBP431,000,
of which GBP11,000 is expected to be uncollectible.
Revenue and Profit Contribution
The acquired business contributed revenues of GBP581,000 and net
profit of GBP111,000 to the Group for the period from 1 March to 30
June 2019. If the acquisition had occurred on 1 January 2019, the
Group's consolidated pro-forma revenue and profit for the 6 months
ended 30 June 2019 would have been GBP30,353,000 and GBP3,657,000
respectively.
These amounts have been calculated using the subsidiary's
results and adjusting them for:
- differences in the accounting policies between the Group and the subsidiary, and
- the additional depreciation and amortisation that would have
been charged assuming the fair value adjustments to property, plant
and equipment and intangible assets had applied from 1 January
2019, together with the consequential tax effects.
Notes to the Consolidated Financial Statements
Purchase Consideration - Cash Outflow
2019 2018
GBP'000 GBP'000
Cash consideration paid 3,189 -
Less: Cash balances acquired (475) -
(________) (______)
Net outflow of cash - investing activities 2,714 -
(________) (______)
Acquisition-related costs
In the period, acquisition-related costs of GBP177,000 that were
not directly attributable to the issue of shares are included as
acquisition costs in segmental analysis and in operating cash flows
in the statement of cash flows.
14 Financial calendar for the year ending 31 December 2019
The Company announces the following dates in its financial
calendar for the year ending 31 December 2019:
-- Preliminary results for the year ending 31 December 2019 -
March 2020
-- Publication of Report and Accounts for 2019 - March 2020
-- AGM
- April 2020
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR EANNKFFANEFF
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