Half-yearly Report

Personal Group Holdings Plc - Interim Statement For the 6 months ended 30 June 2008 Enquiries: Personal Group Holdings Plc Tel: 0207 367 8888(on 29/9/08) Christopher Johnston, Chairman 01908 605000 ext 235 (thereafter) Ken Rooney, Managing Director John Barber, Finance Director Cenkos Securities Stephen Keys Tel: 0207 397 8900 Bankside Consultants Simon Rothschild Tel: 0207 367 8888 Interim statement for the six months to 30 June 2008 Personal Group Holdings Plc is one of the UK's leading providers of employee benefits insurance and consultancy. Highlights 2008 2007 % Â£m Â£m Profit before tax 4.4 4.2 +5 Total revenue 13.2 13.2 - 2008 2007 % pence pence Earnings per share (basic) 10.2 9.8 +4 Dividends per share paid in 2008 9.9 9.5 +4 Ken Rooney, Chief Executive, commented: "Thirteen new benefit programmes were launched in the first half of 2008 including those for Vision Express, UK Mail and Barchester Healthcare. This new business will begin to show through in revenue in the second half of 2008 and in 2009. In addition, renewal programmes for our established host employers generated significant new insurance sales opportunities. Our core hospital plan and death benefit policies have continued to perform very strongly. Although progress for our Voluntary Group Income Protection project has not gathered momentum as fast as anticipated we have introduced seven new host companies to the scheme in the first full year of operation. Our Perflex software continues to attract more users with 320,000 employees now having access to the system from 88 companies." Chairman's Statement Group profit before tax (PBT) for the period was Â£4.4m (2007: Â£4.2m). Revenues from our Personal Hospital Plan (PHP) and Death Benefit (DB), our core employee benefit related business policies, increased to Â£8.1m and Â£1.1m respectively (2007: Â£7.9m and Â£0.9m respectively) as the improved new business production achieved in 2007 began to feed into 2008. New business in the first half of 2008 showed an improvement over the corresponding period in 2007 and exceeded our all time first half year record set in 2005. Expenses, in particular travel and accommodation costs, for our expanded field based employed sales team increased from Â£2.3m in 2007 to Â£2.6m in 2008. PBT generated from investment income and our Berkeley Morgan (BM) operation totalled Â£1.0m (2007: Â£1.1m). Our loan interest charge was reduced from Â£0.2m in the first half of 2007 to less than Â£0.1m in the current period as a result of repayments made in 2007. Our Voluntary Group Income Protection (VGIP) sales have not moved ahead as fast originally anticipated. Productivity and penetration has improved for VGIP but availability of suitable host companies for this product has come through more slowly than expected. We are already seeing more candidates wanting to join our field sales operation as other companies cut back on their sales budgets and reduce the size of their sales teams. Our voluntary schemes and low cost employee benefit programmes are improving their appeal to employers faced with increasing staff costs and reduced profit margins. We continue to hold a substantial proportion of our tangible assets in cash and cash equivalents Â£7.4m (31 December 2007: Â£9.2m) and UK treasury loan stock Â£ 3.0m (31 December 2007: Â£3.0m). The bid market valuation of our portfolio of quoted UK equities totalled Â£0.9m (31 December 2007: Â£0.9m). Unrealised losses recognised directly into equity were less than Â£0.1m. Our freehold property in Blackburn, previously occupied by our BM operation, has now been let on a 10 year lease at an initial rent of Â£100,000 per annum. After provision for taxation there is a surplus for the period of Â£3.1m (2007: Â£3.0m) which has been added to equity. Shareholders' funds at 30 June 2008 were Â£26.5m (2007: Â£24.1m) which represents 87p per share (2007: 79p per share). As reported in my chairman's statement for the year ended 31 December 2007 the directors have chosen to pay four dividends a year. The third quarterly dividend for 2008 of 3.3 pence per share was declared on 21 August 2008 and was paid today. I anticipate that the final quarterly dividend for 2008 will be declared in November 2008 and will be paid in December 2008. We have had an excellent first half of 2008 and there is every indication that the momentum created will continue in line with directors' expectations. My thanks to all policyholders, employees, agents, consultants and host companies for their contribution to our continuing success. Christopher W T Johnston Chairman 26th September Personal Group Holdings Plc - Interim Statement For the 6 months ended 30 June 2008 Condensed consolidated interim income statement Note 6 months 6 months 12 months ended 30 ended 30 ended 31 June 2008 June 2007 December 2007 Unaudited Unaudited Audited Â£000 Â£000 Â£000 Gross premiums written 8,081 7,946 16,007 Change in unearned premiums (28) (31) 31 ______ ______ ______ Net premiums written 8,053 7,915 16,038 Other income: Insurance related 3,850 3,987 7,769 Non-insurance related 867 811 1,746 Investment income 392 512 848 ______ ______ ______ Revenue 13,162 13,225 26,401 ______ ______ ______ Claims incurred (1,611) (1,658) (3,080) Insurance operating expenses (3,655) (3,492) (7,084) Other expenses: Insurance related (2,504) (2,738) (5,495) Non-insurance related (882) (867) (1,736) Charitable donations (40) (40) (80) ______ ______ ______ Expenses (8,692) (8,795) (17,475) ______ ______ ______ Results of operating activities 4,470 4,430 8,926 Finance costs (67) (189) (355) ______ ______ ______ Profit before tax 4,403 4,241 8,571 Tax (1,320) (1,275) (2,213) ______ ______ ______ Profit for the period 3,083 2,966 6,358 ______ ____ ______ The profit for the period is attributable to equity holders of Personal Group Holdings Plc Earnings per share as arising Pence Pence Pence from total and continuing operations Basic 4 10.2 9.8 21.0 Diluted 4 10.2 9.8 21.0 Consensed consolidated interim balance sheet at 30 June 2008 At 30 At 30 At 31 June 2008 June 2007 December 2007 Unaudited Unaudited Audited Note Â£000 Â£000 Â£000 ASSETS Non-current assets 9,433 9,247 9,433 Goodwill Property, plant and equipment 5 5,389 6,612 5,449 Investment property 2,091 2,073 2,091 Financial assets 6,230 6,266 6,075 ______ ______ ______ 23,143 24,198 23,048 ______ ______ ______ Current assets 3,354 3,414 3,570 Trade and other receivables Cash and cash equivalents 7,383 9,204 7,728 ______ ______ ______ 10,737 12,618 11,298 ______ ______ ______ Non-current assets classified as held for sale Property, plant and equipment 1,068 - 1,068 ______ ______ ______ ______ ______ ______ Total assets 34,948 36,816 35,414 ______ ______ ______ EQUITY Equity attributable to equity holders of Personal Group Holdings Plc Share capital 1,527 1,528 1,527 Other reserve (848) (551) (570) Treasury shares reserve - (2) - Retained earnings 25,855 23,094 25,752 ______ ______ ______ Total equity 26,534 24,069 26,709 ______ ______ ______ LIABILITIES Non-current liabilities Deferred tax liabilities 256 147 143 ______ ______ ______ Current liabilities Provisions 376 294 345 Trade and other payables 4,260 5,043 5,020 Current tax liabilities 1,207 1,134 1,092 Borrowings 2,315 6,129 2,105 ______ ______ ______ 8,158 12,600 8,562 ______ ______ ______ Total liabilities 8,414 12,747 8,705 ______ ______ ______ Total equity and liabilities 34,948 36,816 35,414 ______ ______ ______ Condensed consolidated statement of changes in equity for the six months ended 30 June 2008 Equity attributable to equity holders of Personal Group Holdings Plc Share Other Profit & Total capital reserve loss equity reserve Â£000 Â£000 Â£000 Â£000 Balance as at 1 January 1,527 (570) 25,752 26,709 2008 ______ ______ ______ ______ Available for sale investments: Transfer to income - 2 - 2 statement Valuation changes taken - (48) - (48) to equity ______ ______ ______ ______ Net expense recognised - (46) - (46) directly into equity Profit for the period - - 3,083 3,083 ______ ______ ______ ______ Total recognised income - (46) 3,083 3,037 and expense for the period ______ ______ ______ ______ Employee share based - - 22 22 compensation Dividends - - (2,996) (2,996) Proceeds of AESOP share - - 108 108 sales Cost of AESOP shares sold - 114 (114) - Cost of AESOP shares - (346) - (346) purchased ______ ______ ______ ______ Balance as at 30 June 1,527 (848) 25,855 26,534 2008 ______ ______ ______ ______ Condensed consolidated statement of changes in equity for the year ended 31 December 2007 Equity attributable to equity holders of Personal Group Holdings Plc Share Shares Other Treasury Profit & Total capital to be reserve shares loss equity issued reserve reserve Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Balance as at 1 January 1,528 298 (685) (298) 22,957 23,800 2007 ______ ______ ______ ______ ______ ______ Available for sale investments: Transfer to income - - (10) - - (10) statement Valuation changes taken to - - 5 - - 5 equity ______ ______ ______ ______ ______ ______ Net expense recognised - - (5) - - (5) directly into equity Profit for the year - - - - 6,358 6,358 ______ ______ ______ ______ ______ ______ Total recognised income - - (5) - 6,358 6,353 and expense for the year ______ ______ ______ ______ ______ ______ Employee share based - - - - 43 43 compensation Dividends - - - - (3,627) (3,627) Proceeds of AESOP share - - - - 555 555 sales Cost of AESOP shares sold - - 534 - (534) - Cost of AESOP shares - - (415) - - (415) purchased Shares issued from - (298) - 298 - - treasury Cancellation of treasury (1) - 1 - - - shares ______ ______ ______ ______ ______ ______ Balance as at 31 December 1,527 - (570) - 25,752 26,709 2007 ______ ______ ______ ______ ______ ______ Condensed consolidated statement of changes in equity for the six months ended 30 June 2007 Equity attributable to equity holders of Personal Group Holdings Plc Share Shares Other Treasury Profit & Total capital to be reserve shares loss equity issued reserve reserve Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Balance as at 1 January 1,528 298 (685) (298) 22,957 23,800 2007 ______ ______ ______ ______ ______ ______ Available for sale investments: Transfer to income - - (9) - - (9) statement Valuation changes taken to - - 35 - - 35 equity ______ ______ ______ ______ ______ ______ Net expense recognised - - 26 - - 26 directly into equity Profit for the period - - - - 2,966 2,966 ______ ______ ______ ______ ______ ______ Total recognised income - - 26 - 2,966 2,992 and expense for the period ______ ______ ______ ______ ______ ______ Employee share based - - - - 27 27 compensation Dividends - - - - (2,868) (2,868) Proceeds of AESOP share - - - - 523 523 sales Cost of AESOP shares sold - - 509 - (509) - Cost of AESOP shares - - (401) - - (401) purchased Shares issued from - (298) - 296 (2) (4) treasury ______ ______ ______ ______ ______ ______ Balance as at 30 June 2007 1,528 - (551) (2) 23,094 24,069 ______ ______ ______ ______ ______ ______ Condensed consolidated interim cashflow statement 6 months 6 months 12 months ended 30 ended 30 ended 31 June 2008 June 2007 December 2007 Unaudited Unaudited Audited Â£000 Â£000 Â£000 Operating activities Profit after tax 3,083 2,966 6,358 Adjustments for 223 213 439 Depreciation Profit on disposal of property, plant (3) (4) (14) and equipment Realised and unrealised net investment 12 (93) 25 losses/(gains) Interest received (389) (410) (847) Dividends received (27) (11) (18) Interest paid 73 189 366 Share based payments 22 27 43 Taxation expense recognised in income 1,320 1,275 2,213 statement Changes in working capital Trade and other receivables 212 675 464 Trade and other payables (728) (868) (793) Taxes paid (1,092) (1,471) (2,641) _______ _______ _______ Net cash from operating 2,706 2,488 5,595 activities _______ _______ _______ Investing activities Additions to property, plant and (177) (221) (362) equipment Additions to investment property - - (18) Proceeds from disposal of property 20 34 62 plant and equipment Purchase of own shares (346) (401) (415) Proceeds from disposal of own 108 523 555 shares Purchase of financial assets (225) - (95) Proceeds from disposal of 12 87 228 financial assets Interest received 389 410 847 Dividends received 27 11 18 _______ _______ _______ Net cash (used)/gained in (192) 443 820 investing activities _______ _______ _______ Financing activities Proceeds from bank loans 346 402 415 Repayment of bank loans (136) (558) (4,595) Interest paid (73) (189) (366) Dividends paid (2,996) (2,868) (3,627) ______ ______ ______ Net cash used in financing (2,859) (3,213) (8,173) activities ______ ______ ______ Net change in cash and cash (345) (282) (1,758) equivalents Cash and cash equivalents, beginning of 7,728 9,486 9,486 period ______ ______ ______ Cash and cash equivalents, end of 7,383 9,204 7,728 period ______ ______ ______ Notes to the condensed consolidated interim financial statements 1 General information The principal activities of Personal Group Holdings Plc (`the company') and subsidiaries (`the group') include transacting short-term accident and health insurance, and providing employee benefits related business and financial services in the UK. The company is a public limited company incorporated and domiciled in England. The address of its registered office is John Ormond House, 899 Silbury Boulevard, Milton Keynes MK9 3XL. The company's shares trade on the Alternative Investment Market of the London Stock Exchange. The condensed consolidated financial statements do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the group as at and for the year ended 31 December 2007. The financial information set out in this interim report does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. The group's statutory financial statements for the year ended 31 December 2007, prepared under UK GAAP, 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 237 (2) or (3) of the Companies Act 1985. These consolidated interim financial statements have been approved for issue by the board of directors on 2 Accounting policies These June 2008 condensed consolidated financial statements of Personal Group Holdings Plc are for the six months ended 30 June 2008. They have been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting. These financial statements have been prepared on the basis of the recognition and measurement requirements of those IFRS standards and IFRIC interpretations as adopted by the EU, issued and effective or issued and early adopted as at 31 December 2008. The principal accounting policies have remained unchanged from the year ended 31 December 2007. 3 Segment analysis The group operates three main trading business segments: insurance underwriting; insurance and financial services related business; and non-insurance related business. In addition investment income (net of finance costs) is classified as a separate business segment. Personal Assurance Plc, a subsidiary within the group, is an FSA regulated general insurance company and is authorised to transact accident and sickness insurance. Insurance and financial services related business income includes insurance brokerage commissions generated from insurance underwriting agencies, general insurance and reinsurance brokerage commission and the provision of financial services. All of this income is generated from subsidiary companies that are also regulated by the FSA. Non-insurance related business consists of income derived from the sale of benefit books, non-FSA regulated commission and property rental income. The revenue and net result generated by each of the group's business segments are summarised as follows: Business segments Insurance Insurance Non-insurance Net Group investment underwriting related related income Â£000 Â£000 Â£000 Â£000 Â£000 6 months to 30 June 2008 Revenue 8,053 3,850 867 392 13,162 Net result for the period 2,787 1,306 (15) 325 4,403 before tax 6 months to 30 June 2007 Revenue 7,915 3,987 811 512 13,225 Net result for the period 2,765 1,209 (56) 323 4,241 before tax 4 Earnings per share and dividends The weighted average numbers of outstanding shares used for basic and diluted earnings per share are as follows: Six months to Six months to Twelve months to 30 June 2008 30 June 2007 31 December 2007 Basic 30,289,858 30,227,184 30,260,729 Diluted 30,310,421 30,261,956 30,297,146 During the first six months of 2008, Personal Group Holdings Plc paid dividends of Â£3,024,000 to its equity shareholders (six months to 30 June 2007: Â£ 2,902,000, twelve months to 31 December 2007: Â£3,666,000). This represents a payment of 9.9p per share (six months to 30 June 2007: 9.5p, twelve months to 31 December 2007: 12.0p). In the statement of changes in equity and the cash flow statement dividends are stated net of amounts paid on treasury shares and unallocated shares held by Personal Group Trustees Limited. 5 Additions and disposals of property, plant and equipment For the six months period ended 30 June 2008 Freehold Motor Computer Furniture Total land and vehicles fixtures properties equipment & Â£000 Â£000 fittings Â£000 Â£000 Â£000 Cost At 1 January 2008 5,225 530 452 1,935 8,142 Additions - 94 14 68 176 Disposals - (37) (1) - (38) _______ _____ _____ _______ ______ At 30 June 2008 5,225 587 465 2,003 8,280 _______ _____ _____ _______ ______ Depreciation At 1 January 2008 657 207 330 1,499 2,693 Provided in the period 44 68 55 56 223 Eliminated on disposals - (24) (1) - (25) _______ _____ _____ _______ ______ At 30 June 2008 701 251 384 1,555 2,891 _______ _____ _____ _______ ______ Net book amount at 30 June 4,524 336 81 448 5,389 2008 _______ _____ _____ _______ ______ Net book amount at 1 4,568 323 122 436 5,449 January 2008 _______ _____ _____ _______ ______ For the year ended 31 December 2007 Freehold land Motor Computer Furniture Total and vehicles fixtures properties equipment & Â£000 Â£000 fittings Â£000 Â£000 Â£000 Cost At 1 January 2007 6,365 477 406 1,915 9,163 Transfer to assets classified as held for sale (1,140) - - - (1,140) Additions - 225 105 21 351 Disposals - (172) (59) (1) (232) _______ _____ ____ _______ _______ At 31 December 2007 5,225 530 452 1,935 8,142 _______ _____ _____ _______ _______ Depreciation At 1 January 2007 616 204 290 1,399 2,509 Eliminated on transfer to assets classified as held for (72) - - - (72) sale Provided in the year 113 127 99 100 439 Eliminated on disposals - (124) (59) - (183) _______ _____ _____ _______ _______ At 31 December 2007 657 207 330 1,499 2,693 _______ _____ _____ _______ _______ Net book amount at 31 December 4,568 323 122 436 5,449 2007 _______ _____ _____ _______ _______ Net book amount at 1 5,749 273 116 516 6,654 January 2007 _______ _____ _____ _______ _______ For the six months period ended 30 June 2007 Freehold land Motor Computer Furniture Total and properties vehicles fixtures equipment & Â£000 Â£000 Â£000 fittings Â£000 Â£000 Cost At 1 January 2007 6,365 477 406 1,915 9,163 Additions - 120 77 4 201 Disposals - (94) (1) (1) (96) _______ _____ _____ _______ _______ At 30 June 2007 6,365 503 482 1,918 9,268 _______ _____ _____ _______ _______ Depreciation At 1 January 2007 616 204 290 1,399 2,509 Provided in the period 56 62 42 53 213 Eliminated on disposals - (64) (1) (1) (66) _______ _____ _____ _______ _______ At 30 June 2007 672 202 331 1,451 2,656 _______ _____ _____ _______ _______ Net book amount at 30 5,693 301 151 467 6,612 June 2007 _______ _____ _____ _______ _______ Net book amount at 1 5,749 273 116 516 6,654 January 2007 _______ _____ _____ _______ _______ Financial calendar for the year ending 31 December 2008 The company announces the following dates in its financial calendar for the year ending 31 December 2008: * Preliminary results for the year ending 31 December - March 2009 2008 * Publication of Report and Accounts for 2008 - March 2009 * AGM - April 2009

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