Interim Results

RNS Number : 0417B
Personal Group Holdings PLC
18 September 2018
 
 

PERSONAL GROUP HOLDINGS PLC

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

                                                                          

Interim Results for the Six Months ended 30 June 2018

 

Solid progress across all three business segments

 

 

Personal Group Holdings Plc, a leading provider of employee services in the UK, announces its interim results for the six months ended 30 June 2018. The Company has continued to make solid progress, performing in-line with management's expectations and ahead of last year across all three business segments.  

 

Highlights

 

Financial

 

·     Group revenue of £21.1m (2017: £19.6m), an increase of 7.3%

·     EBITDA* from continuing operations of £4.7m (2017: £3.7m), an increase of 27.0%

·     Profit before tax from continuing operations of £3.9m (2017: £3.0m), an increase of 27.7%

·     Basic EPS from continuing operations of 10.5p (2017: 8.2p), an increase of 28.0%

·     Balance sheet remains strong with cash and deposits of £18.4m and no debt

·     Dividends per share paid in the period up 1.3% to 11.50p (2017: 11.35p), maintaining progressive dividend policy

 

Operational

 

·     Strong trading across all three business segments and all market sectors

·     Solid performances from both Insurance and PG Let's Connect (salary sacrifice)

·     Strong increase in SaaS revenue to £2.0m (2017: £0.9m)

·     Successful launch of the next generation Hapi platform app

·     Continued focus on the rollout of the Company's offer, with further investment in sales planned

·     Further expansion into the Public Sector through the Crown Commercial Services Framework

·     Company also today announces Mark Scanlon's (CEO) intention to step down from the board, having led the business through a successful period of growth and diversification (see separate RNS).

 

 

* 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, write back of contingent consideration and release of tax provision. This definition applies to all references to EBITDA within these interim results. A reconciliation from PBT to this adjusted EBITDA has been included in note 3.

 

Mark Scanlon, Chief Executive of Personal Group, commented:

 

"It has been an encouraging start to the year, with all three business segments ahead of this time last year. SaaS sales continue to increase as expected; core insurance performance remains robust and growing; PG Let's Connect is rebounding and we are well positioned to provide our range of employee services to companies of all sizes and within all sectors.

 

"The momentum we've seen in the first half of the year has continued into the second half and the Board remains confident that the Group continues to trade in-line with expectations for the full year.

 

"Having led the business for almost seven years and taken it through a period of growth and diversification I feel that now is an opportune time to handover to a successor. Personal Group is in great shape, underpinned by the strength and depth of the team, and well positioned for the next phase of growth."

 

- ENDS -

 

 

 

For more information please contact:

 

Personal Group Holdings Plc

 

Mark Scanlon / Mike Dugdale

+44 (0)1908 605 000

Philip Dennis (Investor Relations)

+44 (0)7947 868 206

Cenkos Securities Plc

 

Max Hartley / Callum Davidson (Nominated Adviser)

+44 (0)20 7397 8900

Russell Kerr (Sales)

 

Hudson Sandler

 

Nick Lyon / Sophie Lister / Lucy Wollam

+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 over 2 million employees across the UK.

Personal Group's offer comprises 8,000 in-house and third-party products and services, from c.60 supply lines. In-house services include employee insurance products (hospital plans, convalescence plans and death benefit plans) and the provision of technology via salary sacrifice (iPads, computers, laptops, smart phones and smart TVs). Third party services include retail discounts, employee assistance programmes, wellbeing programmes and salary sacrifice cars and bikes.

The offer is provided via the Company's proprietary technology platform, Hapi. The platform is intuitive, designed primarily for app deployment and is also accessible via the web on PC 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 SaaS product.

Through technology and select acquisitions, the Company has grown its addressable market from 6m to 32m UK employees; 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, combined with its face-to-face method of communicating with employees, makes its offer compelling to blue chip clients across the UK as a way of attracting, retaining and motivating employees. 

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, Priory Group, Spire Healthcare, Bibby, 2 Sisters Food Group and Young's Seafood.   

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 up on last year across all three business segments. The performance of the Company's core insurance business and PG Let's Connect, its salary sacrifice business, was encouraging, while income from SaaS saw a further strong increase in revenues.

The Company continues to deliver on its strategy and remains well positioned to take advantage of the significant and growing employee services market, with the focus having shifted from developing and expanding the offer to growing sales. The market remains strong, with continued increased competition for employees in a tight labour market and wider recognition among employers of the productivity value and cost advantage to their business of attracting and retaining employees.

Financial Performance

Group revenue for the six months to 30 June 2018 increased by 7.3% to £21.1m (2017: £19.6m). This increase was driven by a strong performance in the SaaS business, which saw revenues increase 120.2% over this time last year, alongside a solid performance across the rest of the business.

During the period, EBITDA from continuing operations increased by 27.0% to £4.7m (2017: £3.7m). This again was driven by the strong performance in SaaS and solid performances from the other business segments, combined with a continued focus on costs control.

Profit before tax was up 27.7% to £3.9m (2017: £3.0m), while earnings per share increased 28.0% to 10.5p (2017: 8.2p). During the period the Company maintained its progressive dividend policy, with dividends per share paid up 1.3% to 11.50p (2017: 11.35p). As previously announced, the Company's third dividend for 2018 of 5.75p per share will be paid on 21 September 2018 to members on the register on 10 August 2018.

The Company's balance sheet remained strong with total cash and deposits increasing to £18.4m and no debt. The increase in cash balances was down to a combination of good trading, along with the planned sale of the Company's equity portfolio.

Business Review

The core insurance division again produced a solid performance with revenue slightly ahead of last year and new insurance sales up 6% on the prior year. The insurance business saw momentum continuing into the first half of this year, post the investments made in expanding and developing the sales team in 2017.

PG Let's Connect, the Company's salary sacrifice business, had an encouraging start to the year, with trading marginally ahead of this time last year and in line with management's expectations. The business benefitted from Royal Mail's decision to run its salary sacrifice offer to its employees on a continuous basis from March of this year.

PG Let's Connect also benefitted from the changes made to that business in 2017, including improving and simplifying the customer experience and a revised cost base, to place it in the best possible position to grow as it entered 2018. PG Let's Connect has the most extensive pipeline the Company has ever had which further underlines how the product offering has increased demand, particularly as the surrounding legislation is now clear and much easier to operate within.

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 improved visibility provides cautious optimism for the overall year. With the appointment to the Crown Commercial Service Framework, management remain optimistic that PG Let's Connect is well placed to make additional inroads into the wider public sector.

The Company's SaaS business saw a strong first half, with revenues increasing by 120% over the corresponding period last year. This was driven primarily by revenues generated from Sage licences and an increase in direct sales from clients using the Hapi platform. Additional revenue was also generated via the platform from the increasing provision of products directly to clients, such as the newly developed Hapi Cinema offer. The SaaS business saw several significant new-client wins during the period, including Randstad and St John Ambulance.

As stated in the Company's July trading update, the rationalisation of its supply chain and the increasing provision of some products provided directly to clients, rather than through a third party, is not only providing commercial benefits in terms of additional revenue and margin but is also reducing the Company's external exposure to supply chain risk. This allows the Company to have closer and tighter control of the data flows associated with its business further improving its resilience to potential cyber attacks.

The launch of the new and improved App for the Hapi platform has gone well and is gaining traction with existing and potential clients. The new App is more easily accessible, being available within the Apple App store, and has significantly improved functionality. 

The relationship with Sage continues to make progress, with Sage's commitment to the product offer having strengthened this year. The next product version of the Sage Employee Benefits proposition extends the offer to their wider client base. To date the focus has been in Sage's payroll clients, which accounts for only a small portion of their total client base.

Market

The employee services market continues to grow and develop. This is being driven by continued wage pressures in an increasingly competitive labour market, which is increasingly leading employers to compete for labour using non-wage benefits.

The market is also being driven by a continued growing recognition among employers of the commercial benefit to investing in and retaining key staff. High staff turnover creates a direct replacement cost and impacts productivity, due to time to replace and time to develop competency in the new employee. As such, Personal Group's offer has appeal to both employers and their employees alike, improving real income benefits for employees and cost saving and commercial advantage for their employers.

Outlook

Personal Group's trading was strong during the first half of the year and that momentum has continued into the second half of the year. As part of maintaining that momentum for the longer term and in-line with the Company's strategy, there will again be an increased focus and investment in developing sales opportunities as we progress through the second half of this year and into 2019.

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 the Group continues to trade in-line with expectations for the full year. 

 

Mark Winlow

Non-Executive Chairman

Mark Scanlon

Chief Executive

 

18 September 2018

 

          Consolidated Income Statement

 

 

 

 

 

 

 

6 months

ended

30 June 2018

Unaudited

6 months

ended

30 June 2017 Unaudited

12 months

ended

31 December 2017

Audited

 

 Note

£'000

£'000

£'000

Continuing Operations

 

 

 

 

 

 

 

 

 

Gross premiums written

 

15,795

15,033

30,739

Outward reinsurance premiums

 

(117)

(146)

(272)

Change in unearned premiums

 

                   (59)

442

233

Change in reinsurers' share of unearned premiums

 

(8)

(8)

(21)

 

 

________

________

________

Earned premiums net of reinsurance

 

15,611

15,321

30,679

 

 

 

 

 

Other insurance related income

 

120

159

391

IT salary sacrifice income

 

3,264

3,141

11,292

SaaS income

 

2,004

910

2,648

Other non-insurance income

 

53

53

105

Investment property

 

1

-

1

Investment income

 

31

60

117

 

 

________

________

________

Revenue

 

21,084

19,644

45,233

 

 

________

________

________

 

 

 

 

 

Claims incurred

 

(3,730)

(3,738)

(6,780)

Insurance operating expenses

 

(7,238)

(6,885)

(13,529)

Other insurance related expenses

 

(109)

(174)

(244)

IT salary sacrifice expenses

 

(3,570)

(3,908)

(11,034)

SaaS costs

 

(1,676)

(1,076)

(2,459)

Other non-insurance related expenses

 

(353)

(284)

(710)

Share-based payment expenses

 

(76)

(156)

(192)

Charitable donations

 

(50)

(50)

(100)

Amortisation of intangible assets

 

(336)

(329)

(673)

 

 

________

________

________

Expenses

 

(17,138)

(16,600)

(35,721)

 

 

________

________

________

 

 

 

 

 

Operating profit from continuing operations

 

3,946

3,044

9,512

Finance costs

 

 (72)

-

-

Share of loss of equity-accounted investee net of tax

 

       (8)

        (17)

(2)

 

 

________

________

________

Profit before tax from continuing operations

 

3,866

3,027

9,510

Tax

4

(646)

                  (516)

(1,486)

 

 

________

________

________

Profit for the period from continuing operations

 

3,220

2,511

8,024

 

 

 

 

 

Profit from discontinued operation

 

8

23

238

 

 

________

________

________

Profit for the period after tax

 

3,228

2,534

8,262

 

 

________

________

________

 

 

 

 

6 months

ended

30 June 2018

Unaudited

6 months

ended

30 June 2017 Unaudited

12 months

ended

31 December 2017 Audited  

Earnings per share as arising from total operations

 

 Pence

Pence

Pence

Basic

 

10.5

8.2

26.9

Diluted

 

10.3   

8.1

26.4

 

 

 

 

 

 

Consolidated Statement of Comprehensive Income

 

 

 

 

6 months

ended

30 June 2018

Unaudited

6 months

ended

30 June 2017

Unaudited

12 months

ended

31 December 2017

Audited  

 

 

 

 

 

 

 

£'000

£'000

£'000

 

 

 

 

 

Profit for the period

 

3,228

2,534

8,262

 

 

 

 

 

Other comprehensive income

 

 

 

 

Available for sale financial assets:

 

 

 

 

 Valuation changes taken to equity

 

-

56

 106

 Reclassification of (gains)/losses on

 available for sale financial assets on

 derecognition

 

                      -

                        (26)

(40)

 

 

 

 

 

Income tax on unrealised valuation
changes taken to equity

 

                      -

                          (6)

(11)

 

 

 

 

 

 

 

_______

_______

_______

Total comprehensive income for the period

 

3,228

2,558

8,317

 

 

_______

_______

_______

 

 

 

 

 

 

 

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

 

Some reclassifications have been made to the June 17 comparatives to align them with the classifications used from December 2017.

 

Full details can be seen on p59 of the 2017 Annual Report and Accounts, but these reclassifications have been made without any effect on the profit and loss or net assets.

 

 

 

 

Consolidated Balance Sheet

 

 

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

 

At

30 June 2018

Unaudited

At

31 December 2017

Audited  

At

30 June 2017

Unaudited

 

 

 

 

 

 

 

 

Note

£'000

£'000

£'000

 

ASSETS

 

 

 

 

 

Non-current assets

 

 

 

 

 

Goodwill

6

10,575

10,575

10,575

 

Intangible assets

7

696

986

1,233

 

Property, plant and equipment

8

5,402

4,747

4,921

 

Investment property

 

130

130

1,070

 

Equity-accounted investee

11

628

638

627

 

Deferred tax asset

 

8

-

27

 

 

 

________

________

________

 

 

 

17,439

17,076

18,453

 

 

 

________

________

________

Current assets

 

 

 

 

 

Financial assets

9

4,353

4,492

6,219

 

Trade and other receivables

 

8,873

14,619

6,029

 

Reinsurance assets

 

184

180

290

 

Inventories

 

375

560

169

 

Cash and cash equivalents

 

14,023

12,641

11,112

 

 

 

________

________

________

 

 

 

27,808

32,492

23,819

 

 

 

________

________

________

 

Total assets

 

45,247

49,568

42,272

 

 

 

________

________

________

 

 

 

 

 

           

 

 

 

Consolidated Balance Sheet

 

 

 

At

30 June 2018

Unaudited

At

31 December 2017

Audited  

At

30 June 2017

Unaudited

 

 

 

 

 

 

Note

£'000

£'000

£'000

 

 

 

 

 

EQUITY

 

 

 

 

 

 

 

 

 

Equity attributable to equity holders of Personal Group Holdings plc

 

 

 

 

Share capital

 

1,544

1,540

1,540

Capital redemption reserve

 

24

24

24

Amounts recognised directly into equity relating to non-current assets held for sale

 

      -

                       85 

         54

Other reserve

 

(295)

(310)

(303)

Profit and loss reserve

 

32,230

32,417

30,166

 

 

________

________

________

Total equity

 

33,503

33,756

31,481

 

 

________

________

________

                                                                       

 

LIABILITIES

 

 

 

 

Non-Current Liabilities

 

 

 

 

Deferred Tax Liabilities

 

-

21

-

 

 

 

 

 

Current liabilities

 

 

 

 

Provisions

12

1,905

1,905

1,905

Trade and other payables

 

6,688

10,698

5,681

Insurance contract liabilities

 

2,479

2,507

2,721

Current tax liabilities

 

672

681

484

 

 

________

________

________

 

 

11,744

15,791

10,791

 

 

________

________

________

 

 

 

 

 

 

 

________

________

________

Total liabilities

 

11,744

15,812

10,791

 

 

________

________

________

 

 

 

 

 

 

 

________

________

________

Total equity and liabilities

 

45,247

49,568

42,272

 

 

________

________

________

 

 

 

Consolidated Statement of Changes in Equity for the six months ended 30 June 2018

                           

 

 

 

Share capital

Capital

redemption

reserve

Available for sale financial assets

Other reserve

Profit & loss reserve

Total equity

 

£'000

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

Balance as at 1 January 2018

1,540

24

85

(310)

32,417

33,756

 

________

________

________

________

________

________

Dividends

-

-

-

-

(3,541)

(3,541)

Employee share-based compensation

-

-

-

-

53

53

Proceeds of AESOP* share sales

-

-

-

-

32

32

Cost of AESOP shares sold

-

-

-

40

(40)

-

Cost of AESOP shares purchased

-

-

-

(25)

-

(25)

Nominal value of LTIP** shares issued

4

-

-

-

(4)

-

 

________

________

________

________

________

________

Transactions with owners

4

-

-

15

(3,500)

(3,481)

 

________

________

________

________

________

________

Profit for the period

-

-

-

-

3,228

3,228

Other comprehensive income

 

 

 

 

 

 

Available for sale financial assets:

 

 

 

 

 

 

IFRS 9 Adjustment - See Notes 2 and 13

-

-

(85)

-

85

-

Current tax on unrealised valuation changes taken to
equity

 

-

 

-

 

-

 

-

 

-

-

 

________

________

________

________

________

________

Total comprehensive income for the period

-

-

(85)

-

3,313

3,228

 

________

_______

_______

_______

_______

_______

Balance as at 30 June 2018

1,544

24

-

(295)

32,230

33,503

 

________

________

________

________

________

________

 

 

* All Employee Share Option Plan (AESOP)

** Long Term Incentive Plan (LTIP)

 

Consolidated Statement of Changes in Equity for the year ended 31 December 2017 

                                                   

 

 

 

Share capital

Capital

redemption

reserve

Available for sale financial assets

Other reserve

Profit & loss reserve

Total equity

 

£'000

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

Balance as at 1 January 2017

1,540

24

30

(330)

31,061

32,325

 

________

________

________

________

________

________

Dividends

-

-

-

-

(6,979)

(6,979)

Employee share-based compensation

-

-

-

-

166

166

Proceeds of AESOP* share sales

-

-

-

-

51

51

Cost of AESOP shares sold

-

-

-

94

(94)

-

Cost of AESOP shares purchased

-

-

-

(74)

-

(74)

Nominal value of LTIP** shares issued

-

-

-

-

-

-

 

________

________

________

________

________

________

Transactions with owners

-

-

-

20

(6,856)

(6,836)

 

________

________

________

________

________

________

Profit for the year

-

-

-

-

8,262

8,262

Other comprehensive income

 

 

 

 

 

 

Deferred Tax Reserve Movement

 

 

 

 

(50)

(50)

Available for sale financial assets:

 

 

 

 

 

 

Change in fair value of assets classified as held for sale

-

-

106

-

-

106

Transfer to income statement

-

-

(40)

-

-

(40)

Current tax on unrealised

valuation changes taken to
 equity

 

-

 

-

 

(11)

 

-

 

-

(11)

 

________

________

________

________

________

________

Total comprehensive income for the year

-

-

 

55

-

8,212

8,267

 

________

_______

_______

_______

_______

_______

 

 

 

 

 

 

 

Balance as at 31 December 2017

1,540

24

85

(310)

32,417

33,756

 

________

________

________

________

________

________

 

 

* All Employee Share Option Plan (AESOP)

** Long Term Incentive Plan (LTIP)   

 

Consolidated Statement of Changes in Equity for the six months ended 30 June 2017

                                       

 

 

 

Share capital

Capital

redemption

reserve

Available for sale financial assets

Other reserve

Profit & loss reserve

Total equity

 

£'000

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

Balance as at 1 January 2017

1,540

24

30

(330)

31,061

32,325

 

________

________

________

________

________

________

Dividends

-

-

-

-

(3,490)

(3,490)

Employee share-based compensation

-

-

-

-

85

85

Proceeds of AESOP* share sales

-

-

-

-

28

28

Cost of AESOP shares sold

-

-

-

52

(52)

-

Cost of AESOP shares purchased

-

-

-

(25)

-

(25)

Nominal value of LTIP** shares issued

-

-

-

-

-

-

 

________

________

________

________

________

________

Transactions with owners

-

-

-

27

(3,429)

(3,402)

 

________

________

________

________

________

________

Profit for the period

-

-

-

-

2,534

2,534

Other comprehensive income

 

 

 

 

 

 

Available for sale financial assets:

 

 

 

 

 

 

Change in fair value of assets classified as held for sale

-

-

56

-

-

56

Transfer to income statement

-

-

(26)

-

-

(26)

Current tax on unrealised valuation changes taken to
equity

 

-

 

-

 

(6)

 

-

 

-

(6)

 

________

________

________

________

________

________

Total comprehensive income for the period

-

-

 

24

-

2,534

2,558

 

________

_______

_______

_______

_______

_______

 

 

 

 

 

 

 

Balance as at 30 June 2017

1,540

24

54

(303)

30,166

31,481

 

________

________

________

________

________

________

 

 

* All Employee Share Option Plan (AESOP)

** Long Term Incentive Plan (LTIP)

 

Consolidated Statement of Cash Flows 

 

 

 

6 months

ended

30 June 2018

Unaudited

6 months

ended

30 June 2017

Unaudited

12 months

ended

31 December 2017

Audited

 

 

£'000

£'000

£'000

 

 

 

 

 

Net cash from operating activities (see below)

 

4,899

7,489

9,928

 

 

______

______

______

Investing activities

 

 

 

 

Additions to property, plant and equipment

 

(90)

(70)

(120)

Additions to intangible assets

 

(46)

(85)

(182)

Proceeds from disposal of property, plant and equipment

 

                          67

17

25

Proceeds from disposal of investment property

 

-

-

933

Purchase of financial assets

 

(874)

(97)

(195)

Proceeds from disposal of financial assets

 

994

105

1,995

Interest received

 

30

14

30

Dividends received

 

8

20

23

 

 

______

______

______

Net cash from investing activities

89

(96)

2,509

 

 

______

______

______

Financing activities

 

 

 

 

Purchase of own shares by the AESOP

 

(25)

(25)

(74)

Proceeds from disposal of own shares by the AESOP

 

                          32

28

51

Interest paid

 

(72)

-

-

Dividends paid

 

(3,541)

(3,490)

(6,979)

 

 

______

______

______

Net cash used in financing activities

 

(3,606)

(3,487)

(7,002)

 

 

______

______

______

Net change in cash and cash equivalents

 

1,382

3,906

5,435

Cash and cash equivalents, beginning of period

12,641

7,206

7,206

 

 

_______

_______

_______

Cash and cash equivalents, end of period

14,023

11,112

12,641

 

________

________

_______

 

 

Consolidated Statement of Cash Flows 

 

 

6 months

ended

30 June 2018

Unaudited

6 months

ended

30 June 2017

Unaudited

12 months

ended

31 December 2017

Audited

 

 

£'000

£'000

£'000

Operating activities

 

 

 

 

Profit after tax

 

                 3,228

2,534

8,262

Adjustment for:

 

 

 

 

  Depreciation

 

                    396

225

437

  Amortisation of intangible assets

 

                    336

329

673

  Profit on disposal of property, plant and     equipment

 

                        -

2

7

  Loss on disposal of investment property

                        -

-

7

  Realised and unrealised net investment losses/(profits)

 

                     21

(60)

(101)

  Interest received

 

(30)

(14)

(30)

  Dividends received

 

  (8)

(20)

(23)

  Interest paid

 

                       72

-

-

  Share of (profit)/loss of equity-accounted investee, net of tax

 

 

                        8

12

2

  Share-based payment expenses

 

                       53

85

192

  Taxation expense recognised in income statement

 

                     646

516

1,543

Changes in working capital:

 

 

 

 

  Trade and other receivables

 

                 5,746

14,191

5,711

  Trade and other payables

 

 (5,067)

(10,269)

(5,493)

  Inventories

 

                   184

                   259

(132)

Taxes paid

 

           (686)

(301)

(1,127)

 

 

______

______

______

Net cash from operating activities

 

                 4,899

7,489

9,928

 

 

______

______

______

 

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 of 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 2017.

 

The financial information for the year ended 31 December 2017 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 2017 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 17 September 2018.

 

2          Accounting policies

 

These June 2018 interim consolidated financial statements of Personal Group Holdings Plc are for the six months ended 30 June 2018.  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 2017.

 

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 2018.

 

The principal accounting policies remain unchanged from the year ended 31 December 2017 with the exception of the adoption of new or amended standards as set out below.

 

The following standards have become applicable for accounting periods commencing on or after 1st January 2018 and the appropriate adjustments have been made:

·      IFRS 9 - Financial Instruments

·      IFRS 15 - Revenue from Contracts with Customers

 

In addition, the group has elected to early adopt the implementation of the following:

·      IFRS 16 - Leases

 

The impact of the adoption of these standards and the new accounting policies are disclosed in note 13 of these financial statements. 

 

3          Segment analysis

 

The Group operates the following four continuing operating segments:

 

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.

 

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 discontinued segment is:

 

Mobile

 

Mobile refers to the trade of Personal Group Mobile a mobile phone salary sacrifice Company set up from the trade and assets of Shebang Technologies purchased in 2015, which ceased trading in December 2016. 

 

 

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

 

Operating segments

Core Insurance

£'000

 

IT Salary Sacrifice

£'000

 

 

SaaS

£'000

Other

£'000

Continuing Operations

£'000

 

Discontinued Mobile

£'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

-

3,264

2,004

53

5,321

5

Investment property

-

-

-

1

1

-

Investment income

-

-

-

31

31

 

 

 

 

 

 

 

_________

_________

_________

_________

_________

_________

Total revenue

 

15,605

3,264

2,008

207

21,084

5

_________

_________

_________

_________

_________

_________

 

 

 

 

 

 

Net result for period before tax

4,160

        (515)

         257

(36)

3,866

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

 

 

 

 

 

 

EBITDA

4,623

        (256)

      336

44

4,747

 

_________

_________

_________

_________

_________

_________

Segment assets

25,197

6,051

1,269

12,701

45,228

19

 

_________

_________

_________

_________

_________

_________

Segment liabilities

6,668

3,710

1,188

166

11,740

2

 

_________

_________

_________

_________

_________

_________

Depreciation and amortisation

409

245

75

4

733

-

 

_________

_________

_________

_________

_________

_________

 

 

 

 

 

 

 

 

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

 

The implementation of IFRS 16 has resulted in EBITDA being increased by £72,000 of interest costs and £169,000 of depreciation which would previously have been included within operating profit as lease costs. 

 

 

 

Operating segments

Core Insurance

£'000

 

 

 

IT Salary Sacrifice

£'000

 

 

 

 

SaaS

£'000

Other

£'000

Continuing - Group

£'000

 

 

Discontinued -

Mobile

£'000

 

 

 

 

 

 

 

6 months to June 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

Earned premiums net of reinsurance

15,321

-

-

-

15,321

-

Other insurance related income

         (28)

-

-

187

159

-

Non-insurance related income

-

3,141

910

53

4,104

56

Investment property

-

-

-

-

-

-

Investment income

-

-

-

60

60

-

 

 

 

 

 

 

 

 

_________

_________

_________

_________

_________

_________

Total revenue

 

15,293

3,141

910

300

19,644

56

_________

_________

_________

_________

_________

_________

Net result for period before tax

4,310

        (949)

(237)

(97)

3,027

23

PG Let's Connect - amortisation of intangibles

-

165

 

-

 

-

165

-

Share-based payment expenses

-

-

-

156

156

-

Depreciation

132

14

75

4

225

-

Amortisation (other)

147

17

-

-

164

-

 

 

 

 

 

 

 

EBITDA

4,589

        (753)

  (162)

63

3,737

23

 

_________

_________

_________

_________

_________

_________

Segment assets

21,352

4,707

1,035

15,149

42,242

29

 

_________

_________

_________

_________

_________

_________

Segment liabilities

6,078

3,113

1,149

179

10,519

272

 

_________

_________

_________

_________

_________

_________

Depreciation and amortisation

279

196

75

4

554

-

 

_________

_________

_________

_________

_________

_________

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

Operating segments

Core Insurance

IT Salary Sacrifice

SaaS

Other

Continuing - Group

Discontinued - Mobile

 

£'000

£'000

£'000

£'000

£'000

£'000

2017 Full Year

 

 

 

 

 

 

 

 

 

 

 

 

 

Earned premiums net of reinsurance

30,670

-

9

-

30,679

-

Other insurance related income

57

-

-

334

391

-

Non-insurance related income

-

11,292

2,648

105

14,045

63

Investment property

-

-

-

1

          1

-

Investment income

-

-

-

117

117

-

 

 

 

 

 

 

 

 

_________

_________

_________

_________

_________

_________

Total revenue

 

30,727

11,292

2,657

557

45,233

63

_________

_________

_________

_________

_________

_________

 

 

 

 

 

 

 

Net result for year before tax

9,406

(111)

197

18

9,510

295

PG Mobile - reorganisation costs

-

-

-

-

-

           (225)

PG Let's Connect - amortisation of intangibles

-

330

-

-

330

-

Share-based payment expenses

-

-

-

192

192

-

Depreciation

392

30

5

10

437

-

Amortisation (other)

162

39

142

-

343

-

 

 

 

 

 

 

 

EBITDA

9,960

288

314

220

10,812

70

 

_________

_________

_________

_________

_________

_________

Segment assets

21,628

10,979

       1,384

15,568

49,560

8

 

_________

_________

_________

_________

_________

_________

Segment liabilities

6,379

8,035

1,257

139

15,810

2

 

_________

_________

_________

_________

_________

_________

Depreciation and amortisation

554

399

147

10

1,110

-

 

_________

_________

_________

_________

_________

_________

 

  

 

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

 

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 2018 was 16.8% (six month period ended 30 June 2017: 17.0%).

 

 

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

30 June 2018

EPS

Pence

6 months

ended

30 June 2017

EPS

Pence

12 months

ended

31 December 2017

EPS

Pence

 

 

 

 

 

 

 

Basic

30,785,383

10.5

30,741,056

8.2

30,743,826

26.9

Diluted

31,205,704

10.3

31,397,670

8.1

31,282267

26.4

 

 

During the first six months of 2018, Personal Group Holdings Plc paid dividends of £3,541,000 to its equity shareholders (2017: £3,490,000). This represents a payment of 11.50p per share (2017: 11.35p).          

 

 

 

6 months ended

30 June 2018

6 months ended

30 June 2017

12 months ended 31 December 2017

 

£'000

£'000

£'000

Dividends paid or provided for during the period

3,541

3,490

6,979

 

   _____

   _____

_____

 

 

 

 

 

 

 

 

 

6         Goodwill

 

 

 

BMG

PG Let's Connect

Total

 

£'000

£'000

£'000

Cost

 

 

 

At 1 January 2018

9,433

10,575

20,008

Additions in the year 

-

-

-

 

      ________

________     _________

________

At 30 June 2018

9,433

10,575

20,008

 

________

________     _________

________

Amortisation and impairment

 

 

 

At 1 January 2018

9,433

-

9,433

Impairment charge for year

-

-

-

 

      ________

      ________      _________

      ________      _________

At 30 June 2018

9,433

-

9,433

 

      ________

________

________

Net book value at 30 June 2018

-

10,575

10,575

 

      ________

________

________

Net book value at 31 December 2017

-

10,575

10,575

 

      ________

________

________

 

 

 

7        Intangible assets

 

 

 Customer Value

Computer software and development

Internally Generated Computer Software

Total

 

£'000

£'000

£'000

£'000

Cost

 

 

 

 

At 1 January 2018

1,648

758

428

2,834

Additions

-

46

-

46

Disposals

-

-

-

-

 

________

________

________

________

At 30 June 2018

1,648

804

428

2,880

 

________

________

________

________

Amortisation

 

 

 

 

At 1 January 2018

1,265

428

155

1,848

Provided in the period

165

100

71

336

Disposals in the period

-

-

-

-

 

________

________

________

________

At 30 June 2018

1,430

528

226

2,184

 

________

________

________

________

Net book amount at 30 June 2018

218

276

202

696

 

________

________

________

________

Net book amount at 31 December 2017

383

330

273

986

 

________

________

________

________

           

 

 

8          Property, plant and equipment

 

 

Freehold land and properties

£'000

Motor vehicles

£'000

Computer

equipment

£'000

Furniture fixtures & fittings

£'000

Leasehold improve-

ments

 £'000

Right of use Assets

£'000

Total

£'000

Cost

 

 

 

 

 

 

 

At 1 January 2018

5,478

214

828

1,238

31

-

7,789

IFRS 16 adjustment - see notes 2 and 13

-

-

-

 

-

 

-

 

344

344

Additions

-

15

73

2

-

684

774

Disposals

-

-

(23)

-

-

(56)

       (79)

 

______

______

______

______

______

______

______

At 30 June 2018

5,478

229

878

    1,240

31

972

8,828

 

______

______

______

______

______

______

______

Depreciation

 

 

 

 

 

 

 

At 1 January 2018

1,599

79

644

702

18

-

3,042

Provided in the period

47

20

78

67

2

182

396

Eliminated on disposals

-

-

(11)

-

-

(1)

(12)

 

______

______

______

______

______

______

______

At 30 June 2018

1,646

99

711

769

20

181

3,426

 

______

______

______

______

______

______

______

Net book amount at

30 June 2018

3,832

130

167

471

11

791

5,402

 

______

______

______

______

______

______

______

Net book amount at

31 December 2017

3,879

135

184

536

13

-

            4,747

 

______

______

______

______

______

______

______

 

 

 

 

9   Financial assets

 

 

At

30 June 2018

Unaudited

At

30 June 2017

Unaudited

At

31 December 2017

Audited

 

£'000

£'000

£'000

 

 

 

 

Bank deposits

4,353

5,386

3,591

Investment Bond

-

100

100

Financial assets:

 

 

 

  Available for sale

-

733

801

 

________

________

________

 

4,353

6,219

4,492

 

_________

_________

_________

 

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).

 

The available for sale financial assets are stated at their bid market price, these are all based on level 1 inputs. All available for sale financial assets were sold in May 2018.

 

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.

 

The investment bond subscribed to during 2014 is held in Criticaleye Investments plc and has a fixed three-year initial term. Interest is paid at 8% gross per annum. The bond was acquired late in 2014 and was relinquished in June 2018 at its full value of £100,000.

  

 

10         Long Term Incentive Plan (LTIP)

 

LTIP1

 

During 2012 the Company adopted a discretionary Long-Term Incentive Plan (LTIP1) for the benefit of selected Directors and senior employees of Personal Group.

 

Full details of the scheme can be found in note 24b) of the 2017 Annual Report and Accounts.

 

The scheme had ended for all participants by 30 April 2018.

 

An amount of £nil (2017: £nil) has been charged to the profit and loss account in the six months ended 30 June 2018.

 

During the six months ended 30 June 2018, 88,628 shares were issued, increasing the equity value and decreasing the retained earnings by £4,431. The shares were issued to Mark Scanlon (38,683 shares), Mike Dugdale (46,351 shares) and one other member of senior management (3,594 shares). There are no LTIP 1 options outstanding at 30 June 2018 and the scheme is now closed.

 

LTIP2

 

As with LTIP1, 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. As is the case with LTIP1, LTIP2 is Market Capitalisation based and becomes reward bearing above a Company Market Capitalisation of £183.7m. It also has a yearly EPS performance criterion through its life which can be adjusted by the Remuneration Committee.

 

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 £350m 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 £54,500 (2017: £151,000) has been charged to the profit and loss account in the six months ended 30 June 2018 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.

 

No awards have been made under this scheme to date.

 

In addition to the charges above the related employer's national insurance charge has been classified as share-based payment expenses on the face of the profit and loss account.

 

 

 

 

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.

 

The profit and loss account and balance sheet for this joint venture company are as follows:

 

Profit and loss account

 

6 months ended

30 June 2018

6 months ended

30 June 2017

12 months ended

31 December 2017

 

 

Unaudited

Unaudited

Audited

 

 

£'000

£'000

£'000

 

 

 

 

 

Rent receivable

 

30

24

48

Administration expenses

 

               (46)

               (58)

                    (46)

 

 

________

________

________

Operating profit / (loss)

 

               (16)

               (34)

2

 

 

________

________

________

Profit / (Loss) on ordinary activities before taxation

 

               (16)

               (34)

2

Tax on profit/loss on ordinary activities

 

-

-

   (5)

 

 

________

________

________

Loss for the financial period retained

 

               (16)

               (34)

(3)

 

 

________

________

________

Personal Group Holdings share of loss

 

               (8)

               (17)

(2)

 

 

________

________

________

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance sheet

 

6 months ended 30 June 2018

6 months ended

30 June 2017

12 months ended

31 December 2017

 

 

Unaudited

Unaudited

Audited

 

 

£'000

£'000

£'000

Current assets

 

 

 

 

Inventories

 

1,078

1,082

1,079

Debtors

 

239

198

218

 

 

________

________

________

 

 

1,317

1,280

1,297

 

 

 

 

 

Creditors: amounts falling due within one year

 

(61)

(27)

(24)

 

 

________

________

________

Net current assets

 

1,256

1,253

1,273

 

 

________

________

________

Capital and reserves

 

 

 

 

Called up share capital

 

-

-

-

Profit and loss account

 

1,256

1,253

1,273

 

 

________

________

________

Shareholders' funds

 

1,256

1,253

1,273

 

 

________

________

________

Personal Group Holdings' share of net assets

 

628

627

636

 

 

________

________

________

           

 

12         Provisions

 

As at 30 June 2018, the PG Let's Connect PAYE tax provision has been held at £1,905,000. This remains the directors' best estimate of the potential amount payable to HMRC.

 

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 were made to HMRC during 2018 in respect of these schemes (2017: £nil), however, the Company is aware that these schemes are still currently subject to investigation.

 

 

13         New and Amended Standards Adopted by the Group

 

This note explains the impact of the adoption of IFRS 9 Financial Instruments, IFRS 15 Revenue from Contracts with Customers and IFRS 16 Leases on the Group's financial statements and also discloses the new accounting policies that have been applied from 1st January 2018, where they are different to those applied in prior periods.

 

IFRS 9 Financial Instruments 

 

The adoption of IFRS 9 Financial Instruments from 1st January 2018 resulted in changes in accounting policies and adjustments to the amounts recognised in financial statements. However, it was not required to make any restatement of prior years as financial instruments in the Group are limited to equity investments reclassified to Fair Value through Profit and Loss ("FVPL"), the transition of which has been applied from the start of 2018 without need for retrospective adjustment.     

 

Equity investments reclassified from Available-for-Sale to FVPL

 

The Group has held investments in managed equity shareholdings for several years. These shares were previously held as available for sale financial assets with any changes in value being classified as OCI and dividends being taken to the P&L on receipt. As these assets were held for short term capital appreciation and dividend receipts, they have been reclassified from available for sale assets to FVPL. This has resulted in a transfer of £85,000 on 1st January 2018 from the Available-for-Sale reserve to the Profit and Loss reserve, as disclosed in the Consolidated Statement of Changes in Equity for the six months ended 30 June 2018. All these assets were subsequently sold in May 2018 and the realised change in fair value has been taken directly to the Statement of Profit or Loss.

 

Impairment of Financial Assets

 

IFRS 9 requires the use of an expected credit loss model to calculate impairment losses rather than an incurred loss model. Therefore, it is not necessary for a credit event to have occurred before credit losses are recognised. The new impairment model applies to the all the Group's financial assets.

 

No changes to the impairment provisions were made on transition to IFRS 9. In assessing impairment requirements on financial assets, the Group now considers the historic loss rates, which have been minimal, in conjunction with expected future losses and credit losses as a result of potential defaults. This will, as mandated by IFRS 9, continue to be reassessed as and when further information becomes available or when conditions change.

 

Financial assets on which this method has been applied include trade receivables for sales of insurance products, SaaS products, salary sacrifice technology products and other sales made by the Group.

 

While cash and cash equivalents are also subject to the requirements of IFRS 9, the potential impairment loss identified was negligible.

 

 


 

 

IFRS 15 Revenue from Contracts with Customers

 

The Group has adopted IFRS 15 Revenue from Contracts with Customers from 1st January 2018 and, following a review of the contracts held by the Group, this has not resulted in any changes to existing revenue recognition policies and no adjustments have been made to the amounts recognised in the financial statements.

 

 

IFRS 16 Leases

 

In implementing IFRS 16 Leases, the Group has applied the modified retrospective approach such that the standard has been applied on all existing leases from 1st January onwards with no adjustments to the prior period. An appropriate Group discount rate has been used on all leases and, on transition, the new Right of Use assets have been valued at the present value of the remaining lease payments plus any forecast dilapidations reinstatement costs associated with the assets.

 

As a result of the implementation of IFRS 16 a Right of Use asset of £344,000 and an equal and opposite Right of Use liability were booked on 1st January 2018.

 

Changes in Accounting Policies

 

Under IFRS 16 Leases, with the exception of short term or low value leases, all operating and finance leases are accounted for in the statement of financial position. On inception of the lease the future payments, including any expected end of life costs, are calculated based on the stated interest rate in the lease or on the Group's internal interest rate. A 'Right of Use' asset is created at an equal value depreciated over the life of the lease which is determined by the contract with any break clauses being reviewed as to the expected use at the time of inception and at each following year end. Payments are debited to the creditor and the P&L is charged with monthly depreciation and interest.

 

 

13         Financial calendar for the year ending 31 December 2018

 

The company announces the following dates in its financial calendar for the year ending 31 December 2018:

 

·      Preliminary results for the year ending 31 December 2018                   -            March 2019

·      Publication of Report and Accounts for 2018                                         -            March 2019

·      AGM                                                                                                       -            May 2019

 

 


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
 
 
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