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Personal Group Holdings Plc NEX:PGH.GB NEX Ordinary Share GB0002760279
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  -16.00p -3.40% 454.00p 460.00p 480.00p 470.00p 470.00p 470.00p 0 16:30:08
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Personal Group Holdings PLC Interim Results

18/09/2018 7:01am

UK Regulatory (RNS & others)


Personal (NEX:PGH.GB)
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1 Year : From Jun 2018 to Jun 2019

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TIDMPGH

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 GBP21.1m (2017: GBP19.6m), an increase of 7.3% 
   --     EBITDA* from continuing operations of GBP4.7m (2017: GBP3.7m), an increase of 27.0% 

-- Profit before tax from continuing operations of GBP3.9m (2017: GBP3.0m), 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 GBP18.4m 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 GBP2.0m (2017: GBP0.9m) 
   --     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."

-S -

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 GBP21.1m (2017: GBP19.6m). 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 GBP4.7m (2017: GBP3.7m). 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 GBP3.9m (2017: GBP3.0m), 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 GBP18.4m 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                   Mark Scanlon 
  Non-Executive Chairman    Chief Executive 
 18 September 2018 
 

Consolidated Income Statement

 
                                                          6 months                 6 months          12 months 
                                                             ended                    ended              ended 
                                                      30 June 2018             30 June 2017   31 December 2017 
                                                         Unaudited                Unaudited            Audited 
                                      Note                 GBP'000                  GBP'000            GBP'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       6 months          12 months 
                                         ended          ended              ended 
                                  30 June 2018   30 June 2017   31 December 2017 
                                     Unaudited      Unaudited            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                      6 months          12 months 
                                                        ended                         ended              ended 
                                                 30 June 2018                  30 June 2017   31 December 2017 
                                                    Unaudited                     Unaudited            Audited 
 
                                                      GBP'000                       GBP'000            GBP'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                 At             At 
                                        30 June 2018   31 December 2017   30 June 2017 
                                           Unaudited            Audited      Unaudited 
 
                                 Note        GBP'000            GBP'000        GBP'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                        At             At 
                                        30 June 2018          31 December 2017   30 June 2017 
                                           Unaudited                   Audited      Unaudited 
 
                                Note         GBP'000                   GBP'000        GBP'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

 
                                                          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 
                              (________)    (________)   (________)   (________)   (________)   (________) 
 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

 
                                                          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 
  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

 
                                                          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 
  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       6 months          12 months 
                                                     ended          ended              ended 
                                              30 June 2018   30 June 2017   31 December 2017 
                                                 Unaudited      Unaudited            Audited 
                                                   GBP'000        GBP'000            GBP'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               6 months          12 months 
                                                                  ended                  ended              ended 
                                                           30 June 2018           30 June 2017   31 December 2017 
                                                              Unaudited              Unaudited            Audited 
                                                                GBP'000                GBP'000            GBP'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 1(st) 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,

 
 
                                                      IT Salary                             Continuing    Discontinued 
                                   Core Insurance     Sacrifice         SaaS        Other   Operations          Mobile 
Operating segments                        GBP'000       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                                         -         3,264        2,004           53        5,321               5 
Investment property                             -             -            -            1            1               - 
Investment income                               -             -            -           31           31               - 
 
                                      (_________)   (_________)  (_________)  (_________)  (_________)     (_________) 
                                           15,605         3,264        2,008          207       21,084               5 
Total revenue                         (_________)   (_________)  (_________)  (_________)  (_________)     (_________) 
 
Net result for period 
 before tax                                 4,160         (515)          257         (36)        3,866               8 
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               8 
                                      (_________)   (_________)  (_________)  (_________)  (_________)     (_________) 
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 GBP72,000 of interest costs and GBP169,000 of depreciation which would previously have been included within operating profit as lease costs.

 
 
 
                                                                                                       Discontinued 
                                                   IT Salary                             Continuing               - 
                                Core Insurance     Sacrifice         SaaS        Other      - Group          Mobile 
Operating segments                     GBP'000       GBP'000      GBP'000      GBP'000      GBP'000         GBP'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               - 
 
                                   (_________)   (_________)  (_________)  (_________)  (_________)     (_________) 
                                        15,293         3,141          910          300       19,644              56 
Total revenue                      (_________)   (_________)  (_________)  (_________)  (_________)     (_________) 
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         SaaS        Other   Continuing     Discontinued 
                                                    Sacrifice                                - Group         - Mobile 
                                         GBP'000      GBP'000      GBP'000      GBP'000      GBP'000          GBP'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                - 
 
                                     (_________)  (_________)  (_________)  (_________)  (_________)      (_________) 
                                          30,727       11,292        2,657          557       45,233               63 
Total revenue                        (_________)  (_________)  (_________)  (_________)  (_________)      (_________) 
 
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               6 months                  12 months 
                  ended     EPS          ended     EPS              ended     EPS 
           30 June 2018   Pence   30 June 2017   Pence   31 December 2017   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 GBP3,541,000 to its equity shareholders (2017: GBP3,490,000). This represents a payment of 11.50p per share (2017: 11.35p).

 
                             6 months ended  6 months ended    12 months ended 
                               30 June 2018    30 June 2017   31 December 2017 
                                    GBP'000         GBP'000            GBP'000 
Dividends paid or provided 
 for during the period                3,541           3,490              6,979 
                                    (_____)         (_____)            (_____) 
 
 
 
   6         Goodwill 
 
                                                           PG Let's 
                                              BMG           Connect             Total 
                                          GBP'000           GBP'000           GBP'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 
 
                                                                             Internally 
                                      Customer   Computer software            Generated 
                                         Value     and development    Computer Software        Total 
                                       GBP'000             GBP'000              GBP'000      GBP'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                           Furniture  Leasehold     Right 
                             land and      Motor    Computer     fixtures   improve-    of use 
                           properties   vehicles   equipment   & fittings      ments    Assets             Total 
                              GBP'000    GBP'000     GBP'000      GBP'000    GBP'000   GBP'000           GBP'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              At             At 
                         30 June 2018    30 June 2017    31 December 
                            Unaudited       Unaudited           2017 
                                                             Audited 
                              GBP'000         GBP'000        GBP'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 GBP100,000.

   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 GBPnil (2017: GBPnil) 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 GBP4,431. 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 GBP183.7m. 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 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 GBP54,500 (2017: GBP151,000) 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      6 months ended          12 months ended 
                                            30 June 2018        30 June 2017         31 December 2017 
                                               Unaudited           Unaudited                  Audited 
                                                 GBP'000             GBP'000                  GBP'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      6 months ended          12 months ended 
                                            30 June 2018        30 June 2017         31 December 2017 
                                               Unaudited           Unaudited                  Audited 
                                                 GBP'000             GBP'000                  GBP'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 GBP1,905,000. 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: GBPnil), 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 1(st) January 2018, where they are different to those applied in prior periods.

IFRS 9 Financial Instruments

The adoption of IFRS 9 Financial Instruments from 1(st) 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 GBP85,000 on 1(st) 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 1(st) 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 1(st) 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 GBP344,000 and an equal and opposite Right of Use liability were booked on 1(st) 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

IR LRMLTMBABBTP

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September 18, 2018 02:01 ET (06:01 GMT)

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