PERSONAL GROUP HOLDINGS PLC
PRELIMINARY ANNOUNCEMENT OF RESULTS
FOR THE YEAR ENDED 31 DECEMBER 2008

The board of directors of Personal Group Holdings Plc, providers of employee benefits, insurance and consultancy, are pleased to announce the group’s results as follows:

• Revenue up 2% to £26.8m (2007: £26.4m)

• EBITDA £9.2m (2007: £9.4m)

• Underlying PBT of £8.7m (2007: £8.6m)

• 2008 has been a record year for new business production with Personal Hospital Plan (PHP) and Death Benefit (DB) 29% ahead of 2007

• Dividends paid in 2008 amounted to 16.5p per share, a 38% increase over 2007

• First quarterly dividend payment of 2009 amounting to 4.15p per share paid today.  Providing business continues as expected the board anticipates paying identical amounts in June, September and December 2009

• Goodwill impairment of £3.4m relating to the acquisition of Berkeley Morgan Group Limited in 2005.

EBITDA is defined as earnings before interest, tax, depreciation and goodwill impairment. 

Underlying PBT is defined as earnings before tax and goodwill impairment.

The AGM will be held on 28 April 2009.

Ken Rooney, Group managing director, commented:

2008 was our most successful year ever in terms of new benefit programmes launched and the income generated from these and our existing client relationships.

During the year, 28 new benefit programmes were arranged including schemes for Vision Express, UK Mail, TNT and Merseyrail.  New business premiums for our major insurance products increased by approximately 29% compared to 2007, and it was particularly pleasing that the second half of the year was stronger than the first.

The Voluntary Group Income Protection scheme continues to progress with 8 new employers adopting the programme including Pendragon & IPC Media.  We are committed to developing this plan further during 2009.  Again we wrote more new business in the second half of the year than the first.

Perflex, our flexible benefits software, can now be accessed by 360,000 employees through 102 employers.

The Berkeley Morgan Group (BMG) side of the business continued to trade solidly making a valuable contribution to the group’s income and profitability.  However, the projected underlying performance of BMG has deteriorated since we acquired it in 2005 which has resulted in the impairment provision as noted above.

CHAIRMAN’S STATEMENT

BUSINESS REVIEW

The group’s reported profit before tax (PBT) was £5.2m (2007: £8.6m) after providing for goodwill impairment of £3.4m in the year (2007: £nil).  The group’s profit before interest, tax, depreciation and goodwill impairment was £9.2m (2007: £9.4m).  Adding back the goodwill impairment, PBT increased slightly to £8.7m (2007: £8.6m).

2008 has been a good year for new business production. Our Personal Hospital Plan (PHP) and Death Benefit (DB) was 29% ahead of 2007.  Voluntary Group Income Protection (VGIP) was up 211%.   When translated into new business acquisition cost ratios the comparatives show that the cost of enrolling £100 of new PHP/DB annual premium in 2008 was £73.50 compared with £82.50 in 2007, a saving of approximately 10.9%.  Combined new business expenses for PHP, DB, and VGIP rose by approximately 13.5% representing a £618,000 increased charge against profits in 2008 compared with 2007.

Our PHP and DB and related policies have accumulated a £12.5m (2007: £12.9m) annual premium ‘bank’ of business that has been in force for more than 2 years and where all original sales costs have been recovered.  What is more exciting is the effect of the last two years of  considerably increased new business production that has created an additional annual bank of business which is less than 2 years old, which amounts to £7.9m (2007: £6.4m).

During 2008, 29,698 (2007: 25,992) claims were processed, of which fewer than 1% were denied benefit, with the great majority paid in full by return of post.  For the fifth year in succession no policyholder had their benefit curtailed because their hospital stay exceeded the maximum period payable. No Personal Assurance Plc claims were referred to the Financial Ombudsman Service during the year.

During the financial year Berkeley Morgan Group (BMG) companies contributed £1.4m (2007: £1.1m) of PBT. This represented approximately 16.1% of the PBT (after adding back goodwill impairment) of the group. BMG has generated consistent profits between £1.1m to £1.7m since we acquired the business at the beginning of 2005.  However, as we informed the market last year, we have completed a thorough analysis of the business prospects of each of the trading companies within BMG which includes travel, house & contents, private medical insurance agencies and a small team of financial advisers, and have come to the conclusion that the goodwill previously valued at £9.4m should be reduced to £6.0m, hence the goodwill impairment during the year.

The fall in interest rates during the year has had an adverse impact on our net investment income which has decreased to £508,000 (2007: £848,000).

At 31 December 2008 our government fixed interest securities and cash deposits amounted to £10.5m (2007: £10.7m).   During 2008, our small equity portfolio suffered a reduction in market value to £484,000 at 31 December 2008 (2007: £924,000).

The group’s joint venture with Abbeygate Developments Limited, of additional office space and residential units on the site adjacent to John Ormond House, continues to be fully let and generated a gross income of £0.4m in 2008 (2007: £0.4m) of which 50% is receivable by the group.

As stated in Personal Assurance Plc’s annual return to the Financial Services Authority the capital resources requirement at 31 December 2008 was £3.0m (2007: £2.9m).  Personal Assurance Plc’s qualifying capital resources available to cover this requirement were £7.8m (2007: £7.2m). This margin of solvency will allow further increases in premium income to be written by Personal Assurance Plc without the requirement for new capital.

DIVIDENDS AND DIVIDEND POLICY

During 2008 we paid quarterly dividends amounting to £5m (16.5p per share), an increase of 37.5% compared to 2007.  In my 2007 chairman’s statement I commented that it was unlikely that dividends in 2009 will equal those paid in 2008.  However, I am pleased to report that as a result of our continuing strong profit stream and cash position we were able to announce, earlier this year, our first quarterly dividend for 2009 amounting to 4.15p per share, which was paid today.  Providing business continues as expected we anticipate paying the same amounts in June, September and December 2009.

THE BOARD

On the 2nd February 2009 we announced that we had appointed a new group managing director, Nigel Brittle.   The board anticipates Nigel will take over fully from Ken Rooney following our AGM on the 28th April 2009. Nigel comes to us with 22 years experience with a similar if somewhat larger organisation to Personal Group. We believe Nigel’s personality, character and knowledge will add great value to the group in the years ahead.

Ken Rooney, who has been group managing director for approximately 5 years, will become executive deputy chairman and will chair the subsidiary company boards. The all time record production and low cost of sales ratio achieved during 2008 is a tribute to Ken’s firm financial control and leadership throughout this period.

Personally my plan is to continue as group chairman whilst substantially reducing my involvement in the day to day management of the group, moving to a non-executive role chairing Personal Group Holdings Plc and Personal Assurance Plc boards.  I remain a director of Personal Group Trustees Limited and Abbeygate (Marlborough Gate 2) Limited and remain a trustee of the Personal Assurance Charitable Trust.  I resigned my directorships of other subsidiary companies in January 2009.

PROSPECTS FOR 2009

Current trading is in line with directors’ expectations.  It should be noted that in previous economic downturns the insurance products on which the group’s success is based have proven remarkably resilient as customers have appreciated their simplicity and value for money.  Our balance sheet remains strong with total equity, excluding goodwill, in excess of £17.1m. 

My thanks to all our policyholders, host company employers, employees and associates for their contribution to our continuing success.

Christopher W T Johnston
Chairman

27 March 2009

Enquiries:

PERSONAL GROUP HOLDINGS PLC
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2008

All operations are considered to be continuing.

PERSONAL GROUP HOLDINGS PLC
CONSOLIDATED BALANCE SHEET AT 31 DECEMBER 2008

PERSONAL GROUP HOLDINGS PLC
CONSOLIDATED BALANCE SHEET AT 31 DECEMBER 2008 (CONTINUED)

PERSONAL GROUP HOLDINGS PLC
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2008

Notes

1. Taxation comprises United Kingdom corporation tax of £2,366,000 (2007: £2,379,000), and deferred taxation charge of £90,000 (2007: £166,000 credit).
2. The basic and diluted earnings per share are based on the profit for the financial year of £2,771,000 (2007: £6,358,000) and on 30,268,462 basic (2007: 30,260,729), 30,286,410, diluted (2007: 30,297,146) ordinary shares, the weighted average number of shares in issue during the year.  The EBITDA per share are based on the earnings before interest, tax, depreciation and goodwill impairment for the financial year of £9,237,000 (2007: £9,365,000).
3. The total dividend paid in the year was £4,993,000 (2007: £3,627,000), which is equivalent to 16.5 pence (2007: 12.0 pence) per share.

The preliminary statement has been extracted from the 2008 audited financial statements that will be posted to shareholders in due course.  The statutory accounts for each of the two years to 31 December 2008 and 31 December 2007 received audit reports, which were unqualified and did not contain statements under section 237 (2) or (3) of the Companies Act 1985.  The 2007 accounts have been filed with the Registrar of Companies but the 2008 accounts are not yet filed.