TIDMPGH
RNS Number : 3135G
Personal Group Holdings PLC
29 March 2022
29 March 2022
Personal Group Holdings plc
("the Company" or "Group")
Preliminary Results and Final Dividend
Personal Group Holdings Plc (AIM: PGH), the workforce benefits
and services provider, is pleased to announce its preliminary
results for the year ended 31 December 2021.
Following 15 months of unprecedented COVID-19 related
restrictions on the Group's ability to conduct new insurance policy
sales, the Group was able to begin rebuilding the insurance
policyholder book in the second half of 2021. This, combined with
the significant strategic progress that the Group was able to make
during the 12 months ended 31 December 2021, underpins the Board's
confidence in the Company's growth trajectory and future
prospects.
Financial Highlights
-- Group revenue of GBP74.5m (2020: GBP71.5m)
-- Adjusted EBITDA* of GBP6.1m, in line with market
expectations, (2020: GBP10.1m), reflecting the impact of COVID-19
restrictions on premium income generation, offset by increased
contributions from the Pay & Reward and Other Owned Benefits
divisions
-- Statutory profit before tax of GBP4.3m (2020: GBP8.6m) in line with adjusted EBITDA
-- Basic EPS of 11.5p (2020: 22.1p)
-- Strong balance sheet and liquidity with cash and deposits at
year end of GBP22.9m (2020: GBP20.2m), and no debt
-- Final dividend for 2021 announced post-period end of 5.3p per
share making a full year dividend for 2021 of 10.6p (2020:
18.4p).
Operational Highlights
-- Record number of new client wins in a single year, including
goods retailer Homebase, Avanti West Coast and The Royal Mint
-- Face-to-face insurance product sales recommenced in July 2021
with strong activity throughout H2 and individual average daily
sales production up 8% vs 2019
-- Launched HapiFlex in September, a more complex version of the
Group's benefits platform suitable for enterprise clients, winning
significant clients within first few months
-- Offering to the SME sector with the Sage partnership
continuing to show strong momentum. As at 31 December 2021 there
were 1,500 paying clients of Sage Employee Benefits, reaching
20,000 employees and generating over GBP1.6m gross annualised
recurring revenues
-- Continued expansion into Public Sector with 16 new client
wins and opportunity remaining from the Group being on three key
Government frameworks
-- Martin Bennett assumed the role of Group Chairman in May 2021
-- Further defined our growth strategy for the next three years
with new aspirations for the near term
KPIs
-- 1.21m in the UK workforce with access to one or more of the Group's services (2020:1.16m)
-- 86 new client wins across the Group (2020: 48), driving the
total unique client number to 387 (2020: 358)
-- Annualised Premium income of GBP24.4m (2020: GBP27.1m)
-- 93,147 insurance payers (2020: 103,497)
-- 539,051 activated benefits platform users (includes Hapi and SEB) (2020: 484,773)
-- 72% employee engagement score (2020: 76%), management is
pleased that despite the ongoing effects of the COVID-19 pandemic
and a change in survey provider that the Group's engagement score
has remained amongst the upper quartile of companies surveyed.
Post-Period Trading and Outlook
-- Continued strong trading in line with market expectations,
including good momentum in insurance policy sales
-- Five year contract extension signed with Sage for Sage
Employee Benefits product in February 2022, providing access to an
extensive SMB customer base
-- Contract signed appointing Dame Kelly Holmes as the Group's
Chief Wellbeing Ambassador for 2022
* Adjusted EBITDA is defined as earnings before interest, tax,
depreciation, amortisation of intangible assets, goodwill
impairment, share-based payment expenses, corporate acquisition
costs and restructuring costs.
Deborah Frost, Chief Executive of Personal Group, commented:
"2021 saw employers even more conscious of the need to attract,
retain and look after their employees. The demand for our services
has therefore never been greater or more relevant. Highlights of
the year include having recommenced face-to-face insurance sales in
H2, meaning we are now firmly back on a positive trajectory in the
division. We also achieved a record number of client wins, made
strong progress with our Sage partnership and developed our
offering significantly in order to allow us to grow with the
expanding market going forward. Importantly, we refreshed our
growth strategy and are today setting out our new aspirations for
the mid-term.
2022 has begun well and despite heightened macro-economic
uncertainty we have delivered strong trading in line with
expectations. We have already announced two exciting post-period
strategic wins: the agreement of a new five year contract with Sage
and the appointment of Dame Kelly Holmes as our Chief Wellbeing
Ambassador.
Our business sits at the heart of a macro growth trend; the
increasing importance of helping employees to thrive both at work
and at home. Driven by our talented team, we will continue to press
forward with our initiatives to further innovate and expand. I am
thoroughly looking forward to capitalising on our many growth
opportunities going forward."
An overview of the preliminary results from Deborah Frost, Chief
Executive, is available to watch here:
https://www.fmp-tv.co.uk/2022/03/29/personal-group-holdings-preliminary-results/
Personal Group Holdings will be hosting a webinar for private
investors on Friday 01 April at 12.00. If you would like to
register for the webinar, please follow this link:
https://bit.ly/PGH_FY21_webinar
-S-
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
The Market Abuse Regulation (EU 596/2014) pursuant to the Market
Abuse (Amendment) (EU Exit) Regulations 2018. Upon the publication
of this announcement via a Regulatory Information Service ("RIS"),
this inside information is now considered to be in the public
domain.
For more information please contact:
Personal Group Holdings Plc
Deborah Frost / Sarah Mace +44 (0)1908 605 000
Cenkos Securities Plc
Camilla Hume / Callum Davidson
(Nominated Adviser) +44 (0)20 7397 8900
Russell Kerr (Sales)
Alma PR
Susie Hudson / Lily Soares Smith +44 (0)20 3405 0205
personalgroup@almapr.co.uk
Notes to Editors
Personal Group Holdings Plc (AIM: PGH) is a workforce benefits
and services provider. The Group enables employers across the UK to
improve employee engagement and support their people's physical,
mental, social and financial wellbeing. Its vision is to create a
brighter future for the UK workforce.
Personal Group provides health insurance services and a broad
range of employee benefits, engagement, and wellbeing products. Its
offerings can also be delivered through its proprietary app, Hapi,
and the recently developed extension to the platform, Hapiflex.
The Group's growth strategy is centred around widening the
footprint of the business into the SME, talent-led & Public
Sectors, thereby expanding the addressable customer base. In
addition, it aims to grow in its existing industrial heartlands, to
re-invigorate growth in insurance policyholders and to drive the
use of its SaaS offerings.
Clients include: Arsenal FC, Barchester Healthcare, Merseyrail,
Randstad, Royal Mail Group, The Royal Mint, the Sandwell &
Birmingham NHS Trust, Stagecoach Group plc, and The University of
York. 34% of clients are served by two or more group companies.
For further information on the Group please see
www.personalgroup.com
CHAIR STATEMENT
In this, my first statement as Chairman of Personal Group, I am
delighted to report on a year of excellent strategic progress for
the business. Despite a longer-than-expected lockdown in H1 and
some challenging conditions throughout, the team achieved a great
deal in 2021, accelerating us towards a strong return to growth in
the years ahead.
As a truly purpose-led business the most important achievement
to note is the support we've continued to provide to employees all
over the country. In what has been a very difficult time for many
we have continued to pay out claims in full, supplied invaluable
wellbeing support, improved lives with access to benefits of all
varieties, and provided the means to keep scattered colleagues
connected.
We have touched the lives of more than a million people in some
way this year, a proud achievement in line with our guiding vision:
to create a brighter future for the UK workforce.
I would like to take this opportunity to sincerely thank every
member of the Personal Group team who has made this happen, all our
partners, clients and of course our supportive shareholders.
Focused on growth
Whilst our results for the 2021 were impacted, as anticipated,
by a reduction to our insurance income as a direct consequence of
15 months of COVID-19 lockdowns, we have delivered good growth in
many other key metrics - total unique client numbers and activated
benefits platform users, for example. This, I believe, demonstrates
the underlying health and optimism in the business.
Looking beyond the day-to-day, returning to and delivering
long-term growth has been at the forefront of our minds. We are
therefore delighted to have won 86 new clients across the Group in
2021 - more than ever before. We have broadened our offering
significantly and further defined our strategy in pursuit of that
ambition. Having experienced a reduction in the size of our
insurance book as a result of COVID-19, we have now recommenced
face-to-face sales in earnest and are determined to not only build
back to historic policyholder numbers, but to surpass them.
Providing broader support, widening our footprint
Our progress this year has been driven by two elements in
particular. The first of these is the broadening of our offering;
over the year we have introduced a host of new benefits and
distribution channels and developed HapiFlex, a more multifaceted
version of our benefits platform Hapi, to address the needs of
talent-driven organisations. It has been very well received. This
work builds on our unique selling point: housing a very broad range
of reward, benefits and insurance solutions within one Group.
The second driver has been success in expanding into new
industries. In the public sector we've had 16 new client wins and
have opportunities in play on three key Government frameworks. Our
partnership with Sage has also progressed further - we currently
provide 20,000 employees with Sage Employee Benefits and have
access to the 7m UK employees covered by Sage software. In
addition, we have made important inroads into talent-driven
businesses with more companies taking up Innecto's services and
early wins secured for our HapiFlex product.
A winning team
Supporting, communicating with and rewarding our own people has
been a key focus this year. We implemented a flexible hybrid
working policy to cater for a broad variety of personal preferences
and spent time reaffirming our core values as a team. Knowing we
are all aligned with a clear purpose to serve underpins our ability
to deliver sustainable growth going forward.
The senior team was bolstered by a number of new
operational-lead appointments. Pleasingly, these were a mixture of
experienced external appointments alongside several internal
promotions. As a leadership team we are always pleased to reward
our people and provide career progression opportunities.
At Board level, I was honoured to step into the Chairman role in
May. It is a great team to be part of and I would like to take this
opportunity to again thank Mark Winlow for his service to the
business for many years.
Progression on ESG
I have been greatly encouraged by the strides made in this
important area of the business, one that is a priority at Board
level. Over the course of the year, we have made good progress
against a number of initiatives to reduce our carbon footprint,
foster an inclusive, progressive and diverse working environment
and to ensure a robust corporate governance framework, all
enhancing our wider Environmental, Social and Governance (ESG)
strategy.
Key highlights in 2021 included installing solar panels at our
headquarters, establishing a Nomination Committee, progress from
our diversity and inclusion working group and a continuation of our
long-established commitment to the wider community through our work
with partner charities PACT and The Memusi Foundation. We have an
excellent foundation on which we can continue to build and our
progress on this front will drive meaningful change across our
business going forward.
A market in growth
Part of the reason I joined Personal Group a year ago was the
Group's remarkable growth opportunity. During 2021 the market
accelerated further - it has never been more important for
organisations to look after their people. Whether it is due to the
war for talent, wage inflation, the impacts of Brexit or a host of
other factors, companies everywhere are fighting to retain their
talent and appreciate that caring for employees' health, wellbeing,
and building a sense of community has become a non-negotiable.
The growth in the market underpins our prospects as a business.
We have a first-class, proven and broad offering to cater to this
growing demand and we look forward to capitalising on the
opportunity.
Dividend
I am pleased to announce that the Board has recommended a final
ordinary dividend of 5.3 pence per share which will be paid to
shareholders on 20 May. This makes a total ordinary dividend for
2021 of 10.6 pence per share and whilst this dividend reflects our
reduced profits for the year it does still represent a significant
proportion of our earnings per share as the Board seeks to continue
our dividend payments in line with historic pay-out ratios.
Outlook
Notwithstanding the increased macro political and economic
uncertainty, including the ongoing conflict in Ukraine, which we
will continue to monitor closely to enable us to take appropriate
steps to manage any impact this has on the Group, looking ahead as
a predominantly people-based UK business, the Board and I are
confident about the Group's prospects. Our market has never been
more relevant; we have a strong and driven team in place and a
clear strategy driving us towards growth. We look forward to
continuing to provide more support to more people in the UK over
the coming year, helping them to thrive both in work and in
life.
Martin Bennett
Non-Executive Chair
28 March 2022
CE STATEMENT
2021 saw pandemic-related lockdowns continue until mid-July,
which had a significant effect on our, and our clients', business
operations. As a result, and as previously identified, our profits
were impacted compared with pre-pandemic levels. Pleasingly though,
while we will continue to see the impact on our insurance business
premium income into 2022, we have now entered the recovery phase
and expect to see Group earnings return to year-on-year growth from
FY22.
The pandemic has also brought into even sharper focus the
imperative to build towards our key strategic goals of widening our
offer and making it more relevant to more sectors and sizes of
business - we're building significantly bigger growth prospects in
the medium-term and I am delighted to report on the substantial
progress we've made this year.
I am particularly pleased by the start of the rebuilding of the
insurance book, which having been held back by restrictions for 15
months, began in July 2021, and the growth and development of our
small and medium-sized business (SME) offer. Working together with
Sage, we have grown from 30 to 1,500 clients paying for the Sage
Employee Benefits platform this year, reaching c.20,000 employees
and with a firm formula now established for scaling the business
between us.
During the pandemic, we became closer to our clients. By
listening to our HR Director market, we have driven development of
our products and services in line with their needs, and now have
compelling offers for SME, public sector, enterprise and
talent-driven organisations. We stand out in the workforce benefits
market due to the breadth of our offering, which includes a reward
consultancy capability, market-leading technology platforms,
employee-paid insurances and Let's Connect, our business providing
access to consumer technology through salary sacrifice. As a result
of how we are evolving as a business, we have revised the way we
report our segmental results, which is described in more detail in
the CFO statement below.
While COVID-19 impacted our business in the short-term by
affecting our traditional face-to-face insurance sales model, at
the same time it has brought a welcome long-term focus for
employers on the importance of supporting the resilience of
employees. Never has the importance of supporting your team,
implementing effective remuneration schemes and ensuring they have
access to impactful benefits been more apparent. This is driving
increased demand for our offering and underpins our confidence for
the future.
Sales and Operational review
Pay and Reward
Innecto
Clients often start working with us as they evaluate how
effective their overall pay and reward strategy is, engaging
through Innecto, our consultancy business. Innecto delivered a
strong performance in 2021, as demand returned quickly
post-pandemic and we drove sales of consultancy services up towards
2019 levels.
It was also positive to see that our digital analytics tools now
generate an Annualised Recurring Revenue (ARR) of c.GBP450k,
reflecting the high value clients place on detailed pay analysis
and benchmarking. Innecto won work from 49 new clients through the
year, demonstrating that our market proposition is strongly
resonating with our target market. This year, as well as general
pay and reward products, we've seen clients implementing
responsible reward strategies, looking hard at gender and ethnicity
pay gaps and using our tools to help them map progress
year-on-year.
We've identified a strong drive towards considering the 'Social'
element of ESG metrics in managing pay fairly. The robust
relationships we've built with key decision-makers who return for
advice year after year allows us to also cross-sell wider Group
propositions and we anticipate a year of continued growth in pay
and reward in 2022, especially as employee turnover activity and
pay inflation drives more focus on attracting, rewarding and
retaining the workforce.
Benefits platforms
We are at the forefront of the increasing awareness of the
'benefits of benefits'. Gone are the traditional days of pension
and cars for a select few; today clients are working with us to
find more innovative solutions to improve the wellbeing of their
employees, recognising that the pandemic has brought changing
patterns of working from home for the majority of their
office-based staff. Employee communication channels have
significantly increased in importance in reaching employees
wherever they are, and our benefits platform is frequently used as
part of the employee communications toolkit for direct-to-employee
messaging.
Hapi and HapiFlex
We were delighted to bring the next generation of our 'Hapi'
platform - our flexible benefits solution, HapiFlex - to market in
September 2021, with a number of client wins already secured in Q4.
HapiFlex is a unique platform that delivers a range of flexible
benefits directly to employees via a mobile and desktop app. It
builds on the functionality of the Hapi app while putting the
decision-making process firmly into the hands of employees, making
it easy to build a benefits package that suits their individual
needs. HapiFlex allows us to target a new market sector:
organisations looking to offer their employees a more complex
benefits offer. These tend to be talent-driven organisations, with
greater average earnings per employee than our traditional
'enterprise' customer. You can read more about HapiFlex in our
Annual Report. Meanwhile we saw 20 Hapi platform sales in 2021,
proof that our employee engagement platform is competitive in the
market and meeting the needs of new clients.
Sage Employee Benefits
The SME business we've developed with Sage has gone from a
standing start last winter to a growing business serving 20,000
paying employees. SMEs are facing the same struggle to recruit
workforces as bigger organisations, and a benefits platform gives
them an edge in the war for talent. The growth this year is only
the start of our SME story, as we improve the attraction, retention
and lifetime value of our clients. We help our clients create a
winning employee deal that keeps staff performing at their best,
day after day, in all sizes and sectors.
Affordable insurance
Our insurance business is the resilient, recurring revenue
engine of the business, which served over 93,000 insurance-payers
in 2021, with more than 230,000 policies in force. We resumed
face-to-face insurance sales in July, and although it has taken
time to fully re-start the engine after a gap of 15 months, we are
working towards achieving full strength in the team and conversion
rates are high.
We're serving new clients alongside existing; our partnership
with Royal Mail Group is particularly successful. With individual
salespeople's average daily sales up 8% on 2019 pre-pandemic
numbers, it is clearer than ever that our simple insurances are
highly valued by our customers, and our purpose; to 'protect the
unprotected and connect the unconnected' has never been more
important.
Interestingly, we've seen an increase in sales of our life
product from 20% towards 30% of sales. What's more, these sales are
not all substitutional - we're seeing higher levels of people with
more than one policy and therefore higher levels of policy premium
income. This trend re-emphasises that our products are relevant to
the market we serve, and invaluable in roles which don't offer sick
pay and death in service as part of their standard benefits
package.
Through the pandemic lockdowns we developed more routes to
market - virtual visits, telesales, and in-app insurance. Whilst
face-to-face sales is still our primary distribution method, we've
developed effective, lasting and lower-cost new channels to add to
our sales model which also allows us to reach a wider proportion of
customers. We look forward to seeing the results of our developing
insurance strategy over the medium term as early signs are
promising.
Other Owned Benefits
Let's Connect
During 2021 the segment began to return to normal trading as
schemes began to operate at pre-COVID levels with 19 new clients
won in the period.
The supply shortages, which heavily impacted the second half of
2020, continued to affect the business during the period. However,
this was mitigated by innovation in the product range to
incorporate white goods, gym equipment and outdoor furniture.
This broadening of the product offering coupled with new
business wins and an expected return to full supply of sought after
technology products gives reason to be optimistic for the segment's
performance moving into 2022.
Growth strategy
We aim to build workforce resilience for clients, helping
employees thrive in work and in life.
Over the three years I have led the business, we have
consistently executed on our strategy to widen our business
proposition beyond insurance sales through our enterprise clients.
Despite two years of pandemic restrictions, we added 86 new clients
across the Group in 2021 and continue to see evidence of new client
interest in new sectors. We are focused on building a business with
room to grow in the medium and long-term, and those foundations are
now in place.
In addition to driving organic growth, we also continue to
consider acquisition opportunities. In line with our business
model, we would consider acquisitions which increase our scale in
an existing area, accelerate growth into new, complementary fields
or which add in third-party suppliers to our benefits
proposition.
Our refreshed strategy to substantially grow the business over
the medium-term is based on three key areas for growth:
1. Driving insurance
a. Our overarching strategy continues to focus on developing and
maximising opportunities for growth. Our insurance business has
particular resonance in our core enterprise markets, and we are
continuing to develop opportunities with new and existing accounts
and improve sales penetration through different channels whilst
still retaining our central employer offer of face-to-face meetings
with all employees.
b. Continuing to improve policyholder retention is fundamental
to our growth. We have made important strides by listening to
policyholders, offering payment holidays where needed and ensuring
we have payment back-up beyond company payroll. Our Keep My Cover
alternative payment method resulted in GBP1.1m of premium income,
which would previously have been lost, being collected by direct
debit in 2021 and is now in place for 28% of policyholders who
currently pay through payroll. Our goal is to significantly
increase the percentage of policyholders with alternative payment
methods on their account.
c. In addition, we are developing new products and channels to
market in order to reach new audiences through different types of
employer. This gives us greater distribution opportunities and
allows cross-selling from Let's Connect and Innecto client
bases.
2. Transforming Reward & Benefits (platform growth)
a. Our focus on driving contracted recurring revenue and
investment in Innecto's digital platform by upgrading existing and
developing new products is feeding into a market keen to remove
manual processes and drive improved data access on pay and
reward
b. Workforce benefits is a fast-developing area where we are
creating innovation with our product range: Hapi and HapiFlex.
Adding new market opportunities as well as a clearer offer to our
existing markets is
now showing traction with increased sales and driving
bottom-line growth in the medium-term.
3. Accelerating SME offer
a. The SME market in the UK is vast, and mainly under-served due
to the challenges of reaching the sector at scale. Our partnership
with Sage allows us to directly reach the addressable market of
seven million UK employees in companies employing under 250
employees, at realistic cost. Over 2021 we moved through the
start-up phase and can now really capitalise on growth by
professionalising our joint operation. To meet the needs of this
market we have invested in new talent to drive digital customer
acquisition and improve our customer journey.
Alongside this refreshed strategy, we are today announcing a
number of aspirations for the mid-term:
1. Over 80% employee engagement
2. Over 75% customer approval rating
3. Serving >1.5m employees
4. Driving in-year premium income over GBP35m
5. Unlocking EBITDA growth
A winning team
Employee engagement scores were at 72% this year, and the Board
and I are focussed on building this beyond 80% over the next three
years, which in turn will drive customer satisfaction, client
satisfaction and increased innovation and commerciality.
The Senior Leadership Team has been tightened and refreshed in
the last few years, bringing new skills and perspectives to the
Group. We now have an excellent team in place to execute on our
growth ambition.
Outlook
Our strong team, together with the technology we've developed,
the partnership we have with Sage, our years of experience and
strong balance sheet, combined with a hugely supportive external
market environment, give me great confidence in what we can achieve
in the next three to five years. We recognise that the needs and
required skill-sets of the business evolve, and we will continue to
invest in people at different levels to effect the change we
need.
I would like to thank the senior team, our people and the Board
for their support, challenge and enthusiasm for the goals we've set
ourselves. We are excited about where we are going next.
Deborah Frost
Group Chief Executive
28 March 2022
CFO STATEMENT
Group revenue
Group revenue for the year of GBP74.5m (2020: GBP71.5m) reflects
a varied performance across the different business areas and the
continued contribution from recurring revenue streams.
As anticipated, we saw a reduction to earned premium as a direct
consequence of 15 months of COVID-19 lockdowns restricting our
ability to carry out our traditional face-to-face selling of
insurance. Despite this, as at 31 December 2021 we continue to have
over GBP24m of annualised premium income, the majority of which are
renewable on weekly or monthly rolling contracts.
Outside of insurance, all other areas of the business continued
to grow. Digital platform subscription income from our internally
developed benefits platform increased by over 40% year on year,
driven mainly by our expansion into the SME sector through our
partnership with Sage. Our pay & reward subsidiary, Innecto,
also put in a strong performance with the combination of
consultancy income and digital subscription income from their
proprietary HR solutions up by a third. Annual recurring revenue
across all the Group's digital platforms now stands at GBP3.6m.
Sales of technology and other products to employers as part of
their employee benefit provision though the Group's subsidiary PG
Let's Connect also rebounded somewhat from the supply chain issues
faced in 2020 although these remained in part during its peak
trading period. In addition, income from voucher resale though the
benefits platform continued to grow and whilst this predominantly
represents pass-through revenue, it does continue to demonstrate
the value of the provision to our clients.
Adjusted EBITDA*
Adjusted EBITDA* for the year was GBP6.1m (2020: 10.1m).
The key driver of the decline was the reduction in premium
income and consequential underwriting profit, which was compounded
by the increased cost of scaling up the field sales team back up
towards pre-COVID-19 levels in the second half of the year.
Offsetting this, we saw increased contribution from both our pay
and reward business and PG Let's Connect, in line with their
increased revenue contributions. Outside of this, the reduction in
adjusted EBITDA also reflected investment in both our sales and
marketing team and the general infrastructure and people within the
business to ensure we are in the best place possible to support
future growth.
We believe adjusted EBITDA* remains the most appropriate measure
of performance for our business, reflecting the underlying
profitability of the business and removing the impact of one-off
items arising from past acquisitions on the Group's reported profit
before tax. The definition remains unchanged from previous
years.
Profit before and after tax
Profit before tax for the year was GBP4.3m (2020: GBP8.6m). This
reflects both the reduction in adjusted EBITDA* and the increased
amortisation charge arising from continued investment in the
Group's proprietary software. The tax charge for the year was
GBP0.7m (2020: GBP1.7m), and profit after tax for the year GBP3.6m
(2020: GBP6.9m).
EPS
Resulting earnings per share was 11.5p (2020: 22.1p).
Dividend
The Board has recommended a final ordinary dividend of 5.3 pence
per share, making a total ordinary dividend for 2021 of 10.6 pence
per share. Whilst this dividend reflects our reduced profits for
the year it does exceed recent pay-out ratios and reflects both the
fact that the Group remains strongly capital generative and the
short-term impact of COVID-19 on its results.
As noted with the release of these accounts, a final dividend of
5.3p will be paid on 20 May 2022 to members on the register as at 8
April 2022 (the record date). Shares will be marked ex-dividend on
7 April 2022. The last day for elections will be on 28 April
2022.
Balance sheet
As at 31 December 2021 the Group's balance sheet remained
strong, with cash and deposits of GBP22.9m (2020: GBP20.2m) and no
debt.
The Group's main underwriting subsidiary, Personal Assurance Plc
(PA), continues to maintain a conservative solvency ratio of 357%
(unaudited), with a surplus over its Solvency Capital Requirement
of GBP3.5m. The Company has consistently maintained a prudent
position in relation to its Solvency II requirement. Personal
Assurance (Guernsey) Limited, the Group's subsidiary which
underwrites the death benefit policy, also maintained a healthy
solvency ratio of 220% (unaudited), under its own regime.
No impairment was deemed necessary for the goodwill balances
held in respect of the acquisitions of PG Let's Connect and
Innecto.
Segmental Results
To reflect how our business has evolved, and that in many cases
our clients utilise our services across multiple business areas, we
have changed the way we present our segmental results. We are now
reporting four core segments as detailed in the table below.
For each of the segments, the adjusted EBITDA* contribution
comprises the gross profit of that segment together with any costs
associated directly with the operation of that segment. In
addition, sales and marketing costs and other central costs that
are not directly attributable to a segment, such as Finance, HR,
Depreciation, Amortisation and Group Board expenses are no longer
allocated to a segment but are shown separately as 'Group Admin
& Central Costs'.
We believe the new presentation provides greater transparency to
enable the impact of top line growth on adjusted EBITDA*
contribution for each area of the business to be understood.
Segment Description Income Streams
==================================== ===============================
Pay & Reward Provision of a full reward Consultancy, digital platform
service to employers through subscriptions
the Group's pay and reward
subsidiary, Innecto
==================================== ===============================
Benefits Platform Provision of a benefits platform Digital platform subscriptions,
to employers both directly commissions from third party
(Hapi) and through channel benefits which sit on the
partners, currently Sage for platform
our SME solution
==================================== ===============================
Affordable Insurance A directly owned benefit, provision Premium income
of simple insurance products
underwritten by Group subsidiaries
==================================== ===============================
Other Owned Benefits Other directly owned benefits: Retail sales directly to
sale of technology and other employers, commission received
products to employers as part from the introduction of
of their employee benefit provision third-party finance
through the group's subsidiary,
Let's Connect
==================================== ===============================
Pay & Reward: Innecto
Innecto, the Group's pay and reward subsidiary, put in a strong
performance in 2021, with its consultancy income up 50% on 2020 as
demand from HRDs looking to retain and attract their employees
reignited. Digital subscription income from its proprietary HR
solutions also increased by 33% on the previous year. Annualised
Recurring Revenue on these products stood at GBP0.4m as at 31
December 2021 and is set to increase with the introduction of a
further product, Advance, in January 2022.
Benefits Platform
Revenue from digital platform subscriptions and commissions from
third party benefit suppliers which sit on the benefits platform
rose to GBP3.3m in 2021 (2020: GBP2.4m).
Whilst subscriptions for our enterprise platform, Hapi, remained
relatively static in 2021, the introduction of HapiFlex provides an
opportunity to both target a new market sector and to yield higher
margins from a more sophisticated and complex product.
The main driver of the growth in revenue in this area of the
business was the expansion into the SME market with Sage Employee
Benefits, the Group's SME proposition being taken to market through
its partner Sage, and this is set to continue with the signing of a
new five-year contract in February 2022.
As at 31 December 2021 the Annualised Recurring Revenue from
digital platform subscriptions across all channels stood at
GBP3.1m.
Despite increased revenue Adjusted EBITDA contribution remained
flat year on year at GBP2.1m, reflecting investment made in the
infrastructure to support the platform, outside of capitalised
investment, for future growth.
Insurance
As anticipated, premium income from the Group's core insurance
business in 2021 reduced by GBP4.1m to GBP24.7m (2020:
GBP28.8m).
This reflected the fact that the lockdowns enforced on us by
COVID-19 had a direct impact on our ability to write new insurance
sales through our traditional face-to-face model for 15 months from
the end of March 2020. Whilst we were able to mitigate this in part
through our adoption of virtual visits and telesales, our
annualised new business insurance premiums in 2021 were GBP3.7m
(2020: GBP2.4m, 2019: GBP9.0m), with around 15% of this coming from
the new, alternative channels. Our face-to-face sales activity
recommenced in earnest in July 2021, with availability strong
across our increased employee base, and we have subsequently seen
the insurance book starting to rebuild. As at 31 December 2021 we
have in excess of GBP24m of annualised premium income renewable on
weekly or monthly rolling contracts.
Our retention rates for existing policyholders remained strong
during 2021 with both first year and year-on-year retention rates
up on pre-pandemic levels. This reinforces the value that
policyholders place on our simple, low-cost hospital, convalescence
and death benefit plans, that have been particularly relevant to
our policyholder base of essential and key workers during the
pandemic.
Notwithstanding the short-term impact of COVID-19, the Group's
insurance income remains a high quality and relatively stable
revenue stream to the Group.
Claims ratios for the year remained stable at 24.5% (2020:
24.4%). The increased loss ratio on death benefit continued into
2021 but, as in 2020, was mitigated by an offsetting reduction for
hospital and convalescence in comparison to historic averages,
reflective of the capacity of the NHS being limited as a result of
COVID-19.
Adjusted EBITDA* of GBP11.0m for the year (2020: GBP15.1m),
reflects both the reduction in underwriting profit and the
additional costs associated with the scaling back up of the
face-to-face sales team in the second half of the year towards
pre-pandemic levels.
Other Owned Benefits:
PG Let's Connect
PG Let's Connect, which provides technology and other products
to employers as part of their employee benefit provision, saw
revenues increase to GBP18.2m (2020: GBP16.4m), rebounding in part
from the supply chain issues they experienced in 2020 but also
benefitting from the return of a number of schemes which had
deferred in 2020 due to the pandemic.
Whilst some ongoing nationwide supply issues remained throughout
the year, broadening the product range helped mitigate the impact
and saw order numbers up 21% on pre-pandemic levels, demonstrating
the continued popularity of the benefit for employees.
Adjusted EBITDA* increased to GBP0.7m (2020: GBP0.5m) reflecting
the higher revenues together with a slight increase in gross
margin.
Group Administration Expenses and Central Costs
The increase in Group administration and central costs to
GBP8.2m (2020: GBP7.0m) predominantly reflects the additional
investment made in Sales and Marketing during the year.
Sarah Mace
Chief Financial Officer
28 March 2022
Consolidated Income Statement
Restated*
2021 2020
GBP'000 GBP'000
Gross premiums written 25,050 29,265
Outward reinsurance premiums (163) (182)
Change in unearned premiums (208) (245)
Change in reinsurers' share
of unearned premiums (9) (8)
(_________) (_________)
Earned premiums net of reinsurance 24,670 28,830
Employee benefits and services
income 22,753 19,649
Voucher resale income 26,852 22,735
Other income 215 236
Investment income 23 74
(_________) (_________)
Revenue 74,513 71,524
(_________) (_________)
Claims incurred (6,049) (7,031)
Insurance operating expenses (4,860) (4,171)
Employee benefits and services
expenses (22,370) (19,890)
Voucher resale expenses (26,894) (22,999)
Other expenses 82 (258)
Group administration expenses (9,779) (8,437)
Share based payments expenses (169) (8)
Charitable donations (100) (100)
(___________) (___________)
Expenses (70,139) (62,894)
(___________) (___________)
Operating profit 4,374 8,630
Finance costs (32) (73)
(_________) (_________)
Profit before tax 4,342 8,557
Tax (745) (1,663)
(_________) (_________)
Profit for the year 3,597 6,894
The profit for the year is attributable to equity holders
of Personal Group Holdings Plc
Earnings per share Pence Pence
Basic 11.5 22.1
Diluted 11.5 22.1
There is no other comprehensive income for the year and, as a
result, no statement of comprehensive income has been produced. All
operations are classed as continuing activities.
*While the results remain unchanged, the presentation of the
prior year has been restated to add clarify to the reader. See Note
1 for further details.
Consolidated Balance Sheet at 31 December 2021
2021 2020
GBP'000 GBP'000
ASSETS
Non-current assets
Goodwill 12,696 12,696
Intangible assets 1,637 1,254
Property, plant and equipment 5,033 5,456
(_________) (_________)
19,366 19,406
(__) (______) (________)
Current assets
Financial assets 2,596 2,587
Trade and other receivables 14,035 18,346
Reinsurance assets 108 78
Inventories - Finished Goods 898 861
Cash and cash equivalents 20,291 17,589
Current tax assets 310 55
(_________) (_________)
38,238 39,516
(___) (______) (_________)
Total assets 57,604 58,922
(__________) (__________)
Consolidated Balance Sheet at 31 December 2021
2021 2020
GBP'000 GBP'000
EQUITY
Equity attributable to equity
holders
of Personal Group Holdings
Plc
Share capital 1,561 1,561
Share premium 1,134 1,134
Share based payment reserve 158 -
Capital redemption reserve 24 24
Other reserve (32) (21)
Profit and loss reserve 38,436 38,076
(_________) (_________)
Total equity 41,281 40,774
(_________) (_________)
LIABILITIES
Non-current liabilities
Deferred tax liabilities 478 399
Trade and other payables 402 352
Current liabilities
Trade and other payables 12,356 14,274
Insurance contract liabilities 3,087 3,123
(_________) (_________)
15,443 17,397
(_________) (_________)
(_________) (_________)
Total liabilities 16,323 18,148
(_________) (_________)
(_________) (_________)
Total equity and liabilities 57,604 58,922
(_________) (_________)
Consolidated Statement of Changes in Equity for the year ended
31 December 2021
Equity attributable to equity holders of Personal Group Holdings
Plc
Share Share Capital Share Other Profit Total
capital Premium redemption Based reserve and loss equity
reserve Payment reserve
reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance as at
1
January 2021 1,561 1,134 24 - (21) 38,076 40,774
(________) (______) (______) (______) (______) (________) (________)
Dividends - - - - - (3,244) (3,244)
Employee
share-based
compensation - - - 158 - 11 169
Proceeds of
SIP*
share sales - - - - - 24 24
Cost of SIP
shares
sold - - - - 28 (28) -
Cost of SIP
shares
purchased - - - - (39) - (39)
(________) (________) (________) (________) (________) (________) (________)
Transactions
with
owners - - - 158 (11) (3,237) (3,090)
(________) (________) (________) (________) (________) (________) (________)
Profit for
the year - - - - - 3,597 3,597
(________) (________) (________) (________) (________) (________) (________)
(________) (_______) (________) (________) (________) (________) (________)
Balance as at
31
December
2021 1,561 1,134 24 158 (32) 38,436 41,281
(________) (______) (______) (________) (__________) (_________) (_________)
* PG Share Ownership Plan (SIP)
Consolidated Statement of Changes in Equity for the year ended
31 December 2020
Equity attributable to equity holders of Personal Group Holdings
Plc
Share Share Capital Other Profit Total
capital Premium redemption reserve and loss equity
Reserve reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance as at 1 January
2020 1,561 1,134 24 (230) 35,526 38,015
(________) (______) (______) (______) (________) (________)
Dividends - - - - (4,147) (4,147)
Employee share-based
compensation - - - - 8 8
Proceeds of SIP* share
sales - - - - 26 26
Cost of SIP shares sold - - - 231 (231) -
Cost of SIP shares purchased - - - (22) - (22)
Shares issued in the - - - - - -
year
(________) (________) (________) (________) (________) (________)
Transactions with owners - - - 209 (4,344) (4,135)
(________) (________) (________) (________) (________) (________)
Profit for the year - - - - 6,894 6,894
(________) (_______) (________) (________) (________) (________)
Balance as at 31 December
2020 1,561 1,134 24 (21) 38,076 40,774
(________) (______) (______) (________) (__________) (_________)
* PG Share Ownership Plan (SIP)
Consolidated Cash Flow Statement
2021 2020
GBP'000 GBP'000
Net cash from operating activities
(see next page) 7,588 8,100
(__________) (__________)
Investing activities
Additions to property, plant and equipment (236) (341)
Additions to intangible assets (981) (424)
Proceeds from disposal of property, plant and
equipment 1 382
Purchase of financial assets (9) (22)
Interest received 23 74
(__________) (__________)
Net cash used in investing activities (1,202) (331)
(__________) (__________)
Financing activities
Interest paid 2 (2)
Purchase of own shares by the SIP (35) (22)
Proceeds from disposal of own shares
by the SIP 20 26
Payment of lease liabilities (427) (511)
Dividends paid (3,244) (4,147)
(__________) (__________)
Net cash used in financing activities (3,684) (4,656)
(__________) (__________)
Net change in cash and cash equivalents 2,702 3,113
Cash and cash equivalents, beginning
of year 17,589 14,476
(__________) (__________)
Cash and cash equivalents, end of year 20,291 17,589
(_________) (_________)
Consolidated Cash Flow Statement 2021 2020
GBP'000 GBP'000
Operating activities
Profit after tax 3,597 6,894
Adjustments for
Depreciation 966 1,003
Amortisation of intangible assets 585 470
Profit on disposal of property, plant
and equipment 11 (150)
Interest received (23) (74)
Interest charge 32 73
Share-based payment expenses 169 8
Taxation expense recognised in income
statement 745 1,663
Changes in working capital
Trade and other receivables 4,280 247
Trade and other payables (1,817) 384
Inventories (37) (115)
Taxes paid (920) (2,303)
(__________) (__________)
Net cash from operating activities 7,588 8,100
(__________) (__________)
Notes to the Financial Statements
1 Segment analysis
The segments used by management to review the operations of the
business are disclosed below.
1) Affordable 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. During 2020 PAGL began underwriting employee default
insurance for a proportion of LC customers.
2) Other Owned Benefits
This segment constitutes any goods or services in the benefits
platform supply chain which are owned by the Group. At present this
is made up of technology salary sacrifice business trading as PG
Let's Connect, purchase by the Group in 2014.
3) Benefits and Platform
Revenue 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) Pay and Reward
Pay and Reward refers to the trade of Innecto, a pay and reward
consultancy Company purchased in 2019. Revenue in this segment
relates to consultancy and license income derived from selling
Innecto digital platform subscriptions.
5) Other
The other operating segment consists exclusively of revenue
generated by Berkely Morgan Group (BMG) and its subsidiary
undertakings along with any investment and rental income obtained
by the Group. This segment also includes revenue generated from the
resale of vouchers.
Restated*
Segment analysis 2021 2020
GBP'000 GBP'000
Revenue by segment
----------------------------------------- ------------ ------------
Affordable Insurance 24,670 28,830
Other Owned Benefits 18,214 16,420
Benefits Platform 6,051 4,901
Benefits Platform - Group Elimination (2,748) (2,547)
Pay & Reward 1,236 875
------------------------------------------- ------------ ------------
Other Income
Voucher resale 26,852 22,735
Other 215 236
Investment income 23 74
(__________) (__________)
Group Revenue 74,513 71,524
(__________) (__________)
Adjusted EBITDA* contribution by segment
----------------------------------------- ------------ ------------
Affordable Insurance 11,012 15,082
Other Owned Benefits 730 469
Benefits Platform 2,098 2,092
Pay & Reward 303 (255)
------------------------------------------- ------------ ------------
Other 279 (212)
Admin and central costs (8,228) (6,965)
Charitable Donations (100) (100)
(__________) (__________)
Adjusted EBITDA* 6,094 10,111
(__________) (__________)
Depreciation (966) (1,003)
Amortisation (585) (470)
Interest (32) (73)
Share Based Payments Expenses (169) (8)
(__________) (__________)
Profit before tax 4,342 8,557
(__________) (__________)
2. Taxation comprises United Kingdom corporation tax of
GBP745,000 (2020: GBP1,717,000) and a deferred tax charge of
GBP79,000 (2020: GBP97,000)
3. The basic and diluted earnings per share are based on profit
for the financial year of GBP3,597,000 (2020: GBP6,894,000) and on
31,172,720 basic (2020: 31,164,809) and 31,213,537 diluted (2020:
31,205,375) ordinary shares, the weighted average number of shares
in issue during the year.
4. The total dividend paid in the year was GBP3,244,000 (2020:
GBP4,147,000)
This preliminary statement has been extracted from the 2021
audited financial statements that will be posted to shareholders in
due course. The statutory accounts for each of the two years to 31
December 2021 and 31 December 2020 received audit reports, which
were unqualified and did not contain statements under section 498
(2) or (3) of the Companies Act 2006. The 2020 accounts have been
filed with the Registrar of Companies but the 2021 accounts are not
yet filed.
5. As described in the CFO statement, during the year management
took the decision to change the format of the segmental analysis to
better reflect the Group's business activities. As a result, while
there are no adjusting entries to the financial results in these
financial statements, the layout of both the consolidated income
statement and the segmental analysis have been amended, with prior
year results restated in this new format to ensure comparability
across the two reporting periods.
Alternative Performance Measures
The Group uses an alternative (non-Generally Accepted Accounting
Practice (non-GAAP)) financial measure when reviewing performance
of the Group, evidenced by executive management bonus performance
targets being measured in relation to Adjusted EBITDA*. As such,
this measure is important and should be considered alongside the
IFRS measures.
For Adjusted EBITDA*, the adjustments taken into account in
addition to the standard IFRS measure, are those that are
considered to be non-underlying to trading activities and which are
significant in size. For example, goodwill impairment is a non-cash
item relevant to historic acquisitions; share-based payments are a
non-cash item which have historically been significant in size, can
fluctuate based on judgemental assumptions made about share price
and have no impact on total equity; corporate acquisition costs and
reorganisation costs are both one-off items which are not incurred
in the regular course of business.
This methodology is unchanged from previous years.
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