REG - PensionBee Group plc - FY 2023 Results Announcement
13/03/2024 17:00
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RNS Number : 7552G PensionBee Group plc 13 March 2024
PensionBee Group plc
Incorporated in England and Wales
Registration Number: 13172844
LEI: 2138008663P5FHPGZV74
ISIN: GB00BNDRLN84
13 March 2024
PensionBee Group plc
Full Year Results for the year ended 31 December 2023
Successful strategy drives strong performance for 2023
Adjusted EBITDA Profitability in Q4 2023 underpins expected UK profitability
for FY 2024
Proposed US expansion marks next phase of corporate journey
PensionBee Group plc ('PensionBee' or the 'Company'), a leading online pension
provider, today announces its audited full year results for the year ended 31
December 2023.
Highlights
· PensionBee's online pension offering continued to make retirement planning for
its customers straightforward and enjoyable, serving approximately 230,000
Invested Customers by the end of 2023, aiming to make them Pension
Confident.
· Since the Company's Initial Public Offering in 2021, it has more than tripled
its Assets under Administration to £4.4bn and has quadrupled its Revenue to
£23.8m. In line with the commitment at listing, PensionBee achieved ongoing
Adjusted EBITDA profitability in the fourth quarter of the year.
· Customer acquisition continued to be a core pillar of the strategy for 2023,
with PensionBee maintaining its household brand name status, onboarding 46,000
new Invested Customers at a declining Cost per Invested Customer.
· The Company's scalable technology platform enabled it to serve customers with
delightful new product initiatives and contributed to its delivery of
exceptional customer service, as demonstrated by over 10,000 Trustpilot
reviews supporting PensionBee's 'Excellent' Score.
· Throughout the year the Company experienced broader liquidity in its shares,
joining the FTSE All-Share Index in March 2023 and the FTSE4Good Index in
December 2023.
· In early 2024, the Company announced its proposed expansion to the United
States of America, the world's largest Defined Contribution pension market, in
partnership with a US-based global financial institution. The broadening of
its geographic footprint will enable it to create a world leading company in
the consumer retirement market.
Romi Savova, Chief Executive Officer of PensionBee, commented:
"We are pleased to report strong full year results for 2023, having reached
£4.4 billion of Assets under Administration. PensionBee has firmly
established itself as a household brand name across the UK, synonymous with
easy and effective pensions management for consumers, helping approximately
230,000 customers across the UK to become Pension Confident.
Having met our longstanding and ambitious goal of achieving Adjusted EBITDA
profitability across the fourth quarter of 2023, we are confident in our
continued growth, underpinned by profitability. Our trusted brand,
award-winning customer proposition and distinctive combination of smart
technology and dedicated customer service will see us continue to become the
provider of choice for our customers and grow our market share in the UK.
As we fast approach our 10 year anniversary, we have announced our proposed
expansion into the US, the world's largest Defined Contribution pension
market, where we see an enormous opportunity to assist many consumers in the
US who also struggle to prepare adequately for retirement as they navigate a
complex and confusing pensions landscape. We believe that the simplicity we
bring through our customer proposition will resonate well with the US
consumer, and see this as an exciting next step in our journey to help
everyone save for a happy retirement."
Financial Highlights
· Assets under Administration increased by 44% year on year to £4.4bn (2022:
£3.0bn), driven predominantly by strong net flows from new and existing
customers and a supportive market.
· Correspondingly, Revenue increased by 35% to £23.8m (2022: £17.7m) owing to
PensionBee's resilient revenue margin.
· Invested Customer base increased by 25% year on year to 229,000 (2022:
183,000), driven by continued brand awareness of 50% (2022: 52%). Customer
Retention Rate >95% remained high and stable (2022: >95%).
· Adjusted EBITDA* of £(8.2)m (2022: £(19.5)m) and Adjusted EBITDA Margin of
(35)% (2022: (110)%), reflecting investment in efficient marketing, operating
leverage and emerging profitability.
· Profit/(Loss) before Tax of £(10.7)m (2022: £(22.4)m) and Basic Earnings per
Share was (4.73)p (2022: (9.97)p).
As at Year End
Dec-2021 Dec-2022 Dec-2023 2022-23 YoY
Revenue (£m) 12.8 17.7 23.8 35%
Cost Base (£m) (29.2) (37.2) (32.0) (14)%
Adjusted EBITDA (£m)* (16.4) (19.5) (8.2) 58%
Adjusted EBITDA Margin (% of Revenue) (129)% (110)% (35)% +76ppt
Profit/(Loss) before Tax (£m) (25.0) (22.4) (10.7) 52%
Profit/(Loss) before Tax Margin (% of Revenue) (196)% (127)% (45)% +82ppt
Basic Earnings per Share (11.86)p (9.97)p (4.73)p 53%
Non-Financial Highlights
As at Year End
Dec-2021 Dec-2022 Dec-2023 2022-23 YoY
AUA (£m) 2,587 3,025 4,350 44%
AUA Retention Rate (% of AUA) 96% 97% 96% stable at >95%
Invested Customers (thousands) 117 183 229 25%
Customer Retention Rate (% of IC) 97% 97% 96% stable at >95%
Cost per Invested Customer (£) 246 248 241 within threshold
Revenue Margin (% of AUA) 0.64% 0.63% 0.64% +1bp
As at Year End
Dec-2021 Dec-2022 Dec-2023 2022-23 YoY
Opening AUA (£m) 1,358 2,587 3,025 17%
Gross Inflows (£m) 1,099 1,060 1,174 11%
Gross Outflows (£m) (145) (197) (318) 61%
Net Inflows (£m) 955 863 857 -1%
Market Growth and Other (£m) 275 (424) 468 n/m
Closing AUA (£m) 2,587 3,025 4,350 44%
For definitions, see Managing our Performance section.
ppt - A ppt is a percentage point. A percentage point is the unit for the
arithmetic difference of two percentages.
* PensionBee's Key Performance Indicators include an alternative performance
measure ('APM') which is Adjusted EBITDA. APMs are not defined by
International financial Reporting Standards ('IFRS') and should be considered
together with the Group's IFRS measurements of performance. PensionBee
believes this APM assists in providing greater insight into the underlying
performance of PensionBee and enhances comparability of information between
reporting periods.
Guidance and Outlook
The Board remains confident in PensionBee's potential for continued growth and
profitability, due to a combination of the strength and stability of its
existing customer base, together with its ability to attract new customers
that generate growth in recurring Revenue through its scalable technology
platform.
The Company is pleased to reiterate the guidance for the UK, confirming that
it will aim to deliver sustained, high Revenue growth. While the Company has
demonstrated significant growth to date, the Board remains of the view that
the focus on the mass market of pension savers will enable it to deliver
substantial further growth as the Company aims to pursue a c.2% market share
of the £1.2 trillion transferable pensions market over the next 5-10 years.
The Company is aiming to onboard 1 million Invested Customers with pension
pots of £20,000-£25,000, creating a Revenue ambition of c.£150m in the long
term.
At the same time, given that the Company has invested in its brand and
technology over many years, and achieved ongoing Adjusted EBITDA profitability
in the final quarter of 2023, it is poised to continue delivering increasingly
profitable growth over the medium to long term. The Company's primary
financial goal is to deliver Adjusted EBITDA profitability for the full year
2024, measuring this across the year as opposed to over individual quarters.
Looking ahead to the next few years after 2024, the Company expects to grow
its marketing investment and invest in growth, whilst maintaining its focus on
profitability as an underpin with an ambition to achieve long-term Adjusted
EBITDA Margins of over 50%.
The recently announced proposed US expansion in partnership with a large,
US-based global financial institution will see the US-based partner providing
its expertise and substantial marketing funding to the US business.
Correspondingly, PensionBee's financial contribution will be financed from the
existing resources of PensionBee Group plc, and as a result the US business
does not change the existing guidance in the UK.
Current Trading
Trading in 2024 to date has seen positive momentum, with the Company tracking
well against its objectives, which are to increase Net Inflows in absolute
terms and Net Inflows per £ of marketing spend as compared to 2023.
Analyst, Investor and Press Presentation
A copy of the 2023 Full Year Results announcement and presentation will be
made available post-market close on 13 March 2024 for download at:
pensionbee.com/investor-relations/results-and-reports
(http://pensionbee.com/investor-relations/results-and-reports) . A recording
of the presentation will follow.
There will be a webcast presentation hosted by Romi Savova (CEO) and Christoph
J. Martin (CFO) for analysts, investors and press on Wednesday 13 March at
5:00pm UK (GMT) / 1:00pm US (EST).
Please contact press@pensionbee.com if you would like to attend.
Alternatively you can register and access the webcast with the following
links:
Webcast Link: Webcast for video presentation
(https://www.lsegissuerservices.com/spark/PENSIONBEEGROUP/events/46c14e1f-8f4a-42cc-af8f-7b3ae0047f98)
Conference Call Link: Conference call for Q&A
(https://registrations.events/direct/LON99823315)
Investor Meet Company Presentation
Romi Savova and Christoph J. Martin will also provide a live presentation
relating to the Full Year Results via Investor Meet Company on 15 March 2024
at 2:00pm UK (GMT) / 10.00am US (EST).
The presentation is open to all existing and potential shareholders. Questions
can be submitted pre-event via your Investor Meet Company dashboard up until
2:00pm UK (GMT) / 10.00am US (EST) on 14 March 2024, or at any time during the
live presentation.
Investors can sign up to the Investor Meet Company for free and add to meet
PensionBee via:
investormeetcompany.com/pensionbee-group-plc/register
(https://www.investormeetcompany.com/pensionbee-group-plc/register) .
Investors who already follow the Company on the Investor Meet Company platform
will automatically be invited.
Enquiries
PensionBee
Becky O'Connor
Laura Dunn-Sims
Steven Kennedy
press@pensionbee.com
+44 20 3557 8444
About PensionBee
PensionBee is a leading online pension provider, making pension management
easy for its customers while they save for a happy retirement. PensionBee
helps its customers combine their old pension pots, make flexible
contributions, invest in line with their goals and values and make withdrawals
from the age of 55 (increasing to 57 in 2028). PensionBee offers a range of
investment plans, including fossil fuel free options, from some of the world's
largest asset managers.
Operating in the UK Defined Contribution market, which exceeds £1 trillion of
pension assets, PensionBee has grown rapidly through its direct-to-consumer
marketing activities, creating a household brand name for the mass market.
The Company has £4.4bn in Assets Under Administration and 229,000 Invested
Customers as at 31 December 2023. PensionBee has consistently maintained a
Customer Retention Rate in excess of 95% and an Excellent Trustpilot rating
(from more than 10,000 customers), reflecting its commitment to outstanding
customer service.
PensionBee is admitted to trading on the Premium Segment of the London Stock
Exchange's Main Market (LON:PBEE).
Forward Looking Statements
Statements that are not historical facts, including statements about
PensionBee's or management's beliefs and expectations, are forward-looking
statements. The full year results contain forward-looking statements, which by
their nature involve substantial risks and uncertainties as they relate to
events and depend on circumstances which will occur in the future and actual
results and developments may differ materially from those expressly stated or
otherwise implied by these statements.
These forward-looking statements are statements regarding PensionBee's
intentions, beliefs or current expectations concerning, among other things,
its results of operations, financial condition, prospects, growth, strategies
and the industry and markets within which it operates.
These forward-looking statements relate to the date of these full year results
and PensionBee does not undertake any obligation to publicly release any
revisions to these forward-looking statements to reflect events or
circumstances after the date of the full year results.
Chief Executive Officer's Review
"2023 was not only a year of transition, but also a year of transformation…
PensionBee had a longstanding and ambitious goal of reaching ongoing monthly
Adjusted EBITDA profitability by the end of 2023, which we met.
We focused on the key elements of our strategy that together make us the
pension provider of choice for our customers: our brand and marketing
capability, our innovative product offering, our leading customer service, our
scalable technology platform and our purpose-built investment range."
Dear fellow shareholder,
2023 was not only a year of transition, but also a year of transformation. We
began the year with an uncertain economic backdrop. Interest rates were
hitting highs not seen in decades and consumer sentiment was shaken. The war
in Ukraine, simmering geopolitical tensions and the cost of living crisis were
taking their toll.
Nevertheless, PensionBee had a longstanding and ambitious goal of reaching
ongoing monthly Adjusted EBITDA profitability by the end of 2023, which we
met.(1) We focused on the key elements of our strategy that together make us
the pension provider of choice for our customers: our brand and marketing
capability, our innovative product offering, our leading customer service, our
scalable technology platform and our purpose-built investment range. As a
result, we are proud to have ended the year with Assets under Administration
of £4.4bn representing annual growth of 44% (2022: £3.0bn), Revenue of
£23.8m representing annual growth of 35% (2022: £17.7m) and having achieved
Adjusted EBITDA profitability across the fourth quarter of 2023.(1)
Our strategy and £55m of investment in marketing since inception has seen us
firmly established as a household brand name, enabling us to start 2023 with a
majority of UK consumers having already heard of PensionBee. Historic
investments in high profile advertising campaigns in train stations, on tube
panels and on taxis has embedded PensionBee into the consciousness of the
consumer. In 2023, we centred our brand awareness activities on the most
economical impressions, achieved through radio, television and sports
sponsorship. Having done the hard work of teaching consumers about PensionBee
and often about pension consolidation and the general importance of saving for
a happy retirement, we aspired to keep PensionBee top of mind. We complemented
our refined brand strategy with performance marketing led by our data
insights, with strong results: our brand awareness was stable at 50%(2) and
our 2023 cumulative Cost Per Invested Customer ('CPIC') was £241 (2022:
£248), continuing a downward trajectory through the achievement of an
in-period CPIC of £213 for 2023 (2022: £251) - both well within our publicly
communicated CPIC threshold of £200-250.(1)
While acquiring new customers is crucial to our growth, serving them for
decades to come and maintaining our Customer Retention Rate of over 95% is
crucial to our business. With this in mind, we continued to invest in our
product experience. We released in-product content for our customers, enabling
them to enjoy customised articles based on their profiles and access to our
award-winning Pension Confident Podcast, packed with helpful financial tips.
We invested in tooling to help our customers plan for the future, including a
tax relief calculator, a state pension calculator and an inflation calculator.
For our at-retirement customers, we introduced functionality for regular
in-app withdrawals and the functionality for customers to take a salary
through retirement. We also launched our life insurance partnership with
LifeSearch, taking a broader view of our customers' needs for retirement
planning and helping them to protect themselves and their loved ones should
the worst happen. As a result, we maintained an impressive average app store
rating at 4.7 out of 5 (4.8 App Store rating and 4.5 Google Play rating)
(2022: 4.6) and a Customer Retention Rate of over 95% (2022: >95%).(3)
Key to managing in any economic environment, but especially in the volatile
one we have found ourselves in for the last few years, is the provision of
excellent customer support. At PensionBee we celebrated the arrival of the
Financial Conduct Authority's Consumer Duty, in the hope that it would raise
standards across the board in the pensions sector, improving consumer trust
and confidence in retirement savings. Our customer duty is firmly embedded in
everything we do and especially in our customer service, where we strive to be
available to our customers and to offer them the information they need, when
they need it. We continued to maintain industry-leading call queue times of 23
seconds (2022: 115 seconds) and a Trustpilot rating of 4.6★ based on
approximately 10,000 reviews (2022: 4.6★).(4) In 2023, we even took
PensionBee on the road around the UK, visiting customers in London, Brighton,
Birmingham, Manchester and Glasgow.
In a year where achieving Adjusted EBITDA profitability was a primary goal, a
focus on cost efficiency was of paramount importance. In technology, the best
way to maintain cost efficiency is to ensure scalability by design and to
invest in automation. Having built our technology on cloud native platforms
since inception, we have further automated pension transfers and transactions
in an often paper-based industry. This year we continue to invest in the
straight-through-processing of pension transfers and seamless contributions
through Easy Bank Transfer (our capability of initiating a pension top up in
under 60 seconds directly from a customer's bank). We maintained the security
of our technology platform, becoming recertified to ISO 27001, a global
information security standard.
Finally, we prioritised our investing solution range and with a significant
proportion of our customers desiring investments that make a difference in the
world, we introduced our Impact Plan in February 2023. Investing exclusively
in companies with a proven and measurable impact, the plan enables our
customers to solve the world's great social and environmental problems while
growing their pensions for the long term. We secured Voting Choice and began
voting on 85% of our asset base (Tailored, Tracker and 4Plus) through the ISS
SRI Policy, reflecting the views of our customers in key decisions at the
companies they own through their pensions.(5) We were pleased to receive
another Excellent Value for Money score for our at-retirement product range
from our Governance Advisory Arrangement.
While these have been the key pillars of our success to date, it is clear that
a new strategic pillar has gained importance in our internal dialogue:
Resilience. Having achieved Adjusted EBITDA profitability in the fourth
quarter of this year, we are well positioned to continue to grow our market
share from a position of trust.(1) Key to that growth is the ability to
maintain the security and operational resilience of our infrastructure for the
benefit of our customers. We will continue to deploy extensive resources in
this area with a particular focus on cyber security.
Proposed US Expansion
We have also recently announced our plans to expand into the United States of
America ('US'), having taken an important step by entering into an exclusive,
non-binding term sheet with a large, US-based global financial institution.
The US has the world's largest Defined Contribution pension market,
representing approximately 80% of the global total and $22.5 trillion in
assets.(6) However, many consumers still struggle to prepare adequately for
retirement amidst an array of confusing and difficult to use investment
options. Given the context of the enormous US market opportunity, we see the
potential for our US business to grow rapidly, becoming at least the size of
its UK business over the next decade.
Under the proposed strategic relationship, PensionBee will deliver the US
service through PensionBee Inc, a yet to be established wholly-owned
subsidiary of PensionBee Group plc. PensionBee Inc will be established in
Delaware, with operational headquarters in New York. We will manage the
operations of the US business, including the hiring of a local team, making
available our award-winning online retirement proposition and UK-based
proprietary technology to consumers in the US Defined Contribution market. We
will enable US consumers to easily consolidate and roll over their 401(k)
plans into a new Individual Retirement Account ('IRA').(7)
Our US-based partner will provide its expertise and substantial marketing
funding. Correspondingly, our financial contribution will be financed from the
Company's existing resources. Entry into a final binding agreement between the
parties is subject to confirmatory due diligence, legal documentation and
regulatory approvals, with launch expected in late 2024.
Looking Forward
As we look forward to 2024, we continue to be inspired by the size and
opportunity within the UK Defined Contribution pension market. Our latest
analysis indicates the UK Transferable Pension Market now exceeds £1 trillion
of assets and that more and more consumers are consolidating their pensions
than before. As a result of our relentless focus on the consumer and their
needs, we will continue to grow our market share in the UK.
We are also excited to progress our plans for the US, the world's largest
Defined Contribution pension market, with $22.5 trillion of assets. This
transformative step for the Company will help millions of US consumers look
forward to a happy retirement.
With our established brand and proven scalable technology platform, we remain
committed to serving consumers and growing PensionBee for the success of all
our stakeholders. As we approach our 10 year anniversary since PensionBee was
founded, we look forward to 2024 being another exciting year for us.
Romi Savova
Chief Executive Officer
13 March 2024
Notes:
1. See definitions in the Measuring our Performance section.
2. Source: PensionBee brand tracker. Prompted brand awareness in January 2024
measured through a consumer survey asking 'Which of the following have you
heard of?' with respect to UK financial services brands: Aviva 86%, Scottish
Widows 76%, Standard Life 68%, Royal London 55%, PensionBee 50%, Hargreaves
Lansdown 39%, Vanguard 36%, Fidelity 34%, Nutmeg 32%, AJ Bell 29%, Interactive
Investor 11%. Compares to PensionBee's prompted brand awareness as at January
2023 of 52%, sourced from PensionBee brand tracker.
3. Compared to average app store rating of 4.6 out of 5 (4.7 App Store rating and
4.5 Google Play rating and a Customer Retention Rate of over 95% for the year
ended 31 December 2022.
4. Call queue time of 23 seconds calculated as the average time customers are
waiting in a queue to be put through to a team member (based on 41,622 phone
calls in 2023) as compared to 115 seconds in 2022 (based on 44,956 phone
calls). PensionBee's Trustpilot score as at 12 January 2024 of 4.6★ out of 5
(based on 10,004 reviews) as compared to 4.6★ out of 5 (based on 8,270
reviews) as at 31 December 2022.
5. Reflects 85% of the Assets under Administration across the Tailored, Tracker
and 4Plus investment plans as at 31 December 2023. See definitions in the
Measuring our Performance section.
6. Investment Company Institute, "Release: Quarterly Retirement Market Data" as
at 13 December, 2023. Includes the sum of Defined Contribution Plans and
Individual Retirement Accounts ('IRA's).
7. A 401k is an employer-sponsored Defined Contribution retirement plan into
which employees can contribute and into which employers may also make matching
contributions. An Individual Retirement Account ('IRA') is a tax-advantaged
retirement savings account into which an individual can contribute either pre-
or post-tax money and which grows on either a tax-deferred or tax-free basis.
Operating and Financial Review(1)
The achievement of Adjusted EBITDA profitability across the fourth quarter of
2023 was owing to a combination of continued significant growth, the
scalability of our technology platform and cost discipline
Trading for the financial year 2023 has been strong and in line with guidance,
with high levels of growth achieved across our key performance indicators
('KPI's) along with the achievement of Adjusted EBITDA profitability across
the fourth quarter of the year, fulfilling one of our core financial
objectives. We achieved this objective by virtue of our continued growth in
terms of new customers and strong net inflows from both new and existing
customers, through the inherent scalability of our technology platform and
with continued cost discipline. We have continued to demonstrate particular
strength in customer growth, with the number of Invested Customers ('IC')
increasing by 25% to 229,000 (2022: 183,000) and Assets under Administration
('AUA') increasing by 44% to £4.4bn (2022: £3.0bn). This was underpinned by
strong Net Flows of £857m (2022: £863m) from new and existing customers
together with positive market performance.(2) Revenue for 2023 increased by
35% to £23.8m (2022: £17.7m). Profit/(Loss) before Tax for 2023 was
£(10.7)m (2022: £(22.4)m).
Driving customer acquisition through efficient investment in brand awareness
As at Year End
Dec-2023 Dec-2022 YoY
Advertising and Marketing Expenses
Advertising and Marketing Expenses (£m) (9.7) (16.6) -41%
Cost per Invested Customer (£)(3) 241 248 within threshold
Customers
Invested Customers (thousands) 229 183 25%
This year we continued to realise the benefits of our prior investment,
fulfilling our growth strategy, driving strong customer acquisition with less
spend than the previous year. Marketing spend in 2023 was £9.7m (2022:
£16.6m), bringing our cumulative marketing expenditure to more than £55m,
highlighting our commitment to investing in brand awareness while reducing our
overall Cost per Invested Customer ('CPIC'). Our investment in the brand to
date has helped to cement PensionBee as a household name, with brand awareness
of 50%.4 Our customer acquisition strategy continues to be led by our in-house
Data Platform which provides extensive and invaluable insights, guiding
decision-making and the optimisation of our performance marketing channels.
Our focus has been on driving customer acquisition supported by insights from
our data capability. With this approach, we are able to more effectively and
accurately target customers who are likely to convert - a key reason why we
were able to grow our Invested Customer base by 25% to 229,000 (2022:
183,000).
Our data-led, multi-channel approach to marketing focuses on trusted and
cost-effective channels. Through YouTube and Tik Tok, we have successfully
reached millions of customers. We brought educational initiatives to customers
in ways that increase appeal and brand recognition, for example, through
in-person roadshows and our Lovie award nominated Pension Confident Podcast.
In addition, we maintained our brand name recognition through the renewal of
our partnership with Brentford Football Club ('Brentford FC'). We have
remained the official pension partner sponsor, and have become the left sleeve
sponsor for the Men's first team and the 'front of shirt' sponsor for the B
team, Academy and Women's team. Partnering with a Premier League team has
helped the PensionBee brand to reach millions of football spectators across
the UK, building customer trust in the process.
As guided, the Cost per Invested Customer ('CPIC') has extended its downward
trajectory this year. This can be attributed to our increased brand awareness
as a result of prior investment in marketing as well as our data-driven
acquisition capabilities, which have enabled us to acquire customers
efficiently. In 2023, we grew our Invested Customer base by 25%, with CPIC
declining to £241 (2022: £248). Continuing on this downward trajectory will
be instrumental in driving ongoing sustainable long-term Adjusted EBITDA
profitability.1
Strong Asset Growth Momentum driven by High Retention Rates and Cost
Disciplined Acquisition
As at Year End
Dec-2023 Dec-2022 YoY
Customer Retention Rate (% of IC)(1) 96% 97% Stable at >95%
AUA Retention Rate (% of AUA)(1) 96% 97% Stable at >95%
Opening AUA (£m) 3,025 2,587 17%
Gross Inflows (£m) 1,174 1,060 11%
Gross Outflows (£m) (318) (197) 61%
Net Flows (£m)(1) 857 863 -1%
Market Growth/(Contraction) and Other (£m) 468 (424) n/m
Closing AUA (£m) 4,350 3,025 44%
Net Flows (£m) 857 863 -1%
Of which Net Flows from New Customers (£m) 729 685 7%
Of which Net Flows from Existing Customers (£m) 127 178 -28%
In 2023, we delivered 44% year-on-year growth in our AUA base from £3,025m to
£4,350m. This demonstrated our ability to continue to execute on our growth
strategy, whilst simultaneously meeting our profitability targets. We drove
AUA growth primarily through acquiring new customers, building trust and
aiming to be the main pension provider of choice for our customers. Our
product, which includes various tools, features and capabilities, helps our
customers feel more 'Pension Confident' as they plan for a happy retirement.
This is supported by our high Retention Rate of existing customers, which
continues to be more than 95%. We recorded £1.2bn of Gross Inflows this year
(2022: £1.1bn).
Across the year we acquired 46,000 Invested Customers (2022: 66,000), from
which we generated £729m of Net Flows (2022: £685m Net Flows from New
Customers). Leveraging our strong brand awareness, coupled with our
data-driven customer acquisition capability, we were able to generate a 7%
year-on-year increase in Net Flows from New Customers, even though we reduced
marketing expenditure by 41% over the same period. Additionally, the customers
we acquired in 2023 had a higher average age, and by extension, a higher
incoming pension pot size.
Net Flows by Customer Cohorts (£m)
Our existing customers have continued to entrust us with their retirement
savings, selecting PensionBee as their primary pension provider, adding
additional pensions and making regular pension contributions. Growth from
existing customers represented £127m of AUA in 2023 (2022: £178m). Since
inception, we have been able to maintain high Customer and AUA Retention Rates
of >95%, with this trend continuing in 2023. This reflects PensionBee's
commitment to continuous product development which helps to drive engagement.
Our app, which supports our aim of making pensions simple, provides a rich
content experience to help customers make decisions around core pension
management and retirement planning, such as how much to contribute. As is
customary in the industry, our customers' pensions are predominantly invested
in global equity capital markets and therefore the performance of the market
drives movements in AUA. As such, given that global equity markets largely
recovered from last year's period of extreme volatility, we saw positive
market movement account for £468m of the overall AUA growth this year (2022:
£(424)m).
Resilient Revenue Margin drove an Overwhelming Majority of Recurring Revenue
As at Year End
Dec-2023 Dec-2022 YoY
Revenue Margin (% of AUA)(1) 0.64% 0.63% +1bp
Revenue (£m) 23.8 17.7 35%
We translated strong year-on-year AUA growth of 44% for 2023 (2022: 17%) into
Revenue growth of 35%, reaching £23.8m (2022: £17.7m), by virtue of our
resilient Realised Revenue Margin (the annual management fee after discounts)
of 0.64% (2022: 0.63%).
Since the vast majority of our Revenue is derived from annual management fees
charged as a percentage of AUA, the high retention of Invested Customers and
AUA makes the overwhelming majority of our Revenue recurring in nature.
Revenue is also inclusive of revenue generated from other activities,
including our partnership with intermediaries such as LifeSearch, as well as
ad-hoc income, although this currently represents an immaterial portion of our
overall Revenue.
Efficient Investment in our Industry Leading Technology Platform, People and
Product
As at Year End
Dec-2023 Dec-2022 YoY
Money Manager Costs (£m) (3.2) (2.8) 15%
Employee Benefits Expense (12.3) (9.6) 29%
(excluding Share-based Payments) (£m)
Other Operating Expenses (£m) (6.8) (8.2) -18%
Technology Platform Costs & Other Operating Expenses (£m) (19.1) (17.8) 7%
Our Technology Platform
During 2023, we continued to make further investments into enhancing the
capabilities of our modern, scalable and secure proprietary technology, to
help position PensionBee for future growth. Our cloud-based, API-driven
platform allows for a granular level of optimisation, enabling us to deliver
new innovative features, refinements and increased automation at pace. The
scalability of our technology platform is highlighted by the achievement of a
year-on-year decrease in Technology Platform Costs & Other Operating
Expenses as a percentage of Revenue from (101)% in 2022 to (80)% in 2023
driven in part by a reduction in Other Operating Expenses to £(6.8)m (2022:
£(8.2)m). Continuing on this trajectory of improving cost efficiency is
central to driving long-term operating leverage.
The Company has continued to invest in the scalability of its technology
platform through a focus on internal automation, efficiency, security and
pension transfer improvements to support productivity. There has been further
integration with the Company's proprietary data platform and its product
development processes to facilitate best practice decision-making. We have
emphasised the improvement of our internal automation to support productivity,
including the streamlining of our provider processes. One of the ways we
measure productivity is through the Invested Customers per Staff Member
metric, which saw an improvement of 15% from 970 in 2022 to 1,112 in 2023.(5)
Benefits from investment in automation were instrumental in achieving Adjusted
EBITDA profitability across the fourth quarter of 2023.
We have continued to explore and adopt artificial intelligence tooling within
our departments to leverage its many benefits. For instance, we have begun to
use it for initial content generation, project research and coding problem
resolution, to name a few areas. We are also progressively integrating our
data platform within our daily product management operations, linking core
KPIs to projects to ensure our multidisciplinary development teams remain
productive and impactful. To facilitate company-wide data-led decision making,
we have also trained employees of varying disciplines in utilising the
platform.
Given our focus on security, we continued to implement cyber security tools
and best practices. We reinforced a culture of security awareness through
increasing standardisation, monitoring and automation of information security
operations and compliance.
Our Product
PensionBee has developed an excellent record of delivering industry leading
customer service, which is demonstrated by our continued Excellent Trustpilot
rating of 4.6★ (2022: 4.6★), as well as our consistently high Customer
Retention Rate of >95%. This is a result of our emphasis on customer
satisfaction and continuous product innovation.
Our data supports our conclusion that engaged customers are more likely to
grow their pension savings with us and are therefore more likely to enjoy the
type of retirement they deserve. That is why this year, our
multidisciplinary 'empowered teams' continued to develop our product
offering for the benefit of our customers, incrementally rolling out new
features aimed at increasing engagement with our customers. Our searchable
FAQs and enhanced help functionalities were developed to guide our customers
to more easily find our helpful content. Improving our educational content was
a key focus for us. Our customers can now read our content in-app and are
served with personalised content features based on our predictions of their
interests, to help them make the most of their money. This includes educating
them on helpful complements to their pension, such as life insurance.
We continuously explore ways in which we can help our customers manage their
pensions more easily. Our new Regular Withdrawals feature enables our
customers to take a regular income from their PensionBee pension by setting up
automatic monthly payments, via our desktop or app, directly to their bank
account, effectively saving our customers time and improving convenience.
Listening to our customers is important to us and their feedback helps us to
design products that make managing their pensions easier.
To help our customers with their long-term financial planning we launched our
State Pension Age Calculator, designed to help savers evaluate if they can
retire before they're eligible to receive the State Pension. We also launched
a new online tax relief calculator which encourages our customers to make the
most of their pension contributions ahead of the tax year-end.
Given that the safety and security of our customers' data is of paramount
importance to us, we also implemented mandatory two-factor authentication for
all our customers.
Our customers' overall financial wellbeing is important to us. This is why we
recently launched a partnership with LifeSearch to help our customers obtain a
range of insurance products including life and critical illness cover, to
enable them to continue to save for a happy retirement with the confidence
that they have a source of financial support even if the worst does occur.
Initial customer demand has been positive and we look forward to seeing this
progress.
Our People
We continued to invest in automation and therefore our overall headcount
remained relatively stable at approximately 206 average full-time employees in
2023 (2022: 189), while the associated Employee Benefits Expense increased to
£(12.5)m for 2023 (2022: £(9.6)m), reflecting the advancement of our team
and ensuring we support employees during a high inflation environment.
Our Money Managers
Money Manager Costs increased to £(3.2)m in 2023 (2022: £(2.8)m), a lower
rate than the increase in Revenue, due to the maintenance of competitive
pricing with money managers.
Profitability Metrics
As at Year End
Dec-2023 Dec-2022 YoY
Adjusted EBITDA (£m) (8.2) (19.5) 58%
Adjusted EBITDA Margin (% of Revenue) (35)% (110)% +76ppt
Profit/(Loss) before Tax (£m) (10.7) (22.4) 52%
In 2023, we made significant progress towards Adjusted EBITDA profitability,
achieving sustained Adjusted EBITDA profitability across the fourth quarter of
the year. The effective deployment of our discretionary marketing budget and
continued cost discipline, as well as the benefits of operating leverage
gained through the scalability of our technology platform, were instrumental
in achieving this pivotal milestone.
Adjusted EBITDA Margin in 2023
Adjusted EBITDA Margin improved from (110)% in 2022 to (35)% in 2023. Adjusted
EBITDA profitability was achieved in Q4 2023, with a positive Adjusted EBITDA
Margin of 11% as compared to (98)%, (50)% and (17)% in Q1, Q2 and Q3
respectively. Adjusted EBITDA captures Advertising and Marketing Expenses but
excludes the Share-based Payment costs and Listing Costs.
As at Year End
Dec-2023 Dec-2022 YoY
Share-based Payment (£m) (2.2) (1.9) 15%
Transaction Costs (£m) - (0.7) -100%
Profit/(Loss) before Tax (£m) (10.7) (22.4) 52%
Taxation (£m) 0.1 0.3 n/m
Basic Earnings per Share (4.73)p (9.97)p 53%
Profit/(Loss) before Tax narrowed to £(10.7)m for 2023 from £(22.4)m in
2022, reflecting our progress towards profitability and showcasing the
operating leverage in our model, whilst we continue to grow.
Share-based Payment costs increased during the period to £(2.2)m (2022:
£(1.9)m).
Taxation included enhanced tax credits in relation to routine Research and
Development refunds. No deferred tax asset was recognised with respect to the
carried forward losses.
Basic Earnings per Share ('EPS') was (4.73)p for 2023 (2022: (9.97)p), the
improvement reflecting the progress made towards profitability.
Financial Position
The Group's balance sheet remains strong and the Company is confident in its
ability to maintain an appropriate cash balance going forward. The Cash and
Cash Equivalents balance was £12.2m at the end of this year (2022: £21.3m)
having decreased by £9.1m in the 2023 financial year due to continued
investment in marketing as well as our technology platform, to generate future
returns (2022: net decrease of £22.2m). As of the end of 2023, the Group had
no borrowings.
Regulatory Capital and Financial Resources
PensionBee Limited, a subsidiary of the Company, is authorised and regulated
by the FCA and therefore adheres to capital requirements set by the FCA. As of
December 2023, the capital resources stood at £12.6m (unaudited) as compared
to a capital resource requirement of £1.6m (unaudited), resulting in coverage
of 7.9x. We have maintained a healthy surplus over our regulatory capital
requirement throughout the year and continue to manage our financial resources
prudently.
Summary Financial Highlights*
As at Year End
Dec-2023 Dec-2022 YoY
Revenue (£m) 23.8 17.7 35%
Money Manager Costs,(6) Technology Platform (22.3) (20.6) 8%
Costs & Other Operating Expenses (£m)(7)
Adjusted EBITDA (£m)** (8.2) (19.5) 58%
Adjusted EBITDA Margin (% of Revenue) (35)% (110)% +76 ppt
Profit/(Loss) before Tax (£m) (10.7) (22.4) 52%
Basic Earnings per Share (4.73)p (9.97)p 53%
* See definitions in the Measuring our Performance section.
** PensionBee's Key Performance Indicators include an alternative performance
measure ('APM'), which is Adjusted EBITDA. APMs are not defined by
International Financial Reporting Standards ('IFRS') and should be considered
together with the Group's IFRS measurements of performance. PensionBee
believes this APM assists in providing additional insight into the underlying
performance of PensionBee and aids comparability of information between
reporting periods. A reconciliation to the nearest IFRS number is provided in
Note 25 of the Financial Statements 'Alternative Performance Measure'.
Notes:
1. See the Measuring our Performance section.
2. As at 31 December 2023. Invested Customers ('IC') means those customers who
have transferred pension assets or made contributions into one of PensionBee's
investment plans. Assets under Administration ('AUA') is the total invested
value of pension assets within PensionBee Invested Customers' pensions. It
measures the new inflows less the outflows and records a change in the market
value of the assets. AUA is a measurement of the growth of the business and is
the primary driver of Revenue. Net Flows measures the cumulative inflow of
PensionBee AUA from consolidation and contribution ('Gross Inflows'), less the
outflows from withdrawals and transfers out ('Gross Outflows') over the
relevant period.
3. Cost per Invested Customer ('CPIC') means the cumulative advertising and
marketing costs incurred since PensionBee commenced operations up until the
relevant point in time divided by the cumulative number of Invested Customers
at that point in time. This measure monitors cost discipline of customer
acquisition. PensionBee's desired CPIC threshold is £200-£250.
4. Source: PensionBee brand tracker. Prompted brand awareness in January 2024
measured through a consumer survey asking 'Which of the following have you
heard of?' with respect to UK financial services brands: Aviva 86%, Scottish
Widows 76%, Standard Life 68%, Royal London 55%, PensionBee 50%, Hargreaves
Lansdown 39%, Vanguard 36%, Fidelity 34%, Nutmeg 32%, AJ Bell 29%, Interactive
Investor 11%. Compares to PensionBee's prompted brand awareness as at January
2023 of 52%, sourced from PensionBee brand tracker.
5. Total workforce of 198 as of 31 December 2023 includes 192 UK employees and
six non-UK contractors, but excludes four Non-Executive Directors. Total
workforce of 208 as of 31 December 2022 includes 204 UK employees and four
non-UK contractors, but excludes four Non-Executive Directors. The Invested
Customer per Staff Metric is calculated by dividing the number of Invested
Customers by the total workforce at the end of the period.
6. Money Manager Costs are variable costs paid to PensionBee's money managers.
7. Technology Platform Costs & Other Operating Expenses comprises Employee
Benefits Expense (excluding Share-based Payment) and Other Operating Expenses.
Measuring our Performance
When considering the overall performance of PensionBee, we use a range of key
performance indicators ('KPI's) to monitor and assess our progress against our
strategy.
Financial Performance Measures
Revenue 2023: £23.8m 35% Revenue means the income generated from the asset base of PensionBee's
customers, essentially annual management fees charged on the AUA, together
2022: £17.7m with a minor revenue contribution from other services.
Adjusted EBITDA* 2023: £(8.2)m 58% Adjusted EBITDA is the operating profit or loss for the year before taxation,
finance costs, depreciation, share based compensation and listing costs. This
2022: £(19.5)m measure is a proxy for operating cash flow.
Adjusted EBITDA Margin 2023: (35)% +76ppt(1) Adjusted EBITDA Margin means Adjusted EBITDA as a percentage of revenue for
the relevant year.
2022: (110)%
Profit/(Loss) before 2023: £(10.7)m 52% Profit/(Loss) before Tax is a measure that looks at PensionBee's profit or
Tax ('PBT')
losses for the year before it has paid corporate income tax.
2022: £(22.4)m
Basic Earnings per Share ('EPS') 2023: (4.73)p 53% Basic Earnings per Share is calculated by dividing the profit or loss
attributable to ordinary equity holders of the Group by the weighted average
2022: (9.97)p number of ordinary shares in issue during the period.
Net Cash Flow 2023: £(9.1)m 59% Net Cash Flow is the sum of cash generated by operations, investments and
financing activities, less cash used in operations, investments and financing
2022: £(22.2)m activities.
* PensionBee's Key Performance Indicators include an alternative performance
measure ('APM'), which is Adjusted EBITDA. APMs are not defined by
International Financial Reporting Standards ('IFRS') and should be considered
together with the Group's IFRS measurements of performance. PensionBee
believes this APM assists in providing additional insight into the underlying
performance of PensionBee and aids comparability of information between
reporting periods. A reconciliation to the nearest IFRS number is provided in
Note 25 of the Financial Statements 'Alternative Performance Measures'.
Non-Financial Performance Measures
Assets under Administration 2023: £4.4bn 44% Assets under Administration is the total invested value of pension assets
within PensionBee's Invested Customers' pensions. It measures the new inflows
('AUA') 2022: £3.0bn less the outflows and records a change in the market value of the assets. This
KPI has been selected because AUA is a measurement of the growth of the
business and is the primary driver of Revenue.
AUA Retention Rate 2023: 96% Stable at >95% AUA Retention measures the percentage of retained PensionBee AUA from
transfers out over the average of the year. High AUA retention provides more
(% of AUA) 2022: 97% certainty of future Revenue. This measure can also be used to monitor customer
satisfaction.
Net Flows 2023: £857m -1% Net Flows measures the cumulative inflow of PensionBee AUA from consolidation
and contribution ('Gross Inflows'), less the outflows from withdrawals and
2022: £863m transfers out ('Gross Outflows') over the relevant period.
Invested Customers 2023: 229k 25% Invested Customers means those customers who have transferred pension assets
or made contributions into one of PensionBee's investment plans.
('IC') 2022: 183k
Customer Retention Rate 2023: 96% Stable at >95% Customer Retention Rate measures the percentage of retained PensionBee
Invested Customers over the average of the year. High customer retention
(% of IC) 2022: 97% provides more certainty of future Revenue. This measure can also be used to
monitor customer satisfaction.
Cost per Invested Customer 2023: £241 Within threshold Cost per Invested Customer means the cumulative advertising and marketing
costs incurred since PensionBee commenced operations up until the relevant
('CPIC') 2022: £248 point in time divided by the cumulative number of Invested Customers at that
point in time. This measure monitors cost discipline of customer acquisition.
PensionBee's desired CPIC threshold is £200-£250.
Revenue Margin 2023: 0.64% +1bp Realised Revenue Margin expresses the recurring Revenue over the average
quarterly AUA held in PensionBee's investment plans over the period.
(% of AUA) 2022: 0.63%
Notes:
1. A ppt is a percentage point. A percentage point is the unit for the arithmetic
difference of two percentages.
Principal Risks and Uncertainties
Principal Risks
We have identified six top-level risks which could potentially have a material
adverse impact on the Company's business or long-term performance, and if not
appropriately mitigated they could result in unfavourable public perceptions
of the Company's business prospects and cause significant reputational damage.
These risks could arise from internal or external events, acts or omissions.
The risks mentioned below do not purport to be exhaustive, as there may be
additional risks that the Company has not yet identified or has deemed to be
immaterial.
Regulatory Risk
Our business is subject to risks relating to changes in UK government policy
and applicable regulations. Whilst we have historically been beneficiaries of
favourable regulatory changes, including through the introduction of Automatic
Enrolment and Pension Freedoms, any regulatory changes which are negative for
our business could have a material adverse effect on our prospects.
PensionBee's operations are subject to authorisation and supervision from the
Financial Conduct Authority ('FCA'), and supervision from HMRC and the
Information Commissioner's Office. PensionBee may fail, or be held to have
failed, to comply with regulations. Such regulations and approvals may change
making compliance more onerous and costly. If the FCA or other regulators
concluded that PensionBee had breached applicable regulations, this could
result in a public reprimand, fines, customer redress or other regulatory
sanctions. PensionBee must also comply with relevant regulatory capital and
liquidity requirements.
We may be subject to complaints or claims from customers and third parties in
the normal course of business. If a large number of complaints, or complaints
resulting in substantial customer and third party related losses, were upheld
against PensionBee, it could have a material adverse effect on our business
and financial condition.
Information Security Risk
PensionBee faces various risks related to the confidentiality, availability
and integrity of our IT systems.
We hold confidential and personal data, which is subject to strict data
protection and privacy laws in the UK, including the Data Protection Act and
UK GDPR. The loss or misuse of data could result in a material loss of
business, financial losses, regulatory enforcement actions and significant
harm to our reputation. If our information security processes, policies and
procedures relating to personal data are not fully implemented and adhered to
by our employees, or if any of our third party service providers fail to
manage data in a compliant manner, we could face financial sanctions and
reputational damage.
Furthermore, our operations are susceptible to cybercrime and loss or theft of
data. Failure to prevent such actions, including circumvention of our
information security processes, policies and procedures, could result in
financial losses, business interruption and unauthorised access or disclosure
of personal data.
There is also a risk of ineffective controls, or control failures, that are in
place to ensure our technology architecture is fit for purpose, including the
infrastructure required to support applications, networking, hardware and
software, resulting in our inability to meet the standards required to deliver
to internal and external user expectations.
Operational Risk
During the regular course of business, we may be exposed to adverse financial
or reputational impact due to inadequate or failed internal processes, people
performance or IT systems, or due to third-parties or external events. Key
operational process risks are linked to our customer service, banking,
finance, marketing and change implementation processes. Operational Risk also
includes our risks in the areas of human resource management, risk management
and internal governance.
PensionBee is dependent on third-party technology and financial services
providers for the provision of asset management, banking and technology
services. Any termination, interruption or reduced performance of the services
provided by these third parties could negatively impact the provision of our
services and have a material adverse effect on our reputation and
profitability.
Our operational infrastructure and business continuity may be affected by
other failures or interruption from events, some of which are beyond our
control. Our systems and the systems of our third-party providers may be
vulnerable to fire, flood and other natural disasters, power loss or
telecommunications or data network failures, improper or negligent operation
by employees or service providers, unauthorised physical or electronic access,
or other causes. There is no guarantee that our preventative measures would
protect us from all potential damage arising from any of the events described
above.
Financial Risk
Market Risk
Our business may be adversely affected by negative sudden or prolonged
fluctuations in global capital markets. We generate the vast majority of
Revenue in the form of fees charged on a recurring basis calculated by
reference to the value of our Assets under Administration. Our Revenue and
profitability are therefore directly influenced by the health of the global
capital markets. A general deterioration in the global economy and a resulting
decline in capital markets, or an increase in volatility, may have a negative
impact on the value of our customers' pensions and their overall confidence to
make new contributions to, or to consolidate new pensions into, their
PensionBee pension.
Credit Risk
PensionBee is dependent on third-party financial services providers for the
provision of asset management and banking services. We are reliant upon these
third parties for the safekeeping of our own and our customers' assets. A
default by one of these third parties would have a material adverse effect on
our reputation and financial position.
Strategic Risk
The pensions market is competitive and there is no guarantee that we will be
able to continue to maintain the growth levels we have achieved to date, nor
that we will be able to maintain our financial performance either at
historical or anticipated future levels. Our competitors include a variety of
financial services firms and our market is characterised by ongoing
technological progression, including of the underlying infrastructure and user
experience. There is no guarantee that we will continue to outpace our
competitors. In addition, the pension market remains cost-sensitive and
competitors could materially undercut our fees, thereby generating pressure on
our revenues. Any failure to maintain our competitive position could lead to a
reduction in revenues and profitability as well as lower future growth.
We are dependent upon the experience, skills and knowledge of our Directors
and our Executive Management Team to implement our strategy. The loss of a
significant number of Directors, Executive Management and/or other key
employees, or the inability to recruit suitably experienced, qualified and
trained staff as needed, may cause significant disruption to our business and
the ability to achieve our strategic objectives.
Climate Risk
· As climate change intensifies, dangerous weather events are
becoming more frequent and more severe. More frequent and intense droughts,
storms, heat waves, rising sea levels, melting glaciers and warming oceans can
directly harm life and wreak havoc on people's livelihoods and communities.
These significant shifts in the global climate have a potential to adversely
affect our employees, customers and other stakeholders, and have broader
implications on economic, social and cultural assets.
Physical risks from increased variability and extremity of climatic conditions
can reduce the value of certain assets and income streams. Climate change
could also affect monetary policy by slowing productivity growth (for example,
through damage to health and infrastructure) and heightening the uncertainty
and inflation volatility. This can justify the adaptation of monetary policy
to the new challenges. Any of these changes could in turn have a material
adverse effect on our business and financial position.
Summary of Risks and Mitigations
Through the risk management processes described above, we have taken the
appropriate steps to manage risk in accordance with the Board's risk appetite.
The summary of the key mitigating factors is presented below.
Principal Risk Risk Definition Key Mitigations
Regulatory Risk The risk of regulatory sanctions, material financial loss, or reputational Maintaining a robust risk management framework and a set of internal policies
damage the Company could suffer as a result of its failure to comply with which are reviewed regularly
applicable laws, regulations, rules, or related internal standards and codes
of conduct · Ensure adequate staff training and communication for key policies
and procedures
· Comprehensive second line assurance programme in place providing
oversight over the effectiveness of regulatory compliance and related controls
· Robust change approval process requiring regulatory compliance
checks
· Regulatory capital and liquidity planning and monitoring through
the Finance function
· Regular interactions with industry bodies to proactively monitor
trends
· Values-based culture and strategy centred around Consumer Duty
Information Security Risk The risk of data loss, theft or disruption of information systems both · Regular Data back-up and restoration testing to allow for
internally and throughout the supply chain, which impacts confidentiality, recovery in the event of cyber attack or corruption of data
integrity and availability
· Proactive technical and analytical vulnerability assessment and
mitigation
· Monitoring key third party services and performance metrics as
part of the ISMS
· Ongoing infrastructure assessments against business requirements
· Ongoing compliance and certification to ISO 27001 and Cyber
Essentials Plus
· Ongoing monitoring of compliance with applicable regulation and
legislation in respect of Data Protection
· Maintaining a robust policy set and controls to keep information
secure
· Frequent training for all employees to promote a culture of
security awareness
· Continuing to invest in the Information Security Programme in
order to mitigate the evolving cyber risks
· Robust business continuity plans in place for critical assets and
functions, which are tested regularly
· 24x7 / 365 threat detection, monitoring and response on critical
assets to detect and prevent malicious behaviour proactively and reactively
Operational Risk The risk of loss, disruption of business or adverse regulatory action · Implementing automation to reduce manual processing
resulting from inadequate or failed internal processes, people performance,
systems, or due to third parties or external events · A comprehensive set of internal controls, operational procedures
and Company policies
· Periodic training for all employees and specialised training for
customer service teams
· Structured performance management for all employees and
formalised succession planning for key roles
· Robust external supplier selection and due diligence process with
ongoing monitoring of key suppliers
· Effective internal governance to adequately oversee and challenge
the risk positions
· Maintaining a risk-aware corporate culture based on
accountability and transparency
Financial Risk The risk of the Company's inability to fulfil its financial obligations or · Geographic and asset class diversification of the plans
internal objectives due to loss of revenue resulting from adverse price
movements in the capital markets, or the impact of worsening creditworthiness · Recurring Revenue from long-duration assets
or default of a key financial partner
· Financial planning based on scenario analysis
· Partnering with only large and reputable asset managers and
banking institutions
· Internal controls in place monitoring capital quality and
reserves
· Robust processes in place to ensure the integrity of financial
data
Strategic Risk The risk of failures in strategic planning and execution leading to the · Core objectives calibrated using customer and regulatory trends
Company not achieving its core objectives and feedback
· Robust strategic change management internal controls in place
· Employing agile product development and deployment cycles
Climate Risk The risk of negative impact of climate change or its broader economic, · Small physical footprint, remote working, cloud-based technology
financial and societal consequences on the Company, or the Company's failure
to meet sustainability requirements from a commercial, regulatory or · Risk transfer policies
stakeholder perspective
· Ongoing monitoring of regulatory compliance
· Screenings applied in our funds to reduce harmful exposures
(Tailored Plan, Fossil Fuel Free Plan, Impact Plan)
· Using asset managers, banking and cloud providers that have
robust business continuity plans in place
· Clearly assigned climate risk-related roles and responsibilities
· Monitoring climate risks faced today and under future scenarios
Viability Statement
In accordance with provision 31 of the UK Corporate Governance Code, the Board
has assessed the viability of PensionBee Group plc and its subsidiary
PensionBee Limited (together the 'Group') for the four-year period to December
2027, considering this to be an appropriate period over which to assess the
Group's strategy and its capital requirements, considering the investment
needs of the business and the potential risks and uncertainties that could
impact the Group's ability to meet its strategic objectives. The Board
considers a four-year period to be an appropriate time frame because it would
likely capture the length of a potential downside business cycle and provide
sufficient time to identify and execute mitigating actions required to address
the stress test scenarios as outlined below.
This assessment has been made giving consideration to the financial position,
regulatory capital and liquidity requirements of the Group (as set out in the
Operating and Financial Review within the Strategic Report), in the context of
the Company's strategy, business model and medium-term business plan, together
with an assessment of the principal risks and uncertainties (as set out in the
Managing our Risks section of the Strategic Report). Such risks have been
categorised into Regulatory Risk, Information Security Risk, Operational Risk,
Financial Risk, Reputational Risk, Strategic Risk and Climate Risk, in
accordance with our risk management framework.
PensionBee Limited is an FCA regulated entity and therefore is required to
hold appropriate levels of own funds which are at all times in excess of its
Liquid Capital Requirement and other capital requirements.
The Board-approved medium term plan assumes the business continues to grow
Invested Customers and AUA through continued investment in its customer
proposition, marketing, people and technology. It is assumed that there are no
significant or prolonged market movements in underlying asset values from the
time the plan was approved by the Board.
The Board has also considered the potential impact of the following stress
test scenarios, which together represent a severe and unlikely, but possible
scenario. The stress test scenarios would impact the plan from 2024 onwards:
· Financial Risk (Market Risk) - A material reduction in global
equity markets as a result of global macroeconomic uncertainty (such as
geopolitical disruptions, persistent inflation and a high interest rate
environment) and prolonged equity market volatility has been assumed over the
forecast period. More specifically, the analysis assumed a significant decline
in the global equity markets, falling by 50% in the first year and remaining
depressed until 2025, with a linear recovery to the pre-crisis level assumed
for the remainder of the forecast period.
· Information Security Risk - The materialisation of a
confidentiality, availability or integrity event that undermines our
reputation and reduces conversion and reduces average pension pot sizes. The
analysis assumed a material reduction in the customer conversion rate and
average pension pot size of newly acquired customers over the forecast period,
whereby they would decrease Assets under Administration by 10%.
In the event that such modelled scenarios were to manifest, the Board has
identified a number of potential mitigating actions that management could
take. The primary lever for consideration would be the reduction of
discretionary marketing expenditure and the implementation of fixed cost
savings. The Board considers this approach to be reasonable, especially given
that the Group's financial position has strengthened further over 2023 (in
light of it achieving ongoing Adjusted EBITDA profitability in the fourth
quarter of 2023) and given the strength of PensionBee's positioning within the
UK competitive landscape. The results of the modelling have confirmed that the
Group would be able to withstand the adverse financial impact of these
aforementioned scenarios occurring together over the four-year assessment
period and that it would continue to be able to meet its liabilities and
capital requirements.
The Group's medium term plan underwent rigorous review and was approved by the
Board in December 2023. The stress test scenarios and associated mitigating
actions were reviewed in February 2024 and were subsequently approved in March
2024. The Directors confirm that they have a reasonable expectation that the
Group will be able to continue to operate and meet its capital requirements
and liabilities as they fall due over the four-year period to December 2027.
The Strategic Report was approved by the Board on 13 March 2024 and signed on
its behalf by:
Romi Savova
Chief Executive Officer
13 March 2024
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Annual Report and Financial
Statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare Financial Statements for each
financial year. Under that law, they are required to prepare the Group
Financial Statements in accordance with International Financial Reporting
Standards ('IFRS') as adopted by the UK in conformity with the requirements of
the Companies Act 2006 and have elected to prepare the Parent Company
Financial Statements in accordance with UK Accounting Standards, including FRS
102, the Financial Reporting Standard applicable in the UK and Republic of
Ireland. Under company law, the Directors must not approve the Financial
Statements unless they are satisfied that they give a true and fair view of
the state of affairs of the Group and the Company and of their profit or loss
for that period.
In preparing each of the Group and Parent Company Financial Statements, the
Directors are required to:
· select suitable accounting policies and then apply them
consistently;
· make judgements and estimates that are reasonable, relevant,
reliable and prudent;
· state whether applicable UK Accounting Standards have been
followed, subject to any material departures disclosed and explained in the
Financial Statements; and
· prepare the Financial Statements on a going concern basis unless
it is inappropriate to presume that the Group and the Company will continue in
business.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Group's and the Company's operations and
disclose with reasonable accuracy at any time the financial position of the
Group and the Company and that enable them to ensure that its Financial
Statements comply with the Companies Act 2006. They are responsible for such
internal control as they determine is necessary to enable the preparation of
Financial Statements that are free from material misstatement, whether due to
fraud or error, and have general responsibility for taking such steps as are
reasonably open to them to safeguard the assets of the Group and the Company
and to prevent and detect fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible for
preparing a Strategic Report, Directors' Report, Directors' Remuneration
Report and Corporate Governance Report that complies with that law and those
regulations. The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the Company's website.
Legislation in the UK governing the preparation and dissemination of Financial
Statements may differ from legislation in other jurisdictions.
We confirm that to the best of our knowledge:
· The Financial Statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair view of the
assets, liabilities and financial position of the Group and the Company and
profit or loss of the Group and the undertakings included in the consolidation
taken as a whole; and
· The Strategic Report includes a fair review of the development
and performance of the business and the position of the issuer and the
undertakings included in the consolidation taken as a whole, together with a
description of the principal risks and uncertainties that it faces.
We consider that the Annual Report and Financial Statements 2023, taken as a
whole, is fair, balanced and understandable and provides the information
necessary for shareholders to assess the Group's and the Company's position
and performance, business model and strategy.
Approved by the Board of Directors on 13 March 2024 and signed on its behalf
by:
Romi Savova
Chief Executive Officer
13 March 2024
Results for the Year
PensionBee Group plc
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2023
2023 2022
£ 000 £ 000
Note
Revenue 23,817 17,662
4
Employee Benefits Expense (12,301) (9,554)
(excluding Share-based
Payment) 5
Share-based (2,182) (1,898)
Payment
5, 21
Depreciation (288) (276)
Expense
12, 13
Advertising and Marketing (9,718) (16,554)
Other (10,017) (11,067)
Expenses
7
Listing - (687)
Costs
25
Operating Profit/(Loss) (10,689) (22,374)
Finance 6 -
Income
8
Finance (36) (46)
Costs
8
Profit/(Loss) before Tax (10,719) (22,420)
Taxation 150 274
10
Profit/(Loss) for the Year (10,569) (22,146)
Total Comprehensive Profit/(Loss) for the Year wholly attributable to Equity (10,569) (22,146)
Holders of the Parent Company
Earnings per Share (pence per Share)
Basic and (4.73) (9.97)
Diluted
11
( )
The above results were derived from continuing operations.
The notes form an integral part of these financial statements.
PensionBee Group plc
Consolidated Statement of Financial Position
As at 31 December 2023
2023 2022
£ 000 £ 000
Note
Assets
Non-current Assets
Property, Plant and 305 358
Equipment
12
Right of Use 412 553
Assets
13
Financial Assets (Deposits) 147 -
864 911
Current Assets
Trade and Other 4,347 3,412
Receivables
14
Cash and Cash Equivalents 12,214 21,321
16,561 24,733
Total Assets 17,425 25,644
Equity and Liabilities
Equity
Share 224 223
Capital
15
Share 53,218 53,218
Premium
16
Share-based Payment 12,397 10,215
Reserve
16,21
Retained (50,694) (40,124)
Earnings
16
Total Equity 15,145 23,532
Non-current Liabilities
Lease 292 397
Liability
17
Provisions 49 46
18
341 443
Current Liabilities
Lease 106 154
Liability
17
Trade and Other 1,833 1,515
Payables
19
1,939 1,669
Total Liabilities 2,280 2,112
Total Equity and Liabilities 17,425 25,644
The notes form an integral part of these financial statements.
Approved by the Board on 13 March 2024 and signed on its behalf by:
Christoph J. Martin
Chief Financial Officer
PensionBee Group plc
Consolidated Statement of Changes in Equity
For the year ended 31 December 2023
Share Capital Share Premium Share-based Payment Reserve Retained Earnings Total
Note £ 000 £ 000 £ 000 £ 000 £ 000
At 1 January 2022 221 53,218 8,317 (17,976) 43,780
Profit/(Loss) for the Year - - - (22,146) (22,146)
Total Comprehensive Profit/(Loss) - - (22,146) (22,146)
Share-based Payment Transactions - - 1,898 - 1,898
Exercise of Share Options 2 - - (2) -
15
At 31 December 2022 223 53,218 10,215 (40,124) 23,532
At 1 January 2023 223 53,218 10,215 (40,124) 23,532
Profit/(Loss) for the Year - - - (10,569) (10,569)
Total Comprehensive Profit/(Loss) - - (10,569) (10,569)
Share-based Payment Transactions - - 2,182 - 2,182
Exercise of Share Options 15 1 - - (1) -
At 31 December 2023 224 53,218 12,397 (50,694) 15,145
The notes form an integral part of these consolidated financial statements.
PensionBee Group plc
Consolidated Statement of Cash Flows
For the year ended 31 December 2023
2023 2022
£ 000 £ 000
Note
Cash Flows used in Operating Activities
Profit/(Loss) for the Year (10,569) (22,146)
Adjustments to Cash Flows from Non-cash Items
Depreciation 288 276
Finance 36 46
Costs
8
Share-based Payment Transactions 2,182 1,898
Taxation (150) (274)
10
Operating Cash Flows before movements in Working Capital (8,213) (20,200)
Working Capital Adjustments
Increase in Trade and Other (1,553) (162)
Receivables
14
Increase in Trade and Other 318 (1,511)
Payables
19
Cash used in Operations (9,448) (21,873)
Income Taxes 623 194
Received
10
Net Cash Flow used in Operating Activities (8,825) (21,679)
Cash Flows used in Investing Activities
Acquisition of (96) (367)
Equipment
12
Net Cash Flow used in Investing Activities (96) (367)
Cash Flows from Financing Activities
Payment of Principal of Lease (153) (105)
Liabilities
17
Payment of Interest of Lease (33) (46)
Liabilities
17
Net Cash Flows from Financing Activities (186) (151)
Net (Decrease) / Increase in Cash and Cash Equivalents (9,107) (22,197)
Cash and Cash Equivalents at 1 January 21,321 43,518
Cash and Cash Equivalents at 31 December 12,214 21,321
Changes in the Group's liabilities arising from financing activities,
including both cash and non-cash changes have been disclosed in Note 17 to the
financial statements.
The notes form an integral part of these consolidated financial statements.
PensionBee Group plc
Notes to the Financial Statements
For the year ended 31 December 2023
1. General Information
PensionBee Group plc ('Company') is the parent company of PensionBee Limited
('Subsidiary') (together the 'Group'). The Company is a public company, whose
shares are traded on the Premium Segment of the Main Market of the London
Stock Exchange ('LSE'), and is incorporated and domiciled in England and
Wales.
The address of its registered office is:
209 Blackfriars Road
London
SE1 8NL
United Kingdom
Principal Activity
The principal activity of the Group is that of a direct-to-consumer online
pension provider. The Group seeks to make its UK customers 'Pension Confident'
by giving them complete control and clarity over their retirement savings. The
Group helps its customers to combine their pensions into one new online plan
where they can contribute, forecast outcomes, invest effectively, and withdraw
their pensions (from the age of 55), all from the palm of their hand.
2. Accounting Policies
Basis of Preparation
The consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards ('IFRS') as adopted by the UK in
conformity with the requirements of the Companies Act 2006. The financial
statements are prepared on the historical cost basis and on a going concern
basis.
The preparation of financial statements in conformity with IFRS requires the
use of certain critical accounting estimates. It also requires management to
exercise its judgement in the process of applying the Group's accounting
policies.
The financial statements are presented in GBP and all values are rounded to
the nearest thousand (£'000), except when otherwise indicated. The functional
currency of the Company is GBP because it is the primary currency in the
economic environment in which the Company operates.
Basis of Consolidation
The consolidated financial statements consolidate the financial statements of
the Company and its subsidiary undertakings drawn up to 31 December 2023.
On 24 March 2021, PensionBee Group plc acquired all the issued shares of
PensionBee Limited through a share for share transaction ('Group
Reorganisation'). From the acquisition date, PensionBee Limited became a
subsidiary of PensionBee Group plc.
A subsidiary is an entity controlled by the Company. Control is achieved where
the Company has the power to govern the financial and operating policies of an
entity so as to obtain benefits from its activities. The Company reassesses
whether it controls an entity if facts and circumstances indicate there are
changes to one or more elements of control.
Inter-company transactions, balances and unrealised gains on transactions
between the Company and its subsidiary, which are related parties, are
eliminated in full.
Intra-group losses are also eliminated but may indicate an impairment that
requires recognition in the consolidated financial statements.
Summary of Accounting Policies and Key Accounting Estimates
The principal accounting policies applied in the preparation of these
financial statements are set out below. These policies have been consistently
applied to all the years presented, unless otherwise stated.
Going Concern
The Directors have a reasonable expectation that the Group has adequate
financial resources to continue in operational existence for the foreseeable
future and are satisfied that the Group can continue to pay its liabilities as
they fall due for a period of at least 12 months from the date of approval of
these financial statements. The Group has good cash reserves and forecasts
growth that should see the financial results improve in the future years.
The Group has been operationally resilient as proven by consistent operational
efficiencies that have been maintained during the financial year. Stress
testing was done by considering severe and unlikely but possible scenarios
including a sharp decline in equity markets, the worsening of conversion and
lower transferred-in pension pot sizes, all of which could potentially be
caused by the macroeconomic and geopolitical environment, increased cost of
living in the UK and interest rate rises.
The Group has adequate resources to survive macroeconomic downturns and the
Directors concluded that the Group has sufficient financial resources to
remain in operational existence. For these reasons, the Directors adopt the
going concern basis of preparation for these financial statements.
Changes in Accounting Policy
The following amendments are effective for the period beginning 1 January
2023:
Standard Effective Date, Annual Period beginning on or after
Amendments to IAS 1 - Classification 1 January 2023
Amendments to IAS 1 and IFRS Practice Statement 2 - Deciding which Accounting 1 January 2023
Policies to Disclose
Amendments to IAS 8 - Distinction between changes in Accounting Policies and 1 January 2023
Accounting Estimates
Amendments to IAS 12 - Deferred Tax related to Assets 1 January 2023
All the changes were adopted by the Group. None of the standards,
interpretations and amendments, effective for the first time from 1 January
2023 have had a material effect on the financial statements.
New Standards, Interpretations and Amendments not yet Effective
The new standards which are not yet effective will not have a material impact
on the financial statements.
Standard Effective Date, Annual Period beginning on or after
Amendments to IAS 1 - Classification of Liabilities as Current or Non-current 1 January 2024
Amendments to IAS 1 - Noncurrent Liabilities with Covenants 1 January 2024
Amendments to IFRS 16 - Lease Liability in a Sale and Leaseback 1 January 2024
Amendments to IAS 7 and IFRS 7 - Supplier Finance Arrangements 1 January 2024
Revenue Recognition
Revenue represents amounts receivable for services net of VAT. Revenue is
derived from the administration of our customers' retirement savings and the
provision of one-off ancillary services to customers. The Group operates a
service to combine and transfer customers' old pensions into new online plans,
which are subsequently managed by third party money managers. The Group has
applied the 5-step model outlined in IFRS 15 Revenue from contracts with
customers as is set out below:
Identification of the contract with a customer - During account opening, the
customer is made aware of the promises the Group is making. Rights and
obligations of each party are outlined. The point at which the customer agrees
to the terms and conditions is the point at which both the Group and the
customer have signed or agreed the contract.
Identification of the performance obligations in the contract - The Group
makes one promise to its customers, the careful administration of the
customers' retirement savings, including through investments with its third
party money managers. The Group performs administrative tasks during the
process of on boarding its customers to its technology platform which are
necessary for the fulfilment of administration of the customers' retirement
savings. The Group does not consider these administrative tasks to be a
separate performance obligation. As a result, it is considered that the Group
has a single performance obligation, which is the administration of the
customers' retirement savings.
Determination of the transaction price - The money managers invest customers'
retirement savings in funds ('Group Plans') that match each customer's
selection. The Group charges an annual management fee that is charged daily
against the units held by each customer. The annual management fee is based on
afixed percentage (%) which varies for each of the Group Plans; the fees
range from 0.50% to 0.95%. There is a further fixed discount of 50% provided
to customers who have over £100,000 in their pension pots. The discount is
applied to the incremental amount over and above £100,000.
Allocation of the transaction price - As there is only one performance
obligation, the whole transaction price is allocated to this performance
obligation.
Recognition of revenue when a performance obligation is satisfied - The
administration of customers' retirement savings is continuous until the
customer fully withdraws their pension pot or transfers it to another UK
registered pension provider. Revenue is recognised over time as the customer
simultaneously receives and consumes the benefits provided by the Group's
performance as the Group performs them. The performance obligation is
satisfied when the customer receives the service. Revenue is calculated daily
as a percentage (basis points) of the value of Assets under Administration
('AUA') as agreed by the customer. Payment is due on a daily basis but settled
on a monthly basis.
Consideration Payable to Customers
The Group runs a number of incentive-linked marketing campaigns. Under these
campaigns, a customer becomes entitled to either a pension contribution once
they make their first live pension transfer. This consideration payable to the
customer is not in exchange for a distinct good or service that the customer
transfers to the Group. Therefore, it is accounted for as a reduction to the
transaction price. The full consideration is accounted for as a revenue
reduction in the year it is payable because the difference between spreading
it over the contract life and recognising it in full in the year it is
incurred is not material. A materiality assessment is done annually.
Recurring Revenue
The Group's revenue is recurring in nature as the annual charges are
calculated daily as a percentage (basis points) of the value of AUA and will
continue to be earned on an ongoing basis whilst the Group administers those
assets. Recurring Revenue is derived from management fees and is recognised
based on daily accruals of customers' pension balances as the performance
obligation, being the provision of pension scheme administration services to
customers, is met. These management fees are charged daily and collected by
the Group on a monthly basis.
Other Revenue
Other Revenue relates to commission earned from referring individuals to
purchase life insurance products and to a one-off charge for full draw-down
within one year of becoming an Invested Customer. For this revenue stream, the
performance obligation is the execution of the requested task. There are fee
structures in place which are used to determine the transaction price. Revenue
is recognised at a point in time when the requested task is executed (when the
service is provided to the customer).
Foreign Currency Transactions and Balances
In preparing the financial statements of the Group entities, transactions in
currencies other than the entity's functional currency (foreign currencies)
are recognised at the rates of exchange prevailing on the dates of the
transactions. At each reporting date, monetary assets and liabilities that are
denominated in foreign currencies are retranslated at the rates prevailing at
that date. Non-monetary items carried at fair value that are denominated in
foreign currencies are translated at the rates prevailing at the date when the
fair value was determined. Non-monetary items that are measured in terms of
historical cost in a foreign currency are not retranslated. Exchange
differences are recognised in the Statement of Comprehensive Income in the
period in which they arise.
For the purpose of presenting consolidated financial statements, transactions
in foreign currencies are translated to the Group's presentation currency at
the foreign exchange rate recorded at the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies at the balance sheet
date are retranslated to the presentation currency at the foreign exchange
rate recorded at that date. Foreign exchange differences arising on
translation are recognised in the Statement of Comprehensive Income. There are
no material foreign exchange transactions in the financial statements.
Tax
Tax on the loss for the year comprises research and development credit. There
was no current or deferred tax charge for the year (2022: £nil). Tax is
recognised in the Statement of Comprehensive Income except to the extent that
it relates to items recognised directly in equity or other comprehensive
income, in which case it is recognised directly in equity or other
comprehensive income.
Current income tax assets and liabilities are measured at the amount expected
to be recovered from or paid to the taxation authorities. The tax rates and
tax laws used to compute the amount are those that are enacted or
substantively enacted at the reporting date in the United Kingdom where the
Group operates and generates taxable income.
Management periodically evaluates positions taken in the tax returns with
respect to situations in which applicable tax regulations are subject to
interpretation and establishes liabilities where appropriate.
Deferred tax is provided using the liability method on temporary differences
between the tax bases of assets and liabilities and their carrying amounts for
financial reporting purposes at the reporting date.
Deferred tax assets are recognised for all deductible temporary differences,
the carry forward of unused tax credits and any unused tax losses. Deferred
tax assets are recognised to the extent that it is probable that taxable
profit will be available against which the deductible temporary differences,
and the carry forward of unused tax credits and unused tax losses can be
utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date
and reduced to the extent that it is no longer probable that sufficient
taxable profit will be available to allow all or part of the deferred tax
asset to be utilised. Unrecognised deferred tax assets are re-assessed at each
reporting date and are recognised to the extent that it has become probable
that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are
expected to apply in the year when the asset is realised or the liability is
settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted at the reporting date.
The Group offsets deferred tax assets and deferred tax liabilities if and only
if it has a legally enforceable right to set off current tax assets and
current tax liabilities and the deferred tax assets and deferred tax
liabilities relate to income taxes levied by the same taxation authority on
either the same taxable entity or different taxable entities which intend
either to settle current tax liabilities and assets on a net basis, or to
realise the assets and settle the liabilities simultaneously, in each future
period in which significant amounts of deferred tax liabilities or assets are
expected to be settled or recovered.
Property, Plant and Equipment
Tangible fixed assets are stated at cost less accumulated depreciation and
accumulated impairment losses. The Group assesses at each reporting date
whether there are impairment indicators for tangible fixed assets.
Depreciation
Depreciation is charged to the Statement of Comprehensive Income on a
straight-line basis over the estimated useful lives of each part of an item of
tangible fixed assets. The estimated useful lives are as follows:
Asset Class Depreciation Method and Rate
Computer Equipment three years straight line
Furniture and Fittings four years straight line
Leasehold Improvements straight line over life of the lease
Right of Use Assets straight line over life of the lease
An item of property, plant and equipment and any significant part initially
recognised is derecognised upon disposal (i.e. at the date the recipient
obtains control) or when no future economic benefits are expected from its use
or disposal. Any gain or loss arising on derecognition of the asset
(calculated as the difference between the net disposal proceeds and the
carrying amount of the asset) is included in the Statement of Comprehensive
Income when the asset is derecognised.
The residual values, useful lives, and methods of depreciation of property,
plant and equipment are reviewed at each financial year end and adjusted
prospectively, if appropriate.
Impairment of Non-Financial Assets
The Group assesses at each reporting date, whether there is an indication that
an asset may be impaired. If any such indication exists, the recoverable
amount of the asset is estimated based on future cashflows with a suitable
range of discount rates and the expectations of future performance. An
impairment loss is recognised for the amount by which the asset's carrying
amount exceeds its recoverable amount. Impairment loss is recognised in the
Statement of Comprehensive Income.
Cash and Cash Equivalents
Cash and cash equivalents comprise cash on hand and short term highly liquid
deposits with a maturity of less than 3 months.
Trade Receivables
Trade and other receivables are recognised initially at the transaction price
less attributable transaction costs. Subsequent to initial recognition they
are measured at amortised cost using the effective interest method, less any
impairment losses in the case of trade receivables and other receivables.
Trade Payables
Trade and other payables are recognised initially at transaction price plus
attributable transaction costs. Subsequently they are measured at amortised
cost using the effective interest method. Trade and other payables are
obligations to pay for goods or services that have been acquired in the
ordinary course of business from suppliers. Trade payables are classified as
current liabilities if payment is due within one year or less (or in the
normal operating cycle of the business if longer). If not, they are presented
as non-current liabilities.
Provisions
Provisions are recognised when the Group has a present obligation (legal or
constructive) as a result of a past event, it is probable that the Group will
be required to settle that obligation and a reliable estimate can be made of
the amount of the obligation. Provisions are measured at the Directors' best
estimate of the expenditure required to settle the obligation at the reporting
date and are discounted to present value where the effect is material.
Leases
Initial Recognition and Measurement
The Group initially recognises a lease liability for the obligation to make
lease payments and a right-of-use asset for the right to use the underlying
asset for the lease term.
The lease liability is measured at the present value of the lease payments to
be made over the lease term. The lease payments include fixed payments,
purchase options at exercise price (where payment is reasonably certain),
expected amount of residual value guarantees, termination option penalties
(where payment is considered reasonably certain) and variable lease payments
that depend on an index or rate.
The right-of-use asset is initially measured at the amount of the lease
liability, adjusted for lease prepayments, lease incentives received, the
group's initial direct costs (e.g. commissions) and an estimate of
restoration, removal, and dismantling costs.
Subsequent Measurement
After the commencement date, the Group measures the lease liability by:
(a) Increasing the carrying amount to reflect interest on the lease liability;
(b) Reducing the carrying amount to reflect the lease payments made; and
(c) Re-measuring the carrying amount to reflect any reassessment or lease
modifications or to reflect revised in substance fixed lease payments or on
the occurrence of other specific events.
Interest on the lease liability in each period during the lease term is the
amount that produces a constant periodic rate of interest on the remaining
balance of the lease liability. Interest charges are included in finance cost
in the Statement of Comprehensive Income, unless the costs are included in the
carrying amount of another asset applying other applicable standards. Variable
lease payments not included in the measurement of the lease liability, are
included in operating expenses in the period in which the event or condition
that triggers them arises. Repayment of lease liabilities within financing
activities in the Statement of Cash Flows include both the principal and
interest.
Short Term and Low Value Leases
The Group has made an accounting policy election, by class of underlying
asset, not to recognise lease assets and lease liabilities for leases with a
lease term of 12 months or less (i.e. short-term leases).
The Group has made an accounting policy election on a lease-by-lease basis,
not to recognise lease assets and lease liabilities on leases for which the
underlying asset is worth £5,000 or less (i.e. low value leases).
Lease payments on short term and low value leases are accounted for on a
straight-line bases over the term of the lease or other systematic basis if
considered more appropriate. Short term and low value lease payments are
included in operating expenses in the Statement of Comprehensive Income.
Share Capital
Ordinary shares are classified as equity. Equity instruments are measured at
the fair value of the cash or other resources received or receivable, net of
the direct costs of issuing the equity instruments. If payment is deferred and
the time value of money is material, the initial measurement is on a present
value basis.
Defined Contribution Pension Obligation
The Group operates a defined contribution plan for its employees, under which
the Group pays fixed contributions into the PensionBee Personal Pension. Once
the contributions have been paid the Group has no further payment obligations.
The contributions are recognised as an expense in the Statement of
Comprehensive Income when they fall due. Amounts not paid are shown in
creditors as a liability in the Statement of Financial Position. The assets of
the plan are held separately from the Group.
Share-based Payment
The cost of equity-settled transactions with employees is measured by
reference to the fair value of the equity instruments granted at the date at
which they are granted and is recognised as an expense over the vesting
period, which ends on the date on which the relevant employees become fully
entitled to the award. Fair value is determined by using the market price of
the shares at a point in time adjacent to the issue of the award. In valuing
equity-settled transactions, no account is taken of any vesting conditions,
other than conditions linked to the price of the shares of the Group (market
conditions) and non-vesting conditions. No expense is recognised for awards
that do not ultimately vest, except for awards where vesting is conditional
upon a market or non-vesting condition, which are treated as vesting
irrespective of whether the market or non-vesting condition is satisfied,
provided that all other vesting conditions are satisfied. At each balance
sheet date before vesting, the cumulative expense is calculated, representing
the extent to which the vesting period has expired and management's best
estimate of the achievement or otherwise of non-market conditions and of the
number of equity instruments that will ultimately vest or in the case of an
instrument subject to a market condition, be treated as vesting as described
above. The movement in cumulative expense since the previous balance sheet
date is recognised in the Statement of Comprehensive Income, with a
corresponding entry in equity under the Share-based Payment Reserve.
Where the terms of an equity-settled award are modified, or a new award is
designated as replacing a cancelled or settled award, the cost based on the
original award terms continues to be recognised over the original vesting
period. In addition, an expense is recognised over the remainder of the new
vesting period for the incremental fair value of any modification, based on
the difference between the fair value of the original award and the fair value
of the modified award, both as measured on the date of the modification. No
reduction is recognised if this difference is negative. Where an
equity-settled award is cancelled, it is treated as if it had vested on the
date of cancellation, and any cost not yet recognised in the Statement of
Comprehensive Income for the award is expensed immediately. Any compensation
paid up to the fair value of the award at the cancellation or settlement date
is deducted from equity (Share-based Payment Reserve), with any excess over
fair value expensed in the Statement of Comprehensive Income.
The Company has established a Share-based Payment Reserve but does not
transfer any amounts from this reserve on the exercise or lapse of options. On
exercise, shares issued are recognised in share capital at their nominal
value. Share premium is recognised to the extent the exercise price is above
the nominal value. Where the Company is settling part of the exercise price, a
transfer is made from retained earnings to share capital.
Research and Development
Research and development expenditure is recognised as an expense as incurred,
except that development expenditure incurred on an individual project is
capitalised as an intangible asset when the Group can demonstrate the
technical feasibility of completing the intangible asset so that it will be
available for use or sale, how the asset will generate future economic
benefits, the availability of resources to complete development of the asset
and the ability to measure reliably the expenditure during development.
Capitalised development costs are recorded as intangible assets and amortised
from the point at which the asset is ready for use. The Group's research and
development costs relate to costs incurred on projects carried out to advance
technology used to serve its customers. No development expenditure has been
capitalised during the years 2022 and 2023, on the basis that the specified
criteria for capitalisation has not been met, as costs spent on the
development phase of projects cannot be reliably estimated. All research and
development costs are therefore recognised as an expense as incurred.
Impairment of Financial Assets
Measurement of Expected Credit Losses
Expected credit losses ('ECLs') are based on the difference between the
contractual cash flows due in accordance with the contract and all the cash
flows that the Group expects to receive, discounted at an approximation of the
original effective interest rate.
For trade and other receivables, the Group applies a simplified approach in
calculating the ECLs. Therefore, the Group recognises a loss allowance based
on lifetime ECLs at each reporting date.
3. Critical Accounting Judgements and Key Sources of Estimation Uncertainty
In the application of the Group's accounting policies, the Directors are
required to make judgements, estimates and assumptions about the carrying
amount of assets and liabilities that are not readily apparent from other
sources. The estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant. Actual
results may differ from these estimates. The estimates and underlying
assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimate is revised where
the revision affects only that period, or in the period of the revision and
future periods where the revision affects both current and future periods.
The Group does not have any critical accounting judgements or key estimation
uncertainties.
4. Revenue
The analysis of the Group's Revenue for the year from continuing operations is
as follows
2023 2022
£ 000 £ 000
Recurring Revenue 23,660 17,527
Other Revenue 157 135
23,817 17,662
Recurring Revenue relates to revenue from the annual management fee charged to
customers. There are no individual revenues from customers which exceed 10% of
the Group's total Revenue for the year.
Segment Information
Operating segments and reporting segments are reported in a manner consistent
with the internal reporting provided to the Chief Operating Decision Maker
('CODM'). The Group considers that the role of CODM is performed by the Board
of Directors. The CODM regularly reviews the Group's operating results to
assess performance and to allocate resources. All earnings, balance sheet and
cash flow information received and reviewed by the Board of Directors is
prepared at a company level. The CODM considers that it has a single business
unit comprising the provision of direct-to-consumer online pension
consolidation and, therefore, recognises one operating and reporting segment
with all revenue, losses before tax and net assets being attributable to this
single reportable business segment.
Further, the Group operates in a single geographical location only, being the
United Kingdom.
5. Employee Benefits Expense
The aggregate payroll costs (including Directors' remuneration) were as
follows:
2023 2022
£ 000 £ 000
Wages and Salaries 10,801 8,373
Social Security Costs 1,200 946
Pension Costs, Defined Contribution Scheme 300 235
12,301 9,554
Share-based Payment Expense 2,182 1,898
14,483 11,452
The average number of persons employed by the Group (including Directors)
during the year, analysed by category, was as follows:
2023 2022
No. No.
Executive Management 10 9
Technology and Product 47 38
Marketing 17 15
Customer Service 92 90
Legal, Compliance and Risk 12 11
Administration and Other 24 22
202 185
6. Directors' Remuneration
The Directors' remuneration for the year was as follows:
2023 2022
£ 000 £ 000
Remuneration 963 853
Group Contributions paid to Defined Contribution Pension Schemes 11 10
974 863
During the year the number of Directors who were receiving benefits and share
incentives was as follows:
2023 2022
No. No.
Members of Defined Contribution Pension Schemes 5 5
In respect of the highest paid Director:
2023 2022
£ 000 £ 000
Remuneration 219 193
Group Contributions to Defined Contribution Pension Schemes 2 2
Exercise of Share Options
2023 2022
£ 000 £ 000
Amount of Gains made on the Exercise of Share Options 164 225
7. Other Expenses
Arrived at after charging:
2023 2022
£ 000 £ 000
Auditor's Remuneration 215 196
Money Manager Costs 3,245 2,825
Other Expenses 6,557 8,047
10,017 11,067
Included in Other Expenses are technology and platform costs, professional
services fees, irrecoverable VAT and general and administrative costs.
8. Finance (Income) and Costs
2023 2022
Finance (Income): £ 000 £ 000
Interest (Income) (6) -
(6) -
2023 2022
Finance Costs: £ 000 £ 000
Interest Expense on Lease Liabilities 33 43
Interest Expense on Dilapidations Provision 3 3
Total Finance Costs 36 46
9. Auditor's Remuneration
2023 2022
£ 000 £ 000
Audit of the Company's Financial Statements 56 44
Audit of the Company's Subsidiary Financial Statements 112 94
Total Audit Fees 168 138
Audit Related Assurance Services 47 58
Total Audit Related Assurance Fees 47 58
Auditor's remuneration has been shown net of VAT. Audit Related Assurance Fees
relate to the half year review of the Group's financial statements and CASS
audit services received by the Subsidiary. No services were provided pursuant
to contingent fee arrangements.
10. Tax
Tax charged/(credited) in the Statement of Comprehensive Income:
2023 2022
£ 000 £ 000
Current Taxation
UK Corporation Tax (150) (274)
Deferred Taxation
Arising from Origination and Reversal of Temporary Differences - -
Arising from Tax Rate Changes - -
Total Deferred Taxation - -
Tax Credit in the Statement of Comprehensive Income (150) (274)
The tax on the loss for the year was computed at the blended rate of
corporation tax of 23.5% (2022: 19%). From 1 April 2022, the standard rate of
corporation tax in the UK was 19%. From 1 April 2023, the corporation tax rate
of 25% was effective for companies with profits of £250,000 and over.
PensionBee will likely utilise its carried forward losses while making profits
exceeding £250,000 and incurring corporation tax at the rate of 25% therefore
the blended rate is deemed appropriate.
The differences are reconciled below:
2023 2022
£ 000 £ 000
Profit/(Loss) before Tax (10,719) (22,420)
Corporation Tax at Standard Rate (2,521) (4,260)
Increase from effect of different UK Tax Rates on some Earnings - -
Increase from effect of expenses not deductible in determining Taxable Profit 172 288
(Tax Loss)
Capital Allowances (1) (11)
Share-based Payment 318 83
Deferred Tax Expense (Credit) from unrecognised Tax Loss or Credit 2,032 3,900
Decrease from effect of adjustments in Research Development Tax Credit (150) (274)
Total Tax Credit (150) (274)
2023 2022
£ 000 £ 000
Fixed Assets (36) (43)
Temporary Difference Trading - -
Total Deferred Tax Liability (36) (43)
Losses available for offsetting against Future Taxable Income 36 43
Total Deferred Tax Asset 36 43
Net Deferred Tax - -
The Group has £81,394,000 of non-expiring carried forward tax losses at 31
December 2023 (2022: £72,755,000) against which no deferred tax asset has
been recognised. A deferred tax asset has not been recognised on the basis
that there is insufficient certainty over the recovery of these tax losses in
the near future.
11. Earnings per Share
Basic Earnings per Share is calculated by dividing the Loss Attributable to
Equity Holders of the Company by the Weighted Average Number of ordinary
Shares Outstanding during the year.
Diluted Earnings per Share is calculated by dividing the Loss Attributable to
Equity Holders of the Company adjusted for the effect that would result from
the weighted average number of ordinary shares plus the weighted average
number of shares that would be issued on the conversion of all the dilutive
potential shares under option. At each balance sheet date reported below, the
following potential ordinary shares under option are anti-dilutive and are
therefore excluded from the weighted average number of ordinary shares for the
purpose of Diluted Earnings per Share.
2023 2022
Number of Potential Ordinary Shares 6,757,781 4,619,220
Profit/(Loss) Attributable to Equity Holders of PensionBee Group plc (£) (10,569,000) (22,146,000)
Weighted Average Number of Ordinary Shares Outstanding during the 223,559,764 222,223,650
Year
Basic and Diluted Earnings per Share (pence per Share) (4.73) (9.97)
Basic Earnings per Share was (4.73)p for 2023 (2022: (9.97)p).
12. Property, Plant and Equipment
Fixtures and Fittings Leasehold Improvements Computer Equipment Total
£ 000 £ 000 £ 000 £ 000
Cost
At 1 January 2022 60 126 265 451
Additions 1 251 115 367
Disposals - - (17) (17)
At 31 December 2022 61 377 363 801
At 1 January 2023 61 377 363 801
Additions 2 41 52 95
Disposals - - - -
At 31 December 2023 63 418 415 896
Accumulated Depreciation
At 1 January 2022 51 126 147 324
Charge for the year 7 50 77 134
Eliminated on Disposal - - (15) (15)
At 31 December 2022 58 176 209 443
At 1 January 2023 58 176 209 443
Charge for the year 2 56 90 148
Eliminated on Disposal - - - -
At 31 December 2023 60 232 299 591
Carrying Amount
At 31 December 2023 3 186 116 305
At 31 December 2022 3 201 154 358
At 1 January 2022 9 - 118 127
13. Right of Use Asset
£ 000
Cost
At 1 January 2022 703
Additions 3
Disposals -
At 31 December 2022 706
At 1 January 2023 706
Additions -
Disposals -
At 31 December 2023 706
Accumulated Depreciation
At 1 January 2022 11
Charge for the year 141
Eliminated on Disposal -
At 31 December 2022 152
At 1 January 2023 152
Charge for the year 141
Eliminated on Disposal -
At 31 December 2023 293
Carrying Amount
At 31 December 2023 413
At 31 December 2022 553
At 1 January 2022 692
14. Trade and Other Receivables
2023 2022
£ 000 £ 000
Trade Receivables 2,240 1,565
Prepayments 1,901 903
Other Receivables 206 944
4,347 3,412
Trade and Other Receivables are measured at amortised cost and management
assessed that the carrying value is approximately their fair value due to the
short-term maturities of these balances.
15. Share Capital
Allotted, Called Up and Fully Paid Shares
2023 2022
No. 000 £ 000 No. 000 £ 000
At 1 January 222,862 223 221,526 221
Shares issued 1,101 1 1,336 2
At 31 December 223,963 224 222,862 223
During the year, PensionBee Group plc issued ordinary shares, to satisfy the
exercise of share options totalling 1,100,706 ordinary shares (2022:
1,336,148) of £0.001 each. The exercise price for each exercised share option
was £0.001 (2022: £0.001).
Each ordinary share carries one vote per share and ranks pari passu with
respect to dividends and capital.
16. Reserves
Share Premium
The Share Premium account represents the excess of the issue price over the
par value on shares issued, less transaction costs arising on the issue.
Share-based Payment Reserve
The Share-based Payment Reserve is used to recognise the value of
equity-settled share-based payments provided to employees, including key
management personnel, as part of their remuneration.
Retained Earnings
The balance in the Retained Earnings account represents the distributable
reserves of the Group.
17. Leases
In December 2021, the Group entered into a new property lease with a 5-year
lease term ending in December 2026 with an option to terminate the lease after
three years. The Group is reasonably certain that this option will not be
exercised therefore the lease term was determined to be five years. At
inception, the lease liability was determined using a discount rate linked to
London office rental yields, adjusted for the risk premium for certain company
specific factors as well as taking into consideration the interest rate
associated with the revolving credit facility entered into in March 2021 and
subsequently cancelled in September 2021. The discount rate applied was 7%.
The lease terms have not been amended since inception.
The carrying amounts of right-of-use assets recognised and the movements
during each year are set out in Note 13. Set out below are the carrying
amounts of lease liabilities and the movements during the year.
2023 2022
£ 000 £ 000
As at 1 January 551 657
Accretion of Interest 33 43
Cash Flow Timing Adjustment - 2
Payments (186) (151)
As at 31 December 398 551
Lease Liabilities included in the Statement of Financial Position:
2023 2022
£ 000 £ 000
Non-current 292 397
Current 106 154
398 551
The following are the amounts recognised in the Statement of Comprehensive
Income:
2023 2022
£ 000 £ 000
Depreciation on Right of Use Asset 141 141
Interest on Lease Liability 33 43
174 184
18. Provisions
2023 2022
£ 000 £ 000
Dilapidations
At 1 January 46 43
Interest 3 3
At 31 December 49 46
Non-current Liabilities 49 46
The Group is required to restore the leased premises of its offices to their
original condition at the end of the lease term. The lease term ends on 2
December 2026. A provision has been recognised at the present value of the
estimated expenditure required to remove any leasehold improvements. These
costs have been capitalised as part of the Right of Use Asset and are
amortised over the useful life of the asset.
19. Trade and Other Payables
2023 2022
£ 000 £ 000
Trade Payables 269 132
Accrued Expenses 1,496 1,301
Other Payables 68 83
1,833 1,515
Trade and Other Payables are measured at amortised cost and management
assessed that the carrying value is approximately their fair value due to the
short-term maturities of these balances.
20. Pension and Other Schemes
The Group operates a defined contribution pension scheme. The pension cost
charge for the year represents contributions payable by the Group to the
scheme and amounted to £301,000 (2022: £235,000).
21. Share-based Payment
PensionBee EMI and Non-EMI Share Option Scheme
Scheme Details and Movements
Under the PensionBee EMI and Non-EMI Share Option Scheme share options were
granted to eligible employees who have passed their probation period at the
Group. The exercise price of all share options is £0.001 per share.
The share options normally vest on the later of the following tranches, 25% of
the shares vest on the first anniversary of the vesting commencement date with
the remaining 75% of the shares vesting quarterly in equal instalments over
the following three years.
The fair value of the share options granted is estimated on the date of grant
by reference to the prevailing share price. Before the Company was listed in
2021, the fair value was determined by reference to the price paid by external
investors as part of periodic funding rounds.
The weighted average fair value of share options granted during the year of
grant was £nil (2022: £ nil).
During the year ended 31 December 2021, share options could be exercised upon
the occurrence of an exit event, a takeover, reconstruction, liquidation and
sale of the business, to the extent they had vested. In the event that there
had been no exit event before the tenth anniversary of the date of grant, the
Directors were able to determine that an option holder could exercise their
option in the 30 day period before such anniversary.
Following the listing of the Company in 2021, share options can be exercised
upon satisfying the service condition.
The movements in the number of share options during the year were as follows:
2023 2022
Number Number
Outstanding, start of the year 2,444,403 3,911,235
Exercised during the year (910,283) (1,297,359)
Expired during the year (16,350) (169,472)
Outstanding, end of the year 1,517,770 2,444,404
The weighted average share price on the dates the share options were exercised
during the year was £0.74 (2022: £1.05) and the weighted average remaining
contractual life is eight months (2022: one year and six months).
Deferred Share Bonus Plan
Scheme Details and Movements
Under the PensionBee Deferred Share Bonus Plan, awards ('DSB Awards') are
granted to eligible employees who are or were an employee (including an
Executive Director) of the Group who have been granted a bonus. DSB Awards are
granted in the subsequent financial year once the annual bonus outturn has
been determined. The DSB Awards are granted by way of share options, with an
exercise price of £0.001 per share.
For the two Executive Directors that were in office as of 31 December 2021,
their 2022 granted DSB Awards cliff vest on the third anniversary of the date
of grant. For the rest of the employees and the subsequent grants, DSB Awards
vest in three equal instalments over a service period of three years from
grant date. DSB Awards vest upon satisfying the service condition.
The fair value of the DSB Awards is the share price on the grant date. DSB
Awards can be exercised to the extent they have vested.
The weighted average fair value of DSB Awards granted during 2023 was £0.98
(2022: £1.44).
The movements in the number of DSB Awards during the year were as follows:
2023 2022
Number Number
Outstanding, start of the year 889,551 -
Granted during the year 626,223 944,508
Exercised during the year (190,423) -
Lapsed during the year (44,589) (54,957)
Outstanding, end of the year 1,280,762 889,551
The weighted average share price on the dates the share options were exercised
during the year was £0.80. No share options were exercised in 2022. The
weighted average remaining contractual life is one year (2022: one year and
five months).
Long Term Incentives Plan
Scheme Details and Movements
Under the PensionBee Long Term Incentives Plan, restricted share plan awards
('RSP Awards') are granted to eligible employees who are or were employees
(including an Executive Director) of the Group, at mid-level management or
higher, who have been granted a bonus. RSP Awards are granted in the
subsequent financial year following a bonus grant. The RSP Awards are granted
by way of share options, with an exercise price of £0.001 per share.
The RSP Awards vest in tranches, a third of the RSP Awards vest on the third
anniversary, a third on the fourth anniversary and the last third on the fifth
anniversary of the grant date.
The fair value of the RSP Awards is the share price on the grant date
discounted for the restricted selling period. RSP Awards can be exercised to
the extent they have vested and after a five year holding period.
The weighted average fair value of RSP Awards granted during 2023 was £0.94
(2022: £1.38).
The movements in the number of RSP Awards during the year were as follows:
2023 2022
Number Number
Outstanding, start of the year 1,285,266 -
Granted during the year 2,791,756 1,311,681
Exercised during the year - -
Lapsed during the year (117,773) (26,415)
Outstanding, end of the year 3,959,249 1,285,266
There were no exercises during the year (2022: nil) and the weighted average
remaining contractual life is two years and five months. (2022: three years
and three months).
Charge/Credit arising from Share-based Payment
The total charge for the year for the Share-based Payment was £2,182,000
(2022: £1,898,000), all of which related to equity-settled share-based
payment transactions.
22. Financial Risks Review
This note presents information about the Group's exposure to financial risks
and the Group's management of capital. Financial risk exposure results from
the operations of the Subsidiary. The Company is not trading and therefore is
structured to avoid, in so far as possible, all forms of financial risk.
Financial Risk Management Objectives
The Group has identified the financial risks arising from its activities and
has established policies and procedures to manage these risks in accordance
with its risk appetite. These risks included market risk, credit risk and
liquidity risk. The Group does not enter or trade financial instruments,
including derivative financial instruments. Assisted by the Audit and Risk
Committee, the Board of Directors has overall responsibility for establishing
and overseeing the Group's risk management framework and risk appetite.
The Group's financial risk management policies are intended to ensure that
risks, including emerging risks are identified, evaluated and subject to
ongoing close monitoring and mitigation where appropriate. The Board of
Directors regularly reviews financial risk management policies, procedures and
systems to reflect changes in the business, risk horizon, markets and
financial instruments used by the Group. The Group's senior management is
responsible for the day-to-day management of these risks in accordance with
the Group's risk management framework.
Market Risk
Market risk is the risk that the fair value or future cash flows of financial
instruments will fluctuate because of changes in market prices. Market risk
comprises risks including interest rate risk, currency risk and price risk.
Interest Rate Risk
Interest rate risk is the risk that the fair value or future cash flows of a
financial instrument will fluctuate because of changes in market interest
rates. The Group considers interest rate risk to be insignificant due to no
debt.
Price Risk
The main source of revenue is based on the value of Assets under
Administration ('AUA'), a measure of the total assets for which a financial
institution provides administrative services. The Group has an indirect
exposure to price risk on investments held on behalf of customers. These
assets are not on the Group's Statement of Financial Position. The risk of
lower revenues is partially mitigated by asset class diversification. The
Group does not hedge its revenue exposure to movements in the value of
customers assets arising from these risks, and so the interests of the Group
are aligned to those of its customers.
A10% change in equity markets would have an approximate 7.5% impact on
revenue. The 10% change in equity markets is a reasonable approximation of
possible change. The key assumption in this assessment is the percentage
change of market volatility over the next 12 months from the year ended 2023.
Credit Risk
Credit risk is the risk that a counterparty will be unable to pay amounts in
full when due. The Group's exposure to credit risk arises principally from its
cash balances held with banks and trade receivables. The Group's trade
receivables are the contractual cash flow obligations that the payors must
meet. The payors are BlackRock, Legal & General, and State Street which
are high credit rated financial institutions. Assets they hold on behalf of
the Group are a small percentage of their net assets and on this basis, credit
risk is considered to be low. The Group utilises the simplified approach to
provide for expected credit losses allowing the use of lifetime loss
allowances to be made. In determining expected credit losses, financial assets
have been grouped based on shared credit risk characteristics, such as number
of days past due and the counterparty.
At the end of the reporting period no assets were determined to be impaired
and there was no balance past due.
In certain cases, the Group will also consider a financial asset to be in
default when internal or external information indicates that the Group is
unlikely to receive the outstanding contractual amounts in full. A financial
asset is written off when there is no reasonable expectation of recovering the
contractual cash flows.
Due to the Group's financial assets primarily being trade receivables which
all have an expected lifetime of less than 12 months, the Group has elected to
measure the expected credit losses at 12 months only. The Group's expected
credit loss is £nil (2022: £nil).
Set out below is the information about the credit risk exposure on the Group's
trade receivables:
Days Past Due
Current < 30 days 30-60 days 61-90 days >91 days Total
31-Dec-23 £ 000 £ 000 £ 000 £ 000 £ 000 £ 000
Gross Trade Receivables 2,240 - - - - 2,240
Other Receivables 179 - - - 27 206
Days Past Due
Current < 30 days 30-60 days 61-90 days >91 days Total
31-Dec-22 £ 000 £ 000 £ 000 £ 000 £ 000 £ 000
Gross Trade Receivables 1,565 - - - - 1,565
Other Receivables 540 - - - 404 944
The Group's Trade Receivables are concentrated in the three money managers
2023 2022
% %
BlackRock 75% 73%
State Street 15% 16%
Legal & General 10% 11%
Total 100% 100%
Other Receivables mainly comprise of the R&D tax credit due from HMRC and
the office rental deposit. The probability of default by these parties is
deemed low. The credit risk on liquid funds financial instruments is limited
because the counterparties are banks with high credit-ratings assigned by
international credit-rating agencies. The Group's principal Banks are Barclays
Bank and HSBC Innovation Banking. The Group only uses banks with a credit
rating of at least BBB+ (Standard & Poor's). The Group's liquid funds are
concentrated in Barclays, which holds 72% of the total balance as at year end
(2022: 94%) and HSBC, which holds 27% of the total balance as at year end
(2022: 0%).
Liquidity Risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting
obligations to settle its liabilities. This is managed through cash flow
forecasting.
Undiscounted Maturity Analysis
The following table sets out the remaining contractual maturities of the
group's financial liabilities by type:
Within 1 year Between 1 and 5 years After more than 5 years Total
2023 £ 000 £ 000 £ 000 £ 000
Trade and Other Payables 1,833 - - 1,833
Lease Liabilities 129 309 - 438
Within 1 year Between 1 and 5 years After more than 5 years Total
2022 £ 000 £ 000 £ 000 £ 000
Trade and Other Payables 1,515 - - 1,515
Lease Liabilities 186 438 - 624
Capital Risk Management
For the purpose of the Group's capital management, capital includes issued
share capital, share premium and all other equity reserves attributable to the
equity holders of the Company.
The Group manages its capital to ensure that it will be able to continue as a
going concern by ensuring compliance with regulatory capital requirements set
by the FCA and maximising returns to shareholders through optimal capital
deployment. Regulatory capital is determined in accordance with the
requirements prescribed by the FCA. The Group performs capital assessments and
maintains a surplus over the regulatory capital requirement at all times.
The Group met its regulatory capital requirement throughout the years 2022 and
2023.
The Group manages its capital structure and makes adjustments considering
changes in economic conditions. To maintain or adjust the capital structure,
the Group may return capital to shareholders or issue new shares.
Externally Imposed Capital Requirements
The capital adequacy of the business is monitored on a quarterly basis as part
of general business planning by the Finance Team. The Group conducts a capital
adequacy assessment process, as required by the Financial Conduct Authority
('FCA') to assess and maintain the appropriate levels.
23. Related Party Transactions
Key Management Compensation 2023 2022
£ 000 £ 000
Salaries and Other Short-term Employee Benefits 2,034 1,752
Other Long-term Benefits 25 24
Share-based Payment 1,463 1,222
3,522 2,998
Some Key Management Personnel use the Group's services on commercial terms
which are consistent with the standard terms and condition as available on the
website.
Related Party - PensionBee Trustees
The following related party transactions occur between the Company and
PensionBee Trustees Limited:
(i) Payment of the PensionBee Trustees Limited bank fees on a
quarterly basis. During the year bank fees amounted to £104,000 (2022:
£52,000). There was no outstanding balance at year end (2022: £nil).
(ii) Payment of the PensionBee Trustees Limited's Data Protection fee
on an annual basis. During the year, payments amounted to £35 (2022: £35).
There was no outstanding balance at year end (2022: £nil).
Transactions with Directors
During the year ended 31 December 2023, there were no transactions with
Directors. During the year ended 31 December 2022, Mark Wood repaid £105,279
to the Subsidiary in respect of a payment to HMRC made by the Group on his
behalf in 2021. As at the year ended 31 December 2023, there was no
outstanding balance (2022: £nil).
Some Directors use the Group's services on commercial terms which are
consistent with the standard terms and condition as available on the website.
24. Events After the Reporting Period
On 4 March 2024, the Group announced its proposed expansion into the United
States of America ('US'), having taken an important step by entering into an
exclusive, non-binding term sheet with a large, US-based global financial
institution. Under the proposed strategic relationship, the US service will be
delivered through PensionBee Inc, a yet to be established wholly-owned
subsidiary of PensionBee Group plc. PensionBee Inc will be established in
Delaware, with operational headquarters in New York. The financial effect of
the proposed expansion cannot yet be estimated.
25. Alternative Performance Measures
The Group uses an alternative performance measure ('APM') which is not defined
or specified by IFRS. The APM is Adjusted EBITDA, which is the loss for the
year before taxation, finance costs, depreciation, share-based compensation
and listing costs. The Directors use this APM and a combination of IFRS
measures when reviewing the performance and position of the Group and believe
that these measures provide useful information with respect to the Group's
business and operations. The Directors consider that this APM illustrates the
underlying performance of the business by excluding items considered by
management not to be reflective of the underlying trading operations of the
Group.
The APM used by the Group is defined below and reconciled to the related IFRS
financial measures:
Adjusted EBITDA
Adjusted EBITDA represents loss for the year before taxation, finance costs,
depreciation, share-based compensation and listing costs.
2023 2022
£ 000 £ 000
Operating Profit/(Loss) (10,689) (22,374)
Depreciation Expense 288 276
Share-based Payment (1) 2,182 1,898
Listing Costs (2) - 687
Adjusted EBITDA (8,219) (19,513)
(1) Relates to total annual charge in relation to Share-based Payment expense
as detailed in Note 21.
(2) 2022 Listing Costs relate to expenses incurred in relation to the
preparation for the transfer from the High Growth Segment to the Premium
Segment of the Main Market of the London Stock Exchange.
In the prior year, the Group utilised Adjusted EBITDAM as an APM which
represented the loss for the year before taxation, finance costs,
depreciation, advertising and marketing, share based compensation and listing
costs. In the year ended 31 December 2023, the Group successfully achieved
Adjusted EBITDAM profitability therefore, Adjusted EBITDAM is no longer
presented as an APM.
Asset Class Depreciation Method and Rate
Computer Equipment three years straight line
Furniture and Fittings four years straight line
Leasehold Improvements straight line over life of the lease
Right of Use Assets straight line over life of the lease
An item of property, plant and equipment and any significant part initially
recognised is derecognised upon disposal (i.e. at the date the recipient
obtains control) or when no future economic benefits are expected from its use
or disposal. Any gain or loss arising on derecognition of the asset
(calculated as the difference between the net disposal proceeds and the
carrying amount of the asset) is included in the Statement of Comprehensive
Income when the asset is derecognised.
The residual values, useful lives, and methods of depreciation of property,
plant and equipment are reviewed at each financial year end and adjusted
prospectively, if appropriate.
Impairment of Non-Financial Assets
The Group assesses at each reporting date, whether there is an indication that
an asset may be impaired. If any such indication exists, the recoverable
amount of the asset is estimated based on future cashflows with a suitable
range of discount rates and the expectations of future performance. An
impairment loss is recognised for the amount by which the asset's carrying
amount exceeds its recoverable amount. Impairment loss is recognised in the
Statement of Comprehensive Income.
Cash and Cash Equivalents
Cash and cash equivalents comprise cash on hand and short term highly liquid
deposits with a maturity of less than 3 months.
Trade Receivables
Trade and other receivables are recognised initially at the transaction price
less attributable transaction costs. Subsequent to initial recognition they
are measured at amortised cost using the effective interest method, less any
impairment losses in the case of trade receivables and other receivables.
Trade Payables
Trade and other payables are recognised initially at transaction price plus
attributable transaction costs. Subsequently they are measured at amortised
cost using the effective interest method. Trade and other payables are
obligations to pay for goods or services that have been acquired in the
ordinary course of business from suppliers. Trade payables are classified as
current liabilities if payment is due within one year or less (or in the
normal operating cycle of the business if longer). If not, they are presented
as non-current liabilities.
Provisions
Provisions are recognised when the Group has a present obligation (legal or
constructive) as a result of a past event, it is probable that the Group will
be required to settle that obligation and a reliable estimate can be made of
the amount of the obligation. Provisions are measured at the Directors' best
estimate of the expenditure required to settle the obligation at the reporting
date and are discounted to present value where the effect is material.
Leases
Initial Recognition and Measurement
The Group initially recognises a lease liability for the obligation to make
lease payments and a right-of-use asset for the right to use the underlying
asset for the lease term.
The lease liability is measured at the present value of the lease payments to
be made over the lease term. The lease payments include fixed payments,
purchase options at exercise price (where payment is reasonably certain),
expected amount of residual value guarantees, termination option penalties
(where payment is considered reasonably certain) and variable lease payments
that depend on an index or rate.
The right-of-use asset is initially measured at the amount of the lease
liability, adjusted for lease prepayments, lease incentives received, the
group's initial direct costs (e.g. commissions) and an estimate of
restoration, removal, and dismantling costs.
Subsequent Measurement
After the commencement date, the Group measures the lease liability by:
(a) Increasing the carrying amount to reflect interest on the lease liability;
(b) Reducing the carrying amount to reflect the lease payments made; and
(c) Re-measuring the carrying amount to reflect any reassessment or lease
modifications or to reflect revised in substance fixed lease payments or on
the occurrence of other specific events.
Interest on the lease liability in each period during the lease term is the
amount that produces a constant periodic rate of interest on the remaining
balance of the lease liability. Interest charges are included in finance cost
in the Statement of Comprehensive Income, unless the costs are included in the
carrying amount of another asset applying other applicable standards. Variable
lease payments not included in the measurement of the lease liability, are
included in operating expenses in the period in which the event or condition
that triggers them arises. Repayment of lease liabilities within financing
activities in the Statement of Cash Flows include both the principal and
interest.
Short Term and Low Value Leases
The Group has made an accounting policy election, by class of underlying
asset, not to recognise lease assets and lease liabilities for leases with a
lease term of 12 months or less (i.e. short-term leases).
The Group has made an accounting policy election on a lease-by-lease basis,
not to recognise lease assets and lease liabilities on leases for which the
underlying asset is worth £5,000 or less (i.e. low value leases).
Lease payments on short term and low value leases are accounted for on a
straight-line bases over the term of the lease or other systematic basis if
considered more appropriate. Short term and low value lease payments are
included in operating expenses in the Statement of Comprehensive Income.
Share Capital
Ordinary shares are classified as equity. Equity instruments are measured at
the fair value of the cash or other resources received or receivable, net of
the direct costs of issuing the equity instruments. If payment is deferred and
the time value of money is material, the initial measurement is on a present
value basis.
Defined Contribution Pension Obligation
The Group operates a defined contribution plan for its employees, under which
the Group pays fixed contributions into the PensionBee Personal Pension. Once
the contributions have been paid the Group has no further payment obligations.
The contributions are recognised as an expense in the Statement of
Comprehensive Income when they fall due. Amounts not paid are shown in
creditors as a liability in the Statement of Financial Position. The assets of
the plan are held separately from the Group.
Share-based Payment
The cost of equity-settled transactions with employees is measured by
reference to the fair value of the equity instruments granted at the date at
which they are granted and is recognised as an expense over the vesting
period, which ends on the date on which the relevant employees become fully
entitled to the award. Fair value is determined by using the market price of
the shares at a point in time adjacent to the issue of the award. In valuing
equity-settled transactions, no account is taken of any vesting conditions,
other than conditions linked to the price of the shares of the Group (market
conditions) and non-vesting conditions. No expense is recognised for awards
that do not ultimately vest, except for awards where vesting is conditional
upon a market or non-vesting condition, which are treated as vesting
irrespective of whether the market or non-vesting condition is satisfied,
provided that all other vesting conditions are satisfied. At each balance
sheet date before vesting, the cumulative expense is calculated, representing
the extent to which the vesting period has expired and management's best
estimate of the achievement or otherwise of non-market conditions and of the
number of equity instruments that will ultimately vest or in the case of an
instrument subject to a market condition, be treated as vesting as described
above. The movement in cumulative expense since the previous balance sheet
date is recognised in the Statement of Comprehensive Income, with a
corresponding entry in equity under the Share-based Payment Reserve.
Where the terms of an equity-settled award are modified, or a new award is
designated as replacing a cancelled or settled award, the cost based on the
original award terms continues to be recognised over the original vesting
period. In addition, an expense is recognised over the remainder of the new
vesting period for the incremental fair value of any modification, based on
the difference between the fair value of the original award and the fair value
of the modified award, both as measured on the date of the modification. No
reduction is recognised if this difference is negative. Where an
equity-settled award is cancelled, it is treated as if it had vested on the
date of cancellation, and any cost not yet recognised in the Statement of
Comprehensive Income for the award is expensed immediately. Any compensation
paid up to the fair value of the award at the cancellation or settlement date
is deducted from equity (Share-based Payment Reserve), with any excess over
fair value expensed in the Statement of Comprehensive Income.
The Company has established a Share-based Payment Reserve but does not
transfer any amounts from this reserve on the exercise or lapse of options. On
exercise, shares issued are recognised in share capital at their nominal
value. Share premium is recognised to the extent the exercise price is above
the nominal value. Where the Company is settling part of the exercise price, a
transfer is made from retained earnings to share capital.
Research and Development
Research and development expenditure is recognised as an expense as incurred,
except that development expenditure incurred on an individual project is
capitalised as an intangible asset when the Group can demonstrate the
technical feasibility of completing the intangible asset so that it will be
available for use or sale, how the asset will generate future economic
benefits, the availability of resources to complete development of the asset
and the ability to measure reliably the expenditure during development.
Capitalised development costs are recorded as intangible assets and amortised
from the point at which the asset is ready for use. The Group's research and
development costs relate to costs incurred on projects carried out to advance
technology used to serve its customers. No development expenditure has been
capitalised during the years 2022 and 2023, on the basis that the specified
criteria for capitalisation has not been met, as costs spent on the
development phase of projects cannot be reliably estimated. All research and
development costs are therefore recognised as an expense as incurred.
Impairment of Financial Assets
Measurement of Expected Credit Losses
Expected credit losses ('ECLs') are based on the difference between the
contractual cash flows due in accordance with the contract and all the cash
flows that the Group expects to receive, discounted at an approximation of the
original effective interest rate.
For trade and other receivables, the Group applies a simplified approach in
calculating the ECLs. Therefore, the Group recognises a loss allowance based
on lifetime ECLs at each reporting date.
3. Critical Accounting Judgements and Key Sources of Estimation Uncertainty
In the application of the Group's accounting policies, the Directors are
required to make judgements, estimates and assumptions about the carrying
amount of assets and liabilities that are not readily apparent from other
sources. The estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant. Actual
results may differ from these estimates. The estimates and underlying
assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimate is revised where
the revision affects only that period, or in the period of the revision and
future periods where the revision affects both current and future periods.
The Group does not have any critical accounting judgements or key estimation
uncertainties.
4. Revenue
The analysis of the Group's Revenue for the year from continuing operations is
as follows
2023 2022
£ 000 £ 000
Recurring Revenue 23,660 17,527
Other Revenue 157 135
23,817 17,662
Recurring Revenue relates to revenue from the annual management fee charged to
customers. There are no individual revenues from customers which exceed 10% of
the Group's total Revenue for the year.
Segment Information
Operating segments and reporting segments are reported in a manner consistent
with the internal reporting provided to the Chief Operating Decision Maker
('CODM'). The Group considers that the role of CODM is performed by the Board
of Directors. The CODM regularly reviews the Group's operating results to
assess performance and to allocate resources. All earnings, balance sheet and
cash flow information received and reviewed by the Board of Directors is
prepared at a company level. The CODM considers that it has a single business
unit comprising the provision of direct-to-consumer online pension
consolidation and, therefore, recognises one operating and reporting segment
with all revenue, losses before tax and net assets being attributable to this
single reportable business segment.
Further, the Group operates in a single geographical location only, being the
United Kingdom.
5. Employee Benefits Expense
The aggregate payroll costs (including Directors' remuneration) were as
follows:
2023 2022
£ 000 £ 000
Wages and Salaries 10,801 8,373
Social Security Costs 1,200 946
Pension Costs, Defined Contribution Scheme 300 235
12,301 9,554
Share-based Payment Expense 2,182 1,898
14,483 11,452
The average number of persons employed by the Group (including Directors)
during the year, analysed by category, was as follows:
2023 2022
No. No.
Executive Management 10 9
Technology and Product 47 38
Marketing 17 15
Customer Service 92 90
Legal, Compliance and Risk 12 11
Administration and Other 24 22
202 185
6. Directors' Remuneration
The Directors' remuneration for the year was as follows:
2023 2022
£ 000 £ 000
Remuneration 963 853
Group Contributions paid to Defined Contribution Pension Schemes 11 10
974 863
During the year the number of Directors who were receiving benefits and share
incentives was as follows:
2023 2022
No. No.
Members of Defined Contribution Pension Schemes 5 5
In respect of the highest paid Director:
2023 2022
£ 000 £ 000
Remuneration 219 193
Group Contributions to Defined Contribution Pension Schemes 2 2
Exercise of Share Options
2023 2022
£ 000 £ 000
Amount of Gains made on the Exercise of Share Options 164 225
7. Other Expenses
Arrived at after charging:
2023 2022
£ 000 £ 000
Auditor's Remuneration 215 196
Money Manager Costs 3,245 2,825
Other Expenses 6,557 8,047
10,017 11,067
Included in Other Expenses are technology and platform costs, professional
services fees, irrecoverable VAT and general and administrative costs.
8. Finance (Income) and Costs
2023 2022
Finance (Income): £ 000 £ 000
Interest (Income) (6) -
(6) -
2023 2022
Finance Costs: £ 000 £ 000
Interest Expense on Lease Liabilities 33 43
Interest Expense on Dilapidations Provision 3 3
Total Finance Costs 36 46
9. Auditor's Remuneration
2023 2022
£ 000 £ 000
Audit of the Company's Financial Statements 56 44
Audit of the Company's Subsidiary Financial Statements 112 94
Total Audit Fees 168 138
Audit Related Assurance Services 47 58
Total Audit Related Assurance Fees 47 58
Auditor's remuneration has been shown net of VAT. Audit Related Assurance Fees
relate to the half year review of the Group's financial statements and CASS
audit services received by the Subsidiary. No services were provided pursuant
to contingent fee arrangements.
10. Tax
Tax charged/(credited) in the Statement of Comprehensive Income:
2023 2022
£ 000 £ 000
Current Taxation
UK Corporation Tax (150) (274)
Deferred Taxation
Arising from Origination and Reversal of Temporary Differences - -
Arising from Tax Rate Changes - -
Total Deferred Taxation - -
Tax Credit in the Statement of Comprehensive Income (150) (274)
The tax on the loss for the year was computed at the blended rate of
corporation tax of 23.5% (2022: 19%). From 1 April 2022, the standard rate of
corporation tax in the UK was 19%. From 1 April 2023, the corporation tax rate
of 25% was effective for companies with profits of £250,000 and over.
PensionBee will likely utilise its carried forward losses while making profits
exceeding £250,000 and incurring corporation tax at the rate of 25% therefore
the blended rate is deemed appropriate.
The differences are reconciled below:
2023 2022
£ 000 £ 000
Profit/(Loss) before Tax (10,719) (22,420)
Corporation Tax at Standard Rate (2,521) (4,260)
Increase from effect of different UK Tax Rates on some Earnings - -
Increase from effect of expenses not deductible in determining Taxable Profit 172 288
(Tax Loss)
Capital Allowances (1) (11)
Share-based Payment 318 83
Deferred Tax Expense (Credit) from unrecognised Tax Loss or Credit 2,032 3,900
Decrease from effect of adjustments in Research Development Tax Credit (150) (274)
Total Tax Credit (150) (274)
2023 2022
£ 000 £ 000
Fixed Assets (36) (43)
Temporary Difference Trading - -
Total Deferred Tax Liability (36) (43)
Losses available for offsetting against Future Taxable Income 36 43
Total Deferred Tax Asset 36 43
Net Deferred Tax - -
The Group has £81,394,000 of non-expiring carried forward tax losses at 31
December 2023 (2022: £72,755,000) against which no deferred tax asset has
been recognised. A deferred tax asset has not been recognised on the basis
that there is insufficient certainty over the recovery of these tax losses in
the near future.
11. Earnings per Share
Basic Earnings per Share is calculated by dividing the Loss Attributable to
Equity Holders of the Company by the Weighted Average Number of ordinary
Shares Outstanding during the year.
Diluted Earnings per Share is calculated by dividing the Loss Attributable to
Equity Holders of the Company adjusted for the effect that would result from
the weighted average number of ordinary shares plus the weighted average
number of shares that would be issued on the conversion of all the dilutive
potential shares under option. At each balance sheet date reported below, the
following potential ordinary shares under option are anti-dilutive and are
therefore excluded from the weighted average number of ordinary shares for the
purpose of Diluted Earnings per Share.
2023 2022
Number of Potential Ordinary Shares 6,757,781 4,619,220
Profit/(Loss) Attributable to Equity Holders of PensionBee Group plc (£) (10,569,000) (22,146,000)
Weighted Average Number of Ordinary Shares Outstanding during the 223,559,764 222,223,650
Year
Basic and Diluted Earnings per Share (pence per Share) (4.73) (9.97)
Basic Earnings per Share was (4.73)p for 2023 (2022: (9.97)p).
12. Property, Plant and Equipment
Fixtures and Fittings Leasehold Improvements Computer Equipment Total
£ 000 £ 000 £ 000 £ 000
Cost
At 1 January 2022 60 126 265 451
Additions 1 251 115 367
Disposals - - (17) (17)
At 31 December 2022 61 377 363 801
At 1 January 2023 61 377 363 801
Additions 2 41 52 95
Disposals - - - -
At 31 December 2023 63 418 415 896
Accumulated Depreciation
At 1 January 2022 51 126 147 324
Charge for the year 7 50 77 134
Eliminated on Disposal - - (15) (15)
At 31 December 2022 58 176 209 443
At 1 January 2023 58 176 209 443
Charge for the year 2 56 90 148
Eliminated on Disposal - - - -
At 31 December 2023 60 232 299 591
Carrying Amount
At 31 December 2023 3 186 116 305
At 31 December 2022 3 201 154 358
At 1 January 2022 9 - 118 127
13. Right of Use Asset
£ 000
Cost
At 1 January 2022 703
Additions 3
Disposals -
At 31 December 2022 706
At 1 January 2023 706
Additions -
Disposals -
At 31 December 2023 706
Accumulated Depreciation
At 1 January 2022 11
Charge for the year 141
Eliminated on Disposal -
At 31 December 2022 152
At 1 January 2023 152
Charge for the year 141
Eliminated on Disposal -
At 31 December 2023 293
Carrying Amount
At 31 December 2023 413
At 31 December 2022 553
At 1 January 2022 692
14. Trade and Other Receivables
2023 2022
£ 000 £ 000
Trade Receivables 2,240 1,565
Prepayments 1,901 903
Other Receivables 206 944
4,347 3,412
Trade and Other Receivables are measured at amortised cost and management
assessed that the carrying value is approximately their fair value due to the
short-term maturities of these balances.
15. Share Capital
Allotted, Called Up and Fully Paid Shares
2023 2022
No. 000 £ 000 No. 000 £ 000
At 1 January 222,862 223 221,526 221
Shares issued 1,101 1 1,336 2
At 31 December 223,963 224 222,862 223
During the year, PensionBee Group plc issued ordinary shares, to satisfy the
exercise of share options totalling 1,100,706 ordinary shares (2022:
1,336,148) of £0.001 each. The exercise price for each exercised share option
was £0.001 (2022: £0.001).
Each ordinary share carries one vote per share and ranks pari passu with
respect to dividends and capital.
16. Reserves
Share Premium
The Share Premium account represents the excess of the issue price over the
par value on shares issued, less transaction costs arising on the issue.
Share-based Payment Reserve
The Share-based Payment Reserve is used to recognise the value of
equity-settled share-based payments provided to employees, including key
management personnel, as part of their remuneration.
Retained Earnings
The balance in the Retained Earnings account represents the distributable
reserves of the Group.
17. Leases
In December 2021, the Group entered into a new property lease with a 5-year
lease term ending in December 2026 with an option to terminate the lease after
three years. The Group is reasonably certain that this option will not be
exercised therefore the lease term was determined to be five years. At
inception, the lease liability was determined using a discount rate linked to
London office rental yields, adjusted for the risk premium for certain company
specific factors as well as taking into consideration the interest rate
associated with the revolving credit facility entered into in March 2021 and
subsequently cancelled in September 2021. The discount rate applied was 7%.
The lease terms have not been amended since inception.
The carrying amounts of right-of-use assets recognised and the movements
during each year are set out in Note 13. Set out below are the carrying
amounts of lease liabilities and the movements during the year.
2023 2022
£ 000 £ 000
As at 1 January 551 657
Accretion of Interest 33 43
Cash Flow Timing Adjustment - 2
Payments (186) (151)
As at 31 December 398 551
Lease Liabilities included in the Statement of Financial Position:
2023 2022
£ 000 £ 000
Non-current 292 397
Current 106 154
398 551
The following are the amounts recognised in the Statement of Comprehensive
Income:
2023 2022
£ 000 £ 000
Depreciation on Right of Use Asset 141 141
Interest on Lease Liability 33 43
174 184
18. Provisions
2023 2022
£ 000 £ 000
Dilapidations
At 1 January 46 43
Interest 3 3
At 31 December 49 46
Non-current Liabilities 49 46
The Group is required to restore the leased premises of its offices to their
original condition at the end of the lease term. The lease term ends on 2
December 2026. A provision has been recognised at the present value of the
estimated expenditure required to remove any leasehold improvements. These
costs have been capitalised as part of the Right of Use Asset and are
amortised over the useful life of the asset.
19. Trade and Other Payables
2023 2022
£ 000 £ 000
Trade Payables 269 132
Accrued Expenses 1,496 1,301
Other Payables 68 83
1,833 1,515
Trade and Other Payables are measured at amortised cost and management
assessed that the carrying value is approximately their fair value due to the
short-term maturities of these balances.
20. Pension and Other Schemes
The Group operates a defined contribution pension scheme. The pension cost
charge for the year represents contributions payable by the Group to the
scheme and amounted to £301,000 (2022: £235,000).
21. Share-based Payment
PensionBee EMI and Non-EMI Share Option Scheme
Scheme Details and Movements
Under the PensionBee EMI and Non-EMI Share Option Scheme share options were
granted to eligible employees who have passed their probation period at the
Group. The exercise price of all share options is £0.001 per share.
The share options normally vest on the later of the following tranches, 25% of
the shares vest on the first anniversary of the vesting commencement date with
the remaining 75% of the shares vesting quarterly in equal instalments over
the following three years.
The fair value of the share options granted is estimated on the date of grant
by reference to the prevailing share price. Before the Company was listed in
2021, the fair value was determined by reference to the price paid by external
investors as part of periodic funding rounds.
The weighted average fair value of share options granted during the year of
grant was £nil (2022: £ nil).
During the year ended 31 December 2021, share options could be exercised upon
the occurrence of an exit event, a takeover, reconstruction, liquidation and
sale of the business, to the extent they had vested. In the event that there
had been no exit event before the tenth anniversary of the date of grant, the
Directors were able to determine that an option holder could exercise their
option in the 30 day period before such anniversary.
Following the listing of the Company in 2021, share options can be exercised
upon satisfying the service condition.
The movements in the number of share options during the year were as follows:
2023 2022
Number Number
Outstanding, start of the year 2,444,403 3,911,235
Exercised during the year (910,283) (1,297,359)
Expired during the year (16,350) (169,472)
Outstanding, end of the year 1,517,770 2,444,404
The weighted average share price on the dates the share options were exercised
during the year was £0.74 (2022: £1.05) and the weighted average remaining
contractual life is eight months (2022: one year and six months).
Deferred Share Bonus Plan
Scheme Details and Movements
Under the PensionBee Deferred Share Bonus Plan, awards ('DSB Awards') are
granted to eligible employees who are or were an employee (including an
Executive Director) of the Group who have been granted a bonus. DSB Awards are
granted in the subsequent financial year once the annual bonus outturn has
been determined. The DSB Awards are granted by way of share options, with an
exercise price of £0.001 per share.
For the two Executive Directors that were in office as of 31 December 2021,
their 2022 granted DSB Awards cliff vest on the third anniversary of the date
of grant. For the rest of the employees and the subsequent grants, DSB Awards
vest in three equal instalments over a service period of three years from
grant date. DSB Awards vest upon satisfying the service condition.
The fair value of the DSB Awards is the share price on the grant date. DSB
Awards can be exercised to the extent they have vested.
The weighted average fair value of DSB Awards granted during 2023 was £0.98
(2022: £1.44).
The movements in the number of DSB Awards during the year were as follows:
2023 2022
Number Number
Outstanding, start of the year 889,551 -
Granted during the year 626,223 944,508
Exercised during the year (190,423) -
Lapsed during the year (44,589) (54,957)
Outstanding, end of the year 1,280,762 889,551
The weighted average share price on the dates the share options were exercised
during the year was £0.80. No share options were exercised in 2022. The
weighted average remaining contractual life is one year (2022: one year and
five months).
Long Term Incentives Plan
Scheme Details and Movements
Under the PensionBee Long Term Incentives Plan, restricted share plan awards
('RSP Awards') are granted to eligible employees who are or were employees
(including an Executive Director) of the Group, at mid-level management or
higher, who have been granted a bonus. RSP Awards are granted in the
subsequent financial year following a bonus grant. The RSP Awards are granted
by way of share options, with an exercise price of £0.001 per share.
The RSP Awards vest in tranches, a third of the RSP Awards vest on the third
anniversary, a third on the fourth anniversary and the last third on the fifth
anniversary of the grant date.
The fair value of the RSP Awards is the share price on the grant date
discounted for the restricted selling period. RSP Awards can be exercised to
the extent they have vested and after a five year holding period.
The weighted average fair value of RSP Awards granted during 2023 was £0.94
(2022: £1.38).
The movements in the number of RSP Awards during the year were as follows:
2023 2022
Number Number
Outstanding, start of the year 1,285,266 -
Granted during the year 2,791,756 1,311,681
Exercised during the year - -
Lapsed during the year (117,773) (26,415)
Outstanding, end of the year 3,959,249 1,285,266
There were no exercises during the year (2022: nil) and the weighted average
remaining contractual life is two years and five months. (2022: three years
and three months).
Charge/Credit arising from Share-based Payment
The total charge for the year for the Share-based Payment was £2,182,000
(2022: £1,898,000), all of which related to equity-settled share-based
payment transactions.
22. Financial Risks Review
This note presents information about the Group's exposure to financial risks
and the Group's management of capital. Financial risk exposure results from
the operations of the Subsidiary. The Company is not trading and therefore is
structured to avoid, in so far as possible, all forms of financial risk.
Financial Risk Management Objectives
The Group has identified the financial risks arising from its activities and
has established policies and procedures to manage these risks in accordance
with its risk appetite. These risks included market risk, credit risk and
liquidity risk. The Group does not enter or trade financial instruments,
including derivative financial instruments. Assisted by the Audit and Risk
Committee, the Board of Directors has overall responsibility for establishing
and overseeing the Group's risk management framework and risk appetite.
The Group's financial risk management policies are intended to ensure that
risks, including emerging risks are identified, evaluated and subject to
ongoing close monitoring and mitigation where appropriate. The Board of
Directors regularly reviews financial risk management policies, procedures and
systems to reflect changes in the business, risk horizon, markets and
financial instruments used by the Group. The Group's senior management is
responsible for the day-to-day management of these risks in accordance with
the Group's risk management framework.
Market Risk
Market risk is the risk that the fair value or future cash flows of financial
instruments will fluctuate because of changes in market prices. Market risk
comprises risks including interest rate risk, currency risk and price risk.
Interest Rate Risk
Interest rate risk is the risk that the fair value or future cash flows of a
financial instrument will fluctuate because of changes in market interest
rates. The Group considers interest rate risk to be insignificant due to no
debt.
Price Risk
The main source of revenue is based on the value of Assets under
Administration ('AUA'), a measure of the total assets for which a financial
institution provides administrative services. The Group has an indirect
exposure to price risk on investments held on behalf of customers. These
assets are not on the Group's Statement of Financial Position. The risk of
lower revenues is partially mitigated by asset class diversification. The
Group does not hedge its revenue exposure to movements in the value of
customers assets arising from these risks, and so the interests of the Group
are aligned to those of its customers.
A 10% change in equity markets would have an approximate 7.5% impact on
revenue. The 10% change in equity markets is a reasonable approximation of
possible change. The key assumption in this assessment is the percentage
change of market volatility over the next 12 months from the year ended 2023.
Credit Risk
Credit risk is the risk that a counterparty will be unable to pay amounts in
full when due. The Group's exposure to credit risk arises principally from its
cash balances held with banks and trade receivables. The Group's trade
receivables are the contractual cash flow obligations that the payors must
meet. The payors are BlackRock, Legal & General, and State Street which
are high credit rated financial institutions. Assets they hold on behalf of
the Group are a small percentage of their net assets and on this basis, credit
risk is considered to be low. The Group utilises the simplified approach to
provide for expected credit losses allowing the use of lifetime loss
allowances to be made. In determining expected credit losses, financial assets
have been grouped based on shared credit risk characteristics, such as number
of days past due and the counterparty.
At the end of the reporting period no assets were determined to be impaired
and there was no balance past due.
In certain cases, the Group will also consider a financial asset to be in
default when internal or external information indicates that the Group is
unlikely to receive the outstanding contractual amounts in full. A financial
asset is written off when there is no reasonable expectation of recovering the
contractual cash flows.
Due to the Group's financial assets primarily being trade receivables which
all have an expected lifetime of less than 12 months, the Group has elected to
measure the expected credit losses at 12 months only. The Group's expected
credit loss is £nil (2022: £nil).
Set out below is the information about the credit risk exposure on the Group's
trade receivables:
Days Past Due
Current < 30 days 30-60 days 61-90 days >91 days Total
31-Dec-23 £ 000 £ 000 £ 000 £ 000 £ 000 £ 000
Gross Trade Receivables 2,240 - - - - 2,240
Other Receivables 179 - - - 27 206
Days Past Due
Current < 30 days 30-60 days 61-90 days >91 days Total
31-Dec-22 £ 000 £ 000 £ 000 £ 000 £ 000 £ 000
Gross Trade Receivables 1,565 - - - - 1,565
Other Receivables 540 - - - 404 944
The Group's Trade Receivables are concentrated in the three money managers
2023 2022
% %
BlackRock 75% 73%
State Street 15% 16%
Legal & General 10% 11%
Total 100% 100%
Other Receivables mainly comprise of the R&D tax credit due from HMRC and
the office rental deposit. The probability of default by these parties is
deemed low. The credit risk on liquid funds financial instruments is limited
because the counterparties are banks with high credit-ratings assigned by
international credit-rating agencies. The Group's principal Banks are Barclays
Bank and HSBC Innovation Banking. The Group only uses banks with a credit
rating of at least BBB+ (Standard & Poor's). The Group's liquid funds are
concentrated in Barclays, which holds 72% of the total balance as at year end
(2022: 94%) and HSBC, which holds 27% of the total balance as at year end
(2022: 0%).
Liquidity Risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting
obligations to settle its liabilities. This is managed through cash flow
forecasting.
Undiscounted Maturity Analysis
The following table sets out the remaining contractual maturities of the
group's financial liabilities by type:
Within 1 year Between 1 and 5 years After more than 5 years Total
2023 £ 000 £ 000 £ 000 £ 000
Trade and Other Payables 1,833 - - 1,833
Lease Liabilities 129 309 - 438
Within 1 year Between 1 and 5 years After more than 5 years Total
2022 £ 000 £ 000 £ 000 £ 000
Trade and Other Payables 1,515 - - 1,515
Lease Liabilities 186 438 - 624
Capital Risk Management
For the purpose of the Group's capital management, capital includes issued
share capital, share premium and all other equity reserves attributable to the
equity holders of the Company.
The Group manages its capital to ensure that it will be able to continue as a
going concern by ensuring compliance with regulatory capital requirements set
by the FCA and maximising returns to shareholders through optimal capital
deployment. Regulatory capital is determined in accordance with the
requirements prescribed by the FCA. The Group performs capital assessments and
maintains a surplus over the regulatory capital requirement at all times.
The Group met its regulatory capital requirement throughout the years 2022 and
2023.
The Group manages its capital structure and makes adjustments considering
changes in economic conditions. To maintain or adjust the capital structure,
the Group may return capital to shareholders or issue new shares.
Externally Imposed Capital Requirements
The capital adequacy of the business is monitored on a quarterly basis as part
of general business planning by the Finance Team. The Group conducts a capital
adequacy assessment process, as required by the Financial Conduct Authority
('FCA') to assess and maintain the appropriate levels.
23. Related Party Transactions
Key Management Compensation 2023 2022
£ 000 £ 000
Salaries and Other Short-term Employee Benefits 2,034 1,752
Other Long-term Benefits 25 24
Share-based Payment 1,463 1,222
3,522 2,998
Some Key Management Personnel use the Group's services on commercial terms
which are consistent with the standard terms and condition as available on the
website.
Related Party - PensionBee Trustees
The following related party transactions occur between the Company and
PensionBee Trustees Limited:
(i) Payment of the PensionBee Trustees Limited bank fees on a
quarterly basis. During the year bank fees amounted to £104,000 (2022:
£52,000). There was no outstanding balance at year end (2022: £nil).
(ii) Payment of the PensionBee Trustees Limited's Data Protection fee
on an annual basis. During the year, payments amounted to £35 (2022: £35).
There was no outstanding balance at year end (2022: £nil).
Transactions with Directors
During the year ended 31 December 2023, there were no transactions with
Directors. During the year ended 31 December 2022, Mark Wood repaid £105,279
to the Subsidiary in respect of a payment to HMRC made by the Group on his
behalf in 2021. As at the year ended 31 December 2023, there was no
outstanding balance (2022: £nil).
Some Directors use the Group's services on commercial terms which are
consistent with the standard terms and condition as available on the website.
24. Events After the Reporting Period
On 4 March 2024, the Group announced its proposed expansion into the United
States of America ('US'), having taken an important step by entering into an
exclusive, non-binding term sheet with a large, US-based global financial
institution. Under the proposed strategic relationship, the US service will be
delivered through PensionBee Inc, a yet to be established wholly-owned
subsidiary of PensionBee Group plc. PensionBee Inc will be established in
Delaware, with operational headquarters in New York. The financial effect of
the proposed expansion cannot yet be estimated.
25. Alternative Performance Measures
The Group uses an alternative performance measure ('APM') which is not defined
or specified by IFRS. The APM is Adjusted EBITDA, which is the loss for the
year before taxation, finance costs, depreciation, share-based compensation
and listing costs. The Directors use this APM and a combination of IFRS
measures when reviewing the performance and position of the Group and believe
that these measures provide useful information with respect to the Group's
business and operations. The Directors consider that this APM illustrates the
underlying performance of the business by excluding items considered by
management not to be reflective of the underlying trading operations of the
Group.
The APM used by the Group is defined below and reconciled to the related IFRS
financial measures:
Adjusted EBITDA
Adjusted EBITDA represents loss for the year before taxation, finance costs,
depreciation, share-based compensation and listing costs.
2023 2022
£ 000 £ 000
Operating Profit/(Loss) (10,689) (22,374)
Depreciation Expense 288 276
Share-based Payment (1) 2,182 1,898
Listing Costs (2) - 687
Adjusted EBITDA (8,219) (19,513)
(1) Relates to total annual charge in relation to Share-based Payment expense
as detailed in Note 21.
(2) 2022 Listing Costs relate to expenses incurred in relation to the
preparation for the transfer from the High Growth Segment to the Premium
Segment of the Main Market of the London Stock Exchange.
In the prior year, the Group utilised Adjusted EBITDAM as an APM which
represented the loss for the year before taxation, finance costs,
depreciation, advertising and marketing, share based compensation and listing
costs. In the year ended 31 December 2023, the Group successfully achieved
Adjusted EBITDAM profitability therefore, Adjusted EBITDAM is no longer
presented as an APM.
Company Information
PensionBee Executive Directors Romi Savova (Chief Executive Officer)
Jonathan Lister Parsons (Chief Technology Officer)
Christoph J. Martin (Chief Financial Officer)
PensionBee Non-Executive Directors Mark Wood CBE (Non-Executive Chair)
Mary Francis CBE (Senior Independent Director)
Michelle Cracknell CBE (Independent Non-Executive Director)
Lara Oyesanya FRSA (Independent Non-Executive Director)
Company Secretary Michael Tavener
Registered Number 13172844
Registered Office 209 Blackfriars Road
London
SE1 8NL
United Kingdom
Auditor Deloitte LLP
4 Brindley Place
Birmingham
B1 2HZ
United Kingdom
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