REG - Personal Group - Preliminary Results and Final Dividend
29/03/2022 07:00
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RNS Number : 3135G Personal Group Holdings PLC 29 March 2022
29 March 2022
Personal Group Holdings plc
("the Company" or "Group")
Preliminary Results and Final Dividend
Personal Group Holdings Plc (AIM: PGH), the workforce benefits and services
provider, is pleased to announce its preliminary results for the year ended
31 December 2021.
Following 15 months of unprecedented COVID-19 related restrictions on the
Group's ability to conduct new insurance policy sales, the Group was able to
begin rebuilding the insurance policyholder book in the second half of 2021.
This, combined with the significant strategic progress that the Group was able
to make during the 12 months ended 31 December 2021, underpins the Board's
confidence in the Company's growth trajectory and future prospects.
Financial Highlights
· Group revenue of £74.5m (2020: £71.5m)
· Adjusted EBITDA* of £6.1m, in line with market expectations,
(2020: £10.1m), reflecting the impact of COVID-19 restrictions on premium
income generation, offset by increased contributions from the Pay & Reward
and Other Owned Benefits divisions
· Statutory profit before tax of £4.3m (2020: £8.6m) in line with
adjusted EBITDA
· Basic EPS of 11.5p (2020: 22.1p)
· Strong balance sheet and liquidity with cash and deposits at year end
of £22.9m (2020: £20.2m), and no debt
· Final dividend for 2021 announced post-period end of 5.3p per share
making a full year dividend for 2021 of 10.6p (2020: 18.4p).
Operational Highlights
· Record number of new client wins in a single year, including goods
retailer Homebase, Avanti West Coast and The Royal Mint
· Face-to-face insurance product sales recommenced in July 2021 with
strong activity throughout H2 and individual average daily sales production up
8% vs 2019
· Launched HapiFlex in September, a more complex version of the Group's
benefits platform suitable for enterprise clients, winning significant clients
within first few months
· Offering to the SME sector with the Sage partnership continuing to
show strong momentum. As at 31 December 2021 there were 1,500 paying clients
of Sage Employee Benefits, reaching 20,000 employees and generating over
£1.6m gross annualised recurring revenues
· Continued expansion into Public Sector with 16 new client wins and
opportunity remaining from the Group being on three key Government frameworks
· Martin Bennett assumed the role of Group Chairman in May 2021
· Further defined our growth strategy for the next three years with new
aspirations for the near term
KPIs
· 1.21m in the UK workforce with access to one or more of the Group's
services (2020:1.16m)
· 86 new client wins across the Group (2020: 48), driving the total
unique client number to 387 (2020: 358)
· Annualised Premium income of £24.4m (2020: £27.1m)
· 93,147 insurance payers (2020: 103,497)
· 539,051 activated benefits platform users (includes Hapi and SEB)
(2020: 484,773)
· 72% employee engagement score (2020: 76%), management is pleased that
despite the ongoing effects of the COVID-19 pandemic and a change in survey
provider that the Group's engagement score has remained amongst the upper
quartile of companies surveyed.
Post-Period Trading and Outlook
· Continued strong trading in line with market expectations, including
good momentum in insurance policy sales
· Five year contract extension signed with Sage for Sage Employee
Benefits product in February 2022, providing access to an extensive SMB
customer base
· Contract signed appointing Dame Kelly Holmes as the Group's Chief
Wellbeing Ambassador for 2022
*Adjusted EBITDA is defined as earnings before interest, tax, depreciation,
amortisation of intangible assets, goodwill impairment, share-based payment
expenses, corporate acquisition costs and restructuring costs.
Deborah Frost, Chief Executive of Personal Group, commented:
"2021 saw employers even more conscious of the need to attract, retain and
look after their employees. The demand for our services has therefore never
been greater or more relevant. Highlights of the year include having
recommenced face-to-face insurance sales in H2, meaning we are now firmly back
on a positive trajectory in the division. We also achieved a record number of
client wins, made strong progress with our Sage partnership and developed our
offering significantly in order to allow us to grow with the expanding market
going forward. Importantly, we refreshed our growth strategy and are today
setting out our new aspirations for the mid-term.
2022 has begun well and despite heightened macro-economic uncertainty we have
delivered strong trading in line with expectations. We have already announced
two exciting post-period strategic wins: the agreement of a new five year
contract with Sage and the appointment of Dame Kelly Holmes as our Chief
Wellbeing Ambassador.
Our business sits at the heart of a macro growth trend; the increasing
importance of helping employees to thrive both at work and at home. Driven by
our talented team, we will continue to press forward with our initiatives to
further innovate and expand. I am thoroughly looking forward to capitalising
on our many growth opportunities going forward."
An overview of the preliminary results from Deborah Frost, Chief Executive, is
available to watch
here: https://www.fmp-tv.co.uk/2022/03/29/personal-group-holdings-preliminary-results/
(https://www.fmp-tv.co.uk/2022/03/29/personal-group-holdings-preliminary-results/)
Personal Group Holdings will be hosting a webinar for private investors on
Friday 01 April at 12.00. If you would like to register for the webinar,
please follow this link: https://bit.ly/PGH_FY21_webinar
(https://bit.ly/PGH_FY21_webinar)
-ENDS-
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under The Market Abuse Regulation
(EU 596/2014) pursuant to the Market Abuse (Amendment) (EU Exit) Regulations
2018. Upon the publication of this announcement via a Regulatory Information
Service ("RIS"), this inside information is now considered to be in the public
domain.
For more information please contact:
Personal Group Holdings Plc
Deborah Frost / Sarah Mace +44 (0)1908 605 000
Cenkos Securities Plc
Camilla Hume / Callum Davidson (Nominated Adviser) +44 (0)20 7397 8900
Russell Kerr (Sales)
Alma PR
Susie Hudson / Lily Soares Smith +44 (0)20 3405 0205
personalgroup@almapr.co.uk
Notes to Editors
Personal Group Holdings Plc (AIM: PGH) is a workforce benefits and services
provider. The Group enables employers across the UK to improve employee
engagement and support their people's physical, mental, social and financial
wellbeing. Its vision is to create a brighter future for the UK workforce.
Personal Group provides health insurance services and a broad range of
employee benefits, engagement, and wellbeing products. Its offerings can also
be delivered through its proprietary app, Hapi, and the recently developed
extension to the platform, Hapiflex.
The Group's growth strategy is centred around widening the footprint of the
business into the SME, talent-led & Public Sectors, thereby expanding the
addressable customer base. In addition, it aims to grow in its existing
industrial heartlands, to re-invigorate growth in insurance policyholders and
to drive the use of its SaaS offerings.
Clients include: Arsenal FC, Barchester Healthcare, Merseyrail, Randstad,
Royal Mail Group, The Royal Mint, the Sandwell & Birmingham NHS Trust,
Stagecoach Group plc, and The University of York. 34% of clients are served by
two or more group companies.
For further information on the Group please see www.personalgroup.com
(http://www.personalgroup.com)
CHAIR STATEMENT
In this, my first statement as Chairman of Personal Group, I am delighted to
report on a year of excellent strategic progress for the business. Despite a
longer-than-expected lockdown in H1 and some challenging conditions
throughout, the team achieved a great deal in 2021, accelerating us towards a
strong return to growth in the years ahead.
As a truly purpose-led business the most important achievement to note is the
support we've continued to provide to employees all over the country. In what
has been a very difficult time for many we have continued to pay out claims in
full, supplied invaluable wellbeing support, improved lives with access to
benefits of all varieties, and provided the means to keep scattered colleagues
connected.
We have touched the lives of more than a million people in some way this year,
a proud achievement in line with our guiding vision: to create a brighter
future for the UK workforce.
I would like to take this opportunity to sincerely thank every member of the
Personal Group team who has made this happen, all our partners, clients and of
course our supportive shareholders.
Focused on growth
Whilst our results for the 2021 were impacted, as anticipated, by a reduction
to our insurance income as a direct consequence of 15 months of COVID-19
lockdowns, we have delivered good growth in many other key metrics - total
unique client numbers and activated benefits platform users, for example.
This, I believe, demonstrates the underlying health and optimism in the
business.
Looking beyond the day-to-day, returning to and delivering long-term growth
has been at the forefront of our minds. We are therefore delighted to have won
86 new clients across the Group in 2021 - more than ever before. We have
broadened our offering significantly and further defined our strategy in
pursuit of that ambition. Having experienced a reduction in the size of our
insurance book as a result of COVID-19, we have now recommenced face-to-face
sales in earnest and are determined to not only build back to historic
policyholder numbers, but to surpass them.
Providing broader support, widening our footprint
Our progress this year has been driven by two elements in particular. The
first of these is the broadening of our offering; over the year we have
introduced a host of new benefits and distribution channels and developed
HapiFlex, a more multifaceted version of our benefits platform Hapi, to
address the needs of talent-driven organisations. It has been very well
received. This work builds on our unique selling point: housing a very broad
range of reward, benefits and insurance solutions within one Group.
The second driver has been success in expanding into new industries. In the
public sector we've had 16 new client wins and have opportunities in play on
three key Government frameworks. Our partnership with Sage has also progressed
further - we currently provide 20,000 employees with Sage Employee Benefits
and have access to the 7m UK employees covered by Sage software. In addition,
we have made important inroads into talent-driven businesses with more
companies taking up Innecto's services and early wins secured for our HapiFlex
product.
A winning team
Supporting, communicating with and rewarding our own people has been a key
focus this year. We implemented a flexible hybrid working policy to cater for
a broad variety of personal preferences and spent time reaffirming our core
values as a team. Knowing we are all aligned with a clear purpose to serve
underpins our ability to deliver sustainable growth going forward.
The senior team was bolstered by a number of new operational-lead
appointments. Pleasingly, these were a mixture of experienced external
appointments alongside several internal promotions. As a leadership team we
are always pleased to reward our people and provide career progression
opportunities.
At Board level, I was honoured to step into the Chairman role in May. It is a
great team to be part of and I would like to take this opportunity to again
thank Mark Winlow for his service to the business for many years.
Progression on ESG
I have been greatly encouraged by the strides made in this important area of
the business, one that is a priority at Board level. Over the course of the
year, we have made good progress against a number of initiatives to reduce our
carbon footprint, foster an inclusive, progressive and diverse working
environment and to ensure a robust corporate governance framework, all
enhancing our wider Environmental, Social and Governance (ESG) strategy.
Key highlights in 2021 included installing solar panels at our headquarters,
establishing a Nomination Committee, progress from our diversity and inclusion
working group and a continuation of our long-established commitment to the
wider community through our work with partner charities PACT and The Memusi
Foundation. We have an excellent foundation on which we can continue to build
and our progress on this front will drive meaningful change across our
business going forward.
A market in growth
Part of the reason I joined Personal Group a year ago was the Group's
remarkable growth opportunity. During 2021 the market accelerated further - it
has never been more important for organisations to look after their people.
Whether it is due to the war for talent, wage inflation, the impacts of Brexit
or a host of other factors, companies everywhere are fighting to retain their
talent and appreciate that caring for employees' health, wellbeing, and
building a sense of community has become a non-negotiable.
The growth in the market underpins our prospects as a business. We have a
first-class, proven and broad offering to cater to this growing demand and we
look forward to capitalising on the opportunity.
Dividend
I am pleased to announce that the Board has recommended a final ordinary
dividend of 5.3 pence per share which will be paid to shareholders on 20 May.
This makes a total ordinary dividend for 2021 of 10.6 pence per share and
whilst this dividend reflects our reduced profits for the year it does still
represent a significant proportion of our earnings per share as the Board
seeks to continue our dividend payments in line with historic pay-out ratios.
Outlook
Notwithstanding the increased macro political and economic uncertainty,
including the ongoing conflict in Ukraine, which we will continue to monitor
closely to enable us to take appropriate steps to manage any impact this has
on the Group, looking ahead as a predominantly people-based UK business, the
Board and I are confident about the Group's prospects. Our market has never
been more relevant; we have a strong and driven team in place and a clear
strategy driving us towards growth. We look forward to continuing to provide
more support to more people in the UK over the coming year, helping them to
thrive both in work and in life.
Martin Bennett
Non-Executive Chair
28 March 2022
CE STATEMENT
2021 saw pandemic-related lockdowns continue until mid-July, which had a
significant effect on our, and our clients', business operations. As a result,
and as previously identified, our profits were impacted compared with
pre-pandemic levels. Pleasingly though, while we will continue to see the
impact on our insurance business premium income into 2022, we have now entered
the recovery phase and expect to see Group earnings return to year-on-year
growth from FY22.
The pandemic has also brought into even sharper focus the imperative to build
towards our key strategic goals of widening our offer and making it more
relevant to more sectors and sizes of business - we're building significantly
bigger growth prospects in the medium-term and I am delighted to report on the
substantial progress we've made this year.
I am particularly pleased by the start of the rebuilding of the insurance
book, which having been held back by restrictions for 15 months, began in July
2021, and the growth and development of our small and medium-sized business
(SME) offer. Working together with Sage, we have grown from 30 to 1,500
clients paying for the Sage Employee Benefits platform this year, reaching
c.20,000 employees and with a firm formula now established for scaling the
business between us.
During the pandemic, we became closer to our clients. By listening to our HR
Director market, we have driven development of our products and services in
line with their needs, and now have compelling offers for SME, public sector,
enterprise and talent-driven organisations. We stand out in the workforce
benefits market due to the breadth of our offering, which includes a reward
consultancy capability, market-leading technology platforms, employee-paid
insurances and Let's Connect, our business providing access to consumer
technology through salary sacrifice. As a result of how we are evolving as a
business, we have revised the way we report our segmental results, which is
described in more detail in the CFO statement below.
While COVID-19 impacted our business in the short-term by affecting our
traditional face-to-face insurance sales model, at the same time it has
brought a welcome long-term focus for employers on the importance of
supporting the resilience of employees. Never has the importance of supporting
your team, implementing effective remuneration schemes and ensuring they have
access to impactful benefits been more apparent. This is driving increased
demand for our offering and underpins our confidence for the future.
Sales and Operational review
Pay and Reward
Innecto
Clients often start working with us as they evaluate how effective their
overall pay and reward strategy is, engaging through Innecto, our consultancy
business. Innecto delivered a strong performance in 2021, as demand returned
quickly post-pandemic and we drove sales of consultancy services up towards
2019 levels.
It was also positive to see that our digital analytics tools now generate an
Annualised Recurring Revenue (ARR) of c.£450k, reflecting the high value
clients place on detailed pay analysis and benchmarking. Innecto won work from
49 new clients through the year, demonstrating that our market proposition is
strongly resonating with our target market. This year, as well as general pay
and reward products, we've seen clients implementing responsible reward
strategies, looking hard at gender and ethnicity pay gaps and using our tools
to help them map progress year-on-year.
We've identified a strong drive towards considering the 'Social' element of
ESG metrics in managing pay fairly. The robust relationships we've built with
key decision-makers who return for advice year after year allows us to also
cross-sell wider Group propositions and we anticipate a year of continued
growth in pay and reward in 2022, especially as employee turnover activity and
pay inflation drives more focus on attracting, rewarding and retaining the
workforce.
Benefits platforms
We are at the forefront of the increasing awareness of the 'benefits of
benefits'. Gone are the traditional days of pension and cars for a select few;
today clients are working with us to find more innovative solutions to improve
the wellbeing of their employees, recognising that the pandemic has brought
changing patterns of working from home for the majority of their office-based
staff. Employee communication channels have significantly increased in
importance in reaching employees wherever they are, and our benefits platform
is frequently used as part of the employee communications toolkit for
direct-to-employee messaging.
Hapi and HapiFlex
We were delighted to bring the next generation of our 'Hapi' platform - our
flexible benefits solution, HapiFlex - to market in September 2021, with a
number of client wins already secured in Q4. HapiFlex is a unique platform
that delivers a range of flexible benefits directly to employees via a mobile
and desktop app. It builds on the functionality of the Hapi app while putting
the decision-making process firmly into the hands of employees, making it easy
to build a benefits package that suits their individual needs. HapiFlex allows
us to target a new market sector: organisations looking to offer their
employees a more complex benefits offer. These tend to be talent-driven
organisations, with greater average earnings per employee than our traditional
'enterprise' customer. You can read more about HapiFlex in our Annual Report.
Meanwhile we saw 20 Hapi platform sales in 2021, proof that our employee
engagement platform is competitive in the market and meeting the needs of new
clients.
Sage Employee Benefits
The SME business we've developed with Sage has gone from a standing start last
winter to a growing business serving 20,000 paying employees. SMEs are facing
the same struggle to recruit workforces as bigger organisations, and a
benefits platform gives them an edge in the war for talent. The growth this
year is only the start of our SME story, as we improve the attraction,
retention and lifetime value of our clients. We help our clients create a
winning employee deal that keeps staff performing at their best, day after
day, in all sizes and sectors.
Affordable insurance
Our insurance business is the resilient, recurring revenue engine of the
business, which served over 93,000 insurance-payers in 2021, with more than
230,000 policies in force. We resumed face-to-face insurance sales in July,
and although it has taken time to fully re-start the engine after a gap of 15
months, we are working towards achieving full strength in the team and
conversion rates are high.
We're serving new clients alongside existing; our partnership with Royal Mail
Group is particularly successful. With individual salespeople's average daily
sales up 8% on 2019 pre-pandemic numbers, it is clearer than ever that our
simple insurances are highly valued by our customers, and our purpose; to
'protect the unprotected and connect the unconnected' has never been more
important.
Interestingly, we've seen an increase in sales of our life product from 20%
towards 30% of sales. What's more, these sales are not all substitutional -
we're seeing higher levels of people with more than one policy and therefore
higher levels of policy premium income. This trend re-emphasises that our
products are relevant to the market we serve, and invaluable in roles which
don't offer sick pay and death in service as part of their standard benefits
package.
Through the pandemic lockdowns we developed more routes to market - virtual
visits, telesales, and in-app insurance. Whilst face-to-face sales is still
our primary distribution method, we've developed effective, lasting and
lower-cost new channels to add to our sales model which also allows us to
reach a wider proportion of customers. We look forward to seeing the results
of our developing insurance strategy over the medium term as early signs are
promising.
Other Owned Benefits
Let's Connect
During 2021 the segment began to return to normal trading as schemes began to
operate at pre-COVID levels with 19 new clients won in the period.
The supply shortages, which heavily impacted the second half of 2020,
continued to affect the business during the period. However, this was
mitigated by innovation in the product range to incorporate white goods, gym
equipment and outdoor furniture.
This broadening of the product offering coupled with new business wins and an
expected return to full supply of sought after technology products gives
reason to be optimistic for the segment's performance moving into 2022.
Growth strategy
We aim to build workforce resilience for clients, helping employees thrive in
work and in life.
Over the three years I have led the business, we have consistently executed on
our strategy to widen our business proposition beyond insurance sales through
our enterprise clients. Despite two years of pandemic restrictions, we added
86 new clients across the Group in 2021 and continue to see evidence of new
client interest in new sectors. We are focused on building a business with
room to grow in the medium and long-term, and those foundations are now in
place.
In addition to driving organic growth, we also continue to consider
acquisition opportunities. In line with our business model, we would consider
acquisitions which increase our scale in an existing area, accelerate growth
into new, complementary fields or which add in third-party suppliers to our
benefits proposition.
Our refreshed strategy to substantially grow the business over the medium-term
is based on three key areas for growth:
1. Driving insurance
a. Our overarching strategy continues to focus on developing and maximising
opportunities for growth. Our insurance business has particular resonance in
our core enterprise markets, and we are continuing to develop opportunities
with new and existing accounts and improve sales penetration through different
channels whilst still retaining our central employer offer of face-to-face
meetings with all employees.
b. Continuing to improve policyholder retention is fundamental to our
growth. We have made important strides by listening to policyholders, offering
payment holidays where needed and ensuring we have payment back-up beyond
company payroll. Our Keep My Cover alternative payment method resulted in
£1.1m of premium income, which would previously have been lost, being
collected by direct debit in 2021 and is now in place for 28% of policyholders
who currently pay through payroll. Our goal is to significantly increase the
percentage of policyholders with alternative payment methods on their account.
c. In addition, we are developing new products and channels to market
in order to reach new audiences through different types of employer. This
gives us greater distribution opportunities and allows cross-selling from
Let's Connect and Innecto client bases.
2. Transforming Reward & Benefits (platform growth)
a. Our focus on driving contracted recurring revenue and investment in
Innecto's digital platform by upgrading existing and developing new products
is feeding into a market keen to remove manual processes and drive improved
data access on pay and reward
b. Workforce benefits is a fast-developing area where we are creating
innovation with our product range: Hapi and HapiFlex. Adding new market
opportunities as well as a clearer offer to our existing markets is
now showing traction with increased sales and driving bottom-line growth in
the medium-term.
3. Accelerating SME offer
a. The SME market in the UK is vast, and mainly under-served due to the
challenges of reaching the sector at scale. Our partnership with Sage allows
us to directly reach the addressable market of seven million UK employees in
companies employing under 250 employees, at realistic cost. Over 2021 we moved
through the start-up phase and can now really capitalise on growth by
professionalising our joint operation. To meet the needs of this market we
have invested in new talent to drive digital customer acquisition and improve
our customer journey.
Alongside this refreshed strategy, we are today announcing a number of
aspirations for the mid-term:
1. Over 80% employee engagement
2. Over 75% customer approval rating
3. Serving >1.5m employees
4. Driving in-year premium income over £35m
5. Unlocking EBITDA growth
A winning team
Employee engagement scores were at 72% this year, and the Board and I are
focussed on building this beyond 80% over the next three years, which in turn
will drive customer satisfaction, client satisfaction and increased innovation
and commerciality.
The Senior Leadership Team has been tightened and refreshed in the last few
years, bringing new skills and perspectives to the Group. We now have an
excellent team in place to execute on our growth ambition.
Outlook
Our strong team, together with the technology we've developed, the partnership
we have with Sage, our years of experience and strong balance sheet, combined
with a hugely supportive external market environment, give me great confidence
in what we can achieve in the next three to five years. We recognise that the
needs and required skill-sets of the business evolve, and we will continue to
invest in people at different levels to effect the change we need.
I would like to thank the senior team, our people and the Board for their
support, challenge and enthusiasm for the goals we've set ourselves. We are
excited about where we are going next.
Deborah Frost
Group Chief Executive
28 March 2022
CFO STATEMENT
Group revenue
Group revenue for the year of £74.5m (2020: £71.5m) reflects a varied
performance across the different business areas and the continued contribution
from recurring revenue streams.
As anticipated, we saw a reduction to earned premium as a direct consequence
of 15 months of COVID-19 lockdowns restricting our ability to carry out our
traditional face-to-face selling of insurance. Despite this, as at 31 December
2021 we continue to have over £24m of annualised premium income, the majority
of which are renewable on weekly or monthly rolling contracts.
Outside of insurance, all other areas of the business continued to grow.
Digital platform subscription income from our internally developed benefits
platform increased by over 40% year on year, driven mainly by our expansion
into the SME sector through our partnership with Sage. Our pay & reward
subsidiary, Innecto, also put in a strong performance with the combination of
consultancy income and digital subscription income from their proprietary HR
solutions up by a third. Annual recurring revenue across all the Group's
digital platforms now stands at £3.6m. Sales of technology and other products
to employers as part of their employee benefit provision though the Group's
subsidiary PG Let's Connect also rebounded somewhat from the supply chain
issues faced in 2020 although these remained in part during its peak trading
period. In addition, income from voucher resale though the benefits platform
continued to grow and whilst this predominantly represents pass-through
revenue, it does continue to demonstrate the value of the provision to our
clients.
Adjusted EBITDA*
Adjusted EBITDA* for the year was £6.1m (2020: 10.1m).
The key driver of the decline was the reduction in premium income and
consequential underwriting profit, which was compounded by the increased cost
of scaling up the field sales team back up towards pre-COVID-19 levels in the
second half of the year. Offsetting this, we saw increased contribution from
both our pay and reward business and PG Let's Connect, in line with their
increased revenue contributions. Outside of this, the reduction in adjusted
EBITDA also reflected investment in both our sales and marketing team and the
general infrastructure and people within the business to ensure we are in the
best place possible to support future growth.
We believe adjusted EBITDA* remains the most appropriate measure of
performance for our business, reflecting the underlying profitability of the
business and removing the impact of one-off items arising from past
acquisitions on the Group's reported profit before tax. The definition remains
unchanged from previous years.
Profit before and after tax
Profit before tax for the year was £4.3m (2020: £8.6m). This reflects both
the reduction in adjusted EBITDA* and the increased amortisation charge
arising from continued investment in the Group's proprietary software. The tax
charge for the year was £0.7m (2020: £1.7m), and profit after tax for the
year £3.6m (2020: £6.9m).
EPS
Resulting earnings per share was 11.5p (2020: 22.1p).
Dividend
The Board has recommended a final ordinary dividend of 5.3 pence per share,
making a total ordinary dividend for 2021 of 10.6 pence per share. Whilst this
dividend reflects our reduced profits for the year it does exceed recent
pay-out ratios and reflects both the fact that the Group remains strongly
capital generative and the short-term impact of COVID-19 on its results.
As noted with the release of these accounts, a final dividend of 5.3p will be
paid on 20 May 2022 to members on the register as at 8 April 2022 (the record
date). Shares will be marked ex-dividend on 7 April 2022. The last day for
elections will be on 28 April 2022.
Balance sheet
As at 31 December 2021 the Group's balance sheet remained strong, with cash
and deposits of £22.9m (2020: £20.2m) and no debt.
The Group's main underwriting subsidiary, Personal Assurance Plc (PA),
continues to maintain a conservative solvency ratio of 357% (unaudited), with
a surplus over its Solvency Capital Requirement of £3.5m. The Company has
consistently maintained a prudent position in relation to its Solvency II
requirement. Personal Assurance (Guernsey) Limited, the Group's subsidiary
which underwrites the death benefit policy, also maintained a healthy solvency
ratio of 220% (unaudited), under its own regime.
No impairment was deemed necessary for the goodwill balances held in respect
of the acquisitions of PG Let's Connect and Innecto.
Segmental Results
To reflect how our business has evolved, and that in many cases our clients
utilise our services across multiple business areas, we have changed the way
we present our segmental results. We are now reporting four core segments as
detailed in the table below.
For each of the segments, the adjusted EBITDA* contribution comprises the
gross profit of that segment together with any costs associated directly with
the operation of that segment. In addition, sales and marketing costs and
other central costs that are not directly attributable to a segment, such as
Finance, HR, Depreciation, Amortisation and Group Board expenses are no longer
allocated to a segment but are shown separately as 'Group Admin & Central
Costs'.
We believe the new presentation provides greater transparency to enable the
impact of top line growth on adjusted EBITDA* contribution for each area of
the business to be understood.
Segment Description Income Streams
Pay & Reward Provision of a full reward service to employers through the Group's pay and Consultancy, digital platform subscriptions
reward subsidiary, Innecto
Benefits Platform Provision of a benefits platform to employers both directly (Hapi) and through Digital platform subscriptions, commissions from third party benefits which
channel partners, currently Sage for our SME solution sit on the platform
Affordable Insurance A directly owned benefit, provision of simple insurance products underwritten Premium income
by Group subsidiaries
Other Owned Benefits Other directly owned benefits: sale of technology and other products to Retail sales directly to employers, commission received from the introduction
employers as part of their employee benefit provision through the group's of third-party finance
subsidiary, Let's Connect
Pay & Reward: Innecto
Innecto, the Group's pay and reward subsidiary, put in a strong performance in
2021, with its consultancy income up 50% on 2020 as demand from HRDs looking
to retain and attract their employees reignited. Digital subscription income
from its proprietary HR solutions also increased by 33% on the previous year.
Annualised Recurring Revenue on these products stood at £0.4m as at 31
December 2021 and is set to increase with the introduction of a further
product, Advance, in January 2022.
Benefits Platform
Revenue from digital platform subscriptions and commissions from third party
benefit suppliers which sit on the benefits platform rose to £3.3m in 2021
(2020: £2.4m).
Whilst subscriptions for our enterprise platform, Hapi, remained relatively
static in 2021, the introduction of HapiFlex provides an opportunity to both
target a new market sector and to yield higher margins from a more
sophisticated and complex product.
The main driver of the growth in revenue in this area of the business was the
expansion into the SME market with Sage Employee Benefits, the Group's SME
proposition being taken to market through its partner Sage, and this is set to
continue with the signing of a new five-year contract in February 2022.
As at 31 December 2021 the Annualised Recurring Revenue from digital platform
subscriptions across all channels stood at £3.1m.
Despite increased revenue Adjusted EBITDA contribution remained flat year on
year at £2.1m, reflecting investment made in the infrastructure to support
the platform, outside of capitalised investment, for future growth.
Insurance
As anticipated, premium income from the Group's core insurance business in
2021 reduced by £4.1m to £24.7m (2020: £28.8m).
This reflected the fact that the lockdowns enforced on us by COVID-19 had a
direct impact on our ability to write new insurance sales through our
traditional face-to-face model for 15 months from the end of March 2020.
Whilst we were able to mitigate this in part through our adoption of virtual
visits and telesales, our annualised new business insurance premiums in 2021
were £3.7m (2020: £2.4m, 2019: £9.0m), with around 15% of this coming from
the new, alternative channels. Our face-to-face sales activity recommenced in
earnest in July 2021, with availability strong across our increased employee
base, and we have subsequently seen the insurance book starting to rebuild. As
at 31 December 2021 we have in excess of £24m of annualised premium income
renewable on weekly or monthly rolling contracts.
Our retention rates for existing policyholders remained strong during 2021
with both first year and year-on-year retention rates up on pre-pandemic
levels. This reinforces the value that policyholders place on our simple,
low-cost hospital, convalescence and death benefit plans, that have been
particularly relevant to our policyholder base of essential and key workers
during the pandemic.
Notwithstanding the short-term impact of COVID-19, the Group's insurance
income remains a high quality and relatively stable revenue stream to the
Group.
Claims ratios for the year remained stable at 24.5% (2020: 24.4%). The
increased loss ratio on death benefit continued into 2021 but, as in 2020, was
mitigated by an offsetting reduction for hospital and convalescence in
comparison to historic averages, reflective of the capacity of the NHS being
limited as a result of COVID-19.
Adjusted EBITDA* of £11.0m for the year (2020: £15.1m), reflects both the
reduction in underwriting profit and the additional costs associated with the
scaling back up of the face-to-face sales team in the second half of the year
towards pre-pandemic levels.
Other Owned Benefits:
PG Let's Connect
PG Let's Connect, which provides technology and other products to employers as
part of their employee benefit provision, saw revenues increase to £18.2m
(2020: £16.4m), rebounding in part from the supply chain issues they
experienced in 2020 but also benefitting from the return of a number of
schemes which had deferred in 2020 due to the pandemic.
Whilst some ongoing nationwide supply issues remained throughout the year,
broadening the product range helped mitigate the impact and saw order numbers
up 21% on pre-pandemic levels, demonstrating the continued popularity of the
benefit for employees.
Adjusted EBITDA* increased to £0.7m (2020: £0.5m) reflecting the higher
revenues together with a slight increase in gross margin.
Group Administration Expenses and Central Costs
The increase in Group administration and central costs to £8.2m (2020:
£7.0m) predominantly reflects the additional investment made in Sales and
Marketing during the year.
Sarah Mace
Chief Financial Officer
28 March 2022
Consolidated Income Statement
2021 Restated*
2020
£'000 £'000
Gross premiums written 25,050 29,265
Outward reinsurance premiums (163) (182)
Change in unearned premiums (208) (245)
Change in reinsurers' share of unearned premiums (9) (8)
( ) (_________) (_________)
Earned premiums net of reinsurance 24,670 28,830
Employee benefits and services income 22,753 19,649
Voucher resale income 26,852 22,735
Other income 215 236
Investment income 23 74
( ) (_________) (_________)
Revenue 74,513 71,524
( ) (_________) (_________)
( ) ( ) ( )
Claims incurred (6,049) (7,031)
Insurance operating expenses (4,860) (4,171)
Employee benefits and services expenses (22,370) (19,890)
Voucher resale expenses (26,894) (22,999)
Other expenses 82 (258)
Group administration expenses (9,779) (8,437)
Share based payments expenses (169) (8)
Charitable donations (100) (100)
(___________) (___________)
Expenses ( ) (70,139) (62,894)
(___________) (___________)
( )
Operating profit 4,374 8,630
Finance costs (32) (73)
(_________) (_________)
Profit before tax 4,342 8,557
Tax (745) (1,663)
(_________) (_________)
Profit for the year 3,597 6,894
The profit for the year is attributable to equity holders of Personal Group
Holdings Plc
Pence Pence
Earnings per share
Basic 11.5 22.1
Diluted 11.5 22.1
There is no other comprehensive income for the year and, as a result, no
statement of comprehensive income has been produced. All operations are
classed as continuing activities.
*While the results remain unchanged, the presentation of the prior year has
been restated to add clarify to the reader. See Note 1 for further details.
Consolidated Balance Sheet at 31 December 2021
2021 2020
£'000 £'000
ASSETS
Non-current assets 12,696 12,696
Goodwill
Intangible assets 1,637 1,254
Property, plant and equipment 5,033 5,456
(_________) (_________)
19,366 19,406
(__)(______) (________)
Current assets
Financial assets 2,596 2,587
Trade and other receivables 14,035 18,346
Reinsurance assets 108 78
Inventories - Finished Goods 898 861
Cash and cash equivalents 20,291 17,589
Current tax assets 310 55
(_________) (_________)
38,238 39,516
(___)(______) (_________)
Total assets 57,604 58,922
(__________) (__________)
Consolidated Balance Sheet at 31 December 2021
2021 2020
£'000 £'000
EQUITY
Equity attributable to equity holders
of Personal Group Holdings Plc
Share capital 1,561 1,561
Share premium 1,134 1,134
Share based payment reserve 158 -
Capital redemption reserve 24 24
Other reserve (32) (21)
Profit and loss reserve 38,436 38,076
(_________) (_________)
Total equity ( ) 41,281 40,774
(_________) (_________)
LIABILITIES
Non-current liabilities
Deferred tax liabilities 478 399
Trade and other payables 402 352
Current liabilities ( )
Trade and other payables 12,356 14,274
Insurance contract liabilities 3,087 3,123
( _________) ( _________)
( ) 15,443 17,397
( _________) ( _________)
( ) ( _________) ( _________)
Total liabilities ( ) 16,323 18,148
(_________) (_________)
( ) ( _________) ( _________)
Total equity and liabilities ( ) 57,604 58,922
(_________) (_________)
( )
Consolidated Statement of Changes in Equity for the year ended 31 December
2021
Equity attributable to equity holders of Personal Group Holdings Plc
Share capital Share Capital redemption reserve Share Based Payment reserve Other reserve Profit and loss reserve Total equity
Premium
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance as at 1 January 2021 1,561 1,134 24 - (21) 38,076 40,774
(________) (______) (______) (______) (______) (________) (________)
Dividends - - - - - (3,244) (3,244)
Employee share-based compensation - - - 158 - 11 169
Proceeds of SIP* share sales - - - - - 24 24
Cost of SIP shares sold - - - - 28 (28) -
Cost of SIP shares purchased - - - - (39) - (39)
(________) (________) (________) (________) (________) (________) (________)
Transactions with owners - - - 158 (11) (3,237) (3,090)
(________) (________) (________) (________) (________) (________) (________)
Profit for the year - - - - - 3,597 3,597
(________) (________) (________) (________) (________) (________) (________)
(________) (_______) (________) (________) (________) (________) (________)
Balance as at 31 December 2021 1,561 1,134 24 158 (32) 38,436 41,281
(________) (______) (______) (________) (__________) (_________) (_________)
*PG Share Ownership Plan (SIP)
Consolidated Statement of Changes in Equity for the year ended 31 December
2020
Equity attributable to equity holders of Personal Group Holdings Plc
Share capital Share Capital redemption Reserve Other reserve Profit and loss reserve Total equity
Premium
£'000 £'000 £'000 £'000 £'000 £'000
Balance as at 1 January 2020 1,561 1,134 24 (230) 35,526 38,015
(________) (______) (______) (______) (________) (________)
Dividends - - - - (4,147) (4,147)
Employee share-based compensation - - - - 8 8
Proceeds of SIP* share sales - - - - 26 26
Cost of SIP shares sold - - - 231 (231) -
Cost of SIP shares purchased - - - (22) - (22)
Shares issued in the year - - - - - -
( ) (________) (________) (________) (________) (________) (________)
Transactions with owners ( ) - - - 209 (4,344) (4,135)
( ) (________) (________) (________) (________) (________) (________)
Profit for the year - - - - 6,894 6,894
( ) (________) (_______) (________) (________) (________) (________)
Balance as at 31 December 2020 ( ) 1,561 1,134 24 (21) 38,076 40,774
( ) (________) (______) (______) (________) (__________) (_________)
*PG Share Ownership Plan (SIP)
Consolidated Cash Flow Statement
2021 2020
£'000 £'000
Net cash from operating activities (see next page) 7,588 8,100
(__________) (__________)
Investing activities ( ) ( ) ( )
Additions to property, plant and equipment (236) (341)
Additions to intangible assets (981) (424)
Proceeds from disposal of property, plant and equipment 1 382
Purchase of financial assets (9) (22)
Interest received 23 74
(__________) (__________)
Net cash used in investing activities (1,202) (331)
(__________) (__________)
Financing activities
Interest paid 2 (2)
Purchase of own shares by the SIP (35) (22)
Proceeds from disposal of own shares by the SIP 20 26
Payment of lease liabilities (427) (511)
Dividends paid (3,244) (4,147)
(__________) (__________)
Net cash used in financing activities (3,684) (4,656)
(__________) (__________)
Net change in cash and cash equivalents 2,702 3,113
Cash and cash equivalents, beginning of year 17,589 14,476
(__________) (__________)
Cash and cash equivalents, end of year 20,291 17,589
(_________) (_________)
Consolidated Cash Flow Statement 2021 2020
£'000 £'000
Operating activities
Profit after tax 3,597 6,894
Adjustments for 966 1,003
Depreciation
Amortisation of intangible assets 585 470
Profit on disposal of property, plant and equipment 11 (150)
Interest received (23) (74)
Interest charge 32 73
Share-based payment expenses 169 8
Taxation expense recognised in income statement 745 1,663
Changes in working capital
Trade and other receivables 4,280 247
Trade and other payables (1,817) 384
Inventories (37) (115)
Taxes paid (920) (2,303)
(__________) (__________)
Net cash from operating activities 7,588 8,100
(__________) (__________)
Notes to the Financial Statements
1 Segment analysis
The segments used by management to review the operations of the business are
disclosed below.
1) Affordable Insurance
Personal Assurance Plc (PA), a subsidiary within the Group, is a PRA regulated
general insurance Company and is authorised to transact accident and sickness
insurance. It was established in 1984 and has been underwriting business since
1985. In 1997 Personal Group Holdings Plc (PGH) was created and became the
ultimate parent undertaking of the Group.
Personal Assurance (Guernsey) Limited (PAGL), a subsidiary within the Group,
is regulated by the Guernsey Financial Services Commission and has been
underwriting death benefit policies since March 2015.
This operating segment derives the majority of its revenue from the
underwriting by PA and PAGL of insurance policies that have been bought by
employees of host companies via bespoke benefit programmes. During 2020 PAGL
began underwriting employee default insurance for a proportion of LC
customers.
2) Other Owned Benefits
This segment constitutes any goods or services in the benefits platform supply
chain which are owned by the Group. At present this is made up of technology
salary sacrifice business trading as PG Let's Connect, purchase by the Group
in 2014.
3) Benefits and Platform
Revenue this segment relates to the annual subscription income and other
related income arising from the licensing of Hapi, the Group's employee
benefit platform. This includes sales to both the large corporate and SME
sectors.
4) Pay and Reward
Pay and Reward refers to the trade of Innecto, a pay and reward consultancy
Company purchased in 2019. Revenue in this segment relates to consultancy and
license income derived from selling Innecto digital platform subscriptions.
5) Other
The other operating segment consists exclusively of revenue generated by
Berkely Morgan Group (BMG) and its subsidiary undertakings along with any
investment and rental income obtained by the Group. This segment also includes
revenue generated from the resale of vouchers.
Segment analysis Restated*
2021 2020
£'000 £'000
Revenue by segment
Affordable Insurance 24,670 28,830
Other Owned Benefits 18,214 16,420
Benefits Platform 6,051 4,901
Benefits Platform - Group Elimination (2,748) (2,547)
Pay & Reward 1,236 875
Other Income
Voucher resale 26,852 22,735
Other 215 236
Investment income 23 74
(__________) (__________)
Group Revenue 74,513 71,524
(__________) (__________)
Adjusted EBITDA* contribution by segment
Affordable Insurance 11,012 15,082
Other Owned Benefits 730 469
Benefits Platform 2,098 2,092
Pay & Reward 303 (255)
Other 279 (212)
Admin and central costs (8,228) (6,965)
Charitable Donations (100) (100)
(__________) (__________)
Adjusted EBITDA* 6,094 10,111
(__________) (__________)
Depreciation (966) (1,003)
Amortisation (585) (470)
Interest (32) (73)
Share Based Payments Expenses (169) (8)
(__________) (__________)
Profit before tax 4,342 8,557
(__________) (__________)
2. Taxation comprises United Kingdom corporation tax of £745,000 (2020:
£1,717,000) and a deferred tax charge of £79,000 (2020: £97,000)
3. The basic and diluted earnings per share are based on profit for the
financial year of £3,597,000 (2020: £6,894,000) and on 31,172,720 basic
(2020: 31,164,809) and 31,213,537 diluted (2020: 31,205,375) ordinary shares,
the weighted average number of shares in issue during the year.
4. The total dividend paid in the year was £3,244,000 (2020: £4,147,000)
This preliminary statement has been extracted from the 2021 audited financial
statements that will be posted to shareholders in due course. The statutory
accounts for each of the two years to 31 December 2021 and 31 December 2020
received audit reports, which were unqualified and did not contain statements
under section 498 (2) or (3) of the Companies Act 2006. The 2020 accounts
have been filed with the Registrar of Companies but the 2021 accounts are not
yet filed.
5. As described in the CFO statement, during the year management took the
decision to change the format of the segmental analysis to better reflect the
Group's business activities. As a result, while there are no adjusting entries
to the financial results in these financial statements, the layout of both the
consolidated income statement and the segmental analysis have been amended,
with prior year results restated in this new format to ensure comparability
across the two reporting periods.
Alternative Performance Measures
The Group uses an alternative (non-Generally Accepted Accounting Practice
(non-GAAP)) financial measure when reviewing performance of the Group,
evidenced by executive management bonus performance targets being measured in
relation to Adjusted EBITDA*. As such, this measure is important and should be
considered alongside the IFRS measures.
For Adjusted EBITDA*, the adjustments taken into account in addition to the
standard IFRS measure, are those that are considered to be non-underlying to
trading activities and which are significant in size. For example, goodwill
impairment is a non-cash item relevant to historic acquisitions; share-based
payments are a non-cash item which have historically been significant in size,
can fluctuate based on judgemental assumptions made about share price and have
no impact on total equity; corporate acquisition costs and reorganisation
costs are both one-off items which are not incurred in the regular course of
business.
This methodology is unchanged from previous years.
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