REG - Personal Group - Preliminary Results and Final Dividend
28/03/2023 07:15
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RNS Number : 3932U Personal Group Holdings PLC 28 March 2023
28 March 2023
Personal Group Holdings plc
("the Company", "Personal Group" 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 2022.
The Group has successfully delivered growth across the majority of its KPIs,
increasing total client numbers and reporting double digit growth in key areas
of recurring revenue. The strength of trading in the second half of the year
underpins the Board's confidence that Personal Group is firmly back on a
growth trajectory and set to benefit from the investments that have been made
in the offering and team.
Financial Highlights
· Group revenue up 16% to £86.7m (2021: £74.5m)
· Adjusted EBITDA* of £6.0m, in line with market expectations,
(2021: £6.1m), showing significant half on half EBITDA growth (H2 2022
adjusted EBITDA of approximately £4.5m, H1 2022: £1.5m)
· Adjusted profit before tax** of £3.8m (2021: £4.3m profit), with a
statutory loss before tax of £6.8m as a result of £10.6m goodwill impairment
of Let's Connect
· Adjusted Basic EPS** of 10.6p (2021: 11.5p), with a statutory Basic
EPS of (23.1)p (2021: 11.5p)
· Strong balance sheet and liquidity, with cash and deposits at year
end of £18.7m (2021: £22.9m) and no debt
· Final dividend for 2022 of 5.3p per share, making a full year
dividend for 2022 of 10.6p (2021: 10.6p)
Operational Highlights
· Continued expansion of our customer base and high retention rates
o Significant new contracts secured with 101 new clients (2021: 86),
including Secure Trust Bank, Telford & Wrekin Council and the National
Trust
o 1.4m employees in the UK workforce with access to one or more of the
Group's services (2021: 1.2m)
o High client and customer retention rates, evidencing the value placed on
our products
· Increased Affordable Insurance sales provide basis for future growth
o Annualised Premium income up 15% to £28.0m (2021: £24.4m)
o New insurance sales of £9.5m, up 157% (2021: £3.7m); at the highest
level seen since 2018, benefiting from investments in our sales team.
o Claims ratios increased to 27.7% (2021: 24.5%) higher than historic norms
as hospital admittances and visits increased post COVID-19 lockdowns. As the
NHS continues to address long waiting lists, we anticipate this continuing in
the short to medium term.
· Benefits platform providing increased contribution to the Group
o Subscriptions for our enterprise platform, Hapi, gained momentum with
Annualised Recurring Revenue (ARR) increasing by 29% to £2.0m (2021: £1.6m)
o Expansion into SME market also continued to grow at pace, with Sage
Employee Benefits, the Group's SME proposition, being taken to market through
Sage achieving gross ARR by end of 2022 of £3.0m (2021: £1.6m) and 50,000
paying employees on the platform.
· Challenging H2 for Let's Connect
o Consumer technology benefits business impacted by industrial action within
in its major client, compounding existing supply chain availability and
impacting its peak trading period, leading to a goodwill impairment.
o Other clients performed well, emphasising the cost-of-living benefit for
employees in being able to spread the cost of technology purchases without the
interest charges and credit checks they face on the High Street.
· M&A adds to Pay & Reward division footprint
o Acquisition of Quintige Consulting Group in July 2022 presents
opportunities for cross-selling and adding new clients.
Confident Outlook
· Growth in insurance book and increased levels of ARR provide high
levels of visibility of revenues for 2023. This, together with investments in
the development of the Hapi platform and expansion of our Pay and Reward
offering provide confidence in another successful year
· Trading has continued positively into the first quarter, including
good momentum in new insurance policy sales.
· While cognisant of the ongoing economic challenges, the Board looks
to the future with a strong sense of optimism and confidence in meeting market
expectations for FY23.
*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.
** Excluding goodwill impairment of Let's Connect of £10.6m.
Deborah Frost, Chief Executive of Personal Group, commented:
"I have a great deal of satisfaction on looking back on a pivotal year for
Personal Group; we delivered a strong year of new business development,
insurance book growth and expansion in our key market focus of Small and
Medium Business. I am very proud of how my team have rebuilt the business post
the impact of the pandemic, delivering double digit growth in many key areas
of our book of recurring revenue. Annualised Premium Income ends the year 15%
ahead of last year's close, new client numbers are up 17% and we have hit our
Sage channel target of 50,000 paying employees from 2,800 companies.
"Our business is now significantly stronger and more diversified than it was
in 2019, our last year of full trading pre-pandemic. Amidst an uncertain wider
trading environment, the need for organisations to look after their people has
never been more important, and whilst our core business plays a very important
role in our future, we have expanded our reach to different sectors of the
economy, widening our market opportunity for growth in the future. We are now
seeing the investments we have made in sales, marketing and technology
bearing fruit through the number of new clients we are engaging with and
delivering for. Whilst we have planned for 2023 to be another difficult year
for the economy, we are confident our offer resonates with our target markets,
and we will continue to see growth over the forthcoming years."
An overview of the preliminary results from Deborah Frost, Chief Executive, is
available to watch
here: https://www.fmp-tv.co.uk/2023/03/28/personal-group-tvclip/
(https://www.fmp-tv.co.uk/2023/03/28/personal-group-tvclip/)
Personal Group Holdings will be hosting a webinar for private investors on
Friday 31 March at 12.00. If you would like to register for the webinar,
please follow this link:
https://www.investormeetcompany.com/personal-group-holdings-plc/register-investor
(https://www.investormeetcompany.com/personal-group-holdings-plc/register-investor)
-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 Via Alma PR
Cenkos Securities Plc
Camilla Hume / Callum Davidson (Nominated Adviser) +44 (0)20 7397 8900
Russell Kerr (Sales)
Alma PR
Caroline Forde +44 (0)20 3405 0205
Joe Pederzolli personalgroup@almapr.co.uk
Kinvara Verdon
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.
Group Clients include: Airbus, B & Q, Barchester Healthcare, British
Transport Police, The Prince's Trust, Randstad, Royal Mail Group, The Royal
Mint, the Sandwell & Birmingham NHS Trust, Stagecoach Group plc, and The
University of York.
For further information on the Group please see www.personalgroup.com
(http://www.personalgroup.com)
CHAIR STATEMENT
I am pleased to report on a year of progress, in which the team have again
delivered on our strategic and financial objectives. The strength of trading
in the second half of the year underpins our confidence that we are now firmly
back on a growth trajectory, set to benefit from the investments we have made
in our offering and team.
It is evident to me that the team takes great pride in our role in supporting
people's physical, mental, social and financial wellbeing, working together to
achieve our vision: to create a brighter future for the UK workforce. This
clear sense of purpose, with a passion for clients, partners and the people
within the business, has stood Personal Group in good stead through the
economic challenges of recent years, and we have emerged a stronger and more
diversified business as a result. I would like to thank the team for their
continued hard work and embodiment of the Company's values.
Achieving growth
We have successfully delivered growth across a number of our KPIs, increasing
our total client numbers and reporting double digit growth in key areas of our
recurring revenue.
Of particular note in the year was the reinvigoration of the insurance sales
model which had been so affected by the pandemic. Recruiting the right people,
training, and getting them back in to see clients was by no means a simple
task and has been achieved exceptionally well, exemplified by the consecutive
record new insurance sales achieved in November and December. Whilst this
investment in the field sales team impacts our profits in the short term the
benefits of the resultant growth in the insurance book will be seen in future
years.
Across the benefits platform we won new customers and secured valuable new
partners, including the signing of a multi-year extension to our engagement
with Sage to power the Sage Employee Benefits platform which is reflective of
the success of our partnership to date. Following its establishment several
years ago, momentum accelerated in 2022, resulting in an increased gross
Annualised Recurring Revenue of £3.0m (2021: £1.6m) with c50,000 paying
employees on the platform at the end of the year and we are confident that
this will continue to be a growth engine for the business.
The acquisition of Quintige Consulting Group Limited ("QCG") in July has
enhanced the Group's overall pay and reward offering and consolidated the
Group's position as a leading provider of employee services in the UK.
Integration of the QCG team into our organisation is progressing well and we
are already benefiting from shared knowledge and activities.
We are, of course, not immune to the disruption taking place across the UK,
whether that be strikes or ongoing supply chain issues. As described in our
trading update issued in January 2023, our consumer technology business, Let's
Connect, had a challenging second half of the year, as a result of the
industrial action taking place at its major client. This continued action has
had implications as we have moved into the start of 2023, and as a result, the
current salary sacrifice technology scheme we run with them is no longer
appropriate for them in its current format. Whilst not reflective of our
overall offering, taken alongside continued uncertainties around supply chain
and ongoing margin pressures, in undertaking our annual impairment review of
the goodwill held from the acquisition of Let's Connect in 2014, we have made
the prudent decision to fully impair the £10.6m of goodwill created on
acquisition. Whilst this has impacted our statutory profit before tax for
the year it is a non cash item and does not affect the financial strength of
the business.
We are all cognisant of operating within an inflationary environment and the
management team have negotiated this well, through the careful management of
resources and considered investment. With inflation set to remain high
throughout 2023, we will continue to carefully balance the investment in the
business with profitable growth.
A strengthened team
Personal Group places the success and happiness of people at its heart,
demonstrated by the very nature of our offering. Internally, this ethos has
seen the business maintain our high staff retention rates, whilst also
supporting the hiring of additional talented senior managers to strengthen the
team as well as the introduction of the QCG team in July. In April, we
welcomed Ciaran Astin to the Board as Non-Executive Director. Ciaran brings
with him a wealth of sales, digital and marketing experience.
ESG
As a Board, we are committed to high standards of ESG and made good progress
against our stated objectives during the year, building on our existing
foundation of responsible business practice. We have made progress in reducing
our carbon footprint, fostering an inclusive, progressive and diverse working
environment and ensuring a robust corporate governance framework, all
enhancing our wider Environmental, Social and Governance (ESG) strategy.
It is in the area of societal good that we believe we can have the most
positive impact, both through our own actions and providing the tools for our
customers to similarly effect change. You can read more on these efforts
within the ESG section of our Annual Report.
A growing market
The need for organisations to look after their people has never been more
important. Caring for health, wellbeing, and building a sense of community is
crucial to modern companies and represents the ongoing opportunity for
Personal Group. In this current macroeconomic environment, there are few, if
any, markets about which one can be so optimistic 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 18 May
2023. This makes a total ordinary dividend for 2022 of 10.6 pence per share.
The Board has considered the level of dividend in the context of the non-cash
impairment of goodwill, alongside the underlying growth seen during the year
and continued confidence in the Group's business model and prospects.
Outlook
With the impact of the pandemic now largely behind us, and with the growth we
have seen in our key areas of recurring revenue, our focus now is on taking
Personal Group onto the next stage of growth and we have entered 2023 on the
front foot, benefiting from the strong end to FY22. The growth in our
insurance book, investments in our Hapi platform and expansion of our Pay and
Reward offering all provide confidence in another successful year.
While cognisant of the ongoing economic challenges, we look to the future with
a strong sense of optimism and remain committed to the continued execution of
our strategy.
Martin Bennett
Non-Executive Chair
27 March 2023
CEO STATEMENT
I have a great deal of satisfaction on looking back on a pivotal year for
Personal Group. In 2022, we came out of the pandemic and built on 2021's work
in the restarting of the engine of the business. We have delivered a strong
year of new business development, insurance book growth and expansion in our
key market focus of Small and Medium Business.
In a year when many businesses have issued profit warnings, political
turbulence has spilled over into financial markets and inflation has deeply
affected many people in the UK, I am very proud of how my team have been
rebuilding the business with double digit growth in many key areas of our book
of recurring revenue. Annualised Premium Income ends the year 15% ahead of
last year's close, new client numbers are up 17% and we have hit our Sage
channel target of 50,000 paying employees from 2,800 companies.
Sales and Operational Review
Affordable insurance
2022 was always going to be a year of lower profit, primarily because our
historical normal investment in our field sales insurance team has been set
against lower premium values, as a result of the pandemic. Slightly higher
claims ratios this year were expected against previous years of low NHS
activity but have remained stable. However, this has been a year of bests:
best annual individual performance ever by a field sales colleague, best ever
month in November 2022, and best ever December in 2022. Our new insurance
sales of £9.5m were up 157% on 2021 and at the highest level seen since 2018.
These achievements are set against a backdrop of industrial action and staff
shortages in our clients, which means our site visits have to be professional
and credible in building employee engagement for our clients, as well as
offering key insurances for our policyholders. Over 50% of client employees
that we present our insurance policies to choose to buy our insurances on the
day we meet them which emphasises the value perceived in our products. The
majority of our policyholders elect to pay through their payroll on a weekly
or monthly basis, these policies typically have a lifetime value of around
five years - so business written in 2022 builds momentum for the future.
Benefits platform
Our new business and account management teams for Enterprise clients have also
had success this year. Our overall client retention rate remains extremely
high for the benefits business where we retained 164 clients in year (95%
retention) and added 22 new ones.
The five-year deal signed with Sage in February highlights the value that both
partners place on the relationship, with us hitting our target of 50,000
paying employees by the end of 2022. This shows growth of +87% from £1.6m ARR
end 2021 to £3.0m ARR end 2022. We are now actively seeking other external
partners, to widen our reach, and build further ARR streams.
Pay and reward
Since the acquisition of QCG in July 2022, the Pay and Reward division has
continued to develop, with cross selling of Innecto Digital and Hapi
platforms, and bringing on of new clients. The division now serves 174 active
clients, although as is the nature of consultancy, these clients cyclically
move on, as projects are completed. We have been pleased with the retention of
Innecto Digital products, covering Job Evaluation, Pay Benchmarking and Pay
Review software. Our blended retention rate is 87% against a target of 75%,
with 12 new clients added.
Other owned benefits: Let's Connect
Let's Connect has experienced a challenging year: the backdrop of industrial
unrest in their biggest client affected our marketing campaigns as well as the
ability of striking workers to afford new technology items. We have
recognised that this will impact this area of the business going forwards and
accordingly have determined to take a prudent approach and fully impaired the
value of goodwill associated with it as a result of its acquisition in 2014.
Notwithstanding this, other Let's Connect clients have performed well,
emphasising the cost-of-living benefit for employees in being able to spread
the cost of technology purchases, without the direct interest charges and
credit checks that they face on the High Street. Some stock shortages have
affected sales in the year, but this has significantly improved in comparison
to the last couple of years.
Future outlook
Our business is now significantly stronger and more diversified than 2019, our
last year of trading pre-pandemic. Previously the business mainly operated in
our heartlands of lower wage, hourly-paid employees; food production,
transport, care homes, warehousing and distribution. Whilst our core business
plays a very important role in our future, as we set out in our strategic
roadmap in 2019, we have expanded our reach to different sectors of the
economy - SMEs, the public and ex-public sectors, and salaried employees in
the private sector. This widens the Group's platform and market opportunity
for growth in the future, and our investment in sales and marketing and
technology is now bearing fruit in the number of new clients we are engaging
with and delivering for. Underlying organic growth in 2022 will lead to
increased EBITDA in 2023 and beyond, as our business model is mainly based on
recurring contracts, whether with SMEs, insurance policyholders or our major
Enterprise clients.
We also continue to search for acquisitive growth that will increase
shareholder value. Alongside the small acquisition made in-year, we have
continued to review selected acquisition opportunities against a clearly
defined criteria of identifying businesses that would be capable of adding
complementary, earnings-accretive non-organic growth.
Whilst we have planned for 2023 to be another difficult year for the economy,
trading in 2023 has started positively and we are confident our offer
resonates with our target markets, and we will continue to see growth over the
forthcoming years.
Deborah Frost
Group Chief Executive
27 March 2023
CFO STATEMENT
Group revenue
Group revenue for the year increased 16% to £86.7m (2021: £74.5m) reflecting
growth across all areas of the business, with the exception of the Other Owned
Benefits division (Let's Connect).
With COVID-19 lockdowns, which impacted our ability to carry out our
traditional face-to-face selling of insurance, firmly behind us, our insurance
segment returned to growth as anticipated and as at 31 December 2022 we have
an insurance book of £28.0m Annualised Premium Income (API) (31 December 2021
£24.4m), the majority of which is renewable on weekly or monthly rolling
contracts.
External income from our internally developed Benefits Platform increased by
over 45% year on year, following on from the 40% growth seen in the previous
year. This growth is a result of our continued expansion into the SME sector
through our partnership with Sage and growth in our own HAPI platform sales.
Growth in our pay and reward segment reflected the acquisition of Quintige
Consulting Group (QCG) at the start of the second half of the year but also
growth in consultancy income and digital subscription income in Innecto.
Annualised Recurring Revenue (ARR) across all the Group's digital platforms
now stands at £5.6m (2021: £3.6m).
Sales of technology and other products to employers as part of their employee
benefit provision through the Group's subsidiary, Let's Connect, fell short of
2021, primarily as a result of industrial action in its key client impacting
its peak trading period in Q4.
Income from voucher resale through the benefits platform also grew
significantly in the year and, whilst this predominantly represents
pass-through revenue, it does continue to demonstrate the value that our
Benefits Platform provision can bring to our clients and their employees.
Adjusted EBITDA*
Adjusted EBITDA* for the year was £6.0m (2021: £6.1m). Adjusted EBITDA
remained in line with last year but reflected a changing mix in contribution
from the various business areas.
As anticipated, we saw a reduced contribution from the insurance business, as
we invested heavily in the acquisition costs of the field sales team as it
re-established itself to pre-Covid levels. Offsetting this we saw increased
contribution from both our Pay & Reward and Benefits Platform businesses
in line with their increased revenues, with the contribution from Other Owned
Benefits remaining broadly flat year on year. Outside of the core segments,
group administration and central costs reduced in line with a return to more
normalised levels of sales and marketing spend.
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.
Loss before and after tax
Statutory loss before tax for the year was £6.8m (2021: profit of £4.3m).
This reflects an operating profit of £3.8m together with a £10.6m impairment
charge relating to the goodwill balance associated with Lets Connect. Despite
the profitability of Lets Connect being maintained at a similar level to 2021,
the operating landscape at its key client has changed and the current salary
sacrifice technology scheme they run is no longer appropriate for them in its
current format. As a result the future revenue stream for this area of the
business has significantly changed and an impairment charge has been
registered. The tax charge for the year was £0.5m (2021: £0.7m), and loss
after tax for the year £7.3m (2021: profit of £3.6m).
Excluding the non-cash impairment charge the profit before tax is £3.8m.
EPS
Resulting earnings per share was (23.1p) (2021: 11.5p); excluding the non-cash
impairment charge this would have been 10.6p.
Dividend
The Board has recommended a final ordinary dividend of 5.3 pence per share,
making a total ordinary dividend for 2022 of 10.6 pence per share. The final
ordinary dividend will be paid on 18 May 2023 to members on the register as at
11 April 2023 (the record date). Shares will be marked ex-dividend on 6 April
2023. The last day for elections will be on 25 April 2023. The Board has
considered the level of dividend in the context of the non-cash impairment of
goodwill, alongside the underlying growth seen during the year and the
continued confidence in the Group's business model and prospects.
Balance sheet
As at 31 December 2022 the Group's balance sheet remained strong, with cash
and deposits of £18.7m (2021: £22.9m) and no debt. This reduction reflects
both the c£1m purchase of QCG and a £1.5m equity investment (valued at
£1.3m within Financial Investments) alongside investment of c£1m in our
proprietary software. The Group's main underwriting subsidiary, Personal
Assurance Plc (PA), continues to maintain a conservative solvency ratio of
333% (unaudited), with a £8.1m 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 312% (unaudited), under its own
regime.
Segmental Results (see note 1)
The Group reports across 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. 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 not allocated to a
segment and are shown separately as 'Group Admin & Central Costs'.
We believe this presentation provides transparency to enable the impact of top
line growth on adjusted EBITDA* contribution for each area of the business to
be better understood.
Segment Description Income Streams
Pay & Reward Provision of a full reward service to employers through the Group's pay and Consultancy, industry surveys and digital platform subscriptions
reward subsidiaries, Innecto and QCG
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's strong performance in 2021 continued into 2022, with consultancy
income up 34% as the battle for talent continued and demand from HRDs looking
to retain and attract their employees increased. Digital subscription income
from its proprietary HR solutions also increased by 19% on the previous year.
Annualised Recurring Revenue on these products stood at £0.5m as at 31
December 2022 (2021: £0.4m).
The acquisition of QCG in July 2022 also added to the Group's Pay & Reward
offering with the expectations set out at acquisition achieved in the second
half of the year. Whilst operating in a similar market to Innecto, QCG
operates in different market sectors, has a strong presence in pay surveys and
provides opportunities to cross sell across both client bases.
Collectively this division achieved revenue of £2.0m (2021: £1.2m) and
EBITDA of £0.5m (2021: £0.3m) of which QCG contributed £0.4m of revenue and
£0.1m of EBITDA post acquisition.
Benefits Platform
Revenue from digital platform subscriptions and commissions from third party
benefit suppliers which sit on the benefits platform rose to £4.8m in 2022
(2021: £3.3m).
Subscriptions for our enterprise platform, Hapi, gained momentum in 2022 with
ARR on the platform increasing by 29% to £2.0m (2021: £1.6m) during the
course of the year and are expected to benefit further in 2023 with the
refined and refreshed Hapi 2.0.
Our expansion into the SME market also continued to grow at pace, with Sage
Employee Benefits, the Group's SME proposition being taken to market through
its partner Sage. Having signed a new five-year contract in February 2022 and
with an updated version of the platform to be launched in 2023, we are
anticipating further growth in its ARR which stood at £3.0m at the end of the
year (2021: £1.6m).
As at 31 December 2022 the ARR from Benefits Platform subscriptions across all
channels stood at £5.0m (2021: £3.2m).
Adjusted EBITDA contribution of £2.9m (2021: £2.1m) increased in line with
increased revenue but also demonstrates the increased margins available as
this area of the business scales up.
Affordable Insurance
Premium income from the Group's core insurance business increased by £0.6m to
£25.3m (2021: £24.7m).
The strong opportunity for our face-to-face sales activity, driven by
employers wishing to re-engage with their workforce post COVID-19, has given
opportunity to rebuild the sales team and grow the insurance book back towards
levels seen pre-COVID. £9.5m of new insurance sales were written during the
year (2021: £3.7m) which together with continued strong retention rates for
existing policyholders meant that as at 31 December 2022 we have £28.0m
(2021: £24.4m) of Annualised Premium Income, the majority of which are
renewable on weekly or monthly rolling contracts.
Claims ratios for the year increased to 27.3% (2021: 24.5%) higher than
historic norms as hospital admittances and visits increased post COVID-19
lockdowns. As the NHS starts to address their long waiting lists, we
anticipate this continuing in the short to medium term.
Adjusted EBITDA contribution of £9.0m for the year (2021: £11.0m), reflects
the increased premiums and claims costs but also the increased acquisition
costs of the field sales team as we invested heavily to re-establish it at
pre-Covid levels. The benefit of the related new insurance sales will be seen
in future years.
Other Owned Benefits: Let's Connect
Let's Connect, which provides technology and other products to employers as
part of their employee benefit provision, saw revenues decrease to £16.8m
(2021: £18.2m), although margin improvements helped mitigate the impact on
its EBITDA contribution of £0.7m (2021: £0.7m). The industrial action which
took place at its key client in the second half of the year impacted its peak
trading period in Q4 and has led to full impairment of the £10.6m goodwill
balance associated with its acquisition at group level.
Group Administration Expenses and Central Costs
Group administration and central costs of £7.1m (2021: £8.2m) reflected a
return to a more normalised level of sales and marketing spend post the
additional investment made in 2021 alongside a reduced level of bonus costs.
Sarah Mace
Chief Financial Officer
27 March 2023
Consolidated Income Statement
2022 2021
£'000 £'000
Gross premiums written 25,660 25,050
Outward reinsurance premiums (138) (163)
Change in unearned premiums (254) (208)
Change in reinsurers' share of unearned premiums (11) (9)
( ) (_________) (_________)
Earned premiums net of reinsurance 25,257 24,670
Employee benefits and services income 23,627 22,753
Voucher resale income 37,389 26,852
Other income 237 215
Investment income 145 23
( ) (_________) (_________)
Revenue 86,655 74,513
( ) (_________) (_________)
( ) ( ) ( )
Claims incurred (6,990) (6,049)
Insurance operating expenses (6,619) (4,860)
Employee benefits and services expenses (22,236) (22,370)
Voucher resale expenses (37,368) (26,894)
Other expenses (33) 82
Group administration expenses (8,973) (9,779)
Share based payments expenses (291) (169)
Unrealised losses on equity investments (210) -
Charitable donations (100) (100)
(___________) (___________)
Expenses ( ) (82,820) (70,139)
(___________) (___________)
( )
Operating profit 3,835 4,374
Finance costs (20) (32)
Impairment of Goodwill (10,575) -
(_________) (_________)
(Loss) / Profit before tax (6,760) 4,342
Tax (493) (745)
(_________) (_________)
(Loss) / Profit for the year (7,253) 3,597
The loss for the year is attributable to equity holders of Personal Group
Holdings Plc
Pence Pence
Earnings per share
Basic (23.2) 11.5
Diluted (23.2) 11.5
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.
Consolidated Balance Sheet at 31 December 2022
2022 2021
£'000 £'000
ASSETS
Non-current assets 2,684 12,696
Goodwill
Intangible assets 2,384 1,637
Property, plant and equipment 4,639 5,033
(_________) (_________)
9,707 19,366
(__)(______) (________)
Current assets
Financial assets 3,031 2,596
Trade and other receivables 15,863 14,035
Reinsurance assets 95 108
Inventories - Finished Goods 726 898
Cash and cash equivalents 16,958 20,291
Current tax assets 229 310
(_________) (_________)
36,902 38,238
(___)(______) (_________)
Total assets 46,609 57,604
(__________) (__________)
Consolidated Balance Sheet at 31 December 2022
2022 2021
£'000 £'000
EQUITY
Equity attributable to equity holders
of Personal Group Holdings Plc
Share capital 1,562 1,561
Share premium 1,134 1,134
Share based payment reserve 367 158
Capital redemption reserve 24 24
Other reserve (55) (32)
Profit and loss reserve 27,946 38,436
(_________) (_________)
Total equity ( ) 30,978 41,281
(_________) (_________)
LIABILITIES
Non-current liabilities
Deferred tax liabilities 681 478
Trade and other payables 130 402
Current liabilities ( )
Trade and other payables 11,346 12,356
Insurance contract liabilities 3,474 3,087
( _________) ( _________)
( ) 14,820 15,443
( _________) ( _________)
( ) ( _________) ( _________)
Total liabilities ( ) 15,631 16,323
(_________) (_________)
( ) ( _________) ( _________)
Total equity and liabilities ( ) 46,609 57,604
(_________) (_________)
( )
Consolidated Statement of Changes in Equity for the year ended 31 December
2022
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 24 158 (32) 38,436 41,281
(________) (______) (______) (______) (______) (________) (________)
Dividends - - - - - (3,310) (3,310)
Employee share-based compensation - - - 271 - 20 291
Proceeds of SIP* share sales - - - - - 11 11
Cost of SIP shares sold - - - - 20 (20) -
Cost of SIP shares purchased - - - - (43) - (43)
LTIP Options Exercised 1 - - (62) - 62 1
(________) (________) (________) (________) (________) (________) (________)
Transactions with owners 1 - - 209 (23) (3,237) (3,050)
(________) (________) (________) (________) (________) (________) (________)
Profit for the year - - - - - (7,253) (7,253)
(________) (________) (________) (________) (________) (________) (________)
(________) (_______) (________) (________) (________) (________) (________)
Balance as at 31 Dec 2022 1,562 1,134 24 367 (55) 27,946 30,978
(________) (______) (______) (________) (__________) (_________) (_________)
*PG Share Ownership Plan (SIP)
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 Dec 2021 1,561 1,134 24 158 (32) 38,436 41,281
(________) (______) (______) (________) (__________) (_________) (_________)
*PG Share Ownership Plan (SIP)
Consolidated Cash Flow Statement
2022 2021
£'000 £'000
Net cash from operating activities (see next page) 3,240 7,588
(__________) (__________)
Investing activities ( ) ( ) ( )
Additions to property, plant and equipment (332) (236)
Additions to intangible assets (1,196) (981)
Proceeds from disposal of property, plant and equipment 39 1
Proceeds from disposal of financial assets 871 -
Purchase of financial assets (1,517) (9)
Interest received 145 23
Acquisition of QCG (812) -
(__________) (__________)
Net cash used in investing activities (2,802) (1,202)
(__________) (__________)
Financing activities
Proceed from issue of shares 1 -
Interest paid - 2
Purchase of own shares by the SIP (54) (35)
Proceeds from disposal of own shares by the SIP 21 20
Payment of lease liabilities (429) (427)
Dividends paid (3,310) (3,244)
(__________) (__________)
Net cash used in financing activities (3,771) (3,684)
(__________) (__________)
Net change in cash and cash equivalents (3,333) 2,702
Cash and cash equivalents, beginning of year 20,291 17,589
(__________) (__________)
Cash and cash equivalents, end of year 16,958 20,291
(_________) (_________)
Consolidated Cash Flow Statement 2022 2021
£'000 £'000
Operating activities
Profit after tax (7,253) 3,597
Adjustments for 1,052 966
Depreciation
Amortisation of intangible assets 786 585
Goodwill impairment 10,575 -
Profit on disposal of property, plant and equipment 12 11
Realised and unrealised investment losses 210 -
Interest received (145) (23)
Interest charge 20 32
Share-based payment expenses 291 169
Taxation expense recognised in income statement 493 745
Changes in working capital
Trade and other receivables (1,637) 4,280
Trade and other payables (1,010) (1,817)
Inventories 172 (37)
Taxes paid (326) (920)
(__________) (__________)
Net cash from operating activities 3,240 7,588
(_________) (_________)
2022
2021
£'000
£'000
Operating activities
Profit after tax
(7,253)
3,597
Adjustments for
Depreciation
1,052
966
Amortisation of intangible assets
786
585
Goodwill impairment
10,575
-
Profit on disposal of property, plant and equipment
12
11
Realised and unrealised investment losses
210
-
Interest received
(145)
(23)
Interest charge
20
32
Share-based payment expenses
291
169
Taxation expense recognised in income statement
493
745
Changes in working capital
Trade and other receivables
(1,637)
4,280
Trade and other payables
(1,010)
(1,817)
Inventories
172
(37)
Taxes paid
(326)
(920)
(__________)
(__________)
Net cash from operating activities
3,240
7,588
(_________)
(_________)
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, purchased 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 the Group's pay and reward consultancy
Company Innecto, purchased in 2019, and QCG, purchased in 2022. Revenue in
this segment relates to consultancy, surveys, and licence income derived from
selling digital platform subscription.
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
2021
2022
£'000 £'000
Revenue by segment
Affordable Insurance 25,257 24,670
Other Owned Benefits 16,800 18,214
Benefits Platform 7,446 6,051
Benefits Platform - Group Elimination (2,627) (2,748)
Pay & Reward 2,008 1,236
Other Income
Voucher resale 37,389 26,852
Other 237 215
Investment income 145 23
(__________) (__________)
Group Revenue 86,655 74,513
(__________) (__________)
Adjusted EBITDA* contribution by segment
Affordable Insurance 9,032 11,012
Other Owned Benefits 664 730
Benefits Platform 2,866 2,098
Pay & Reward 495 303
Other 160 279
Group admin and central costs (7,107) (8,228)
Charitable Donations (100) (100)
(__________) (__________)
Adjusted EBITDA* 6,010 6,094
(__________) (__________)
Depreciation (1,052) (966)
Amortisation (786) (585)
Interest (20) (32)
Share Based Payments Expenses (291) (169)
Goodwill impairment (10,575) -
Corporate acquisition costs (46) -
(__________) (__________)
Profit before tax (6,760) 4,342
(__________) (__________)
2022
2021
£'000
£'000
Revenue by segment
Affordable Insurance
25,257
24,670
Other Owned Benefits
16,800
18,214
Benefits Platform
7,446
6,051
Benefits Platform - Group Elimination
(2,627)
(2,748)
Pay & Reward
2,008
1,236
Other Income
Voucher resale
37,389
26,852
Other
237
215
Investment income
145
23
(__________)
(__________)
Group Revenue
86,655
74,513
(__________)
(__________)
Adjusted EBITDA* contribution by segment
Affordable Insurance
9,032
11,012
Other Owned Benefits
664
730
Benefits Platform
2,866
2,098
Pay & Reward
495
303
Other
160
279
Group admin and central costs
(7,107)
(8,228)
Charitable Donations
(100)
(100)
(__________)
(__________)
Adjusted EBITDA*
6,010
6,094
(__________)
(__________)
Depreciation
(1,052)
(966)
Amortisation
(786)
(585)
Interest
(20)
(32)
Share Based Payments Expenses
(291)
(169)
Goodwill impairment
(10,575)
-
Corporate acquisition costs
(46)
-
(__________)
(__________)
Profit before tax
(6,760)
4,342
(__________)
(__________)
2. Taxation comprises United Kingdom corporation tax of
£493,000 (2021: £745,000) including a deferred tax charge of £122,000
(2021: £79,000)
3. The basic and diluted earnings per share are based on
losses for the financial year of £7,253,000 (2021: £3,597,000 profit) and on
31,214,765 basic (2021: 31,205,375) and 31,969,989 diluted (2021: 31,213,537)
ordinary shares, the weighted average number of shares in issue during the
year.
4. The total dividend paid in the year was £3,310,000 (2021:
£3,244,000)
This preliminary statement has been extracted from the 2022 audited financial
statements that will be posted to shareholders in due course. The statutory
accounts for each of the two years to 31 December 2022 and 31 December 2021
received audit reports, which were unqualified and did not contain statements
under section 498 (2) or (3) of the Companies Act 2006. The 2021 accounts
have been filed with the Registrar of Companies but the 2022 accounts are not
yet filed.
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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