REG - Personal Group - Preliminary Results and Final Dividend
19/03/2024 07:00
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RNS Number : 3227H Personal Group Holdings PLC 19 March 2024
19 March 2024
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 2023.
The Group has successfully delivered growth across 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
· Revenue grew across all areas outside of Let's Connect:
o Group revenue* stable at £49.7m (2022 restated: £49.8m)
o Revenue, excluding Let's Connect, increased 17% to £38.6m (2022: £33.0m)
o Recurring revenue streams increased 14% to £38.3m (£2022: £33.5m)
· Adjusted EBITDA** increased 35% to £8.1m, in line with market expectations
(2022: £6.0m)
· Adjusted profit before tax of £5.3m (2022 adjusted***: £3.8m profit
excluding goodwill impairment)
· Adjusted Basic EPS of 13.8p (2022 adjusted***: 10.6p, statutory loss of 23.2p)
· Strong balance sheet and liquidity, with cash and deposits at year end
of £20.1m (2022: £18.7m) and no debt
· Final dividend for 2023 of 5.85p per share, making a full year dividend for
2023 of 11.7p (2022: 10.6p) payable on 8 May 2024.
* Revenue restated in prior year as a result of the Group's transition to
IFRS 17 and to present voucher income as agency rather than principal.
** 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.
Operational Highlights
· First phase of the strategy review and market mapping complete
o The strategy review provided a clear sense of positioning, vision and areas to
focus to maximise shareholder value.
o Applicability and resonance of the Group's insurance products and its sizable
addressable market have been validated and industries with the biggest
opportunities confirmed.
o Restructuring of senior leadership team has been undertaken to optimise
processes and drive performance.
· A record year for insurance sales
o Record new annualised insurance sales of £11.8m for the year (2022: £9.5m)
o Annualised premium income (API) increased 13% to £31.6m (31 Dec 2022:
£28.0m) supported by strong retention levels.
o Claims ratios remained stable at 27.0% (2022: 27.7%), as the NHS continues to
address long waiting lists.
· Benefits platform providing increased contribution to the Group.
o Continued growth across both enterprise clients on Hapi and SMEs utilising
Sage Employee Benefits, ending the year with Annual Recurring Revenue ("ARR")
of £2.5m and £3.7m respectively (31 Dec 2022: £2.0m and £3.0m).
o 31 new Benefits clients won in 2023 (2022: 22).
o Hapi 2.0, the next generation of our employee benefits platform, was launched
internally in H2 2023 and externally in early 2024. Initial feedback from
customers has been positive.
Confident Outlook
· Confidence across the Group is high for 2024 and the Group is well-placed to
deliver further growth with an increasing proportion of recurring revenue and
a strong balance sheet.
· Trading has continued positively into the first quarter, reinforced by the
renewal of the contract with Royal Mail Group, securing the provision of
insurance cash plans via face-to-face road show visits, and the signing of a
significant contract for the Pay & Reward division with a global airline.
· Initial results of an external review into the Group's product and markets
have emphasised the ongoing relevance of our insurance products in a sizeable
addressable market and highlights clear options for strategic growth
available.
Paula Constant, Chief Executive of Personal Group, commented:
"This has been a year of positive change for Personal Group. The financial
performance delivered in the year speaks to the quality of both the offerings
and the team, whose efforts have driven a record year of insurance sales and
increased overall levels of recurring revenue, despite a testing trading
environment.
The first phase of the strategy review is now complete. The results of this
have confirmed the strong alignment of the Group's product offering with
existing and target markets but importantly outlined the scale of the
opportunity for Personal Group. We are now focusing on building the detail of
our strategy and product portfolio, in addition to simplifying the business'
processes to deliver more effectively for customers, capitalise on our
opportunities and maximise value for shareholders. I look forward to updating
the market on our progress in due course."
Personal Group Holdings will be hosting a webinar for private investors on
Friday 22 March at 13.00. 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
Paula Constant (CEO) / Sarah Mace (CFO) Via Alma
Cavendish Capital Markets Limited
Camilla Hume / Callum Davidson (Nomad) +44 (0)20 7397 8900
Jasper Berry (Sales)
Alma Strategic Communications +44 (0)20 3405 0205
Caroline Forde / Joe Pederzolli / Kinvara Verdon personalgroup@almastrategic.com
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.
Group Clients include Airbus, Barchester Healthcare, Merseyrail, 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'S STATEMENT
It has been a year of continued progress for Personal Group, in which we have
performed well amidst a challenging market backdrop, delivering on our
financial objectives while responding positively to a change in leadership.
HR teams across the UK have had to focus their efforts on dealing with the
well-documented market challenges, such as the decreased availability of
labour, and increased employment costs. We have nonetheless continued to win
customers at a steady rate, supporting the wellbeing of key workers across the
country, a historically underserviced and growing segment of the UK workforce.
I would like to thank the team for their continued hard work, with this year's
results again reflecting the quality and diligence of our people. It is clear
to me that we have a solid foundation on which to grow, bolstered by
increasing levels of revenue visibility for 2024 and beyond. I look forward to
the future with confidence.
A year of change
In August 2023 we welcomed Paula Constant to the Group as Chief Executive.
Paula has brought with her strong strategic acumen and over 20 years of
telecoms, banking, and outsourcing experience, largely gathered from
multinational organisations. Paula has had a significant impact on the
business in a short period of time, reinforcing my faith in her to take
Personal Group to its next stage of growth.
Under Paula's leadership, a review of the Group's strategy is being undertaken
to identify the greatest opportunities to improve profitability and drive
longer term growth in the business. A detailed analysis of our market has
validated the strength of our insurance offering and the sectors we are best
placed to target. Paula has simplified the organisational structure of the
Group, with the senior leadership team refreshed by key hires, and introduced
new operational KPIs.
With the transitionary period now complete and Paula fully integrated into
day-to-day operations of the business, we look forward to the Group further
progressing under her leadership.
I would like to take this opportunity to thank Deborah Frost for her
contribution to Personal Group, first as a Non-Executive Director, and then as
Chief Executive. Deborah's stewardship in successfully navigating the business
through the pandemic was excellent, and it was her work which laid the
foundations for Personal Group to emerge as a stronger business and to return
to a growth trajectory. On behalf of the Board, we wish her all the very best
with her future endeavours.
Solid delivery
We have successfully delivered across our KPIs in the year, achieving
increased revenue and EBITDA in line with market expectations in all segments
except Let's Connect. We are strengthened by a robust balance sheet and our
highest ever rate of recurring revenue, providing high levels of visibility
for 2024 and beyond.
Following the reinvigoration of the insurance division in 2022, I am
particularly pleased with the ongoing momentum gathered across our core
Affordable Insurance offering in 2023, which has gone from strength to
strength in the year, driven by a record level of new sales and high retention
rates amongst existing customers.
Benefits platform revenue has also continued to grow, delivering increased
levels of annual recurring revenue ("ARR"). We are pleased to have
successfully launched the next generation of our platform, Hapi 2.0,
internally. The initial external launch and migration began in early 2024.
The contribution from Pay & Reward and Other Owned Benefits remained
steady throughout the year, in line with the Board's expectations.
ESG
A key feature of Personal Group's business is the caring attitude towards
people and communities. This is reflected not only in our aim to improve
employee engagement and support people's physical, mental, social and
financial wellbeing, but also in how the business is run.
We remain committed as a Board to maintaining high standards of ESG and during
the year we made progress in executing against our ESG strategy. We have
worked on reducing our carbon footprint, continued to foster an inclusive,
progressive and diverse working environment, while ensuring a robust corporate
governance framework.
We have incorporated ESG success metrics into our Executive remuneration for
the last few years and from 2024 will be extending this to the group bonus
scheme, applicable to all employees, to encourage greater engagement across
the entire business.
Dividend
I am pleased to announce that the Board has recommended a final ordinary
dividend of 5.85 pence per share which will be paid on 8 May 2024 to members
on the register as at 2 April 2024 (the record date). Shares will be marked
ex-dividend on 28 March 2024. This makes a total ordinary dividend for 2023 of
11.7 pence per share, representing an increase of 10% year on year. The Board
has considered the level of dividend in the context of the growth seen during
the year and continued confidence in the Group's business model and prospects.
Outlook
This has been a year of positive change for Personal Group. We have continued
to gather momentum, focusing on enhancing the quality and organisational
structure of the business to exploit our opportunity.
With the first phase of the review of Group's product and markets complete, we
have a clearer sense of our positioning, vision and areas of focus, leaving us
well-placed to maximise value for shareholders. I look forward to the results
of the second phase of the review and am excited by the opportunity that lies
ahead.
Martin Bennett
Non-Executive Chair
19 March 2024
GROUP CHIEF EXECUTIVE'S STATEMENT
I am pleased to report on this positive set of results delivering strong
growth across the core Affordable Insurance and Benefits Platform offerings.
The financial performance speaks to the quality of both the offerings and the
team, whose efforts have driven a record year of insurance sales, and an
increased proportion of recurring revenue, despite a testing trading
environment.
Since assuming the role of Chief Executive, I have focused on invigorating the
energy of the organisation, our customer focus, and the pace at which we
deliver our services, preparing the business to build upon its solid
foundations. As part of this process, I initiated an external review of the
Group's product offering, market position and market opportunity to inform the
strategic direction of the business and position Personal Group to drive
sustainable long-term growth.
The first phase of this review, which concluded in December 2023, included
market mapping and insight into the size and segmentation of the UK employee
benefits landscape applicable to our core insurance offering. This confirmed
the ongoing relevance of our insurance products and emphasised the industries
which present the largest opportunities to the Group. The market mapping also
confirmed that Personal Group has a clear competitive advantage through being
the only 'face to face' sales-led offering in its area of the market and that
there remains a large addressable market opportunity. Informed by the
research, we have developed a targeted marketing strategy aimed at specific
customer types and the most appropriate market segments for our insurance
offerings being, in the first instance, construction, transport and
production.
The second phase of the review is nearing completion and aims to determine the
Group's opportunity in benefits platform provision and assess success factors
across various market segments.
The initial results of the review have highlighted that the Group has a
strong, repeatable business and currently operates in the right segments with
clear options for strategic growth available. As the detailed outputs of the
review are digested and assessed, they will serve to inform and provide focus
to our detailed Group strategy update later in the year, which will also
consider the most effective way to optimise performance in the Pay and Reward
and Let's Connect segments.
Sales and Operational Review
We made good progress in the year under each of our three strategic areas of
focus: driving our Affordable Insurance sales, transforming reward &
benefits offerings, and accelerating our SME offering.
Affordable Insurance
Key achievements in 2023 were the improved delivery and productivity of the
face-to-face sales team, helping to deliver a record year for new annualised
insurance sales of £11.8m, up 24% from 2022. We continued to reduce the time
spent working away from home for the sales team, to improve their wellbeing,
and implemented new tools and operational enhancements to support FCA Customer
Duty and ensure better outcomes for customers. £6.8m of claims payments were
made to support policyholders in 2023 (2022: £6.4m) and customer retention
rates remained high, demonstrating the value employees place on the Group's
product offering. As a result of all the above, the insurance book increased
from £28.0m in 2022 to £31.6m in Annualised Premium Income at the end of
2023, setting us up for further success in 2024.
In 2024 we will increase our focus on specific sectors identified as offering
the largest opportunities for growth, continue to review our insurance product
offering, progress opportunities to partner with other benefits providers to
promote their benefits platforms alongside the sale of insurance and explore
opportunities to partner with third party providers to offer alternative
products that would benefit our growing client base.
Transforming Reward & Benefits
The internal launch of the next generation of our benefits platform, Hapi 2.0,
and subsequent launch with our first new client in January 2024 marks a key
highlight for the year. The new and enhanced platform, now with improved
Reward and Recognition functionality, navigation, search capabilities,
onboarding processes, and modularisation for tiered and self-serve offers,
sets the service up well for sustained success. We won 31 new Benefits clients
in 2023 (2022: 22) which helped to drive growth in Hapi related annual
recurring revenue up 29% to £2.5m (2022: £2.0m). We also secured a place on
the Crown Commercial Framework, providing a new avenue for customer
acquisition in 2024.
Our focus for 2024 will be the external launch of the full functionality of
Hapi 2.0 alongside existing client migration. In addition, we anticipate that
the development of a new 'career pathways' product, for the Pay & Reward
segment, will provide an opportunity for upsell to our customer base and
increase the attractiveness of our offering.
Contribution from Pay & Reward, comprising Innecto and QCG, remained
steady in the year with ARR of £0.6m, despite market demand being affected by
wider economic challenges. The combination of the Innecto and QCG
consultancies was completed in the year, aiming to create operational
efficiencies.
As previously announced, Other Owned Benefits (Let's Connect) had a
challenging period with the cessation of a long-term scheme with a major
client in March 2023. Notwithstanding, the business performed resiliently and
performance was in line with management's expectations.
SME Offering
We have an SME version of Hapi pre-populated, with key benefits, taken to
market through our partnership with Sage as Sage Employee Benefits (SEB) which
now serves around 4,100 clients and 60,000 employees. Areas of focus in 2023
were the improved onboarding journey for both account managed and digitally
onboarded clients, the improvement of the end-to-end customer journey to
improve lifetime value of clients going onto the platform, and the preparation
for launch of SEB 2.0 in 2024. SEB 2.0 is based on Hapi 2.0 and aims to
increase the attractiveness of the offering and accelerate uptake, with a new
look and feel. We saw steady growth in SEB annual recurring revenues in the
year, to £3.7m (2022: £3.0m).
In early 2024, we began working alongside Sage to migrate all clients onto SEB
2.0 with this expected to conclude in the coming months. We are continuing to
develop a premium version of SEB with a wider range of benefits to attract
businesses at the larger end of the SME market and progress conversations with
prospective partners in different markets to increase the number of routes to
the SME market.
Organisational change
In addition to the Group's market review, we conducted a review of our
internal operations with a view to enhancing visibility across the
organisation on delivery against our strategy and to drive profitability. We
are in the process of implementing more granular operational KPIs,
particularly across our sales processes and pipeline, giving greater
visibility into the effectiveness of our lead conversions and opportunities
for process improvements.
As part of our preparation for growth at pace, we have streamlined the
operations of the business, creating a new senior leadership structure. This
has included the hiring, post-period end, of a new Chief Operations Officer,
with our current Chief Operations Officer moving into a tech transformation
role, and a new interim Chief People Officer, to ensure the success of this
vital piece of our strategy.
Future outlook
I am confident that Personal Group has solid foundations from which we can
deliver an accelerated rate of growth. Increasing recurring revenues, a
compelling offering, powerful partnerships, and a well-run and expert sales
team that delivers strong results, combine to create an exciting opportunity
for future growth.
Through completion of the market review, we have validated the strength of our
insurance offering and benefits platform while gaining a fuller understanding
of the large market opportunity that exists for Personal Group. Equipped
with the insight gleaned from the market review and the strengthened team, I
am excited by the fantastic opportunities that lie ahead for Personal Group.
Paula Constant
Group Chief Executive
19 March 2024
CHIEF FINANCIAL OFFICER'S STATEMENT
Group revenue
Group revenue remained stable at £49.7m (2022: £49.8m). With the exception
of the Other Owned Benefits division (Let's Connect), growth was seen across
all areas of the business.
Our insurance segment continues to grow as anticipated and as at 31 December
2023 we had an insurance book of £31.6m Annualised Premium Income (API) (2022
£28.0m), the majority of which is renewable on weekly or monthly rolling
contracts.
External income from our internally developed Benefits Platform increased by
28% year on year, following on from the 45% 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 was moderate as economic challenges
continued to impact the market demand. ARR across all the Group's digital
platforms now stands at £6.1m (2022: £5.6m).
Sales of technology and other products to employers as part of their employee
benefit provision through the Group's subsidiary, Let's Connect, fell 34% year
on year, in line with expectation, reflecting the loss of its largest customer
in Q1.
Other income increased to £1.0m (2022: £0.4m) as a result of increased rates
on the cash deposits held by the insurance subsidiaries.
The Group continues to benefit from an increasing proportion of recurring
revenues, providing high levels of visibility for 2024.
Adjusted EBITDA*
Adjusted EBITDA* for the year increased to £8.1m (2022: £6.0m) reflecting
the growth in contribution from the higher margin insurance segment,
in particular where underwriting profit continued to grow in line with the
size of the insurance book.
The increased EBITDA in the period has been driven by continued contribution
growth (up 33% to £3.8m) from the Benefits Platform, both through new Hapi
platform sales and the growth in size of the white labelled Sage Employee
Benefits. We saw a stable contribution from our Pay & Reward businesses,
however, the contribution from Other Owned Benefits fell in line with the loss
in top line revenue (down 56% to 0.4m). Outside of the core segments, Group
administration and central costs increased year on year reflecting the
investment in the Group's sales and marketing function alongside inflationary
staff and operating expenses.
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.
Accounting changes
IFRS 17
During the year the Group adopted IFRS 17 which has had a significant impact
on the accounting for insurance contracts but mainly from a presentation
perspective as can be seen in Note 5.
Restated Revenue
Furthermore, the Group reviewed the application of its accounting policy and
now treats all vouchers as agency, showing only the voucher margin and not
income as previously stated, this is discussed further in Note 5.
Profit before and after tax
Statutory profit before tax for the year was £5.3m (2022: loss of £6.8m),
which includes £0.6m of costs associated with restructuring the organisation
following the change of Chief Executive. The 2022 loss before tax reflected a
£10.6m impairment charge relating to the goodwill balance associated with
Let's Connect, excluding the non-cash impairment charge the profit before tax
for 2022 was £3.8m. The tax charge for the year was £1.0m (2022: £0.5m),
and profit after tax for the year £4.3m (2022: loss of £7.3m).
EPS
Resulting earnings per share were 13.8p (2022: loss of 23.2p), excluding the
non-cash impairment charge, earnings per share would have been 10.6p in 2022.
The calculation is detailed in Note 3.
Dividend
The Board has recommended a final ordinary dividend of 5.85 pence per share,
making a total ordinary dividend for 2023 of 11.7 pence per share. This will
be paid on 8 May 2024 to members on the register as at 2 April 2024 (the
record date). Shares will be marked ex-dividend on 28 March 2024. The Board
has considered the level of dividend in the context of 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 2023 the Group's balance sheet remained strong, with cash
and deposits of £20.1m (2022: £18.7m) and no debt. The Group's main
underwriting subsidiary, Personal Assurance Plc (PA), continues to maintain
a conservative solvency ratio of 272% (unaudited), with a £6.8m surplus over
its Solvency Capital Requirement of £4.0m. 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 484% (unaudited), under its own regime.
Segmental results
Segment Description Income Streams
Affordable Insurance A directly owned benefit, provision of simple insurance products underwritten Insurance income.
by Group subsidiaries.
Benefits Provision of a benefits platform to employers both directly and through Digital platform subscriptions, commissions from third party benefits which
channel partners, currently Sage for our SME solution. sit on the platform.
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.
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.
The Group reports across four core segments as detailed in the table above.
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 and 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.
Affordable insurance
Insurance revenue from the Group's core insurance business increased by £3.3m
to £28.7m (2022: £25.4m).
The continued opportunity for our face-to-face sales activity, driven by
employers wishing to engage more effectively with their workforce, has
provided the opportunity to continue to expand the sales team and grow the
insurance book back to levels seen pre-COVID. A record £11.8m of new
insurance sales were written during the year (2022: £9.5m) which, together
with continued strong retention rates for existing policyholders, meant that
as at 31 December 2023 we have £31.6m (2022: £28.0m) of Annualised Premium
Income, the majority of which is renewable on weekly or monthly rolling
contracts.
Claims ratios remained stable at 27.0% (2022: 27.7%), as the NHS continued to
address long waiting lists.
Adjusted EBITDA contribution of £11.2m for the year (2022: £9.0m), reflects
the increased underlying profit arising from increased revenue alongside the
stabilisation of acquisition costs.
Benefits platform
Revenue from digital platform subscriptions and commissions from third party
benefit suppliers which sit on the benefits platform rose 28% to £6.7m in
2023 (2022: £5.2m).
Subscriptions for our enterprise platform, Hapi, continued to grow throughout
2023 with ARR on the platform increasing to £2.5m (2022: £2.0m) during the
course of the year with 31 new clients onboarded.
Our expansion into the SME market also continued to grow, with Sage Employee
Benefits, the Group's SME proposition being taken to market through its
partner Sage. ARR increased to £3.7m at the end of the year (2022: £3.0m).
As at 31 December 2023 the ARR from Benefits Platform subscriptions across all
channels stood at £6.1m (2022: £5.0m).
Adjusted EBITDA contribution of £3.8m (2022: £2.9m) increased in line with
increased revenue but also demonstrates the increased margins available as
this area of the business scales up.
Pay & Reward
Whilst economic challenges impacted market demand, revenue from consultancy
income and digital subscription income from proprietary HR solutions increased
to £2.2m (2022: £2.0m). This reflected a full year's contribution from
Innecto and QCG. ARR from digital products remained stable and stood at £0.6m
on 31 December (2022: £0.5m).
Towards the end of the year, the operational capabilities of the two entities
were merged which is anticipated to lead to efficiencies and improved
productivity in 2024.
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 £11.1m
(2022: £16.8m) following the loss of a key client in March 2023. Increased
average order values, alongside margin improvements and operational downsizing
helped mitigate the impact on its EBITDA contribution of £0.4m (2022:
£0.7m).
Group administration expenses and central costs
Group administration and central costs of £8.7m (2022: £7.1m) reflects an
investment in the year building the sales and marketing function to
accommodate for future growth alongside inflationary cost increases associated
with utilities, Group insurances and other services. Expenses for the year
also reflect additional costs in relation to the change of Chief Executive
during the year.
Sarah Mace
Chief Financial Officer
19 March 2024
Consolidated Income Statement
2023 Restated*
2022
£'000 £'000
Insurance Revenue 28,708 25,406
Employee benefits and services 20,012 24,016
Other income 139 237
Investment income 807 145
( ) (_________) (_________)
Revenue 49,666 49,804
( ) (_________) (_________)
( ) ( ) ( )
Insurance service expenses (14,593) (13,675)
Net expenses from reinsurance contracts (135) (8)
Employee benefits and services expenses (18,077) (22,236)
Other expenses (94) (33)
Group administration expenses (11,266) (8,973)
Share based payments expenses (169) (291)
Unrealised gain / (loss) on equity investments 181 (210)
Charitable donations (100) (100)
(___________) (___________)
Expenses (44,253) (45,601)
(___________) (___________)
Results of operating activities 4,613 3,835
Finance costs (79) (20)
Goodwill impairment - (10,575)
(_________) (_________)
Profit / (Loss) before tax 5,334 (6,760)
Taxation (1,010) (493)
(_________) (_________)
Profit / (Loss) for the year 4,324 (7,253)
The profit for the year is attributable to equity holders of Personal Group
Holdings Plc.
Earnings per share Pence Pence
Basic 13.8 (23.2)
Diluted 13.5 (23.2)
There is no other comprehensive income for the year and, as a result, no
statement of comprehensive income has been produced.
*With the transition to IFRS 17, certain comparative amounts have been
re-stated as if the standard had always been in effect. Further detail can be
found in Note 25 of the Annual Report.
In addition, a change to the presentation of voucher income, to present this
net as agency income rather than principal as has previously been done, has
resulted in further restatement of the prior year comparatives. Further detail
can be found in Note 2.22 of the Annual Report.
Both restatements are presentational and neither has impacted the overall
result for the prior year as shown in Note 5 below.
Consolidated Balance Sheet at 31 December 2023
2023 Restated 2022 Restated
2021
£'000 £'000 £'000
ASSETS
Non-current assets 2,684 2,684 12,696
Goodwill
Intangible assets 3,654 2,384 1,637
Property, plant and equipment 5,020 4,639 5,033
(_________) (_________) (_________)
11,358 9,707 19,366
(__)(______) (________) (________)
Current assets
Financial assets 4,035 3,031 2,596
Trade and other receivables 16,015 13,471 12,370
Reinsurance assets (2) 42 108
Inventories - Finished Goods 272 726 898
Cash and cash equivalents 17,497 16,958 20,291
Current tax assets 12 229 310
(_________) (_________) (_________)
37,829 34,457 36,510
(___)(______) (_________) (_________)
Total assets 49,187 44,164 55,876
(__________) (__________) (__________)
Consolidated Balance Sheet at 31 December 2023
2023 Restated 2022 Restated
2021
£'000 £'000 £'000
EQUITY
Equity attributable to equity holders
of Personal Group Holdings Plc
Share capital 1,562 1,562 1,561
Share premium 1,134 1,134 1,134
Share based payment reserve 513 367 158
Capital redemption reserve 24 24 24
Other reserve (36) (55) (32)
Profit and loss reserve 28,798 27,946 38,436
(_________) (_________) (_________)
Total equity 31,995 30,978 41,281
(_________) (_________) (_________)
LIABILITIES
Non-current liabilities
Deferred tax liabilities 790 681 478
Trade and other payables 567 130 402
Current liabilities ( )
Trade and other payables 15,100 11,293 12,293
Insurance contract liabilities 735 1,082 1,422
(_________) (_________) (_________)
15,835 12,375 13,715
(_________) (_________) (_________)
(_________) (_________) (_________)
Total liabilities 17,192 13,186 14,595
(_________) (_________) (_________)
(_________) (_________) (_________)
Total equity and liabilities 49,187 44,164 55,876
(_________) (_________) (_________)
( )
Consolidated Statement of Changes in Equity for the year ended 31 December
2023
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 2023 1,562 1,134 24 367 (55) 27,946 30,978
(________) (______) (______) (______) (______) (________) (________)
Dividends - - - - - (3,482) (3,482)
Employee share-based compensation - - - 146 - 23 169
Proceeds of SIP* share sales - - - - - 22 22
Cost of SIP shares sold - - - - 35 (35) -
Cost of SIP shares purchased - - - - (16) - (16)
(________) (________) (________) (________) (________) (________) (________)
Transactions with owners - - - 146 19 (3,472) (3,307)
(________) (________) (________) (________) (________) (________) (________)
Profit for the year - - - - - 4,324 4,324
(________) (________) (________) (________) (________) (________) (________)
(________) (_______) (________) (________) (________) (________) (________)
Balance as at 31 Dec 2021 1,561 1,134 24 513 (36) 28,798 31,995
(________) (______) (______) (________) (__________) (_________) (_________)
*PG Share Ownership Plan (SIP)
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 2022 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 Cash Flow Statement
2023 2022
£'000 £'000
Net cash from operating activities (see next page) 6,678 3,240
(__________) (__________)
Investing activities ( ) ( ) ( )
Additions to property, plant and equipment (157) (332)
Additions to intangible assets (2,040) (1,196)
Proceeds from disposal of property, plant and equipment 78 39
Proceeds from disposal of financial assets - 871
Purchase of financial assets (823) (1,517)
Interest received 807 145
Acquisition of QCG - (812)
(__________) (__________)
Net cash used in investing activities (2,135) (2,802)
(__________) (__________)
Financing activities
Proceed from issue of shares - 1
Interest paid (1) -
Purchase of own shares by the SIP (16) (54)
Proceeds from disposal of own shares by the SIP 25 21
Payment of lease liabilities (530) (429)
Dividends paid (3,482) (3,310)
(__________) (__________)
Net cash used in financing activities (4,004) (3,771)
(__________) (__________)
Net change in cash and cash equivalents (539) (3,333)
Cash and cash equivalents, beginning of year 16,958 20,291
(__________) (__________)
Cash and cash equivalents, end of year 17,497 16,958
(_________) (_________)
2023 2022
£'000 £'000
Operating activities
Profit after tax 4,324 (7,253)
Adjustments for 1,135 1,052
Depreciation
Amortisation of intangible assets 770 786
Goodwill impairment - 10,575
Profit on disposal of property, plant and equipment 8 12
Realised and unrealised investment (gains)/losses (181) 210
Interest received (807) (145)
Interest charge 79 20
Share-based payment expenses 169 291
Taxation expense recognised in income statement 1,010 493
Changes in working capital
Trade and other receivables (2,569) (1,637)
Trade and other payables 3,247 (1,486)
Insurance Liabilities (275) 476
Inventories 454 172
Taxes paid (686) (326)
(__________) (__________)
Net cash from operating activities 6,678 3,240
(_________) (_________)
Consolidated Cash Flow Statement
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. This segment includes agency revenue generated from the resale of
vouchers.
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.
Segment analysis
Restated
2023
2022
£'000 £'000
Revenue by segment
Affordable Insurance 28,708 25,406
Other Owned Benefits 11,081 16,800
Benefits Platform 9,445 7,835
Benefits Platform - Group Elimination (2,760) (2,627)
Pay & Reward 2,246 2,008
Other Income
Other 139 237
Investment income 807 145
(__________) (__________)
Group Revenue 49,666 49,804
(__________) (__________)
Adjusted EBITDA* contribution by segment
Affordable Insurance 11,226 9,032
Other Owned Benefits 369 664
Benefits Platform 3,837 2,887
Pay & Reward 493 495
Other 1,033 139
Group admin and central costs (8,732) (7,107)
Charitable Donations (100) (100)
(__________) (__________)
Adjusted EBITDA* 8,126 6,010
(__________) (__________)
Interest (79) (20)
Depreciation (1,135) (1,052)
Amortisation (770) (786)
Goodwill impairment - (10,575)
Corporate acquisition costs - (46)
Restructuring costs (639) -
Share Based Payments Expenses (169) (291)
(__________) (__________)
Profit before tax 5,334 (6,760)
(__________) (__________)
2023
Restated
2022
£'000
£'000
Revenue by segment
Affordable Insurance
28,708
25,406
Other Owned Benefits
11,081
16,800
Benefits Platform
9,445
7,835
Benefits Platform - Group Elimination
(2,760)
(2,627)
Pay & Reward
2,246
2,008
Other Income
Other
139
237
Investment income
807
145
(__________)
(__________)
Group Revenue
49,666
49,804
(__________)
(__________)
Adjusted EBITDA* contribution by segment
Affordable Insurance
11,226
9,032
Other Owned Benefits
369
664
Benefits Platform
3,837
2,887
Pay & Reward
493
495
Other
1,033
139
Group admin and central costs
(8,732)
(7,107)
Charitable Donations
(100)
(100)
(__________)
(__________)
Adjusted EBITDA*
8,126
6,010
(__________)
(__________)
Interest
(79)
(20)
Depreciation
(1,135)
(1,052)
Amortisation
(770)
(786)
Goodwill impairment
-
(10,575)
Corporate acquisition costs
-
(46)
Restructuring costs
(639)
-
Share Based Payments Expenses
(169)
(291)
(__________)
(__________)
Profit before tax
5,334
(6,760)
(__________)
(__________)
2. Taxation comprises United Kingdom corporation tax of
£1,010,000 (2022: £493,000) including a deferred tax charge of £109,000
(2021: £122,000)
3. The basic and diluted earnings per share are based on
profit for the financial year of £4,234,000 (2022: £7,253,000 loss) and on
31,226,632 basic (2022: 31,214,765) and 31,977,184 diluted (2022: 31,969,989)
ordinary shares, the weighted average number of shares in issue during the
year.
4. The total dividend paid in the year was £3,482,000 (2021:
£3,310,000)
This preliminary statement has been extracted from the 2023 audited financial
statements that will be posted to shareholders in due course. The statutory
accounts for each of the two years to 31 December 2023 and 31
December 2022 received audit reports, which were unqualified and did not
contain statements under section 498 (2) or (3) of the Companies Act
2006. The 2022 accounts have been filed with the Registrar of Companies but
the 2023 accounts are not yet filed.
5. Prior Year Restatement
As a result of the implementation of IFRS 17, it is necessary to restate the
2022 results as though these policies have always been in effect. Furthermore,
2022 has been restated to reflect a change in accounting for voucher resale
income to appropriately reflect the agency nature of the underlying contracts.
Below is a reconciliation from the 2022 income statement as presented in the
prior year signed financial statements to the income statement presented as a
comparative in these financial statements.
IFRS 17
The transition to IFRS 17 has resulted in a small change in presentation on
the balance sheet, particularly around unpaid premiums. These were previously
presented as insurance receivables but, per IFRS 17, these now offset the
liability for remaining coverage within insurance contract liabilities. See
Note 23 in the Annual Report for further details.
Voucher Income reclassification
Over the course of the year, management has undertaken a review of a number of
the underlying arrangements that it has with its suppliers, considering in
particular (in accordance with IFRS 15) the steps taken to fulfil the
purchasing of the vouchers (which are increasingly electronic in nature), the
process by which the vouchers are transferred from supplier to customer and
whether the Group has control of those vouchers prior to the transfer of those
vouchers from the supplier to the customer.
The key indicators of control such as inventory risk, control over pricing
and responsibility over the acceptability of the goods being fulfilled, have
been considered during this review and, while the Group does have limited
control over pricing, the risks associated with the other indicators reside
with suppliers. As a result, management considers the substance of these
relationships as that of an agency, with only the resulting transaction fee
and/or margin recognised in the income statement for the period.
Management also concluded that PMS was acting as an agent in the prior year
and have therefore restated the comparatives to appropriately reflect the
agency nature of the underlying contracts. As a consequence, 2022 income has
been netted to represent agency income and this figure has been included
within employee benefits and services income. Expenses related to this agency
service (largely card transaction costs) have been allocated to employee
service expenses accordingly.
Below is a reconciliation from the 2022 income statement as presented in the
prior year signed financial statements to the income statement presented as a
comparative in these financial statements.
Previous IFRS 17 Voucher Rounding Restated
2022
Reclass
Income
£'000
2022
£'000
£'000
£'000
£'000
Gross premiums written 25,660 (25,660) - - -
Outward reinsurance premiums (138) 138 - - -
Change in unearned premiums (254) 254 - - -
Change in reinsurers' share of unearned premiums (11) 11 - - -
Earned premiums net of reinsurance 25,257 (25,257) - - -
Insurance Revenue - 25,406 - - 25,406
Employee benefits and services income 23,627 - 385 2 24,016
Voucher resale income 37,389 - (37,389) - -
Other income 237 - - - 237
Investment income 145 - - - 145
Group revenue 86,655 149 (37,002) 2 49,804
Claims incurred (6,990) 6,990 - - -
Insurance operating expenses (6,619) 6,619 - - -
Insurance Service Expenses - (13,674) - (1) (13,675)
Net expenses from reinsurance contracts held - (84) - (1) (85)
Employee benefits and services expenses (22,236) - (366) - (22,602)
Voucher resale expenses (37,368) - 37,368 - -
Other expenses (33) - - - (33)
Group administration expenses (8,973) - - - (8,973)
Share based payments expenses (291) - - - (291)
Unrealised losses on equity investments (210) - - - (210)
Charitable donations (100) - - - (100)
Group expenses (82,820) (149) 37,002 (2) (45,969)
Operating profit 3,835 - - - 3,835
Finance costs (20) - - - (20)
Goodwill impairment (10,575) - - - (10,575)
Loss before tax (6,760) - - - (6,760)
Taxation (493) - - - (493)
Loss for the year (7,253) - - - (7,253)
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 restructuring 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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