TIDMPGH
RNS Number : 1100T
Personal Group Holdings PLC
23 March 2021
23 March 2021
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.
Personal Group Holdings plc
("the Company" or "Group")
Preliminary Results & Final Dividend for the Year Ended 31
December 2020
Robust financial results alongside clear strategic progress
Personal Group Holdings Plc (AIM: PGH), the digitally-enabled
employee benefits and services provider, is pleased to announce its
preliminary results for the year ended 31 December 2020.
Financial Highlights
-- Group revenue resilient at GBP71.5m (2019: GBP70.9m)
despite the COVID-19 impact, owing to a high level
of recurring revenue and diverse income streams
-- Adjusted EBITDA, the Group's key performance metric,
of GBP10.1m (2019: GBP11.0m)
-- Statutory profit before tax of GBP8.6m (2019: GBP10.5m,
with the benefit of a GBP1.3m tax provision release)
-- Basic EPS of 22.1p (2019: 28.4p)
-- Strong balance sheet and liquidity with cash and
deposits as at year end of GBP20.2m, and no debt
-- Dividend announced post-period end of 5.1p per share
Operational Highlights
-- Introduced new sales channels of virtual visits and
telesales in the core insurance business to mitigate
inability to perform face to face visits on client
premises due to COVID-19, but new annualised insurance
premium still impacted at GBP2.4m (2019: GBP9.0m)
-- Significant new contracts secured with Royal Mail
and post-period end with Kingfisher, together adding
an extra 180,000 potential customers able to buy
insurance products
-- Successful launch of the Sage Employee Benefits offering,
targeting the SME sector
-- Expansion of Public Sector customer base, signing
contracts with 13 public sector clients and being
accepted onto six public sector frameworks
-- Hapi users up c.15% to over 470,000 with over 175
organisations using our employee engagement platform
Post-period trading and Outlook
-- Limited new insurance sales during 2020 and the current
lockdown will impact insurance revenues in 2021
-- Sage Employee Benefits currently delivering in excess
of GBP1m gross annualised recurring revenues, representing
an exciting mid-term opportunity and potential access
to approximately 10m additional employees
-- Growing pipeline of opportunities both direct and
through partners
-- Clear strategy in place, which will enable the Group
to capitalise on market trends including the increased
importance of supporting employee wellbeing
* Adjusted EBITDA is defined as earnings before interest, tax,
depreciation, amortisation of intangible assets, goodwill
impairment, share-based payment expenses, corporate acquisition
costs, restructuring costs and release of tax provision.
Deborah Frost, Chief Executive of Personal Group, commented:
"There is no doubt it has been a very challenging year, with the
restrictions in 2020 impacting new insurance sales in 2020 and into
2021, but looking past this one-off headwind, we believe the
business has entered the new year in a very strong position.
I am proud of the way that the team has responded. We were able
to quickly pivot our core insurance sales approach so that it could
be delivered virtually where client availability allowed, and
continued to press forward with other strategic initiatives, such
as broadening our services into SME and the public sector. Thanks
to the hard work of everyone in the business we have delivered
robust financial results alongside a number of significant new
client wins and the fruition of our partnership with Sage.
Looking after the health and wellbeing of all employees, from
key workers to SME employees, is high on the agenda for many UK
managers, and we have an excellent proposition to make this a
reality. Our strategy to expand our footprint into new markets has
begun to be executed over recent months as we have substantially
expanded the pipeline of employees to whom we can sell our
products. We have a winning team creating a brighter future for the
UK workforce and look toward to the future with excitement.
I want to thank Mark Winlow, our outgoing chairman, for his
support and drive over the last eight years and welcome Martin
Bennett to the team as we enter the next chapter in our
development."
An overview of the preliminary results from Deborah Frost, Chief
Executive, is available to watch here:
https://youtu.be/QkGAbk8v1PU
-S-
For more information please contact:
Personal Group Holdings Plc
Deborah Frost (CE) / Sarah Mace Via Alma PR
(CFO)
Cenkos Securities Plc
Max Hartley / Callum Davidson (Nomad) +44 (0)20 7397 8900
Russell Kerr (Sales)
Alma PR +44 (0)20 3405 0205
Susie Hudson / Caroline Forde / personalgroup@almapr.co.uk
Harriet Jackson
Notes to Editors
Personal Group Holdings Plc (AIM: PGH) is a digitally-enabled
employee 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. Many
of these services are delivered through its proprietary app,
Hapi.
The Group's growth strategy is centred around widening the
footprint of the business into the SME, talent-led & Public
Sectors, thereby expanding the addressable customer base. In
addition, it aims to grow in its existing industrial heartlands, to
re-invigorate growth in insurance policyholders and to drive the
use of its SaaS offerings.
Clients include: Arsenal FC, Barchester Healthcare, DHL Supply
Chain Limited, Merseyrail, Randstad, Royal Mail Group, the Sandwell
& Birmingham NHS trust and Stagecoach Group plc. c.40% of
clients are served by two or more group companies.
For further information, please see www.personalgroup.com
Chairman's Statement
Navigating a challenging year
As we are well aware, 2020 was a highly challenging year for all
following the outbreak of the COVID-19 pandemic. We are therefore
particularly pleased that Personal Group demonstrated its
resilience in this most challenging year - we have again delivered
a good profit from our operations and have driven forward key
strategic initiatives. We also continued to pay dividends, albeit
reduced, to shareholders, balancing the importance of income to
this stakeholder group with a programme of prudent cost
management.
Most critically, we continued to deliver benefits, both in
financial terms and in peace of mind, to individual employees, many
of whom make up the working backbone of Britain as "Key Workers".
The risks that these individuals were taking in the early days of
the pandemic were unknown and consequently, our products were
starkly important in providing protections to individuals and their
families should they become hospitalised or, as sadly happened in
some cases, die. I am proud that we have managed to Connect the
Unconnected, Protect the Unprotected, and equipped employers to
engage and reward their loyal employees during 2020.
I sincerely thank all the people at Personal Group who have
enabled us to provide support to our policyholders, in particular.
Behind the scenes our people have shown tremendous flexibility to
continue providing a seamless service. It is with great pride that
I tell those outside our business about what we do and how we have
responded. Deborah Frost covers this in more detail in her Chief
Executive report however I would also like to take this opportunity
to recognise that all we have achieved this year flows from the
efforts and attitude of all of our Personal Group employees.
Group priorities responding to COVID-19
During 2020 we have seen a considerable change in the behaviour
of employers. Our clients are becoming more thoughtful in how they
approach engaging their workforces and improving their wellbeing.
This has become a key business imperative.
As a result, many of our clients now have more complex
communication and engagement needs and Personal Group has responded
to this well. Our methods of engaging with our existing and
prospective clients have changed; we have become more targeted and
consistent in our account management which has led to successes
with Royal Mail and other significant clients. We have also
developed a much more integrated style that takes advantage of the
strengths of our combined business propositions and our unique
salesforce. Furthermore, we have adapted to selling our products
remotely.
Nevertheless, two of our businesses have faced significant
challenges in the year - the face-to-face selling of insurance was
impossible for large parts of 2020 and Innecto, our reward
consulting business, was similarly affected. However, we were
pleased to see our Software as a Service (SaaS)-based offering grew
well. It is also well positioned for 2021 as our partnership with
Sage has started to have a positive effect with a marked increase
in SME clients signing up to the offering. Let's Connect, our
business delivering consumer technology as a benefit, performed
well but was hindered by global supply chain shortages during its
peak trading period in the run up to Christmas. In the round, our
results stood up due to our high level of repeat business and
recurring fees from a diverse business model. Overall, our business
delivered Revenue up GBP0.6m from last year with Profit Before Tax
(PBT) down circa GBP2m.
We consider Adjusted EBITDA to be the most appropriate measure
of our performance as it has a consistent composition and does not
include one-off elements that might distract from the underlying
performance. Adjusted EBITDA for 2020 was only marginally lower
than 2019, a remarkable performance given all that happened in 2020
and demonstrating the resilient nature of our business model.
As well as thanking our colleagues for their hard work, it is
worth noting that we do not take for granted the continued support
of our shareholders, large and small. We greatly appreciate their
belief in the business and remain focused on creating value for
both them and all our stakeholders.
Progression on our ESG journey
As a business that is driven by a passion and commitment to
improving people's health and wellbeing, and that wants to make a
positive impact on our communities and our environment, ESG is very
important to us and a priority at Board level. We have identified a
number of ambitious ESG targets that we are now working towards,
such as reducing our carbon footprint and having a positive social
impact on the communities that we work with. I am particularly
pleased that Personal Group is at the vanguard of diversity at the
board and senior executive levels. Further information on the
Group's ESG goals and targets are detailed in our annual
report.
Board appointments and succession
This is my last report as chairman of Personal Group. I will be
stepping down from the business immensely proud that we weathered
the tidal wave of 2020 and remain buoyant as we progress in
2021.
The world in which we operate has changed rapidly in the last
eight years and I am pleased how the business has adapted. I leave
the business still facing challenges and opportunities ahead but in
the extremely capable hands of Deborah, our Chief Executive and my
successor Martin Bennett, former CEO of HomeServe UK, who joined
the board in January. I thank the entire board for their
support.
2020 saw some significant changes to our leadership team and
Board. Long-serving executive directors, CFO Mike Dugdale, and Andy
Lothian, MD of PGB, respectively retired in September and stepped
down as an executive in December. Andy remains a Director, but in a
non-Executive capacity. Ken Rooney has also retired from the
Personal Group Holdings board but will remain a director of our
regulated insurance company, Personal Assurance. They have all
provided extremely valuable counsel to Personal Group with support
and challenge brought to the Senior Leadership Team, especially in
the last year. We also welcomed Sarah Mace, as interim CFO in
September 2020, a position which became permanent post-period end
in January 2021. Sarah was formerly our Group Financial Controller
and Company Secretary so brings Personal Group experience alongside
her broader skillset. When I step down, our board will be equally
split by gender.
Dividend
Following the outbreak of COVID-19, in May 2020 the Board took
the decision to reduce the second quarter dividend as a measure of
prudence amidst the uncertain trading environment resulting from
the pandemic. In November 2020, the Company also announced that, in
light of further national lockdown restrictions and ongoing
uncertainty at that time, any payment of its fourth and final
dividend in respect of its financial year ending 31 December 2020
would be made following publication of its audited full year
results in March 2021.
As noted with the release of these accounts, a final dividend of
5.1p will be paid to shareholders on 12 May 2021.
We also announced in November 2020 that from 2021 the Board has
decided to adopt a more typical dividend payment profile with two
dividends scheduled each year following the respective half-year
and full year financial reporting periods. This revised profile
will enable the Board to have greater clarity on operational
results for the year before declaring the dividend to be paid. We
will seek to continue dividend payments in line with the historic
pay-out ratio over the past three years.
Outlook
Whilst we have faced quite a different year than expected.
Personal Group has demonstrated its underlying strength and
resilience. I close with the same sentiments as last year.
"Fairness is an often-stated aspiration, but making it happen is
rarely discussed. Making aspects of financial security accessible
to more people at a fair price is what Personal Group does,
consistently". Personal Group did so again in 2020 and I wish all
involved every success in making it happen in the future.
Mark Winlow
Non-Executive Chairman
22 March 2021
Chief Executive Statement
An eventful year
It has been a tumultuous year, and no one could have predicted
back in January 2020 all that has happened since. Not only have we
faced the coronavirus pandemic and pivoted our core insurance
business in response, but it has also been a milestone year for
several other reasons, as we won major new clients and saw the
start of long- awaited results from our partnership with Sage in
the SME market.
I am extremely proud of how everyone in the business has
persevered and innovated to maintain services to our clients
throughout the year, no matter what was thrown at them. I
congratulate them for their unfailing determination and hard work.
I would also like to take this opportunity to thank our
shareholders for their support. In any year it is helpful to know
that our shareholders believe in the Board and leadership team, but
this year your support has been especially welcome.
For many UK employees, this was the year when access to our
insurance products, wellbeing support and engagement from their
employers demonstrated their value, and we are pleased to have been
able to make available those much-needed services to over 1,260,000
UK employees. I send condolences to the families of our
policyholders who have been bereaved and good wishes to those who
have been ill and are now recovering. I am glad that we could
provide assurance and help to those individuals through these tough
times.
Financial review
Our financial performance in 2020 was robust, with our
underpinning recurring revenue model demonstrating its resilience
despite unprecedented upheaval in our business operations.
Adjusted EBITDA has been driven by the strength of our insurance
book and the value our employer clients place on the benefits
platform. Let's Connect, our consumer technology benefits business,
retained clients but global stock shortages and increased
distribution costs hit their EBITDA contribution. Innecto, our
reward consultancy, also suffered as consultancy projects stalled,
although new sales and client retention of the Digital suite
supported their recovery opportunities. Alongside this the
contribution from the SaaS business continued to grow.
Our costs reduced in the year due to our Insurance Field Sales
team being unable to work, which resulted in a saving in
policyholder acquisition costs. However, the impact of this will be
felt in 2021 and beyond where, despite our best endeavours, there
is a gap in new insurance premium to set against our planned
acquisition costs for policyholders in 2021. Whilst it will take
some time to build back profitability, we are pleased to have over
650,000 potential buyers in our pipeline, a c.43% increase on the
figure at the end of 2019.
Impact of COVID-19 and pivoting our core business
In 2020 our core business sales process - sitting down with
employees in their place of work, connecting them to their benefits
platform, and talking to them about the advantages of holding an
insurance policy - was halted almost overnight in March. However,
the team immediately switched to different distribution methods
through phone, and later, virtual visits, connecting with
policyholders via video calls in their workplace. Although
inevitably our new approach was impacted by ongoing restrictions,
which meant there were generally fewer people in work, conversion
rates of the virtual visits that took place were comparable with
that which we have historically seen in-person. It is clear that we
have developed an effective, lasting and lower cost new channel to
add to our distribution model.
Our policyholders have demonstrated their belief in the value of
our products, with retention rates increasing to reach over 80%
year-on-year retention. We are proud to have kept our promises
through the pandemic, paid out claims promptly and in full, as well
as developing an immediate response to assisting financially
vulnerable customers. Our genuine desire to protect our
policyholders remains an important part of why they choose to stay
with us.
Performance against growth strategy
Our growth strategy centres around widening our footprint across
a broader range of industries as part of our vision to create a
brighter future for the UK workforce.
We aim to ensure the insurance, employee benefits and wellbeing
services we provide can be delivered in an appropriate,
easy-to-access and cost effective medium. To this end we are
pursuing the greater use of technology across the business,
including through our proprietary platform and app, Hapi. This also
means that the Group will increasingly benefit from a growing level
of recurring revenue and high margins.
We also intend to accelerate cross-selling across the Group.
With a solid base of 140 clients (c.40% of our base) being served
in 2020 by two or more lines of business, we have identified this
as a core KPI for building future value.
Entering the SME market with the conversion of Sage clients
beginning
For some time, we have been in the process of working with Sage
to launch Sage Employee Benefits ("SEB"), a digital benefits
platform for SMEs, and this has begun to bear fruit over the
period. Following limited-time free trials through the summer and
autumn, we now have clear evidence that companies are seeing value
in the offering and are converting to paid at the end of the trial
period.
We took the on-boarding and mobilisation of new customers
in-house, and this has been positive in allowing us to develop
predictive analytics about which customers stay and pay, improving
our set-up and engagement levers.
The launch of Sage Employee Benefits has shown what we have
always believed; that the SME market is a major market for growth.
The challenge has always been how to reach it at cost-effective
scale, and we are now seeing the scope our partnership offers us to
reach an available market of c. 10 million employees. We are
pleased to confirm that post-period end SEB is generating GBP1m
gross annualised recurring revenues.
Gaining a greater foothold in the Public Sector
The Public Sector is another market where we have been looking
to increase out foothold, and we were therefore pleased to have
signed contracts with 13 new NHS and public sector clients. In
addition, we were accepted onto six public sector frameworks during
the year. This makes the onerous procurement process for NHS Trusts
and local government far simpler and demonstrates that the value of
our products is understood by this target market.
Maintaining focus on the growth of our insurance book
In our Insurance segment, our mission to 'Protect the
Unprotected and Connect the Unconnected' has resonated strongly
with clients as they seek to prioritise their employees'
welfare.
We secured the opportunity to sell insurance to Royal Mail Group
on a three-year contract, strengthening an existing relationship
with the Group. In addition, we agreed a roll-out with Kingfisher
plc post-period end, to deliver a new Hapi benefits platform and
insurance offer. Together, these two wins alone give us an extra
180,000 additional employees who can buy insurance.
Added to the c. 450,000 employees we currently have in our
client book, there are significant opportunities for developing our
insurance book over future years.
Our goal for 2021 and 2022 is to reverse the impact of the
COVID-19 shutdown on this segment of our business, to take
advantage of our new channel distribution methods and to ensure
that our good-value simple policies protect as many as possible,
recognising the effect of COVID-19 has been to change people's
perception of risk.
Driving an increased use of digital platforms with a SaaS
model
The pandemic has driven increased adoption of services delivered
digitally, and the same is true in the employee benefits and
insurance market, where employees began to increasingly want and
expect their benefits to be accessible through consumer-grade
technology.
With the Hapi mobile app being a core part of our product offer
we were in a strong position to address the demand, especially for
key workers who are often on the move rather than sitting behind a
desk. We have developed the capability to also offer our insurance
products digitally through Hapi, allowing us to reach more
potential policyholders, albeit conversion rates are as yet
untested through this delivery method Our development of virtual
visits and usage of video calls has opened up sites and employers
who previously were too geographically remote, or too small to
reach with our face-to-face model. We ended the year with 92%
client retention on the Hapi platform, demonstrating its enduring
value to clients.
Our long-term strategy has been to develop more margin on our
SaaS solutions and to drive subscription revenue through widening
our sector footprint beyond our industrial heartlands. Product
adoption growth with existing clients for Hapi, new clients for
Innecto Digital and the take-off of Sage Employee Benefits
demonstrate the merit of our platforms and the results of our
investments into Sales and Marketing over the last couple of years.
SaaS clients build future value for our business and add to the
security of our recuring revenue model.
The Group's 2025 aspiration is to have 1 million users of the
Group's Hapi platform, and we currently stand at over 470,000
activated users, an increase of c.15% in-year, despite the pandemic
impact.
Our People
Our teams have performed exceptionally well, in difficult
circumstances, working from home on kitchen tables and in bedrooms.
I salute them all for their unwavering support for our clients and
policyholders through what has been, at times, a harrowing
year.
In recognition of our employees' commitment, we made
shareholders of all employees who had worked through the pandemic
by offering GBP500 each of free shares - to both thank them for
their contribution but also allow them to share in our future
success as the business grows over the years.
Outlook
Our plans for growth are centred around our aspiration to double
profits by widening our footprint into new industry sectors and
delivering new products and services to existing and new clients.
The impact of the pandemic will be seen in an EBTIDA decline in
2021 as a result of limitations in insurance sales during lockdown,
yet we retain a strong level of ambition and today affirm our
continued desire to reach the profit growth aspiration in the
mid-term. Our strategy remains the right one and reasons abound for
continued excitement about our future prospects.
The market opportunity is accelerating. The importance of
looking after employee wellbeing in running a successful,
sustainable business has never been more apparent, and will be an
important macro growth trend in years to come. We have proven
access and delivery into a number of sectors, including the vast
SME market, and look forward to building on the results we've seen
so far.
Finally, following the successful integration of Let's Connect
and Innecto we are actively seeking further complementary
acquisition opportunities. To accelerate entry into key markets,
and provide an opportunity to both cross-sell and vertically
integrate key supply chains we are actively looking for
acquisitions which:
-- Fit our recurring revenue model;
-- Bring access to new clients and markets; and
-- Bring attractive propositions to post COVID-19 fast-growth sectors
We have a strong and motivated team in place and a high-quality,
well-invested offering. We are confident we are positioned for long
term success.
Deborah Frost
Chief Executive
22 March 2021
CFO Review
Group revenue
Group revenue for the year of GBP71.5m (2019: GBP70.9m) reflects
a mixed performance across the various business areas. The COVID-19
pandemic directly impacted performance on the insurance side, where
our field sales team were unable to carry out their traditional
face-to face approach for new insurance sales, and PG Let's Connect
was affected by global supply shortages of technology products
during its peak trading period.
However, this was outweighed by strong revenue growth from the
SaaS business, from both transactional spend through the Hapi
platform and the platform subscriptions themselves. The Group
undoubtedly benefitted from its high levels of recurring revenue
and repeat business in a very challenging trading environment.
Adjusted EBITDA*
Adjusted EBITDA* for the year was GBP10.1m (2019: 11.0m).
Performance in both SaaS and PG Let's Connect reflected the revenue
trend in those respective areas, but contribution from the
insurance business increased by GBP0.5m on the previous year,
predominantly as a result of the savings in acquisition costs with
our field sales team off the road. In 2020 the Group recovered
GBP0.6m through utilisation of the Government furlough scheme, with
the vast majority related to this area. The furlough scheme was the
only COVID-19 Government initiative utilised by the Group.
We believe Adjusted EBITDA* remains the most appropriate measure
of performance for our business, reflecting the underlying
profitability of the business and removing the impact of one-off
items arising from past acquisitions on the Group's reported Profit
Before Tax. The definition remains unchanged from previous
years.
Profit before and after tax
Profit before tax was GBP8.6m during the year (2019: GBP10.5m).
This reflects both the reduction in Adjusted EBITDA* and also the
fact that 2019 benefitted from a GBP1.3m tax provision release. The
tax charge for the year was GBP1.7m (2019: GBP1.6m), and profit
after tax for the year of GBP6.9m (2019: GBP8.8m).
EPS
Resulting earnings per share was 22.1p (2019: 28.4p).
Insurance
Revenue from the Group's core insurance business in 2020 reduced
by GBP1.4m to GBP28.8m (2019: GBP30.2m).
The lockdowns enforced on us by COVID-19 had a direct impact on
our ability to write new insurance sales through our traditional
face-to-face model and, whilst we were able to mitigate this in
part through our adoption of virtual visits and telesales, our
annualised new business insurance premiums dropped significantly to
GBP2.4m (2019: GBP9.0m). This had an impact on revenue in the year
but will also impact further in 2021 as the shortfall in new sales
flows through. Continuing restrictions in the first quarter of 2021
will compound this in the short-term, however the additional
180,000 employees available from our 2020 new business wins,
together with the c. 450,000 employees from our existing clients,
gives us significant opportunities to write new insurance business
over the next few years.
In contrast, our year-on-year retention rates for existing
policyholders strengthened during 2020 to over 80%, helping to
alleviate the shortfall from new business. This reflects the value
that policyholders place on our simple, low-cost hospital,
convalescence and death benefit plans, that have been particularly
relevant to our policyholder base of essential and key workers
during the pandemic. Notwithstanding the short- term impact of
COVID-19, the Group's insurance income remains a high quality and
relatively stable revenue stream to the Group.
Claims ratios for the year remained fairly stable at 24.4%
(2019: 22.1%) despite the Group paying out GBP0.5m, and holding a
significantly increased reserve at the year-end, in relation to
COVID-19 claims. We understandably saw an increase in our loss
ratio for death benefit, which represents c20% of our insurance
book, but this was mitigated by an offsetting reduction for
hospital and convalescence, reflective of the capacity of the NHS
being largely consumed by its COVID-19 response. With NHS waiting
lists having increased, we may potentially see claims for ordinary
operations begin to rise as the NHS catches up postponed
procedures. We will continue to monitor for any evidence of any
rises.
Despite the reduction to underwriting profit, Adjusted EBITDA*
was up GBP0.5m on the prior year at GBP8.8m (2019: GBP8.3m). This
was primarily due to the savings in new insurance acquisition
costs. With the majority of the field sales team and support staff
furloughed for a significant portion of the year, this area of the
business benefitted from temporary savings in salary costs together
with the related 'on-the-road' costs. The utilisation of furlough
has enabled us to keep our trained and regulated salesforce with us
until they are able to return to the field post lockdown.
SaaS
The Group's SaaS business saw revenue increase by GBP4.5m in
2020 to GBP26.0m (2019: 21.5m).
Transactional spend and commissions through the Hapi platform,
on products such as e-vouchers and reloadable cards, increased to
GBP22.7m (2019: 18.4m). Whilst this predominantly represents
pass-through revenue, it demonstrates an increased usage of the
platform, validating its value to clients.
Outside of this, the recurring revenue from the SaaS business
continued to show year-on-year growth. Hapi platform subscriptions
increased with the addition of some new 'SaaS only' clients,
combined with strong retention of existing clients, and growth in
SaaS sales. We continue to see our SaaS segment growing to provide
the Group with another high quality, very scalable revenue
stream.
The contribution from Sage Employee Benefits (SEB), the Group's
SME proposition being taken to market through its partner Sage,
increased with Sage supporting the cost of the platform. During the
year the product was offered to a section of Sage's client base on
a free trial basis. Initial conversion rates to a per-employee
monthly user fee have been encouraging and ahead of initial
expectations for the small sample that have converted to date.
Again, this provides opportunity for future growth.
Innecto, the Group's pay and reward subsidiary, which represents
around a third of the non-transactional revenue, saw a temporary
decline in its higher margin consultancy income as clients focussed
on their own COVID-19 activity. However, it made good operational
progress developing its 'Innecto digital' product range and has
entered 2021 with a strong pipeline of customers.
The combined impact of these resulted in Adjusted EBITDA* ending
slightly ahead of the prior year at GBP0.7m (2019: GBP0.6m).
PG Let's Connect
PG Let's Connect saw revenues reduce to GBP16.4m (2019:
GBP18.8m).
The business remained open and fulfilling orders throughout the
year however sales in the first half the year were impacted by some
clients deferring or postponing their schemes during the onset of
the pandemic.
The Company benefitted from its major client, Royal Mail Group,
whose contract was extended for a further 3 years in September
2020, continuing to run its 'always-on' scheme and had a healthy
end to the year, with those schemes that chose to run for the
Christmas period performing broadly in line with 2019. However
nationwide stock availability issues for some key in-demand items,
together with general supply chain disruption caused by COVID-19
restrictions, limited its potential performance for the year. This
does provide additional opportunity for 2021 when these products
become available.
Adjusted EBITDA* reduced to GBP0.5m (2019: GBP1.7m) reflecting
the lower revenues but also a temporary reduction in gross margin
as desired products were sourced from alternative suppliers. In
addition, margin was impacted by a reduction in commissions
received from third- party finance providers, in line with reduced
interest rates, together with an increased cost of insurances and
warranties.
Balance sheet
As at 31 December 2021 the Group's balance sheet remained
strong, with cash and deposits of GBP20.2m (2019: GBP17.0m) and no
debt.
The increase in cash balances reflects the Company's decision to
defer the payment of its fourth and final dividend of the year
until May 2021 as explained further below.
The Group's main underwriting subsidiary, Personal Assurance Plc
(PA), continues to maintain a conservative solvency ratio of 308%
(unaudited), with a surplus over its Solvency Capital Requirement
of GBP8.4m. 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 216% under its own regime, despite the increase
in death claims seen over the year.
No impairment was deemed necessary for the goodwill balances
held in respect of the acquisitions of PG Let's Connect and
Innecto.
Dividend
The Company paid a total dividend of 13.3p per share over the
year (2019: 23.3p).
Following the outbreak of COVID-19, in May 2020 the Board took
the decision to reduce its second quarter dividend as a measure of
prudence amidst the uncertain trading environment resulting from
the pandemic.
In November 2020, the Company also announced that, in light of
further national lockdown restrictions and ongoing uncertainty at
that time, any payment of its fourth and final dividend in respect
of its financial year ending 31 December 2020 would be made
following publication of its audited full year results in March
2021.
As noted with the release of these accounts, a final dividend of
5.1p will be paid on 12 May 2021 to members on the register as at 6
April 2021 (the record date). Shares will be marked ex-dividend on
1 April 2021. The last day for elections will be on 20 April
2020.
Also as announced in November 2020, from 2021 the Board has
decided to adopt a more typical dividend payment profile with two
dividends scheduled each year following the respective half- year
and full year financial reporting periods. This revised profile
will enable the Board to have greater clarity on operational
results for the period, prior to declaring the amount to be
paid.
The Board seeks to continue dividend payments in line with the
historic pay-out ratio over the past three years.
Sarah Mace
Chief Financial Officer
22 March 2021
Consolidated Income Statement
2020 2019
GBP'000 GBP'000
Continuing Operations
Gross premiums written 29,265 30,369
Outward reinsurance premiums (182) (204)
Change in unearned premiums (245) 59
Change in reinsurers' share
of unearned premiums (8) (10)
(_________) (_________)
Earned premiums net of reinsurance 28,830 30,214
Other insurance related income 138 191
IT salary sacrifice income 16,421 18,794
SaaS income 25,963 21,459
Other non-insurance income 98 100
Investment income 74 131
(_________) (_________)
Revenue 71,524 70,889
(_________) (_________)
Claims incurred (7,031) (6,670)
Insurance operating expenses (13,504) (15,964)
Other insurance related expenses (266) (210)
IT salary sacrifice expenses (16,057) (17,157)
SaaS costs (25,458) (20,930)
Share-based payment expenses (8) (19)
Charitable donations (100) (100)
Amortisation of intangible assets (470) (489)
(___________) (___________)
Expenses (62,894) (61,539)
(___________) (___________)
Operating profit 8,630 9,350
Finance costs (73) (131)
Release of provisions - 1,259
Share of profit of equity-accounted
investee net of tax - 9
(_________) (_________)
Profit before tax 8,557 10,487
Tax (1,663) (1,649)
(_________) (_________)
Profit for the year 6,894 8,838
The profit for the year is attributable to equity holders
of Personal Group Holdings Plc
Earnings per share Pence Pence
Basic 22.1 28.4
Diluted 22.1 28.4
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 2020
2020 2019
GBP'000 GBP'000
ASSETS
Non-current assets
Goodwill 12,696 12,696
Intangible assets 1,254 1,301
Property, plant and equipment 5,456 5,984
(_________) (_________)
19,406 19,981
(__) (______) (________)
Current assets
Financial assets 2,587 2,565
Trade and other receivables 18,346 18,549
Reinsurance assets 78 121
Inventories - Finished Goods 861 746
Cash and cash equivalents 17,589 14,476
Current tax assets 55 -
(_________) (_________)
39,516 36,457
(___) (______) (_________)
Total assets 58,922 56,438
(__________) (__________)
Consolidated Balance Sheet at 31 December 2020
2020 2019
GBP'000 GBP'000
EQUITY
Equity attributable to equity
holders
of Personal Group Holdings
Plc
Share capital 1,561 1,561
Share premium 1,134 1,134
Capital redemption reserve 24 24
Other reserve (21) (230)
Profit and loss reserve 38,076 35,526
(_________) (_________)
Total equity 40,774 38,015
(_________) (_________)
LIABILITIES
Non-current liabilities
Deferred tax liabilities 399 302
Trade and other payables 352 290
Current liabilities
Trade and other payables 14,274 15,043
Insurance contract liabilities 3,123 2,104
Current tax liabilities - 684
(_________) (_________)
17,397 17,831
(_________) (_________)
(_________) (_________)
Total liabilities 18,148 18,423
(_________) (_________)
(_________) (_________)
Total equity and liabilities 58,922 56,438
(_________) (_________)
Consolidated Statement of Changes in Equity for the year ended
31 December 2020
Equity attributable to equity holders of Personal Group Holdings
Plc
Share Share Capital Other Profit Total
capital Premium redemption reserve and loss equity
Reserve reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance as at 1 January
2020 1,561 1,134 24 (230) 35,526 38,015
(________) (______) (______) (______) (________) (________)
Dividends - - - - (4,147) (4,147)
Employee share-based
compensation - - - - 8 8
Proceeds of SIP* share
sales - - - - 26 26
Cost of SIP shares sold - - - 231 (231) -
Cost of SIP shares purchased - - - (22) - (22)
Shares issued in the - - - - - -
year
(________) (________) (________) (________) (________) (________)
Transactions with owners - - - 209 (4,344) (4,135)
(________) (________) (________) (________) (________) (________)
Profit for the year - - - - 6,894 6,894
(________) (________) (________) (________) (________) (________)
Total comprehensive income for
the year - - - - 6,894 6,894
(________) (_______) (________) (________) (________) (________)
Balance as at 31 December
2020 1,561 1,134 24 (21) 38,076 40,774
(________) (______) (______) (________) (__________) (_________)
* PG Share Ownership Plan (SIP)
Consolidated Statement of Changes in Equity for the year ended
31 December 2019
Equity attributable to equity holders of Personal Group Holdings
Plc
Share Share Capital Other Profit Total
capital Premium redemption reserve and loss equity
Reserve reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance as at 1 January
2019 1,544 - 24 (210) 33,937 35,295
(________) (______) (______) (______) (________) (________)
Dividends - - - - (7,244) (7,244)
Employee share-based
compensation - - - - 19 19
Proceeds of SIP* share
sales - - - - 20 20
Cost of SIP shares sold - - - 44 (44) -
Cost of SIP shares purchased - - - (64) - (64)
Shares issued in the
year 17 1,134 - - - 1,151
(________) (________) (________) (________) (________) (________)
Transactions with owners 17 1,134 - (20) (7,249) (6,118)
(________) (________) (________) (________) (________) (________)
Profit for the year - - - - 8,838 8,838
(________) (________) (________) (________) (________) (________)
Total comprehensive
income for the year - - - - 8,838 8,838
(________) (_______) (________) (________) (________) (________)
Balance as at 31 December
2020 1,561 1,134 24 (230) 35,526 38,015
(________) (______) (______) (________) (__________) (_________)
* PG Share Ownership Plan (SIP)
Consolidated Cash Flow Statement
2020 2019
GBP'000 GBP'000
Net cash from operating activities
(see next page) 8,100 8,668
(__________) (__________)
Investing activities
Additions to property, plant and equipment (341) (734)
Additions to intangible assets (424) (266)
Proceeds from disposal of property, plant and
equipment 382 398
Proceeds from disposal of investment property - 188
Purchase of financial assets (22) (34)
Interest received 74 131
Dividends received from equity accounted
investee - 59
Acquisition of subsidiary, net of cash
acquired - (2,714)
(__________) (__________)
Net cash used in investing activities (331) (2,972)
(__________) (__________)
Financing activities
Proceeds from the issue of shares - 1,151
Interest paid (2) (2)
Purchase of own shares by the SIP (22) (64)
Proceeds from disposal of own shares
by the SIP 26 20
Payment of lease liabilities (511) (229)
Dividends paid (4,147) (7,244)
(__________) (__________)
Net cash used in financing activities (4,656) (6,368)
(__________) (__________)
Net change in cash and cash equivalents 3,113 (672)
Cash and cash equivalents, beginning
of year 14,476 15,148
Cash and cash equivalents, end of year 17,589 14,476
(_________) (_________)
Consolidated Cash Flow Statement 2020 2019
GBP'000 GBP'000
Operating activities
Profit after tax 6,894 8,838
Adjustments for
Depreciation 1,003 970
Amortisation of intangible assets 470 489
Profit on disposal of property, plant
and equipment (150) (127)
Profit on disposal of investment property - (60)
Interest received (74) (131)
Interest charge 73 131
Share of profit of equity-accounted
investee, net of tax - (9)
Share-based payment expenses 8 19
Taxation expense recognised in income
statement 1,663 1,649
Changes in working capital
Trade and other receivables 247 (1,520)
Trade and other payables 384 1,406
Provisions - (1,259)
Inventories (115) (103)
Taxes paid (2,303) (1,625)
(__________) (__________)
Net cash from operating activities 8,100 8,668
(__________) (__________)
Notes to the Financial Statements
1 Segment analysis
The segments used by management to review the operations of the
business are disclosed below.
1) Core 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) IT Salary Sacrifice
IT salary sacrifice refers to the trade of PG Let's Connect, a
salary sacrifice technology Company purchased in 2014.
3) SaaS
Revenue in 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. Also included in this segment,
from 1 March 2019, is consultancy and license income derived from
selling Innecto digital platform subscriptions.
4) Other
The other operating segment consists exclusively of revenue
generated by Berkeley Morgan Group (BMG) and its subsidiary
undertakings along with any investment and rental income obtained
by the Group.
IT Salary
Core Insurance Sacrifice SaaS Other Group
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Operating segments
2020
Revenue
Earned premiums net
of reinsurance 28,826 - 4 - 28,830
Other income - Insurance
Related - - - 138 138
Other income - IT Salary
Sacrifice - 16,421 - - 16,421
Other income - Platform - - 3,229 - 3,229
Other income - Transactional
and commission - - 22,734 - 22,734
Other income - - - 98 98
Investment income - - - 74 74
(_________) (_________) (_________) (_________) (_________)
28,826 16,421 25,967 332 71,524
Total revenue (_________) (_________) (_________) (_________) (_________)
Net result for year
before tax 7,909 288 271 89 8,557
Amortisation - Acquisition
intangibles - - 205 - 205
Interest 47 14 12 - 73
Share based payments - - - 8 8
Depreciation 674 106 215 8 1,003
Amortisation (other) 182 61 22 - 265
Adjusted EBITDA* 8,812 469 725 105 10,111
(_________) (_________) (_________) (_________) (_________)
Segment assets 26,573 11,748 6,020 14,581 58,922
Segment liabilities 7,566 6,937 3,645 - 18,148
Depreciation and amortisation 856 167 442 8 1,473
* Adjusted EBITDA is defined as earnings before interest, tax,
depreciation, amortisation of intangible assets, goodwill
impairment, share-based payment expenses, corporate acquisition
costs, restructuring costs, and release of tax provision.
IT Salary
Core Insurance Sacrifice SaaS Other Group
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Operating segments
2019
Revenue
Earned premiums net
of reinsurance 30,205 - 9 - 30,214
Other income - Insurance
Related 3 - - 188 191
Other income - IT Salary
Sacrifice - 18,794 - - 18,794
Other income - Platform - - 3,104 - 3,104
Other income - Transactional
and commission - - 18,355 - 18,355
Other income - - - 100 100
Investment income - - - 131 131
(_________) (_________) (_________) (_________) (_________)
30,208 18,794 21,468 419 70,889
Total revenue (_________) (_________) (_________) (_________) (_________)
Net result for year
before tax 7,322 2,764 219 182 10,487
PG Let's Connect - Tax
provision - (1,259) - - (1,259)
Amortisation - Acquisition
intangibles - 53 171 - 224
Acquisition costs - - - 145 145
Interest 91 23 17 - 131
Share based payments - - - 19 19
Depreciation 791 112 58 9 970
Amortisation (other) 79 55 131 - 265
Adjusted EBITDA* 8,283 1,748 596 355 10,982
(_________) (_________) (_________) (_________) (_________)
Segment assets 25,195 12,023 4,669 14,551 56,438
Segment liabilities 7,948 7,045 3,430 - 18,423
Depreciation and amortisation 870 220 360 9 1,459
2. Taxation comprises United Kingdom corporation tax of
GBP1,566,000 (2019: GBP1,600,000) and a deferred tax charge of
GBP97,000 (2019: GBP49,000)
3. The basic and diluted earnings per share are based on profit
for the financial year of GBP6,894,000 (2019: GBP8,838,000) and on
31,164,809 basic (2019: 31,118,589) and 31,172,720 diluted (2019:
31,122,136) ordinary shares, the weighted average number of shares
in issue during the year.
4. The total dividend paid in the year was GBP4,147,000 (2019: GBP7,244,000)
This preliminary statement has been extracted from the 2020
audited financial statements that will be posted to shareholders in
due course. The statutory accounts for each of the two years to 31
December 2020 and 31 December 2019 received audit reports, which
were unqualified and did not contain statements under section 498
(2) or (3) of the Companies Act 2006. The 2019 accounts have been
filed with the Registrar of Companies but the 2020 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; and the movement in the PG Let's
Connect tax provision are both considered to be non-underlying
items, relates to a liability inherited on acquisition of that
business and have the potential to fluctuate and be of significant
size.
This methodology is unchanged from previous years.
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