Trading Update

RNS Number : 8309M

Personal Group Holdings PLC

26 January 2021

 

26 January 2021

Personal Group Holdings plc

("the Company" or "Group")

Trading Update

A solid result for the year alongside clear strategic progress

Personal Group Holdings Plc (AIM: PGH), the technology-enabled employee benefits and services provider, is pleased to provide the following update on the financial year ended 31 December 2020 ("FY 2020"). The Company expects to publish its results for FY 2020 in late March 2021.

Overview

Following a solid first half performance, we continued to trade robustly for the remainder of 2020, demonstrating the business' ongoing resilience during a most challenging period. The Company made good strategic progress throughout the year, securing a number of new contracts and strengthening key partnerships. The pandemic has spurred organisations to increasingly recognise the value of supporting and protecting their employees' financial and general wellbeing and this trend is set to grow substantially creating long term growth opportunities for the Group.

Revenues for the full year 31 December 2020 are expected to be approximately £70m, broadly in line with the previous year, and adjusted EBITDA to be upwards of £9.5m (2019: £11.0m) reflecting the change in revenue mix. This performance, delivered despite the impact of Covid-19, highlights the strength of our underlying offering and our diverse business model with its various streams of recurring revenues. 

The Group's balance sheet remains strong with a cash position of approximately £20m as at 31 December 2020 (2019: £17.0m) and no debt.

Operational Review

Insurance

Hospital plan and death benefits policy provision

We are very proud of the service that our teams have provided over the year to our insurance policyholders, who are mainly key and essential workers. All claims made have been paid out swiftly and in full.

Trends in the Insurance division have been consistent since the onset of the pandemic. Retention rates for existing policyholders have remained strong, reflecting the value placed on our policies. Meanwhile claims levels have remained broadly in line with previous years as the additional Covid-19 related claims were mitigated by a reduction in claims in other areas of healthcare - the capacity of the NHS was largely consumed by its Covid-19 response.

Generally, we have remained unable to execute new policy sales face-to-face, an important channel when attempting to reach employees directly. Whilst this has had a material impact on new insurance sales, and will impact the Group's premium income and profitability in 2021, we still successfully secured major wins with Royal Mail Group and a large retailer during the period, both to be rolled out in 2021.  

Pleasingly, the new virtual insurance sales solution has shown encouraging initial results. We have also expanded our policyholder base to capture contingent workers. These developments, together with the newly added capability to access insurance benefits through our digital platforms, will mean the Insurance division will benefit from expanded distribution channels going forward.

PG Let's Connect

Provision of home technology via salary sacrifice

Trading from PG Let's Connect stepped back from last year due to global Covid-19 related supply chain disruption, however, demand remained robust. As previously announced, there have been several new wins in this division alongside an extension of the existing Royal Mail Group contract. For a large proportion of the UK workforce, having a  convenient, accessible way to purchase new technology remains a highly desirable benefit, and is reflected in the engagement rates of current clients.

SaaS

Digital employee benefits platforms

The recurring revenue nature of the SaaS division meant that revenue across our digital employee benefit platform products continued to be relatively unaffected during the second half of the year. Pass-through transactional spend, through the Hapi platform on products such as e-vouchers and reloadable cards, was particularly strong and reflected increased usage of the platform and its value to clients. The Group's consultancy business, the pay and reward subsidiary, Innecto, represents roughly a third of non-transactional revenues, was directly impacted by clients being in lockdown but made good operational progress developing the 'Innecto digital' product range.

The Group made good progress with its key strategic initiative to grow the SaaS division and has continued to work with Sage its partner in the SME sector. Together we offered a limited free trial offer of Sage Employee Benefits to Sage's customer base, with Personal Group's in-house sales team helping to embed the product with SME employers and their staff. Whilst the conversion of SME businesses into paying customers only commenced recently, initial conversion levels have been encouraging which we believe will underpin the expansion of our work with Sage.

Outlook

Protecting employees' health and wellbeing became a key focus for all employers in 2020. With 72% of UK managers naming wellbeing as a top priority in 2021, the Company's three divisions remain well placed to help them deliver on this.

With further Government lockdowns ongoing, 2021 is expected to see a more significant financial impact on both income and profit as the ongoing restrictions reduce the ability to write new insurance sales and the historic impact from 2020 flows through.  We also remain vigilant for the potential impact on the Group from any increase in claims. Notwithstanding, there are a number of clear strategic growth opportunities which underpin our confidence in the Group's prospects over the medium-term. New client wins will give Personal Group access to a significant number of employees when restrictions are lifted, all of whom will have the ability to apply for Group's insurance products, and the partnership with Sage represents an exciting, tangible opportunity to materially grow our target market for employee benefits.

With its strong balance sheet, quality customer base and leading technology platform, the Group is well placed to capitalise on opportunities that arise as employee wellbeing rises further up the Board agenda. We remain confident in the long-term outlook for the Company.

Deborah Frost, Chief Executive of Personal Group, commented:

"2020 has been a year like no other, and first and foremost I'd like to thank all our teams for their hard work. It is due to their extraordinary efforts that we have been able to deliver on our core mission: to protect the unprotected and connect the unconnected. This is a responsibility employers are increasingly recognising they owe to their staff, and it is great to see it resonating at such scale.

Despite the challenge to our traditional business model, we've delivered robust financial results and made clear strategic progress in the period, with a number of key clients wins. In addition, we've enhanced our technical and operational capability, setting us up well for rebuilding for the long term. We now see organisations appreciating their responsibility for the health and wellbeing of their staff, not just as a method to increase productivity but as a core element of their ESG agendas and business resilience. Personal Group is an expert in this market and is well positioned to help businesses deliver on their plans, whatever the structure of their workforce."

Market Abuse Regulation (MAR) Disclosure

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.

-ENDS-

For more information please contact:

Personal Group Holdings Plc
Deborah Frost (CEO) / Sarah Mace (CFO)		Via Alma PR
Cenkos Securities Plc
Max Hartley / Callum Davidson (Nomad)		[phone]
Russell Kerr (Sales)
Alma PR		[phone]
Susie Hudson / Caroline Forde / Rebecca Sanders-Hewett		[e-mail]

Notes to Editors

Personal Group Holdings Plc (AIM: PGH) is a technology enabled employee benefits and services provider. The Group exists to help organisations right across the UK to build better connections with their most important asset - their people - through tailored, flexible and innovative services, benefits and insurance products. Its core mission is to connect the unconnected and protect the unprotected.

Personal Group's offer comprises in-house services, including employee insurance products (hospital, convalescence plans and death benefit), the provision of home technology via salary sacrifice (iPads, computers, laptops, smart phones and smart TVs), the provision of e-payslips, and pay and reward consulting via Innecto, the leading independent UK consultancy acquired in 2019. Third party services include retail discounts, employee assistance programmes, wellbeing programmes and salary sacrifice cars and bikes.

The product offer is provided via the Company's proprietary technology platform, Hapi. The platform is intuitive, designed primarily for app deployment and also accessible via web and tablet, driving better engagement, communication and value recognition. Hapi is flexible and can quickly integrate additional services, such as existing employee services and partner platforms. Hapi is a digital SaaS product.

Through technology and select acquisitions, the Company has grown its addressable market to the majority of the working population in the UK; including 15.6m SME employees targeted via its partnership with Sage, the UK's largest software company. 

Personal Group's innovative approach to using technology to deliver its programmes, in combination with its face-to-face method of communicating with employees, delivers a compelling offer to blue-chip clients across the UK as a way of attracting, retaining and motivating employees.  The acquisition of Innecto in February 2019 allows Personal Group to engage with clients earlier in their thinking around Pay and Reward, and to interact with a new base of blue-chip and fast growth clients typically at HR Director and CEO level.

Personal Group has a strong client base across a diverse range of sectors. Clients include: Arsenal F.C., Barchester Healthcare Ltd, DHL Supply Chain Limited, The Go-Ahead Group plc, Samworth Brothers Ltd, Independent Television News, Stagecoach Group plc and Wincanton plc.

For further information, please see   www.personalgroup.com

 

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