PERSONAL GROUP HOLDINGS PLC

("Personal Group", "Company" or "Group")

Interim Results & Interim Dividend for the six months ended 30 June 2022

Underlying growth, a strong balance sheet, and products that resonate in a challenging market for both employers and their employees, positions the Group well for future uplift in EBITDA. On track to meet full year market expectations.

Personal Group Holdings Plc (AIM: PGH), the workforce benefits and services provider is pleased to announce its interim results for the six months ended 30 June 2022.

Financial Highlights

·    Group revenue increased 5.8% to £34.7m (H1 2021: £32.8m)

·    Annualised Premium Income for the Group's largest division, Affordable Insurance, rebuilding post-pandemic, up 7% to £26.2m, providing a strong basis for future growth

·    Adjusted EBITDA* of £1.5m (H1 2021: £4.1m), in line with management expectations reflecting the anticipated reduced contribution from insurance due to investment in policyholder acquisition and increased claims costs, offset by strong growth from other divisions

·    Profit before tax of £0.5m (H1 2021: £3.2m) in line with adjusted EBITDA

·    Basic EPS of 1.7p (H1 2021: 8.4p)

·    Strong balance sheet and liquidity with cash and deposits at period end of £21.8m (Dec 2021: £22.9m), and debt free

·    Interim dividend of 5.3p (H1 2021: 5.3p) to be paid, reflecting continued confidence in the Group's business model and prospects

Operational Highlights

·    52 new client wins secured in the period including Vinci, Renfrewshire Council and BSI Group

·    Strong retention and new insurance sales across Affordable Insurance segment, successfully building back towards pre-pandemic levels

·    Continued substantial increase in contribution from SME channel via Sage Employee Benefits; Annual Recurring Revenue of £2.1m at 30 June 22 (£1.6m at 31 December 21, £1.2m at June 21)

·    Hapi platform subscriptions showing growth; ARR of £1.7m at 30 June 22 (£1.5m at 31 December 21), with significant investment into the platform, driving immediate and ongoing cost savings

·    Strong organic growth in Pay & Reward

Post-Period Trading and Outlook

·    New client gains continue with notable wins with Secure Trust Bank and Aston University choosing HapiFlex as their benefit platform

·    Insurance sales and retention rates in H2 to date remain positive despite the macroeconomic environment and cost of living crisis, demonstrating the continued relevance of the Group's product offering in the current economic environment

·    Strategic acquisition of Quintige Consulting Group ("QCG") post period end brings new clients to the Group with cross-sell opportunities for Hapi, Insurance and Innecto Digital products

·    Trading remains in line to meet market's full year expectations

·    Board is confident in longer-term outlook for the business

*Adjusted EBITDA is defined as earnings before interest, tax, depreciation, amortisation of intangible assets, goodwill impairment, share-based payment expenses, corporate acquisition costs and restructuring costs.

 Deborah Frost, Chief Executive of Personal Group, commented:

"These half-year results are a demonstration of the resilience of our business model and product offering. We have made significant progress in executing our strategy and meeting the goals we set ourselves in the first six months of the year and we are starting to see new sales driving future growth.

Despite the challenges in the economic environment the Group has continued to successfully rebuild the Affordable Insurance side of the business, which will drive growth in a weighted second half, underpinning our confidence in meeting full-year targets for FY 2022.

Our relationship with Sage has gathered further momentum and gives us access to the previously untapped market of the UK's SME sector. We have also maintained significant investment into the business to support further innovation across our offering, including the new and improved Hapi 2.0 which, once launched, we expect will add significant value for clients and their employees.

Whilst we are cognisant of the macro environment and potential challenges it may bring, we believe that our products are valued by customers, as evidenced by the retention rates we've seen so far, across all of our product set, and which assures us that the million-plus employees using them share our views. We are seeing growth across the breadth of the business, which reinforces our belief in the relevance and importance of our product in these difficult times. These results are a credit to the hard work of our dedicated team and the Board is excited to see what we can achieve over the next twelve months."

An overview of the interim results from Deborah Frost, Chief Executive, is available to watch here: 

www.fmp-tv.co.uk/2022/09/27/personal-group-interim-results-tv-interview/

Personal Group Holdings will be hosting a webinar for private investors on Friday 30 September at 12.00. If you would like to register for the webinar, please follow this link: https://www.investormeetcompany.com/personal-group-holdings-plc/register-investor

-ENDS-

For more information please contact:

Notes to Editors

Personal Group Holdings Plc (AIM: PGH) is a workforce benefits and services provider. The Group enables employers across the UK to improve employee engagement and support their people's physical, mental, social and financial wellbeing. Its vision is to create a brighter future for the UK workforce.

Personal Group provides health insurance services and a broad range of employee benefits, engagement, and wellbeing products. Its offerings can also be delivered through its proprietary app, Hapi, and the recently developed extension to the platform, Hapiflex.

The Group's growth strategy is centred around widening the footprint of the business into the SME, talent-led & Public Sectors, thereby expanding the addressable customer base. In addition, it aims to grow in its existing industrial heartlands, to re-invigorate growth in insurance policyholders and to drive the use of its SaaS offerings.

Group Clients include: Airbus, B & Q, Barchester Healthcare, British Transport Police, The Prince's Trust, Randstad, Royal Mail Group, The Royal Mint, the Sandwell & Birmingham NHS Trust, Stagecoach Group plc, and The University of York.

For further information on the Group please see www.personalgroup.com

CEO STATEMENT

I am pleased to report that over the first six months we have seen all our underlying growth drivers moving in the right direction and we reflect on a period of good momentum and clear strategic progress.

As anticipated, year-on-year profit comparison is lower, reflecting the lagged impact of the pandemic and 17 months of lockdowns on the insurance business. However this comparison masks the underlying growth and important achievements, at an operational level, across the Group and which will underpin future profitable growth. 

Over the period I am particularly pleased to have seen the insurance book re-building substantially, a very strong period for Pay & Reward, and acceleration in our offering to the small and mid-sized business market. All of this reflects the continued high demand for workforce benefits and services and the relevance of our product offering.

With workers throughout the country becoming increasingly exposed to challenging macroeconomic trends, such as the cost-of-living crisis, the value of our offering has never been more apparent as is demonstrated by new client wins and positive insurance sales and retention rates during the period. We continue to enable employers across the UK to improve employee engagement and support their people's physical, mental, social and financial wellbeing, priorities which have all become more important in times of uncertainty.

Performance against Growth Strategy

Our overarching strategy is to build workforce resilience for clients, helping employees thrive in work and in life. With our preliminary results, I announced our refreshed strategy, focusing on three core pillars:

·    Driving insurance

·    Transforming Reward & Benefits

·    Accelerating our SME offer

In H1 we've made clear progress against each of these pillars. Our insurance book continues to build back towards pre-Pandemic levels, with Annualised Premium Income seeing real growth from the end of last year. Subscriptions for our market-leading employee engagement platform, Hapi, also grew across the first six months of the year, and we are planning significant investment into the platform. This investment into 'Hapi 2.0' is expected to further drive growth, with immediate and ongoing savings across the platform and a better user experience for clients. The acquisition of QCG, alongside organic growth for Innecto, strengthens our strategic reward offer and allows for cross-sell of Innecto Digital products and other benefit products. Our strategic development into the SME sector continues to show significant growth in terms of Annualised Recurring Revenue.

Divisional H1 Segmental Analysis

Affordable Insurance

Our traditional face-to-face insurance sales' model was significantly affected by the series of lockdowns seen in 2020 and 2021 and we have witnessed the expected lagged impact of this over the past few reporting periods. However, with the field sales team now up to full strength, we continue to successfully rebuild the insurance book and in June 2022 we recorded the highest amount of new business signed in a single month since November 2018. This, combined with retention rates remaining above the Group's historical averages, has helped to drive the Annualised Premium Income (API) value up to £26.2m (December 2021: £24.4m).

The level of claims in H1, and particularly in Q1, was higher than anticipated, although this has subsequently returned to projected levels. This, in combination with a smaller insurance book and the increased policy-holder acquisition costs associated with having a full sales team out in the field, resulted in an adjusted EBITDA contribution of £4.0m (H1 2021: £6.5m), which should now continue to build in line with our increasing API.

Pay and Reward

(Innecto)

Pay & Reward delivered strong organic growth during the period with overall revenue up 73%, consultancy fee income up 93% and annual subscription income from Innecto Digital products up 24% versus H1 2021. The acquisition of QCG and early wins achieved in H2 are anticipated to drive growth throughout the remainder of the year.

Benefits platform

Organic growth was seen in the period across the Company's Benefits Platform with the combined Annualised Recurring Revenue (ARR) standing at £3.8m as of June 2022 (December 2021: £3.2m). This growth was largely driven by the substantial contribution from the Group's partnership with Sage, where ARR via Sage Employee Benefits increased to £2.1m at the end of the period (December 2021: £1.6m), and where we continue to see good momentum. We are now also exploring further routes to market including reaching SMEs directly, as well as through other potential partnerships.

Other Owned Benefits

(Let's Connect)

Revenue for Let's Connect is down year-on-year, largely due to comparison with a strong H1 2021, where schemes were deferred from 2020. The division proves to be a popular benefit for employees, with order numbers up 10% on H1 2021, and one that we expect to remain highly relevant against the current macro backdrop as it moves into its peak period in Q4.

Interim Dividend

The Company is pleased to announce that an interim dividend for 2022 of 5.3p will be paid on 15 November 2022 to members on the register as at 7 October 2022 (the record date). Shares will be marked ex-dividend on 6 October 2022. The last day for elections will be on 25 October 2022. The Board has considered the level of dividend in the context of the full year results, reflecting continued confidence in the Group's business model and prospects.

Board Changes

As detailed in the RNS dated 1 June 2022, Liam McGrath stepped down from the Board, and left the Company, on 30 August 2022.

Current Trading and Outlook

Trading into July and August has remained robust, and in line with management's expectations, giving the Board confidence in meeting market expectations for the full year.

Operationally, the Company is full of activity, with the core business delivering well and new opportunities being driven forward by an energised workforce.

Despite the confidence and positivity that currently surrounds the business we are very aware of the difficult and uncertain macro-environment in which we are all living. Whilst we continually monitor our lead indicators for signs of impact to the business, we are pleased that, to date, all indicators remain positive thereby supporting the Board's current confidence in the full year outcome. We are mindful, too, of industrial action by unions which could become more widespread and affect our client base and will also continue to monitor this. That said, our insurance offer is good value and gives peace of mind, qualities which are highly sought after in the current challenging climate and our Benefits and Pay & Reward products are becoming ever more important as employers look at how they can best remunerate teams against an inflationary backdrop.

We will continue to monitor events carefully and remain committed to executing on our growth strategy and look forward to delivering for shareholders going forward.

Deborah Frost

Group Chief Executive

27 September 2022