Trading Update and Notice of Results

Continued growth in recurring revenues and a record year for new insurance sales

Personal Group (AIM: PGH), the workforce benefits and services provider, is pleased to provide the following update for the financial year ended 31 December 2023 (FY 2023) and confirms that the Company expects to publish its results for FY 2023, together with notification of its final dividend, on 19 March 2024.

Financial Highlights

• Revenue of approximately £103m (2022: £86.7m) (£49m excluding voucher resales (2022: £49.3m) and adjusted EBITDA* of approximately £8m (2022: £6.0m), in line with market expectations
• The Group continues to benefit from an increasing proportion of recurring revenues, providing high levels of visibility for 2024 and beyond:
  • Total recurring revenue increased by c.14% to £38.3m (31 Dec 2022: £33.5m)
  • Insurance Annualised Premium Income (“API”) increased by c.13% to £31.6m (31 Dec 2022: £28.0m), driven by a record year for new annualised insurance sales
  • Benefits Platform Annual Recurring Revenue (“ARR”) increased c.22%. to £6.1m (31 Dec 2022: £5.0m)
  • Pay & Reward ARR increased c.6% to £0.57m (31 Dec 2022: £0.54m)
• Strong balance sheet and liquidity with a cash position in excess of £20m as at 31 December 2023 (31 Dec 2022: £18.7m) and no debt

*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.

Operational Highlights

Paula Constant assumed the role of Group Chief Executive Officer on 1 August 2023 and is undertaking a review of the Group’s strategy. The review is focussed on identifying the greatest available opportunities to improve profitability across the Group and drive longer term growth. The findings have confirmed the demand for Personal Group’s insurance product and highlighted the industries where the largest growth opportunities exist for the Group. As part of the Company’s preparation for growth at pace, the Group’s senior leadership team is being restructured in order to optimise processes and drive efficiencies.

Given the unfavourable economic backdrop, in which HR departments across the country have had to manage a shortage of labour and increased employment costs, it was pleasing that the Group’s client base continued to grow through the second half, collectively achieving 133 new client wins across the full year (2022: 101). Continued progress against the Board’s key strategic objectives was also made; in particular, positive momentum across the business’ largest division – Affordable Insurance.

Affordable Insurance

Strong insurance sales continued into the second half, resulting in a record year for new annualised insurance sales, with growth of 24% to £11.8m for the full year (2022: £9.5m). This, alongside strong retention levels, which remain above pre-pandemic averages, helped to drive up the API value to £31.6m (31 Dec 2022: £28.0m). Claims levels remained stable in the second half but continue above historic norms on Hospital Cashplans, as expected and in line with activity to address NHS backlogs.

Benefits Platform

Continued growth was seen in H2, across enterprise clients taking both Hapi and Sage Employee Benefits, with each ending the year with ARR of £2.5m and £3.7m respectively (31 Dec 2022: £2.0m and £3.0m). Following our investment during the year into the next generation of our benefits platform, Hapi 2.0, the platform was launched internally in H2. Initial feedback from customers has been positive, as the platform continues to be developed ahead of completion and external launch in 2024.

Whilst the economic challenges continued to impact the market demand, the contribution from Pay & Reward, comprising Innecto and Quintige Consulting Group, remained steady in the second half of the year, ending the year with ARR of £0.57m (31 Dec 2022: £0.54m).

Contribution from Other Owned Benefits (Let’s Connect) was in line with management’s expectations post cessation of the long-term scheme with a major client in March 2023, as previously announced.

The Group also benefitted from increased investment returns on its cash balances within the insurance business.

Outlook

Following the progress made in 2023, Personal Group is well positioned moving forwards, bolstered by an increasing proportion of recurring revenue and a strong balance sheet. Trading in the first few weeks of 2024 has been positive, reinforcing confidence in ongoing delivery moving forward.

The first phase of the strategy review has served to highlight the considerable market opportunity ahead for Personal Group and helped to identify where the further growth opportunities for the Group exist. It has also reaffirmed the strength of the Group’s insurance offering, benefits platform and brand. Confidence across the Company is high for 2024 and the Group is well-placed to deliver ongoing growth acceleration.

Paula Constant, Chief Executive of Personal Group, commented:

“I am delighted to have assumed my role at Personal Group and I have been pleased with my findings during the first few months of my tenure. The financial results reported for the year are testament to the hard work of the team who have worked at a relentless pace.

“The value of the Personal Group offering is clear, as supported by our record new insurance sales and number of new client wins. Despite contending with a challenging trading environment, we have achieved a robust financial performance, with strong growth across our Affordable Insurance offering alongside steady growth across other areas of the business.

“The findings of our strategy review will be presented in March and underline the demand for our products and, whilst there will be much work ahead, I am excited by the future opportunities.”

Personal Group, Results Video (March 2023)