Personal Group Holdings Plc Annual Report and Accounts 2021
Personal Group Holdings Plc Annual Report and Accounts 2021
Personal Group Holdings Plc
Annual Report and Accounts 2021
THE UK WORKFORCE
IS CHANGING.
SO ARE WE.
SUPPORTING THE UK WORKFORCE
THROUGH OUR BROAD OFFERING
OF EMPLOYEE WELLBEING AND
ENGAGEMENT SERVICES.
–
Significant new contracts
secured
with 86 new clients,
including goods retailer
Homebase, University of York
and The Royal Mint, resulting in
a record number of new clients
signed across the Group in
one year.
–
2021 results impacted, as
anticipated, by a reduction to
insurance income
as a direct
consequence of 15 months of
COVID-19 lockdowns.
–
Face-to-face insurance
product
sales recommenced
in July with
strong activity throughout H2 and
high conversion rates for new
policyholders.
–
Continued expansion into Public
Sector
with six new public sector
contracts secured and the Group
being accepted onto three key
Government frameworks.
–
Launched Hapiflex
, a more complex version of our benefits
platform suitable for enterprise
clients, winning significant clients
within the first few months.
–
Offering to the SME sector
with the Sage partnership continuing to
show strong momentum.
2021 HIGHLIGHTS
GROUP REVENUE
£74.5m
(2020: £71.5m)
Financial Highlights
Operational Highlights
BASIC EPS
11.5p
(2020: 22.1p)
ADJUSTED EBITDA
£6.1m
(2020: £10.1m)
CASH & DEPOSITS
£22.9m
(2020: £20.2m)
PROFIT BEFORE TAX
£4.3m
(2020: £8.6m)
DIVIDEND PER SHARE
10.6p
(2020: 18.4p)
STAYING
BETTER
CONNECTED
page 6
KEEPING A
PERSONAL
TOUCH
page 8
BIG BENEFITS FOR
SMALL
COMPANIES
page 10
Personal Group Holdings Plc
· Annual Report and Accounts 2021
CONTENTS
See more online at
https://www.personalgroup.com
GROUP CHIEF
EXECUTIVE’S
STATEMENT
Read more |
page 14
BOARD OF DIRECTORS
AND SENIOR
LEADERSHIP TEAM
Read more |
page 50-52
RESPONSIBLE
BUSINESS
Read more |
page 38
OUR
STRATEGY
Read more |
page 24
Overview
02
Why Invest in Personal Group?
04
What We Do
06
Our Purpose in Action
12
Chairman’s Statement
14
Group Chief Executive’s Statement
Governance
46
Corporate Governance
48
Board Activity in 2021
50
Board of Directors
52
Senior Leadership Team
53
Risk and Compliance Committee Report
54
Audit Committee Report
57
Nominations Committee Report
60
Remuneration Committee Report
64
Directors’ Report
65
Statement of Directors’ Responsibilities
Financial Statements
66
Independent Auditor’s Report
74
Consolidated Income Statement
75
Consolidated Balance Sheet
77
Company Balance Sheet
78
Consolidated Statement of Changes in Equity
79
Company Statement of Changes in Equity
80
Consolidated Cash Flow Statement
82
Company Cash Flow Statement
83
Notes to the Financial Statements
115
Company Information
Strategic Report
18
Our Markets
20
Launch Of Hapiflex
22
Our Business Model
24
Our Strategy
26
Strategic Progress
28
Key Performance Indicators
30
Q&A with Liam McGrath, Chief Operating Officer
32
Chief Financial Officer’s Statement
36
Risk Management
38
Environmental, Social and Governance
44
Section 172 Statement
01
Strategic Report
Overview
Governance Financial Statements
WHY INVEST IN PERSONAL GROUP?
A PROGRESSIVE, PROFITABLE
BUSINESS ADDRESSING A
RAPIDLY GROWING MARKET.
Offering a broad market proposition spanning
reward consultancy, employee benefits and
insurance. This end-to-end solution makes
Personal Group more attractive to clients and
increasingly more resilient to market forces.
High retention rates on insurance products,
strong revenue visibility thanks to recurring
revenues from SaaS licences and strong repeat
business on provision of home technology salary
sacrifice products.
Demand for our services has never been greater as
employers put an increased focus on improving
their employee value propositions. Employers
increasingly see employee benefits and wellbeing
services as essential for recruiting and retaining
staff in a competitive talent market.
Post-pandemic, we’re seeing sustained demand
for our affordable insurance products, both from
employers looking to make their workforce more
resilient, and employees who want some financial
security in case of ill health or death.
A digital solution that allows employees to access
a wealth of financial, physical, mental and social
benefits through an easy to use platform and app.
Easy for new offerings and business lines to be
integrated into the platform.
Annual recurring revenue across the Group’s
digital platforms now stands at £3.6m. We are
improving and adding to our digital platforms all
the time – see p. 20-21 for the successful launch
of the latest iteration, Hapiflex.
34%
OF OUR CLIENTS TAKE ADVANTAGE OF TWO OR MORE
OF OUR SEGMENTS
41%
OF EMPLOYEES WORLDWIDE PLAN TO LEAVE
THEIR JOBS THIS YEAR*
* Microsoft study
539,051
ACTIVATED USERS ON HAPI AND SAGE
EMPLOYEE BENEFITS
Group Chief Executive’s Statement|
page 14
Our Markets | page 18
Our Business Model | page 22
A DIVERSE AND
ROBUST BUSINESS
ADDRESSING A RAPIDLY
GROWING MARKET
DIGITALLYLED MODEL
WITH PROPRIETARY
SOFTWARE PLATFORM AT
THE CENTRE
Personal Group Holdings Plc
· Annual Report and Accounts 2021
02
Cash generative with regular income generated
from insurance premiums collected by our clients
through payroll deduction and annual digital
subscriptions paid in advance.
This together with strong financials underpins a
longstanding policy of paying a significant level of
profits as a dividend as well as providing firepower
for growth.
Board and senior leadership have a deep
understanding of the business, and a proven
track record in scaling-up businesses. We utilise a
combined wealth of knowledge and experience to
help the business achieve success and keep it
moving forward.
Our senior leadership comprises a mixture of
recent experienced external appointments and
those with a historic understanding of our
business.
We have outlined a clear strategy to drive
significant growth and momentum is building
with 86 new clients secured across the Group in
2021 and further progression made on
partnerships.
We are diversifying customer bases and channels
to market to future-proof our growth and our
focus for the next few years will be on driving
insurance, transforming reward and benefits and
accelerating our SME offer.
£22.9m
CASH AND DEPOSITS WITH NO
DEBT AS AT 31DECEMBER 2021
180+ yrs
COMBINED EXPERIENCE
IN THE INDUSTRY
>1.5m reach
AMBITION TO SUPPORT OVER 1.5M EMPLOYEES
WITH OUR PRODUCTS AND SERVICES
CFO statement |
page 32
Meet our Board | page 50
Our Strategy | page 24
CASH GENERATIVE,
DEBTFREE AND A
STRONG BALANCE SHEET
EXPERIENCED
MANAGEMENT
TEAM
AMBITIOUS PLANS
WITH A CLEAR ROADMAP
TO GROWTH
WHY INVEST IN PERSONAL GROUP?
03
Strategic Report
Overview
Governance Financial Statements
WHAT WE DO
WE PROTECT THE UNPROTECTED AND
CONNECT THE UNCONNECTED – HELPING
EMPLOYEES THRIVE IN WORK AND IN LIFE.
OUR PURPOSE
To Protect the
Unprotected and Connect
the Unconnected.
OUR VISION
A winning team creating a brighter
future for the UK workforce.
PAY &
REWARD
Consultancy and
software solutions
BENEFITS
PLATFORM
Delivered to employers
directly and through
channel partners
AFFORDABLE
INSURANCE
On weekly or monthly
rolling contracts
OTHER
OWNED
BENEFITS
Access to consumer
technology
What we do
Provide benefits and services focused on improving employee health, wellbeing and engagement. As a socially responsible
business, we ensure that our offerings across the Group are fair, reasonable and accessible to all corners of society.
Our business has four core focuses:
Where we want to get to
Innecto
– Innecto offers expert
consultancy on all things pay and
reward, along with a suite of
cloud-based Saas tools.
Clients can choose a bespoke
solution to help them develop
and implement fair, consistent
and best fit reward programmes.
Hapi
– A market leading, fully
customisable, employee
engagement platform and app.
Hapiflex, offering flexible
benefits, is also available for
more complex requirements.
Sage Employee Benefits
– An
employee engagement product
designed for the SME market.
Insurance
– Hospital plan,
convalescence plan, and death
benefit policies, underwritten by
Group subsidiaries.
Simple plans that are secured for
the lifetime of the policy,
providing people with peace of
mind if the unexpected happens.
Let’s Connect
– Enables
employers to provide a benefit
scheme that allows their
employees to access the latest
consumer technology and other
high end products from leading
manufacturers and spread the
cost either by salary sacrifice or
net pay arrangements.
Read about Innecto’s work |
page 8
Read about insurance | page 30
Read the case study | page 6
Read about Hapiflex |
page 20
Personal Group Holdings Plc
· Annual Report and Accounts 2021
04
OUR STRATEGY
Our growth strategy is focused on widening our footprint across a broader range of industries.
Read more about Our Strategy |
page 24
OUR VALUES
Our core values ensure that everyone understands, and is aligned with, who we are
and how we want to operate.
How we’re going to get there
Driving insurance
sales through new
and existing channels
Transforming reward
and benefits
Accelerating our
SME offer
Engaging
Genuine, approachable
and passionate, ensuring
people feel comfortable
and confident when
talking to us.
Expert
Professional, precise,
knowledgeable, learning
all the time to make sure
we are delivering viable,
quality solutions to our
clients.
Solid
Trustworthy, respected
and dependable. We keep
our promises and get it
right the first time – every
time.
Driven
Motivated, ambitious and
determined, delivering
what our clients and
customers need in an
ever-changing landscape.
WHAT WE DO
05
Strategic Report
Overview
Governance Financial Statements
£481k
EMPLOYEE SPEND
ON LET’S CONNECT
2021
OUR PURPOSE IN ACTION
STAYING
BETTER
CONNECTED
OPPORTUNITY
Hywel Dda is a health
board that supports the
health of West Wales,
across the counties
of Carmarthenshire,
Ceredigion and
Pembrokeshire.
They employ 13,000 staff.
SOLUTION
Hapi provides a quick and simple way for Hywel Dda to
connect with every employee.
Hywel Dda initially implemented the Hapi platform to showcase
the wide range of benefits they offer to their amazing workforce.
Providing benefits that employees want and use
Hapi offers access to hundreds of high street and online retail
discounts, including restaurants, days out, and cinema schemes,
which have proved popular across the organisation. With instant
e-vouchers downloaded straight to employees’ smartphones,
it’s easy to shop and save. Local offers will now be added to
bring wider community benefits around their main locations.
Employees can also save with salary sacrifice schemes, running
twice a year. They can save money on a new bike via a Cycle to
Work scheme, encouraging a healthier, greener commute.
Employees also have access to the latest home technology
through tech benefit provider Let’s Connect – so far Hywel Dda
has achieved employer savings of an estimated £1m with over
3,500 staff enrolled in the scheme since it began.
Looking forward, Hywel Dda are also excited about using
Hapi to expand their wellbeing offer.
Like other healthcare organisations, they faced huge challenges
throughout the COVID-19 pandemic. It’s important to support
their staff’s mental and physical wellness so they can continue
to perform at their best. By making it easy to access health and
wellbeing benefits, the organisation hopes to improve rates of
sickness absence and staff turnover, leading to better outcomes
for their service users.
OUTCOME
Hywel Dda are really pleased with
how Hapi has helped to deliver a
winning benefits offer to every
employee, with consequent gains
for engagement and productivity.
With Hapi, staff can make the most
of their benefits, wherever and
whenever is convenient for them.
Hywel Dda also now has a direct line
of communication via push
notifications so everyone has access
to relevant information, even hard to
reach frontline employees.
A final word from the client:
“Hywel Dda are well on the way to
creating and delivering a benefits
package that will help us recruit and
retain our amazing workforce. We’ve
done great work in creating a culture
of collaboration between HR,
management and frontline staff,
which in turn generates greater staff
engagement and satisfaction.”
Read more online |
www.personalgroup.com/casestudies
HYWEL DDA UNIVERSITY HEALTH BOARD
Our work with Hywel Dda emphasises the relevance of technology benefit to the public sector. Let’s Connect have a
particular depth of experience with NHS Trusts, and when combined with a Hapi platform sale so employees can access their
entire benefits offer in one place, the impact on engagement across the organisation is remarkable.
Personal Group Holdings Plc
· Annual Report and Accounts 2021
06
“The organisation has historically
struggled with engagement with
certain groups of staff but Hapi
integrates our entire benefits offering
into a single app and delivers push
notifications, making it accessible for
all employees spread across our large
organisation and not just those who
have easy access to a computer”
Rob Blake*
Head of Culture and Workforce Experience at Hywel Dda University Health Board
OUR PURPOSE IN ACTION
*Picture posed by model
INVESTOR ANGLE
Let’s Connect has a particular depth of
experience with NHS Trusts and its work
with Hywel Dda emphasises the relevance
of technology benefit to the public sector.
When combined with a Hapi platform sale
so employees can access their entire
benefits offer in one place, the impact on
engagement across the organisation is
remarkable.
07
Strategic Report
Overview
Governance Financial Statements
OPPORTUNITY
Bought By Many is a fast-
growing organisation
scaling at pace and thus
recognise the importance
of ensuring the right roles
are in place at the right
level to support growth.
They want to ensure that their
employee deal is effective at
attracting and retaining talent
in a competitive market.
SOLUTION
It was important that any solution would support
the agility and growth aspirations of Bought By
Many, balancing rigour with flexibility.
Innecto worked closely with the people team and the
Senior Leadership Team to firstly implement a job
evaluation framework to size roles and understand the
organisation shape of the business. Evaluate™ is a
robust job evaluation scheme, delivered via Innecto’s
proprietary software. It provides an analytical
framework which provides the rigour without a
lengthy evaluation process that would work against a
fast-moving business.
The second phase to the project was to benchmark
their roles to understand how the Bought By Many
employee deal compares with the external market. The
outputs were delivered through PayLab™, our cloud-
based pay insights tool. This brought the information
to life, presenting it in a visual way which was easier to
absorb and enabled the senior team to easily share the
outcomes with their team.
The job evaluation framework and the external
benchmarking then fed into the pay review process,
giving confidence to the Senior Leadership Team and
employees that pay decisions were fair, consistent, and
routed in data.
OUTCOME
The project provided a strong
foundation on which Bought By
Many could base reward decisions
going forward. Through the
combination of Evaluate and PayLab,
Bought By Many have the software
to ensure future roles are sized
objectively and that pay is set in line
with the market and their pay
stance. Both Evaluate and PayLab
can be easily updated as the business
grows therefore supporting the
need to recruit at pace in line with
the ambitious growth aspirations.
The additional insight provided by
Evaluate into organisational shape
and design will help Bought By Many
to think through what their
organisational structure needs to
look like both now and in the future
as the business grows.
Read more online |
www.personalgroup.com/casestudies
BOUGHT BY MANY
Innovative insurtech business Bought By Many sells pet insurance policies. With impressive growth over the last four years
and no plans to slow down, the company needed to implement robust reward architecture that would enable them to keep
attracting and retaining talented employees, whilst flexing to accommodate their fast-growing business.
OUR PURPOSE IN ACTION
continued
KEEPING A
PERSONAL
TOUCH
76%
UK MANAGERS
HAVE NAMED
WELLBEING AS A
TOP PRIORITY
Personal Group Holdings Plc
· Annual Report and Accounts 2021
08
*Picture posed by model
“It was important that any solution
would support the agility and growth
aspirations of Bought By Many,
balancing rigour with flexibility.”
Julia Ingall*
Chief People Officer at Bought By Many
OUR PURPOSE IN ACTION
continued
INVESTOR ANGLE
Innecto’s enviable client list includes many
household names within retail, financial
services, not-for-profit, professional
services, sport and media. As a former
start-up, Bought By Many is a good
example of a fast-growing business using
Innecto’s expertise and digital analytics to
secure a robust pay infrastructure which
will underpin their future growth.
09
Strategic Report
Overview
Governance Financial Statements
OUR PURPOSE IN ACTION
continued
BIG BENEFITS FOR
SMALL
COMPANIES
1m
NUMBER OF UK
SMES USING SAGE
OPPORTUNITY
Clinisupplies provide medical
devices for the continence,
urology, and wound
closure markets. They are
headquartered in Watford
with 120 staff split between
the UK and India.
Clinisupplies wanted to pull
together their employee
benefit offerings into a
cohesive and easy to access
package, as well as saving HR
time and resource by
managing them in one place.
The company has a
long-standing culture of
recognising excellence via
reward and recognition, but
wanted to centralise their
schemes and make them
easier to administer. They also
wanted to provide wellbeing
resources for staff, helping
them stay healthy and
productive even in difficult
circumstances.
SOLUTION
Reward & Recognition
Historically, Clinisupplies had a variety of reward and recognition
schemes. Sage Employee Benefits enabled them to centralise and
expand their reward and recognition offerings, using it to motivate
employees and celebrate their hard work.
Now, whenever employees receive an award or are recognised for
their efforts, they can quickly and easily redeem their award
through Sage Employee Benefits from their choice of retailers.
2020’s conference was held virtually because of COVID-19
restrictions, but Clinisupplies sent employees vouchers to buy food
and drink to enjoy at home, as well as £50 in Amazon vouchers – all
administered through Sage Employee Benefits. So far over £43,000
has been approved in awards!
Personal Group worked with the client to personalise these awards
to make them as easy as possible to issue and manage. Clinisupplies
also regularly use e-cards peer to peer to say thank you or
recognise excellence.
Wellbeing
Sage Employee Benefits allows Clinisupplies to host the majority
oftheir health and wellbeing benefits in one place. The EAP sits
alongside a weekly newsletter offering advice on healthy lifestyle
choices. Employees can also access 24/7 GP appointments for
themselves and their families via video or phone call.
Clinisupplies’ wellbeing offering fits with their company ethos of
supporting health and the resources were particularly welcome in
the age of COVID-19. Having it all in one place makes it easy for staff
to access and HR teams to administer.
OUTCOME
95% of Clinisupplies’ employees are
activated on Sage Employee
Benefits. After taking up a six-month
free trial, they have transitioned to a
paid subscription for several reasons:
– Platform provided what they were
looking for and more
– Simplicity of having many benefits
in one place
–
Saves HR teams’ time and resource
and is easy to administer
–
Scalable to future needs
– Flexibility to add or take away
licences month by month
Read more online |
www.personalgroup.com/casestudies
CLINISUPPLIES
Clinisupplies are a great example of an SME using access to Personal Group benefits through our partnership with Sage to
give them an edge in the war for talent. The UK’s SME sector is vast but fragmented – the business we’ve developed with Sage
gives us access to this previously untapped market. Our growth this year is only the start of our SME story, as we improve the
attraction, retention and lifetime value of our clients.
Personal Group Holdings Plc
· Annual Report and Accounts 2021
10
“Sage Employee Benefits has
very quickly become part of our
process. We’ve had excellent
feedback in our employee surveys
about the platform – it supports
positive engagement and makes
it simple for employees to access
their benefits”
Amanda Cass*
HR Director at Clinisupplies
OUR PURPOSE IN ACTION
continued
*Picture posed by model
INVESTOR ANGLE
Clinisupplies is a great example of an SME
using access to Personal Group benefits
through our partnership with Sage to give
them an edge in the war for talent. The
UK’s SME sector is vast but fragmented –
the partnership we’ve developed with Sage
gives us access to this previously untapped
market. Our growth this year is only the
start of our SME story, as we improve the
attraction, retention and lifetime value of
our clients.
11
Strategic Report
Overview
Governance Financial Statements
CHAIRMAN’S STATEMENT
“SUCCESSFULLY SUPPORTING
THE UK WORKFORCE WHEN IT
WAS NEEDED MOST.”
In this, my first statement as Chairman of
Personal Group, I am delighted to report on a year
of excellent strategic progress for the business.
Despite a longer-than-expected lockdown in
H1 and some challenging conditions throughout,
the team achieved a great deal in 2021,
accelerating us towards a strong return to
growth in the years ahead.
As a truly purpose-led business the most
important achievement to note is the support
we’ve continued to provide to employees all over
the country. In what has been a very difficult time
for many we have continued to pay out claims in
full, supplied invaluable wellbeing support,
improved lives with access to benefits of all
varieties, and provided the means to keep
scattered colleagues connected.
We have touched the lives of more than a million
people in some way this year, a proud achievement
in line with our guiding vision: to create a brighter
future for the UK workforce.
I would like to take this opportunity to sincerely
thank every member of the Personal Group team
who has made this happen, all our partners, clients
and of course our supportive shareholders.
Focused on growth
Whilst our results for the 2021 were impacted, as
anticipated, by a reduction to our insurance
income as a direct consequence of 15 months of
COVID-19 lockdowns, we have delivered good
growth in many other key metrics – total unique
client numbers and activated benefits platform
users, for example. This demonstrates the
underlying health and optimism in the business.
Looking beyond the day-to-day, returning to and
delivering long-term growth has been at the
forefront of our minds. We are therefore delighted
to have won 86 new clients across the Group in
2021 – more than ever before. We have broadened
our offering significantly and further defined our
strategy in pursuit of that ambition with new
targets for 2025. Having experienced a reduction
in the size of our insurance book as a result of
COVID-19, we have now recommenced face-to-
face sales in earnest and are determined to not
only build back to historic policyholder numbers,
but to surpass them.
Providing broader support,
widening our footprint
Our progress this year outside of insurance has
been driven by two elements in particular. The
first of these is the broadening of our offering.
Over the year we have introduced a host of new
benefits and distribution channels. We’ve also
developed Hapiflex, a more multifaceted version
of our benefits platform Hapi, to address the
needs of talent-driven organisations. It has been
very well received. This work builds on our unique
selling point: housing a very broad range of
reward, benefits and insurance solutions within
one Group.
The second driver has been success in expanding
into new industries. In the public sector we’ve won
six new contracts and been accepted onto three
key Government frameworks. Our partnership
with Sage has also progressed further – we
currently provide 20,000 employees with Sage
Employee Benefits and have access to the 7m UK
employees covered by Sage software. In addition,
we have made important inroads into talent-
driven businesses with more companies taking up
Innecto’s services and early wins secured for our
Hapiflex product.
“The growth in the market
underpins our prospects
as a business.”
Martin Bennett
Non-Executive Chair
Personal Group Holdings Plc
· Annual Report and Accounts 2021
12
A winning team
Supporting, communicating with and rewarding
our own people has been a key focus this year. We
implemented a flexible hybrid working policy to
cater for a broad variety of personal preferences
and spent time reaffirming our core values as a
team. Knowing we are all aligned with a clear
purpose to serve underpins our ability to deliver
sustainable growth going forward.
The senior team was bolstered by a number of
new operational-lead appointments. Pleasingly,
these were a mixture of experienced external
appointments alongside several internal
promotions. As a leadership team we are always
pleased to reward our people and provide career
progression opportunities.
At Board level, I was honoured to step into the
Chairman role in May. It is a great team to be part
of and I would like to take this opportunity to again
thank Mark Winlow for his service to the business
for many years.
Progression on ESG
I have been greatly encouraged by the strides
made in this important area of the business, one
that is a priority at Board level.
Over the course of the year, we have made
good progress against a number of initiatives to
reduce our carbon footprint, foster an inclusive,
progressive and diverse working environment
and to ensure a robust corporate governance
framework, all enhancing our wider
Environmental, Social and Governance
(ESG) strategy.
Key highlights in 2021 included installing solar
panels at our headquarters, establishing a
Nomination Committee, progress from our
diversity and inclusion working group and a
continuation of our long-established commitment
to the wider community through our work with
partner charities PACT and The Memusi
Foundation.
We have an excellent foundation on which we can
continue to build, and will drive meaningful change
across our business going forward.
A market in growth
Part of the reason I joined Personal Group a year
ago was the Group’s remarkable growth
opportunity. During 2021 the market accelerated
further – it has never been more important for
organisations to look after their people. Whether it
is due to the war for talent, wage inflation, the
impacts of Brexit or a host of other factors,
companies everywhere are fighting to retain their
talent and appreciate that caring for employees’
health, wellbeing, and building a sense of
community has become a non-negotiable.
The growth in the market underpins our prospects
as a business. We have a first-class, proven and
broad offering to cater to this growing demand
and we look forward to capitalising on the
opportunity.
Dividend
I am pleased to announce that the Board has
recommended a final ordinary dividend of 5.3
pence per share which will be paid to shareholders
on 20 May. This makes a total ordinary dividend
for 2021 of 10.6 pence per share and whilst this
dividend reflects our reduced profits for the year it
does still represent a significant proportion of our
earnings per share as the Board seeks to continue
our dividend payments in line with historic
pay-out ratios.
Outlook
Notwithstanding the increased macro political and
economic uncertainty, including the ongoing
conflict in Ukraine, which we will continue to
monitor closely to enable us to take appropriate
steps to manage any impact this has on the Group,
looking ahead, as a predominately people-based
UK business, the Board and I are confident about
the Group’s prospects. Our market has never been
more relevant; we have a strong and driven team
in place and a clear strategy driving us towards
growth. We look forward to continuing to provide
more support to more people in the UK over the
coming year, helping them to thrive both in work
and in life.
Martin Bennett
Non-Executive Chair
28 March 2022
EMPLOYEES WITH ACCESS TO ONE OR MORE
OF OUR SERVICES
1.2m
(2020 1.1m)
DIVIDEND PER SHARE
10.6p
(2020 13.3p)
EMPLOYEE ENGAGEMENT SCORE
72%
(2020 76%)
Further information
KEY PERFORMANCE INDICATORS
Track how we measured up on KPIs.
Read more |
page 28
ESG
Our progress on Environmental, Social and
Governance goals.
Read more |
page 38
CHAIRMAN’S STATEMENT
13
Strategic Report
Overview
Governance Financial Statements
2021 saw the pandemic-related lockdown
continue until mid-July, which had a significant
effect on our, and our clients’, business operations.
As a result, and as previously identified, our profits
were impacted compared with pre-pandemic
levels. Pleasingly though, while we will continue
to see the impact on our insurance business
premium income into 2022, we have now
entered the recovery phase and expect to see
Group earnings return to year-on-year growth
from FY22.
The pandemic has also brought into even sharper
focus the imperative to build towards our key
strategic goals of widening our offer and making it
more relevant to more sectors and sizes of
business – we’re building significantly bigger
growth prospects in the medium-term and I am
delighted to report on the substantial progress
we’ve made this year.
I am particularly pleased by the re-building of the
insurance book, which having been held back by
restrictions for 15 months, began in July 2021, and
the growth and development of our small and
medium-sized business (SME) offer. Working
together with Sage, we have grown from 30 to
1,500 clients paying for the Sage Employee
Benefits platform this year, reaching c.20,000
GROUP CHIEF EXECUTIVE’S STATEMENT
“PERSONAL GROUP IS A
PURPOSE-LED BUSINESS –
WE’RE A WINNING TEAM
CREATING A BRIGHTER FUTURE
FOR THE UK WORKFORCE.”
Further information
HAPIFLEX
Our flexible benefits solution for talent-driven
organisations.
Read more |
page 20
CFO STATEMENT
From Personal Group CFO Sarah Mace.
Read more |
page 32
INSURANCE BUSINESS
Read interview with COO Liam
McGrath on our ambitious growth plan.
Read more |
page 30
employees and with a firm formula now
established for scaling the business between us.
During the pandemic, we became closer to our
clients, and by listening to our HR Director market,
we have driven development of our products and
services in line with their needs, and now have
compelling offers for SME, public sector,
enterprise and talent-driven organisations. We
stand out in the workforce benefits market due to
the breadth of our offering, which includes a
reward consultancy capability, market-leading
technology platforms, employee-paid insurances
and Let’s Connect, our business providing access
to consumer technology through salary sacrifice.
As a result of how we are evolving as a business,
we have revised the way we report our segmental
results, which is described in more detail in the
CFO statement on page 34.
While COVID-19 impacted our business in the
short-term by affecting our traditional face-to-
face insurance sales model, at the same time it has
brought a welcome long-term focus for
employers on the importance of supporting the
resilience of employees. Never has the importance
of supporting your team, implementing effective
remuneration schemes and ensuring they have
access to impactful benefits been more apparent.
This is driving increased demand for our offering
and underpins our confidence for the future.
Sales and Operational review
Pay and Reward: Innecto
Clients often start working with us as they
evaluate how effective their overall pay and
reward strategy is, engaging through Innecto, our
consultancy business. Innecto delivered a strong
performance in 2021, as demand returned quickly
post-pandemic and we drove sales of consultancy
services up towards 2019 levels.
It was also pleasing to see that our digital analytics
tools now generate an Annualised Recurring
Revenue (ARR) of c.£450k, reflecting the high
value clients place on detailed pay analysis and
benchmarking. Innecto won work from 49 new
clients through the year, demonstrating that our
market proposition is strongly resonating with our
target market. This year as well as general pay and
reward products, we’ve seen clients implementing
responsible reward strategies, looking hard at
gender and ethnicity pay gaps and using our tools
to help them map progress year-on-year.
Looking forward, there is a strong drive towards
considering the ‘Social’ element of ESG metrics in
managing pay fairly. The robust relationships
we’ve built with key decision-makers who return
for advice year after year allows us to also
cross-sell wider Group propositions and we
anticipate a year of continued growth in pay and
reward in 2022, especially as employee turnover
activity and pay inflation drives more focus on
attracting, rewarding and retaining the workforce .
Benefits platforms
We are at the forefront of the increasing
awareness of the ‘benefits of benefits’. Gone are
the traditional days of pension and cars for a
select few; today clients are working with us to
find more innovative solutions to improve the
wellbeing of their employees, recognising that the
pandemic has brought changing patterns of
working from home for the majority of their
office-based staff. Employee communication
channels have significantly increased in
importance in reaching employees wherever they
are, and our benefits platform is frequently used
as part of the employee communications toolkit
for direct-to-employee messaging.
Personal Group Holdings Plc
· Annual Report and Accounts 2021
14
Hapi and Hapiflex
We were delighted to bring the next generation of
our ‘Hapi’ platform – our flexible benefits solution,
Hapiflex – to market in September 2021, with a
number of client wins already secured in Q4.
Hapiflex is a unique platform that delivers a range
of flexible benefits directly to employees via a
mobile and desktop app. It builds on the
functionality of the Hapi app while putting the
decision-making process firmly into the hands of
employees, making it easy to build a benefits
package that suits their individual needs. Hapiflex
allows us to target a new market sector:
organisations looking to offer their employees a
more complex benefits offer. These tend to be
talent-driven organisations, with greater average
earnings per employee than our traditional
‘enterprise’ customer. You can read more about
Hapiflex on page 20. Meanwhile we saw 20 Hapi
platform sales in 2021, proof that our employee
engagement platform is competitive in the market
and meeting the needs of new clients.
Sage Employee Benefits
The SME business we’ve developed with Sage has
gone from a standing start last winter to a
growing business serving 20,000 paying
employees. SMEs are facing the same struggle to
recruit workforces as bigger organisations, and a
benefits platform gives them an edge in the war
for talent. The growth this year is only the start of
our SME story, as we improve the attraction,
retention and lifetime value of our clients.
We help our clients create a winning employee
deal that keeps staff performing at their best, day
after day, in all sizes and sectors.
Affordable insurance
Our insurance business is the resilient, recurring
revenue engine of the business, which served over
93,000 insurance-payers in 2021, with more than
230,000 policies in force. We resumed face-to-face
insurance sales in July, and although it has taken
time to fully re-start the engine after a gap of 15
months, we are working towards achieving full
strength in the team and conversion rates are high.
We’re serving new clients alongside existing; our
partnership with Royal Mail Group is
particularly successful. With individual
salespeople’s average daily sales up
18% on 2019 pre-pandemic numbers,
it is clearer than ever that our simple
insurances are highly valued by our
customers, and our purpose; to
‘protect the unprotected and
connect the unconnected’ has never
been more important.
What’s more, these sales are not all
substitutional – we’re seeing higher
levels of people with more than one
policy and therefore higher levels of
policy premium income. This trend
re-emphasises that our products are
relevant to the market we serve,
and invaluable in roles which don’t offer sick pay
and death in service as part of their standard
benefits package.
Through the pandemic lockdowns we developed
more routes to market – virtual visits, telesales,
and in-app insurance. Whilst face-to-face sales is
still our primary distribution method, we’ve
developed effective, lasting and lower-cost new
channels to add to our sales model which also
allows us to reach a wider proportion of
customers. We look forward to seeing the results
of our developing insurance strategy over the
medium term as early signs are promising.
NEW CLIENTS IN 2021
86
(2020 48)
ACTIVATED USERS ON HAPI AND SAGE
EMPLOYEE BENEFITS
539,051
(2020 485,773)
NO OF INSURANCE PAYERS
93,147
(2020 103,497)
“We are at the forefront of increasing
awareness of the ‘benefits of benefits”
Deborah Frost
Group Chief Executive
GROUP CHIEF EXECUTIVE’S STATEMENT
15
Strategic Report
Overview
Governance Financial Statements
GROUP CHIEF EXECUTIVE’S STATEMENT
continued
“WE ARE FOCUSED ON BUILDING A
BUSINESS WITH ROOM TO GROW IN THE
MEDIUM AND LONG-TERM, AND THOSE
FOUNDATIONS ARE NOW IN PLACE.”
Other owned benefits
: Let’s Connect
During 2021 the segment began to return to
normal trading as schemes began to operate at
pre COVID levels with 20 new clients won in the
period.
The supply shortages which heavily impacted the
second half of 2020 continued to affect the
business during the period. However, this was
mitigated by broadening the product range to
incorporate white goods, gym equipment and
outdoor furniture.
This broadening of the product offering coupled
with new business wins and an expected return to
full supply of sought after technology products
gives reason to be optimistic for the segment’s
performance moving into 2022.
Further information
OUR STRATEGY
Find out about our ambitious three year plan.
Read more |
page 24
Growth strategy
We aim to build workforce resilience for clients,
helping employees thrive in work and in life.
Over the three years I have led the business, we
have consistently executed on our strategy to
widen our business proposition beyond insurance
sales through our enterprise clients. Despite two
years of pandemic restrictions, we added 86 new
clients across the Group in 2021 and continue to
see evidence of new client interest in new sectors.
We are focused on building a business with room
to grow in the medium and long-term, and those
foundations are now in place.
As our business model has evolved, we have
improved clarity about business acquisition
targets. These fall into three main areas:
– increasing the scale of the business through the
addition of clients and customers with cross-
sell opportunity;
– accelerating growth into a chosen area such as
digital insurance or providing access to specific
technology; and
– adding in third-party suppliers to our benefits
proposition.
We are actively looking at opportunities under
these main headings.
Our refreshed strategy to substantially grow the
business over the medium-term is based on three
key areas for growth:
1. Driving insurance
– Our overarching strategy continues to focus on
developing and maximising opportunities for
growth. Our insurance business has particular
resonance in our core enterprise markets, and
we are continuing to develop opportunities with
new and existing accounts through different
approaches whilst still retaining our central
employer offer of face-to-face meetings with
all employees.
– In addition, we are developing new products and
channels to market in order to reach new
audiences through different types of employer.
This gives us greater distribution opportunities
and allows cross-selling from Let’s Connect and
Innecto client bases.
– Continuing to improve policyholder retention is
fundamental to our growth. We have made
important strides by listening to policyholders,
offering payment holidays where needed and
ensuring we have payment back-up beyond
company payroll. Our Keep My Cover alternative
payment method resulted in £1.1m of premium
income, which would previously have been lost,
being collected by direct debit in 2021 and is
now in place for 28% of policyholders who
currently pay through payroll. Our goal is to
significantly increase the percentage of
policyholders with alternative payment
methods on their account.
2. Transforming Reward & Benefits
(platform growth)
– Workforce benefits is a fast-developing area
where we are creating innovation with our
product range: Hapi and Hapiflex. Adding new
market opportunities as well as a clearer offer
to our existing markets is
now showing traction with increased sales and
driving bottom-line growth in the medium-
term.
3. Accelerating SME offer
– The SME market in the UK is vast, and mainly
under-served due to the challenges of reaching
the sector at scale. Our partnership with Sage
allows us to directly reach the seven million UK
employees using Sage services at realistic cost.
Over 2021 we moved through the start-up
phase and can now really capitalise on growth
by professionalising our joint operation. To meet
the needs of this market we have invested in
new talent to drive digital customer acquisition
and improve our customer journey.
Alongside this refreshed strategy, we are today
announcing a number of aspirations for the
mid-term:
1. Over 80% employee engagement
2. Over 75% customer approval rating
3. Serving >1.5m employees
4. Driving in-year premium income over £45m
5. Unlocking EBITDA growth
Personal Group Holdings Plc
· Annual Report and Accounts 2021
16
HOMEBASE SEES THE VALUE OF FACETOFACE VISITS
Homebase is a British home improvement retailer and garden centre with stores
across the United Kingdom and Ireland. They employ over 5,600 people.
“The site visits are delivering ROI on our benefits
– both in boosting take-up numbers, and making
sure employees appreciate the value of working
for Homebase compared to a competitor.
Using the backend HR Hub, we can see obvious
spikes in activation levels resulting from the
Employee Engagement Executive (EEE) visits.
Having them take employees through the
platform 1:1 is clearly driving the activation and
usage numbers we want to see.
Feedback from site managers is that the EEEs
are always polite and efficient. They work around
peak times to make sure our productivity is not
affected and there’s absolutely no ‘hard sell’
when it comes to the insurance policies.
In fact, we’ve had positive feedback from
employees who did choose to take up a health
insurance plan. In the wake of COVID-19, it’s not
surprising that employees value the opportunity
to protect themselves and their families at an
affordable price.
We look forward to building on this success by
continuing to increase registrations and
activations in 2022.”
Read more online |
www.personalgroup.com/casestudies
A winning team
Employee engagement scores were at 72% this
year, and the Board and I are focused on building
this beyond 80% over the next three years, which
in turn will drive customer satisfaction, client
satisfaction and increased innovation and
commerciality.
The Senior Leadership Team has been tightened
and refreshed in the last few years, bringing new
skills and perspectives to the Group. We now have
an excellent team in place to execute on our
growth ambition.
Outlook
Our strong team, together with the technology
we’ve developed, the partnership we have with
Sage, our years of experience and strong balance
sheet, combined with a hugely supportive external
market environment, give me great confidence in
what we can achieve in the next three to five
years. We recognise that the needs and required
skill-sets of the business evolve, and we will
continue to invest in people at different levels to
effect the change we need.
I would like to thank the senior team, our people
and the Board for their support, challenge and
enthusiasm for the goals we’ve set ourselves. We
are excited about where we are going next.
Deborah Frost
Group Chief Executive
28 March 2022
GROUP CHIEF EXECUTIVE’S STATEMENT
continued
“We’ve now completed our site visits schedule
and we’re delighted with how the rollout is going”
Amber Garner
Reward, Benefits & Recognition Manager, Homebase
17
Strategic Report
Overview
Governance Financial Statements
OUR MARKETS
THE DRIVE TO LOOK AFTER EMPLOYEES
HAS NEVER BEEN GREATER AND
UNDERPINS A CONTINUALLY INCREASING
DEMAND FOR OUR SERVICES.
* https://londonlovesbusiness.com/pandemic-fuels-great-resignation-in-uk-job-market-as-workforce-rethinks-career-priorities/
** https://www.mckinsey.com/featured-insights/diversity-and-inclusion/diverse-employees-are-struggling-the-most-during-covid-19-heres-how-companies-can-respond
Market drivers
Trends in the world of work have a significant
impact on the Group, often creating new
opportunities for the business.
Overall, 2021 saw the continued acceleration of a
core theme: the need for employers to improve
their employee value propositions. The drive to
look after employees, creating a real, positive
impact on lives rather than as a ‘tick-box’ exercise
has never been greater, and underpins a
continually increasing demand for our services.
Ke themes
Increased importance of employee health
and wellbeing
2021 saw a widespread recognition of the role
played by the employer in providing different
forms of health and wellbeing support, with
mental health provisions in particular emerging as
one of the key growth areas.
This means providing wellbeing services that place
emphasis on exercise, sleep, healthy food, and
mental health support, which have a significant
impact on preventing underlying conditions.
Maintaining a team that is ‘well’ underpins a
business’s ongoing operations and is also
increasingly seen to be part of the employer’s
moral responsibility.
Personal Group offers employers access to
workplace wellbeing initiatives designed to boost
morale, effectiveness, and resilience across their
operations.
A developing nuance of interest is the increased
responsibility for employers to ensure that health
and wellbeing benefits genuinely have a
meaningful impact on their people (as proven in
the data) as opposed to a token effort.
The ‘Great Resignation’ and the war for talent
What has been called “The Great Resignation” saw
4.7% of the UK workforce voluntarily resigning
from roles in 2021, due to a combination of
increasing economic instability and a shift in
workers’ priorities following the onset of the
pandemic.* At the same time, demand for new
candidates is outstripping supply. In response,
companies have further recognised the
importance of employee health protection,
employee benefits and wellbeing support as a tool
in the attraction and retention of staff.
Building resilient workforces
Living through a global pandemic has created a
shift in the minds of many people; the thought
they may become ill “someday” has been replaced
by a realisation that it could happen “any day”. With
this in mind, the Group’s health protection
offerings have continued to resonate strongly.
We’ve seen sustained interest in our protection
plans from employers who want to keep workers
safe and productive, but a limited benefits budget
means they are unable to provide cover for ill
health. By partnering with Personal Group, clients
can provide their staff with easy access to
affordable individual policies at no extra cost to
the employer. Employees also value the chance to
safeguard themselves from the impact of ill health
on their earnings.
Flexible working
COVID-19 has changed the game on flexible
working – many employees will never go back to
five days in the office. Hybrid working is here to
stay and HR managers are facing the challenge of
a workforce that is more disconnected than ever.
As such, using technology both to communicate
with employees and to deliver wellbeing services
has emerged as a key trend. As well as providing
vital support, it also encourages continued
participation with the business’s values and
philosophy. The advantages of introducing a digital
platform such as Hapi are therefore increasingly
relevant.
Diversity and inclusion
The rise of flexible working has also posed a threat
to the progress made by many businesses in terms
of diversity and inclusion; businesses must now
consider how they will preserve social equity in a
disrupted environment. Despite many businesses
pledging to prioritise diversity and inclusion
programmes throughout the pandemic, just one in
six employees in diverse categories reported
feeling appropriately supported in late 2020.**
Throughout 2021 and heading into 2022, HR
managers needed to think strategically about
employee benefits and support and how they can
make sure these provisions are reaching their
people and providing meaningful support.
Personal Group Holdings Plc
· Annual Report and Accounts 2021
18
Personal Group Holdings Plc
· Annual Report and Accounts 2021
34%
OF CLIENTS ARE CURRENTLY SERVED BY TWO OR MORE SEGMENTS
OUR MARKETS
Enterprise
One of our main markets is the
industrial heartlands of the UK,
across sectors such as social care,
food manufacturing, transport and
logistics. We are proud to offer a
benefits package and affordable
employee paid insurance protection
to these employees, many of whom
don’t sit behind a desk and might not
have access to the benefits package
offered in other sectors. Our
Hospital Cash Plan, Convalescence
Plan and Death Benefit Plan increase
these employees’ financial resilience
against unexpected costs.
The ONS estimates there are 13m
employees in UK companies over
1,000 employees. We are already
trusted by large household name
organisations like DHL, Stagecoach,
and Royal Mail.
Public Sector
With sustained pressure on the NHS
in the last 18 months, coupled with
the impact of staff shortages due to
illness and self-isolation, NHS
employees are vulnerable to missing
out on the discounts and benefits
that others take for granted. Our
NHS offer is a customised platform,
empowering employees with easy
access to core NHS benefits. We
have also developed an NHS
framework strategy to provide
access to PG Let’s Connect and other
salary sacrifice benefits provided by
third parties. The launch of HapiFlex
with the University of York this year
will also help us gain access to more
of the UK’s 5.6m public sector
workers, providing services for
employees with more disposable
income.
Talent-driven
Our work with fast-growing
talent-led businesses mainly takes
place through Innecto, our pay and
reward consultancy. For such
enterprises, attracting and retaining
the right talent is key to their future
success, a challenge that has only
been exacerbated by recent high
levels of churn across the UK
workforce. Innecto’s intelligent
consultancy and digital analysis
solutions help organisations
understand their reward position
better. As companies seek to
safeguard social equity in a disrupted
working environment, Innecto’s
gender pay gap and other
legislative-led transparency
reporting is more relevant than ever,
providing benchmarking data to
guide companies to best support
their people and preserve equity.
SMEs
We target the UK’s vast but
fragmented SME market through our
partnership with Sage, the UK’s
largest provider of payroll and
accounting software for small
businesses. Through this
partnership, we are able to reach
significant numbers of smaller
companies in the UK.
Currently circa 1m SMEs have access
to Sage accounting services,
covering 7m employees. We also
have plans to widen our partnership
to include other organisations which
work within the SME market, such as
business services and membership
organisations.
Our markets
Personal Group offers a uniquely holistic market proposition, spanning insurance, employee benefits, and reward consultancy, allowing us to address
every sector of UK business and offer relevant, timely and price-appropriate services that help companies address these key themes.
Product offering by vertical
Other owned benefits
(Let’s Connect)
Digital benefits platform
– Hapi (HapiFlex version
most relevant)
Digital benefits platform
(Hapi white-labelled as
‘Sage Employee Benefits’)
Fair-deal health and life
insurance products
Digital benefits platform
– Hapi
Pay and reward consultancy
(Innecto)
Digital benefits platform
– Hapi (HapiFlex version
most relevant)
ENTERPRISE
e.g.
Royal Mail Group,
Cranswick
SME
s
e.g.
Any enterprise with
<250 employees
TALENTDRIVEN
e.g.
Skyscanner,
Refinitiv
PUBLIC SECTOR
e.g.
Sandwell & West
Birmingham NHS Trust
See Bought By Many case study |
page 8
See Clinisupplies case study |
page 10
See NHS case study |
page 6
& University of York |
page 20
See Homebase case study |
page 17
19
Strategic Report Governance Financial Statements
Strategic Report
Governance Financial StatementsOverview
LAUNCH OF HAPIFLEX
AFTER A SUCCESSFUL LAUNCH WITH
UNIVERSITY OF YORK, WE WERE DELIGHTED
TO BRING OUR NEXT GENERATION FLEXIBLE
BENEFITS SOLUTION, HAPIFLEX, TO MARKET
IN SEPTEMBER 2021.
HapiFlex is an easy to use platform that delivers a range of flexible benefits directly to employees via
a mobile and desktop app. It builds on the functionality of the Hapi app, but puts the decision-making
process firmly into the hands of employees, making it simple to build a benefits package that suits their
individual needs.
HapiFlex allows us to target organisations looking
to offer their employees a more complex benefits
offer. These tend to be talent-led organisations,
with greater average earnings per employee than
our traditional ‘enterprise’ customer.
Whether it’s commuting by bike, holiday trading, a
tech scheme or affordable salary loans, HapiFlex
brings together a range of pre-selected benefits
all in one place, enabling employees to see a
complete overview of their chosen package.
Through their personalised Total Reward
Statement, they can see what benefits they
currently have, view the progress of an
application, adjust their choices within pre-set
windows or check out any new offers.
Offering more benefit options doesn’t mean more
admin for the HR team. With everything hosted on
a single platform, it’s easier to coordinate the
many different schemes. Personal Group can
accommodate existing providers or agree new
deals as necessary. The intuitive back-end system
helps HR teams reduce the hours spent
coordinating benefits packages across the
business and has a dashboard that shows which
benefits are the most popular. This data helps with
analysis, highlights any gaps and ensures the very
best benefits are being offered to staff. HR can
also see real time notifications of any requests,
share Total Reward Statements and integrate
directly with payroll.
Julie Stayte, Chief People Officer at Personal
Group says, “Now more than ever, employees are
expecting their employers to not only provide a
competitive salary but also additional perks that
prove how much they are valued. Being able to
choose benefits that suit their own individual
lifestyle is key to helping employees feel engaged
and motivated. This is where HapiFlex can help.”
HapiFlex makes it easy to communicate with
employees. There is the option to schedule regular
messaging, including push notifications, which
helps keep usage and engagement up. The
messaging, which can include employee surveys
and other business information, can be sent
directly to employees, which is key for reaching
remote or hybrid workers”.
Julie adds, “HapiFlex builds on the principle that
when a person feels supported – financially,
mentally, emotionally, physically, socially as well
as in their career – they are more likely to thrive
both in work and in life. By responding to
employees’ needs and offering them the benefits
they really want, businesses can engage and
motivate their workforce at the same time as
showing how much they care.”
5,030
EMPLOYEES AT HAPIFLEX CLIENT
UNIVERSITY OF YORK
Sep 2021
FULL LAUNCH OF HAPIFLEX
“HapiFlex brings together a range of bespoke
benefits all in one place.”
Personal Group Holdings Plc
· Annual Report and Accounts 2021
20
Personal Group Holdings Plc
· Annual Report and Accounts 2021
LAUNCH OF HAPIFLEX
After a competitive tender process, we
chose to partner with Personal Group to
develop and deliver flexible benefits to our
workforce of 5,030 staff.
Personal Group have designed our platform,
Rewards Extra, around our organisation’s
unique needs and workforce profile. It’s quick
and easy for employees to choose and
manage their choice of benefits from
transport, health cover, EAP, financial
wellbeing, discounts and charitable giving.
Rewards Extra only launched a few months
ago, but so far it’s been a real success. We’re
working with Personal Group to continually
optimise our employee offer, enabling us to
recruit and retain the very best talent in our
sector.
Read more online |
www.personalgroup.com/casestudies
UNIVERSITY
OF YORK
“Rewards Extra only
launched a few months
ago, but so far it’s been a
real success.”
Helen Challand
Rewards Officer, University of York
CASE STUDY
HAPIFLEX
LAUNCH
21
Strategic Report Governance Financial Statements
Strategic Report
Governance Financial StatementsOverview
OUR BUSINESS MODEL
PERSONAL GROUP’S OFFERING IS
FOCUSED OVERALL ON IMPROVING THE
LIVES OF THE UK WORKFORCE.
CLEAR PURPOSE
AND STRATEGY
HAPI
OUR MARKETLEADING,
PROPRIETARY DIGITAL
PLATFORM
AUTHORISED BY
THE FCA
VARIETY OF OFFERINGS
WITHIN ONE GROUP
PARTNERSHIP
WITH LEADING
SME SOFTWARE
PROVIDER
EXPERIENCED
MANAGEMENT TEAM
Our unique resources:
The Group provides UK organisations with the full-service solution they need to
stand out as an employer of choice.
We use these resources to:
Provide a broad range of employee engagement and
wellbeing offerings to all sectors of the UK workforce.
Our purpose provides the guiding light for
our business and aligns us behind one goal.
Our clear strategy provides motivation
for all staff and attracts investors.
A digital solution that allows employees
to access a wealth of financial, physical,
mental and social benefits through an
easy-to-use platform and smartphone
app.
Hapiflex, launched in 2021, is an
extension to the platform providing even
greater flexibility and choice.
We are authorised by the FCA for
insurance distribution, a significant
barrier to entry to competitors in the
employee benefits space.
Our ability to offer a very wide range of
benefits and solutions within one Group
is attractive to clients, provides a point of
differentiation and sets us up for further
bolt-on acquisitions.
Our long term relationship with Sage provides
access to c. 7 million employees within the
UK’s vast but fragmented SME market.
Our strong and experienced team ensures
quality delivery of our offerings across the
Group, underpinning our brand as a trustworthy
partner.
AFFORDABLE
INSURANCE
OTHER OWNED
BENEFITS
BENEFITS
PLATFORM
PAY & REWARD
How we make money
Personal Group Holdings Plc
· Annual Report and Accounts 2021
22
Personal Group Holdings Plc
· Annual Report and Accounts 2021
OUR BUSINESS MODEL
OUR
CLIENTS
OUR
COLLEAGUES
OUR
CUSTOMERS
OUR
SHAREHOLDERS
How our work creates value:
Our employee benefits and employee insurance products serve hundreds of
thousands of UK employees, helping them thrive in work and in life.
Bespoke, integrated and intuitive delivery
of a broad and affordable suite of
employee services to help employers to
attract, motivate and retain staff and to
deliver on their ESG commitments.
An engaging, supportive and challenging
environment for our people. Meaningful
purpose-led work with great opportunity
for personal career progression.
Helping customers thrive in work and in
life. Peace of mind for policyholders with
our fair-deal insurance products and
enhanced access to benefits and
discounts via several channels.
Strong financials underpin dividend
payments and provide firepower for
growth. Increasing resilience through
continued development in new channels,
offerings and audiences.
AFFORDABLE INSURANCE
Employee-paid insurance plans – access to our insurance products is made
available through an individual’s wider employee benefits offering. Premiums
are paid by the employee via a weekly or monthly payroll deduction.
OTHER OWNED BENEFITS
Employer-paid home technology salary sacrifice sales – employers pay up
front for their employees’ technology and other purchases with employees
making subsequent monthly salary sacrifice payments back to their
employers.
BENEFITS PLATFORM
Hapi subscriptions – employers pay monthly or annual subscriptions per
employee for use of the Hapi platform and app.
• Can be white-labelled through a corporate partner, eg. Sage Employee
Benefits.
Commission on third party transactions – we earn a margin on some of the
discounted vouchers available to employees through Hapi and commission
on any third-party financing arranged or employer purchases of partner
solutions.
A significant
proportion of revenue
(c.36%) is pass through
voucher resale on Hapi
and therefore has no
impact on earnings
34%
OF CLIENTS ARE
SERVED BY TWO OR
MORE SEGMENTS
Adjusted EBITDA
contribution
PAY & REWARD
Innecto Digital subscriptions – employers pay an annual subscription for
digital analysis and predictive SaaS tools for use in making pay decisions.
Innecto consultancy income – employers pay for a full reward service – from
pay benchmarking to the development of job evaluation and bonus schemes.
Insurance
Employee Engagement
and Benefits
Pay and Reward
Consumer tech
23
Strategic Report Governance Financial Statements
Strategic Report
Governance Financial StatementsOverview
OUR STRATEGY
WE ARE BUILDING ON OUR
SUCCESS WITH A CLEAR THREE
YEAR STRATEGY.
OUR MEDIUMTERM
ASPIRATIONS
Over 80% employee
engagement
great place to work
Over 75% customer
approval rating
great to work with
Serving >1.5m
employees
making a difference
Drive in-year premium
income over £35m
protecting the
unprotected
Unlocking EBITDA
growth
OUR
CAPABILITIES
High performing
customer, sales, and
client service teams
Leading-edge
technology
End to end processes
that work every time
Supplying products
and services people
need to help them
thrive in life
Purpose-driven Board
and SLT with great
supporting teams
Effective governance
PERSONAL GROUP HOLDINGS PLC
OUR VISION
A winning team building a brighter future for the UK
workforce, supporting over 1.5m employees by 2025
HOW WE WIN
We help people thrive in life and in work – ourselves
and our clients’ employees
– We make it easy for our clients and prospects to choose us,
by creating a market-leading offer, meeting all Reward and
Benefits requirements
– Our proposition, onboarding, and lifetime service for B2B
clients is industrial-strength and scalable
– Our satisfyingly simple insurance products are backed by
outstanding claims and service experience
– We make it easy to do business with us through any channel
TIER 1
SMES 0250
EMPLOYEES
We have a market-
leading partnership
with Sage with
ambitious plans for
growth in the SME
market. We will add
other partners and a
direct-to-market offer
TIER 2
TALENTDRIVEN
Through HapiFlex
we offer a bespoke
benefits solution to
UK-based companies
with a sophisticated
full-service offer:
consultancy, salary
sacrifice and other
third-party solutions
TIER 3
ENTERPRISE/
PUBLIC SECTOR
Our core markets
offer company-paid
wellbeing benefits
and employee-paid
insurance to UK-based
enterprise clients
between 2,000 and
140,000 employees
OUR ASPIRATIONS
We are focused on building a business with room to grow in the medium and long-term and have laid out
what our business will need to look like to meet our aspirations.
WHERE WE PLAY
Personal Group Holdings Plc
· Annual Report and Accounts 2021
24
Personal Group Holdings Plc
· Annual Report and Accounts 2021
OUR STRATEGY
HOW WE WILL DELIVER
Our refreshed strategy to substantially grow the business over the medium-term is based on three key areas for growth.
a. Increase channels to market
direct mail, virtual visits,
digital, face-to-face
b. New products
eg Cancer Protect, new
company paid product
c. Improve retention
improve policyholder journey
and communications to
retain higher numbers
d. Improve penetration levels
currently estimated at c.10%
of available employees
a. Increase client base
reach new markets with clear
‘best in class’ offer
b. Increase each client’s spend
on reward and benefits
by offering new ideas and
services including Innecto
and Let’s Connect
c. Increased range of offering
providing a broader range
of benefits to our
customer base
a. Our target market covers
c150,000 businesses
(ONS data Nov 2021) between
20 and 250 employees.
Together they account for
around 6.1m employees
with a market value of
c£300m ARR.
b. Maximise our relationship
with Sage
c. Improve lifetime value (LTV)
of subscribers
d. Add new channels
to address market needs
1.
DRIVE
INSURANCE
2.
TRANSFORM REWARD
& BENEFITS
3.
ACCELERATE
SME OFFER
25
Strategic Report Governance Financial Statements
Strategic Report
Governance Financial StatementsOverview
STRATEGIC PROGRESS
MAKING REAL PROGRESS ON
OUR STRATEGIC GOALS
STRATEGIC AREA
PAY & REWARD
BENEFITS PLATFORM AFFORDABLE INSURANCE OTHER OWNED BENEFITS
Client proposition
Innecto is the largest independent pay and reward consultancy in the UK.
We offer a comprehensive suite of consultancy services including reward
strategy, pay structures, pay benchmarking, job evaluation, gender pay and
executive remuneration. Innecto specialise in working with clients who are
going through significant change or growth and need to update their pay
and reward arrangements to meet business demands.
2021 clients include Airbus, Airtanker, Taylor Wessing, Bought by Many,
Canada Life, Avanti West Coast, and Bloomsbury Publishing.
Innecto has also developed a suite of digital analysis and predictive SaaS
tools for use in making pay decisions. Innecto has also developed a platform
of digital analysis and predictive tools for use in making pay decisions. During
the year, we developed a new tool, Advance, which allows employers to
simplify and speed up decision-making around the annual pay review
process. This was launched in early 2022.
Many clients start work on their reward proposition with pay, following on
with bonus and finally benefit provision. Innecto brings clients into the
Group at an early stage in their thinking and tends to work with key decision-
makers. We are unique among mid-market benefit providers in offering
complete pay, reward and benefit solutions.
Our employee benefits solution, Hapi, is a market-leading
employee engagement platform.
The app-first technology enables employees to access their
benefits and wellbeing services wherever and whenever
they need to which works particularly effectively in our core
clients where employees are often not working at a desk, and
with the increase in hybrid and home-working, we see a
distinct requirement for employers to be able to host a
central hub with employee information in one, easily
accessed location.
For larger clients, the platform is fully customised and white
labelled with their own bespoke mix of benefits and
branding, whereas our SME clients buy a standardised
product pre-populated key benefits as Sage Employee
Benefits through our partnership with Sage.
Hapiflex is our new version of Hapi, aimed at more
sophisticated client users who want to be able to offer
flexible benefits to their employees which includes opting in
to specific benefits (ie buy/sell holiday) on an annual cycle.
Our insurance products provide peace of mind and security for employee groups
who don’t receive death in service or sick pay from their employers. Our simple
products, which don’t require a medical or premium underwriting, are paid
through payroll deduction. The premiums and payouts are relatively low value,
but fill an important gap for the communities we serve.
Our unique sales approach is to conduct benefits rollout directly in the
workplace with employees, both introducing them to their benefits package on
Hapi, and offering them chance to buy insurance there and then, face to face.
This fulfils our purpose of Connecting the Unconnected, and Protecting the
Unprotected, and helps employers get their key messages about employee
wellbeing and the key benefits they offer employees at the same time.
Since COVID, we have been developing other channels to market, including
Virtual Visits, Direct Mail and Telesales. We are also trialling Digital Insurance
sales through our Hapi app.
This sector refers to suppliers within the platform which are also owned by the
Group. At present this refers to Let’s Connect, the Group’s Salary Sacrifice
Technology business, but the reallocation of segments allows this area to grow
as the Group moves forward.
Our benefit proposition provides employees with the opportunity to exchange
some of their salary each month for the latest technology devices from leading
manufacturers.
Employees are able to save National Insurance – up to 12% – and proves very
popular, as they are able to spread the cost over a fixed period of time.
Employers value how the benefit drives employee engagement and helps them
create an excellent employee value proposition, which both attracts and retains
staff.
Other benefits include having access to the latest devices for remote working,
communications and learning.
2021 progress
–
Growth in consultancy income of 50% on 2020.
–
49 new clients.
–
Third digital product developed; HR pay review tool ‘Advance’ launched in
early 2022.
–
40 clients on either Evaluate and PayLab with a retention rate of 84%.
–
Annual Recurring Revenue (ARR) of £0.43m at Dec 21 (£0.25m Dec 20 +72%).
–
Launch of Hapiflex, the Group’s new Benefit Management
System, allows full integration of a range of company-paid
benefits (ie pension, CycletoWork, Let’s Connect, season
ticket loans etc) into the Hapi software allowing greater
choice for employees, an improved customer journey and
value-add one-stop process for clients and their
employees. This allows us access to new markets who see
the offer of flexible benefits to their teams as key to their
employee value proposition.
–
Return to the field was impeded by lockdown until mid-July where we
gradually saw a re-start of face-to-face visits with clients. Re-starting the
engine on the field sales team after a hiatus of 15 months was challenging,
and we were still hampered by employee shortages, both ours and clients as a
result of COVID through the summer and autumn. Individual colleagues are
performing very well with individual sales delivery up c8% based on 2019
levels which is encouraging as we continue returning to normal, and look
forward to 2022 with confidence.
–
We went live with a digital insurance trial with our largest client in July.
–
Attracted new clients as a result of public sector frameworks gained in 2020.
Successfully part of joint Personal Group-wide tender for Kent County
Council Framework – goes live in 2022.
–
Added 20 new clients.
–
Due to global technology shortages, we expanded our product set – launches
of white goods, high end garden furniture and gym equipment which helped
to retain margins and meet client expectations.
2022 plans
–
Many organisations have come out of the pandemic keen to review
existing reward practice in response to the tight labour market and are
focusing heavily on reward strategy reviews and benchmarking.
–
Focus on employee lifetime value has seen an uplift in consultancy
projects looking at benefit provision, recognition and pay progression.
–
Successful launch of new Innecto Digital product Advance, a pay review
software solution. 2022 will see the evolution of how we are positioning
our platforms in the market and a continued focus on connectivity of all
Innecto Digital products. Once connected, clients will have a seamless
journey through reward, alongside APIs into HRIS systems, which will
provide significant cross-sell opportunities for multiple products.
–
2022 is Innecto’s 20 year anniversary.
–
SME growth: Drive relationship with Sage to add more
clients, improve sign-up and retention. Expand further
SME channels.
–
Hapi growth: Integration of manual back-office processes,
increased functionality on marketing capability driven
centrally to drive sign-up and usage including integrating
digital insurance.
–
Sourcing and integrating through API third party
partnerships to add innovation to product offer on Hapi at
speed drive higher revenue values earned per platform
through improved product range and offer of benefits plus
Hapiflex sales at higher revenue per user.
–
Driving Insurance initiative focused on widening and deepening all aspects of
our insurance customer operation:
–
Improve penetration with existing clients through extension of digital
insurance and other routes to market.
–
Innovation in products with third party trials of other insurance products.
–
Review first year policyholder retention journey to ensure that we support
the customer as required in the initial stages of their partnership with the
Group.
–
Cross sell/upsell across the Group, including Hapi/Let’s Connect on the Kent
Framework as a viable public sector choice to EdenRed.
–
As supplies of technology products improve in 2022, the moves made in 2021
to broaden the product range of Let’s Connect will allow greater choice and
more seasonally relevant product marketing throughout the year.
–
The Group continues to actively consider acquisition into other areas to widen
its owned offering.
Personal Group Holdings Plc
· Annual Report and Accounts 2021
26
Personal Group Holdings Plc
· Annual Report and Accounts 2021
STRATEGIC PROGRESS
STRATEGIC AREA
PAY & REWARD
BENEFITS PLATFORM AFFORDABLE INSURANCE OTHER OWNED BENEFITS
Client proposition
Innecto is the largest independent pay and reward consultancy in the UK.
We offer a comprehensive suite of consultancy services including reward
strategy, pay structures, pay benchmarking, job evaluation, gender pay and
executive remuneration. Innecto specialise in working with clients who are
going through significant change or growth and need to update their pay
and reward arrangements to meet business demands.
2021 clients include Airbus, Airtanker, Taylor Wessing, Bought by Many,
Canada Life, Avanti West Coast, and Bloomsbury Publishing.
Innecto has also developed a suite of digital analysis and predictive SaaS
tools for use in making pay decisions. Innecto has also developed a platform
of digital analysis and predictive tools for use in making pay decisions. During
the year, we developed a new tool, Advance, which allows employers to
simplify and speed up decision-making around the annual pay review
process. This was launched in early 2022.
Many clients start work on their reward proposition with pay, following on
with bonus and finally benefit provision. Innecto brings clients into the
Group at an early stage in their thinking and tends to work with key decision-
makers. We are unique among mid-market benefit providers in offering
complete pay, reward and benefit solutions.
Our employee benefits solution, Hapi, is a market-leading
employee engagement platform.
The app-first technology enables employees to access their
benefits and wellbeing services wherever and whenever
they need to which works particularly effectively in our core
clients where employees are often not working at a desk, and
with the increase in hybrid and home-working, we see a
distinct requirement for employers to be able to host a
central hub with employee information in one, easily
accessed location.
For larger clients, the platform is fully customised and white
labelled with their own bespoke mix of benefits and
branding, whereas our SME clients buy a standardised
product pre-populated key benefits as Sage Employee
Benefits through our partnership with Sage.
Hapiflex is our new version of Hapi, aimed at more
sophisticated client users who want to be able to offer
flexible benefits to their employees which includes opting in
to specific benefits (ie buy/sell holiday) on an annual cycle.
Our insurance products provide peace of mind and security for employee groups
who don’t receive death in service or sick pay from their employers. Our simple
products, which don’t require a medical or premium underwriting, are paid
through payroll deduction. The premiums and payouts are relatively low value,
but fill an important gap for the communities we serve.
Our unique sales approach is to conduct benefits rollout directly in the
workplace with employees, both introducing them to their benefits package on
Hapi, and offering them chance to buy insurance there and then, face to face.
This fulfils our purpose of Connecting the Unconnected, and Protecting the
Unprotected, and helps employers get their key messages about employee
wellbeing and the key benefits they offer employees at the same time.
Since COVID, we have been developing other channels to market, including
Virtual Visits, Direct Mail and Telesales. We are also trialling Digital Insurance
sales through our Hapi app.
This sector refers to suppliers within the platform which are also owned by the
Group. At present this refers to Let’s Connect, the Group’s Salary Sacrifice
Technology business, but the reallocation of segments allows this area to grow
as the Group moves forward.
Our benefit proposition provides employees with the opportunity to exchange
some of their salary each month for the latest technology devices from leading
manufacturers.
Employees are able to save National Insurance – up to 12% – and proves very
popular, as they are able to spread the cost over a fixed period of time.
Employers value how the benefit drives employee engagement and helps them
create an excellent employee value proposition, which both attracts and retains
staff.
Other benefits include having access to the latest devices for remote working,
communications and learning.
2021 progress
–
Growth in consultancy income of 50% on 2020.
–
49 new clients.
–
Third digital product developed; HR pay review tool ‘Advance’ launched in
early 2022.
–
40 clients on either Evaluate and PayLab with a retention rate of 84%.
–
Annual Recurring Revenue (ARR) of £0.43m at Dec 21 (£0.25m Dec 20 +72%).
–
Launch of Hapiflex, the Group’s new Benefit Management
System, allows full integration of a range of company-paid
benefits (ie pension, CycletoWork, Let’s Connect, season
ticket loans etc) into the Hapi software allowing greater
choice for employees, an improved customer journey and
value-add one-stop process for clients and their
employees. This allows us access to new markets who see
the offer of flexible benefits to their teams as key to their
employee value proposition.
–
Return to the field was impeded by lockdown until mid-July where we
gradually saw a re-start of face-to-face visits with clients. Re-starting the
engine on the field sales team after a hiatus of 15 months was challenging,
and we were still hampered by employee shortages, both ours and clients as a
result of COVID through the summer and autumn. Individual colleagues are
performing very well with individual sales delivery up c8% based on 2019
levels which is encouraging as we continue returning to normal, and look
forward to 2022 with confidence.
–
We went live with a digital insurance trial with our largest client in July.
–
Attracted new clients as a result of public sector frameworks gained in 2020.
Successfully part of joint Personal Group-wide tender for Kent County
Council Framework – goes live in 2022.
–
Added 20 new clients.
–
Due to global technology shortages, we expanded our product set – launches
of white goods, high end garden furniture and gym equipment which helped
to retain margins and meet client expectations.
2022 plans
–
Many organisations have come out of the pandemic keen to review
existing reward practice in response to the tight labour market and are
focusing heavily on reward strategy reviews and benchmarking.
–
Focus on employee lifetime value has seen an uplift in consultancy
projects looking at benefit provision, recognition and pay progression.
–
Successful launch of new Innecto Digital product Advance, a pay review
software solution. 2022 will see the evolution of how we are positioning
our platforms in the market and a continued focus on connectivity of all
Innecto Digital products. Once connected, clients will have a seamless
journey through reward, alongside APIs into HRIS systems, which will
provide significant cross-sell opportunities for multiple products.
–
2022 is Innecto’s 20 year anniversary.
–
SME growth: Drive relationship with Sage to add more
clients, improve sign-up and retention. Expand further
SME channels.
–
Hapi growth: Integration of manual back-office processes,
increased functionality on marketing capability driven
centrally to drive sign-up and usage including integrating
digital insurance.
–
Sourcing and integrating through API third party
partnerships to add innovation to product offer on Hapi at
speed drive higher revenue values earned per platform
through improved product range and offer of benefits plus
Hapiflex sales at higher revenue per user.
–
Driving Insurance initiative focused on widening and deepening all aspects of
our insurance customer operation:
–
Improve penetration with existing clients through extension of digital
insurance and other routes to market.
–
Innovation in products with third party trials of other insurance products.
–
Review first year policyholder retention journey to ensure that we support
the customer as required in the initial stages of their partnership with the
Group.
–
Cross sell/upsell across the Group, including Hapi/Let’s Connect on the Kent
Framework as a viable public sector choice to EdenRed.
–
As supplies of technology products improve in 2022, the moves made in 2021
to broaden the product range of Let’s Connect will allow greater choice and
more seasonally relevant product marketing throughout the year.
–
The Group continues to actively consider acquisition into other areas to widen
its owned offering.
27
Strategic Report Governance Financial Statements
Strategic Report
Governance Financial StatementsOverview
TOTAL UNIQUE CLIENT NUMBERS
387
(2020: 358)
NUMBER OF INSURANCE PAYERS
93,147
(2020: 103,497)
ACTIVATED USERS ON HAPI AND SAGE EMPLOYEE
BENEFITS
539,051
(2020: 484,773)
LEAD INDICATORS
As part of our strategy for delivering long-term sustainable growth, we identified a number of lead indicators, the improvement of which will enable us to grow both our
revenue and profits and build future value for the business.
Lead Indicator
Why we chose it
31 December 2021 31 December 2020
Restated*
Total unique client numbers
Winning new clients and retaining existing ones will be key to us being able to
grow our business.
387
358
Number of clients served by two or
more lines of business
Encouraging cross-selling across the Group will enable us to achieve increased
penetration across our existing clients as well as making us an important part
of clients’ employee wellbeing proposition.
132
120
Total number of employees to
whom one or more of our services
are made available
Increasing the number of employees we provide services to will be fundamental
to us achieving our growth aspirations as well as helping us achieve our vision of
being a winning team creating a brighter future for the UK workforce.
1,210,980
1,159,691
Activated users on Hapi and Sage
Employee Benefits
Increasing the number of activated users on Hapi and Sage Employee Benefits
will help us drive greater return on the Group’s SaaS digitally enabled products.
539,051
484,773
Number of insurance payers
Re-invigorating growth in insurance policyholders, together with a consistent
focus on retention, will help us increase the size of our insurance business. We
have chosen to use payers instead of our historic measure of policies to reflect
that the majority of our premiums are collected through payroll deduction and our
retention rates are largely determined by the actions of the individual payer.
93,147
103,497
* In line with our approach to a more holistic view of our clients we implemented Salesforce across the Group in 2021. As a result, some of the 2020 comparators for these
metrics have been restated.
KEY PERFORMANCE INDICATORS
THE GROUP METICULOUSLY
REVIEWS ITS PERFORMANCE,
MEASURED ACROSS A NUMBER
OF KPIS.
Personal Group Holdings Plc
· Annual Report and Accounts 2021
28
Personal Group Holdings Plc
· Annual Report and Accounts 2021
2021 £3.2m
2020 £1.6m
2019 £1.5m
2021 80.7%
2020 80.5%
2019 76.6%
2021 33,155
2020 27,320
2019 31,319
2021 £3.7m
2021 £24.4m
2020 £27.1m
2019 £30.3m
2020
£2.4m
2019 £9.0m
2021 24.5%
2020 24.4%
2019 22.1%
YEAR ON YEAR INSURANCE RETENTION
80.7%
ANNUALISED RECURRING REVENUE
FOR SAAS LICENCES
£3.2m
LC ORDERS
33,155
OTHER KPIS
In addition to our lead indicators we continue to measure against a variety of additional KPIs both across the Group and within the various business segments.
1. Annualised premium income refers to the annualised premium of policies in force at the end of the financial year net of IPT.
2. Annualised new business premiums are a key performance indicator as, whilst no direct reconciliation to earned premiums for the year can be carried out, they are a primary driver of earned premiums
in future years and, as such, are a key measure for the Group. For a weekly premium, the measure is calculated as the value of the premium (net of IPT) x 52; for a monthly premium, the value of the net
premium (net of IPT) x 12.
KEY PERFORMANCE INDICATORS
ANNUALISED NEW BUSINESS PREMIUM
2
£3.7m
CLAIMS RATIO
24.5%
ANNUALISED PREMIUM INCOME
1
£24.4m
29
Strategic Report Governance Financial Statements
Strategic Report
Governance Financial StatementsOverview
Q&A WITH LIAM MCGRATH, CHIEF OPERATING OFFICER
A CONVERSATION WITH LIAM MCGRATH,
PERSONAL GROUP’S COO, TO DISCUSS
THE CHANGING MARKET, NAVIGATING
OPERATIONAL CHALLENGES AND THE
GROUP’S BIGGEST OPPORTUNITIES.
“Growth is at the top of the
agenda and we are clear how
we will achieve it.”
Liam McGrath
Chief Operating Officer
Q
What were Personal Group’s priorities
over the last year?
It’s been a really busy first seven months.
When I joined Personal Group back in May
2021, the loosening of lockdown restrictions
from the pandemic had just begun which
enabled us to get the insurance field sales
team back out to work. There was a clear
priority for us to get back to face-to-face
meetings alongside our virtual sales channels
and we were able to act quickly and flexibly to
successfully restart these sales.
In addition to this we have been thinking
carefully about how we’re going to grow
the insurance business significantly over
the next three to four years, and ultimately
what that requires from a channel and
product perspective. Recognising the world is
different post pandemic, we know the division
must be multi-channel, and appropriate to
multiple markets. Driving this forward is very
much front of mind.
On the employee benefits platform side,
we’ve been really busy winning new clients
and successfully launching Hapiflex, a more
complex version of the benefits platform
for talent-driven organisations. The Sage
partnership continues to go from strength
to strength as well and our pay and reward
business Innecto is thriving.
Q
What are the key goals for Personal Group’s
insurance business and how will you
achieve them?
Driving insurance through new and existing
channels – specifically, getting in-year
premium income to over £45m – is central to
our strategy. It’s an ambitious target but I’m
confident in our capability of having really
high performing sales and service teams that
plays directly to how we win with our simple
products and outstanding service.
We have identified 12 growth levers: these
will enable us to protect and grow the core
of our insurance business as well as enter
adjacent and new markets. At the same time
as increasing penetration into existing clients
and maximising policyholder retention,
we’ll be adding new products that serve our
customers’ needs. Our diversified channels to
market – face to face, direct mail, virtual visits
and in-app insurance – will enable us to reach
more customers than ever before.
Q
How much has the industry changed
during your career?
The insurance and employee benefits
and wellbeing industries have changed
exponentially in the last 20 years. Previous
benefits packages had nothing compared
to what you can access now in terms of
discounts, flex benefits and perks.
BRIEF BIOGRAPHY
As COO, Liam leads Personal Group’s
insurance arm Personal Group Benefits.
He was previously Group COO for
Advanced, provider of business software
and services to over 19,000 customers
where he had responsibility for all
customer support and professional
services.
Liam has held large operational roles in
retail financial services for over 15 years
working for brands such as Equiniti Group
plc, RBS, RSA and GE Consumer Finance.
Personal Group Holdings Plc
· Annual Report and Accounts 2021
30
Personal Group Holdings Plc
· Annual Report and Accounts 2021
Advancements in technology have been
the key driving force across both industries
and have enabled a lot of the progression
to happen. Consumers now have direct and
instant access to insurance or employee
benefits from their phone.
Alongside that, the breadth of offering has
significantly increased, particularly in the past
24 months with the rise of insurtech. We’ve
also seen innovation in the way cover is sold
and provided – at Personal Group we’re now
able to sell insurance policies via our Hapi app
to employees of existing clients.
Q
What attracted you
to Personal Group?
I was attracted to Personal Group due to it
being a strong purpose-driven business that
prioritises people. With businesses now more
focused on their employees than ever before,
the opportunity in the protection services
and employee benefits markets is huge. That
really attracted me to the role too. Everybody
I met during the recruitment process was
genuinely passionate about the business.
Q
How has Personal Group adapted to
meeting customer demand during the
COVID-19 pandemic?
Following the national lockdowns we’ve
seen people become more concerned about
being ill and focused on their mortality.
People are subsequently seeking out the
protection insurance offerings that are
available. Personal Group’s combined offering
of wellbeing services and employee insurance
means we can help employers safeguard their
productivity with a resilient workforce.
1. Assessing Interest and Affordability Among Non-policyholders, ‘Amount willing to pay for health insurance by non-policyholders’, Mintel Report, July 2020.
We’ve also seen the pandemic drive a war on
talent, meaning employers can’t simply use
basic salary to attract the right employees.
You now need to be looking at what your
employee value proposition is and how
you maximise that. All of these factors are
translating into more demand, and ultimately,
more new business.
Q
What do you see as the biggest challenges
and the biggest opportunities facing the
UK workforce today?
There is still a level of uncertainty lingering
from the pandemic, forcing people to think
about where they want to be and how flexibly
they want to work. This is contributing to the
significant challenge for employers to attract
and retain the right talent.
On the opportunity side, the pandemic
has driven digital adoption. This has forced
businesses to innovate and digitalise, creating
new opportunities for employers and their
workforce to take up software-based support
structures.
Q
What challenge is top of the list for
Personal Group’s insurance business and
how are you tackling it?
Growth is obviously at the top of the agenda
and we are clear how we will achieve this.
We must become more multi-channelled, we
must serve new audiences, and to do this we
need to innovate. This is already underway,
and together with the growth in the market,
we have a great opportunity available to us.
I’m excited about our new routes to market
and the range of organisation sizes and
sectors we can now serve.
Q
What makes Personal Group different to
other market players?
The quality and breadth of our offering.
Competitors in the employee benefits space
can’t offer the same level of insurances we
can, and conversely those we are competing
against in the insurance space don’t provide an
overly attractive employee benefits offering.
We can take a holistic view of what will help
an employee thrive and cater to the vast
majority of those needs.
Q
Where will Personal Group go in
thefuture?
The market for employee benefits and
wellbeing is large and rapidly growing.
Employers in all sectors see benefits package
and employee experience as key tools for
attracting, recruiting and retaining talent.
Our affordable insurance is meeting a
market need. According to in-depth research
by Mintel, 65% of people without health
protection would not be willing to pay more
than £30 per month.
1
Over time, I would like to see Personal Group
regarded as one of the top three players in the
market; considered a household name that
is front of mind for clients and employees.
Financial growth also remains a priority of
course, with a clear goal to drive insurance
income through new and existing channels.
We have a brilliant opportunity to capitalise
on the hard yards we did through the
pandemic, to build a clear and successful
brand with our market-beating range of
products and position ourselves as the
obvious choice for clients.
31
Strategic Report Governance Financial Statements
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Governance Financial StatementsOverview
CHIEF FINANCIAL OFFICER’S STATEMENT
WE MAINTAINED OUR STRONG
BALANCE SHEET THROUGH 2021
AND REMAIN WELL POSITIONED
FOR FUTURE GROWTH.
“As anticipated we saw a reduction
to premium income as a direct
consequence of COVID-19 but despite
this continue to have over £24m of
annualised premium at the end of 2021”
Sarah Mace
Chief Financial Officer
Group revenue
Group revenue for the year of £74.5m (2020:
£71.5m) reflects a varied performance across the
different business areas and the continued
contribution from recurring revenue streams.
As anticipated we saw a reduction to earned
premium as a direct consequence of 15 months of
COVID-19 lockdowns restricting our ability to carry
out our traditional face-to-face selling of
insurance. Despite this, as at 31 December 2021 we
continue to have over £24m of annualised
premium income, the majority of which are
renewable on weekly or monthly rolling contracts.
Group results
2021
£’000
2020
£’000
Revenue
74,513
71,524
Adjusted EBITDA*
6,094
10,111
Operating profit
4,374
8,630
Profit before tax
4,342
8,557
Tax
(745)
(1,663)
Profit for the year
3,597
6,894
Adjusted EBITDA*
Adjusted EBITDA* for the year was £6.1m (2020:
10.1m).
The key driver of the decline was the reduction in
premium income and consequential underwriting
profit, which was compounded by the increased
cost of scaling up the field sales team back up
towards pre-COVID-19 levels in the second half
of the year. Offsetting this, we saw increased
contribution from both our pay and reward
Outside of insurance, all other areas of the
business continued to grow. Digital platform
subscription income from our internally developed
benefits platform increased by over 40% year on
year, driven mainly by our expansion into the SME
sector through our partnership with Sage. Our pay
and reward subsidiary, Innecto, also put in a strong
performance with the combination of consultancy
income and digital subscription income from their
proprietary HR solutions up by a third. Annual
recurring revenue across all the Group’s digital
platforms now stands at £3.6m. Sales of
technology and other products to employers as
part of their employee benefit provision through
the Group’s subsidiary PG Let’s Connect also
rebounded somewhat from the supply chain
issues faced in 2020 although these remained in
part during its peak trading period. In addition,
income from voucher resale through the benefits
platform continued to grow and whilst this
predominantly represents pass-through revenue,
it does continue to demonstrate the value of the
provision to our clients.
* 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.
Personal Group Holdings Plc
· Annual Report and Accounts 2021
32
Personal Group Holdings Plc
· Annual Report and Accounts 2021
CHIEF FINANCIAL OFFICER’S STATEMENT
GROUP REVENUE
£74.5m
(2020 £71.5m)
ADJUSTED EBITDA
£6.1m
(2020 £10.1m)
EARNINGS PER SHARE
11.5p
(2020 22.1p)
business and PG Let’s Connect, in line with their
increased revenue contributions. Outside of this,
the reduction in adjusted EBITDA also reflected
investment in both our sales and marketing team
and the general infrastructure and people within
the business to ensure we are in the best place
possible to support future growth.
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 for the year was £4.3m (2020:
£8.6m). This reflects both the reduction in
adjusted EBITDA* and the increased amortisation
charge arising from continued investment in the
Group’s proprietary software. The tax charge for
the year was £0.7m (2020: £1.7m), and profit after
tax for the year £3.6m (2020: £6.9m).
EPS
Resulting earnings per share was 11.5p (2020:
22.1p). The calculation is detailed in Note 13.
Dividend
The Board has recommended a final ordinary
dividend of 5.3 pence per share, making a total
ordinary dividend for 2021 of 10.6 pence per share.
Whilst this dividend reflects our reduced profits
for the year it does exceed recent pay-out ratios
and reflects both the fact that the Group remains
strongly capital generative and the short-term
impact of COVID-19 on its results.
Balance sheet
As at 31 December 2021 the Group’s balance sheet
remained strong, with cash and deposits of
£22.9m (2020: £20.2m) and no debt.
The Group’s main underwriting subsidiary,
Personal Assurance Plc (PA), continues to maintain
a conservative solvency ratio of 357% (unaudited),
with a surplus over its Solvency Capital
Requirement of £3.5m. 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
220% (unaudited), under its own regime.
No impairment was deemed necessary for the
goodwill balances held in respect of the
acquisitions of PG Let’s Connect and Innecto as
detailed in Note 14.
Profit before tax
2021
£’000
2020
£’000
Profit before tax
4,342
8,557
Finance costs
32
73 Depreciation
966
1,003
Amortisation of acquired intangibles
205
205
Amortisation (other)
380
265
Share-based payment expense
169
8
Adjusted EBITDA*
6,094
10,111
Alternative performance
measure
Adjusted EBITDA, which is referenced
throughout this document, is an alternative
(non-Generally Accepted Accounting
Practice (non-GAAP)) financial measure
used by the Group when reviewing
performance, evidenced by executive
management bonus performance targets.
As such, this measure is important and
should be considered alongside the IFRS
measures.
Adjusted EBITDA takes into account
adjustments, in addition to the standard
IFRS measure, which 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 payment expenses are a non-cash
item which have historically been
significant in size but can fluctuate based
on judgmental 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.
33
Strategic Report Governance Financial Statements
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Governance Financial StatementsOverview
Segmental results
To reflect how our business has evolved, and that in many cases our clients utilise our services across multiple business areas, we have changed the way we
present our segmental results. We are now reporting four core segments as detailed in the table below.
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. In addition, sales and marketing costs and other central costs that are not directly attributable to a segment, such as Finance, HR,
depreciation and amortisation and Group Board expenses are no longer allocated to a segment but are shown separately as ‘Group Admin & Central Costs’.
We believe the new presentation provides greater transparency to enable the impact of top line growth on adjusted EBITDA* contribution for each area of the
business to be understood.
Segment
Description
Income Streams
Pay & Reward
Provision of a full reward service to employers through the Group’s
pay and reward subsidiary, Innecto
Consultancy, digital platform subscriptions
Benefits Platform
Provision of a benefits platform to employers both directly and
through channel partners, currently Sage for our SME solution
Digital platform subscriptions, commissions from third party
benefits which sit on the platform
Affordable Insurance
A directly owned benefit, provision of simple insurance products
underwritten by Group subsidiaries
Premium income
Other Owned Benefits
Other directly owned benefits: sale of technology and other
products to employers as part of their employee benefit provision
through the Group’s subsidiary, Let’s Connect
Retail sales directly to employers, commission received from the
introduction of third party finance
CHIEF FINANCIAL OFFICER’S STATEMENT
continued
THE RECURRING REVENUE FROM
SAAS SUBSCRIPTIONS CONTINUED
TO SHOW YEAR-ON-YEAR
GROWTH ACROSS THE GROUP.
Revenue
Dec-21
£’000’s
Dec-20
£’000’s
Pay and Reward
1,236
875
Benefits Platform
3,303
2,354
Affordable Insurance
24,670
28,830
Other Owned Benefits
18,214
16,420
Other
238
310
Revenue pre voucher sales
47,661
48,789
Voucher resale
26,852
22,735
Total Revenue
74,513
71,524
Adj EBITDA Contribution
Dec-21
£’000’s
Dec-20
£’000’s
Pay & Reward
303
(255)
Benefits Platform
2,098
2,092
Affordable Insurance
11,012
15,082
Other Owned Benefits
730
469
Group Admin & Central Costs
(8,228)
(6,965)
Other
179
(312)
Total Adj EBITDA
6,094
10,111
Personal Group Holdings Plc
· Annual Report and Accounts 2021
34
Personal Group Holdings Plc
· Annual Report and Accounts 2021
CHIEF FINANCIAL OFFICER’S STATEMENT
continued
Pay & Reward: Innecto
Innecto, the Group’s pay and reward subsidiary,
put in a strong performance in 2021, with its
consultancy income up 50% on 2020 as demand
from HRDs looking to retain and attract their
employees reignited. Digital subscription income
from its proprietary HR solutions also increased by
33% on the previous year. Annualised Recurring
Revenue on these products stood at £0.4m as at
31 December 2021 and is set to increase with the
introduction of a further product, Advance, in
January 2022.
Benefits platform
Revenue from digital platform subscriptions and
commissions from third party benefit suppliers
which sit on the benefits platform rose to £3.3m
in2021 (2020: £2.4m).
Whilst subscriptions for our enterprise platform,
Hapi, remained relatively static in 2021, the
introduction of Hapiflex provides an opportunity
to both target a new market sector and to yield
higher margins from a more sophisticated and
complex product.
The main driver of the growth in revenue in this
area of the business was the expansion into the
SME market with Sage Employee Benefits, the
Group’s SME proposition being taken to market
through its partner Sage, and this is set to
continue with the signing of a new five-year
contract in February 2022.
As at 31 December 2021 the Annualised Recurring
Revenue from digital platform subscriptions
across all channels stood at £3.1m.
Despite increased revenue Adjusted EBITDA
contribution remained flat year on year at £2.1m,
reflecting investment made in the infrastructure
to support the platform, outside of capitalised
investment, for future growth.
Insurance
As anticipated, premium income from the Group’s
core insurance business in 2021 reduced by £4.1m
to £24.7m (2020: £28.8m).
This reflected the fact that 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 for 15 months
from the end of March 2020. Whilst we were able
to mitigate this in part through our adoption of
virtual visits and telesales, our annualised new
business insurance premiums in 2021 were £3.7m
(2020: £2.4m, 2019: £9.0m), with around 15% of this
coming from the new, alternative channels. Our
face-to-face sales activity recommenced in
earnest in July 2021, with availability strong across
our increased employee base, and have
subsequently seen the insurance book starting to
rebuild. As at 31 December 2021 we have in excess
of £24m of annnualised premium income
renewable on weekly or monthly rolling contracts.
Our retention rates for existing policyholders
remained strong during 2021 with both first year
and year-on-year retention rates up on pre-
pandemic levels. This reinforces 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 stable at 24.5%
(2020: 24.4%). The increased loss ratio on death
benefit continued into 2021 but, as in 2020, was
mitigated by an offsetting reduction for hospital
and convalescence in comparison to historic
averages, reflective of the capacity of the NHS
being limited as a result of COVID-19.
Adjusted EBITDA of £11.0m for the year (2020:
£15.1m), reflects both the reduction in
underwriting profit and the additional costs
associated with the scaling back up of the
face-to-face sales team in the second half of the
year towards pre-pandemic levels.
Other owned benefits:
PG Let’s Connect
PG Let’s Connect, which provides technology and
other products to employers as part of their
employee benefit provision, saw revenues
increase to £18.2m (2020: £16.4m), rebounding in
part from the supply chain issues they experienced
in 2020 but also benefitting from the return of a
number of schemes which had deferred in 2020
due to the pandemic.
Whilst some ongoing nationwide supply issues
remained throughout the year, broadening the
product range helped mitigate the impact and saw
order numbers up 21% on pre-pandemic levels,
demonstrating the continued popularity of the
benefit for employees.
Adjusted EBITDA increased to £0.7m (2020: £0.5m)
reflecting the higher revenues together with a
slight increase in gross margin.
Group administration expenses
andcentral costs
The increase in Group administration and central
costs to £8.2m (2020: £7.0m) predominantly
reflects the additional investment made in Sales
and Marketing during the year.
Sarah Mace
Chief Financial Officer
28 March 2022
35
Strategic Report Governance Financial Statements
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BUSINESS AREA OWNER INTERNAL AUDIT
RISK FUNCTION
RISK MANAGEMENT
THE BOARD RECOGNISES THAT THE EFFECTIVE MANAGEMENT
OF RISKS AND OPPORTUNITIES IS CENTRAL TO OUR CULTURE
AND DECISION MAKING AND KEY TO ACHIEVING THE GROUP’S
STRATEGIC OBJECTIVES.
It is important that there is a strong risk
management culture embedded throughout
the Group. We focus on ethical behaviours, the
fair treatment of colleagues and of customers.
We continue to identify, assess, manage and
appropriately mitigate the key risks to the Group
in achieving its objectives.
The Board is responsible for identifying the risks to
its strategic objectives and for setting the overall
risk appetite and tolerance levels. The Board
delegates oversight of risk management to the
Risk and Compliance Committee. The
effectiveness of the risk management system may
also be independently assessed by the Internal
Audit Function.
The risk environment is managed in a two-pronged
approach: top-down risks that threaten the
strategic plan and bottom-up financial,
operational, regulatory and non-insurance risks
which are identified within business areas.
The risks are captured on a risk register where the
inherent risk is identified, and the residual risk
rated after identifying operational controls and
mitigating actions.
Responsibility to maintain the register as well as to
implement and monitor mitigating actions sits
with each member of the Senior Leadership Team.
Each month a Risk Forum is held where the Senior
Leadership Team discuss the key risks, both current
and emerging. Mitigating activities and timelines
for implementation are agreed so that the Group
can continue to achieve its strategic objectives.
The risks facing the business are discussed at each
Board meeting and in greater detail at the
quarterly Risk and Compliance Committee
meeting. The Board is satisfied that, through the
processes set out above, it can effectively identify,
assess and manage current and emerging risks.
Risk governance
In accordance with recognised good practice, the
Group operates a ‘three lines of defence’ approach
which defines accountability for risk management
within roles . The Group’s risk governance is
overseen by a Risk function headed by the Head of
Risk, with independence assured through direct
and separate access to the Chair of the Risk and
Compliance Committee.
The Group’s risk management framework and Own
Risk and Solvency Assessment (ORSA) processes
are proportionate to the risks that the Group
faces.
The Risk strategy, appetite and framework are set
out in a suite of policies covering the material risks
which exist in the business. Each policy is subject
to annual review and approval.
Risk Management Three Lines of Defence
–
Identify, assess and manage the risk
on a daily basis.
–
Develop and implement policies and
procedures.
–
Ownership of business practices.
–
Ensure activities are consistent with
objectives.
–
Implement controls.
–
Risk identification.
–
Developing and oversight of the risk
management framework.
–
Risk reporting to Risk Forum, Risk
and Compliance Committee and to
the Board.
–
Providing guidance to the first line of
defence.
–
Assurance of the effectiveness of
policies and procedures.
–
Independent assurance of the
effectiveness of the first and second
lines of defence.
–
Independent reporting to the Board and
to the Audit Committee.
–
Advisory role.
Personal Group Holdings Plc
· Annual Report and Accounts 2021
36
Personal Group Holdings Plc
· Annual Report and Accounts 2021
RISK MANAGEMENT
Below follows a description of the key enterprise risks the Group has managed in 2021:
Key risks
(with an impact of
£500k+ within the
next year)
Current and emerging Mitigating activities
Change in risk
Costs and losses
Coronavirus
(COVID-19)
The claims ratios of the Group’s Hospital, Convalescence and
Death Benefit plans are all impacted by the pandemic
situation. The ongoing impact will be dependent on the
continued success of the Government’s vaccination
programme, the circulation of the current and new strains of
the virus, and infection rates. Looking forward to when the
NHS recommences its schedule of routine treatments, it is
possible that there will be an influx of claims in relation to
those routine treatments.
In addition, there is an impact on the Group’s ability to
undertake face-to-face insurance sales as well as an impact
on the PG Let’s Connect and Innecto businesses.
Both our insurance subsidiaries hold significant surpluses above their
capital resource requirements and scenario and stress testing has been
carried out to assess the likely financial impact on the Group.
Strong operational resilience enables the Group to maintain services
and support to its customers and policyholders.
Alternative routes for sale of insurance products have been launched
and new partnerships are being developed.
The long-term impact of COVID-19 is uncertain however we know
people are more aware of the importance of good physical and mental
health. We continue to offer free access 24/7 to a digital GP service.
Decreased
in 2021
Inability to
undertake/
maximise
workplace
marketing and
selling
New sales opportunities cannot be fully realised as the
traditional face-to-face method of selling is challenging
or no longer available.
New sales opportunities cannot be fully realised as on-site
access is restricted or prohibited by law or by the client.
The risk associated to both points above persists due to the
ongoing implications of COVID-19 and the subsequent
changes in working practices.
A new digital sales channel has been introduced to a
key client and is expected to be offered more widely during 2022.
The retention of existing clients and customers has been a focal point.
Insureds who are leaving their employment have the facility to retain
their covers.
New opportunities to work with introducers are being sought, to run
alongside the arrangements already in existence.
No change
Threats to
information and
to physical
security
arrangements
Poor, weak or outdated technology systems and
arrangements lead to disruptive cyber attacks, ransomware,
security breaches and/or fines, or restrict business
innovation.
Home working and hybrid working by all staff have increased
the potential threat to information security.
Data processing protocols facilitate homeworking.
IT systems are regularly tested for security from attack. The systems
are backed up regularly and hosted on third-party data centres.
Disaster recovery plans are in place and tested annually. ISO 27001
accreditation is held.
Awareness training and testing of staff has been increased and adapted
to reflect the current environment.
A number of internal and external audits have been completed in 2021
in light of the increasing threat of a cyber attack. The threat is
increasing worldwide and is not specific to the Group.
No change
Recruit, train and
retain staff
The strategic plan to double the premium income from
insurance policies is dependent on increasing the size of the
face-to-face sales force. Resourcing is challenging across all
functions/roles in what is currently a candidate led
environment, which has resulted in a rapid increase in salary
expectations of external hires. In turn this creates issues due
to internal budgets and comparators.
We have particularly seen this with Tech roles where there is
a candidate shortage across the UK; which again drives
expectations much higher than the norm alongside more
recruiter approaches being made directly to our staff
offering enhanced packages, creating a high risk of attrition.
Introduction of a Strategic Workforce Planning (SWP) approach in late
2021 mapping our people strategy to our business strategy. We aim to
optimise the current workforce together with a clear view of the skills
and capability needs for now and future to deliver our strategic
objectives in the most efficient way possible.
This will be the driver for identification and delivery of a Talent
Development Strategy which ensures that we have the right people at
the right time at the right cost for our business and at the same time a
focus on retention and giving managers the tools to have meaningful
conversations with their people to avoid a vacancy unnecessarily
arising.
The Group has reviewed our recruitment and assessment tools. We are
educating hiring managers on best practice recruitment techniques,
alongside a review of rewards and incentives for our sales force
supported by pay benchmarking, and providing more colleague
engagement tools such as hybrid and flexible working opportunities.
Increased in
2021
Rising inflation
With consumer prices rising at a fast rate there is an
increasing risk of high inflation in the market place which
may have an impact on the Group through increased supply
chain costs and disruption to customers and clients through
appropriate price increases.
The Group undertakes regular reviews of external threats such as
inflation and should the need arise has the ability to adjust prices
across all business sectors to deal with increases in inflation.
This will, in all instances, be done in conjunction with a review of
customer fairness to ensure that no stakeholder is disproportionately
affected.
Increased in
2021
37
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Governance Financial StatementsOverview
THE BUSINESS IS MOVING
FORWARD WITH A STRONG
ESG AGENDA.
A purpose-led Group
As a Group driven by a passion and
commitment to improving people’s health and
wellbeing, ESG is at the core of our business.
Our purpose is to protect the unprotected and
connect the unconnected. We exist in order to
create a positive impact on society:
– Ensuring there is an affordable, straight-
forward way for all UK workers to gain
access to health insurance
–
Helping organisations provide fair and
appropriate remuneration and benefits to
their workforces
– Supporting the holistic wellbeing of people
in the UK – both at work and at home.
The progress that we make against our ESG
goals is therefore very important to us and a
priority at Board level.
We pride ourselves on doing the right thing, a
value that is shared throughout our entire
organisation. Just as this drives our day-to-day
work, it is also reflected in how we operate as
a business at all levels.
Progress in last 12 months
Our commitment to being a responsible
business is front of mind and the Board is
committed to continuing to make progress on
the goals formalised in 2020. Some of the
highlights are outlined below.
Over the past year we have made progress
decreasing our carbon footprint by installing
solar panels at our headquarters which will
help contribute toward our “base level”
energy requirements. In 2021, since
installation, 6.1 MWh of energy ws
generted in 2021 which would power
1.4 homes for yer nd equtes to
plnting 71 trees.
It was the first year we had a Nomination
Committee, and their efforts together with
that of our diversity and inclusion working
group have led to gender and ethnicity
representation targets at all levels of the
organisation.
Employee wellbeing remains a focus for us
and we have continued to invest significantly
in training and development, as well as
providing best-in-class employee benefits,
whilst introducing hybrid work policies in
order to create a flexible and collaborative
working environment.
The Board recognises the importance of
contributing to the wider society and across
2021, the Company has continued to support
our partner charities – PACT and The Memusi
Foundation – with both financial donations
and time volunteered.
Next steps
We have identified a number of ambitious ESG
targets that we are working towards. We are
committed to holding ourselves accountable
and will provide measurements of progress
against our stated targets annually.
We will also be making all ESG information
and
goals accessible from our corporate
website in due course to aid accessibility. We
are currently defining which UN Sustainable
Development Goals our strategy is linked to
and that we will focus on going forward; these
will be announced in the 2022 Annual Report.
Our strategy to deliver long-term growth
aligns closely with our ESG objectives and the
Company is excited about the potential of our
ongoing programmes to drive meaningful
change over the medium and longer term.
Through collaboration with its people and
external stakeholders, the Company has
identified core focuses under its ESG strategy
which sit under ‘Environmental’, ‘Social’ and
‘Governance’ pillars, listed on pages 40-43.
ESG GOVERNANCE
Ownership of ESG matters
Under the leadership of our Board, 2021 has seen
us building on a clear, holistic vision when it
comes to our ESG responsibilities and progress.
The Company’s ESG strategy is overseen by
Non-Executive Director Maria Darby-Walker.
Maria, together with the support of the wider
Board, is responsible for developing appropriate
policies and practices to ensure that we
continue to work towards our targets.
This responsibility is reflected in the fact that
progression against these targets are linked
to Senior Executive and Board compensation,
with 15% of the 2021 Long Term Incentive Plan
Awards being subject to the attainment of
ESG targets.
Read more about Board engagement |
page 48
ENVIRONMENTAL, SOCIAL AND GOVERNANCE
Personal Group Holdings Plc
· Annual Report and Accounts 2021
38
Personal Group Holdings Plc
· Annual Report and Accounts 2021
ENVIRONMENTAL
SOCIAL
GOVERNANCE
OUR ESG GOALS AND TARGETS
ENVIRONMENTAL, SOCIAL AND GOVERNANCE
Although the environmental footprint of our
business is relatively small compared to others,
reducing our impact on the environment remains
a key focus. We invested in renewable energy to
power the building (via solar panels) and have
started to incorporate more lower emission
options for the fleet we operate. For critical and
significant partners we use environmental
criteria in our selection process and our
environmental activities are independently
reviewed by Avieco.
Our purpose is helping to Protect the
Unprotected and this is something that
expands outside of our day-to-day work; we
are focused on investing in our people and
providing the support they need both inside
and outside of work. Our offering is designed
for lower income categories and to create
meaningful positive social impact. The business
has supported vulnerable people within our
local community and beyond for many years
now, and helping others, not just financially but
by dedicating time, is something we take great
pride in.
As a regulated business we take governance very
seriously. Ensuring we reflect the communities
that we serve and having equal gender and
ethnic representation at different levels of the
business are key metrics for the Board.
GOAL
Improvement on reducing carbon footprint and
energy efficiency by using electricity from
renewable sources and managing fleet usage
effectively.
GOAL
To ensure that our business has a positive social
impact on the communities where we trade
and that Personal Group is an employer that
strives to offer opportunity to people of all
backgrounds.
GOAL
Continue to ensure and reassure our stakeholders
that our governance is robust and compliant with
all regulatory and legal frameworks.
TARGETS
–
Reduce Head Office 2019 carbon emissions
by three tonnes per annum.
–
Reduce 2019 fleet CO
2
usage by 25% over
three years.
–
Work towards becoming net carbon neutral
by 2031.
–
No waste production target as negligible.
–
Work on environmental policy for suppliers
and partners is ongoing.
TARGETS
–
Pledge at least 1% of EBITDA with annual
minimum of £100k to PACT (Personal
Assurance Charitable Trust) per year which
will increase funding with profitability.
–
Maintaining our long-term pledge to our
school project in Kenya (Memusi) and to
increase the time-sharing given back to our
local community through volunteering and
community action.
–
Continue working towards equal gender
representation at each level in the
organisation, maintaining the split at senior
level and improving in more junior roles.
–
To reflect the ethnic mix of the communities
in which we are based, improving our
outreach, ensuring our recruitment/talent
management approach is inclusive and
accessible.
TARGETS
–
Maintain current equal representation of
independent Directors versus non-
independent Directors.
–
Maintain equal representation of men and
women on the Board – sector average is 19%.
–
To meet blended ethnicity representation
target of 20% (taking into account the
different locations we trade in).
–
Keep CEO pay as a multiple of Personal
Group median in line with market.
PROGRESS IN 2021
–
Solar panels installed and producing
renewable energy.
–
The Group is reviewing the fleet of cars
currently in use with a view to transitioning
to more environmentally friendly cars in
2022 as the current leases expire.
–
Work on setting targets in line with UN
Development goals is ongoing.
PROGRESS IN 2021
–
Diversity & Inclusion Working Group.
–
The Group continues to develop its employee
proposition, ensuring that its benefits remain
competitive and that we remain an employer
of choice.
–
PACT donation made in line with target.
–
Flexible/hybrid working for employees.
–
Nomination Committee.
PROGRESS IN 2021
–
Policy regarding the gender diversity of the
Board.
–
The Group has made progress in its target to
reflect the local environment representation in its
workforce.
–
The Group has become one of only four AIM-listed
companies with both a female CEO and CFO.
–
Through our Accelerated Development
Programme the Group is developing a talent
pipeline for diverse future leaders.
39
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Strategic Report
Governance Financial StatementsOverview
ENVIRONMENTAL, SOCIAL AND GOVERNANCE
continued
PERSONAL GROUP’S SECR STATEMENT
The Streamlined Energy and Carbon Reporting
(SECR) regulations, enacted in 2018, are
designed to increase awareness of energy costs
within organisations, provide them with data to
inform adoption of energy efficiency measures
and to help them to reduce their impact on
climate change. They also seek to provide
greater transparency for stakeholders.
Personal Group recognises that our operations
have an environmental impact and we are
committed to monitoring and reducing our
emissions year-on-year. We are aware of our
reporting obligations under The Companies
(Directors’ Report) and Limited Liability
Partnerships (Energy and Carbon Report)
Regulations 2018.
We have continued the reporting under SECR
for the year to meet these new requirements
and increase the transparency with which we
communicate about our environmental impact
to our stakeholders.
2021 performance
Our carbon footprint for the 2021 reporting
year has been calculated based on our
environmental impact across scope 1, 2 and 3
(selected categories) emission sources for the
UK only. Our emissions are presented on both a
location and market basis. On a location basis
our emissions are 381 tCO
2
e, which is an
average impact of 2.6 tCO
2
e per employee (2.5
tCO
2
e per employee for scope 1 and scope 2
emissions only), and on a market basis our
emissions are 380 tCO
2
e. We have calculated
emission intensity metrics on an employee
basis, which we will monitor to track
performance in our subsequent environmental
disclosures.
As the business has begun to return to normal
trading following the lockdowns resulting from
the COVID-19 pandemic there has been a
considerable increase in scope 1 (53%) activities.
Scope 2, however, has shown a continued
reduction (23%) as certain offices within the
Group have not been utilised or are being utilised
less due to the introduction of hybrid working
across the Group. A further reduction has been
seen due to the introduction of the solar panels
on the roof the Group’s head office in June 2021.
Energy and carbon action
As noted previously, Personal Group installed a
roof-mounted solar PV system onto the John
Ormond House site in Milton Keynes. This project
was completed in 2021. These panels were
implemented to reduce reliance on grid
electricity and provide a source of low carbon
energy for the Group.
The entirety of the Group’s fleet is up for renewal
in 2022/23 and so a review of what vehicles will
be allowed for those who need them is underway
at the time of writing. The Group, unfortunately,
does not believe that electric cars are an option
at this stage for its sales team due to the lack of a
nationwide infrastructure. However, as a
minimum, constraints on the CO
2
emissions of all
vehicles leased are being included in the decision.
2021 results
The methodology used to calculate the GHG
emissions is in accordance with the requirements
of the following standards:
World Resources Institute (WRI) Greenhouse Gas
(GHG) Protocol (revised version).
DEFRA’s Environmental Reporting Guidelines:
Including Streamlined Energy and Carbon
Reporting requirements (March 2019).
UK office emissions have been calculated using
the DEFRA 2019, DEFRA 2020 issue of the
conversion factor repository.
Following an operational control approach
to defining our organisational boundary,
our calculated GHG emissions from business
activities fall within the reporting period of
January 2021 to December 2021 and using
reporting period of January 2020 to December
2020 for comparison.
ENVIRONMENTAL
Emissions and energy usage
Table 1 – Energy and carbon disclosures for reporting year. All units tCO
2
e unless otherwise stated.
Emissions source
2021 2020
Variance
Scope 1
Natural gas
112
128
(12%)
Company and leased cars
212
84
152%
Total Scope 1
324
212 53%
Scope 2 Electricity
49
67
(23%)
Total Scope 2
49
67
(23%)
Scope 3
Electricity T&D
4 6
(33%)
Scope 3 Employee cars
3 3
0%
Total Scope 3
7 9
(22%)
Total (Market Based)
380
273
39%
Total (Location Based)
381
282
34%
Total Energy Usage (kWh)
1
1,702,505
1,347,526
27%
Normaliser
tCO
2
e per FTE
2.6
1.9
37%
1 Energy reporting includes kWh from scope 1, scope 2 and scope 3 employee cars only (as required by the SECR regulation)
Personal Group Holdings Plc
· Annual Report and Accounts 2021
40
Personal Group Holdings Plc
· Annual Report and Accounts 2021
PEOPLE
Culture and values
The Group’s culture is set from the top of
the organisation and as such the Board
promotes a culture based around four
values: Solid, Engaging, Driven, and
Expert. These values form a core part of
how the business is managed, from
recruitment to training, and ongoing
reward and recognition.
Our employees are at the heart of our
business and the Group’s biggest asset.
We carry out an employee satisfaction
survey annually and feed the results back
to the Board. Despite the implications of
lockdown and remote working, our
employee engagement score remained
steady at 72% in 2021.
Operating ethically is also very important
to us and we have in place policies
including: Treating Customers Fairly,
Whistleblowing and Anti-Bribery. We also
have a Modern Slavery policy which
covers our policy on human rights, child
labour and forced labour.
In 2021 we made no political donations.
Wellbeing
The Group’s core purpose is to support
workforce wellbeing and engagement,
and our offerings touch more than half a
million UK employees.
We are also focused on investing in and
improving the wellbeing and overall
satisfaction of our own workforce both
at and outside of work, including having
conducted a thorough review of rewards
and benefits offered to employees in
2021. Personal Group employee
engagement and wellbeing is delivered
through our industry leading platform,
Hapi and our continued high employee
engagement scores reflect our
committed and passionate team.
Post-period end the Group appointed the
Hon Colonel Dame Kelly Holmes MBE
(mil) as Chief Wellbeing Ambassador. In
this role Dame Kelly will be helping to
guide Personal Group’s wellbeing
strategy, to ensure that our offering
remains as meaningful, relevant and
impactful as it can be.
Employees have access to a broad range
of best-in-class benefits, including
private medical and travel insurance,
access to an online GP, options to buy and
sell holiday allowances, death in service,
long service rewards, access to an
Employee Assistance Programme and
discounted gym memberships.
The Group pays all staff above the living
wage and delivers a programme of
culturally relevant wellbeing initiatives.
Alongside flexible working hours we have
a hybrid working policy in place. We also
have an employee health and safety
team, as well as training for all executives
on health and safety.
Learning and development
Our Chief People Officer oversees
learning and development amongst staff,
with the Group monitoring the average
training hours per employee to ensure
that all employees have easy access to
enhance their learning.
Despite disruption from the pandemic, in
2021 Group employees completed
approximately 6,868 training hours. This
is a very positive increase of 283% from
2020.
The increase in training hours was helped
by an increase of face to face delivery or
longer virtual sessions, as opposed to all
virtual or just e-learning courses in 2020.
We have policies in place aimed to
improve the career development paths of
employees, or to improve their skills. The
development and promotion of internal
candidates is always encouraged as
appropriate.
During 2021 the Group began its first ever
Accelerated Learning Programme with
the aim of upskilling and developing staff
in more junior roles in order to support
their career growth.
.
Diversity and inclusion
Diversity, Equity and Inclusion has been
identified as an integral part of the
Group’s objective of providing a
welcoming and inclusive working
environment where people are engaged,
recognised and rewarded. The Board
strives for equality of opportunity for all
and for the Group to reflect the diverse
communities that we serve. Not only is
this the right thing to do, but diverse,
inclusive teams, we believe, are higher
performing and better for our growth.
As such the Board has put a number of
initiatives in place to ensure the Group’s
desired culture is enhanced. These
include:
– A diversity and inclusion working group,
to ensure that as an organisation, we
continue to celebrate and support
inclusivity and diversity within our
workforce.
–
A Nomination Committee, responsible
for reviewing the structure, size and
composition (including the skills,
knowledge, experience and diversity) of
the Board and making
recommendations to the Board with
regard to any changes.
– A policy regarding the gender diversity
of the board, aiming to keep the gender
balance neutral.
SOCIAL
ENVIRONMENTAL, SOCIAL AND GOVERNANCE
continued
Group employee breakdown
by gender as at 31 December 2021
Male
Female
Directors
4 3
Managers
27
35
Employees
74
90
105
128
41
Strategic Report Governance Financial Statements
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ENVIRONMENTAL, SOCIAL AND GOVERNANCE
continued
SOCIAL
continued
Supporting our community
PACT
Personal Assurance Charity Trust (PACT) has donated around
£2m to charitable causes since it was founded in 1993. The
Group has historically donated approx. £100k to PACT per year,
which is then allocated in a number of ways. Since 2020, the
Trust has refocused to ensure the money being donated was
being used effectively. This saw the Committee move from
being simply fundraisers to become partners of local charities.
We now work with, and allocate funds to, specific projects
within many local charities with a view to continue
involvement beyond pure financial support. Key local projects
around the Milton Keynes head office for 2021 included:
–
MK Winter Night Shelter
– £16k creating the Personal Group Life Skills Programme which enables life skills training (such
as basic ITSkills, interview preparedness, managing a
household budget, cooking) and employment training
(barista, admin etc) for guests ofthe shelter who have just
gained accommodation, beaten an addiction or have the
chance to work with one of our employment partners to
reach their full potential and stand a better chance of
succeeding when they move on from homelessness.
–
MK Community Foundation
– £10k creating the Personal Group Charitable Trust Fund aimed at connecting
communities through technology, decreasing digital
poverty and improving access to ITtechnology.
The Memusi Foundation
Since 2015, Personal Group has supported the Memusi Foundation
– acharity that works to provide children in Kenya with access to
quality education, providing a safe place for children to learn and giving
support to the surrounding community. We pledged that over a decade
we would provide £0.5m to build and develop a new school, known as
Memusi B.
2021 saw:
– After eight months away from school due to the pandemic, the
students returned to the classrooms.
– The community continued to suffer from the risk of starvation
following the after-effects of COVID.
– After a gap of 18 months due to the restrictions in place, letters and
pictures were sent and received from the sponsored children at
Memusi.
– A further ad-hoc payment of £2,473 was made in April 2021 for the
Smart Aid initiative which provides food to the community.
– A payment of £25,000 (in lieu of cancelled volunteering trips) was
made to Memusi in November which will be used to build dormitories
on the Memusi B site. These will support 36 girls, providing them
with a safe base so that they do not end up having to drop out of
school due to their periods, FGM or child marriage.
– Several online fundraisers arranged to adapt to COVID restrictions.
FOUNDATION
Personal Group Holdings Plc
· Annual Report and Accounts 2021
42
Personal Group Holdings Plc
· Annual Report and Accounts 2021
GOVERNANCE
GOVERNANCE IS CENTRAL TO OUR ETHOS OF
OPERATING WITH INTEGRITY.
GOVERNANCE
The Board recognises the important role a robust
corporate governance framework plays in the
successful delivery of our long-term strategy and
has adopted the QCA Corporate Governance Code
which we continue to monitor our performance
against in line with each of the 10 principles.
(seepage 47).
The Chairman and the Board is ultimately
responsible for establishing the Group’s
governance structure, the effectiveness of
internal controls, risk management, and the
direction of the Group in accordance with our
purpose and values to help deliver our strategy.
Board composition
The composition of our Board is carefully selected
to ensure a diverse and varied set of skills,
cultures, experiences and knowledge to promote
success within the business.
We have targets to which we are working towards
to ensure that our Board is diverse and inclusive. To
support this, we have a policy in place regarding
the gender diversity of the Board and currently
have 14% of Board members and Senior Executives
with a cultural background different from the
location of the corporate headquarters.
We also strive to have equal representation of
both executive and non-executive Board members
to allow for fair, varied and independent opinion.
Board members are elected with a majority vote
and have the authority to hire external advisers or
consultants without management’s approval.
2021 saw the inauguration of our Nomination
Committee, responsible for reviewing the
structure, size and composition (including the
skills, knowledge, experience and diversity) of the
Board and making recommendations to the Board
with regard to any changes. The Nominations
Committee Report on page 57 contains more
detailed information on the Committee’s activity
during the year.
Board compensation
The Board’s compensation is determined by our
Remuneration Committee, chaired by Non-
Executive Director Maria Darby-Walker. Our
shareholders have the right to vote on executive
compensation.
For more information on how the Remuneration
Committee sets appropriate compensation, see
pages 60-63.
POLICIES
The following polices are currently implemented
by the Group:
Modern slavery
The Modern Slavery Act (2015) requires a
commercial organisation over a certain size to
publish a slavery and human trafficking statement
for each financial year. This statement can be
found on our website personalgroup.com and is
made available to our entire workforce. As a
business we are committed to eradicating human
trafficking and slavery and ensure a zero tolerance
policy in relation to our direct and indirect
operations and across our supply chain. Our policy
also extends to our wider Personal Group
community and partners. Across the reporting
period there have been no instances that do not
comply with the Modern Slavery Act.
Whistleblowing
We have a whistleblowing policy in place, which
complies with local regulatory requirements and is
designed to protect those who report wrongdoing
in the workplace. Details of the policy are
communicated to all workforce members.
Bob Head, Independent Non-Executive Director, is
the designated Whistleblowers’ Champion and has
oversight of the arrangements. He is responsible for:
– submitting the Annual Report to the Board
forapproval;
– ensuring and overseeing the integrity,
independence and effectiveness of the policy
and arrangements;
– ensuring the Policy and supporting
Arrangements protect Whistleblowers from
being victimised because they have disclosed
reportable concerns;
– receiving all notifications made to the external
provider of the whistleblowing line;
– and deciding who to engage with in Personal
Group when he receives notification of a call,
depending on the nature of the report.
Anti-bribery and corruption
The Group’s Anti-Bribery and Corruption Policy
is reviewed annually and includes all Directors,
employees and all third parties operating on
its behalf.
There were no instances of bribery or corruption in
the period.
We assess all our business partners for potential
compliance risks such as bribery and corruption,
money laundering, tax evasion facilitation, data
privacy breaches or other reputational red flags.
Further detail is included in the Corporate
Governance section, pages 46-47.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE
continued
43
Strategic Report Governance Financial Statements
Strategic Report
Governance Financial StatementsOverview
SECTION 172 STATEMENT
The Directors are aware of their duty under
s172 of the Companies Act 2006 to act in
the way they would consider, in good faith,
would be most likely to promote the
success of the Group for the benefit of its
members as a whole and, in doing so, to
have regard (amongst other matters) to:
– the likely consequences of its decisions
in the long-term;
– the interests of the Group’s employees;
– the need to foster the Group’s business
relationships with suppliers, customers
and others;
– the impact of the Group’s operations on
the community and the environment;
– the desirability of the Group maintaining
a reputation for high standards of
business conduct; and
– the need to act fairly between members
of the Group.
The Chairman sets out the text of s172
Companies Act 2006 on every Board
agenda by way of a reminder.
Below follows a description of the key enterprise risks the Group has managed in 2021:
Strategic area
Why we engage How we engaged in 2021 What matters to the Group
Our
Policyholders
Our policyholders are key to the long-term success of the Group. The retention
of existing, and attraction of new, policyholders is equally important.
We aim to make any interaction with Personal Group as positive and simple
as possible.
Provision of suitable and targeted employee benefits to our relevant
market sectors.
We provide individual face-to-face presentations of our products to potential and existing policyholders at their
place of work. Since the beginning of the COVID-19 pandemic this method of selling was impacted and so we
developed virtual and telesales methods to allow us to explain our products to customers we were otherwise
unable to see. This has now been incorporated as an option in the BAU approach of the Group, albeit now that our
representatives are able to see people at their place of work this approach has become increasingly popular in
order to provide a personalised service to our potential and existing policyholders.
The COVID-19 pandemic forced the Customer Relations Team to work from home for the majority of 2020 and
since then we have operated a hybrid working model with staff asked to work from the office three days a week,
in times where Government recommendations allow, and to work from home or the office as required for the
remainder at the individual and manager’s agreed choosing. This flexibility has allowed us to maintain a smooth
and supportive outcome for our customers, especially with many of our policyholders calling from a place of
vulnerability.
In 2021 our Customer Relations Team took over 48,500 calls and dealt with over 54,000 emails and
online queries.
–
Our products are relevant and provide cost effective
protection
–
Fair and consistent pricing
–
Efficient and sympathetic processing of claims
–
Ease of access to customer service
–
Strong net promoter score
–
Retention rates
Our Clients
Our purpose is to help companies improve their effectiveness and profitability
by improving their staff engagement and retention. Improving such metrics in
turn improves our customer retention and encourages new business.
We engage and build relationships with our customers and clients in several ways from face-to-face interaction
to holding industry and other business forums and producing white papers on topics that are relevant for their
businesses. We also recognise the importance of system security for our customers and their employees and
have ISO 27001 accreditation across the whole Group and ISO 9001 covering the Employee Benefits Platform
operated by the Group.
–
Product range, price and quality
–
Convenience and accessibility
–
Customer service
–
Fair marketing
–
Responsible use of personal data
–
Ethics and sustainability
Our Colleagues
The Group’s long-term success is predicated on the commitment of our
employees to our purpose and demonstration of our values. In order to deliver
great customer service and improve our already high staff engagement scores
we need to ensure that we provide an appropriate environment to attract and
retain great people.
We have an open, collaborative, and inclusive management structure and engage regularly with our employees.
We do this through an appraisal process, structured career conversations, employee surveys, our Hapi site and
Company presentations. We remunerate with market-based pay, rewards and benefits and our continued high
employee engagement scores reflect our committed and passionate team. Following a successful trial, we have
introduced a hybrid working policy for all office-based staff. Feedback tells us that this helps employees
maintain a better work-life balance, with subsequent gains for engagement and productivity.
–
Fair employment
–
Fair pay and benefits
–
Training, development and career opportunities
–
Health and safety
–
Responsible use of personal data
–
Ethics and sustainability
Our Suppliers
Our suppliers are fundamental to the quality of our products and to ensuring
that as a business we meet the high standard of conduct that we set ourselves.
Our Hapi platform contains numerous third-party offerings which add value to
the overall proposition. It is important that we ensure good working
relationships with those suppliers but also to choose partners that allow the
Group to fulfil its day-to-day operations to deliver our products and services to
the best standard possible.
We regularly engage in open and two-way conversations with our largest suppliers. Key suppliers are invited to
attend and present at our client conferences or workshops.
We have reviewed and updated our supplier onboarding process through the year, and as part of that process we
now feel we have improved our understanding of our suppliers and are able to work together better as a result.
–
Long-term partnerships
–
Collaborative approach
–
Open terms of business
–
Fair payment terms
Our Community
and Environment
The Board recognises the importance of leading a Group that not only generates
value for shareholders but also contributes to the wider society.
We encourage all our employees to engage in the local community and work with our PACT Committee to utilise
the funds in the Personal Assurance Charitable Trust to support charities at home and abroad as discussed on
page 42. We are conscious of the need for our business to focus on long-term sustainability, during 2021 we have
installed solar panels on the roof of our head office and are currently in the process of renewing our fleet with
emissions a key factor in any decision made.
We are currently reviewing ways in which the Group can be more active in the local community and are
beginning discussions with local schools and colleges to support them and to offer ourselves as a work
experience possibility for their students.
–
Reduce environmental impact
–
Invest in local community
–
Promote environmental offerings on platform,
i.e. Cycle to Work
–
Supporting local community by creating jobs and
providing work experience and apprenticeships
Our Shareholders
Our shareholders are key to the long-term success of the business. Through our
investor engagement activities, we strive to obtain investor buy-in into our
strategic objectives and how we plan to deliver on them. We create value for
our shareholders by generating strong sustainable profits and dividends
Through our investor relations programme, which includes regular updates, meetings, roadshows and our
Annual General Meeting, we ensure that shareholders’ views are brought into the Boardroom and considered in
our decision making. We introduced retail investor roadshows for the first time in 2021, as both live and virtual
events. After successive years of closed door AGMs we are looking forward to the possibility of moving to a
traditional AGM in 2022 and being able to see and take questions from our shareholders in our head office.
–
Financial performance
–
Strategy and business model
–
Dividend
–
Long term growth
–
Reputation of the Group
Personal Group Holdings Plc
· Annual Report and Accounts 2021
44
Personal Group Holdings Plc
· Annual Report and Accounts 2021
SECTION 172 STATEMENT
Below follows a description of the key enterprise risks the Group has managed in 2021:
Strategic area
Why we engage How we engaged in 2021 What matters to the Group
Our
Policyholders
Our policyholders are key to the long-term success of the Group. The retention
of existing, and attraction of new, policyholders is equally important.
We aim to make any interaction with Personal Group as positive and simple
as possible.
Provision of suitable and targeted employee benefits to our relevant
market sectors.
We provide individual face-to-face presentations of our products to potential and existing policyholders at their
place of work. Since the beginning of the COVID-19 pandemic this method of selling was impacted and so we
developed virtual and telesales methods to allow us to explain our products to customers we were otherwise
unable to see. This has now been incorporated as an option in the BAU approach of the Group, albeit now that our
representatives are able to see people at their place of work this approach has become increasingly popular in
order to provide a personalised service to our potential and existing policyholders.
The COVID-19 pandemic forced the Customer Relations Team to work from home for the majority of 2020 and
since then we have operated a hybrid working model with staff asked to work from the office three days a week,
in times where Government recommendations allow, and to work from home or the office as required for the
remainder at the individual and manager’s agreed choosing. This flexibility has allowed us to maintain a smooth
and supportive outcome for our customers, especially with many of our policyholders calling from a place of
vulnerability.
In 2021 our Customer Relations Team took over 48,500 calls and dealt with over 54,000 emails and
online queries.
–
Our products are relevant and provide cost effective
protection
–
Fair and consistent pricing
–
Efficient and sympathetic processing of claims
–
Ease of access to customer service
–
Strong net promoter score
–
Retention rates
Our Clients
Our purpose is to help companies improve their effectiveness and profitability
by improving their staff engagement and retention. Improving such metrics in
turn improves our customer retention and encourages new business.
We engage and build relationships with our customers and clients in several ways from face-to-face interaction
to holding industry and other business forums and producing white papers on topics that are relevant for their
businesses. We also recognise the importance of system security for our customers and their employees and
have ISO 27001 accreditation across the whole Group and ISO 9001 covering the Employee Benefits Platform
operated by the Group.
–
Product range, price and quality
–
Convenience and accessibility
–
Customer service
–
Fair marketing
–
Responsible use of personal data
–
Ethics and sustainability
Our Colleagues
The Group’s long-term success is predicated on the commitment of our
employees to our purpose and demonstration of our values. In order to deliver
great customer service and improve our already high staff engagement scores
we need to ensure that we provide an appropriate environment to attract and
retain great people.
We have an open, collaborative, and inclusive management structure and engage regularly with our employees.
We do this through an appraisal process, structured career conversations, employee surveys, our Hapi site and
Company presentations. We remunerate with market-based pay, rewards and benefits and our continued high
employee engagement scores reflect our committed and passionate team. Following a successful trial, we have
introduced a hybrid working policy for all office-based staff. Feedback tells us that this helps employees
maintain a better work-life balance, with subsequent gains for engagement and productivity.
–
Fair employment
–
Fair pay and benefits
–
Training, development and career opportunities
–
Health and safety
–
Responsible use of personal data
–
Ethics and sustainability
Our Suppliers
Our suppliers are fundamental to the quality of our products and to ensuring
that as a business we meet the high standard of conduct that we set ourselves.
Our Hapi platform contains numerous third-party offerings which add value to
the overall proposition. It is important that we ensure good working
relationships with those suppliers but also to choose partners that allow the
Group to fulfil its day-to-day operations to deliver our products and services to
the best standard possible.
We regularly engage in open and two-way conversations with our largest suppliers. Key suppliers are invited to
attend and present at our client conferences or workshops.
We have reviewed and updated our supplier onboarding process through the year, and as part of that process we
now feel we have improved our understanding of our suppliers and are able to work together better as a result.
–
Long-term partnerships
–
Collaborative approach
–
Open terms of business
–
Fair payment terms
Our Community
and Environment
The Board recognises the importance of leading a Group that not only generates
value for shareholders but also contributes to the wider society.
We encourage all our employees to engage in the local community and work with our PACT Committee to utilise
the funds in the Personal Assurance Charitable Trust to support charities at home and abroad as discussed on
page 42. We are conscious of the need for our business to focus on long-term sustainability, during 2021 we have
installed solar panels on the roof of our head office and are currently in the process of renewing our fleet with
emissions a key factor in any decision made.
We are currently reviewing ways in which the Group can be more active in the local community and are
beginning discussions with local schools and colleges to support them and to offer ourselves as a work
experience possibility for their students.
–
Reduce environmental impact
–
Invest in local community
–
Promote environmental offerings on platform,
i.e. Cycle to Work
–
Supporting local community by creating jobs and
providing work experience and apprenticeships
Our Shareholders
Our shareholders are key to the long-term success of the business. Through our
investor engagement activities, we strive to obtain investor buy-in into our
strategic objectives and how we plan to deliver on them. We create value for
our shareholders by generating strong sustainable profits and dividends
Through our investor relations programme, which includes regular updates, meetings, roadshows and our
Annual General Meeting, we ensure that shareholders’ views are brought into the Boardroom and considered in
our decision making. We introduced retail investor roadshows for the first time in 2021, as both live and virtual
events. After successive years of closed door AGMs we are looking forward to the possibility of moving to a
traditional AGM in 2022 and being able to see and take questions from our shareholders in our head office.
–
Financial performance
–
Strategy and business model
–
Dividend
–
Long term growth
–
Reputation of the Group
45
Strategic Report Governance Financial Statements
Strategic Report
Governance Financial StatementsOverview
CORPORATE GOVERNANCE
THE BOARD CONTINUES TO HAVE A SIGNIFICANT
ROLE TO PLAY IN ESTABLISHING THE CULTURE OF THE
BUSINESS
Dear Shareholder
My role as Chairman of Personal Group is to
ensure that the Board is performing its role
effectively. This means making sure the Directors
have the capacity, ability, structure, diversity and
support to respond to the opportunities being
created for us, whilst having consideration of
our responsibilities under s172 of the Companies
Act 2006.
I also have responsibility for ensuring the robust
governance of the Group through challenge and
direction of the Senior Leadership Team. Good
governance should enhance performance and
deliver positively for our shareholders, staff,
customers, suppliers and other stakeholders
whilst still enabling achievement of the Group’s
strategic aims.
The Board continues to have a significant role to
play in establishing the culture of the business,
ensuring that it is consistent with our business
model and suitably cascaded through the Group.
This is monitored through engagement with the
wider investor community, through involvement
of the Board Committees and by use of the
wide-ranging experience, skills and capabilities of
Board members.
We have worked on an integrated succession
plan for the Board and, as noted in my Chairman’s
report earlier in this document, we have
embedded the Board changes (both executive
and non-executive) made in 2020 and 2021.
With Mark Winlow, Group Chair, departing the
Personal Group Holdings Board in May 2021 I am
pleased to have taken on his role. In addition, Liam
McGrath has joined the Board as Chief Operating
Officer and Andy Lothian, having stepped down
from his executive duties, has remained with the
Board in a Non-Executive capacity.
This year has continued to see challenges as a
result of the COVID-19 pandemic and the Board
has been focused on supporting the Senior
Leadership Team in ensuring the employees of the
Company are supported in their roles be it from
the office or working from home. Ensuring our
staff have the right support, not just in terms of
equipment but also with their mental health, has
continued to be a major priority for the Board
during this time.
In 2021, we continued to develop our governance
processes to improve adherence to the Quoted
Companies Alliance (QCA) Corporate Governance
Code which the Group adopted in 2018. The Board
does not consider that it departs from any of the
principles of the Code and we continue to monitor
our performance against each of the 10 principles.
The Board is able to deliver effective decision
making and subsequent drive of value for
shareholders, based on the quality information
which it receives.
Our last independent board effectiveness review
was carried out in 2019 and, in line with our
commitment under the QCA Code (Principle 7) we
will be conducting a further one towards the end
of 2022. In the meantime, during 2021 we
conducted an internal effectiveness review and
are in the process of addressing the points raised.
The Board met 10 times in 2021 and the number of
meetings each Director attended can be seen on
pages 50 and 51. In addition, the reports of the
Audit, Risk and Compliance, Nominations and
SM&CR and Remuneration Committees can be
seen later in this section.
Martin Bennett
Independent Non-Executive Chair
Chairman’s Introduction
2021 Committee meeting dates
Board
21 Jan 22 Feb 17 Mar 5 May 26 May 30 Jun 21 Jul 28 Sep 21 Oct
23 Nov
Audit
11 Mar
14 Sep
23 Nov
Risk & Compliance
11 Mar
30 Jun 14 Sep
23 Nov
Nomination
21 Jul
Remuneration
21 Jan 17 Mar 21 Jul 21 Oct
Personal Group Holdings Plc
· Annual Report and Accounts 2021
46
Personal Group Holdings Plc
· Annual Report and Accounts 2021
CORPORATE GOVERNANCE
QCA Code compliance
Principle 1
Establish a strategy and business
model, which promote long-term
value for shareholders.
Personal Group provides insurance services and a broad range of employee benefits and wellbeing products to
businesses across the UK. The Group enables employers to improve employee engagement and support their people’s
physical, mental, social and financial wellbeing, supporting our vision of creating a brighter future for the UK
workforce. Full details of our business model and strategy can be found in the Strategic Report section of our Annual
Report (page 24) and Accounts which are available on our Company website (www.personalgroup.com).
Principle 2
Seek to understand and meet
shareholders’ needs and expectations.
Regular dialogue takes place with shareholders through initiatives including the Annual General Meeting, investor
roadshows, regulatory announcements and the Report and Accounts. During 2021 our Chief Executive, CFO, Chairman
and other Non-Executive Directors met virtually, and in person, with key investors. We also hosted our first retail
investor events in March and September 2021.
Principle 3
Take into account wider stakeholder
and social responsibilities and their
implications for long-term success.
As a Board we understand our duty to promote the success of the Company whilst considering the views of, and
impact on, our wider stakeholder group of customers, policyholders, suppliers, colleagues and our community and
environment as well as our shareholders. A more detailed summary of the Group’s engagement with all our
stakeholders can be seen on pages 44-45.
Principle 4
Embed effective risk management,
considering both opportunities and
threats, throughout the organisation.
The Board is responsible for identifying and mitigating risks to the Group achieving its strategic objectives. It addresses
risk management through an “Enterprise Risk Management Framework”, and a system of risk governance, including a
Risk and Compliance Committee. During 2021, a risk based internal audit function was again provided by RSM. For
further details see page 53.
Principle 5
Maintain the Board as a well-
functioning, balanced team led
by the Chair.
The Group maintains, and is satisfied that, the Board has a suitable balance of independence and knowledge, with
Directors encouraged to challenge all matters. The Board meets regularly, with a formal schedule of matters for its
approval. The Board is supported by regular engagement with the Senior Leadership Team, and a system of formal
Board committees. Directors are required to devote sufficient time to carry out their role.
Principle 6
Ensure that between them the
Directors have the necessary
up to date experience, skills and
capabilities.
The background and experience of the Board ensures there is an effective and appropriate balance of skills and
knowledge. Additional training is provided where needed and Board members are encouraged to maintain their
professional development. As noted on page 46 there have been two additions to the Board in the year with Martin
Bennett and Liam McGrath taking up their roles as Chairman and COO respectively. The recent Board effectiveness
review has highlighted the need for an additional Non-Executive, the search for which is underway.
Principle 7
Evaluate Board performance based on
clear and relevant objectives, seeking
continuous improvement.
Board members are each set annual objectives, with performance feedback provided by corresponding Executive and
Non-Executive members. Board evaluation is the responsibility of the Chairman. Internal Board effectiveness reviews
are undertaken yearly, with independent reviews at least every three years. The consistent themes from the 2021
Internal review have been fed back to the Board and actions are being worked on.
Principle 8
Promote a corporate culture that is
based on ethical values
and behaviours.
The Board believes Group culture is set from the top of the organisation. The Board promotes a culture based around
four values: Solid, Engaging, Driven and Expert. These values form a core part of how the business is managed, from
recruitment to training, and ongoing reward and recognition. An employee satisfaction survey is carried out on an
annual basis, with the results fed back to the Board. Despite the ongoing impact of COVID-19 and the move to hybrid
working the Group’s engagement scores remained very high and remains a source of pride for the Board.
Principle 9
Maintain governance structures and
process that are fit for purpose and
support good decision-making by
the Board.
The Board is collectively responsible for the long-term success of the Group and for setting and executing the business
strategy. It fulfils this responsibility through Board and other Committee meetings held regularly throughout the year.
The meetings held in 2021 for the Board and other Committees can be seen above.
Principle 10
Communicate how the Company
is governed and is performing by
maintaining a dialogue with shareholders
and other relevant stakeholders.
The Group communicates through a variety of regular digital and traditional communications. These include face-to-
face meetings, the Annual Report and Accounts, Interim Results, investor news announcements and information
provided on the Group’s website.
47
Strategic Report Governance Financial StatementsStrategic Report
Overview
Governance
Financial Statements
BOARD ACTIVITY IN 2021
STRATEGY AND
DEVELOPMENT
We are focused on building a business with
room to grow in the medium and long-
term, and those foundations are now in
place
GOVERNANCE
AND RISK
We continued to identify, assess, manage
and appropriately mitigate the key risks to
the Group in achieving its objectives
THIS YEAR, THE KEY BUSINESS
AND ACTIVITIES OF THE BOARD
INCLUDED…
At our strategy day in June 2021, we reflected on our
previously stated strategic aims and growth aspirations
to widen the footprint of the business and to double
the EBITDA in the mid-term. We refined this further to
concentrate on those areas of the business that we
believe have the greatest potential to deliver on this.
This has resulted in the identification of three core
pillars of focus to deliver the refined strategy:
– Driving insurance sales through new and existing
channels
–
Transforming reward and benefits
– Accelerating SME
In response to our strategy reset, we also considered
the format of our Board meetings to help support this
and have consequently reshaped the structure of our
agenda to enable an increased amount of time and
focus to be spent on the areas that will help deliver on
our strategy.
In line with the revised format for our Board meetings,
we also adopted a slightly different approach to our
work at the Risk and Compliance Committee.
We have continued to cover all relevant areas of risk
and compliance but have focused debate on
exceptions. With the time saved we now address two
‘deep dives’ at each meeting on subjects regarded as
either new risks or areas where we perceive we have
increased risk which are key to us achieving our business
objectives.
In addition, through our outsourced internal audit
function, provided by RSM, we have changed our
approach to ensure that we not only focus on the
effectiveness of key internal controls but also those
areas of the business that are potentially going to
witness the most change as we progress on our journey
to growth.
In 2021 we also introduced a Nominations and SM&CR
Committee to enable focused discussions around the
composition of the Board and the Group requirements
around SM&CR, which had previously been discussed as
part of regular Board meetings.
Read more about Our Strategy |
page 24
Read more about Risk | pages 36-37 & 53
Personal Group Holdings Plc
· Annual Report and Accounts 2021
48
Personal Group Holdings Plc
· Annual Report and Accounts 2021
PERFORMANCE
MONITORING
The monthly review provided to the Board
includes an update on progress for the lead
indicators KPIs introduced in 2020
CULTURE AND
ENGAGEMENT
The Board continues to have a significant
role to play in establishing the culture of
our business, ensuring it is consistent with
our business model
In 2020, as part of our strategy for delivering long-term
sustainable growth, we identified a number of lead
indicators, the improvement of which will enable us to
grow both our revenue and profits and build future
value for the business.
In 2021 we have regularly reviewed both these lead
indicators and the lower level KPIs which sit beneath
them to monitor our performance against our strategy.
In addition we regularly review and consider our KPIs
around ESG which were also introduced in 2020.
All of these metrics are brought into consideration by
the Remuneration Committee for the development of
annual bonus schemes and performance targets for the
Group’s long term incentive plan for the senior
leadership team.
Supporting, communicating with and rewarding our
own people has been a key focus this year and we
implemented a flexible hybrid working policy to cater
for a broad variety of personal preferences and spent
time reaffirming our core values as a team.
Our culture and values are also an important part of
what we look for in new candidates to join our Board
and Senior Leadership Team and consequently our
appointments in 2021 were a mixture of experienced
external appointments alongside several internal
promotions.
72% employee
engagement score
We ran our yearly
employee engagement
survey in October 2021.
We were delighted with an
overall score of 75% across
the Group.
Read more about our Key Performance Indicators |
page 28
Read more about our People | page 41
49
Strategic Report Governance Financial StatementsStrategic Report
Overview
Governance
Financial Statements
BOARD OF DIRECTORS
Sarah Mace
Chief Financial Officer
Deborah Frost
Group Chief Executive
Liam McGrath
Chief Operating Officer
Martin Bennett
Non-Executive Chairman
EXPERIENCED
MANAGEMENT
TEAM
THE BOARD HAS A COMBINED WEALTH OF KNOWLEDGE
AND EXPERIENCE TO HELP THE BUSINESS ACHIEVE
SUCCESS AND KEEP IT MOVING FORWARD.
Appointed date
Experience
Skills, personal
qualities and
capabilities
External
appointments
Committee
membership and
Board attendance
January 2021 September 2015
(previously Non-Executive
Director; appointed CEO
February 2019)
October 2020
(previously Company Secretary
from April 2014)
May 2021
Martin is an experienced
non-executive and chairman,
bringing over 20 years of
financial service experience to
businesses. He has a diverse
and extensive skill set,
stretching across commerce,
operations and finance. Prior to
embarking on a non-executive
career in 2018 Martin spent
nearly 15 years at HomeServe
plc creating a FTSE 250
services business, holding CEO,
COO and CFO responsibilities in
the UK, US and Europe.
Before this he spent three
years as Finance Director of
Clarity Group and 10 years at
Arthur Andersen where he
worked in audit and
transaction services.
An accounting and finance
graduate, Martin is a Fellow of
the Institute of Chartered
Accountants.
A Chartered Fellow of the CIPD,
Deborah is a respected and
ground-breaking thought-
leader in reward.
Sarah is a Fellow Member of
the Association of Chartered
Certified Accountants and also
has a Master’s degree in
mathematics from Oxford
University.
Liam graduated with honours
in History from the University
of Bristol. His early career was
as an Infantry Officer where he
completed Operational Tours
in Northern Ireland and Iraq.
Chairman of Ventureprise plc,
Lumon, and the Association of
Foreign Exchange and
Payments Companies (AFEP).
10/10 Meetings attended
None
10/10 Meetings attended
None
10/10 Meetings attended
Non-Executive Director at
Astral PS Ltd
6/6 Meetings attended
C
Deborah was appointed Group
Chief Executive in February
2019.
Before joining Personal Group,
Deborah had a diverse
background and long-standing
career spanning over two
decades in both industry and
consultancy. She co-founded
Innecto Reward Consulting in
2002, which has since become
the largest independent
reward consultancy in the UK.
Her role involved her securing
and successfully delivering
multiple global projects for
prestigious clients including
Boden, Caffè Nero, Grosvenor
Estate, England & Wales
Cricket Board, ITN, and Arsenal
Football Club.
Sarah joined Personal Group in
January 2014 as Group
Financial Controller and
Company Secretary.
Previously Head of Finance for
private equity owned Chicago
Leisure Ltd she also has
experience in a broad range of
industries including roles at
large communications firm
Cable and Wireless and various
life and pensions companies.
Sarah is particularly proud that
Personal Group is one of only
four out of 844 AIM-listed
businesses that have both a
female CEO and CFO.
Prior to joining Personal Group,
Liam was Group Chief
Operating Officer for
Advanced, the UK’s third
largest provider of business
software and services to over
19,000 customers where he
had responsibility for all
customer support and
professional services.
Liam has held large operational
roles in retail financial services
for over 15 years, working for
brands such as Equniti Group
plc, RBS, RSA and GE Consumer
Finance.
I
Personal Group Holdings Plc
· Annual Report and Accounts 2021
50
Personal Group Holdings Plc
· Annual Report and Accounts 2021
BOARD OF DIRECTORS
Andy Lothian
Non-Executive Director
Bob Head
Non-Executive Director
Maria Darby-Walker
Senior Non-Executive
Director
Damian Kane
Finance Director and
Company Secretary
Committee membership key
Committee
SM&CR Committee
Committee
Committee
C
I
Independent
June 2019
(Appointed Senior Non-Executive
Director in January 2021)
November 2016 July 2017
(previously Executive Director,
appointed Non-Executive
Director in January 2021)
October 2020
Beyond her technical and
industry qualifications, Maria is
also a qualified leadership
coach and mentor.
Bob has solid blue-chip
experience with big brands and
business and a rich tapestry of
management roles.
Andy hasextensive knowledge
and experience of the
important day-to-day role that
all Personal Group employees
play in the development and
growth of the business.
Damian is a Chartered
Accountant and holds a degree
in Economics and Politics from
the University of
Southampton.
Non-Executive Director at
Redwood Bank Ltd, Board
Governor at University of
Central Lancashire, and
Non-Executive Director for
Amigo Loans Plc.
10/10 Meetings attended
Non-Executive Director at
Alexander Forbes and Chair of
Audit and Remcom
committees at Mirriad.
10/10 Meetings attended
None
10/10 Meetings attended
None
10/10 Meetings attended
C
C
C
Maria joined Personal Group as
Non-Executive Director in
June 2019 and is Chair of the
Remuneration Committee.
In 2005 she started her own
consultancy, advising the
Boards of leading brand names
on business-critical issues
including mergers and
acquisitions, crisis
management, brand and
reputation, ESG, equality and
diversity, and financial
regulation. Her client list
included: The Financial
Conduct Authority, The
Investment Association, Unum,
Iglo / Birds Eye, Cadbury and
Rio Tinto amongst others.
Bob joined Personal Group in
July 2016. With over 25 years in
Non-Executive Director Roles,
Bob brings an extensive range
of knowledge and experience
to the Board.
His diverse working life has
seen him work worldwide with
almost every branch of
financial services. He also has
experience of software and
marketing companies as well
as government.
Andy Lothian joined Personal
Group in 1998 as a Group
Account Executive focusing on
new business sales and client
servicing. His passion for
excellence, drive, and
commitment has seen him go
from strength to strength. His
journey at Personal Group has
evolved greatly over the last
two decades, through Sales
Management roles and
eventually 11 years as
Managing Director ofPersonal
Group Benefits.
In January 2021 Andy moved
into a Non-Executive Director
role on the Board.
Damian first joined the
business in 2015 as Senior
Finance Manager, with his role
evolving to Financial Controller
in 2018. He was appointed
Finance Director and Company
Secretary in 2020.
Damian has extensive
knowledge and experience in a
variety of industries having
held finance positions within
Amtech Group Ltd and
Connells Group subsequent to
his professional training as an
auditor for Grant Thornton UK
LLP.
II
51
Strategic Report Governance Financial StatementsStrategic Report
Overview
Governance
Financial Statements
Karen Thornley
Chief Commercial Officer
Karen joined Personal Group as Chief
Commercial Officer in March 2021,
bringing over 20 years’ commercial
and strategic experience to the role.
Karen is also CEO of Innecto Reward
Consulting where she is responsible
for providing inspired leadership and
strategic direction across all aspects
of the company.
SENIOR LEADERSHIP TEAM
AN ADEPT SENIOR LEADERSHIP TEAM
REFLECTING ALL FACETS OF THE GROUP
Deborah Frost
Group Chief Executive
Sarah Mace
Chief Financial Officer
Richard Thompson
Chief Customer & Product Officer
Julie Stayte
Chief People Officer
Liam McGrath
Chief Operating Officer
See Board spread on previous page. See Board spread on previous page.See Board spread on previous page.
Richard was appointed as Chief
Customer & Product Officer in
January 2022. With a strong
technical background, Richard can
identify client requirements and
drive our continual improvement.
Richard is also Managing Director of
Let’s Connect. He has a wealth of
knowledge of its business operations,
products and services and has led
the execution of large multifaceted
projects for clients.
Julie joined Personal Group in August
2021 as Interim Human Resources
Director, and took on the role of Chief
People Officer from January 2022.
Julie possesses a wealth of
experience in commercial HR and
has operated within demanding,
fast-paced environments, including
working within Financial Services,
Retail, Hospitality, Aviation and
Manufacturing.
Personal Group Holdings Plc
· Annual Report and Accounts 2021
52
Personal Group Holdings Plc
· Annual Report and Accounts 2021
RISK AND COMPLIANCE COMMITTEE REPORT
THE ROLE OF THE COMMITTEE IS TO
OVERSEE COMPLIANCE IN CONJUNCTION
WITH THE OVERALL APPROACH TO
GOVERNANCE AND RISK MANAGEMENT.
– Updating and further developing the Own Risk
and Solvency Assessment (ORSA) for Personal
Assurance Plc. The ORSA process is well
embedded and the Committee and Board apply
their minds to new potential or actual risks. For
example, inflation is viewed as a more material
risk this review compared to prior years.
– Greater focus being applied to the oversight of
the Health and Safety Committee, specifically
ensuring Government advice relating to the
COVID-19 pandemic was complied with at all
times.
In addition to the above, other work undertaken
during the year comprised:
– Oversight of the further embedding of data
(specifically GDPR related) arrangements.
–
The continued monitoring of the adequacy and
effectiveness of the Group’s risk management
including emerging and focus risks being
informed by data from our Treating Customers
Fairly (TCF) and Conduct Risk dashboards.
–
The ongoing review, consideration and approval of
the existing Group policies used across the business.
– Consideration of management information
which confirms levels of quality and compliance.
and the effectiveness of the Information
Security Management System.
As in previous years, the Committee has applied its
mind to the risk logs both in terms of completeness
and how risks are optimised. The Committee has also
worked tightly with the Audit Committee to ensure
that the Committees neither duplicate work nor allow
things to slip between the gaps.
Bob Head
Independent Non-Executive Director
28 March 2022
Dear Shareholder
I am pleased to present the Risk and Compliance
Committee Report for the year ended
31 December 2021.
Objectives
The role of the Committee is to oversee
compliance with Prudential Regulation Authority
and Financial Conduct Authority requirements,
as well as other appropriate regulations which
impact the Group, in conjunction with the overall
approach to governance and risk management,
including setting the Group’s risk appetite and
monitoring and reviewing the impact of business
decisions upon the capital held by the Group over
and above the statutory minimums.
Activity during the year
We have adopted a slightly different approach to
our work this year. We still cover the same ground
but have focused debate on exceptions. With the
time saved we do two “deep dives” in each
meeting on subjects that the members regard as
either new risks or areas where we perceive we
have increased risk. Each meeting we review our
list of planned “deep dives” for subsequent
meetings.
The Committee’s Chairman reports formally to
the Board on its proceedings after each meeting
and during the year the Committee met four
times, overseeing significant Group-wide projects
which included:
– A review of the Group’s approach to
Environmental, Social and Governance matters
and to the financial risks posed by climate
change.
– Fair value for insurance customers.
– The quality of insurance sales made as our
field-based sales staff returned to work.
– The Group’s resilience against cyber threats.
– Ensuring vulnerable customers are identified
and supported during their relationship with the
Group.
MEETINGS HELD
4
RISK AND COMPLIANCE
COMMITTEE MEMBERS
Meeting Attendance
Bob Head (Chair)
4/4
Martin Bennett
4/4
Maria Darby-Walker
4/4
Andy Lothian
4/4
Deborah Frost
4/4
Sarah Mace
4/4
Liam McGrath
3/3
Mark Winlow
1/1
53
Strategic Report Governance Financial StatementsStrategic Report
Overview
Governance
Financial Statements
AUDIT COMMITTEE REPORT
THE AUDIT COMMITTEE CONTINUES TO PROVIDE ASSURANCE
THAT SHAREHOLDERS’ INTERESTS ARE BEING PROPERLY
PROTECTED BY APPROPRIATE FINANCIAL MANAGEMENT,
REPORTING AND INTERNAL CONTROLS.
Dear Shareholder
The Committee has focused on ensuring that the
changes to the working environment and needs of
the Group’s stakeholders have been appropriately
dealt with and relevant changes to financial
management and internal controls have been
implemented, ensuring that the control
environment remains fit for purpose.
Roles and Responsibilities
The Audit Committee assists the Board in
discharging its responsibilities with regard to
the oversight of:
Financial reporting:
– Monitoring the integrity of the financial
statements of the Group, including its annual
and half yearly reports, and considering the
clarity and completeness of disclosures therein;
–
Reviewing and challenging any changes to
accounting policies, accounting for significant or
unusual transactions and the application of
appropriate judgements and estimates; and
– Advising the Board on whether the Group’s
financial statements are fair, balanced and
understandable.
Internal and external audit:
– Overseeing the Group’s relationship with its
external and internal auditors, including their
appointment, remuneration, independence
and the effectiveness of the audit process;
– Developing and implementing a policy on the
supply of non-audit services by the external
auditor; and
–
Monitoring and reviewing the effectiveness
of the outsourced internal audit function in
the context of the Group’s overall risk
management system.
Internal controls:
– Reviewing the adequacy and effectiveness of
the Group’s internal financial controls and risk
management systems; and
– Reviewing the Group’s arrangements with
regard to employee/contractor whistleblowing,
fraud detection, prevention of bribery and
money-laundering.
Membership and meetings
The Audit Committee comprises the Independent
Non-Executive Directors and meets at least twice
a year.
The Directors’ profiles and qualifications are
included on page 50.
Risk is covered at the Risk Committee but all
members of the Audit Committee are also
members of the Risk Committee, which ensures
tight co-ordination.
Three formal meetings were held during 2021 and
all Committee members were in attendance.
Additionally, the remaining Board members, Head
of Risk and Company Secretary were present at all
meetings.
The meetings of the Committee are designed to
facilitate and encourage communication among
the Committee, the Group, the Group’s
outsourced internal audit function (RSM) and the
appointed external auditor. The Committee meets
with the internal auditors and the external
auditors, with and without management present,
to discuss the results of their examinations, their
evaluations of the Group’s internal control and the
overall quality of the Group’s financial reporting. In
addition, the members of the Audit Committee
also meet separately to consider any issues.
“The ongoing disruption
caused by COVID-19
has required a dynamic
approach to risk
management.”
Bob Head
Non-Executive Director
MEETINGS HELD
3
AUDIT COMMITTEE MEMBERS
Meeting Attendance
Bob Head (Chair)
3/3
Martin Bennett
3/3
Maria Darby-Walker
3/3
Mark Winlow
1/1
Personal Group Holdings Plc
· Annual Report and Accounts 2021
54
Personal Group Holdings Plc
· Annual Report and Accounts 2021
AUDIT COMMITTEE REPORT
Activities of the Audit Committee
during the year
The Committee discussed with the Group’s
internal and external auditors the overall scope
and plans for their respective audits. In addition,
the key work undertaken by the Committee during
the year under review and up to the date of this
Annual Report included:
– Review and approval of the 2020 Annual Report
and Accounts and 2021 Interim Results
statement.
– Approval of the Solvency and Financial
Condition Report and Own Risk & Solvency
Assessment.
– Review of internal audits carried out by RSM.
During 2021 RSM undertook audits, in line with the
agreed scope, over areas including remote
working, internal controls of Innecto, HR & payroll,
conduct risk management, premium collection
and supplier management.
The Committee received reports from the internal
auditors throughout the year and was satisfied
with the effectiveness of internal controls and risk
optimisation. It supports the recommendations
made by the internal auditors and is satisfied with
the plans in place and the actions taken or planned
by management in response to these
recommendations and monitors the clearance of
the items raised to ensure that they are resolved
on a timely basis.
The approach in developing the internal audit plan
for 2022 was based on analysing the corporate
objectives, risk profile and assurance framework of
the Group, as well as other factors affecting the
Group. The aim is to cover all significant risk areas
at least once every three years.
The Audit Committee regularly discusses the
performance of internal audit within the
Committee, with management and with internal
audit. Given the size of the Group we believe that
an outsourced Internal Audit function gives us
access to more areas of expertise than an
internally resourced department.
Significant reporting issues and judgements
In fulfilling its oversight responsibilities, the
Committee has reviewed and discussed the
audited consolidated financial statements and the
related schedules within the Annual Report with
Group management, including a discussion of the
appropriateness of the accounting principles, the
reasonableness of significant judgements and the
clarity of disclosures in the financial statements.
With the exception of COVID-19, the areas the
Audit Committee have been concerned about are
similar to prior years and are detailed later in the
report.
COVID-19 continued to have a sizeable impact both
on Group and its counterparties.
Key Group issues included:
– As with the prior year the amount of new
insurance business that could be written was
materially affected due to the continued
lockdowns and restrictions on movement during
the first half of the year. This impact was felt in
2021 by the amount of new business that could
be written but given first year profitability is
marginal the full effect on profitability will be
felt in future years rather than in 2021.
– Whilst the office reopened for most of the
calendar year, the national move to a hybrid way
of working has meant continued attention has
been paid to cyber risks as well as operational
resilience to deliver what we have promised our
clients and customers.
– Consideration was given to going concern, the
adequacy of capital in a variety of scenarios and
the ability to pay a dividend whilst maintaining
our target of two times regulatory capital.
– The carrying value of goodwill in the Group’s
financial statements was reviewed in line with
the difficult trading environment.
55
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Governance
Financial Statements
AUDIT COMMITTEE REPORT
continued
The Committee reviewed the recommendations of the finance function and received reports from the external auditor on their findings. The significant reporting
matters and judgements the Committee considered during the year included:
Carrying value of goodwill and other intangibles Note 15 & 16
As a result of business acquisitions, the Group has recognised significant balances
for goodwill. Goodwill must be tested annually for impairment; other intangible
assets are tested when there are indicators that they may be impaired.
The assessment of potential impairment requires a number of judgements and
estimates to be made in determining the relevant future cash flows and the
discount rate to be applied.
The Committee reviewed the key financial assumptions underpinning cash flow
projections, the discount and long-term growth rates applied thereto and the
results of sensitivity analyses. The Committee was satisfied that, considering the
sufficient headroom available, no impairment was required, and appropriate
disclosure has been made (see note 15 to the financial statements for details).
The presentation of “Adjusted EBITDA” alongside statutory profit.
Page 32 & Note 4
Adjusted EBITDA, in this context, looks to adjust for non-underlying trading
activity within the financials for year which are material in size, in order to
fairly remunerate the management on underlying performance.
The Committee considered the approach adopted and was satisfied that the
approach continues to help provide a clear and more balanced view of the
underlying performance of the business than simply profit after tax. It also
concluded that the approach is being applied consistently from year to year and
the rationale is clearly presented and reconciled back to the IFRS published
numbers.
The Committee is supportive of the revised segmental reporting which provides
greater understanding of the make up of the Group for the reader of the financial
statements
The valuation of the claims provision
Note 25
The Group retains a provision for the gross estimated liability arising from claims
episodes in the current and preceding financial years which have not given rise to
claims paid. It is estimated based on the current information, and the ultimate
liability may vary as a result of subsequent information and events.
Due to the ongoing COVID-19 pandemic and the nature of the Group’s insurance
policies the Committee has reviewed the methodology and calculations relating
to the claims provisions held by the insurance entities within the Group to ensure
that the incurred but not reported claims reflect not only the historical trends of
the insurance policies sold but also ongoing review of the data around COVID-19
and in particular the recent rise of the Omicron variant. The Committee was
satisfied that the amount reserved for across the Group is appropriate given the
data available.
External audit
EY LLP were first appointed for the 2019 financial
year. We value continuity providing the Group gets
value for money both for the formal reporting and
the third-party assurance that the business has a
good control environment.
The Committee considers a number of areas when
reviewing the external auditor reappointment,
namely their performance in discharging the audit,
the scope of the audit and terms of engagement,
their independence and objectivity, and their
reappointment and remuneration. In addition, we
are seeking more value from the audit and
encourage a control based approach rather than
substantive where it is cost effective to do so.
The external auditor reports to the Committee on
actions taken to comply with professional and
regulatory requirements and is required to rotate
the lead audit partner every five years.
There is also an active, ongoing dialogue between
the Committee and the external auditor on actions
to improve the effectiveness and efficiency of
the external audit process. In addition, the
Committee considers risk areas that might
inform the audit strategy and discuss this with
the external auditors.
The Committee has confirmed it is satisfied
with the independence, objectivity and
effectiveness of EY LLP as auditor and will
support a resolution to retain them at the
forthcoming Annual General Meeting.
No non-audit services were provided by the
external auditors during this financial year or
since they were originally appointed.
Bob Head
Independent Non-Executive Director
28 March 2022
Personal Group Holdings Plc
· Annual Report and Accounts 2021
56
Personal Group Holdings Plc
· Annual Report and Accounts 2021
NOMINATIONS COMMITTEE REPORT
THE OBJECTIVE OF THE NOMINATIONS COMMITTEE IS TO
RECOMMEND FOR SELECTION BY THE FULL BOARD,
DIRECTOR NOMINEES AND TO ENSURE COMPLIANCE
WITH THE REQUIREMENTS AROUND SM&CR.
Dear Shareholder
I am pleased to present the inaugural Nominations
Committee Report for the year ended 31
December 2021. The Committee met for the first
time in 2021 and it was introduced to enable
focused discussions around the composition of
the Board and the Group requirements around
SM&CR which had been previously discussed as
part of other Committee meetings.
Objectives
The aims and objectives of the Nominations
Committee is to:
– ensure there is a formal, rigorous and
transparent procedure for the appointment of
new Directors to the Board and new members
of the senior management team;
– provide oversight of Board composition,
membership and Board and senior / executive
appointments;
– lead the process for appointments, ensure plans
are in place for orderly succession to both the
Board and senior management positions, and
oversee the development of a diverse pipeline
for succession;
– provide independent oversight of the Group’s
compliance with the Senior Managers and
Certification Regime;
– ensure all Board recruitment related processes
are transparent, credible, effective and reliable;
and
–
determine whether employees who are subject
to disciplinary procedures have breached the
Conduct Rules applicable to their role and
whether dismissal is an appropriate outcome.
The Nominations Committee, assisted by external
executive search agencies as required, primarily
manages appointments to the Board, but all Board
members have the opportunity to meet
shortlisted candidates, ensuring a wide range of
feedback in the appointment process. All
Executive Directors are engaged on a full-time
basis. Non-Executive Directors have letters of
appointment stating their annual fee, the
minimum required time commitment and
confirmation that their appointment is subject to
satisfactory performance. Their appointment may
be terminated with a maximum of six months’
written notice at any time.
The remuneration of the Chairman and
Non-Executive Directors is determined by the
Board following proposals from the Nominations
Committee, within the limits set out in the Articles
of Association, based on a review of the level of
fees paid by comparator companies.
“The Board is satisfied
that its current
composition includes
an appropriate balance
of skills, experience
and capabilities.”
Martin Bennett
Non-Executive Director
MEETINGS HELD
1
NOMINATIONS
COMMITTEE MEMBERS
Meeting Attendance
Martin Bennett (Chair)
1/1
Maria Darby-Walker
1/1
Bob Head
1/1
The CEO, Non-Independent NEDs and
Company Secretary are normally present
at the meetings.
57
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Financial Statements
Activity during the year
The Committee’s Chairman reports formally to the
Board on its proceedings after each meeting and
during the year the Committee met once, detail of
what was reviewed by the Committee is as
follows;
Board succession
We actively manage our Board succession plan, to
ensure that our Board has an appropriate and
diverse range of skills to enable us to deliver our
strategy for the benefit of all of our stakeholders.
We are a small and cohesive Board, and take care
to ensure that all new members of our Board are
aligned to our culture and share our values,
whatever their skills and background. Our Board
induction process, undertaken by all new
members upon appointment, is an important way
to get our new Board members up to speed and
valued by our Non-Executive Directors. We have a
formal plan for how Board membership should
develop which aims to balance continuity of
service with a regular refreshment of skills and
experience needed to deliver our evolving
strategy. We regularly review the balance of skills
on the Board as a whole, taking account of the
future needs of the business, and the knowledge,
experience, length of service and performance of
the Directors. We are satisfied with the plan which
has resulted in the placement of Liam McGrath on
the Board and are confident that the search for a
further independent Non-Executive Director in
2022 will prove effective.
Board and Director effectiveness
The CEO receives a formal evaluation of their
performance during the year, which is conducted
by the Chairman. In addition, the CEO discusses
with the Non-Executive Directors the
performance of individuals of the Executive team
and any changes that she proposes to make to this
team. Whilst this activity does not take place
formally within the meetings of the Nominations
Committee, it does form part of its work in
overseeing Executive team development and
succession process, and the pipeline of talent
available for succession to the Board. The
performance of our Board and the Committees is
evaluated by the Chair and he has concluded that
the Board is functioning well, is dynamic, has a
breadth and depth of complementary skills and
experience and that there is a strong trust
between the Non-Executive Directors and the
Executive Directors in the running of the Group. A
key action to the effectiveness of the Board will
be the decision on filling the Non-Executive
Director position left after the retirement of Ken
Rooney. An internal Board effectiveness review
was conducted in 2021 with a formal external
review due in 2022.
Diversity
We fully support diversity as an important
contribution to good quality decision making and
innovative thinking. Diversity has many dimensions
and we particularly value diversity of thought,
which in turn is assisted by diversity of background
and experience, as well as of gender and ethnicity.
We already have on our Board a diversity of gender,
skills, experience, personality, and cognitive
approach. Across the business, teams are diverse
with an even split of males and females in
management positions. However, we are
conscious that our senior leadership population
does not currently reflect the broader ethnic mix
of our employees and our customers and we will
seek to address this. We continue to review how
we can further broaden our approach,
encouraging diversity and inclusion throughout
the Board and the business.
Culture and values
Preservation of our culture has always been a
priority, which stems from the values instilled by
the Board. Our culture is brought to life through
our shared values and business principles which
the Board monitors through Board reports and
agenda items, engagement with employees, and
visits to the Group’s offices. Our culture and values
are an important part of what we look for in new
candidates to join our Board, so that they may
promote and engage with the development of
these aspects throughout the business. It is
important that they are aligned with our values so
that they can be role models for all our employees
and stakeholders.
Certification & conduct rules
It is important for the ongoing success of the
business that rigorous certification processes and
training and oversight of compliance with the
conduct rules are completed and monitored by
the Committee. We have worked hard to articulate
the conduct rules as part of the wider Group
values and have no tolerance for any breaches
of the rules.
NOMINATIONS COMMITTEE REPORT
continued
Personal Group Holdings Plc
· Annual Report and Accounts 2021
58
Personal Group Holdings Plc
· Annual Report and Accounts 2021
NOMINATIONS COMMITTEE REPORT
continued
TENURE AND RE-ELECTION OF DIRECTORS
The Nominations Committee considers the length of service of Board members at least annually. The tenure of the Directors is set out below:
Member Appointment
Last AGM renewal Up for renewal at 2022 AGM
Board role
Martin Bennett
January 2021
AGM 2021
Non-Executive Chairman
Deborah Frost
September 15
(previously NED, appointed CEO Feb 19)
AGM 2021
Chief Executive
Sarah Mace
October 2020
Chief Financial OfficerAGM 2021
Liam McGrath
May 2021 Chief Operating Officer
N/A
For renewal as first yearMaria Darby-Walker
June 2019
AGM 2020
Senior Non-Executive DirectorFor renewal by rotation
Bob Head
November 2016
AGM 2020
For renewal by rotation
Non-Executive Director
Andy Lothian
July 2017
(previously Executive Director,
appointed NED Jan 2021)
AGM 2021
Non-Executive Director
Martin Bennett
Independent Non-Executive Chairman
28 March 2022
59
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Financial Statements
REMUNERATION COMMITTEE REPORT
“We remain focused on
aligning reward with
the business’s long-
term sustainability and
growth.”
Maria Darby-Walker
Non-Executive Chair
THE COMMITTEE’S OBJECTIVE IS TO ALIGN OUR REWARD
STRATEGY WITH THE DELIVERY OF PROFITABLE AND
SUSTAINABLE GROWTH FOR THE BENEFIT OF ALL OUR
STAKEHOLDERS.
MEETINGS HELD
4
REMUNERATION
COMMITTEE MEMBERS
Meeting Attendance
Maria Darby-Walker (Chair)
4/4
Martin Bennett
3/3
Bob Head
4/4
Mark Winlow
1/1
Dear Shareholder
On behalf of the Board, I am pleased to present
this year’s Remuneration Committee report. The
Remuneration Report provides a comprehensive
picture of the structure of our remuneration
framework, its alignment with the business
strategy and the rest of the workforce, as well as
the decisions made by the Committee as a result
of business performance for this year and the
intended arrangements for FY22.
Aims of the Remuneration Committee
The primary purpose of the Remuneration
Committee is to review and make
recommendations regarding the remuneration
policy for the Group, specifically regarding the
Group’s framework of Executive Remuneration.
The Committee’s overall objective is to align
reward for the Executive Team with the delivery
of profitable sustainable growth for our
shareholders and employees through the Group’s
remuneration framework which:
– Offers competitive salary packages to attract,
retain, and motivate talented people.
– Operates straightforward, transparent, and
effective reward schemes that incentivise
delivery of stretching annual targets and
delivery of our longer-term business strategy.
In addition, the Committee:
– Offers the chance for all employees to
participate in share schemes so that everyone
thinks and acts to “run it like we own it” – one of
our core employee values.
– Oversees and reviews the commission and
bonus arrangements for customer-facing
insurance sales employees to ensure a proper
balance between motivating staff whilst
making sales of the highest quality (i.e. beyond
simple regulatory compliance).
To that end, we currently operate the following
remuneration framework:
– Annual salary and associated benefits (all
employees).
–
Defined contribution pension scheme and other
benefits such as life cover, private medical
insurance (all employees).
– Performance based annual bonus linked to
delivering stretching financial, business
development, and service-oriented targets
(selected employees).
– Commission, bonus schemes and incentives for
the customer-facing insurance teams (selected
sales and sales support employees).
–
Share schemes:
– PG Share Ownership Plan (all employees);
– Company Share Option Plan (selected
employees); and
– Long Term Incentive Plans (LTIPs) (selected
senior executives – see page 63 for further
details).
We have continued to consider comparisons of
remuneration for senior employees of similar sized
quoted companies in related sectors when
establishing the levels of packages set. Our most
recent executive benchmarking exercise was
undertaken in December 2021.
Personal Group Holdings Plc
· Annual Report and Accounts 2021
60
Personal Group Holdings Plc
· Annual Report and Accounts 2021
REMUNERATION COMMITTEE REPORT
Composition of the Remuneration Committee
The Remuneration Committee consists of the
independent Non-Executive Directors, with the
Chief Executive, Chief People Officer, Company
Secretary and any non-independent Non-
Executive Directors invited to be in attendance at
times. The Remuneration Committee operates
within defined terms of reference, which were
updated last year. It met four times in 2021, with
ad hoc calls taking place which reflected the
changing circumstances around the pandemic.
None of the Committee has any personal financial
interest, conflicts of interests arising from cross
Directorships, or day-to-day involvement in
running the business and, as such, the Committee
is deemed to be independent.
The Board determines the remuneration of the
Non-Executive Directors after benchmarking
external market research. Non-Executive
Directors are not involved in setting their own pay
and do not participate in the bonus schemes or the
LTIPs, or in any other share award scheme.
Performance for the year
As has been reviewed elsewhere in this report in
2021 the business continued to have a challenging
year due to the COVID-19 pandemic. Despite this,
due to a number of business objectives and KPIs
being met, the Remuneration Committee decided
that a proportion of the Senior Leadership Team
bonus commensurate with the targets achieved
should be paid.
2021 annual bonus
Since the end of the national lockdowns the Group
has been working hard to create new routes to
market and improved product offerings. Whilst the
rewards of this work are still to be reflected in the
profit of the Group, it is the opinion of the
Committee that staff should be rewarded for the
work performed to put the Group in a favourable
position moving into 2022.
As a result of this, those with bonuses as part of
their employment received amounts
commenserate to the objectives being reached.
In addition an all-staff bonus for those employees
with no eligibility for other commission or bonus
structure, was paid at one week’s salary for all
eligible employees.
Pay increases
The Remuneration Committee decided that no
Company pay review should be applied to the
Board for the financial year 2021, although all
other employees received a share of a pay increase
pot of c3% of payroll.
However, it was agreed during the year to increase
the salary of Group Chief Executive Deborah Frost
as of 1 October 2022 to £330,000 following
benchmarking and a performance review.
Other Committee activities for the year
The Committee has been actively engaged in
reviewing the changing nature of reward and
benefits in light of changes in packages as a result
of the pandemic and working from home
becoming an industry norm. The Committee is in
regular communication with the Chief People
Officer to ensure that the Group understands the
market norms and offers packages which are
competitive offers for our employees.
The Committee discussed, and approved the issue,
of a number of Company Share Option Plan (CSOP)
options to senior staff during the year. This is
expected to provide further incentive for the level
of management below the Senior Leadership Team
in fulfilling the Group’s goals moving forward.
During the year the Group utilised a new employee
engagement survey tool which, in line with prior
years, showed exceptionally high scores from the
employees of the Group. The Committee regularly
reviews the necessary actions the Group needs to
take to preserve and enhance our employees’
working environment.
The year ahead
In recognition too of the growing importance of
ESG reporting for businesses, we will also ensure
that any long-term incentives for the business are
closely linked and aligned to our ESG strategy
which the Company is currently developing.
The Remuneration Committee remains focused on
aligning reward with delivering long-term
sustainability and growth of the business,
combined with our on-going progressive dividend
policy. Where any material changes are made to
the Remuneration policy, we will continue to
discuss our intentions with our major shareholders
and give them the opportunity to comment.
Service contracts
The Executive Directors have service contracts
that can be terminated on 6 months’ notice with
the exception of the Chief Executive who has a 12
month notice period.
These provide for termination payments
equivalent to the notice periods basic salary and
contractual benefits.
The Non-Executive Directors have letters of
appointment that can be terminated on six
months’ notice.
61
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Governance
Financial Statements
REMUNERATION COMMITTEE REPORT
continued
Membership of Board and Directors’ interests
The membership of the Board throughout the year is set out below.
The interests of the Directors and their families (including transactions committed to before the year end and shares held in the PGH employee share ownership
plan) in the shares of the Company as of 31 December 2020 or date of appointment if later, and 31 December 2021, were as follows:
Ordinary shares of 5p each in
Personal Group Holdings Plc
At 31 December
2021
At 31 December
2020
Deborah Frost
(Chief Executive)
304,063
304,919
Sarah Mace
(Chief Financial Officer – Appointed October 2020)
12,030
11,907
Andrew Lothian
(Non-Executive Director – Managing Director PGB Sales until December 2020)
37,532
38,128
Bob Head
(Independent Non-Executive)
–
–
Maria Darby-Walker
(Senior Independent Non-Executive)
–
–
Martin Bennett
(Independent Non-Executive Chair – Appointed January 2021)
–
–Liam McGrath
(Chief Operations Officer – Appointed May 2021)
–
–At 31 December 2021, the mid-market closing share price was 325.00p per share (31 December 2020: 206.00p).
Directors’ remuneration
The Executive Directors’ remuneration packages currently include components of a basic salary, annual bonus, a company car or car allowance if applicable to the
role, Long Term Incentive Plan (LTIP), non-matched pension contributions and life cover as appropriate.
The remuneration of the Directors listed by individual Director is as follows:
Salary
and fees
2021
£’000
Bonus 2021
£’000
Share-based
gains on
exercise of
options 2021
£’000
Pension
contributions
2021
£’000
Total
2021
£’000
Total
2020
£’000
Deborah Frost
304
113
–
10
427
310Sarah Mace *
182
–45
12
239
42
Liam McGrath - 4
113
28145
-Andrew Lothian ** – -
41
–41
266
Bob Head
50
– – –
50
42
Maria Darby-Walker
49
– – -
49
43
Martin Bennett ***
78
- - -
78
-Mark Winlow - -
33
-33
81
Mike Dugdale
- - - -
-
237
Ken Rooney
- - - -
-
45
Total
850
186
–
26
1,062
1,066
* Sarah Mace was appointed to the role of Chief Financial Officer. Sarah had worked for the business as Group Financial Controller and Company Secretary previously, the values above show their salary and
fees for their time as a Director of the Group
** Andrew Lothian was Managing Director of PGB, and an Executive Board member, until 31/12/20 at which point he retired from his Executive role and became a Non Independent Non-Executive Director.
*** Martin Bennett became a Non-Executive Director in January 2021 and became Chair in May 2021 following the departure of Mark Winlow.
Personal Group Holdings Plc
· Annual Report and Accounts 2021
62
Personal Group Holdings Plc
· Annual Report and Accounts 2021
REMUNERATION COMMITTEE REPORT
continued
Directors’ share options
CSOP
On 31 December 2021 options outstanding were as follows:
Number
of shares
Exercise price
pence per share
Earliest
exercisable date
Andy Lothian
6,026
498.00
14 February 2017
Sarah Mace
6,122
490.00
28 January 2017
Deborah Frost
8,746
343.00
29 November 2024
Liam McGrath
8,746
343.00
29 November 2024
LTIP
On 31 December 2021 options outstanding were as follows:
Number
of shares
Exercise price
pence per share
Earliest
exercisable date
Deborah Frost
235,662
5.00
01 January 2024
Deborah Frost
29,615
5.00
31 March 2022
Sarah Mace
62,438
5.00
01 January 2024
Liam McGrath
52,032
5.00
01 January 2024
The options above are subject to the performance criteria of the LTIP.
Long Term Incentive Plans
LTIP 2021
The plan rules and heads of agreement of a new Long Term Incentive Plan were finalised in April 2021. This LTIP has been established in order to reward and
incentivise the senior executives to deliver sustainable growth for the Company and to create material value for shareholders, and replaced LTIP 2 which expired
without any payments made under the scheme in March 2020. The scheme accommodates performance conditions across market, financial and ESG measures
which support the growth of the business.
In April 2021 the first tranche of LTIP 2021 was announced along with a further addition in July 2021 following the appointment of Liam McGrath to the Board. The
options in these two tranches were issued to the three Executive directors, as shown in the LTIP share option table above, and also four senior members of staff
two of whom had subsequently left the business by 31st December 2021 with no payment made under the scheme. The performance criteria of the options is
shown in note 22b of the financial statements
As noted in the 2020 financial statements the 29,615 share options granted to Deborah Frost in lieu of an LTIP in previous years were also announced in April 2021.
There are no performance conditions attached to these options other than continued employment to the exercise date.
A new tranche is currently being finalised following the principles outlined in LTIP 2021. This is expected to be completed in the second quarter of 2022 and will be
announced as an RNS when finalised.
Maria Darby-Walker
Non-Executive Director
28 March 2022
63
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Governance
Financial Statements
DIRECTORS’ REPORT
THE DIRECTORS PRESENT THEIR REPORT TOGETHER
WITH THE AUDITED FINANCIAL STATEMENTS FOR THE
YEAR ENDED 31 DECEMBER 2021
Principal activities
The Group is principally engaged in providing
employee services, including short-term accident and
health insurance, benefits and platform products,
pay and reward consultancy and the provision of
salary sacrifice technology products in the UK.
Results and dividends
A review of the year’s results is given in the Chief
Financial Officer’s Statement (see page 32).
The profit from continuing operations for the year is
£4,342,000 (2020: £8,557,000) before taxation of
£745,000 (2020: £1,663,000). During the year ordinary
dividends of £3,244,000 (2020: £4,147,000) were paid.
Directors
The membership of the Board at the end of the year
is set out in the Remuneration Report on pages
60-63. The Remuneration Committee Report also
includes details of the Directors’ remuneration and
interests in the ordinary shares of the Company.
During the year all Directors and officers were
covered by third party indemnity insurance.
Political contributions
Neither the Company nor any of its subsidiaries
made any political donation or incurred any
political expenditure during the year (2020: £nil).
Charitable donations
Donations to charitable organisations amounted
to £100,000 (2020: £100,000).
Principal risks and uncertainties
The principal risks and uncertainties facing the
Group, along with the risk management objectives
and policies are discussed in the Risk and Audit
Committee reports and Note 3 of these financial
statements.
Capital requirements
See Note 4 of these financial statements.
Corporate governance
The Board of Personal Group Holdings Plc supports
the principles and is committed to achieving high
standards of corporate governance and has
adopted the Quoted Companies Alliance Corporate
Governance Code in its entirety. The Board’s report
on the Group’s corporate governance procedures is
set out on pages 46-47.
Disclosure of information to auditor
The Directors who held office at the date of
approval of this Directors’ Report confirm that, so
far as they are each aware, there is no relevant
audit information of which the Group’s auditor is
unaware; and each Director has taken all the steps
that they ought to have taken as a Director to
make themselves aware of any relevant audit
information and to establish that the Group’s
auditor is aware of that information.
Auditor
EY LLP have expressed willingness to continue in
office. In accordance with section 489 (4) of the
Companies Act 2006 a resolution to both formally
appoint and reappoint EY LLP will be proposed at
the Annual General Meeting to be held on
Wednesday 5 May 2022.
Other information
An indication of likely future developments in the
business and particulars of significant events
which have occurred since the end of the financial
year have been included in the Strategic Report.
In arriving at their conclusion that the Group’s
accounts should be prepared on a going concern
basis, the Directors have considered the potential
impact of COVID-19 over the next 12 months based
on review of a variety of possible stress and
scenario tests.
BY ORDER OF THE BOARD
Sarah Mace
Chief Financial Officer
28 March 2022
Personal Group Holdings Plc
· Annual Report and Accounts 2021
64
Personal Group Holdings Plc
· Annual Report and Accounts 2021
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
THE DIRECTORS ARE RESPONSIBLE FOR PREPARING THE
STRATEGIC REPORT, DIRECTORS’ REPORT AND THE GROUP
AND PARENT COMPANY FINANCIAL STATEMENTS IN
ACCORDANCE WITH APPLICABLE LAW AND REGULATIONS
In respect of the Strategic Report,
Directors’ Report and the Financial
Statements
The Directors are responsible for preparing the
Strategic Report, Directors’ Report and the Group
and parent Company Financial Statements in
accordance with applicable law and regulations.
Company law requires the Directors to prepare
Group and parent Company financial statements
for each financial year. Under the AIM Rules of the
London Stock Exchange they are required to
prepare the Group financial statements in
accordance with International Financial Reporting
Standards as adopted by the EU (IFRSs as adopted
by the EU) and applicable law and they have
elected to prepare the parent Company financial
statements on the same basis.
Under company law the Directors must not
approve the financial statements unless they are
satisfied that they give a true and fair view of the
state of affairs of the Group and parent Company
and of their profit or loss for that period. In
preparing each of the Group and parent Company
financial statements, the Directors are required to:
–
Select suitable accounting policies and then
apply them consistently.
– Make judgements and estimates that are
reasonable, relevant and reliable.
– State whether they have been prepared in
accordance with IFRSs as adopted by the EU.
– Assess the Group and parent Company’s ability
to continue as a going concern, disclosing, as
applicable, matters related to going concern.
– Use the going concern basis of accounting
unless they either intend to liquidate the Group
or the parent Company or to cease operations,
or have no realistic alternative but to do so.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and
explain the parent Company’s transactions and
disclose with reasonable accuracy at any time the
financial position of the parent Company and
enable them to ensure that its financial
statements comply with the Companies Act 2006.
They are responsible for such internal control as
they determine is necessary to enable the
preparation of financial statements that are free
from material misstatement, whether due to
fraud or error, and have general responsibility for
taking such steps as are reasonably open to them
to safeguard the assets of the Group and to
prevent and detect fraud and other irregularities.
Under applicable law and regulations, the Directors
are also responsible for preparing a Strategic Report
and a Directors’ Report that complies with that law
and those regulations.
The Directors are responsible for the maintenance
and integrity of the corporate and financial
information included on the Company’s website.
Legislation in the UK governing the preparation and
dissemination of financial statements may differ
from legislation in other jurisdictions.
65
Strategic Report Governance Financial StatementsStrategic Report
Overview
Governance
Financial Statements
INDEPENDENT AUDITOR’S REPORT
Personal Group Holdings Plc
· Annual Report and Accounts 2021
66
Personal Group Holdings Plc
· Annual Report and Accounts 2021
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF PERSONAL
GROUP HOLDINGS PLC
Opinion
In our opinion:
– Personal Group Holdings plc’s group financial statements and parent company financial statements (the “financial statements”) give a true and fair
view of the state of the group’s and of the parent company’s affairs as at 31 December 2021 and of the group’s profit for the year then ended;
– the group financial statements have been properly prepared in accordance with UK adopted international accounting standards;
– the parent company financial statements have been properly prepared in accordance with UK adopted international accounting standards as applied in
accordance with section 408 of the Companies Act; and
– the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements of Personal Group Holdings plc (the ‘parent company’) and its subsidiaries (the ‘group’) for the year ended 31
December 2021 which comprise:
Group Parent Company
Consolidated income statement for the year ended 31 December 2021 Balance sheet as at 31 December 2021
Consolidated balance sheet as at 31 December 2021 Statement of changes in equity for the year
then ended
Consolidated statement of comprehensive income for the year then ended Cash flow statement for the year then ended
Consolidated statement of changes in equity for the year then ended Related notes 1 to 32 to the financial
statements including a summary of significant
accounting policies
Consolidated cash flow statement for the year then ended
Related notes 1 to 32 to the financial statements (except for the solvency capital position of the Group’s
regulated companies disclosed in note 4 which is marked as unaudited), including a summary of
significant accounting policies
The financial reporting framework that has been applied in their preparation is applicable law and UK adopted international accounting standards and, as
regards to the parent company financial statements, as applied in accordance with section 408 of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those
standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the
group and parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the
FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
INDEPENDENT AUDITOR’S REPORT
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Overview
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the
financial statements is appropriate. Our evaluation of the directors’ assessment of the group and parent company’s ability to continue to adopt the going
concern basis of accounting included the following procedures:
– confirmed our understanding of management’s going concern assessment process and obtained management’s assessment which covers 12 months
ending 28 March 2023;
– obtained the financial forecasts prepared by the Group and assessed the appropriateness of assumptions applied in the modelled stress scenarios
based on our understanding of the business and the Group’s historical performance, including since the start of COVID-19 pandemic;
– performed enquiries of management and those charged with governance to identify risks or events that may impact the Group’s ability to continue as
a going concern. We also reviewed management’s assessment approved by the Board, minutes of meetings of the Board and its committees, and made
enquiries as to the impact of COVID-19 on the business; and
– assessed the appropriateness of the going concern disclosures by comparing the consistency with management’s assessment and for compliance
with the relevant reporting requirements
Based on management’s assessment, we have observed that the Group is able to continue to have surplus cash and solvency above the solvency
requirements within its two regulated entities in a number of extreme downside scenarios and the Group has continued to service customers and meet
its commitments in the current environment.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the group and parent company’s ability to continue as a going concern for the period ending 28 March 2023.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. However,
because not all future events or conditions can be predicted, this statement is not a guarantee as to the group’s ability to continue as a going concern.
Overview of our audit approach
Audit scope – We performed full scope audit of four components of the Group:
– UK core insurance (Personal Assurance Plc),
–
Guernsey core insurance (Personal Assurance (Guernsey) Limited),
– IT salary sacrifice (PG Let’s Connect IT Solutions Limited),
– Software as a service (Personal Management Solutions Limited), and
In addition, we performed audit procedures on specific balances for Innecto People Consulting Limited, included in the
Group component Software as a service.
– The components where we performed full or specific audit procedures accounted for 99% of the Group revenue and 99%
of the Group profit before tax.
Key audit matters – Valuation of PG Let’s Connect goodwill
– Valuation of Innecto goodwill and other intangible assets.
Materiality
– Overall group materiality of £219,000 (2020: £430,000) which represents 5% (2020: 5%) of consolidated profit before tax.
Profit before tax
88% Full scope compenents
6% Specific scope compenents
6% Other procedures
Revenue
98% Full scope compenents
2% Specific scope compenents
0% Other procedures
INDEPENDENT AUDITOR’S REPORT
continued
Personal Group Holdings Plc
· Annual Report and Accounts 2021
68
Personal Group Holdings Plc
· Annual Report and Accounts 2021
An overview of the scope of the parent Company and Group audits
Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our audit scope for each company
within the Group. Taken together, this enables us to form an opinion on the consolidated financial statements. We take into account size, risk profile, the
organisation of the group and effectiveness of group wide controls, changes in the business environment and other factors such as recent Internal audit
results when assessing the level of work to be performed at each company.
In assessing the risk of material misstatement to the Group financial statements, and to ensure we had adequate quantitative coverage of significant
accounts in the financial statements, we identified five reporting components of the Group. Of the five components selected, we performed an audit of
the complete financial information of four components (“full scope components”) which were selected based on their size or risk characteristics. The full
scope components are UK core insurance (Personal Assurance plc), Guernsey core insurance (Personal Assurance (Guernsey) Limited), IT salary sacrifice
(PG Let’s Connect IT Solutions Limited), and Software as a service (Personal Management Solutions Limited only). In addition, for the remaining one
component, Software as a service (Innecto People Consulting Limited) (“specific scope component”), we performed audit procedures on specific
accounts that we considered had the potential for the greatest impact on the significant accounts in the financial statements either because of the size
of these accounts or their risk profile.
For the current year, the full scope components contributed 88% (2020: 96%) of the Group’s profit before tax and 98% (2020: 98%) of the Group’s
Revenue. The specific scope component contributed 6% of the Group’s profit before tax (2020: 3%) and 2% of the Group’s Revenue (2020: 1%). The audit
scope of these components may not have included testing of all significant accounts of the component but will have contributed to the coverage of
significant accounts tested for the Group.
The charts below illustrate the coverage obtained from the work performed by our audit teams.
Involvement with component teams
In establishing our overall approach to the Group audit, we determined the type of work that needed to be undertaken at each of the components by us,
as the primary audit engagement team, or by component auditors from other EY global network firms operating under our instruction.
Of the four full scope components, audit procedures were performed on three of these directly by the primary audit team, EY UK, whilst audit
procedures on the remaining one component (Personal Assurance (Guernsey) Limited) were performed by the component audit team, EY Guernsey. We
determined the appropriate level of involvement to enable us to determine that sufficient audit evidence had been obtained as a basis for our opinion on
the Group as a whole. We provided detailed audit instructions to EY Guernsey which included guidance on areas of focus, including the relevant risks of
material misstatement, and set out the information required to be reported to us. We held discussions with the component team throughout the audit
and reviewed their key working papers. Due to the pandemic, the UK primary audit team did not visit Guernsey and conducted the audit with the EY
Guernsey team remotely. This, together with the additional procedures performed at Group level, gave us appropriate evidence for our opinion on the
Group financial statements.
Climate change
There has been increasing interest from stakeholders as to how climate change will impact companies. The Group has determined that the physical and
transition risks from climate change do not currently pose a material risk to the Group. This is explained on page 83 in the Accounting Policies, which form
part of the “Other information” rather than the audited financial statements. Our procedures on these disclosures therefore consisted solely of
considering whether they are materially inconsistent with the financial statements or our knowledge obtained in the course of the audit or otherwise
appear to be materially misstated.
INDEPENDENT AUDITOR’S REPORT
continued
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Financial Statements
Overview
Our audit effort in considering climate change was focused on challenging management’s risk assessment of the impact of physical and transition risks
and the resulting conclusion that there was no material impact from climate change and the adequacy of the Group’s disclosures on pages
XX
to XX
of
the financial statements which explain the rationale.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current
period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included
those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement
team. These matters were addressed in the context of our audit of the financial statements as a whole, and in our opinion thereon, and we do not
provide a separate opinion on these matters.
Risk
Our response to the risk
Key observations communicated to the
Audit Committee
Valuation of PG Let’s Connect Goodwill
(2021: £10.6m, 2020: £10.6m)
We consider the risk associated with the
valuation of PG Let’s Connect goodwill to
have increased as a result of increased
uncertainty over the future cash flow
projections due to the COVID-19 pandemic.
Refer to Accounting policies (page 84); and
Note 14 of the Consolidated Financial
Statements (pages 99 to 101).
The PG Let’s Connect goodwill arising on
consolidation represents the excess of the
costs of acquisition over the Group’s
interest in the fair value of the identified
assets and liabilities at the date of
acquisition of PG Let’s Connect in 2014.
The PG Let’s Connect goodwill balance as at
31 December 2021 is significant based on its
size relative to the total assets of the Group.
Based on our prior year experience and the
updated current year considerations including
the impact of the COVID-19 pandemic and
global supply chain interruptions, we consider
the following key assumptions to have the
most significant impact on the PG Let’s
Connect goodwill valuation.
– Discount rate
– Future cash flow forecasts
These key assumptions involve significant
judgement about future events for which
small changes can result in a material impact
to the resultant valuation and therefore leads
to a greater risk of material misstatement.
To obtain sufficient audit evidence to conclude on the
valuation of PG Let’s Connect goodwill, we performed the
following procedures:
– Examined and assessed the appropriateness of
management’s impairment model, including an
identification of the cash generating unit (‘CGU’) and
attributable cashflows, an assessment of discounted cash
flows, and understanding of the significant assumptions
used in the impairment test for the identified CGU;
– Considered the increased uncertainty in the underlying
forecasts and challenged the future cash flow projections
of the CGU, including the appropriateness of the applied
short-term and long-term growth rates and estimated
conversion rates;
– Engaged EY valuation specialists to assess the
reasonableness of the discount rate by considering the
CGU’s specific circumstances as well as comparable
companies;
– Performed sensitivity analysis to assess the impact of
certain key variables on levels of headroom, including
discount rate and growth assumptions; and
– Considered whether the applied accounting treatment is in
compliance with the applicable accounting framework and
the Group’s accounting policy and the Group disclosure is in
line with the required reporting framework and the revised
auditing standard – ISA 540 (Revised)
Auditing Accounting
Estimates and Related Disclosures.
We are satisfied that there is no impairment
and the carrying value of the goodwill is
appropriate as at 31 December 2021.
However, this assumes the ongoing improved
future trading of PG Let’s Connect following
the COVID-19 pandemic and global supply
chain interruptions. The timing and scale of
the CGU’s future growth is currently
uncertain, particularly with respect to the
speed at which the business’ cash flows will
revert to pre-COVID-19 levels and historical
growth trends (disclosed in Note 14 of the
financial statements). Delay in this recovery
could have a significant adverse impact on
the future cash flows of the PG Let’s Connect
CGU and may affect the future carrying value
of the goodwill.
We have reviewed the related disclosures and
concluded that these accurately reflect the
uncertainty associated with the future cash
flows of the Let’s Connect CGU, as well as the
sensitivities and key assumptions.
INDEPENDENT AUDITOR’S REPORT
continued
Personal Group Holdings Plc
· Annual Report and Accounts 2021
70
Personal Group Holdings Plc
· Annual Report and Accounts 2021
Risk
Our response to the risk
Key observations communicated to the
Audit Committee
Valuation of Innecto goodwill and other
intangible assets (2021: £2.6m, 2020: £2.8m)
We consider the risk associated with the
valuation of Innecto goodwill and other
intangible assets to have increased as a
result of increased uncertainty over the
future cash flow projections due to the
COVID-19 pandemic.
Refer to Accounting policies (page 84); and
Note 14 of the Consolidated Financial
Statements (pages 99 to 101).
The Innecto goodwill arising on
consolidation represents the excess of the
costs of acquisition over the Group’s
interest in the fair value of the identified
assets and liabilities at the date of
acquisition of Innecto in 2019.
We consider the valuation of Innecto
goodwill and other intangible assets to be a
significant risk for the Group. Specifically,
discount rate and short-term and long-term
growth rates have the most significant
impact on the valuation.
The value of the Innecto goodwill was most
sensitive to the discount rate and the
short-term growth rates of the digital sales.
The forecasted cash flows were dependent
on the re-platforming of Innecto’s digital
pay management suite in 2020, which was
delayed further into 2021 due to COVID-19.
The applied discount rate took into account
the existing uncertainties around the future
cash flows. Current 2021 forecasts show a
more positive outlook for Innecto, but due
to COVID-19 still impacting the business’s
ability to generate new business,
uncertainty related to the future cash flows
and sensitivity to the discount rate continue
to remain.
The identified key assumptions involve
significant judgment about future events
for which small changes can result in a
material impact to the resultant valuation
and therefore leads to a greater risk of
material misstatement.
To obtain sufficient audit evidence to conclude on the
valuation of goodwill at the year end, we performed the
following procedures:
– Examined and assessed the appropriateness of
management’s impairment model, including an
identification of the cash generating unit (‘CGU’) and
attributable cashflows, an assessment of discounted cash
flows, and understanding of the significant assumptions
used in the impairment test for the identified CGU;
– Considered the increased uncertainty in the underlying
forecasts and challenged the future cash flow projections
of the CGU, including the appropriateness of the applied
short-term and long-term growth rates and estimated
conversion rates;
– Engaged EY valuation specialists to assess the
reasonableness of the discount rate and growth rates by
considering the CGU’s specific circumstances as well as
comparable companies;
– Performed sensitivity analysis to assess the impact of
certain key variables on levels of headroom, including
discount rate and growth assumptions; and
– Considered whether the applied accounting treatment is in
compliance with the applicable accounting framework and
the Group’s accounting policy and the Group disclosure is in
line with the required reporting framework and the revised
auditing standard – ISA 540 (Revised)
Auditing Accounting
Estimates and Related Disclosures.
We are satisfied that there is no impairment
and the carrying value of the goodwill is
appropriate as at 31 December 2021. However,
this assumes ongoing growth within the CGU
following the COVID-19 pandemic (disclosed in
Note 14 of the financial statements). Delay in
the post COVID-19 recovery could have a
significant adverse impact on the future cash
flows of the Innecto CGU and may affect the
future carrying value of the goodwill.
We have reviewed the related disclosures and
concluded that these accurately reflect the
uncertainty associated with the future cash
flows of the Innecto CGU, as well as the
sensitivities and key assumptions.
INDEPENDENT AUDITOR’S REPORT
continued
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Overview
Our application of materiality
We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements on the audit and in
forming our audit opinion.
Materiality
The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence the economic decisions
of the users of the financial statements. Materiality provides a basis for determining the nature and extent of our audit procedures.
We determined materiality for the Group to be £219,000 (2020: £430,000), which is 5% (2020: 5%) of the consolidated profit before tax. The Group has
been profitable over a number of years and we judge the focus of shareholders to be the Group’s profitability and earnings per share. While COVID-19 has
impacted the profit before tax, we consider that it remains the most appropriate basis to determine materiality for the Group.
We determined materiality for the Parent Company to be £250,000 (2020: £260,000), which is 1% (2020: 1%) of the Parent Company equity. We have used
the capital based measure for determining materiality due to the Parent Company being a holding company.
During the course of our audit, we reassessed initial materiality and concluded that materiality assessed at planning stages of our audit remained
appropriate.
We also reassessed initial materiality for the Group from £244,000 to £219,000 due to a decrease in the Group’s profit before tax between the
interim forecast amount (upon which the initial material was based) and the year-end actual. We reassessed our audit procedures as a result of the
decreased materiality.
We also reassessed initial materiality for the Parent Company from £266,000 to £250,000 due to a decrease in the Parent Company’s equity between
30 September 2021 (upon which our initial materiality was based) and 31 December 2021. We considered the impact of this on the extent of our audit
procedures.
Performance materiality
The application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately low level the probability that
the aggregate of uncorrected and undetected misstatements exceeds materiality.
On the basis of our risk assessments, together with our assessment of the Group’s overall control environment, our judgment was that performance
materiality was 75% (2020: 75%) of our planning materiality, namely £165,000 (2020: £323,000). We have set performance materiality at this percentage
as we have not identified any significant errors in the prior year audits.
Audit work at component locations for the purpose of obtaining audit coverage over significant financial statement accounts is undertaken based on a
percentage of total performance materiality. The performance materiality set for each component is based on the relative scale and risk of the
component to the Group as a whole and our assessment of the risk of misstatement at that component. In the current year, the range of performance
materiality allocated to components was £33,000 to £165,000 (2020: £32,000 to £275,000).
Reporting threshold
An amount below which identified misstatements are considered as being clearly trivial.
We agreed with the Audit Committee that we would report to them all uncorrected audit differences in excess of £11,000 (2020: £22,000) for the Group
and in excess of £12,000 (2020: £13,000) for the Parent Company , which is set at 5% of planning materiality, as well as differences below that threshold
that, in our view, warranted reporting on qualitative grounds.
We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and in light of other relevant
qualitative considerations in forming our opinion.
Other information
The other information comprises the information included in the annual report set out on pages 1 to 69, other than the financial statements and our
auditor’s report thereon. The directors are responsible for the other information within the annual report.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in this report, we do
not express any form of assurance conclusion thereon.
INDEPENDENT AUDITOR’S REPORT
continued
Personal Group Holdings Plc
· Annual Report and Accounts 2021
72
Personal Group Holdings Plc
· Annual Report and Accounts 2021
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial
statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of the other information, we are
required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
– the information given in the strategic report and the directors’ report for the financial year for which the financial statements are prepared is
consistent with the financial statements; and
– the strategic report and directors’ report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have
not identified material misstatements in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
– adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not
visited by us; or
– the parent company financial statements are not in agreement with the accounting records and returns; or
– certain disclosures of directors’ remuneration specified by law are not made; or
– we have not received all the information and explanations we require for our audit
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 65, the directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group and parent company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate
the group or the parent company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due
to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these financial statements.
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
– We obtained an understanding of the legal and regulatory frameworks that are applicable to the group and determined that the direct laws and
regulations related to elements of Company law and tax legislation, and the financial reporting framework. Our considerations of other laws and
regulations that may have a material effect on the financial statements included permissions and supervisory requirements of the Prudential
Regulation Authority (‘PRA’), the Financial Conduct Authority (‘FCA’) and the Guernsey Financial Services Commission (‘GFSC’).
– We understood how the Company is complying with those frameworks by making enquiries of management, and through discussions with those
charged with governance. We also reviewed correspondence between the Company and the regulatory bodies; reviewed minutes of the Board and
the Risk and Compliance Committee; and gained an understanding of the Company’s approach to governance, demonstrated by the Board’s approval
of the Company’s governance framework.
INDEPENDENT AUDITOR’S REPORT
continued
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Strategic Report Governance Financial StatementsStrategic Report Governance
Financial Statements
Overview
– We assessed the susceptibility of the Group’s financial statements to material misstatement, including how fraud might occur by considering the
controls that the Company has established to address risks identified by the entity, or that otherwise seek to prevent, deter or detect fraud. Where
fraud risk, including the risk of management override, was considered to be higher, we performed audit procedures to address each identified risk.
These procedures included:
– Reviewing estimates for evidence of management bias. Supported by our valuation specialists, we assessed if there were any indicators of
management bias in the valuation of goodwill.
– Testing the appropriateness of journal entries recorded in the general ledger, with a focus on manual journals and evaluating the business rationale
for significant and/or unusual transactions.
In addition, we considered the ongoing impact of Covid-19 on the Group, including an assessment of the consistency of operations and group-wide
controls in place as they continued to operate remotely for a significant proportion of 2021, and making enquiries with management via use of
videoconferencing. We performed analytical review procedures to assess for unusual movements throughout the year. Our audit procedures also
incorporate unpredictability into the nature, timing and extent of our testing.
– We designed our audit procedures to identify non-compliance with both direct and other laws and regulations including those at the components. Our
procedures involved: making enquiry of those charged with governance and senior management for their awareness of any non-compliance of laws or
regulations, inquiring about the policies that have been established to prevent non-compliance with laws and regulations by officers and employees,
inquiring about the company’s methods of enforcing and monitoring compliance with such policies, inspecting significant correspondence with the
FCA, the PRA and the GFSC.
– The Company operates in the insurance industry which is a highly regulated environment. As such the Senior Statutory Auditor considered the
experience and expertise of the engagement team to ensure that the team had the appropriate competence and capabilities, which included the use
of specialists where appropriate.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at
https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has
been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no
other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s
members as a body, for our audit work, for this report, or for the opinions we have formed.
Robert Bruce (Senior statutory auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor London
28 March 2022
CONSOLIDATED INCOME STATEMENT
Note
2021
£’000
Restated*
2020
£’000
Gross premiums written 25,050 29,265
Outward reinsurance premiums
(163 )
(182 )
Change in unearned premiums
(208 )
(245 )
Change in reinsurers’ share of unearned premiums
(9 )
(8 )
Earned premiums net of reinsurance 24,670 28,830
5
Employee benefits and services Income 5 22,753 19,649
Voucher resale income
5 26,852 22,735
Other income
5 215 236
Investment income 23 74
6
Group Revenue 74,513 71,524
Claims incurred
7
(6,049 )
(7,031 )
Insurance operating expenses 8
(4,860 )
(4,171 )
Employee benefits and services expenses 5
(22,370 )
(19,890 )
Voucher resale expenses
(26,894 )
(22,999 )
Other expenses 82
(258 )
Group administration expenses
5
(9,779 )
(8,437 )
Share based payments expenses
22
(169 )
(8 )
Charitable donations
(100 )
(100 )
Group Expenses
(70,139 )
(62,894 )
Operating profit 4,374 8,630
Finance costs
(32 )
(73 )
Profit before tax 4,342 8,557
Taxation
11
(745 )
(1,663 )
Profit for the year 3,597 6,894
The profit for the year is attributable to equity holders of Personal Group Holdings Plc
Earnings per share
Pence
Pence
Basic
13 11.5 22.1
Diluted
13 11.5 22.1
There is no other comprehensive income for the year and, as a result, no statement of comprehensive income has been produced.
* While the results remain unchanged, the presentation of the prior year has been restated to add clarity to the reader. See Note 2.23 for further details.
The accompanying accounting policies and notes form an integral part of these financial statements.
Personal Group Holdings Plc
· Annual Report and Accounts 2021
74
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· Annual Report and Accounts 2021
Personal Group Holdings Plc
· Annual Report and Accounts 2021
CONSOLIDATED INCOME STATEMENT
Note
2021
£’000
2020
£’000
ASSETS
Non-current assets
Goodwill
14 12,696 12,696
Intangible assets
15 1,637 1,254
Property, plant and equipment
16 5,033 5,456
Current assets
Financial investments 2,596 2,587
17
Trade and other receivables
19 14,035 18,346
Reinsurance assets 78
20 108
Inventories
18 898 861
Cash and cash equivalents
21 20,291 17,589
Current tax assets 310 55
Total assets 57,604 58,922
The accompanying accounting policies and notes form an integral part of these financial statements.
CONSOLIDATED BALANCE SHEET
at 31 December 2021
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CONSOLIDATED BALANCE SHEET
continued
for the year ended 31 December 2021
Note
2021
£’000
2020
£’000
EQUITY
Equity attributable to equity holders of Personal Group Holdings Plc
Share capital
22 1,561 1,561
Share premium
22 1,134 1,134
Share based payment reserve 158 -
Capital redemption reserve 24 24
Other reserve
(32 )
(21 )
Profit and loss reserve 38,436 38,076
Total equity 41,281 40,774
LIABILITIES
Non-current liabilities
Deferred tax liabilities
23 478 399
Trade and other payables
24 402 352
Current liabilities
Trade and other payables
24 12,356 14,274
Insurance contract liabilities
25 3,087 3,123
Total liabilities 16,323 18,148
Total equity and liabilities 57,604 58,922
The financial statements were approved by the Board on 28 March 2022.
S Mace D Frost
Chief Financial Officer Chief Executive
Company number: 3194991
The accompanying accounting policies and notes form an integral part of these financial statements.
Personal Group Holdings Plc
· Annual Report and Accounts 2021
76
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· Annual Report and Accounts 2021
Personal Group Holdings Plc
· Annual Report and Accounts 2021
CONSOLIDATED BALANCE SHEET
continued
for the year ended 31 December 2021
Note
2021
£’000
2020
£’000
ASSETS
Non-current assets
Investment in subsidiary undertakings
26
25,203
25,045
25,203
25,045
Current assets
Trade and other receivables
19
192
1,278
Cash and cash equivalents
21
92119
311
1,370
Total assets
25,514
26,415
EQUITY
Equity attributable to equity holders of Personal Group Holdings Plc
Share capital
22
1,561
1,561
Share premium
22
1,134
1,134
Share based payment reserve
158
–Capital redemption reserve
24
24
Other reserve
(32)
(21)
Profit and loss reserve
22,172
23,142
Total equity
25,017
25,840
LIABILITIES
Current liabilities
Trade and other payables
24
497
575
Total liabilities
497
575
Total equity and liabilities
25,514
26,415
The parent Company has taken advantage of section 408 of the Companies Act 2006 and has not included its own profit and loss account in these financial
statements. The parent Company’s profit for th
278,000 (2020: £2,885,000).e year was £2,
The financial statements were approved by the Board on 28 March 2022.
S Mace D Frost
Chief Financial Officer Chief Executive
Company number: 3194991
The accompanying accounting policies and notes form an integral part of these financial statements.
COMPANY BALANCE SHEET
at 31 December 2021
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2021
Equity attributable to equity holders of Personal Group Holdings Plc
Share
capital
£’000
Share
Premium
£’000
Capital
redemption
reserve
£’000
Share Based
Payment
Reserve
£’000
Other
reserve
£’000
Profit and
loss reserve
£’000
Total
equity
£’000
Balance as at 1 January 2021 1,561 1,134 24 – 38,076 40,774
(21 )
Dividends paid – – – – –
(3,244 )
(3,244 )
Employee share-based compensation – – – 158 – 11 169
Proceeds of SIP* share sales – – – – – 24 24
Cost of SIP shares sold – – – – 28 –
(28 )
Cost of SIP shares purchased – – – – –
(39 )
(39 )
Transactions with owners – – – 158
(11 )
(3,237 )
(3,090 )
Profit for the year – – – – – 3,597 3,597
Balance as at 31 December 2021 1,561 1,134 24 158
(32 ) 38,436 41,281
Equity attributable to equity holders of Personal Group Holdings Plc
Share
capital
£’000
Share
Premium
£’000
Capital
redemption
reserve
£’000
Other
reserve
£’000
Profit and
loss reserve
£’000
Total
equity
£’000
Balance as at 1 January 2020 1,561 1,134 24 35,526 38,015
(230 )
Dividends paid – – – –
(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 )
Transactions with owners - - – 209
(4,344 )
(4,135 )
Profit for the year – – – – 6,894 6,894
Balance as at 31 December 2020 1,561 1,134 24 38,076 40,774
(21 )
* PG Share Ownership Plan (SIP)
The accompanying accounting policies and notes form an integral part of these financial statements.
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· Annual Report and Accounts 2021
Personal Group Holdings Plc
· Annual Report and Accounts 2021
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2021
Equity attributable to equity holders of Personal Group Holdings Plc
Share
capital
£’000
Share
Premium
£’000
Capital
redemption
reserve
£’000
Share Based
Payment
Reserve
£’000
Other
reserve
£’000
Profit and
loss
reserve
£’000
Total
equity
£’000
Balance as at 1 January 2021
1,561
1,134
24
-
(21)
23,142
25,840
Dividends paid
– – – - –
(3,244)
(3,244)
Employee share-based compensation
– – – -
158
-158
Proceeds of SIP* share sales - - - - -
24 24
Cost of SIP shares sold – – – - 28 -
(28)
Cost of SIP shares purchased – – – - -
(39)
(39)
Transactions with owners
– – –
158
(11)
(3,248)
(3,101)
Profit for the year – – – - –
2,278
2,278
Balance as at 31 December 2021
1,561
1,134
24
158
(32)
22,172
25,017
Equity attributable to equity holders of Personal Group Holdings Plc
Share
capital
£’000
Share
Premium
£’000
Capital
redemption
reserve
£’000
Other
reserve
£’000
Profit and
loss
reserve
£’000
Total
equity
£’000
Balance as at 1 January 2020
1,561
1,134
24
(230)
24,601
27,090
Dividends paid
– – – –
(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)
Transactions with owners
–
209
(4,344)
(4,135)
Profit for the year – – – –
2,885
2,885
Balance as at 31 December 2020
1,561
1,134
24
(21)
23,142
25,840
* PG Share Ownership Plan (SIP)
The accompanying accounting policies and notes form an integral part of these financial statements.
COMPANY STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2021
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CONSOLIDATED CASH FLOW STATEMENT
Note
2021
£’000
2020
£’000
Net cash from operating activities (see next page) 7,588 8,100
Investing activities
Additions to property, plant and equipment
17
(236 )
(341 )
Additions to intangible assets
16
(981 )
(424 )
Proceeds from disposal of property, plant and equipment 1 382
Purchase of financial assets
(9 )
(22 )
Interest received 6 23 74
Net cash from investing activities
(1,202 )
(331 )
Financing activities
Interest paid 2
(2 )
Purchase of own shares by the SIP*
(35 )
(22 )
Proceeds from disposal of own shares by the SIP* 20 26
Payment of lease liabilities
30
(427 )
(511 )
Dividends paid
14
(3,244 )
(4,147 )
Net cash used in financing activities
(3,684 )
(4,656 )
Net change in cash and cash equivalents 2,702 3,113
Cash and cash equivalents, beginning of year
21 17,589 14,476
Cash and cash equivalents, end of year
21 20,291 17,589
* PG Share Ownership Plan (SIP)
The accompanying accounting policies and notes form an integral part of these financial statements.
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· Annual Report and Accounts 2021
Personal Group Holdings Plc
· Annual Report and Accounts 2021
CONSOLIDATED CASH FLOW STATEMENT
Note
2021
£’000
2020
£’000
Operating activities
Profit after tax 3,597 6,894
Adjustments for
Depreciation
17 966 1,003
Amortisation of intangible assets
16 585 470
Profit or loss on disposal of property, plant and equipment 11
(150 )
Interest received
(23 )
(74 )
Interest charge 32 73
Share-based payment expenses
5 169 8
Taxation expense recognised in income statement
11 745 1,663
Changes in working capital
Trade and other receivables 4,280 247
Trade and other payables 384
(1,817 )
Inventories
(37 )
(115 )
Taxes paid
(920 )
(2,303 )
Net cash from operating activities 7,588 8,100
The accompanying accounting policies and notes form an integral part of these financial statements.
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COMPANY CASH FLOW STATEMENT
Note
2021
£’000
2020
£’000
Net cash from operating activities (see below)
786
1,570
Investing activities
Dividends received
2,500
4,000
Net cash used in investing activities
2,500
4,000
Financing activities
Purchase of own shares by the SIP*
(35)
(22)
Proceeds from disposal of own shares by the SIP*
20 26
Dividends paid
14
(3,244)
(4,147)
Net cash used in financing activities
(3,259)
(4,143)
Net change in cash and cash equivalents
27
(73)
Cash and cash equivalents, beginning of year
21 92
165
Cash and cash equivalents, end of year
21
119 92
Operating activities
Profit after tax
2,278
2,885
Changes in working capital
Trade and other receivables
1,086
1,792
Trade and other payables
(78)
(607)
Dividends received
(2,500)
(4,000)
Net cash from operating activities
786
1,570
* PG Share Ownership Plan (SIP)
The parent Company has cash and cash equivalents at 31 December 2021 including £5
0,000 (2020: £7,00
0) of Company’s own cash and £69,000 (£85,000)
relating to the purchase and sale of SIP shares by the employee benefit trust.
The accompanying accounting policies and notes form an integral part of these financial statements.
Personal Group Holdings Plc
· Annual Report and Accounts 2021
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· Annual Report and Accounts 2021
Personal Group Holdings Plc
· Annual Report and Accounts 2021
COMPANY CASH FLOW STATEMENT
NOTES TO THE FINANCIAL STATEMENTS
1 General information
The principal activities of Personal Group Holdings Plc (“the Company”) and
subsidiaries (together “the Group”) include transacting short-term accident
and health insurance and providing employee services in the UK
The Company is a limited liability company incorporated and domiciled in
Silbury Boulevard, Milton Keynes, MK9 3XL.
The Company is listed on the Alternative Investment Market of the London
Stock Exchange.
These financial statements have been approved for issue by the Board of
Directors on 28 March 2022.
2 Accounting policies
These financial statements of Personal Group Holdings Plc are for the year
ended 31 December 2021. The financial statements are prepared in
accordance with UK endorsed IFRS in conformity with the requirements of
Companies Act 2006.
The Group is aware that IFRS 17 – Insurance Contracts is tobe effective for
periods from 1 January 2023. Based on a review of thecurrent public
information it is not believed that the accounting for theGroup’s insurance
contracts will change materially due to the short tailnature of those
contracts (with the exception of employee default insurance which is
unlikely to be material) although disclosures are expected to be adjusted
for new terminology and additional disclosure requirements likely to
berequired.
2.1 Basis of preparation
The functional and presentational currency of the Group is sterling. These
statements and the prior year comparatives have been presented to the
nearest thousand, unless otherwise stated.
In preparing these consolidated financial statements, management has
made judgements, estimates and assumptions that affect the
applicationof the Group’s accounting policies and the reported amount of
assets, liabilities, income and expenses. Actual results may differ from
these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to estimates are recognised prospectively.
Climate Risk
In preparing these financial statements the directors have considered the
impact of the physical and transition risks of climate change, but have
concluded that it does not have a material impact on the recognition and
measurement of the assets and liabilities in these financial statements as at
31 December 2021. This is because the assets are reported at fair value under
UK endorsed IFRS. Market prices will include the current expectations of the
impact of climate change on these investments. Insurance liabilities are
accrued based on past insurable events so will not be impacted by any future
impact of climate change. However, we recognise that government and
societal responses to climate change risks are still developing and the future
impact cannot be predicted. Future valuations of assets may therefore differ
as the market responds to these changing impacts or assesses the impact of
current requirements differently and the frequency / magnitude of future
insurable events linked to the effect of climate risks could change.
Judgements
Information about judgements made in applying accounting policies that
have the most significant effects on the amounts recognised in the
consolidated financial statements is included in the following notes:
– Agent vs principal (Note 2.22) – whether the sale of discounted vouchers
should be treated as a principal or agency transaction.
Assumptions and estimation uncertainties
Information about assumptions and estimation uncertainties that have a
significant risk of resulting in a material adjustment to the carrying
amounts of assets and liabilities within the year ending 31 December 2021 is
included in the following notes:
– Goodwill valuation (Note 14) – key assumptions underlying recoverable
amounts.
– Establishing the value of claims outstanding (Note 25); – key assumptions
regarding the provisions for claims.
Going concern
The financial statements are prepared on a going concern basis. In
considering going concern, the Directors have reviewed the Group’s and
Company’s future cash requirements, earnings projections and capital
projections over the next 12 months ending 28 March 2023. Various stress
and scenario tests have taken place to assess the potential impact on the
Group of COVID-19, considering the potential impact on premiums, claims
and solvency ratios for the insurance subsidiaries, together with liquidity
and other non-insurance activities for the wider Group. The Directors
believe these forecasts have been prepared on a prudent basis and have
also considered the impact of a range of potentialchanges to trading
performance over the next 12 months ending 28 March 2023, including the
impacts of climate risk discussed above.
Having prepared and considered these stress scenarios the Directors have
concluded that the Group and Company will be able to operate without
requiring any external funding and therefore believe it is appropriate to
prepare the financial statements of the Group and Company on a going
concern basis. This is supported by the Group’s, and Company’s, liquidity
position at the year end.
2.2 Basis of consolidation
Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity
when it is exposed to, or has rights to, variable returns from its involvement
with the entity and has the ability to affect those returns through its power
over the entity. In assessing control, the Group takes into consideration
potential voting rights that are currently exercisable. The acquisition date is the
date on which control is transferred to the acquirer. The financial statements
of subsidiaries are included in the consolidated financial statements from the
date that control commences until the date that control ceases.
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NOTES TO THE FINANCIAL STATEMENTS
continued
2 Accounting policies
continued
2.2 Basis of consolidation
continued
Transactions eliminated on consolidation
Intra-Group balances and transactions, and any unrealised income and
expenses arising from these transactions, are eliminated on consolidation.
2.3 Goodwill and acquired intangibles
Goodwill representing the excess of the cost of acquisition over the fair
value of the Group’s share of the identifiable net assets acquired, is
capitalised and reviewed annually for impairment. Goodwill is carried at
cost less accumulated impairment losses. Negative goodwill is recognised
immediately after acquisition in the income statement.
Intangible assets meeting the relevant recognition criteria are initially
measured at cost and amortised on a systematic basis over their useful lives.
2.4 Revenue
Revenue is measured by reference to the fair value of consideration
received or receivable by the Group for goods supplied and services
provided, excluding VAT, IPT and trade discounts.
Whilst IFRS 15 considerations have been noted for the most significant
revenue streams to which it is applicable, the insurance premium revenue
stream is out of scope for IFRS 15.
Earned premium
Earned premium is recognised in the period in which the Group is legally
bound through a contract to provide insurance cover, which is typically a
week or a month in length and renews at the end of each cover period. It
represents the earned amount of gross written premiums receivable under
the contract. The remainder of gross written premiums are deferred as a
provision for unearned premiums until recognised as revenue computed on
a monthly or daily pro-rata basis. The unearned premium reserve is typically
small as a large proportion of policies are weekly renewals.
Net earned premiums are stated net of amounts passed to reinsurers.
Premiums are shown before deduction of commission and exclude any
sales-based taxes or duties.
Other insurance related
Commission receivable on the renewal of previously sold financial services
are recognised by the Group as the renewal takes place with the underwriter.
IT salary sacrifice
Income from the provision of salary sacrifice technology products is
recognised when the goods are dispatched.
IFRS 15 – IT salary sacrifice income
Performance
Obligations
Provision of IT goods to employer companies. Goods are
acquired by the Group from various suppliers and held as
inventory until sold to customers at an agreed price.
Transaction Price
Purchase price varies dependant on product purchased
but is clearly indicated.
Allocation of Price
Prices are allocated by product, volumes and values.
Satisfaction of
Obligations
Revenue is recognised on dispatch as Group has met its
performance obligation as per the contracts in place.
Platform income
Platform income, including that derived from Hapi, is recognised on a
straight-line basis over the length of the contract.
Where a proportion of this income and costs, credited or charged in the
current year, relate to the provision of services provided in the following
year, they are carried forward as deferred income or costs, calculated on a
daily pro-rata basis.
IFRS 15 – Benefits income
Performance
Obligations
Ongoing access to Hapi platform with each relevant
month access is provided being considered a separate
performance obligation.
Transaction Price
Prices are set on a by employee rate and are agreed with
each client individually.
Allocation of Price
Price allocated evenly to each period/performance
obligation.
Satisfaction of
Obligations
Recognised straight-line over period of agreement of
service as the performance obligation is deemed to be
met each month as the contract progresses.
Voucher income derives from customers ordering retail vouchers through
the Hapi platform. E-vouchers are fulfilled and made available instantly to
the customer while, for reloadable cards, customers receive these several
working days after placing the order. Income from the sale of reloadable
cards and e-vouchers is recognised as orders are fulfilled by the Group. In
the vast majority of these transactions the Group acts as principal. Refer to
2.22 for further details of agent vs principal assessment.
IFRS 15 – Voucher income
Performance
Obligations
Provision of voucher to individuals/companies.
Transaction Price
Prices are based on each retailer’s discount on purchase
into the Group.
Allocation of Price
Whole price allocated to the sole performance obligation.
Satisfaction of
Obligations
Recognised on dispatch of voucher as this is the point at
which the Group has fulfilled its part of the agreed
contract.
The Group receives income from its provision of HR consultancy services to
corporate clients. Consultancy income is recognised in the profit and loss
account at the relevant charge out rates of the consultants and based on
the chargeable time spent on each client project.
Personal Group Holdings Plc
· Annual Report and Accounts 2021
84
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· Annual Report and Accounts 2021
Personal Group Holdings Plc
· Annual Report and Accounts 2021
NOTES TO THE FINANCIAL STATEMENTS
continued
IFRS 15 – Consultancy income
Performance
Obligations
Provision of consultancy services, typically based on an
agreed number of consultant hours.
Transaction Price
Prices are based on each contractual client agreement,
dependant on the level and duration of consultant
hoursspent.
Allocation of Price
Each chargeable hour will have an agreed price dependant
on the level and experience of the consultant.
Satisfaction of
Obligations
Each consultant hour charged is considered a separate
performance obligation and recognition is recorded
periodically (typically monthly) based on chargeable
hours in that period.
Other income
Property rental income is recognised on a receivable basis when the right
to receive consideration has been established.
Government grants
Grants are accounted for under the accruals model as permitted by IFRS.
Grant income relating to the job retention scheme is recognised in line with
furlough costs incurred, and therefore the accrued element of the grant is
included in debtors as accrued income.
Grants are recognised in the Income Statement in the same period as the
related expenditure and netted off against payroll costs within
administrative costs.
Costs incurred to fulfil a contract
Costs incurred to fulfil a contract under IFRS 15 are recognised as an asset
under certain conditions laid out in IFRS 15.95. The capitalised contract
costs are amortised on a systematic basis that is consistent with the
Company’s transfer of the related goods or services to the customer.
Capitalised contract costs are subject to an impairment assessment at the
end of each reporting period. Impairment losses are recognised in the profit
or loss. There are no contracts in the Group for which these conditions are
met and, as such, no assets have been recognised.
Investment income
Interest income is recognised on an effective interest rate method.
2.5 Reinsurance
Outwards reinsurance premiums are accounted for in the same accounting
period as the premiums for the related direct or inwards business being
reinsured. Reinsurers’ share of technical reserves is shown as an asset in the
balance sheet.
Amounts recoverable under reinsurance contracts are assessed for
impairment at each balance sheet date. If objective evidence of impairment
exists reinsurance assets are reduced to the level at which they are
considered to be recoverable and an impairment loss is recognised in the
income statement.
2.6 Claims recognition and claims provisions
The provision for claims represents the gross estimated liability arising
from claim episodes in the current and preceding financial years which have
not given rise to claims paid. The provision includes an allowance for claims
management and handling expenses.
The provision for claims is estimated based on current information, and
theultimate liability may vary as a result of subsequent information
andevents.
Adjustments to the amount of claims provision for prior years are included
in the income statement in the financial year in which the change is made.
In setting the provisions for claims outstanding, a best estimate is
determined on an undiscounted basis and then a margin of prudence is
added such that there is confidence that future claims will be met from the
provisions. The level of prudence set is one that provides an appropriate
degree of confidence.
The liability adequacy test is performed at each reported balance sheet
date. This requires the estimate of future cash flows under its insurance
contracts to be measured against the recognised insurance liabilities.
2.7 Property, plant and equipment and intangible assets
Property, plant and equipment and software intangibles are stated at cost,
net of depreciation, amortisation and any provision for impairment. No
depreciation or amortisation is charged during the period of construction.
Research and development
Expenditure on research activities is recognised in the income statement as
an expense as incurred.
Expenditure on development activities is capitalised if the product or
process is technically and commercially feasible and the Group intends, and
has the technical ability and sufficient resources to, complete
development, future economic benefits are probable and if the Group can
measure reliably the expenditure attributable to the intangible asset during
its development. Development activities involve a plan or design for the
production of new or substantially improved products or processes.
The expenditure capitalised includes the cost of materials, external
consultancy costs and salary costs where a distinct product has been
created. Other development expenditure is recognised in the income
statement as an expense as incurred. Capitalised development expenditure
is stated at cost less accumulated amortisation and less accumulated
impairment losses.
Disposal of assets
The gain or loss arising on the disposal of an asset is determined as the
difference between the disposal proceeds and the carrying amount of the
asset and is recognised in the income statement.
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2 Accounting policies
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2.7 Property, plant and equipment and intangible assets
continued
Amortisation and depreciation
Amortisation and depreciation are calculated to write down the cost or
valuation less estimated residual value of all intangible assets, and tangible
assets other than freehold land excluding investment properties by equal
annual instalments over their estimated economic useful lives.
Residual value is reviewed annually and amended if material. The rates
generally applicable are:
Freehold properties
50 years
Motor vehicles
3 – 4 years
Computer equipment
2 – 4 years
Furniture, fixtures and fittings
5 – 10 years
Computer software and development
2 – 4 years
Internally generated intangibles
3 – 5 years
Intangible assets
3 – 5 years
Right of Use Assets Term of Lease
2.8 Leases
Under IFRS 16, with the exception of short-term or low value leases, all
operating and finance leases are accounted for in the balance sheet. On
inception of the lease, the future payments, including any expected end of
life costs, are discounted based on the implicit interest rate in the specific
lease. A “Right of Use” asset is created at an equal value depreciated over
the life of the lease which is determined by the contract with any break
clauses being reviewed as to the expected use at the time of inception and
at each following year end. Payments made to the lessor are debited to the
balance sheet and the income statement is charged with monthly
depreciation and interest which is included as finance costs in the accounts.
Low value leases or short life leases of less than one year are expensed
directly into the income statement account on a straight line over the life
of the lease.
2.9 Impairment of non-financial assets
For the purposes of assessing impairment, assets are grouped at the
lowestlevels for which there are separately identifiable cash flows (cash-
generating units). As a result, some assets are tested individually for
impairment and some are tested at cash-generating unit level. Goodwill is
allocated to those cash-generating units that are expected to benefit
fromsynergies of the related business combination and represent the lowest
level within the Group at which management monitors the related cash flows.
Goodwill, other individual assets or cash-generating units that include
goodwill and those intangible assets not yet available for use are tested for
impairment at least annually. All other individual assets or cash-generating
units are tested for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable.
See Note 15 for further details on the impairment testing of goodwill.
2.10 Taxation
Current tax is the tax currently payable based on taxable profit for the year.
Deferred income taxes are calculated using the liability method on
temporary differences. Deferred tax is generally provided on the difference
between the carrying amounts of assets and liabilities and their tax bases.
However, deferred tax is not provided on the initial recognition of goodwill,
nor on the initial recognition of an asset or liability unless the related
transaction is a business combination or affects tax or accounting profit.
Deferred tax on temporary differences associated with shares in
subsidiaries and joint ventures is not provided if reversal of these
temporary differences can be controlled by the Group and it is probable
that reversal will not occur in the foreseeable future. In addition, tax losses
available to be carried forward as well as other income tax credits to the
Group are assessed for recognition as deferred tax assets.
Deferred tax liabilities are provided in full, with no discounting. Deferred
tax assets are recognised to the extent that it is probable that the
underlying deductible temporary differences will be able to be offset
against future taxable income. Current and deferred tax assets and
liabilities are calculated at tax rates that are expected to apply to their
respective period of realisation, provided they are enacted or substantively
enacted at the balance sheet date.
2.11 Financial assets
Financial assets include; bank deposits (as defined below); loans and other
receivables. Financial assets are assigned to the different categories by
management on initial recognition, depending on the purpose for which
they were acquired.
A financial asset is measured at amortised cost if it is both: held within a
business model whose objective is to hold assets to collect contractual
cash flows; and its contractual terms give rise to cash flows that are solely
payments of principal and interest on the amount outstanding. For the
purposes of this assessment, “principal” is defined as the fair value of the
financial asset on initial recognition, and “interest” is defined as
consideration for the time value of money and for the credit risk associated
with the principal amount outstanding. In assessing whether the
contractual cash flows are solely payments of principal and interest, the
Group considers the contractual terms of the instrument, including any
terms which may affect the timing or amount of contractual cash flows.
Loans and receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. Loans and
receivables are measured subsequent to initial recognition at amortised
cost using the effective interest method, less provision for impairment. Any
change in their value through impairment or reversal of impairment is
recognised in the income statement.
Fixed interest rate bank deposits with a maturity date of three months or
more from the date of acquisition are classified as financial assets.
There are no financial assets categorised as at fair value through profit and
loss following the sale of the equity investments.
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· Annual Report and Accounts 2021
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NOTES TO THE FINANCIAL STATEMENTS
continued
In assessing impairment requirements on financial assets, the Group
considers the rate of historic losses on similar assets in conjunction with
expected future losses and credit losses as a result of potential defaults.
This will, as mandated by IFRS 9, continue to be reassessed as and when
further information becomes available or when conditions change.
A financial asset is de-recognised only where the contractual rights to the
cash flows from the asset expire or the financial asset is transferred, and
that transfer qualifies for de-recognition. A financial asset is transferred if
the contractual rights to receive the cash flows of the asset have been
transferred or the Group retains the contractual rights to receive the cash
flows of the asset but assumes a contractual obligation to pay the cash
flows to one or more recipients. A financial asset that is transferred
qualifies for de-recognition if the Group transfers substantially all the risks
and rewards of ownership of the asset, or if the Group neither retains nor
transfers substantially all the risks and rewards of ownership but does
transfer control of that asset.
Impairment of financial assets
The Group assesses on a forward-looking basis, the expected credit losses
(ECL) associated with its debt instrument assets carried at amortised costs.
The Group calculates the lifetime ECL as a practical expedient for short-
term receivables. A loss allowance is recognised for such losses at each
reporting date. The Group measures ECL on each balance sheet date
according to a three stage ECL impairment model:
Stage 1 – from initial recognition of the financial asset to the date on which
the asset has experienced a significant increase in credit risk (SICR) relative
to its initial recognition, a loss allowance is equal to the credit loss
expectedto result from default occurring over 12 months following the
reporting date.
Stage 2 – following a significant increase in credit risk relative to the initial
recognition of the financial asset, a loss allowance is recognised equal to
the credit losses expected over the remaining lifetime of the asset. Where
an SICR is no longer observed, the instrument will move back to Stage 1.
Stage 3 – when the financial asset is considered to be credit impaired, a loss
allowance is recognised equal to the credit losses expected over the
remaining life of the asset. Interest and revenue is calculated based on the
gross carrying amount of the asset, net of the loss allowance.
The measurement of the ECL reflects an unbiased and probability-
weighted amount that is determined by evaluating a range of possible
outcomes, the time value of money and reasonable and supportable
information that is available without undue cost and effort at the reporting
date about past events, current conditions and forecasts of future
economic conditions.
Insurance receivables, which are outside the scope of IFRS 9, are subject to
a lapse provision calculated based on historic loss data.
2.12 Financial liabilities
Financial liabilities are classified as measured at amortised cost or fair value
through profit and loss (FVTPL). A financial liability is classified as at FVTPL
if it is classified as held-for-trading or it is designated as such on initial
recognition.
Financial liabilities are subsequently measured at amortised cost using the
effective interest method, with interest related charges recognised as an
expense in finance cost in the income statement. Finance charges,
including premiums payable on settlement or redemption and direct issue
costs, are charged to the income statement on an accruals basis using the
effective interest method and are added to the carrying amount of the
instrument to the extent that they are not settled in the period in which
they arise.
There are no financial liabilities categorised as at fair value through profit
orloss.
A financial liability is de-recognised only when the obligation is
extinguished, that is, when the obligation is discharged or cancelled
orexpires.
2.13 Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits,
together with other short-term, highly liquid investments that are readily
convertible into known amounts of cash and which are subject to an
insignificant risk of changes in value.
As stated in Note 2.11 fixed interest rate bank deposits with the maturity
date of three months or more from the date of acquisition are classified as
financial assets.
2.14 Investments in subsidiary undertakings
Company investments in subsidiary undertakings and joint ventures held in
the Company Balance Sheet are shown at cost less impairment provisions.
Impairment testing is completed on an annual basis or as and when an
indicator for impairment under IAS 36 arises.
2.15 Equity
Equity comprises the following:
– “Share capital” represents the nominal value of equity shares.
– “Share premium account” represents the amount paid on issue for equity
shares in excess of their nominal value.
– “Capital redemption reserve” represents the nominal value of its own
equity shares purchased, and then cancelled, by the Company.
– “Share based payments reserve” represents the equity value of the
accumulated share based payments expenses in LTIP 2021.
– “Other reserve” represents the investment in own Company shares by
the Employee Benefit Trust.
–
“Profit and loss reserve” represents retained profits.
2.16 Employee benefits
Defined contribution group and self-invested personal pension schemes.
The pension costs charged against profits are the contributions payable to
the schemes in respect of the accounting period.
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2 Accounting policies
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2.17 Share-based payment
Equity-settled share-based payment
All goods and services received in exchange for the grant of any share-
based payment are measured at their fair values. Where employees are
rewarded using share-based payments, the fair values of employees’
services are determined indirectly by reference to the fair value of the
instrument as at the date it is granted to the employee.
All equity-settled share-based payments are ultimately recognised as an
expense in the income statement with a corresponding credit to “profit and
loss reserve”.
If vesting periods or other non-market vesting conditions apply, the
expense is allocated over the vesting period, based on the best available
estimate of the number of share options expected to vest. Estimates are
subsequently revised if there is any indication that the number of share
options expected to vest differs from previous estimates. Any cumulative
adjustment prior to vesting is recognised in the current period. No
adjustment is made to any expense recognised in prior periods if share
options ultimately exercised are different to that estimated on vesting.
Upon exercise of share options, the proceeds received net of attributable
transaction costs are credited to share capital, and where appropriate
share premium.
2.18 Employee benefit trust
The assets and liabilities of the Employee Benefit Trust (EBT) have been
included in the Group accounts. Any assets held by the EBT cease to be
recognised on the Group balance sheet when the assets vest
unconditionally in identified beneficiaries.
The costs of purchasing own shares held by the EBT are shown as a
deduction against equity. The proceeds from the sale of own shares held
increase equity. Neither the purchase nor sale of own shares leads to a gain
or loss being recognised in the Group income statement.
At present the Company operates a plan whereby all employees are
entitled to make monthly payments to the trust via payroll deductions. The
current allocation period is six months and shares are allocated to
employees at the end of each allocation period. The shares are allocated at
the lower of the mid-market price at the beginning and end of the
allocation period. The trust Company has not waived its right to dividends
on unallocated shares. Any profit or loss on allocation of shares to
individuals is taken directly to the “other reserve” within equity.
2.19 Shares held in an employee benefit trust
Transactions of the Company sponsored EBT are treated as being those of
the Company and are therefore, reflected in these financial statements.
2.20 Inventories
Inventories are valued at the lower of cost and net realisable value after
making due allowance for obsolete and slow-moving items. Cost includes all
direct costs and an appropriate proportion of fixed and variable overheads.
2.21 Provisions
A provision is recognised in the balance sheet when the Group has a present
legal, or constructive, obligation as a result of a past event, that can be
reliably measured, and it is probable that an outflow of economic benefits
will be required to settle the obligation. Provisions are determined by
discounting the expected future cash flows at a pre-tax rate that reflects
risks specific to the liability.
2.22 Agent vs Principal
The sale of discounted vouchers, be it physical or electronic, represents the
majority of SaaS revenue for the Group. The Group has a mixture of
relationships with retailers and third-party suppliers, depending on the
offering. Some offerings require purchasing inventory in advance while
others require the maintaining of cash floats with suppliers and others
require the settlement of supplier invoices as they are received.
Depending on the contractual relationship and the nature of the
transactions with the relevant suppliers, the Group has made a judgement
on whether the offerings constitute agency or principal transactions. This
judgement is significant in nature as it has a material impact on the revenue
and cost of sales of the Group.
In the majority of circumstances, the Group, either physically or via its IT
systems, takes possession and ownership of the vouchers, has control over
their use and resale price and, as a result, these transactions are deemed to
be principal in nature. In such cases, the sale of vouchers, and their relevant
cost of sales, are presented gross in the income statement for the year.
Where a contractual relationship exists with the supplier that classifies the
relationship as that of an agency, this is deemed to supersede the factors
discussed above. As a result, the voucher sale and their relevant cost of
sales have been presented net as agency income in the income statement
for the period.
2.23 Restatement of segmental information
As described on page 34, during the year management took the decision to
change the format of the segmental analysis to better reflect the Group’s
business activities.
As a result, while there are no adjusting entries to the financial results in
these financial statements, the layout of both the consolidated income
statement and the segmental analysis have been amended, with prior year
results restated in this new format to ensure comparability across the two
reporting periods.
3 Risk management objectives and policies
The Board recognises that the effective management of risks and
opportunities is fundamental to achieving the Group’s strategic objectives.
As a result, it is important there is a strong risk management culture
throughout the Group, and that we identify, assess and appropriately
mitigate the key risks to the Group achieving this strategy.
To achieve its objectives as well as sustainable profitability, the Group may
pursue the opportunities that gave rise to risk. Therefore, we have adopted
an Enterprise Risk Management Framework as part of our decision making
and business management process. As a result of this rigorous approach,
the Group can maintain financial security, produce good outcomes and the
fair treatment of customers, and meet the needs of other parties such as
shareholders, employees, suppliers and regulators.
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· Annual Report and Accounts 2021
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· Annual Report and Accounts 2021
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· Annual Report and Accounts 2021
NOTES TO THE FINANCIAL STATEMENTS
continued
We review the risk management strategy regularly, particularly after any significant change to the change environment and, each year, after the approval of
the Group’s strategy and business plans.
The most significant financial risks to which the Group and Company are exposed under normal circumstances are described in this section.
In addition to those risks identified, the ongoing COVID-19 outbreak continued to impact operations of the business during 2021. Government imposed
lockdowns limited the ability to undertake face-to-face insurance sales in the early parts of the year, but the Group has seen a return to normal trading in
its insurance business in the second half of the year.
Credit risk
The Group’s and Company’s exposure to credit risk includes the carrying value of certain financial assets at the balance sheet date, summarised as follows:
Group Company
2021
£’000
2020
£’000
2021
£’000
2020
£’000
Insurance receivables
1,665
2,295– –
Reinsurance assets
108
78– –
Trade debtors
10,592 –
14,712
–Accrued interest
10
6 – –
Cash and cash equivalents 92
20,291
11917,589
Bank deposits
2,596 –
2,587
–Total credit risk
35,262
37,267
119 92
A large proportion of the Group’s revenue is generated from the sale of insurance policies to individual customers, with most of the premiums collected,
and paid over to the Group, by the individuals’ employer via payroll deduction. The vast majority of employers pay over payroll deductions made, within one
month, on a regular basis, thereby minimising the credit risk exposure to the Group. With very few exceptions, COVID-19 has not had an impact on debtor
recovery across the Group.
Due to the seasonal nature of the PG Let’s Connect business, the year-end receivables balance is heavily weighted towards salary sacrifice goods. These
receivables are due from the employers of the individuals who place the order. The vast majority of these employers pay the receivable balance within two
months of receiving the consolidated invoice for their scheme. Included within trade debtors are £8.4m (2020: £10.1m) relating to PG Let’s Connect sales.
The use of payroll deductions by a “host company employer” would not be permitted where the Board believed there may be a significant credit risk.
Receivables past their due date are summarised within Note 19. The credit risk for liquid funds and other short-term financial assets is considered negligible,
since the counterparties are all regulated in the UK by the PRA.
At 31 December 2021 the counterparties were as follows: The Co-operative Bank plc, Santander UK plc, HSBC Bank Plc, Lloyds Bank Plc, Close Brothers Ltd
and Aberdeen Standard Investments. Long-term rate credit ratings for these counterparties range from AA to B (ratings sourced from Fitch, and Standard &
Poor’s) (2020: AA to B rating range).
The Group is also exposed to the recoverability of receivables from reinsurers. At 31 December 2021, the Group utilised two reinsurances counterparties,
namely, Swiss Re Europe S.A., United Kingdom Branch and AXA XL Insurance Life Syndicate 3002. Credit ratings for this reinsurer range from A+ to AA.
All subsidiary undertakings are 100% owned by the Company or subsidiaries thereof. There is at least one Director of Personal Group Holdings on each of the
larger subsidiary companies’ Boards and all operations are controlled from within the registered office in Milton Keynes. The Company Directors have a
good understanding of the operational performance of each of the subsidiary undertakings. The Company Directors are satisfied that the subsidiary
undertakings have sufficient future income streams to enable the liabilities to be repaid in full in the foreseeable future.
Information relating to the fair value measurement of financial assets can be found in Note 18.
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3 Risk management objectives and policies
continued
Interest rate risk
The Group is not exposed to any financial liabilities with an interest element aside from the interest element intrinsic in leases.
At 31 December 2021, bank deposits and cash and cash equivalents exceeded borrowings by £22,887,000 (2020: £20,176,000). If UK interest rates increased
by 2%, net finance income would increase by approximately £458,000 with a corresponding increase to equity.
Liquidity risk
Cash balances are managed internally by the Financial Controller and amounts are placed on short-term deposits (currently not exceeding six months) to
ensure that sufficient funds are available at all times to pay all liabilities as and when they fall due.
As at 31 December 2021, the Group’s and Company’s liabilities have contractual maturities (including interest payments where applicable) as
summarisedbelow:
Within 6
months
£’000
6–12
months
£’000
1–5 years
£’000
Non-cash
items*
£’000
Total
£’000
Group
At 31 December 2021
Trade and other payables
11,535 182
–743
12,460
Insurance Contract Liabilities
2,188
– –
899
3,087
Total liquidity risk
13,723
182
–
1,642
15,547
At 31 December 2020
Trade and other payables –
14,356
83187
14,626
Insurance Contract Liabilities
2,428
– –
695
3,123
Total liquidity risk
16,784
83 –
882
17,749
Company
At 31 December 2021
Amounts owed to Group undertakings – –
257
–257
Total liquidity risk
257
– – –
257At 31 December 2020 – –
249
–249
Amounts owed to subsidiary undertakings – –
249
–249
* Non-cash items relate to unearned premiums or unearned revenue across the different business segments
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· Annual Report and Accounts 2021
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· Annual Report and Accounts 2021
Personal Group Holdings Plc
· Annual Report and Accounts 2021
NOTES TO THE FINANCIAL STATEMENTS
continued
Currency risk
The Group is not exposed to any currency risk as all business is conducted in
GBP and all bank accounts were held in GBP in both 2021 and 2020.
Insurance claim and related risks
During the year, Personal Assurance Plc (PA) underwrote two categories of
business and Personal Assurance (Guernsey) Ltd (PAGL) a third, which are
described in detail below:
Hospital cash plans and other personal accident and sickness policies
These have been PA’s core products since 1984 and, at 31 December 2021,
represent 98.8% (2020: 98.8%) of PA’s gross premiums written. The vast
majority of these policies are sold to individuals at their place of work as
part of an employee benefits package introduced by PGH on behalf of the
employer. The gross loss ratio (excluding claims handling costs) on these
policies at 31 December 2021 was 19.2% (2020: 19.2%). The loss ratio has
remained relatively consistent over the period of time that these policies
have been underwritten and therefore the Board has taken the decision to
accept the underwriting risk in full and not to use reinsurance as a way of
managing insurance claim risk.
At present the maximum payable on any one single claim is £91,375 (2020:
£91,375) and would only be payable after a period of hospital confinement
of two years. The total number of these individual policies in force at 31
December 2021 was 172,829 (2020: 193,465) and the total annualised
premium value of these policies was £19,227,000 (2020: £21,336,000). The
average amount paid per claim in 2021 was £205 (2019: £191).
Voluntary Group Income Protection policies (VGIP)
In July 2012 PA commenced the underwriting of VGIP policies. In order to
manage this insurance risk, the Board took out a quota share reinsurance
policy to exclusively cover this part of the business. Under this reinsurance
policy 90% of the value of each claim is recoverable from the reinsurer.
At 31 December 2021 these policies represent 1.2% (2020: 1.2%) of PA’s gross
premiums written. The gross loss ratio (excluding claims handling costs) on
these policies at 31 December 2021 was 50.8% (2020: 38.1%). The total
number of these individual policies in force at 31 December 2021 was 692
(2020: 860) and the average amount paid per claim in 2021 was £11,116
(2020: £9,910).
Death benefit policies
Death benefit policies have been underwritten by PAGL since March 2015.
These policies are sold primarily to individuals at their place of work in the
same way as the hospital cash plans.
The gross loss ratio (excluding claims handling costs) on these policies at 31
December 2021 was 32.6% (2020: 30.7%). A stop loss reinsurance policy is in
place to cover claims over £3,000,000 at any given location. The total
number of these individual policies in force at 31 December 2021 was
62,482 (2020: 66,143) and the average amount paid per death in 2021 was
£9,518 (2020: £9,504).
Employee default policies
In February 2020 PAGL commenced the underwriting of employee default
policies in relation to salary sacrifice sales made by Let’s Connect. These
policies provided cover to Let’s Connect’s largest customer in the event
that employees left owing salary sacrifice deductions to their employer
and these monies were unable to be recovered by alternative means.
At 31 December 2021 these policies represent 11.0% (2020: 7.0%) of PAGL’s
gross premiums written. The gross loss ratio (excluding claims handling
costs) on these policies at 31 December 2021 was 82.3% (2020: 78.8%) and
the average amount paid per individual default in 2021 was £750
(2020:£792).
Group loss ratio
For the year ended 31 December 2021 the gross claims ratio of the Group
was 24.9% (2020: 24.0%). A 2% increase in the claims ratio would increase
claims incurred by approximately £501,000.
There are no material individual claims and open claims over 12 months old
are also immaterial. As a result, the Group has elected to not disclose claims
development tables.
4 Capital management and requirements
The Group’s capital management objective is to maintain sufficient capital
to safeguard the Group’s ability to continue as a going concern and to
protect the interests of all of its customers, investors, regulator and
trading partners while also efficiently deploying capital and managing risk
to sustain ongoing business development. The Group manages its capital
resources in line with the Group’s capital management Policy, which is
reviewed on an annual basis. The Group’s capital position is kept under
constant review and is reported monthly to the Board.
Since 1 January 2016, Personal Assurance Plc (PA) has been subject to the
requirements of the Solvency II (SII) Directive and must hold sufficient
capital to cover its Solvency Capital Requirement (SCR). In addition, PA
maintains a buffer in excess of this capital requirement, specified in line
with the capital risk appetite agreed by the Board. The SCR is calculated in
accordance with the Standard Formula specified in the SII legislation.
At least annually, the Group undertakes the Own Risk and Solvency
Assessment (ORSA). This process enables the Group to assess how well the
Standard Formula SCR reflects the Group’s actual risk profile, and
comprises all the activities by which PA establishes the level of capital
required to meet its solvency needs over the planning period given the
Company’s strategy and risk appetite. The conclusions from these activities
are summarised in the ORSA Report which is reviewed by the Risk
Committee, approved by the Board and submitted to the Prudential
Regulation Authority (PRA) at least annually.
PA’s unaudited Eligible Own Funds, determined in accordance with the SII
valuation rules, were £12.6m (2020: £12.4m) which was in excess of the
estimated SCR of £3.5m (2020: £4.0m). This represented an estimated
solvency coverage ratio of 357% (2020: 308%). The movement year on year
remains consistent and is in line with the Board’s risk appetite of holding
greater than 200% of the requirement.
Other than disclosed above there have been no changes to what is
managed as capital or the Group’s capital management objectives, policies
or procedures during the year.
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4 Capital management and requirements
continued
At 31 December 2021, the requirements of the Group’s regulated companies were as follows:
Relevant
regulatory
body
Capital
resources
requirement
unaudited
£’000
Capital
resources
unaudited
£’000
Surplus
over capital
resources
requirement
unaudited
£’000
Company
Personal Assurance Plc FCA, PRA
3,521
12,588
9,067
Personal Assurance Services Limited
FCA
46
3,908 3,862
Personal Group Benefits Limited
FCA 155
292
137
Berkeley Morgan Limited
FCA
25
348
323
Personal Assurance (Guernsey) Limited
GFSC
911
2,010 1,099
In order to maintain its capital resources requirement, Personal Assurance Plc maintains the majority of its assets in cash and short-term fixed interest
ratedeposits.
The capital resources and corresponding capital resource requirement for each PRA regulated entity is calculated in accordance with PRA regulations.
The capital resources and corresponding capital resource requirement for each FCA regulated entity is calculated in accordance with FCA regulations.
The Group’s capital comprises all components of equity.
The Group’s regulated entities have complied with all externally imposed capital requirements during the year.
5 Segment analysis
As noted on page 34, the format of the segmental analysis has been changed in 2021. 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 a
technology salary sacrifice business trading as PG Let’s Connect, purchased by the Group in 2014.
3) Benefits and Platform
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.
4) Pay and Reward
Pay and Reward refers to the trade of Innecto, a pay and reward consultancy Company purchased in 2019. Revenue in this segment relates to consultancy
and license income derived from selling Innecto digital platform subscriptions.
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Personal Group Holdings Plc
· Annual Report and Accounts 2021
NOTES TO THE FINANCIAL STATEMENTS
continued
5) 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. This segment also includes revenue generated from the resale of vouchers (Note 2.22).
2021
£’000
Restated
2020
£’000
Revenue by segment
Affordable Insurance
24,670
28,830
Other Owned Benefits
18,214
16,420
Benefits Platform
6,051
4,901
Benefits Platform – Group Elimination
(2,748)
(2,547)
Pay & Reward
1,236
875
Other Income
Voucher resale
26,852
22,735
Other
215
236
Investment income
23
74
Group Revenue
74,513
71,524
Adjusted EBITDA* contribution by segment
Affordable Insurance
11,012 15,082
Other Owned Benefits
730
469
Benefits Platform
2,098
2,092
Pay & Reward
303
(255)
Other
279
(212)
Admin and central costs** (8,228)
(6,965)
Charitable Donations
(100) (100)
Adjusted EBITDA*
6,094
10,111
Depreciation**
(966)
(1,003)
Amortisation**
(585)
(470)
Interest
(32)
(73)Share Based Payments Expenses
(169)
(8)
Profit before tax
4,342
8,557
* 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
** These constitute Group administration expenses on the face of the Consolidated Income Statement
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5 Segment analysis
continued
Segmental assets and liabilities
2021 2020
Assets
£’000
Liabilities
£’000
Assets
£’000
Liabilities
£’000
Insurance
28,205
8,168
26,218
7,564
Other Owned Benefits
10,910
6,176
11,748
6,937
Benefits Platform
2,055
1,400
2,526
1,271
Pay & Reward
471
-543
-Other
15,963
579
17,885
2,374
Total segment assets and liabilities
57,604
16,323
58,920
18,146
5a Further segmental analysis
The following note provides additional analysis on Group segmental income and expenditure.
Employee benefits and services income
2021
£’000
2020
£’000
IT Salary Sacrifice
18,214
16,420
Other Owned Benefits
6,051
4,901
Benefits Platform Group elimination*
(2,748)
(2,547)
Pay & Reward
1,236
875
Total employee benefits and service income
22,753
19,649
Insurance operating expenses
2021
£’000
2020
£’000
Operating expenses
7,608
6,718
Group elimination*
(2,748)
(2,547)
Total income operating expenses
4,860
4,171
* In order to properly assess the segments individually, this Group elimination apportions an arm’s length value to platform sales offered at a discount in return for insurance selling opportunities at
corporate clients. This value is then added to Benefits Platform income and Insurance Operating expenses before being eliminated out.
Employee benefits and services expenses
2021 2020
Cost of
sales
£’000
Operating
expenses
£’000
Total
expenses
£’000
Cost of
sales
£’000
Operating
expenses
£’000
Total
expenses
£’000
IT Salary Sacrifice
15,818
1,666
17,484
14,325
1,640
15,965Benefits Platform
1,106
2,847
3,953
416
2,393
2,809
Pay & Reward –
933 933
41,126 1,130
Total employee benefits and services
expenses
16,924
5,446
22,370
14,745
5,159
19,904
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· Annual Report and Accounts 2021
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Personal Group Holdings Plc
· Annual Report and Accounts 2021
NOTES TO THE FINANCIAL STATEMENTS
continued
Gross transactional value
Gross transactional value represents the total value of revenue generated from both principal and agency arrangements. Gross transactional value from
the sale of goods and vouchers is recognised at the net value when significant risks and rewards of ownership of the goods and vouchers have been passed
to the buyer, usually on the dispatch of the goods and vouchers. The Company is considered to be an agent for voucher sales of £6,668,000 (2020:
£3,692,000) of the total transaction value of £33,096,000 (2020: £26,143,000).
2021
£’000
2020
£’000
Voucher revenue recognised as principal
26,428
22,463
Voucher resale for revenue recognised as agency
6,668
3,692
Gross transactional value
33,096
26,155
6 Investment income
2021
£’000
2020
£’000
Interest income from cash on deposit
23
74
Total investment income
23
74
7 Claims incurred
2021
£’000
2020
£’000
Claims paid
5,884
5,588
Reinsurers’ share of claims paid
(63)
(90)
Claims handling expenses paid
542
731
6,363
6,229
Increase in claims provision
(275)
767
Reinsurers’ share of movements in claims provision
(39)
35
(358)
802
Total claims incurred
6,049
7,031
8 Insurance operating expenses
2021
£’000
Restated
2020
£’000
Incurred acquisition costs
3,472
2,915
Administration expenses
1,388
1,256
Total Insurance Operating Expenses
4,860
4,171
Total commission incurred during the year in respect of direct insurance was £762,000 (2020: £879,000).
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9 Directors’ and employees’ remuneration
a) Staff costs (excluding Non-Executive Directors’ fees) during the year were as follows:
2021
£’000
2020
£’000
Wages and salaries
11,151
9,976
Share-based payments expense
169
8Social security costs
1,278
1,003
Other pension costs
504
489
Total staff costs
13,102
11,476
During the year the Group received £126,000 from the job retention scheme (2020: £595,000). These government grants have been offset against the
salary costs in the table above.
Average number of employees through the year was as follows:
2021
Number
2020
Number
Administration
160
139
Sales and marketing
73
89
Total number of employees
233
228
b) Directors’ remuneration:
2021
£’000
2020
£’000
Emoluments
1,024
1,002
Amounts paid to third parties in respect of Directors’ services
12
42
Pension contributions to Group and self-invested personal pension schemes
26
22
Total Director’s remuneration
1,062 1,066
During the year, three Directors (2020: four Directors) participated in Group and self-invested personal pension schemes.
The amounts set out above include remuneration in respect of the highest paid Director as follows. All emoluments relate to payments made by subsidiary
undertakings.
2021
£’000
2020
£’000
Emoluments
416
300Share-based payments gains on exercise of options – –
Pension contributions to Group and self-invested personal pension schemes
10 10
Total
426
310
Details of individual Director’s remuneration are given in the Remuneration Report on pages 60-63. The Company does not incur employee remuneration.
Key management of the Group are the Directors of Personal Group Holdings Plc together with the members of the Senior Leadership Team. Key
management personnel remuneration includes the following expenses:
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· Annual Report and Accounts 2021
NOTES TO THE FINANCIAL STATEMENTS
continued
2021
£’000
2020
£’000
Short-term employee benefits:
Salaries including bonuses
2,052
1,638
Social security costs 283
226
Share-based payments expense
– –
2,335
1,864
Post-employment benefits:
Defined contribution pension plans 66
47
Total remuneration
2,401
1,911
10 Profit before tax
2021
£’000
2020
£’000
Profit before tax is stated after:
Auditor’s remuneration (inclusive of non-recoverable VAT):
Audit services:
Audit of Company financial statements – Current Year
172
124
Audit of Company financial statements – Prior Year –
40
Audit of subsidiary undertakings
120
122
Non-audit services
– –
Depreciation of property, plant and equipment
966
1,003
Amortisation of intangibles
585
470
Rental income receivable
101
97
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11 Tax
The relationship between the expected tax expense based on the effective tax rate of Personal Group Holdings Plc at 20% (2020: 19%) and the tax expense
recognised in the income statement can be reconciled as follows:
2021
£’000
2020
£’000
Profit before tax
4,342
8,557
Profit before tax excluding equity-accounted investee
4,342
8,557
Tax rate
19% 19%
Expected tax expense
825
1,626
Adjustment for non-deductible expenses
68
251
Adjustment for tax exempt revenues
(101)
(58)
Other adjustments
Effect of tax rate changes on deferred tax
67
-Tax credit in respect of prior years
(109)
(151)
Adjustment for previously non-deductible expenses
(5) (5)
Actual tax expense
745
1,663
Continuing operations
745
1,663
Current tax expense
775
1,717
In respect of prior years
(109)
(151)
Deferred tax
Origination and reversal of temporary differences
12
97
Effect of tax rate changes
67
-Total tax
745
1,663
During the 3
rd
March 2021 Budget, it was announced that the rate of corporation tax will increased to 25% from April 2023 which has been substantively
enacted.
12 Earnings per share
2021 2020
Earnings
£’000
Weighted
average
number of
shares
Pence per
share
Earnings
£’000
Weighted
average number
of
shares
Pence per
share
Basic
3,597
31,205,375
11.5
6,894
31,164,809
22.1
Dilutive effect of shares in Employee
Share-based schemes
–
8,162
–0.0
7,911
0.0
Diluted
3,597
31,213,537
11.5
6,894
31,172,720
22.1
The weighted average number of shares shown above excludes unallocated own Company shares held by Personal Group Trustees Ltd.
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· Annual Report and Accounts 2021
Personal Group Holdings Plc
· Annual Report and Accounts 2021
NOTES TO THE FINANCIAL STATEMENTS
continued
13 Dividends
2021
Pence per
share
2020
Pence per
share
2021
£’000
2020
£’000
Equity dividends
Ordinary shares paid in year
March
-
5.900
–1,842
June
5.100
1.500
1,591
469
September
-
5.900
–1,842
December 5.300
-
1,654
–10.400
13.300
3,245
4,153
Less: amounts paid on own shares
(1)
(6)
Total dividends
10.400
13.300
3,244
4,147
The dividends listed above were paid in the calendar year. Dividends of 18.4p per share were paid relating to the 2020 financial period and an interim
payment of 5.3p has been paid relating to the 2021 financial period.
14 Goodwill
The carrying amount of goodwill which has been allocated to those cash-generating units can be analysed as follows:
PG Let’s
Connect
£’000s
Innecto
£’000s
Total
£’000s
Cost
At 1 January 2021
10,575
2,121
12,696
Additions in the year – – –
Disposal
– – –
At 31 December 2021
10,575
2,121
12,696
Impairment charged
At 1 January 2021 – – –
Impairment charge for year – – –
At 31 December 2021 – – –
Net book value at 31 December 2021
10,575
2,121
12,696
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14 Goodwill
continued
PG Let’s
Connect
£’000s
Innecto
£’000s
Total
£’000s
Cost
At 1 January 2020
10,575
2,121
12,696
Additions in the year –
Disposal
– – –
At 31 December 2020
10,575
2,121
12,696
Impairment charged
At 1 January 2020 – – –
Impairment charge for year – – –
At 31 December 2020 – – –
Net book value at 31 December 2020
10,575
2,121
12,696
The net carrying values at 31 December 2021 have been reviewed for impairment.
PG Let’s Connect
The first cash generating unit (CGU) considered was the PG Let’s Connect business as a whole and its recoverable amount was based on value in use,
determined by discounting the future cash flows to be generated from continued trading of PG Let’s Connect. As the value in use was found to be in excess
of the carrying amount of £10,575,000, no impairment was recorded in the year.
For the purpose of the value in use model, the CGU value is comprised of the Goodwill allocated, the carrying value of the intangible asset recognised on
acquisition and the assets of the CGU such that the carrying amount of the CGU has been determined on a basis consistent with the way the recoverable
amount of the CGU is determined.
Five years of future cash flows were included in the discounted cash flow model. The long-term growth rate into perpetuity was determined as 2.5%
(30-year average of UK consumer price index). The cash flows were then discounted using a post-tax discount rate of 13% (2020; 13%) based on PG Let’s
Connect weighted average cost of capital, using the capital asset pricing model.
In line with previous years, an expected cash flow approach, based on five different scenarios, was used, as management believe this method to most
appropriately address the fact that the timing and scale of Let’s Connect’s future growth currently remains uncertain. Each of the scenarios was given a
probability expectation, based on management’s best view and historic performance, and the weighted average net present value (NPV) derived from these
calculations was then determined as the value in use. Budgeted EBITDA was based on expectations of future outcomes considering past experience as well
as existing contracts in place.
Key assumptions
Given that NPV is sensitive to several key assumptions which have been used, the following have been highlighted as being the most sensitive with
sensitivities performed.
Discount rate
Management’s approach to determining the 13% discount rate to apply to the value in use model is explained above.
Cash flow revenue projections
Management applied an expected cash flow approach to the value in use model for revenue forecasting, using the weighted average of a number of
scenarios to determine the expected future revenues of Let’s Connect. The scenarios used, and the probabilities applied, take into account the current
market conditions, including global supply chain interruptions, and represent the possible future outcomes and management’s best estimate as to their
likelihood.
In assessing the sensitivity of this assumption, it was found that when gross income was assumed to be £2m lower than the weighted average income of
the scenarios, an impairment was still not required. Management considers the cash flow scenarios used sufficient to address the risks surrounding the
business currently and that this sensitivity further supports the valuation of the CGU.
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· Annual Report and Accounts 2021
Personal Group Holdings Plc
· Annual Report and Accounts 2021
NOTES TO THE FINANCIAL STATEMENTS
continued
Gross profit margin
Management applied an expected gross margin of 13% on its future revenue projections, an increase on actual results for the year ended 31 December 2021
where stock availability limitations have continued to have an impact on cost of sales.
The recoverable amount was based on value in use, determined by discounting the future cash flows to be generated from continued trading of Let’s
Connect. As the carrying amount of £10,575,000 was lower than the recoverable amount, no impairment was deemed necessary.
As the economy starts to recover post COVID-19, and stock availability limitations start to reduce, there is an expectation that future cash projections will
reflect improved gross profit margins in line with pre-COVID levels.
Below is a table showing the sensitivity of the key assumptions and the impact of changes in various key assumptions (in base percentage point terms) have
on the headroom. The Base column refers to the headroom on the impairment review model completed by management.
Sensitivity Analysis – Impact on Headroom
- %
£’000s
Base
£’000s
+ %
£’000s
Discount Rate
( +/- 2%)
6,019
2,531
198Gross Income
( +/- 2%)
688
2,531
5,136Gross Profit Margin
( +/- 2%)
102
2,531
4,940
Innecto
The second cash generating unit (CGU) considered was the Innecto business as a whole. For the purpose of the value in use model, the CGU value is
comprised of the goodwill allocated, the carrying value of the intangible assets recognised on acquisition and the assets of the CGU such that the carrying
amount of the CGU has been determined on a basis consistent with the way the recoverable amount of the CGU is determined.
An expected cash flow approach, similar to that applied to PG Let’s Connect, was used applying multiple scenarios and affixed probabilities that were
deemed to be appropriate under management’s best understanding of the business.
Key assumptions
Five years of future cash flows were included in the discounted cash flow model including a long-term growth rate of 2.5% (30-year average of UK
consumer price index), identical to the rate used in PG Let’s Connect workings. These cash flows were then discounted using a risk mitigating post-tax
discount rate of 22.4% (2020: 25.2%) based on Innecto’s weighted average cost of capital, using the capital asset pricing model with a risk premium in line
with the risks associated with the uncertainties around the forecasted growth. The decrease in the discount rate year on year reflects the additional
certainty within the Group around the operations of Innecto as well as the significant decrease in the risks incorporated into the future cash flows
modelled when calculating the value in use of the CGU.
Sensitivity
While management are confident that Innecto will generate forecasted income, it is recognised that there is an inherent uncertainty within the forecasted
cash flows used in the impairment model due to the expected growth.
Below is a table showing the sensitivity of the key assumptions and the impact of various changes (in base percentage point terms) has on the headroom.
The Base column refers to the headroom on the impairment review model completed by management.
Sensitivity Analysis – Impact on Headroom
- %
£’000s
Base
£’000s
+ %
£’000s
Discount Rate
(+/- 2.5%)
1,492
904
450
Variable Proportion of Costs
(+/- 10%)
916
904
893
Terminal Growth Rate
(+/- 1%)
787
904
1,033
Management is confident that there is no cause for an impairment in either PG Let’s Connect or Innecto. In addition to the future benefits built into each
CGU, there are benefits of each to the wider Group as a result of improved market penetration, marketing expertise and additional cross-selling
opportunities made available.
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15 Intangible assets
For the year ended 31 December 2021
Customer
value
£’000
Innecto Customer
value and tradename
£’000
Innecto
Technology
£’000
Computer software
and development
£’000
Internally Generated
Computer Software
£’000
WIP
£’000
Total
£’000
Cost
At 1 January 2021
1,648
–726
298
1,520
506
4,698
Additions
– – – 783 –
198 981
Disposals
– – – –
(16)
–(16)
At 31 December 2021
1,648
2,287726
298
506
198
5,663
Depreciation
At 1 January 2021
1,648
–266
110 923
498
3,445
Provided in the year – –
145
660
374
585
Disposal
– – – –
(4)
–(4)
At 31 December 2021
1,648
–411
170
1,293
504
4,026
Net book amount at
31December 2021 –
315
2128
994
198
1,637
Net book amount at
31December 2020 – 8 –
460
598188
1,254
For the year ended 31 December 2020
Customer
value
£’000
Innecto Customer
value and tradename
£’000
Innecto
Technology
£’000
Computer software
and development
£’000
Internally Generated
Computer Software
£’000
WIP
£’000
Total
£’000
Cost
At 1 January 2020
1,648
726
298
973
506
124
4,275
Acquisition
– – – 259 –
(259)
Additions
– – – 288 –
135
424
Disposals
– – – – – –
At 31 December 2020
1,648
–726
298
1,520
506
4,698
Depreciation
At 1 January 2020
1,648
–121
50
688
467
2,974
Provided in the year –
145
–60 234
31
470
Disposal
– – – – – – –
At 31 December 2020
1,648
–266
110 923
498
3,444
Net book amount at
31December 2020
– 8 –
460
598188
1,254
Net book amount at
31December 2019 –
605
285248
39
124
1,301
The Innecto customer values, trademark and technologies are being amortised through the consolidated income statement over a five-year period. The net
carrying value on 31 December 2021 has been assessed for impairment and no impairment was deemed necessary. The assets were assessed in conjunction
with the goodwill value in Note 15. The total value of amortisation relating to acquired intangibles was £205k (2020:£205k).
Personal Group Holdings Plc
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Personal Group Holdings Plc
· Annual Report and Accounts 2021
NOTES TO THE FINANCIAL STATEMENTS
continued
16 Property, plant and equipment
For the year ended 31 December 2021
Freehold land
and properties
£’000
Motor
vehicles
£’000
Computer
equipment
£’000
Furniture
fixtures &
fittings
£’000
Lease
Improvements
£’000
Right of use
assets
£’000
Total
£’000
Cost
At 1 January 2021
5,037
1,459157
2,3031,085
38
10,079
Additions
– –
209
–27
307
543
Disposals
– –
(182)
–(20)
(562)
(764)
At 31 December 2021
5,037
157
1,112
2,310
38
1,204
9,858
Depreciation
At 1 January 2020
1,742
102
7741,064
34
907
4,623
Provided in the year
86 23 194
3221
439
966
Eliminated on disposals
–
(182)
– (20)
(562)
(764)
At 31 December 2021
1,828
125
786
1,265
78437
4,825
Net book amount at
31December 2021
3,209
132 326
1,045
420
5,033
Net book amount at
31December 2020
3,295
455
311
1,239
552
5,456
For the year ended 31 December 2020
Freehold land
and properties
£’000
Motor
vehicles
£’000
Computer
equipment
£’000
Furniture
fixtures &
fittings
£’000
Lease
Improvements
£’000
Right of use
assets
£’000
Total
£’000
Cost
At 1 January 2020
5,290
831102
2,357
38
1,432
10,050
Additions
–
55
–260 26
367
708
Disposals
(253)
–
(6)
–(80)
(340)
(679)
At 31 December 2020
5,037
157
2,3031,085
38
1,459
10,079
Depreciation
At 1 January 2020
1,713
77
612
881
29
754
4,066
Provided in the year
87
525
166
251
469
1,003
Eliminated on disposals
(58)
–
(4)
–(68)
(316)
(446)
At 31 December 2020
1,742
102
7741,064
34
907
4,623
Net book amount at
31 December 2020
3,295
455
311
1,239
552
5,456
Net book amount at
31 December 2019
3,577
925
2191,476
678
5,984
In line with IFRS 16, right of use (ROU) assets relate to motor vehicles and building leases, a breakdown for which can be found in Note 30.
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17 Financial investments
Group Company
2021
£’000
2020
£’000
2021
£’000
2020
£’000
Bank deposits
2,596 –
2,587
–Total financial investments
2,596
2,587
– –
IFRS 13 Fair Value Measurement establishes a fair value hierarchy that categorises into three levels the inputs to valuation techniques used to measure fair
value. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1 inputs) and
the lowest priority to unobservable inputs (Level 3 inputs).
– Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
– Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly
(i.e. derived from prices).
– Level 3: inputs for the asset or liability that are not based on observable market data (unobservable input).
Bank deposits, held at amortised cost, are due within six months and the amortised cost is a reasonable approximation of the fair value. These would be
included within Level 2 of the fair value hierarchy.
18 Inventories
Inventories in the Group relate primarily to salary sacrifice technology products held for sale as part of the PG Let’s Connect IT sacrifice business and
vouchers (both digital and physical) held for sale in the SaaS division of the business.
Inventories held are classified as the below:
2021
£’000
2020
£’000
Finished Goods – IT Salary Sacrifice 835
820
Vouchers for resale
63
41
Total
898
861
19 Trade and other receivables
Group Company
2021
£’000
2020
£’000
2021
£’000
2020
£’000
Loans and receivables:
Insurance receivables
1,665
2,295– –
Other receivables due within one year 10,592 –
14,712
–Amounts due from subsidiary undertakings
– –
21
1,107
Accrued interest
10
6 – –
Other prepayments and accrued income
1,768
1,333
171 171
Total trade and other receivables
14,035
18,346
192
1,278
All of the Group’s insurance receivables and other receivables due within one year have been reviewed for indicators of impairment. IFRS 9 compliant credit
loss provisions have been made where applicable and the values shown above are net of those provisions.
Personal Group Holdings Plc
· Annual Report and Accounts 2021
104
Personal Group Holdings Plc
· Annual Report and Accounts 2021
Personal Group Holdings Plc
· Annual Report and Accounts 2021
NOTES TO THE FINANCIAL STATEMENTS
continued
A weighted average ageing of the expected loss provision is shown below:
2021 2020
Trade/
Insurance
Debtor
£’000
Weighted
Average
Provision
Credit Loss
Provision
£’000
Trade/
Insurance
Debtor
£’000
Weighted
Average
Provision
Credit Loss
Provision
£’000
Not Invoiced
6,633
0.3%
16
0.3%7,851
19
Current
4,357
0.1%
4 6,983
0.0%
230 Days
723
81.0%
1,691
1.0%
17
60 Days
257
52.1%
177
42.1%
90 Days
153
7.8%
12
207
125.7%
150 Days
217
17.9%
39
212
28.4%
60
Total
12,340
0.7%
84
0.7%17,121
114
Credit Loss Provision
2021
£’000
2020
£’000
Stage 1
– –
Stage 2
84
91
Stage 3
–
23
Total
84
114
Set out below is the movement in the allowance for expected credit losses of trade receivables and contracted assets:
2021
£’000
2020
£’000
At 1 January
114
62
Provision for expected credit losses
84
114
Provision release
(114)
(62)
At 31 December
84
114
Insurance receivables and other receivables are also held at amortised cost and the carrying amount is a reasonable approximation of fair value which in the
case of the insurance receivables contains a lapse provision of £160,000 (2020: £120,000).
In the past, the Group has not incurred significant bad debt write offs and consequently whilst the above may be overdue, the risk of credit default is
considered to be low. The Group has no charges or other security over any of these assets.
20 Reinsurance assets
2021
£’000
2020
£’000
Reinsurers share of claims incurred
57
18
Reinsurers share of unearned premiums
51
60
Total reinsurance assets
108
78
105
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NOTES TO THE FINANCIAL STATEMENTS
continued
21 Cash and cash equivalents
2021
£’000
2020
£’000
2021
£’000
2020
£’000
Cash at bank and in hand
14,945
13,183
119 92
Short-term deposits
5,346
4,406
– –
Total cash and cash equivalents
20,291
17,589
119
92
22 Share capital
2021
£’000
2020
£’000
Authorised 200,000,000 ordinary shares of 5p each
10,000
10,000
Allotted, called up and fully paid 31,219,207 (2020: 31,219,207) ordinary shares of 5p each
1,561
1,561
Share Premium
1,134
1,134
Each ordinary share is entitled to one vote in any circumstance.
The total number of own shares held by the Employee Benefit Trust at 31 December 2021 was 87,288 (2020: 87,366). Of this amount, there are 76,135
(2020: 80,781) SIP shares that have been unconditionally allocated to employees.
As at 31 December 2021, the Group maintained two share-based payment schemes for employee compensation.
a) Company Share Ownership Plan (CSOP) and unapproved options
For the options granted to vest there are no performance criteria obligations to be fulfilled other than continuous employment during the three-year
period, except for early termination of employment by attaining normal retirement age, ill health or redundancy.
All share-based employee compensation will be settled in equity. The Group has no legal or constructive obligation to repurchase or settle the options.
Share option and weighted average exercise price are as follows for the reporting periods presented:
2021 2020
Number
Weighted
average
exercise price
Pence
Number
Weighted
average
exercise price
Pence
Outstanding at 1 January
205,559
394.5
161,657
446.0
Options granted in year
69,968
343.0 43,902
205.00
Options exercised in year – – – –
Options cancelled or lapsed –
(48,784)
–368.9
Outstanding at 31 December
226,743
384.1
205,559394.5
The weighted average exercise price of 95,294 (2020: 120,873) share options exercisable at 31 December 2021 was 472.35 pence per share (2020: 471.83).
The fair values of options which were granted during 2021 were determined by using the Black-Scholes valuation model. The fair value of these options was
45 pence per share. Significant inputs into the calculation include a weighted average share price of 343p and exercise prices as illustrated above.
Furthermore, the calculation takes into account future dividends of 4.2% and a volatility rate of 29%, based on expected share price. Risk-free interest rate
was determined at 0.1%. The options are exercisable between three and ten years after the date of the grant and have an exercise price of 343 pence
pershare.
The weighted average remaining contracted life of outstanding options at 31 December 2021 was six years and three months (2020: five years and
tenmonths).
Personal Group Holdings Plc
· Annual Report and Accounts 2021
106
Personal Group Holdings Plc
· Annual Report and Accounts 2021
Personal Group Holdings Plc
· Annual Report and Accounts 2021
NOTES TO THE FINANCIAL STATEMENTS
continued
The underlying expected volatility was determined by reference to historical data. No special features immanent to the options granted were incorporated
into the measurement of fair value.
In total, £11,000 of employee compensation by way of share-based payment expense has been included in the consolidated income statement for 2021
(2020: £5,000). The corresponding credit is taken to equity. No liabilities were recognised due to share-based transactions.
b) Long Term Incentive Plan (LTIP)
LTIP 2021
The Remuneration Committee approved a new LTIP on 6 April 2021. Under the scheme share options of Personal Group Holdings Plc are granted to senior
executives with an Exercise Price of 5p (nominal value of the shares). The share options have various market and non-market performance conditions which
are required to be achieved for the options to vest. The options also contain service conditions that require option holders to remain in employment of
theGroup.
Total shareholder return (market condition)
50% of the awards vest under this condition. Subject to Compound Annual Growth Rate (CAGR) of the Total Shareholder Return (TSR) over the
PerformancePeriod.
EBITDA targets (non-market condition)
35% of the awards vest under this condition. Subject to cumulative EBITDA over the Performance Period.
Environmental, social and governance targets (ESG) (non-market condition)
Up to 15% of the awards vest under this condition. The awards shall vest upon the Remuneration Committee determining that all ESG targets have
beenmet.
The fair value of the share options is estimated at the grant date using a Monte-Carlo binomial option pricing model for the market conditions, and a
Black-Scholes pricing model for non-market conditions. However, the above performance condition is only considered in determining the number of
instruments that will ultimately vest.
There are no cash settlements alternatives. The Group does not have a past practice of cash settlement for these share options. The Group accounts for the
LTIP as an equity-settled plan.
As noted in the 2020 financial statements, the 29,615 share options granted to Deborah Frost in lieu of an LTIP in previous years were also announced in April
2021. There are no performance conditions attached to these options other than continued employment to the exercise date.
In total, £158,000 of employee share-based compensation has been included in the consolidated income statement to 31 December 2021 (2020: £nil). The
corresponding credit is taken to equity. No liabilities were recognised from share-based transactions.
23 Deferred tax
2021 2020
Deferred Tax
Assets
£’000
Deferred Tax
Liabilities
£’000
Deferred Tax
Assets
£’000
Deferred Tax
Liabilities
£’000
Non-current assets and liabilities
Property, plant and equipment
17
429
31420
Intangible Assets
–
66
–105
17
495
20
419
Offset
(17) (17)
(20) (20)
Total deferred tax
–
478
–399
107
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Overview
NOTES TO THE FINANCIAL STATEMENTS
continued
23 Deferred tax
continued
2021
£’000
2020
£’000
At 1 January
(399)
(302)
Current year movement
(12) (92)
Movement in provisions due to tax rate changes
(67)
–At 31 December
(478)
(399)
At 31 December 2021 the Group had tax losses of £945,000 (2020: £950,000) available to carry forward to offset against future profits of the same trades.
A deferred tax asset has not been recognised in respect of the carried forward tax losses as there is uncertainty as to whether they will be utilised given the
trade is no longer a significant component of the Group.
24 Trade and other payables
Group Company
Current
2021
£’000
2020
£’000
2021
£’000
2020
£’000
Financial liabilities measured at amortised cost:
Amounts owed to subsidiary undertakings – –
257
249
Other creditors
8,099
10,062
26
38
Right of use creditor –
72 304
–Accruals
3,290
3,103
214
288
Deferred income
895
805
– –
Total trade and other payables
12,356
14,274
497
575
Group Company
Non-Current
2021
£’000
2020
£’000
2021
£’000
2020
£’000
Right of use creditor
402
352
–
–Total
402
352
–
–
These liabilities are not secured against any assets of the Group.
25 Insurance contract liabilities
2021
£’000
2020
£’000
Provision for claims
2,061
2,336
Claims settlement expenses
127
92
Unearned premiums
899
695
Total insurance contract liabilities
3,087
3,123
Personal Group Holdings Plc
· Annual Report and Accounts 2021
108
Personal Group Holdings Plc
· Annual Report and Accounts 2021
Personal Group Holdings Plc
· Annual Report and Accounts 2021
NOTES TO THE FINANCIAL STATEMENTS
continued
The provision for claims represents the gross estimated liability arising from claim episodes in the current and preceding financial years which have not
given rise to claims paid. It is estimated based on current information, and the ultimate liability may vary as a result of subsequent information and events.
Adjustments to the amount of claims provision for prior years are included in the Income Statement in the financial year in which the change is made.
The valuation of the provision for claims outstanding in the Group’s subsidiary, Personal Assurance Plc, of £1,121,000 (2020: £1,485,000) is estimated by
using a Chain Ladder method and the main assumption underlying this technique is that the Company’s past claims development experience can be used to
project future claims development and hence ultimate claims costs. A change of 5% in the past claims development experience would result in a change of
£56,000 (2020: £74,000) in the provision of outstanding claims for Personal Assurance Plc.
Due to the COVID-19 pandemic the Group has adjusted its claims provisions to include an uplift associated with the increase in both hospitalisations and
death claims experienced by the country in the latter part of 2020.
It is estimated that the majority of all claims will be paid within 12 months and therefore claims development information is not disclosed.
In setting the provision for claims outstanding, a best estimate is determined on an undiscounted basis and then a margin of prudence is added such that
there is confidence that future claims will be met from the provisions. The level of prudence set is one that provides an appropriate degree of confidence.
a) Claims
2021 2020
Gross
£’000
Reinsurance
£’000
Net
£’000
Gross
£’000
Reinsurance
£’000
Net
£’000
Provision for claims at 1 January
2,336
(18)
2,318
1,569
(53)
1,516
Claims paid during the financial year
(5,884)
63
(5,821)
(5,588)
132
(5,456)
Increase/(decrease) in liabilities:
Arising from current year claims
6,469
(43)
6,426
6,325
(9)
6,316
Arising from prior year claims
(860)
(59) (919)
30
(88)
(58)
Total movement
(275)
(39)
(314)
767
35
802
Provision for claims at 31 December
2,061
(57)
2,0042,336
(18)
2,318
b) Unearned premiums
2021 2020
Gross
£’000
Reinsurance
£’000
Net
£’000
Gross
£’000
Reinsurance
£’000
Net
£’000
At 1 January
695
(60)
635
(68)450
382
Increase in the financial year
25,050
(163)
24,887
29,265
(182)
29,083
Release in the financial year
(24,846)
172
(24,674)
(29,020)
190
(28,830)
Movement in the financial year
204
9213
8245
253
At 31 December
899
(51)
848
695
(60)
635
109
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NOTES TO THE FINANCIAL STATEMENTS
continued
26 Company investment in subsidiary undertakings and joint venture
Shares in subsidiary undertakings
2021
£’000
2020
£’000
Cost
At 1 January
37,943 37,939
Acquired in the year – –
Share-based expenses
158
4
At 31 December
38,101
37,943
Amounts written off
At 1 January
12,898 12,898
Impairment provision in year
– –
At 31 December
12,898 12,898
Net book amount at 31 December
25,203
25,045
At 31 December 2021 the Company held 100% of the allotted share capital of the following trading companies, all of which were incorporated in England
and Wales, with the exception of Personal Assurance (Guernsey) Limited which is incorporated in Guernsey, and have been consolidated in the Group
financial statements. The registered address of all Group entities is John Ormond House, 899 Silbury Boulevard, Central Milton Keynes, MK9 3XL, with the
exception of Personal Assurance (Guernsey) Limited whose registered address is Level 5, Mill Court, La Charroterie, St Peter Port, Guernsey, GY1 1EJ.
Personal Group Holdings Plc
· Annual Report and Accounts 2021
110
Personal Group Holdings Plc
· Annual Report and Accounts 2021
Personal Group Holdings Plc
· Annual Report and Accounts 2021
NOTES TO THE FINANCIAL STATEMENTS
continued
Nature of business
Personal Group Limited
Intermediate holding Company
Personal Assurance Plc* General insurance
Personal Assurance Services Limited*#
Administration services
Personal Group Benefits Limited*#
Employee benefits sales and marketing
Personal Group Trustees Limited*
Trustee for employee share options Personal
Management Solutions Limited*
Employee benefits sales and marketing
Berkeley Morgan Group Limited*# Berkeley Morgan Group Holding Company
Berkeley Morgan Limited+
Independent financial advisers
Personal Assurance (Guernsey) Limited*
Death insurance underwriting services
Let’s Connect IT Solutions Limited* Employee benefits salary sacrifice technology products
Innecto People Consulting Limited*
HR consultancy and technology providers
Multiplelisting Limited Dormant
Mutual Benefit Limited
Dormant
Partake Services Limited Dormant
Personal Assurance Financial Services Plc
Dormant
Berkeley Morgan Healthcare Limited+ Dormant
B M Agency Services Limited+
Dormant
Berkeley Morgan Property Limited+ Dormant
Summit Financial Solutions Limited+
Dormant
Summit Financial Holdings Plc+
Dormant
Berkeley Morgan Trustees Limited+ Dormant
Personal Group Mobile Limited*
Dormant
Universal Provident Limited+
Dormant
* Indirectly owned by Personal Group Holdings Plc via Personal Group Limited
+ Indirectly owned by Personal Group Holdings Plc via Personal Group Limited and Berkeley Morgan Group Limited
# Exempt from audit under parental guarantee
The following subsidiaries of the Group are exempt from the requirements of the Companies Act 2006 (“the Act”) relating to the audit of individual accounts
by virtue of s479A. The parent undertaking, Personal Group Holdings Plc, gives a guarantee to these subsidiaries under section 479C in respect of the year
ending 31 December 2021.
– Personal Assurance Services Limited – 3194988.
– Personal Group Benefits Limited – 3195037.
– Berkeley Morgan Group Limited – 3456258.
27 Capital commitments
The Group has no capital commitments at 31 December 2021 and 31 December 2020.
28 Contingent liabilities
There were no contingent liabilities at 31 December 2021 and 31 December 2020.
111
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NOTES TO THE FINANCIAL STATEMENTS
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29 Pensions
Group and self-invested personal pension schemes
The Group operates a defined contribution Group personal pension scheme for the benefit of certain Directors and employees. The scheme is administered
by Aegon UK plc and the funds are held independent of the Group. In addition, the Group makes contributions to certain Directors’ self-invested personal
pension schemes.
These schemes are administered by independent third-party administrators and the funds are held independent of the Group.
30 Leasing commitments and rental income receivable
Amounts recognised in the balance sheet
Following the adoption of IFRS 16 the balance sheet at 31 December 2021 includes assets and liabilities relating to Right of Use (ROU) assets as
detailedbelow:
2021 – Right of use assets & lease liabilities
Net Book Value
of Assets
£000’s
Lease
Liability
£000’s
Motor Vehicles
178
222
Buildings
242
252
Total
420
474
2020 – Right of use assets & lease liabilities
Net Book Value
of Assets
£000’s
Lease
Liability
£000’s
Motor Vehicles
224
327
Buildings
328
329
Total
552
656
The initial valuation of the asset is equal to the discounted lease liability on the inception of the lease and this is depreciated over the shorter of either the
life of the asset or the lease term.
Amounts recognised in the consolidated statement of profit or loss
Depreciation
Charge
£000’s
Interest
Expense
£000’s
Motor Vehicles
353
27
Buildings
86
5
Total 439
32
Total operating lease payments due until the end of the lease, or the first break clause, total £388,000 (2020: £418,000).
Personal Group Holdings Plc
· Annual Report and Accounts 2021
112
Personal Group Holdings Plc
· Annual Report and Accounts 2021
Personal Group Holdings Plc
· Annual Report and Accounts 2021
NOTES TO THE FINANCIAL STATEMENTS
continued
An analysis of these payments due is as follows:
2021
£’000
2020
£’000
Total lease payments falling due:
Within one year
193
211
Within one to two years
79
102
Within two to five years
116
105
Total
388
418
Total operating rent receivable payments due until the end of the lease or the first break clause, total £13,000 (2020: £14,000). An analysis of these
receivable payments due is as follows:
2021
£’000
2020
£’000
Future minimum lease payments:
Within one year
13
14
Within one to two years _ –
Within two to five years – –
Total
13
14
Below is a reconciliation of changes in liabilities arising from financing activities:
1 January
2021
£’000
Cash Flows
£’000
New leases
£’000
Other
£’000
31 December
2021
£’000
Current lease liabilities
304
(427)
251
94
222
Non-current lease liabilities
352
- -
252(100)
Total liabilities from financing activities
656
(427)
251
(6)
474
The “Other” column includes the effect of reclassification of non-current leases to current due to the passage of time, the effect of the disposal of lease
assets with their related creditors and the effect of the unwinding of the discounted ROU creditors over time.
113
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NOTES TO THE FINANCIAL STATEMENTS
continued
31 Related party transactions
Personal Group Holdings Plc holds a bank account with Lloyds Bank PLC which it uses for payments to Group company specific creditors. During 2021 and
2020 the Company paid its own dividends and expenses.
A list of intercompany balances that are outstanding at the balance sheet date with subsidiary undertakings is as follows:
2021 2020
Receivable
£’000
Payable
£’000
Receivable
£’000
Payable
£’000
Personal Assurance Plc – –
10
–Personal Assurance Services Limited – 5 – –
Personal Assurance Financial Services Plc –
137
–137
Multiplelisting Limited
–
100
–100
Mutual Benefit Limited
–
12
–12
Partake Services Limited
3 - 3 –
Personal Group Limited
- -
1,103
–Berkeley Morgan Group Limited
4 - - -
Innecto People Group Consulting Limited 4 - - -
Total
21
254
1,106
249
All balances are repayable on demand. None of the balances are secured. All balances relate to intercompany funding balances.
Transactions with Directors
During the year, no transactions were undertaken with Directors, or companies in which Directors were key decision makers.
32 Post balance sheet events
There have been no post balance sheet events.
Personal Group Holdings Plc
· Annual Report and Accounts 2021
114
Personal Group Holdings Plc
· Annual Report and Accounts 2021
Personal Group Holdings Plc
· Annual Report and Accounts 2021
NOTES TO THE FINANCIAL STATEMENTS
continued
Company registration number:
3194991
Registered office:
Personal Group Holdings Plc
John Ormond House
899 Silbury Boulevard
Central Milton Keynes
MK9 3XL
Telephone: 01908 605000
www.personalgroup.com
Directors:
D Frost – Chief Executive
M Bennett – Non-Executive Director
S Mace – Chief Financial Officer
B Head – Non-Executive Director
L McGrath – Chief Operating Officer
M Darby-Walker – Senior Non-Executive Director
A Lothian – Non-Executive Director
Secretary:
D Kane
Solicitor:
SNR Denton UK LLP
The Pinnacle
170 Midsummer Boulevard
Milton Keynes
MK9 1FE
COMPANY INFORMATION
Banker:
The Lloyds Bank plc
25 Gresham Street
London
EC2V 7HN
Auditor:
EY LLP
25 Churchill Place
Canary Wharf
London
E14 5EY
Nominated Broker and Adviser:
Cenkos Securities
6 7 8 Tokenhouse Yard
London
EC2R 7AS
115
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Personal Group Holdings Plc
John Ormond House
899 Silbury Boulevard
Central Milton Keynes
MK9 3XL
www.personalgroup.com
Personal Group Holdings Plc Annual Report and Accounts 2021