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The UK workforce
is changing,
so are we
Personal Group Holdings Plc
Annual Report and Accounts 2022
Supporting the UK
workforce through
our broad offering of
employee wellbeing and
engagement services
Contents
08
09
OUR PURPOSE IN ACTION
BARCHESTER
OUR PURPOSE IN ACTION
THE CARAVAN
CLUB
OUR PURPOSE IN ACTION
NRG
RIVERSIDE
07
GROUP CHIEF
EXECUTIVE’S STATEMENT
13
OUR BUSINESS MODEL
16
ENVIRONMENTAL, SOCIAL
AND GOVERNANCE
32
Overview
02
2022 Highlights
03
Why Invest in Personal Group?
04
Our Purpose & What We Do
06
Market Overview
07
Our Purpose in Action
10
Chairman’s Statement
13
Group Chief Executive's Statement
Strategic Report
16
Our Business Model
17
Our Strategy
19
Strategic Progress
22
Key Performance Indicators
24
Acquisition of Quintige Consulting
Group (QCG)
25
Chief Financial Officer’s Statement
30
Risk Management
32
Environmental, Social and Governance
40
Section 172 Statement
Governance
42
Board Activity in 2022
44
Corporate Governance
46
Board of Directors
48
Senior Leadership Team
49
Risk and Compliance Committee Report
51
Audit Committee Report
54
Remuneration Committee Report
58
Nominations Committee Report
60
Directors’ Report
61
Statement of Directors’ Responsibilities
Financial Statements
62
Independent Auditor’s Report
70
Consolidated Income Statement
71
Consolidated Balance Sheet
73
Company Balance Sheet
74
Consolidated Statement of Changes
in Equity
75
Company Statement of Changes
in Equity
76
Consolidated Cash Flow Statement
78
Company Cash Flow Statement
79
Notes to the Financial Statements
111
Company Information
Personal Group Holdings Plc |
Annual Report and Accounts 2022
01
Overview
Governance
Strategic
Report
Financial
Statements
2022 Highlights
Operational
Financial
Non-financial
GROUP REVENUE
£
86.7
m
(2021 : £74.5m)
ADJUSTED EBITDA
£
6.0
m
(2021 : £6.1m)
DIVIDEND PER SHARE
10.6
p
(2021 : 10.6p)
CASH & DEPOSITS
£
18.7
m
(2021 : £22.9m)
UNIQUE CLIENT NUMBER
502
(2021 : 387)
NO. OF INSURANCE PAYERS
94,877
(2021 : 93,147)
(LOSS) / PROFIT BEFORE TAX
(
£
6.8
m
)
(2021 : £4.3m)
BASIC EPS
(23.2
p
)
(2021 : 11.5p)
Read more in our Strategic progress |
Page 19
Significant new
contracts secured
with 101 new clients,
including Cadent Gas,
AJ Bell, Secure Trust Bank,
Amnesty International,
Severn Group, resulting in
a record number of new
clients signed across the
Group in one year.
Face-to-face
insurance product
sales grew
throughout the year
following 18 months
of sales restrictions
due to COVID-19.
Record insurance
sales in November and
December, building strong
momentum for the future.
LC Goodwill
following the industrial
action at a key client
and lack of certainty
surrounding future sales
to them an impairment
has been made to the
goodwill on acquisition
of LC of £10.6m.
High client
retention rate
the Group has maintained
a strong retention rate
across all of its software as
a service (SaaS) offerings.
Offering to the
SME sector
with the Sage partnership
continued to grow
achieving the Group's
target of 50,000 paying
employees through this
channel at year end.
Acquisition
of Quintige
Consulting Group
(QCG)
adds to our Pay and
Reward division,
presenting opportunities
for cross selling and
adding new clients.
Personal Group Holdings Plc |
Annual Report and Accounts 2022
02
Overview
Governance
Strategic
Report
Financial
Statements
Digitally-led model,
with proprietary
software at the centre
Strong financial
position
Large growth
opportunity
The right offering for
today’s world
Why Invest in Personal Group?
A progressive, profitable business addressing
a rapidly growing market.
The world of work is changing and our offerings
are needed now more than ever. Employers are
more aware and more determined to support the
wellbeing of their employees, to help retain and
incentivise their workforce. Meanwhile,
the ongoing effects of long-COVID and NHS
wait lists have highlighted to many the potential
impact of poor health on their ability to maintain
their income and support their families.
Intrinsic in our DNA is our drive to provide the best
value for our clients and customers – services
and products that are premium quality but
affordable – and in today’s challenging economic
environment this is proving highly attractive.
The investments we have made in expanding
our offerings, sales team and partnerships mean
we have emerged from the pandemic a stronger
business, with an increased growth opportunity.
Our addressable market is now the majority of
the UK workforce, either addressed directly or
through our partners, such as Sage.
These investments have driven growth across
our customer base and improvements in our
operational KPIs.
Our financial strength also makes us an attractive
home for other smaller businesses, which will be
beneficial as we look to augment organic growth
with select M&A activity.
We have proven our ability to remain financially
robust during difficult times. We are profitable,
cash generative, debt free with a strong balance
sheet and dividend paying.
We have seen recurring revenue streams grow
in 2022 by 20% to over £33.5m. This high level of
revenue visibility means we can be confident in
our continued growth.
While EBITDA has been reduced in 2021 and
2022, as a result of the impact of the pandemic
on our face-to-face insurance sales and the
investments in our teams, we are now back on
track towards profit expansion, delivering half-
on-half EBITDA growth in H2 2022.
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 (ARR) across the Group’s digital
platforms now stands at £5.5m.
2023 will see the launch of Hapi 2.0, our first major
re-development of the platform since its launch in
2016. The new platform is updated with improved
look and feel, better management information
(MI), improved functionality and greater ability to
integrate other third-party suppliers.
See what we do |
 Page 04
See our CFO statement |
 Page 25
See our market overview |
 Page 06
See our markets |
 Page 05
HAPI PLATFORM RETENTION
95%
2021: 93%
YEAR ON YEAR INSURANCE RETENTION
81.0%
2021: 80.7%
UNIQUE CLIENT NUMBERS
30%
to 502, 2021: 387
SME CUSTOMERS VIA SEB
91%
to over 2,800, 2021: 1,469
CASH & DEPOSITS OF
£18.7m
2021: £22.9m
DIVIDEND PER SHARE
10.6p
2021: 10.6p
ACTIVATED USERS ON HAPI AND
SAGE EMPLOYEE BENEFITS
582,733
2021: 539,051
ARR FOR SAAS LICENCES
£5.6m
2021: £3.6m
Personal Group Holdings Plc |
Annual Report and Accounts 2022
03
Overview
Governance
Strategic
Report
Financial
Statements
PAY &
REWARD
Consultancy and
software solutions
Innecto & QCG
– offer strategic
consultancy on pay and reward through
their experts and a suite of cloud-based
SaaS solutions and surveys.
Clients can tailor their solution with our
experts to help them define and implement
fair, consistent reward programmes that align
to their business strategy and workforce.
Hapi
– is our technology platform that
powers growth through enhanced
connectivity, engagement, health
and wellbeing.
Sage Employee Benefits
– our tailored
engagement product designed for the
SME market.
Insurance
– hospital plan, convalescence
plan, and death benefit policies,
underwritten by Group subsidiaries.
Our easy to understand, affordable plans
are secured for the lifetime of the policy,
providing peace of mind for diverse
workforces from across society.
Let’s Connect
– delivers a benefit scheme
that allows employers to give their
employees affordable access to the latest
consumer technology and a variety of high-
end products from leading manufacturers.
Employees can spread the cost either by
salary sacrifice or net pay arrangements.
Read about the acquisition of QCG |
 Page 24
Read about NRG Riverside |
 Page 09
Read about driving insurance |
 Page 19
Read about our business model |
 Page 16
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
Our Vision
A winning team building a brighter future for the UK workforce,
supporting over 1.5m employees by 2025.
Our Purpose
We connect the unconnected and
protect the unprotected.
Helping employees thrive in work and in life
Personal Group provides consultancy, benefits and technology services focused
on improving employee health, wellbeing and engagement. Our mission is to
build great working environments where people flourish and shine.
What We Do
Personal Group Holdings Plc |
Annual Report and Accounts 2022
04
Overview
Governance
Strategic
Report
Financial
Statements
What We Do
continued
Driving insurance sales through new
and existing channels
Accelerating our SME offer
Transforming reward and benefits
Our Strategy
Our growth strategy is based on three key areas focused on widening our footprint across a broader range of industry sectors.
Our markets
We offer a uniquely holistic market proposition, spanning insurance, employee benefits, and reward consultancy,
allowing us to cater to every sector of UK business and offer relevant, timely and price-appropriate services that help
companies address these key themes.
Product offering by vertical
SMEs
eg: Any enterprise with
<250 employees
Talent-Driven
eg: Skyscanner,
Refinitiv
Public Sector
eg: Sandwell & West
Birmingham NHS Trust
Enterprise
eg: Royal Mail Group,
Cranswick
Digital benefits platform
(Hapi white-labelled as ‘Sage
Employee Benefits’ (SEB) )
Fair-deal health and life insurance
products
Our digital benefits platform – Hapi
Other owned benefits
(Let’s Connect)
Our digital benefits platform – Hapi
(our flex option 'Hapiflex' is likely to
be the most relevant)
Pay and reward consultancy
(Innecto)
Our digital benefits platform – Hapi
(our flex option 'Hapiflex' is likely to
be the most relevant)
See 'How we will deliver' |
 Page 18
See Caravan Club case study |
 Page 08
See NRG Riverside case study |
 Page 09
See Barchester case study |
 Page 07
26
%
of clients are currently
served by two or
more segments
Personal Group Holdings Plc |
Annual Report and Accounts 2022
05
Overview
Governance
Strategic
Report
Financial
Statements
ENHANCE
EMPLOYEE VALUE
Our consultants design competitive and
fair employer value proposition, aligning
all aspects of reward and benefits
to deliver ESG goals and attract and
win talent
ELEVATE ENGAGEMENT AND
HEALTH FOR ALL
We power growth and productivity by
educating and supporting employees
holistically; recognition, wellbeing,
salary sacrifice and protection products
that help people thrive in life and work
INTEGRATED PROPOSITION
Work as a strategic partner leveraging
our combined capabilities to build
resilient healthy workforces. Aligning
all aspects of the people strategy to the
organisation's purpose and objectives
CONNECTIVITY
Our benefit platforms deliver seamless
digitally enabled experiences that
connect diverse workforces with the
benefits, discounts and wellbeing
support they need
Market Overview
DECLINE
OF STATE
FINANCIAL
SUPPORT
HIGHER
LABOUR
STANDARDS
TALENT-LED
MARKETPLACE AND
LOW UNEMPLOYMENT
DE&I
DEMAND FOR
BUSINESS
RESILIENCE
HYBRID
WORKING
CONSTANT
CONTACT WITH
WORK
THREAT TO
WORK-LIFE
BALANCE
TRUST IN
GOVERNMENT
SUPPORT IN
DECLINE
COST OF
LIVING CRISIS
AND PRICING
PRESSURE
MACRO TRENDS
PACE OF GROWTH IN
TECHNOLOGY
• ECONOMIC INSTABILITY
CLIMATE CHANGE
CHANGES TO WORKERS’
RIGHTS
CHANGING WORKING
PRACTICES
>
Emergence of the talent-led marketplace –
competitive pay is no longer enough
>
Increasing regulatory and legal scrutiny on firms
that rely on gig economy workers, self-employed
and zero hour contracts
>
Fair and competitive pay struggling to keep up
with inflation
>
Increased competition drives constant need to
evaluate and define a competitive employee
value proposition to attract and retain talent
>
Desire to attract diverse talent as a source
of competitive advantage
>
Importance of creating an inclusive and
collaborative working environment
>
Increased pace of work, competition, cost
pressure places more importance and need
for social recognition
>
Role of the employer has widened, employee
expectation rising
>
Employees expect help and support to combat
the cost of living crisis
>
Demand for pay increases, 1 in 8 businesses
affected by industrial action
>
Need to build resilient workforces through holistic
wellbeing support – physical, financial and mental
>
Increased connectivity and constant contact with
work threatens employee work-life balance and
increases exposure to stress-related illness
>
Hybrid working challenges employer's ability
to build a connected engaged workforce
>
Demand for greater transparency,
clearly communicated and monitored goals
and objectives
Economic and societal trends
Challenges for clients
Our growth drivers
Personal Group Holdings Plc |
Annual Report and Accounts 2022
06
Overview
Governance
Strategic
Report
Financial
Statements
Posed by model
Our Purpose in Action
Sector:
Nursing and care homes
Employees:
17,000
Challenge:
Workforce connectivity, retention and engagement
The healthcare sector relies heavily on attracting talent to provide
quality care for their residents and patients. With a large workforce
spread out across the UK, Barchester faces challenges connecting
carers with the business. As an employer who is committed to
ensuring all their team members are given a voice, the business
wanted to engage with its workers better, to hear and harness their
views, support them in their work and daily lives and enable them
to feel better connected with the business. In doing so, it hoped to
expand their benefits offering, improve job satisfaction, their overall
wellbeing and reduce staff attrition and turnover.
We worked with Barchester to enhance their support systems for
their workers’ emotional, social, financial and physical wellbeing,
and make them accessible to everyone 24/7. By enabling easier
access to counselling, legal advice, wellbeing advice and health
protection products, all employees felt added peace of mind.
Working with the business to create the new ‘Speak Up’ programme,
also gives frontline carers a voice into management on all aspects
of their working life: operational policy, ways of working, learning
and development. All enabled through the Hapi App, they now have
another consistent channel to raise concerns, provide feedback and
pose important questions.
By enabling access to greater support and improving genuine two-
way communication across the entire workforce, we have helped
foster a positive working culture where employees feel they have a
voice, and their opinions are valued. Staff also use the Hapi App to
engage with a new rewards programme and the business has driven
engagement with the platform through quizzes, cash incentives and
targeted content such as updates from the Chief Executive Officer.
BARCHESTER
Read more online |
https://www.hapi.co.uk/content-hub/case-studies
Personal Group worked
in partnership with us to
identify key opportunities
for the business. Their
guidance and technical
solutions have helped
us create a happier and
healthier workforce that
feels more protected and
better connected.
Genevieve Glover
Group HR Director, Barchester Healthcare
Personal Group Holdings Plc |
Annual Report and Accounts 2022
07
Overview
Governance
Strategic
Report
Financial
Statements
Our Purpose in Action
continued
Sector:
Leisure, not-for-profit
Employees:
1,200
Challenge:
Pay and reward, employee engagement
and connectivity in an evolving market
As a result of the pandemic many more people have opted for
UK-based holidays. As the Caravan and Motorhome Club’s
membership and demand for new services increased, it was
important to maintain and improve employee engagement.
A significant proportion of its loyal and established workforce
traditionally mirrored the mature caravan enthusiast, however,
this has slowly started to evolve to a younger demographic and
they needed to infuse their engagement approach to reflect the
new glamping generation.
With each site based in a unique and remote location, employees
have always been crucial in overcoming challenges and creating
a positive experience for the customer. Those workers need to
be engaged and motivated and yet often their detachment from
HQ was leaving them isolated from the business and feeling
unappreciated – a concern for retention and for attracting new
talent in a competitive market.
We identified that by evaluating roles and benchmarking its pay,
the Caravan and Motorhome Club could create greater flexibility
in its reward structures and take a more strategic view of its
Total Employee Value Proposition, including the creation of a new
Recognition scheme to engage workers across the Club.
By applying our knowledge and interpreting the data, we helped
them build a transparent fair pay strategy that formed the basis of
a clear job architecture, and enabled them to build a competitive
and fair framework.
To help motivate and engage employees our expert Reward
consultants also advised on a new 'Cheers for your Peers'
recognition scheme enabling colleagues and managers to thank
fellow workers for a job well done, complemented with a quarterly
prize draw and an Annual Club Stars award scheme. With all of this
delivered through the Hapi app, staff are encouraged to engage
with their rewards and benefits through their smart phones,
meaning they are also better connected with the business,
every day. Since the introduction of Hapi, employee engagement
levels have increased, which in turn is reflected in increased
member satisfaction and retention.
THE CARAVAN
CLUB
Innecto consultants
understood our challenges
and saw them as
opportunities to help
us compete and grow.
By combining their expertise
and technology they have
helped us connect with our
workforce in a refreshingly
transparent way. The Hapi
app is like a magic toolbox
that brings all the pieces
together on a daily basis.
The Caravan Club
Posed by model
Read more online |
https://www.hapi.co.uk/content-hub/case-studies
Personal Group Holdings Plc |
Annual Report and Accounts 2022
08
Overview
Governance
Strategic
Report
Financial
Statements
Our Purpose in Action
continued
NRG
RIVERSIDE
The On Demand GP service
is hugely popular and it has
felt great being able to offer
counselling and support to
those in need. We are now
looking forward to rolling
out our new Recognition
Scheme. This partnership has
transformed our business.
JENNY COOK,
People Services Director,
NRG Riverside
Sector:
Specialist Fleet Management
Employees:
226
Challenge:
Employee retention and recruitment in a specialist market
NRG Riverside is one of the UK’s largest specialist fleet management
companies, offering short and long-term truck rental, contract hire,
fleet repair and maintenance services across nine sites nationwide.
Operating in a specialist environment, the company’s success relies
heavily on attracting strong candidates and retaining staff who have
received a high degree of training and regular re-accreditation.
By previously offering only a basic package of salary plus pension
the company was limiting its appeal in a tough recruitment market,
but that situation has been reversed with the launch of a
comprehensive new Reward and Benefits Strategy.
Since launching in February 2022, Sage Employee Benefits has
been used by an impressive 80% of workers and has supported
the reduction of staff attrition rate by 12%. In particular,
the counselling and On Demand GP services have proved
popular, with sick employees now calling On Demand
GP that day for a consultation as part of the company’s
Absence Policy. The diverse package of enhanced benefits
has also become a key driver for attracting new talent.
Working in partnership with our expert consultants,
NRG Riverside is set to launch the next phase of their
benefits package – a new company-wide Award and
Recognition scheme. With quarterly nominations and an
annual winner across eight categories, this will enable
employees to come together and recognise colleagues
across multiple sites and help drive engagement with
the scheme even higher.
Posed by model
Read more online |
https://www.hapi.co.uk/content-hub/case-studies
Personal Group Holdings Plc |
Annual Report and Accounts 2022
09
Governance
Financial
Statements
Strategic
Report
Overview
I am pleased
to report on a year of
strategic progress,
in which the team have
again delivered on
our strategic and
financial objectives.
Chairman’s Statement
Martin Bennett
Non-Executive Chairman
Personal Group Holdings Plc |
Annual Report and Accounts 2022
10
Overview
Governance
Strategic
Report
Financial
Statements
Chairman’s Statement
continued
I am pleased to report on a year of strategic progress, in which
the team have again delivered on our strategic and financial
objectives. The strength of trading in the second half of the
year underpins our confidence that we are now firmly back on
a growth trajectory, set to benefit from the investments we
have made in our offering and team.
It is evident to me that the team takes great pride in our role
in supporting people's physical, mental, social and financial
wellbeing, working together to achieve our vision: to create
a brighter future for the UK workforce. This clear sense of
purpose, with a passion for clients, partners and the people
within the business, has stood Personal Group in good stead
through the economic challenges of recent years, and we
have emerged a stronger and more diversified business as a
result. I would like to thank the team for their continued hard
work and embodiment of the Company’s values.
Achieving growth
We have successfully delivered growth across a number of
our KPIs, increasing our total client numbers and reporting
double digit growth in key areas of our recurring revenue.
Of particular note in the year was the reinvigoration of the
insurance sales model which had been so affected by the
pandemic. Recruiting the right people, training, and getting
them back in to see clients was by no means a simple task
and has been achieved exceptionally well, exemplified by
the consecutive record new insurance sales achieved in
November and December. Whilst this investment in the
field sales team impacts our profits in the short term the
benefits of the resultant growth in the insurance book will
be seen in future years.
Across the benefits platform we won new customers and
secured valuable new partners, including the signing of a
multi-year extension to our engagement with Sage to power
the Sage Employee Benefits platform, which is reflective
of the success of our partnership to date. Following its
establishment several years ago, momentum accelerated
in 2022, resulting in an increased gross Annual Recurring
Revenue of £3.0m (2021: £1.6m) with c50,000 paying
employees on the platform at the end of the year and we
are confident that this will continue to be a growth engine
for the business.
The acquisition of Quintige Consulting Group Limited ("QCG")
in July has enhanced the Group's overall pay and reward
offering and consolidated the Group's position as a leading
provider of employee services in the UK. Integration of the
QCG team into our organisation is progressing well, and we
are already benefiting from shared knowledge and activities.
We are of course not immune to the disruption taking place
across the UK, whether that be strikes or ongoing supply chain
issues. As described in our trading update issued in January
2023, our consumer technology business, Let’s Connect,
had a challenging second half of the year, as a result of the
industrial action taking place at its major client, Royal Mail
Group. This continued action has had implications as we have
moved into the start of 2023 and as a result, the current
salary sacrifice technology scheme we run with them is no
longer appropriate for them in its current format. Whilst not
reflective of our overall offering, taken alongside continued
uncertainties around supply chain and ongoing margin
pressures, in undertaking our annual impairment review of the
goodwill held from the acquisition of Lets Connect in 2014,
we have made the prudent decision to fully impair the
£10.6m of goodwill created on acquisition in 2014. Whilst this
has impacted our statutory profit before tax for the year it
is a non cash item and does not affect the financial strength
of the business. For more details please see note 14.
We are all cognisant of operating within an inflationary
environment and the management team have negotiated
this well, through the careful management of resources and
considered investment. With inflation set to remain high
throughout 2023, we will continue to carefully balance the
investment in the business with profitable growth.
A strengthened team
Personal Group places the success and happiness of
people at its heart, demonstrated by the very nature of
our offering. Internally, this ethos has seen the business
maintain our high staff retention rates, whilst also
supporting the hiring of additional talented senior managers
to strengthen the team as well as the introduction of the
QCG team in July. In May, we welcomed Ciaran Astin to the
Board as Non-Executive Director. Ciaran brings with him a
wealth of sales, digital and marketing experience.
ESG
As a Board, we are committed to high standards of ESG and
made good progress against our stated objectives during
the year, building on our existing foundation of responsible
business practice. We have made progress in reducing
our carbon footprint, fostering an inclusive, progressive
and diverse working environment and ensuring a robust
corporate governance framework, all enhancing our wider
Environmental, Social and Governance (ESG) strategy.
UNIQUE CLIENT NUMBER
502
(2021: 387)
ANNUALISED PREMIUM INCOME
28.0
m
(2021: 24.4m)
DIVIDEND PER SHARE
10.6
p
(2021: 11.5p)
Personal Group Holdings Plc |
Annual Report and Accounts 2022
11
Overview
Governance
Strategic
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Financial
Statements
Chairman’s Statement
continued
It is in the area of societal good that we believe we can have
the most positive impact, both through our own actions
and providing the tools for our customers to similarly effect
change. You can read more on these efforts within the ESG
section of our Annual Report.
A growing market
The need for organisations to look after their people has
never been more important. Caring for health, wellbeing, and
building a sense of community is crucial to modern companies
and represents the ongoing opportunity for Personal Group.
In this current macroeconomic environment, there are few,
if any, markets about which one can be so optimistic 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 18 May 2023. This makes a
total ordinary dividend for 2022 of 10.6 pence per share.
The Board has considered the level of dividend in the
context of the non-cash impairment of goodwill, alongside
the underlying growth seen during the year and continued
confidence in the Group's business model and prospects.
Outlook
With the impact of the pandemic now largely behind us,
and with the growth we have seen in our key areas of
recurring revenue, our focus is now on taking Personal
Group onto the next stage of growth and we have entered
2023 on the front foot, benefiting from the strong end to
FY22. The growth in our insurance book, investments in
our Hapi platform and expansion of our Pay and Reward
offering all provide confidence in another successful year.
FURTHER INFORMATION
OUR STRATEGY
Read more |
 Page 17
CFO STATEMENT
From Personal Group
CFO Sarah Mace.
Read more |
 Page 25
ESG
Read our progress against our ESG targets.
Read more |
 Page 32
The right team in place – experienced and engaged
Our Board and senior leadership have a deep
understanding of the business and industry, and a proven
track record in scaling-up businesses and extensive
commercial experience. They are committed to ensuring
Personal Group couples innovation with strong financial
stewardship and delivers on its purpose to the benefit
of all stakeholders, whether they be customers,
employees, our communities or shareholders.
We are proud of the diversity of our business,
from Board level through to our teams, and we will
continue to be driven by our social purpose.
Read more online |
https://www.personalgroup.com/about-us/our-leadership-team
See our Social section of ESG |
 Page 35
WOMEN ON
THE BOARD
43
%
INDEPENDENT
DIRECTORS
57
%
While cognisant of the ongoing economic
challenges, we look to the future with a strong
sense of optimism and remain committed to
the continued execution of our strategy.
Martin Bennett
Non-Executive Chairman
27 March 2023
Personal Group Holdings Plc |
Annual Report and Accounts 2022
12
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Financial
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Group Chief Executive’s Statement
I have a
great deal of
satisfaction on
looking back
on a pivotal
year for Personal
Group.
Deborah Frost
Group Chief Executive
Personal Group Holdings Plc |
Annual Report and Accounts 2022
13
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Financial
Statements
Group Chief Executive’s Statement
continued
Dear Investor,
I have a great deal of satisfaction on looking back on a
pivotal year for Personal Group. In 2022, we came out of
the pandemic and built on 2021’s work in the restarting of
the engine of the business. We have delivered a strong
year of new business development, insurance book
growth and expansion in our key market focus of Small
and Medium Business.
In a year when many businesses have issued profit warnings,
political turbulence has spilled over into financial markets,
and inflation has deeply affected many people in the UK,
I am very proud of how my team have been rebuilding the
business with double digit growth in many key areas of our
book of recurring revenue. Annualised Premium Income
ends the year 15% ahead of last year’s close, new client
numbers are up 17% and we have hit our Sage channel target
of 50,000 paying employees from 2,800 companies.
Sales and operational review
Affordable insurance
2022 was always going to be a year of lower profit,
primarily because our historical normal investment in
our field sales insurance team has been set against lower
premium values, as a result of the pandemic. Slightly higher
claims ratios this year were expected against previous
years of low NHS activity but have remained stable.
However, this has been a year of bests: best annual
individual performance ever by a field sales colleague,
best ever month in November 2022, and best ever
December 2022. Our new insurance sales of £9.5m were
up 158% on 2021 and at the highest level seen since 2018.
These achievements are set against a backdrop of industrial
action and staff shortages in our clients, which means our
site visits have to be professional and credible in building
employee engagement for our clients, as well as offering
key insurances for our policyholders. Over 50% of client
employees that we present our insurance policies to
chose to buy our insurances on the day we meet them
which emphasises the value perceived in our products.
The majority of our policyholders elect to pay through their
payroll on a weekly or monthly basis, these policies typically
have a lifetime value of around five years – so business
written in 2022 builds momentum for the future.
Benefits platform
Our new business and account management teams
for Enterprise clients have also had success this year.
Our overall client retention rate remains extremely high
for the benefits business where, we retained 164 clients
in year (95% retention), and added 22 new ones.
The five-year deal signed with Sage in February highlights
the value that both partners place on the relationship,
with us hitting our target of 50,000 paying employees by
the end of 2022. This shows growth of +87% from £1.6m
ARR end 2021 to £3.0m ARR end 2022. We are now actively
seeking other external partners, to widen our reach,
and build further ARR streams.
Pay and reward
Since the acquisition of QCG in July 2022, the Pay and
Reward division has continued to develop, with cross
selling of Innecto Digital and Hapi platforms, and the
bringing on of new clients. The division now serves 174
active clients, although as is the nature of consultancy,
these clients cyclically move on, as projects are completed.
We have been pleased with the retention of Innecto Digital
products, covering Job Evaluation, Pay Benchmarking
and Pay Review software. Our blended retention rate is
87% against a target of 75%, with 12 new clients added.
Other owned benefits: Let’s Connect
Let’s Connect has experienced a challenging year:
the backdrop of industrial unrest in their biggest client,
Royal Mail Group affected our marketing campaigns as well
as the ability of striking workers to afford new technology
items. We have recognised that this will impact this area of
the business going forwards and accordingly determined
to take a prudent approach and fully impaired the value of
goodwill associated with it as a result. Notwithstanding
this, other Let's Connect clients have performed well,
emphasising the cost-of-living benefit for employees
in being able to spread the cost of technology purchases
without the direct interest charges and credit checks
that they face on the High Street. Some stock shortages
have affected sales in the year, but this has significantly
improved in comparison to the last couple of years.
NEW CLIENT WINS ACROSS THE GROUP
101
(2021: 86)
ANNUALISED NEW BUSINESS PREMIUM
£
9.5
m
(2021: £3.7m)
SEB ANNUALLY RECURRING REVENUE
£
3.0
m
(2021: £1.7m)
Personal Group Holdings Plc |
Annual Report and Accounts 2022
14
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Financial
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Future outlook
Our business is now significantly stronger and more
diversified than 2019, our last year of trading pre-
pandemic. Previously the business mainly operated in
our heartlands of lower wage, hourly-paid employees;
food production, transport, care homes, warehousing
and distribution. Whilst our core business plays a
very important role in our future, as we set out in our
strategic roadmap in 2019, we have expanded our reach
to different sectors of the economy – SMEs, the public
and ex-public sectors, and salaried employees in the
private sector. This widens the Group's platform and
market opportunity for growth in the future, and our
investment in sales and marketing and technology is
now bearing fruit in the number of new clients we are
engaging with and delivering for. Underlying organic
growth in 2022 will lead to increased EBITDA in 2023
and beyond, as our business model is mainly based on
recurring contracts, whether with SMEs, insurance
policyholders or our major Enterprise clients.
We also continue to search for acquisitive growth that
will increase shareholder value. Alongside the small
acquisition made in-year, we have continued to review
selected acquisition opportunities against a clearly
defined criteria of identifying businesses that would be
capable of adding complementary, earnings-accretive
non-organic growth.
Whilst we have planned for 2023 to be another difficult
year for the economy, trading in 2023 has started
positively and we are confident our offer resonates with
our target markets, and we will continue to see growth
over the forthcoming years.
Deborah Frost
Group Chief Executive
27 March 2023
Read more online |
https://www.personalgroup.com/about-us/our-story
Whilst some of this investment impacts
our in-year profits, we recognise its
importance to enable us to deliver on
our growth strategy.
Deborah Frost
Investing in the future
Group Chief Executive’s Statement
continued
We have expanded
our reach to different
sectors of the economy
– SMEs, the public and
ex-public sectors, and
salaried employees in
the private sector.
Deborah Frost
In 2022 we continued to make
investment that will help us deliver
future growth and evolve our offering
to our customers
£
5.1
m
INVESTED IN THE ACQUISITION
COSTS FOR OUR FACE-TO-FACE
INSURANCE SALES TEAM
£
1.0
m
INVESTED IN THE ACQUISITION
OF QCG
£
0.8
m
INVESTED IN HAPI 2.0, DUE TO
LAUNCH IN 2023
Personal Group Holdings Plc |
Annual Report and Accounts 2022
15
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Financial
Statements
Improving the lives of the UK workforce.
Our Business Model
We provide a broad range of employee engagement and wellbeing offerings to all sectors of the UK workforce. Our full service solutions, encompassing employee benefits
and employee insurance products, enable organisations to stand out as an employer of choice, helping their employees thrive in work and in life.
AFFORDABLE
INSURANCE
OTHER OWNED
BENEFITS
BENEFITS
PLATFORM
PAY &
REWARD
HOW
WE MAKE
MONEY
Innecto Digital subscriptions – employers pay an annual subscription for digital analysis
and predictive SaaS tools for use in making pay decisions.
Innecto & QCG consultancy income – employers pay for a full reward service – from pay
benchmarking and surveys to the development of job evaluation and bonus schemes.
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.
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.
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.
A significant proportion of revenue
(c.43%) is pass through voucher resale
on Hapi and therefore has minimal
impact on earnings.
ADJUSTED EBITDA
CONTRIBUTION
26
%
OF CLIENTS ARE
SERVED BY TWO OR
MORE SEGMENTS
Affordable insurance
Benefits platform
Pay and Reward
Other owned benefits
16
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Personal Group Holdings Plc |
Annual Report and Accounts 2022
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
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
We are building on our success with a clear
three year strategy.
Our Strategy
We continue to focus on building a business with room to grow in the medium and long-term and have laid out what our business will need to be to meet our aspirations.
Our medium-term
aspirations
Our Capabilities
Personal Group Holdings Plc
A winning team building a brighter future for the UK workforce, supporting over 1.5m
employees by 2025
How we win
Where we play
TIER 1
SMEs (10-250 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
Talent Driven
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
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
Our Vision
17
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Personal Group Holdings Plc |
Annual Report and Accounts 2022
How we will deliver.
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.
Our Strategy
continued
1.
DRIVING INSURANCE SALES THROUGH
NEW AND EXISTING CHANNELS
2.
TRANSFORMING REWARD
AND BENEFITS
3.
ACCELERATING OUR
SME OFFER
Our unique sales approach helps employers
communicate their key messages about employee
wellbeing and the key benefits they offer through
a face-to-face conduct with their employees,
both introducing them to their benefits package
on Hapi, and offering the chance to buy insurance
there and then.
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 clients often first come to us for consulting help
with pay, recognition or bonus issues which we are
able to address through our Pay & Reward division,
comprising Innecto and QCG. We are then able to deepen
the relationship; offering our range of products,
including the Innecto Digital suite, Hapi benefits
platform, Let’s Connect and insurance products.
Our employee benefits app-first solution, Hapi, is a market-
leading employee engagement platform, which for larger
clients is fully customised and white-labelled with their
own bespoke mix of benefits and branding, with Hapiflex
aimed at more sophisticated client users who want to be
able to offer flexible benefits to their employees.
Our SME version of Hapi enables us to target small
businesses with a standardised product. We currently
deliver to this traditionally hard to access market through
our partnership with Sage with our proposition of ‘Sage
Employee Benefits (SEB)’.
SEB is pre-populated with key benefits for employers
to access such as discount offers, online GP and an
Employee Assistance Programme and offered to Sage’s
client base with an initial free trial.
For more information |
 Page 19
For more information |
 Page 20
For more information |
 Page 21
18
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Personal Group Holdings Plc |
Annual Report and Accounts 2022
1.
DRIVING INSURANCE
SALES THROUGH NEW AND
EXISTING CHANNELS
2022 Progress
>
Close examination of our policyholder journey with key
customer decision points assessed, and interventions
made. We’ve seen first 12 month retention increase over
two years from <50% to c.58% with more changes to effect
change still being developed and trialled.
>
Return to a strong and fully functioning face-to-face field
sales team, which delivered the highest levels of new
business seen since 2018, with records broken for best
month and best individual full year performance.
>
Delivery and productivity of face-to-face team enhanced
through revised organisational design, improved planning
approach and more focused performance management
infrastructure.
>
Launched digital insurance offer to 34 additional clients.
>
Introduction of Net Promoter Score (NPS) for both
the Customer Relations Team and Customer Loyalty
Team to enable feedback and continuous improvement
opportunities relating to our customer experience.
>
Prepared for the implementation of the FCA Consumer
Duty, ensuring that our insurance products continue to
provide value to policyholders which will in turn mean that
we retain our loyal customer base as well as attract new
customers. Workstreams have been in place to ensure that
our customer communications and supporting customer
service are of the quality expected by the Duty.
Strategic Progress
2023 Plans
>
Continuous improvement of
productivity of face-to-face sales
team through introduction of ‘New
Ways of Working’ which encompass
enhanced leadership capability
and improved planning and client
engagement, through to sales
team wellbeing.
>
Further improvement of penetration
with existing clients through
optimisation of the digital vs face-to-
face channels using other activities
such as webinars and roadshows with
employer support.
>
Progress opportunities to partner with
third-party insurance providers to
offer alternative products suitable
for the widening client base.
>
Further work on retention journey
from initial point of sale through
the first year of the policy, with
particular focus on retention during
the first 14 day early cancellation
and the opportunity to switch to
an alternative payment method at
the point a policyholder leaves their
employer and their payroll payment.
>
Testing and monitoring of consumer
outcomes to enable the continued
assessment of whether customers are
receiving good outcomes from their
relationship with us. This process of
continuous improvement will mean we
can evidence compliance with the FCA
Consumer Duty as well as continuing
to improve customer retention and the
attractiveness of our products.
19
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Personal Group Holdings Plc |
Annual Report and Accounts 2022
Strategic Progress
continued
2.
TRANSFORMING REWARD
AND BENEFITS
2022 Progress
>
2022 has been challenging for HR teams, as we have seen
high a level of wage demands, industrial unrest, recruitment
difficulties and talent shortages. It is unsurprising that
clients are reaching out for advice and support as they
guide their companies through this new landscape and we
have seen an uplift in consultant work as we help clients
through changes.
>
The division grew 82% in consultancy income.
>
101 new clients.
>
47 clients on Innecto Digital products with retention rate
of 87% and 17 holding more than one product.
>
Annual recurring revenue on surveys and Innecto Digital
products of £0.66m (£0.43m Dec 21).
>
Hapi has also seen double digit growth as benefits platform
ARR has grown from £1.55m to £2.00m. We are seeing new
clients on-boarding, as well as existing clients deepening
their relationship with us by widening the benefits they
provide through us to their employees. We’ve seen an uplift
in underlying commissions for third party providers, such
as Cycle to Work schemes, grow by 158% in 2022 with these
schemes continuing into 2023 and beyond. Dame Kelly
Holmes, who joined as our Chief Wellbeing Ambassador for
2022, has introduced her wellbeing solution, Transform,
for our clients expanding our unique benefits offer.
2023 Plans
>
2023 will see the launch of
Hapi 2.0 which is our first
major redevelopment of the
platform since its launch in
2016. The new platform is
updated with improved look
and feel, but also better MI,
improved functionality for
reward and recognition and
greater ability to integrate
other third-party suppliers.
>
We have centralised all
Group Marketing functions
to improve productivity and
knowledge sharing across
the Group which allows us to
concentrate our efforts on
specific B2B and B2C marketing
as different channels, driving
both employee activation and
usage on the Hapi platform
and spearheading our B2B
business development across
Pay, Reward and Benefits.
>
We are actively looking for
acquisition targets to widen
and grow our benefit offer
beyond our heartlands of
hourly-paid employees.
20
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Personal Group Holdings Plc |
Annual Report and Accounts 2022
Strategic Progress
continued
3.
ACCELERATING OUR
SME OFFER
2022 Progress
>
Following the initial years of
development with our Sage
partnership we have been delighted
at the growth in new customers and
the steady reduction in our blended
churn number. All SaaS businesses
require both, and with the
introduction of a new look and feel
to the product in July the division
is growing very satisfactorily.
>
We have introduced new SLAs
with our sales colleagues in Sage,
so our lead quality has improved,
and pipeline is staying steady.
>
We have started discussions with
other prospective partners in
different markets that we hope
to see come to fruition in 2023.
>
Voucher sales topped £5m for SEB
customers, showing the high level
of engagement and value that
employees place on the platform.
2023 Plans
>
SEB will be refreshed in 2023
alongside the new Hapi 2.0 to
include an upgraded reward and
recognition function and better
MI provision for business owners.
>
We are also working on the
development of a premium version
of SEB to include higher levels of
functionality and a wider product
range to attract larger customers.
>
We will continue to continuously
improve end to end customer
journey to improve lifetime value
of clients going onto the platform.
21
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Statements
Personal Group Holdings Plc |
Annual Report and Accounts 2022
Key Performance Indicators
The Group meticulously reviews its performance,
measured across a number of KPIs.
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
2022
31 December
2021
Unique client number
Winning new clients and retaining existing ones will be key to us being able to grow our business.
502
387
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.
128
132
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.
1,432,670
1,210,980
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.
582,733
539,051
Number of insurance payers
Re-invigorating growth in insurance payers, 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.
94,877
93,147
UNIQUE CLIENT NUMBER
502
(2021 : 387)
NUMBER OF INSURANCE PAYERS
94,877
(2021 : 93,147)
ACTIVATED USERS ON HAPI
AND SAGE EMPLOYEE BENEFITS
582,733
(2021 : 539,051)
22
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Personal Group Holdings Plc |
Annual Report and Accounts 2022
2022
£28.0m
2021
£24.4m
2020
£27.1m
2019
£30.3m
2022
£9.5m
2021
£3.7m
2020
£2.4m
2019
£9.0m
2022
27.7%
2022
£5.6m
2021
£3.6m
2020
2019
2021
24.5%
2020
24.4%
2019
22.1%
2022
83.1%
2021
80.7%
2020
80.5%
2019
76.6%
2022
34,297
2021
33,155
2020
27,320
2019
31,319
1.
Annualised premium income refers to the annualised premium value 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.
3. The SaaS license total includes HAPI, SEB and Innecto Digital recurring revenue.
Key Performance Indicators
continued
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.
ANNUALISED PREMIUM INCOME
1
£
28.0
m
(2021 : £24.4m)
YEAR ON YEAR
INSURANCE RETENTION
83.1
%
(2021 : 80.7%)
ANNUALISED NEW BUSINESS PREMIUM
2
£
9.5
m
(2021 : £3.7m)
ANNUALISED RECURRING REVENUE
FOR SAAS LICENCES
3
£
5.6
m
(2021 : £3.6m)
CLAIMS RATIO
27.7%
(2021 : 24.5%)
LC ORDERS
34,297
(2021 : 33,155)
23
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Personal Group Holdings Plc |
Annual Report and Accounts 2022
£1.8m
£1.7m
Acquisition of Quintige Consulting Group (QCG)
On 1st July Personal Group
purchased Quintige Consulting
Group (“QCG”) a leading
employee experience and
reward consultancy, for a cash
consideration of £1m.
QCG was founded in 2000
and has become a leading
HR consultancy business
supporting a wide range of
public and private sector
organisations. It provides
consultancy supporting
employee experience, reward
and recognition and has a
strong pay benchmarking
survey practice.
We were delighted to acquire QCG in
July – adding substantial knowhow
and a new client base to our reward
consulting division. The business
has a similar fingerprint to Innecto,
but operates in different markets
– specifically Rail, Construction,
Governance organisations
(Information Commissioner Office,
Bar Standards Council) and Museum
and Leisure sectors. The team,
led by Juan Novoa, has a strong
reputation in building long-term
relationships and providing advice
on reward strategy, pay structures,
pay benchmarking and actually run
specialist pay surveys, with over 90
companies participating in 2022.
Our goals for the division include
widening opportunities for the
Innecto Digital products into our new
client base, sharing knowledge and
evolving our benefits provision to
meet the needs of the new clients
we’ve acquired.
Read more about
Our Strategy |
 Page 17
24
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Personal Group Holdings Plc |
Annual Report and Accounts 2022
Chief Financial Officer’s Statement
The Group
continues to benefit
from an increasing
proportion of
recurring revenues,
providing high
levels of visibility
for 2023.
Sarah Mace
Chief Financial Officer
25
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Financial
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Personal Group Holdings Plc |
Annual Report and Accounts 2022
Strategic
Report
Chief Financial Officer’s Statement
continued
Group revenue
Group revenue for the year increased 16% to £86.7m (2021:
£74.5m) reflecting growth across all areas of the business,
with the exception of the Other Owned Benefits division
(Let’s Connect).
With COVID-19 lockdowns, which impacted our ability to
carry out our traditional face-to-face selling of insurance,
firmly behind us, our insurance segment returned to
growth as anticipated and as at 31 December 2022 we have
an insurance book of £28.0m Annualised Premium Income
(API) (31 December 2021 £24.4m), the majority of which is
renewable on weekly or monthly rolling contracts.
External income from our internally developed Benefits
Platform increased by over 45% year on year, following on
from the 40% growth seen in the previous year. This growth
is a result of our continued expansion into the SME sector
through our partnership with Sage and growth in our own
HAPI platform sales. Growth in our pay and reward segment
reflected the acquisition of Quintige Consulting Group (QCG)
at the start of the second half of the year but also growth
in consultancy income and digital subscription income in
Innecto. Annual Recurring Revenue (ARR) across all the
Group’s digital platforms now stands at £5.6m (2021: £3.6m).
Sales of technology and other products to employers
as part of their employee benefit provision through the
Group’s subsidiary, Let’s Connect, fell short of 2021,
primarily as a result of industrial action in its key client
impacting its peak trading period in Q4.
Income from voucher resale through the benefits
platform also grew significantly in the year and, whilst this
predominantly represents pass-through revenue, it does
continue to demonstrate the value that our Benefits Platform
provision can bring to our clients and their employees.
Adjusted EBITDA
*
Adjusted EBITDA* for the year was £6.0m (2021: £6.1m).
Adjusted EBITDA remained in line with last year but reflected a
changing mix in contribution from the various business areas.
As anticipated, we saw a reduced contribution from
the insurance business, as we invested heavily in the
acquisition costs of the field sales team as it re-established
itself to pre-COVID levels. Offsetting this we saw increased
contribution from both our Pay & Reward and Benefits
Platform businesses in line with their increased revenues,
with the contribution from Other Owned Benefits
remaining broadly flat year on year. Outside of the core
segments, group administration and central costs reduced
in line with a return to more normalised levels of sales and
marketing spend.
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.
Group results
2022
£’000
2021
£’000
Revenue
86,653
74,513
Adjusted EBITDA*
6,010
6,094
Operating profit
3,835
4,374
(Loss) / Profit before tax
(6,760)
4,342
Tax
(493)
(745)
(Loss) / Profit for the year
(7,253)
3,597
2022
£’000
2021
£’000
Profit before tax
(6,760)
4,342
Finance costs
20
32
Corporate acquisition costs**
47
Depreciation
1,052
966
Amortisation of acquired
intangibles
238
205
Amortisation (other)
548
380
Goodwill impairment***
10,575
Share-based payment expense
291
169
Adjusted EBITDA*
6,010
6,094
*
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.
**
Corporate acquisition costs incurred during the acquisition of QCG.
*** The goodwill impairment is a result of the impairment review of
Let's Connect at year end, please see note 14 for further details.
GROUP REVENUE
£
86.7
m
(2021 : £74.5m)
ADJUSTED EBITDA
£
6.0
m
(2021 : £6.1m)
EARNINGS PER SHARE
(
23.2
p
)
(2021 : 11.5p)
26
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Personal Group Holdings Plc |
Annual Report and Accounts 2022
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.
Our strong balance sheet means we remain
well positioned for future growth.
Sarah Mace
Chief Financial Officer
FURTHER INFORMATION
ACQUISITION OF QCG
.
Read more |
 Page 24
CE STATEMENT
From Personal Group
CE Deborah Frost.
Read more |
 Page 13
KPIs
Read more |
 Page 22
Chief Financial Officer’s Statement
continued
Loss before and after tax
Statutory loss before tax for the year was £6.8m (2021:
profit of £4.3m). This reflects an operating profit of £3.8m
together with a £10.6m impairment charge relating to the
goodwill balance associated with Let's Connect. Despite the
profitability of Lets Connect being maintained at a similar
level to 2021, the operating landscape at its key client has
changed and the current salary sacrifice technology scheme
they run is no longer appropriate for them in its current
format. As a result the future revenue stream for this area
of the business has significantly changed and an impairment
charge has been registered. The tax charge for the year was
£0.5m (2021: £0.7m), and loss after tax for the year £7.3m
(2021: profit of £3.6m).
Excluding the non-cash impairment charge the profit
before tax is £3.8m.
EPS
Resulting earnings per share was (23.2p) (2021: 11.5p),
excluding the non-cash impairment charge this would
have been 10.6p. The calculation is detailed in Note 12.
Dividend
The Board has recommended a final ordinary dividend of
5.3 pence per share, making a total ordinary dividend for
2022 of 10.6 pence per share. The Board has considered
the level of dividend in the context of the non-cash
impairment of goodwill, alongside the underlying growth
seen during the year and the continued confidence in the
Group's business model and prospects.
Balance sheet
As at 31 December 2022 the Group’s balance sheet
remained strong, with cash and deposits of £18.7m (2021:
£22.9m) and no debt. This reduction reflects both the c£1m
purchase of QCG and a £1.5m equity investment (valued at
£1.3m within Financial Investments) alongside investment
of c£1m in our proprietary software. The Group’s main
underwriting subsidiary, Personal Assurance Plc (PA),
continues to maintain a conservative solvency ratio of 333%
(unaudited), with a £8.1m 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 312%
(unaudited), under its own regime.
27
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Annual Report and Accounts 2022
Chief Financial Officer’s Statement
continued
Segmental results
The Group reports across four core segments as detailed in the table above.
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. Sales and marketing costs and other central costs that
are not directly attributable to a segment, such as Finance, HR, depreciation, amortisation and Group Board expenses are
not allocated to a segment and are shown separately as ‘Group Admin & Central Costs’.
We believe this presentation provides transparency to enable the impact of top line growth on adjusted EBITDA*
contribution for each area of the business to be better understood.
The Group continues to see an increasing contribution from
its non insurance activities.
Segment
Description
Income Streams
Pay &
Reward
Provision of a full reward service to employers
through the Group’s pay and reward subsidiaries,
Innecto and QCG
Consultancy, industry surveys and 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
Revenue
Dec-22
£’000
Dec-21
£’000
Pay and Reward
2,008
1,236
Benefits Platform
4,819
3,303
Affordable Insurance
25,257
24,670
Other Owned Benefits
16,800
18,214
Other
382
238
Revenue pre voucher sales
49,264
47,661
Voucher resale
37,389
26,852
Total Revenue
86,655
74,513
Adj EBITDA Contribution
Dec-22
£’000
Dec-21
£’000
Pay & Reward
495
303
Benefits Platform
2,866
2,098
Affordable Insurance
9,032
11,012
Other Owned Benefits
664
730
Group Admin & Central Costs
(7,107)
(8,228)
Other
160
179
Total Adj EBITDA
6,010
6,094
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Annual Report and Accounts 2022
Chief Financial Officer’s Statement
continued
Pay & Reward
Innecto’s strong performance in 2021 continued into 2022,
with consultancy income up 34% as the battle for talent
continued and demand from HRDs looking to retain and
attract their employees increased. Digital subscription
income from its proprietary HR solutions also increased by
19% on the previous year. Annualised Recurring Revenue
on these products stood at £0.5m as at 31 December 2022
(2021: 0.4m).
The acquisition of QCG in July 2022 also added to the
Group’s Pay & Reward offering with the expectations
set out at acquisition achieved in the second half of the
year. Whilst operating in a similar market to Innecto,
QCG operates in different market sectors, has a strong
presence in pay surveys and provides opportunities to
cross sell across both client bases.
Collectively this division achieved revenue of £2.0m
(2021: £1.2m) and EBITDA of £0.5m (2021: £0.3m) of which
QCG contributed £0.4m of revenue and £0.1m of EBITDA
post acquisition.
Benefits platform
Revenue from digital platform subscriptions and
commissions from third party benefit suppliers which sit on
the benefits platform rose to £4.8m in 2022 (2021: £3.3m).
Subscriptions for our enterprise platform, Hapi, gained
momentum in 2022 with ARR on the platform increasing
by 29% to £2.0m (2021: £1.6m) during the course of the
year and are expected to benefit further in 2023 with the
refined and refreshed Hapi 2.0.
Our expansion into the SME market also continued to grow
at pace, with Sage Employee Benefits, the Group’s SME
proposition being taken to market through its partner Sage.
Having signed a new five-year contract in February 2022
and with an updated version of the platform to be launched
in 2023, we are anticipating further growth in its ARR which
stood at £3.0m at the end of the year (2021: £1.6m).
As at 31 December 2022 the ARR from Benefits Platform
subscriptions across all channels stood at £5.0m (2021: £3.2m).
Adjusted EBITDA contribution of £2.9m (2021: 2.1m)
increased in line with increased revenue but also
demonstrates the increased margins available as this
area of the business scales up.
Affordable insurance
Premium income from the Group’s core insurance business
increased by £0.6m to £25.3m (2021: £24.7m).
The strong opportunity for our face-to-face sales activity,
driven by employers wishing to re-engage with their
workforce post-COVID-19, has given opportunity to
rebuild the sales team and grow the insurance book back
towards levels seen pre-COVID. £9.5m of new insurance
sales were written during the year (2021: 3.7m) which,
together with continued strong retention rates for existing
policyholders, meant that as at 31 December 2022 we have
£28.0m (2021: £24.4m) of Annualised Premium Income,
the majority of which are renewable on weekly or monthly
rolling contracts.
Claims ratios for the year increased to 27.7% (KPI's) (2021:
24.5%) higher than historic norms as hospital admittances
and visits increased post COVID-19 lockdowns. As the NHS
starts to address their long waiting lists, we anticipate this
continuing in the short to medium term.
Adjusted EBITDA contribution of £9.0m for the year
(2021: £11.0m), reflects the increased premiums and claims
costs but also the increased acquisition costs of the field
sales team as we invested heavily to re-established it at
pre-Covid levels. The benefit of the related new insurance
sales will be seen in future years.
Other owned benefits: Let’s Connect
Let’s Connect, which provides technology and other
products to employers as part of their employee benefit
provision, saw revenues decrease to £16.8m (2021: £18.2m),
although margin improvements helped mitigate the
impact on its EBITDA contribution of £0.7m (2021: £0.7m).
The industrial action which took place at its key client
in the second half of the year impacted its peak trading
period in Q4 and has led to a full impairment of the £10.6m
goodwill balance associated with its acquisition at group
level (see note 14).
Group administration expenses and central
costs
Group administration and central costs of £7.1m (2021: £8.2m)
reflected a return to a more normalised level of sales and
marketing spend post the additional investment made in
2021 alongside a reduced level of bonus costs.
Sarah Mace
Chief Financial Officer
27 March 2023
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Annual Report and Accounts 2022
Risk Management
Oversight
The Board is responsible for overseeing and maintaining
the adequacy and effectiveness of the risk management
and internal control systems as well as identifying the
nature and extent of the principle risks the Group is willing
to take in achieving its strategic objectives, including the
setting of the overall risk appetite and tolerance levels.
The Board delegates oversight of risk management to the
Risk and Compliance Committee, who in turn regularly
report up to and make recommendations to the Board.
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. We employ an Enterprise Risk Management
framework (ERM) to manage all types of risk which,
alongside our Own Risk and Solvency Assessment activity,
enables reasonable assurance to be provided to the Board
and external stakeholders that the Group is achieving
its risk management and internal controls objectives.
Effective risk management is central to our culture and key to achieving
our strategic objectives.
The effectiveness of the risk management system is also
independently assessed periodically by the outsourced
Internal Audit Function in their role as Third Line of defence,
with the results reported to the Audit Committee.
The Board is satisfied that the processes set out above
enable the Group to effectively identify, assess and
manage current and emerging risks and allow the required
focus on risk awareness, ethical behaviour and the fair
treatment of customers and colleagues.
Risk management approach
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, with mitigating
activities and timelines for implementation agreed.
We operate a ‘three lines of defence’ approach to define
risk management within roles and responsibilities.
The Group’s risk governance is overseen by a Risk function
led by the Head of Risk, with independence assured
through direct and separate access to the Chair of the Risk
and Compliance Committee.
In early 2022 we held a Risk
Workshop, involving all members of the Board and the
Senior Leadership, to reassess how the principal risks of
the business had changed in line with the Group’s refined
strategic plan as we emerged from COVID-19.
Business Area Owner
Risk Function
Internal Audit (outsourced)
>
Risk identification.
>
Developing and oversight of the risk management
framework.
>
Risk reporting to Risk Forum, Risk and Compliance
Committee and to the Board.
>
Providing advice and guidance to business areas and
to the Senior Leadership Team and Board.
>
Assurance of the effectiveness of policies and procedures.
>
Identify, assess and manage risks on a daily basis.
>
Develop and implement policies and procedures.
>
Ownership of business practices.
>
Ensure activities are consistent with objectives.
>
Implement controls.
>
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.
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Annual Report and Accounts 2022
Risk Management
continued
As part of that workshop, we identified 10 ‘Risk Themes’ and have realigned our risk registers in line with these. During the year the Risk Team worked alongside the risk champions
within the various business areas to help them identify their own key risks in line with this revised approach.
Key risks
(with an impact of
£500k+ within the
next year)
Current and emerging factors
Mitigating activities
Change
in risk
exposure
Customer and Key
Client Risk
Potential to lose a Key Client or Partner that would impact the Group’s ability
to meet its strategic objectives.
Relationship management of key clients and partners.
Early renewal/extension of key contracts.
Payroll slots for collection of insurance premiums built into contracts as ‘enduring’
wherever possible.
Increased
in 2022
Environmental,
economic or
regulatory change
impact profit
Inflation, rising interest rates, tax rises, and increased costs negatively impact the
spending power of the Group’s corporate clients and customers, leading to them
to spend less on the Group’s products and services or cancel their contracts or
insurance cover.
Candidate-led job market means it is harder to retain staff and more challenging
to recruit, with employers having to pay increased salaries to attract top talent.
Clear go to market message around how the Group’s offering can help employees
navigate through the ‘cost of living crisis’ through the use of discounts and the Group’s
‘value propositions’, alongside wellbeing and the employee assistance programme.
Engage with clients and prospective clients to help employers maximise the benefit
of their employee benefits programme to help attract and retain staff.
Offer support to financially vulnerable customers where appropriate.
Remunerate with competitive market-based pay, and competitive rewards
and benefits alongside a learning culture with great career opportunities.
Continue to offer a hybrid working policy.
No change
Technology / Cyber
Lack of technological capabilities (infrastructure, systems, solutions, products
and people skills and knowledge) could impact the competitiveness of the Group’s
products and services.
Weak approach to security could facilitate cyber-attacks or data breaches,
leading to lack of trust and reputational damage.
Delivery of Hapi version 2.0
Recruitment of specialist talent and training and upskilling of staff.
IT systems regularly tested for security from attack.
Recommendations from internal/external audits completed in 2021 actioned,
including upgrade of our firewall and introduction of a security incident and event
management system, mobile device management and data loss prevention software.
No change
Products are not
designed to meet
customer/client
requirements
Risk that we fail to deliver innovative or desirable products and services.
Changing demands and needs of consumers in the personal insurance market.
Investment in the design, build and launch of Hapi 2.0 which will have an improved
look and feel, better MI, improved functionality and greater ability to integrate
third-party suppliers.
Annual product governance review of the insurance products which considers
market and product research, design, value, build, testing, and launch and sales
channels. Better analysis of MI to help drive product enhancements and improve
supporting customer service.
Decreased
in 2022
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Annual Report and Accounts 2022
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. To reflect this purpose, we report not only on
our Social goals, but also our Societal ones, wherein
we aim to make a positive impact on society through
our offerings.
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.
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 is 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.
Environmental, Social and Governance
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Strategic
Report
ENVIRONMENTAL
While we are a
naturally low-
emission business,
we take a proactive
approach to
mitigating the
environmental
impact of our
operations and
supply chain.
Group Environmental Policy
Our Group Environmental Policy has been formed during
the year and acknowledges our impact on the environment
and our commitments to preserving the environment in
which we operate, including our expectations regarding
reporting, supplier credentials, waste management, and
the efficient use of resources.
Carbon emissions
Overall the Group’s CO
2
production levels have increased
in the year. This is due to the benefits from the solar panels
installed at our HQ being offset by our increased levels of
face-to-face selling from the mid-point of the year and the
delayed delivery of lower emission CO
2
vehicles for our fleets
due to global shortages. These are now expected in H2 2023.
While we are a naturally low-emission business,
monitoring and reducing our carbon emissions is core
to our environmental approach. Aside from meeting our
reporting obligations, we recognise that as a global citizen
it is our responsibility to minimise our carbon footprint.
We have reported our carbon emissions in our Annual
Reports since 2021.
We have installed solar panels at our headquarters, are
examining further energy efficiency initiatives, and will be
moving to a renewable energy provider once the energy
market steadies.
TARGETS
>
Reduce Head Office 2019 carbon emissions by three tonnes
per annum.
>
Reduce 2019 fleet CO
2
usage by 25% by 2025.
>
Work towards becoming net carbon neutral by 2031.
>
No waste production target as waste is negligible.
>
Work on environmental policy for suppliers and partners
is ongoing.
The use of solar panels at our headquarters have proven
successful in significantly lowering our MegaWatt hours.
In 2022, 13.4 MWh of energy were generated which would
power 4.6 homes for a year and equates to planting 157 trees.
Task-Force on Climate-Related Financial
Disclosures (TCFD)
We continue to monitor the guidance published by the
Financial Stability Board’s Task Force on Climate-Related
Financial Disclosures (TCFD) on corporate disclosures
to enable stakeholders to better understand financial
exposures to climate-related risks. TCFD-aligned
disclosures will be mandatory for AIM-listed companies
with over 500 UK staff from 2023, and it is not yet clear
when they will be mandatory for businesses of our size.
Remote working and business travel
Our carbon emissions and energy use were particularly low
during the COVID-19 pandemic, and we are aware that the
gradual return to the office and fewer limitations on travel
will inevitably increase energy and carbon expenditures.
Our employees are supported in hybrid or fully-remote
working arrangements.
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Annual Report and Accounts 2022
Environmental, Social and Governance
continued
A small portion of the increase is also due
to the acquisition of a new office in 2022.
The end of lockdown has also been the
driving factor in a notable increase in
emissions from both company cars and
employee-owned vehicles in year on
year comparisons.
While absolute emissions have increased
in 2022, an increase in headcount has meant
that the increase in emissions intensity
(tCO
2
e per FTE) has been less severe.
Energy and carbon action
The entirety of the Group’s fleet is up for
renewal in 2022/23 and so a review of what
vehicles will be allowed was completed
in year. The Group, unfortunately, does
not believe that purely electric cars are
an option at this stage for its field sales
team due to the lack, for charging, of a
nationwide infrastructure. However, as a
minimum, constraints on the CO
2
emissions
of all vehicles leased were included in the
decision. Due to the supply side pressures on
new cars in 2022 a number of leases needed
short term extensions whilst orders for new
vehicles were being fulfilled. At the time
of writing the majority of the Group's fleet
should be replaced by the end of H1 2023.
Emissions and energy usage
Table 1 – Energy and carbon disclosures for reporting year. All units tCO
2
e unless otherwise stated.
Emissions source
2022
2021
Variance
Scope 1
Natural gas
90
112
(19%)
Company and leased cars
370
212
74%
Total Scope 1
460
324
42%
Scope 2
Electricity
52
49
5%
Total Scope 2
52
49
5%
Scope 3
Electricity T&D
5
4
8%
Scope 3
Employee cars
11
3
309%
Total Scope 3
16
7
124%
Total (Market Based)
532
380
40%
Total (Location Based)
528
381
39%
Total Energy Usage (kWh)
1
2,277,147
1,702,505
34%
Normaliser
1
tCO
2
e per FTE
1.9
1.6
19%
1. tCO
2
e per FTE for 2021 has been recalculated from 2.6 to 1.6 to reflect the inclusion of sales staff in the total
figure. The same approach has been taken in 2022.
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.
2022 performance
Our carbon footprint for the 2022 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 528 tCO
2
e,
which represents an average impact of
1.9 tCO
2
e per full time employee, and on a
market basis our emissions are 532 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.
There has been a significant year on
year increase in location-based Scope 2
emissions in 2022 (39%), due primarily to
increased activity as COVID restrictions
have eased, as well as an increase in the
number of full-time employees (20%).
2022 results
The methodology used to calculate our
greenhouse gas 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
(Mar 19).
>
UK office emissions have been calculated
using the Defra 2022 issues of the
conversion factor repository.
Following an operational control approach
to defining our organisational boundary,
our calculated GHG emissions from business
activities in the UK fall within the reporting
period 1st January 2022 to 31st December
2022, using the reporting period of
1st January 2020 to 31st December 2020
and January 2021 to 31st December 2021
for comparison.
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Environmental, Social and Governance
continued
Personal Group’s SECR Statement
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.
SOCIAL
Our goal is 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.
People
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 maintaining hybrid work
policies in order to create a flexible and collaborative
working environment.
After many years of conducting annual employee
surveys with steady high engagement results, we
have refreshed our approach with the aim of gaining
more meaningful colleague insights by switching to
smaller, more frequent pulse surveys. This allows
us to focus on what is important to our employees
either at a moment of time and/or on a specific
topic as part of our co-create approach, it allows for
more timely action and supports our wellbeing and
engagement strategy.
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.
Having set gender and ethnicity representation targets
at all levels of the organisation in 2021, we have seen
solid progress in 2022 on delivering on these targets.
Our focus in 2023 is to continue with our Strategic
Workforce Planning approach where we identify the
skill and capability needs – for now and the future –
business wide, and design, develop and deliver bespoke
learning interventions to support our colleague growth.
In 2022 we made no political donations.
Wellbeing
The Group’s core purpose is to protect the unprotected by
supporting workforce wellbeing and engagement, and our
offerings touch more than 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. 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.
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. We will continue to develop our employee
proposition, ensuring that the Group’s benefits remain
competitive and that we remain an employer of choice.
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Environmental, Social and Governance
continued
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.
In 2022 Group employees completed approximately
9,546 training hours (2021: 6,868 hours). This included
Continuous Professional Development, Insurance
Distribution Directive alongside bespoke training courses
and apprenticeship learning. In 2022 we reviewed our
apprenticeship opportunities and have invested in existing
and new employees to offer apprenticeships aimed at
developing skills for the future.
We were delighted with the progress of our Accelerated
Learning Programme participants, all of whom have
remained with the business of employees, with the
majority being promoted internally into new roles.
The development and promotion of internal candidates
is always encouraged as appropriate.
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.
Group employee breakdown by gender
as at 31 December 2022
Male
Female
Directors
4
3
Managers
33
30
Employees
98
101
135
134
Directors
Managers
Employees
Male
Female
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Environmental, Social and Governance
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 continued involvement beyond
pure financial support. Key local projects around
our offices for 2022 included:
>
MK Act – £10K towards funding the Milton
Keynes domestic abuse intervention service,
predominantly to assist the provision of safe
emergency accommodation for women and
children escaping domestic violence.
>
MK Winter Night Shelter – £10k continuing
the funding of the Personal Group Life Skills
Programme which enables life skills training
and employment training for guests of the
shelter who have just gained accommodation,
beaten an addiction or have the chance to
work with one of the charities employment
partners to reach their full potential and stand a
better chance of succeeding when they move
on from homelessness.
>
Northamptonshire Domestic Abuse Service
(NDAS) – £10K towards the cost of a children’s
support worker to help to support victims
of domestic abuse with rehabilitation
and counselling.
>
Baby Basics – £10K supporting families living in
Milton Keynes and the immediate surrounding
area who are in financial hardship. Providing
them with essential items they need, such
as cribs, beds and toiletries, for their children
aged 0 – 6 years.
>
Safety Centre – Hazard Alley – £7.5K to help
deliver bespoke knife crime intervention
sessions to 1,200 Year 6 students in
Milton Keynes.
>
Worktree – £5K towards the development
of the Virtual Career Workout which allows
volunteers to be interviewed remotely by
school classes around the country. This helps
students better understand the world of work
and different career options available to them.
>
Rainy Day – £10K supporting households
facing fuel poverty through provision of
energy saving equipment and free installation,
along with contributions direct to the energy
suppliers in extreme cases.
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Since 2015, Personal Group has supported the Memusi Foundation,
a charity 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.
2022 saw:
>
A team from Personal Group visit the school for the first time
since the outbreak of COVID-19.
>
Memusi B school increased to Grade 5, providing education
to 420 children annually in a dual stream school.
>
Infrastructure was continually invested in; including two
new classrooms, a staff room, new toilet blocks and two
teacher's houses.
>
Internal investment was also made including food for all
children, desks, text books and all learning material.
>
Money received in the previous year for dormitories was spent
on their construction which is close to completion and will be
opened shortly for the girls to make use of this facility.
>
A contribution was made to the Memusi ‘Bread & Milk’ / See The
Child initiative which helped feed homeless children living on
the streets and offer support and guidance with the long-term
plan of getting children off the streets.
Environmental, Social and Governance
continued
FOUNDATION
TARGETS
Separating Societal from Social is a change implemented by
management at the end of 2022. We are currently working
on targets for this area and will report them in the 2023
financial statements.
As Chief Wellbeing Ambassador
I want to spread the word about the
importance of employee wellbeing
and help our clients’ employees
thrive in work and in life.
Hon Colonel Dame Kelly Holmes MBE (mil)
Chief Wellbeing Officer, Personal Group
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SOCIETAL
We believe our vision,
to create a brighter future
for the UK workforce,
brings a responsibility that
goes beyond our clients
and their employees.
We have an opportunity
and obligation to drive
societal change to help
shape and redefine the role
businesses play in society.
Examples of the benefits of our offerings
in use are included |
 
Page 05
Our Group expertise and portfolio of services enables us
to act as an agent for change, empowering businesses
to transition from being a target of social change to
a mobiliser. Employers are uniquely placed to change
people’s behaviours in order to benefit society, whether
that is through DE&I initiatives, wellbeing support,
financial awareness or protection policies and we can
enable them to do so.
Our holistic offering has been designed to support
and engage employees and their families from all
demographics, including those from lower income groups,
in both work and life. We are particularly aware that
people from lower income groups can find it difficult to
access appropriate financial services products – the FCA
recognise they are an underserved group. Our simple,
easy to buy and low cost products meet a gap for people
who find it difficult to use the internet for financial
services products and we have specifically adapted our
products to meet their needs. Recognising the impact
this can have on Societal good, we appointed the
Environmental, Social and Governance
continued
Hon Colonel Dame Kelly Holmes MBE (mil) as our Chief
Wellbeing Ambassador for 2022 to help guide our strategy
and amplify our message to our clients and beyond.
In 2022, in partnership with Dame Kelly we launched
Transform our exclusive, market-leading wellbeing
solution. Transform provides exercise, mindfulness,
meditation, recipes, and broader wellbeing content to
enable the individual to take control of their wellbeing.
This solution was also immediately made available to
all Group employees.
In conjunction with the Financial Wellness Group, we also
ran a serious of Budgeting Bootcamps, which were made
available, for free, to not only our own employees but also
those of our clients. This six-week tutorial programme
was designed to increase ‘money-confidence’ and provide
tips and tools to manage money, from creating budgets
through to prioritising spend and making money
work harder.
Additional initiatives in 2022 included signing the
menopause pledge, campaigning and providing guidance
on Fair Pay at leading industry events, whilst continuing
with our long-standing recognition (monthly peer-to-peer
allowance for all employees) and charitable giving
(match funding up to £500).
Our goal is to continue to ensure and reassure our
stakeholders that our governance is robust and
compliant with all regulatory and legal frameworks.
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. (see page 45).
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 are carefully selected
to ensure a diverse and varied set of skills, cultures,
experiences and knowledge to promote success within
the business.
We have targets 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 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 Nominations 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
GOVERNANCE
Governance is
central to our ethos
of operating with
integrity.
Committee Report on page 58 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 |
 Page 54
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.
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.
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.
Further detail is included in the
Corporate Governance section |
 Page 44
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.
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Environmental, Social and Governance
continued
Why we engage with
How we engaged in 2022
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 and
ensure that our products are regularly reviewed
and fit for purpose.
Provision of suitable and targeted employee
benefits to our relevant market sectors.
Our primary interactions are to provide individual face-to-face presentations of our products
to potential and existing policyholders at their place of work. In 2022 we expanded our sales
channels further to enhance the flexibility of purchase by enabling an online offering via some
of our clients.
In early 2022 we carried out a ‘backbook communication’ to c.90,000 policyholders, which
provided a reminder of policy conditions and benefits but also, in many instances, enhanced
the benefits received at no additional premium. We also added an additional temporary benefit
on the Hospital Plan of an additional outpatient appointment for 2022 and 2023 for existing
policyholders who held policies at 31 December 2021, in recognition of the fact that during
COVID reduced NHS activity had meant that, in many cases, they were unable to make full use
of their plan/benefits.
Other activities which took place during the year were development of an ‘insurance only’
website, to improve accessibility for policyholders, enhancement of the online claims form
and detailed one-to-one interviews of existing policyholders through a third party provider.
Subsequent to the pandemic we have maintained a hybrid working environment for our
customer relations team. We value the ability to have colleagues in the office to support
training and development of staff and to allow greater flexibility in responding to queries
and claims made by our policyholders, some of whom are calling from a place of vulnerability.
In 2022 our Customer Relations Team took over 52,400 calls and dealt with over 58,000
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
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.
The table that follows is a description of our key stakeholder groups and how we engaged with them in 2022.
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Section 172 Statement
Why we engage with
How we engaged in 2022
What matters to the Group
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 and
communication channels to both attract and retain
talent for now and the future.
We have an open, collaborative, and inclusive management structure and actively engage
regularly with our employees. We do this through multiple channels led by a belief and
ethos that engagement is a two-way process. Our colleague voice is critical in enabling
a ‘co-creation’ approach when we seek to enhance not just engagement, but how best we
can improve how we do business.
We remunerate with competitive market-based pay, sector leading rewards and benefits
alongside a learning culture and great career opportunities. We have introduced a hybrid
working policy for all office-based staff, feedback tells us that this helps our colleagues
achieve a better work-life balance with subsequent gains in engagement and productivity.
>
Fair employment
>
Competitive pay and benefits
>
Development and career
opportunities
>
Collaborative and supportive
work environment
>
Health and safety and colleague
wellbeing
>
Responsible and respectful 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 continually review and update our supplier onboarding process and conduct annual
reviews on all key suppliers to the Group.
We work with our suppliers to ensure that they have effective controls in place to protect
the security and privacy of our customers data.
>
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 37.
We are conscious of the need for our business to focus on long-term sustainability, during
2022 the Board discussed the key causes of emissions from the Group and reviewed options
around limiting them. Orders for new fleet cars to reduce the emissions per employee have
been ordered, albeit it was determined that fully electric cars were not currently suitable for
the volume of driving undertaken by the majority of the salesforce.
We continue to review ways in which we 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.
>
Financial performance
>
Strategy and business model
>
Dividend
>
Long term growth
>
Reputation of the Group
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Section 172 Statement
continued
Board Activity in 2022
This year, the key business and activities
of the Board included…
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
At our strategy day in June 2022, we worked on
development of the refined strategy first implemented
in 2021. An area of key focus was around how best we
can continue to improve interactions with our clients and
customers to enable us to really drive growth around our
three core strategic pillars of:
>
Driving insurance sales through new and
existing channels
>
Transforming reward and benefits
>
Accelerating SME
Following recommendations from our independent
Board effectiveness review, we have also made the
decision to restructure our Board meetings in 2023 to
allow greater focus on strategic matters, more details
on this can be found on page 44.
Open actions from the Board effectiveness review are
being worked and are all due to be completed in 2023.
Read more about Our Strategy |
 Page 17
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Supporting, communicating with and rewarding our
own people has remained a key focus this year and
we have remained committed to 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 who we are, during the year the Board has been
working on revising the Groups values to reflect
the work undertaken in recent years and how the
business sees itself moving forward. These revised
values are still being finalised and will be announced
in due course.
In 2022 we have regularly reviewed our lead
indicators and together with a suite of KPIs which
sit beneath them to enable us to monitor our
performance against our strategy, alongside a
standard monthly business review.
There has also been a continued focus on our KPIs
around ESG, which were introduced in 2020 and have
been continually refined thereafter. Work has begun
to complete an Energy Reduction Plan as we work
towards our ESOS compliance for 2023.
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.
During 2022 the we conducted a Board effectiveness
review which highlighted some key areas for the
Board to work on in the coming year in order to
ensure a strategic focus on the long term objectives
and key resources underpinning them. There have
been eight follow up actions identified by the review
all of which are expected to be considered and dealt
with during 2023.
We have continued with ‘deep dives’ into key risk areas
at each Risk and Compliance Committee 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 continued to
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.
Board Activity in 2022
continued
Performance
Monitoring
The monthly review provided to
the Board includes an update on
all strategic KPIs as well as an
update on performance
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
Read more about our People |
 Page 35
Read more about Risk |
 Page 30
Read more about our Key Performance
Indicators |
 Page 22
Governance
and Risk
We continued to identify, assess,
manage and appropriately mitigate
the key risks to the Group in
achieving its objectives
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Corporate Governance
Chairman’s Introduction
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 continue working on an integrated succession plan for
the Board and, as noted in my Chairman’s report earlier in
this document, we have experienced Board changes (both
executive and non-executive) through 2022 with Ciaran
Astin joining the Board as Non-Executive Director as of May
2022 and Liam McGrath, Chief Operating Officer, departing
the Personal Group Holdings Board in August 2022.
This year represented an opportunity for the Group
to rebound following the challenges of the COVID-19
pandemic and the Board has been focused on continued
support of the Senior Leadership Team in ensuring the
employees of the Group are supported in their roles with
our continuing hybrid working environment. 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, especially in light of the
ongoing cost of living crisis.
In 2022, 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
The Board continues to have a significant role to play in establishing
the culture of the business
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.
A board effectiveness review was carried out during
2022, in line with our commitment under the QCA Code
(Principle 7). We have addressed and will be addressing the
recommendations raised. We are committed to external
independent reviews every three years and will continue
to complete annual internal board effectiveness reviews
in the intervening years.
The Board met 10 times in 2022 and the number of
meetings each Director attended can be seen on pages
46 and 47. In addition, the reports of the Audit, Risk and
Compliance, Remuneration Committees and Nominations
and SM&CR Committee can be seen later in this section.
As we move into 2023 the Board has decided to reduce
the number of in person meetings, with six more in-depth
meetings, focusing on strategic matters, and four Board
meetings conducted remotely and used as updates on
performance. This change will have limited impact on the
Board's Committees but should enable greater focus on
strategic matters.
Martin Bennett
Independent Non-Executive Chair
2022 Committee meeting dates
Board
26 Jan
17 Feb
17 Mar
5 May
26 May
30 Jun
21 Jul
28 Sep
21 Oct
24 Nov
Audit
17 Mar
20 Sep
24 Nov
Risk & Compliance
17 Mar
26 May
20 Sep
24 Nov
Nominations
17 Feb
20 Sep
Remuneration
26 Jan
17 Mar
21 Jul
21 Oct
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Corporate Governance
continued
QCA Code compliance
Principle 1 – Establish a strategy
and business model, which
promote long-term value for
shareholders.
Principle 5 – Maintain the Board
as a well-functioning, balanced
team led by the Chair.
Principle 3 – Take into account
wider stakeholder and social
responsibilities and their
implications for long-term
success.
Principle 7 – Evaluate Board
performance based on clear and
relevant objectives, seeking
continuous improvement.
Principle 9 – Maintain governance
structures and process that are
fit for purpose and support good
decision-making by the Board.
Principle 2 – Seek to understand
and meet shareholders’ needs and
expectations.
Principle 6 – Ensure that between
them the Directors have the
necessary up to date experience,
skills and capabilities.
Principle 4 – Embed effective
risk management, considering
both opportunities and threats,
throughout the organisation.
Principle 8 – Promote a corporate
culture that is based on ethical
values and behaviours.
Principle 10 – Communicate how
the Company is governed and
is performing by maintaining a
dialogue with shareholders and
other relevant stakeholders.
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 employees
physical, mental, social and
financial wellbeing, supporting
our vision of creating a brighter
future for the UK workforce.
Full details of our business model
can be found on page 16 and on
the Company website
(www.personalgroup.com).
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.
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
40 and 41.
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 findings from the
2022 external review have been
fed back to the Board and actions
are being worked on.
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 2022 for the
Board and other Committees can
be seen on page 44.
Regular dialogue takes place with
shareholders through initiatives
including the Annual General
Meeting, investor roadshows,
regulatory announcements
and the Report and Accounts.
During 2022 our Chief Executive,
CFO, Chairman and other Non-
Executive Directors met virtually,
and in person, with key investors.
We also hosted our investor events
in March and September 2022.
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 44 there has been
one addition to the Board in the
year with Ciaran Astin taking up
his role as Non-Executive, our first
Non-Executive to concurrently
hold an executive position outside
of the Group.
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
2022, a risk based internal audit
function was again provided
by RSM. For further details see
page 51.
The Board believes Group culture is
set from the top of the organisation.
These values form a core part of
how the business is managed,
from recruitment to training, and
ongoing reward and recognition.
During the year the Group has
focused on smaller, more frequent,
pulse surveys to obtain meaningful
colleague insight on key issues. This
has allowed more focus on these
issues at the point in time it arises
and helps to facilitate the co-create
approach with our employees
supporting our wellbeing and
engagement strategy.
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.
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10/10
Meetings attended
10/10
Meetings attended
Board of Directors
The Board has a combined wealth of knowledge and experience to help the business achieve success and
keep it moving forward.
Martin Bennett
Non-Executive Chairman
January 2021
(previously Non-Executive
Director; appointed Chairman May 2021)
External appointments
Chairman of Ventureprise plc, Homeowner
Services, and the Association of Foreign
Exchange and Payments Companies (AFEP).
Chair of Lumon until 31 August 2022.
Martin is an experienced non-executive and
chairman, bringing over 20 years of financial
service experience. 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.
Skills, personal qualities and capabilities
An accounting and finance graduate, Martin is a
Fellow of the Institute of Chartered Accountants.
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.
Skills, personal qualities and capabilities
Sarah is a Fellow Member of the Association
of Chartered Certified Accountants and also
has a Master’s degree in mathematics from
Oxford University.
Sarah Mace
Chief Financial Officer
October 2020
(previously Company Secretary
from April 2014)
Deborah Frost
Group Chief Executive
September 2015
(previously Non-Executive
Director; appointed CEO February 2019)
Deborah was appointed Group Chief Executive
in February 2019.
Before joining Personal Group, Deborah had a
long-standing career spanning over two decades
in both industry and consultancy, specialising
in Compensation and Benefits. She co-founded
Innecto Reward Consulting in 2002, which has
since become the largest independent reward
consultancy in the UK.
Since her appointment as CEO Deborah has
led the development of Personal Group into
new market sectors, in particular building a
partnership with Sage plc to deliver a benefit
platform to UK SMEs.
Skills, personal qualities and capabilities
A Business Studies graduate, and a Chartered
Fellow of the CIPD, Deborah is a respected and
ground-breaking thought-leader in reward.
Committee membership key
Audit
Committee
Nominations &
SM&CR Committee
Remuneration
Committee
Chair of the
Committee
Risk and Compliance
Committee
Independent
Maria Darby-Walker
Senior Non-Executive Director
June 2019
(Appointed Senior Non-Executive
Director in January 2021)
External appointments
Senior Independent Non-Executive Director at
Redwood Bank Ltd and Non-Executive Director
for Amigo Loans Plc.
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.
Skills, personal qualities and capabilities
Beyond her technical and industry qualifications,
Maria is also a qualified leadership coach and
mentor being appointed an honorary visiting
fellow of Oxford University in September 2022.
10/10
Meetings attended
10/10
Meetings attended
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10/10
Meetings attended
5/5
Meetings attended
8/10
Meetings attended
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.
Skills, personal qualities and capabilities
Damian is a Chartered Accountant and holds
a degree in Economics and Politics from the
University of Southampton.
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
of Personal Group Benefits.
In January 2021 Andy moved into a Non-
Executive Director role on the Board.
Skills, personal qualities and capabilities
Andy has extensive knowledge and experience of
the important day-to-day role that all Personal
Group employees play in the development and
growth of the business.
Andy Lothian
Non-Executive Director
July 2017
(previously Executive Director,
appointed Non-Executive Director in
January 2021)
External appointments
Director of Lothian Property Group.
Bob Head
Non-Executive Director
November 2016
External appointments
Non-Executive Director at Alexander Forbes
and Chair of Audit and Remcom committees
at Mirriad.
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.
Skills, personal qualities and capabilities
Bob has solid blue-chip experience with big
brands and business and a rich tapestry of
management roles.
Damian Kane
Finance Director and Company Secretary
October 2020
Committee membership key
Audit
Committee
Nominations &
SM&CR Committee
Remuneration
Committee
Chair of the
Committee
Risk and Compliance
Committee
Independent
Ciaran is an experienced leader in consumer
services businesses across the insurance,
telecoms and energy sectors. He has extensive
P&L leadership experience in regulated
businesses, with a skill set spanning commercial
and customer-related functions. Ciaran currently
serves as Managing Director of ClearScore's
insurance-related business. Between 2012 and
2019, he held senior leadership roles at leading
personal lines insurers, Hastings Group and
Direct Line Group. Earlier in his career, Ciaran
spent two years driving product transformation
in Centrica's consumer business, following
seven years in commercial leadership roles in the
telecoms sector with BT Group and Telewest.
Skills, personal qualities and capabilities
Ciaran holds a Masters in Engineering from
Cambridge University.
Ciaran Astin
Non-Executive Director
May 2022
External appointments
Managing Director of DriveScore.
10/10
Meetings attended
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Board of Directors
continued
Senior Leadership Team
An adept Senior Leadership Team reflecting all facets of the Group.
Richard was appointed as
Chief Information 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.
Richard Thompson
Chief Information Officer
Julie Stayte
Chief People Officer
Deborah Frost
Group Chief Executive
See Board spread on
previous page.
Sarah Mace
Chief Financial Officer
See Board spread on
previous page.
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.
Karen Thornley
Chief Commercial Officer
The Senior Leadership
Team bring a range
of experience and
commercial drive which
has created a solid and
committed team, driving
the business forward
through both innovation
and a focus on execution.
Deborah Frost
Group Chief Executive
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Risk and Compliance Committee Report
The Committee’s role is to oversee compliance with regulatory
requirements, assess the effectiveness of the Group’s risk management
framework and to set the group’s risk appetite.
Dear Shareholder
I am pleased to present the Risk and Compliance Committee Report for the year ending 31 December 2022.
Activity during the year
The Committee focuses its debate on key risks, emerging risks, new risks and areas where
we perceive we have increased risk.
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 strategic review of the Group’s main
risk exposures and challenging whether
certain activities provide return on
investments which are relative to the
inherent risks involved.
>
Update and further development of
the Own Risk and Solvency Assessment
(ORSA) for Personal Assurance Plc
to account for current risks and
exposures, particularly in relation to
inflationary pressures and negative cost
of living effects which have increased
throughout 2022.
>
Review and approval of Personal
Assurance Plc’s operational resilience
self-assessment and ratification of the
supporting business impact assessments.
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
3/4
Ciaran Astin*
3/3
Deborah Frost
2/4
Sarah Mace
4/4
Liam McGrath**
2/2
>
Consideration of the Group’s approach to
the challenging economic outlook which
took hold in the Autumn, including how
to optimise the Group’s current offering
and tailor the go to market message
to mitigate the risk of any impacts on
income from clients and customers.
>
Consideration of the Group’s resilience
against cyber threats following on
from external audits and reviews of
systems and controls. The Group used
specialist companies for this work and
it was designed to support the Group’s
ISO accreditation.
>
Close monitoring of the potential impact
of the energy crisis affecting the country
including development of contingency
plans for any power outages or rolling
blackouts that may occur.
Objectives
The role of the Committee is to manage
and monitor the risks and threats to the
strategic objectives of the group, set the
risk appetite for the Group, monitor and
review the impact of business decisions
upon the Group’s risk profile and manage
and monitor compliance with Prudential
Regulation Authority and Financial
Conduct Authority requirements and
other appropriate regulations which
impact the Group.
*
Ciaran Astin was appointed on 25.05.2022
** Liam McGrath resigned on 31.08.2022
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In addition, other work undertaken during
the year included:
>
The regular review, consideration and
approval of existing Group policies
used across the business.
>
Oversight of the further embedding
of data related systems and controls
(specifically GDPR).
>
Consideration of management
information which assess levels
of quality and compliance, and the
effectiveness of the Information
Security Management System.
>
Oversight of the further development
and embedding of risk management
in the “first line” environment across
the Group – including rolling out risk
management training to nominated
business area “Risk Champions”,
who have the role of coordinating risk
management activities in conjunction
with their respective Senior Leadership
Team member and being a point of
contact for their designated Risk
Team partner.
Risk and Compliance Committee Report
continued
>
Oversight of the implementation of
the FCA Consumer Duty, including
challenging, reviewing and approving
the Group’s gap analysis against the
requirements and implementation plan.
This is currently work in progress.
>
Annual review of Fair Value for
insurance customers.
>
Assessing the results from a quality
assurance review of insurance sales
to customers, which had an emphasis
on ensuring that vulnerable customers
are receiving outcomes “at least as
good as those” experienced by any
other customer.
As in previous years, the Committee has
continued to apply its mind to the risk logs
both in terms of completeness and how
risks are optimised. The Committee has
also worked closely 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
27 March 2023
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Audit Committee Report
The primary role of the Audit Committee is to assist the Board in fulfilling its oversight
responsibilities in areas such as the integrity of financial reporting, the effectiveness of the internal
controls as well as oversight of the internal and external audit functions.
Dear Shareholder
The Committee oversees the appointment
of, and relationship with, the external
auditor and ensures compliance with other
regulatory requirements that are relevant
to the Group, as well as gaining reassurance
that the control environment is fit for
purpose. The internal audit function is
currently outsourced to a third-party,
and the Committee is also responsible for
overseeing the effectiveness of internal
audit in line with the Chartered Institute
of Internal Auditors (IIA’s) Guidance on
Effective Internal Audit.
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;
>
Considering new accounting standards
and pronouncements and comments from
the Financial Reporting Council; and
>
Advising the Board on whether the
Group’s financial statements are fair,
balanced and understandable. Particular
attention has been given to ensuring the
business commentary is consistent with
the reported results.
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 processes;
>
Developing and implementing a policy
on the supply of non-audit services by
the external auditor; and
>
Monitoring and reviewing the scope
of work and 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 pages 46 and 47.
Risk matters are covered at the Risk and
Compliance Committee but all members
of the Audit Committee are also members
of the Risk and Compliance Committee,
which ensures tight co-ordination.
Three formal meetings were held during
2022 and all Committee members were
in attendance. Additionally, the remaining
Board members, Head of Risk and Company
Secretary were present at all meetings.
Meetings Held
3
Audit Committee
members
Meeting Attendance
Bob Head (Chair)
3/3
Martin Bennett
3/3
Maria Darby-Walker
3/3
Ciaran Astin
2/2
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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.
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. As a part of these discussions the
Committee has considered whether there
are further risk areas that need to be
considered in addition to those raised by
both sets of auditors. 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 2021 Annual
Report and Accounts and 2022 Interim
Results statement.
>
Approval of the Solvency and Financial
Condition Report.
>
Review of internal audits carried out
by RSM.
During 2022 RSM undertook audits,
in line with the agreed scope, over areas
including field sales team remuneration,
change management and a follow up
review of responses to 2021 action
recommendations. RSM also undertook
an advisory report providing a GAP
analysis against key ESG documents,
metrics and controls.
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 (and for 2023) 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.
The areas the Audit Committee have
focused on are detailed later in the report.
Key Group issues included:
>
Investment in the salesforce and its
direct impact on the Group’s profitability;
following two years of interrupted
new business premium levels due to
lockdowns and other restrictions,
the Group needed to return to a full sales
team complement to return to normal
and service the demand of its clients.
>
An ongoing focus on cyber risks as
well as operational resilience to deliver
what we have promised our clients
and customers remains a key topic of
discussion for the Committee.
>
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.
>
The acquisition accounting surrounding
the purchase of Quintige Consulting
Group Limited.
The Committee reviewed the
recommendations of the finance function
and received reports from the external
auditor on their findings. Where cost
effective to do so the Committee has
encouraged the external auditors to adopt a
controls approach to the audit rather than
substantive audit approach.
Audit Committee Report
continued
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The significant reporting matters and judgements the Committee considered during the year included:
Carrying value of goodwill and other intangibles
Note 14 & 15
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 with the
conclusion of management that, due to the macroeconomic
impact on material customer, an impairment was required
to the value proposed for Let's Connect and appropriate
disclosure has been made (see note 14 to the financial
statements for details).
The Committee was satisfied that no impairment was
needed on the goodwill of Innecto and that the accounting
surrounding the purchase of QCG and the initial assessment
of the acquired intangible assets and goodwill was appropriate.
The presentation of “Adjusted EBITDA” alongside
statutory profit.
Note 5
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 focusing on 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 valuation of the claims provision
Note 25
The Group retains a provision for the gross estimated
liability arising from claims in the current and preceding
financial years which have not yet 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.
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
continuing impacts post COVID-19 including considerations
such as increased hospital waiting lists. The Committee was
satisfied that the amount reserved for across the Group is
appropriate given the data available. It should be noted that
the insurance business is short tail and post year end claims
are examined before the accounts are signed off.
Audit Committee Report
continued
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, as noted, 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 discusses 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
27 March 2023
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Remuneration Committee Report
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.
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.
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 Directors
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 (ie 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 57 for further details).
Meetings Held
4
Remuneration Committee
members
Meeting Attendance
Maria Darby-Walker (Chair)
4/4
Martin Bennett
4/4
Bob Head
4/4
Ciaran Astin
2/2
We remain focused on aligning reward with the
business’s long-term sustainability and growth.
Maria Darby-Walker
Independent Non-Executive Director
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Remuneration Committee Report
continued
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 and Non-Executive Directors'
benchmarking exercise was undertaken
in December 2021.
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 2022, with ad hoc calls taking
place when required.
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 & 2022
annual bonus
Despite significant progress in achieving
KPIs and underlying growth, the Group did
not achieve its goals for 2022. As a result
it has been agreed by the Committee that
no bonuses would be paid to the Executive
Directors for 2022. It has, however, been
agreed to review the bonus potential for
the leadership in future years.
The remainder of staff below the SLT
level with a contractual bonus target
have received amounts commensurate
to personal objectives being reached
but not for Group wide targets.
Pay increases
The Remuneration Committee approved
a pay increase pot of c.3.5% for all
eligible employees, including the Board,
in January 2022.
Other Committee activities for
the year
The Committee has been actively engaged
in reviewing the changing nature of
reward and benefits. 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 for our
employees. The Committee particularly
focused on the attraction and retention
of scarce talent, with a detailed review
of the pay of all employees, and those
at particular flight-risk in crucial roles
identified. Market rate adjustments were
completed and key employees were
retained through 2022.
The Committee discussed, and approved
the change to, the remuneration and
incentive programme surrounding the field
sales team. The revised programme looked
to simplify the existing scheme whilst
supporting long term career paths for staff
and adjusting for best practise guidance
offered by a recent internal audit into
the subject.
The Committee also reviewed pension
arrangements for employees, and
established a Pension Working Group to
prioritise our review of pension take-up
and encourage employees to plan for
their futures.
The year ahead
ESG goals and targets have been included
in the 2022 LTIP design, demonstrating our
commitment to ESG goals, and ensuring
that they remain top of mind for our
Executive Directors and their teams.
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 six
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 period's basic
salary and contractual benefits.
The Non-Executive Directors have letters
of appointment that can be terminated
on six months’ notice.
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Remuneration Committee Report
continued
Membership of Board and Directors’ interests
The membership of the Board throughout the year is set
out herein.
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 2021
or date of appointment if later, and 31 December 2022,
are shown in the table to the right.
At 31 December 2022, the mid-market closing share price
was 196.00p per share (31 December 2021: 325.00p).
At 31 December
2022
At 31 December
2021
Deborah Frost
(Chief Executive)
333,678
304,063
Sarah Mace
(Chief Financial Officer)
12,071
12,030
Andrew Lothian
(Non-Executive Director – Managing Director PGB Sales until December 2020)
37,532
37,532
Martin Bennett
(Independent Non-Executive Chair – Appointed January 2021)
18,070
-
Bob Head
(Independent Non-Executive)
Maria Darby-Walker
(Senior Independent Non-Executive)
Ciaran Astin
(Independent Non-Executive – Appointed May 2022)
Salary
and fees
2022
£’000
Bonus
2022
£’000
Share-based
gains on
exercise of
options
2022
£’000
Pension
contributions
2022
£’000
Total
2022
£’000
Total
2021
£’000
Deborah Frost
332
79
10
421
427
Sarah Mace
189
13
202
239
Liam McGrath *
124
6
130
145
Andrew Lothian
41
41
41
Bob Head
50
50
50
Maria Darby-Walker
51
51
49
Martin Bennett **
101
101
78
Ciaran Astin ***
28
28
Mark Winlow
33
Total
916
79
29
1,024
1,062
*
Liam McGrath departed the business in August 2022.
**
Martin Bennett became a Non-Executive Director in January 2021 and became Chair in May 2021 following the departure of Mark Winlow.
*** Ciaran Astin joined the Board as a Non-Executive Director in May 2022.
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 shown to the right.
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Remuneration Committee Report
continued
Directors’ share options
CSOP
On 31 December 2022 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
LTIP
On 31 December 2022 options outstanding were as follows:
Number
of shares
Exercise price
pence per share
Earliest
exercisable date
Deborah Frost
435,362
5.00
01 January 2024
Sarah Mace
147,040
5.00
01 January 2024
The options above are subject to the performance criteria of the LTIP.
Company Share Option Plan
Awards under CSOPs have taken place for a number of
years and have been predominantly allocated to senior
members of staff across the business in line with the
rules on the government scheme. The options have a
requirement to be held for three years prior to exercise
and no performance obligations.
Long Term Incentive Plan
The Long Term Incentive Plan introduced in April 2021 was
established in order to reward and incentivise the senior
executives to deliver sustainable growth for the Company
and to create material value for shareholders. The scheme
accommodates performance conditions across market,
financial and ESG measures which support the growth of
the business.
The scheme has made two awards of share options to
date in April 2021 and April 2022.
The performance criteria of the awards are detailed in
Note 22.
In addition to the Executive Directors, members of the
Senior Leadership Team also had awards.
Maria Darby-Walker
Independent Non-Executive Director
27 March 2023
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Nominations Committee Report
Dear Shareholder
I am pleased to present the Nominations
Committee Report for the year ended
31 December 2022. The Committee’s
primary function is to enable focused
discussions around the composition of
the Board and the Group requirements
around SM&CR.
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; 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. Non-Executive
Directors do not participate in discussions
about their own remuneration.
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 twice, 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
The Board is satisfied that its current composition
includes an appropriate balance of skills, experience
and capabilities.
Martin Bennett
Independent Non-Executive Chairman
Meetings Held
2
Nominations Committee
members
Meeting Attendance
Martin Bennett (Chair)
2/2
Maria Darby-Walker
2/2
Bob Head
2/2
Ciaran Astin
1/1
The CEO, Non-Independent NEDs,
Chief People Officer and Company
Secretary are normally present at
the meetings.
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 Senior Managers and Certification Regime (SM&CR).
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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 Ciaran Astin
on the Board. Liam McGrath left the business during 2022.
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. An external
Board effectiveness review was conducted in 2022 with
development areas being worked on.
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 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.
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 2023 AGM
Board role
Martin Bennett
January 2021
AGM 2021
For renewal
by rotation
Non-Executive Chairman
Deborah Frost
September 2015 (previously NED,
appointed CEO Feb 19)
AGM 2021
Chief Executive
Sarah Mace
October 2020
AGM 2021
For renewal
by rotation
Chief Financial Officer
Maria Darby-Walker
June 2019
AGM 2022
Senior Non-Executive Director
Ciaran Astin
May 2022
For renewal
as first year
Non-Executive Director
Bob Head
November 2016
AGM 2022
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
27 March 2023
Nominations Committee Report
continued
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.
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Directors’ Report
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 25).
The loss from continuing operations for the year is
£6,760,000 (2021: profit of £4,342,000) before taxation
of £510,000 (2021: £745,000). During the year ordinary
dividends of £3,311,000 (2021: £3,244,000) were paid.
Directors
The membership of the Board at the end of the year is
set out in the Remuneration Report on pages 54 to 57.
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 (2021: £nil).
Charitable donations
Donations to charitable organisations amounted to
£100,000 (2021: £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 Compliance 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 44 and 45.
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 Thursday 4 May 2023.
The Directors present their report together with the audited financial
statements for the year ended 31 December 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.
BY ORDER OF THE BOARD
Sarah Mace
Chief Financial Officer
27 March 2023
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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 UK (UK adopted IFRS) 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 UK adopted IFRS.
>
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 preparing the Strategic report,
Directors’ report and the Group and parent company financial statements
in accordance with applicable law and regulations.
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.
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Statement of Directors’ Responsibilities
Governance
Strategic
Report
Overview
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Annual Report and Accounts 2022
62
Financial
Statements
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 2022 and of the group’s
loss 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 been properly prepared in accordance with UK
adopted international accounting standards as applied in accordance with section 408
of the Companies Act 2006; 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 which comprise:
Group
Parent company
Consolidated balance sheet as at 31
December 2022
Balance sheet as at 31 December 2022
Consolidated income statement for the year
then ended
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 33 to the financial
statements including a summary of
significant accounting policies
Consolidated statement of cash flows for
the year then ended
Related notes 1 to 33 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 below. 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 public interest 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.
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 27 March 2024;
>
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;
>
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
market conditions 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.
Independent Auditor’s Report to the Members of Personal Group Holdings Plc
Governance
Strategic
Report
Overview
Personal Group Holdings Plc |
Annual Report and Accounts 2022
63
Financial
Statements
An overview of the scope of our audit
Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and our allocation of performance
materiality determine our audit scope for each entity 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, the potential impact of climate change
and other factors such as recent Internal audit results when assessing the level of work
to be performed at each entity.
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, of the five reporting components of the Group, we selected four components,
which represent the principal business units within 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. For the remaining component (“specific
scope components”), we performed audit procedures on specific accounts within
that component 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 91% (2021: 89%) of the
Group’s Profit before tax, 93% (2021: 98%) of the Group’s Revenue.
The specific scope component contributed 7% (2021: 6%) of the Group’s Profit before tax,
4% (2021: 2%) of the Group’s Revenue. 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.
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 27 March 2024.
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)
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 97% of the Group revenue and 98%
of the Group profit before tax.
Key audit matters
>
Valuation of PG Let’s Connect goodwill
>
Valuation of Innecto goodwill and other intangible assets
>
Acquisition of Quintage Consulting Group
Materiality
>
Overall group materiality of £195,050 which represents 5%
of consolidated profit before tax
Independent Auditor’s Report
continued
Governance
Strategic
Report
Overview
Personal Group Holdings Plc |
Annual Report and Accounts 2022
64
Financial
Statements
Climate change
Stakeholders are increasingly interested in how climate change will impact the Group.
The Group has determined that the most significant future impacts from climate change
on their operations in the ESG section of the strategic report. The Group has also explained
their climate commitments on page 33 in the ESG section of the strategic report. All of
these disclosures form part of the “Other information,” rather than the audited financial
statements. Our procedures on these unaudited 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, in line with our responsibilities on “Other information”.
In planning and performing our audit we assessed the potential impacts of climate change
on the Group’s business and any consequential material impact on its financial statements.
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 page 79 of the financial statements which explain the rationale.
We also challenged the Directors’ considerations of climate change risks in their assessment
of going concern and viability and associated disclosures.
Based on our work we have not identified the impact of climate change on the financial
statements to be a key audit matter or to impact a key audit matter.
The charts below illustrate the coverage obtained from the work performed
by our audit teams.
Profit before tax
Revenue
93% Full scope components
4% Specific scope components
3% Other procedures
91% Full scope components
7% Specific scope components
2% Other procedures
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 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.
Independent Auditor’s Report
continued
Governance
Strategic
Report
Overview
Personal Group Holdings Plc |
Annual Report and Accounts 2022
65
Financial
Statements
Risk
Our response to the risk
Key observations
communicated to the
Audit Committee
Valuation of PG Let’s Connect
Goodwill (2022: £0m, 2021:
£10.6m)
We consider the risk associated
with the valuation of PG Let’s
Connect goodwill to be greater as
a result of increased uncertainty
in relation to future cash flow
projections as a result of the impact
from the COVID-19 pandemic,
economic uncertainty along with
key customer contract renewals
and ongoing supply issues.
Refer to Accounting policies
(page 83); and Note 14 of
the Consolidated Financial
Statements (pages 95 and 96).
The PG Let’s Connect goodwill
balance as at 31 December 2022
has been fully impaired to nil.
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;
>
Reviewed post year end information
available to assess the likelihood of the
key contract renewal.
>
Assessed the appropriateness of the
identified CGU and attributed cash flows;
>
Challenged the future cash flow
projections of Lets Connect to ensure
pipeline business and conversion
rates included in the projections are
appropriate by comparing to prior year
accuracy of forecasting;
>
Engaged our valuation specialists
to assess the reasonableness of the
impairment including an assessment
of the discount rate; and
>
Considered whether the applied
accounting treatment is in compliance
with IFRS and the Group’s accounting
policy, and the Group disclosures are in line
with the required reporting framework.
We have reviewed
managements Let’s
Connect impairment
paper along with post
year end information
available which shows
the loss of a major
customer, leading to a
fall in cash flows which
no longer support
the recoverability of
goodwill.
Based on the above
considerations, we
are satisfied that the
Let’s Connect goodwill
impairment of £10.6m
being recognised at
31 December 2022 is
appropriate.
We have reviewed the
related disclosures and
concluded that these
accurately reflect the
impairment recorded
during the year.
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.
Independent Auditor’s Report
continued
Governance
Strategic
Report
Overview
Personal Group Holdings Plc |
Annual Report and Accounts 2022
66
Financial
Statements
Risk
Our response to the risk
Key observations
communicated to the
Audit Committee
Valuation of goodwill and
other intangible assets arising
on acquisition of Quintage
Consulting Group (2022: £0.9m)
Refer to Accounting policies
(page 83); and Note 14 of
the Consolidated Financial
Statements (pages 95 to 97).
On 1st July 2022, Personal Group
Holdings Plc acquired Quintage
Consulting Group Limited ("QCG"),
a leading employee experience
and reward consultancy, for a
cash consideration of £0.9m.
We consider the identification
and valuation of identifiable
intangible assets such as
customer relationships, acquitted
workforce and brand. The QCG
acquisition has been classed as a
significant risk due to the nature
of judgments and estimates
involved in valuing the intangible
assets acquired.
To obtain sufficient audit evidence to
conclude on the valuation of intangible
assets arising on acquisition of QCG and
the valuation of goodwill at the year end,
we performed the following procedures:
>
Examined the QCG Sale and Purchase
Agreement to understand terms and
conditions and their impact on the
acquisition accounting;
>
Assessed appropriateness of the identified
intangible assets and cash flows identified
as attributable to these assets;
>
Reviewed the valuation report of
management’s expert and assessed the
methodology and assumptions adopted by
management for calculating the fair values
of intangible assets arising on acquisition;
>
Engaged EY valuation specialists to assess
the reasonableness of the key assumptions
by considering Personal Group’s (QCG’s)
specific circumstances as well as
comparable companies;
>
Assessed completeness of the intangible
assets arising from acquisition;
>
Assessed appropriateness of the identified
CGU and challenged the profitability
projections of the CGU, specifically growth
rate, royalty rates and obsolescence
assumptions;
>
Assessed appropriateness of the
impairment model and challenged the
key assumptions applied by management,
specifically discount rate and short-term
and long-term growth rates; and
>
Considered whether the applied
accounting treatment is in compliance
with IFRS and the Group’s accounting
policy, and the Group disclosures are in line
with the required reporting framework.
We are satisfied that the
intangible assets arising
from the acquisition of
QCG are appropriately
identified and accounted
for and their valuation
at the acquisition date is
materially correct.
We are satisfied that
there is no impairment
and the carrying value
of the goodwill is
appropriate as at
31 December 2022.
In addition, we are
satisfied that the
accounting for the
acquisition and related
disclosures are in
compliance with the
applicable accounting
framework.
Risk
Our response to the risk
Key observations
communicated to the
Audit Committee
Valuation of Innecto goodwill
(2022: £2.6m, 2021: £2.6m)
We consider the risk associated with
the valuation of Innecto 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 83); and Note 14 of
the Consolidated Financial
Statements (pages 95 to 97).
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.
As at 31 December 2022 we noted
that 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
are dependent on the continued
projected growth from digital and
consultancy income. Current 2023
forecasts show a more positive
outlook for Innecto, but due to
the economic uncertainty and
inflationary pressures that may
impact 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 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 and appropriate
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;
>
Assessed the appropriateness of the
identified CGU and attributed cash flows;
>
Challenged the future cash flow
projections of Innecto to ensure pipeline
business and conversion rates included
in the projections are appropriate by
comparing to prior year accuracy of
forecasting and applying sensitivity
analysis;
>
Engaged our valuation specialists to assess
methodologies and assumptions used in
the analysis including the reasonableness
of the discount rate by considering
Innecto’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 IFRS and the Group’s accounting
policy, and the Group disclosures are in line
with the required reporting framework.
Based on our work
we are satisfied that
the carrying value of
Goodwill in relation
to the acquisition of
Innecto is not materially
misstated.
However, there is
inherent uncertainty
within the forecasted
cash flows used in the
impairment model due
to the expected growth
in Innecto (disclosed in
Note 14 of the financial
statements). These
uncertainties could have
a significant adverse
impact on the future
cashflows 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
Key audit matters
continued
Governance
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Overview
Personal Group Holdings Plc |
Annual Report and Accounts 2022
67
Financial
Statements
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 judgement was that performance materiality was 75% (2021: 75%)
of our planning materiality, namely £146,288 (2021: £165,000). 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 £16,440 to £146,288 (2021:
£33,000 to £165,000).
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 £9,000 (2021: £11,000), 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.
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 £195,050 (2021: £219,000), which is 5%
(2021: 5%) of the consolidated profit before tax, adjusted for the Let’s Connect impairment
of £10.6m. Given the one-off nature of the impairment, we have excluded it from our
materiality calculation. The Group has been profitable over a number of years, and we
judge the focus of shareholders to be the Group’s underlying profitability and earnings
per share. We consider that it remains the most appropriate basis to determine materiality
for the Group.
We reassessed the initial materiality for the Group from £217,000 to £195,050 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. When reassessing
materiality, we gave due consideration to the impact of the goodwill impairment as set
out above. We reassessed our audit procedures as a result of the decreased materiality.
We determined materiality for the Parent Company to be £252,832 (2021: £250,000),
which is 1% (2021: 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.
We also reassessed initial materiality for the Parent Company from £267,300 to £252,832
due to a decrease in the Parent Company’s equity between 31 October 2022 (upon which
our initial materiality was based) and 31 December 2022. We considered the impact of this
on the extent of our audit procedures.
Independent Auditor’s Report
continued
Governance
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Overview
Personal Group Holdings Plc |
Annual Report and Accounts 2022
68
Financial
Statements
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 and the part of the Directors’ Remuneration
Report to be audited 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 61,
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.
Other information
The other information comprises the information included in the annual report set out
on pages 1 to 62, other than the financial statements and our auditor’s report thereon.
The directors are responsible for the other information.
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.
In connection with our audit of the financial statements, 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 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 or a material misstatement of the
other information. 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, the part of the directors’ remuneration report to be audited has been
properly prepared in accordance with 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.
Independent Auditor’s Report
continued
Governance
Strategic
Report
Overview
Personal Group Holdings Plc |
Annual Report and Accounts 2022
69
Financial
Statements
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
27 March 2023
Explanation as to what extent the audit was considered capable of
detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations.
We design procedures in line with our responsibilities, outlined above, to detect
irregularities, including fraud. The risk of not detecting a material misstatement due to
fraud is higher than the risk of not detecting one resulting from error, as fraud may involve
deliberate concealment by, for example, forgery or intentional misrepresentations,
or through collusion. The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below.
However, the primary responsibility for the prevention and detection of fraud rests with
both those charged with governance of the company and management.
>
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.
>
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.
Independent Auditor’s Report
continued
Personal Group Holdings Plc |
Annual Report and Accounts 2022
Overview
Strategic
Report
Governance
Financial
Statements
70
Consolidated Income Statement
Note
2022
£’000
2021
£’000
Gross premiums written
25,660
25,050
Outward reinsurance premiums
(138)
(163)
Change in unearned premiums
(254)
(208)
Change in reinsurers’ share of unearned premiums
(11)
(9)
Earned premiums net of reinsurance
5
25,257
24,670
Employee benefits and services income
5
23,627
22,753
Voucher resale income
5
37,389
26,852
Other income
5
237
215
Investment income
6
145
23
Group revenue
86,655
74,513
Claims incurred
7
(6,990)
(6,049)
Insurance operating expenses
8
(6,619)
(4,860)
Employee benefits and services expenses
5
(22,236)
(22,370)
Voucher resale expenses
(37,368)
(26,894)
Other expenses
(33)
82
Group administration expenses
(8,973)
(9,779)
Share based payments expenses
22
(291)
(169)
Unrealised losses on equity investments
(210)
Charitable donations
(100)
(100)
Group expenses
(82,820)
(70,139)
Operating profit
3,835
4,374
Finance costs
(20)
(32)
Goodwill impairment
14
(10,575)
(Loss)/Profit before tax
(6,760)
4,342
Taxation
11
(493)
(745)
(Loss)/Profit for the year
(7,253)
3,597
The loss for the year is attributable to equity holders of Personal Group Holdings Plc
Earnings per share
Pence
Pence
Basic
12
(23.2)
11.5
Diluted
12
(23.2)
11.5
There is no other comprehensive income for
the year and, as a result, no statement of
comprehensive income has been produced.
The accompanying accounting policies and notes
form an integral part of these financial statements.
Personal Group Holdings Plc |
Annual Report and Accounts 2022
Overview
Strategic
Report
Governance
Financial
Statements
71
Consolidated Balance Sheet
at 31 December 2022
Note
2022
£’000
2021
£’000
ASSETS
Non-current assets
Goodwill
14
2,684
12,696
Intangible assets
15
2,384
1,637
Property, plant and equipment
16
4,639
5,033
9,707
19,366
Current assets
Financial investments
17
3,031
2,596
Trade and other receivables
19
15,863
14,035
Reinsurance assets
20
95
108
Inventories
18
726
898
Cash and cash equivalents
21
16,958
20,291
Current tax assets
229
310
36,902
38,238
Total assets
46,609
57,604
The accompanying accounting policies and notes
form an integral part of these financial statements.
Personal Group Holdings Plc |
Annual Report and Accounts 2022
Overview
Strategic
Report
Governance
Financial
Statements
72
Consolidated Balance Sheet
at 31 December 2022 continued
Note
2022
£’000
2021
£’000
EQUITY
Equity attributable to equity holders of Personal Group
Holdings Plc
Share capital
22
1,562
1,561
Share premium
22
1,134
1,134
Share based payment reserve
367
158
Capital redemption reserve
24
24
Other reserve
(55)
(32)
Profit and loss reserve
27,946
38,436
Total equity
30,978
41,281
LIABILITIES
Non-current liabilities
Deferred tax liabilities
23
681
478
Trade and other payables
24
130
402
Current liabilities
Trade and other payables
24
11,346
12,356
Insurance contract liabilities
25
3,474
3,087
14,820
15,443
Total liabilities
15,631
16,323
Total equity and liabilities
46,609
57,604
The financial statements were approved by the Board on 27 March 2023.
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.
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Company Balance Sheet
at 31 December 2022
Note
2022
£’000
2021
£’000
ASSETS
Non-current assets
Investment in subsidiary undertakings
26
25,474
25,203
25,474
25,203
Current assets
Trade and other receivables
19
322
192
Cash and cash equivalents
21
237
119
559
311
Total assets
26,033
25,514
EQUITY
Equity attributable to equity holders of Personal Group Holdings Plc
Share capital
22
1,562
1,561
Share premium
22
1,134
1,134
Share based payment reserve
429
158
Capital redemption reserve
24
24
Other reserve
(55)
(32)
Profit and loss reserve
22,217
22,172
Total equity
25,311
25,017
LIABILITIES
Current liabilities
Trade and other payables
24
722
497
Total liabilities
722
497
Total equity and liabilities
26,033
25,514
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 the year was £3,363,000 (2021: £2,278,000).
The financial statements were approved by the Board on 27 March 2023.
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.
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Consolidated Statement of Changes in Equity
for the year ended 31 December 2022
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 2022
1,561
1,134
24
158
(32)
38,436
41,281
Dividends paid
(3,310)
(3,310)
Employee share-based compensation
271
20
291
Proceeds of SIP* share sales
11
11
Cost of SIP shares sold
20
(20)
Cost of SIP shares purchased
(43)
(43)
LTIP options exercised
1
(62)
62
1
Transactions with owners
1
209
(23)
(3,237)
(3,050)
Loss for the year
(7,253)
(7,253)
Balance as at 31 December 2022
1,562
1,134
24
367
(55)
27,946
30,978
Balance as at 1 January 2021
1,561
1,134
24
(21)
38,076
40,774
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
*
PG Share Ownership Plan (SIP)
The accompanying accounting policies and notes form an integral part of these financial statements.
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Company Statement of Changes in Equity
for the year ended 31 December 2022
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 2022
1,561
1,134
24
158
(32)
22,172
25,017
Dividends paid
(3,310)
(3,310)
Employee share-based compensation
271
271
Proceeds of SIP* share sales
11
11
Cost of SIP shares sold
20
(20)
Cost of SIP shares purchased
(43)
(43)
Shares issued in the year
1
1
Transactions with owners
1
271
(23)
(3,319)
(3,070)
Profit for the year
3,364
3,364
Balance as at 31 December 2022
1,562
1,134
24
429
(55)
22,217
25,311
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
*
PG Share Ownership Plan (SIP)
The accompanying accounting policies and notes form an integral part of these financial statements.
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Consolidated Cash Flow Statement
Note
2022
£’000
2021
£’000
Net cash from operating activities (see next page)
3,240
7,588
Investing activities
Additions to property, plant and equipment
16
(332)
(236)
Additions to intangible assets
15
(1,196)
(981)
Proceeds from disposal of property, plant and equipment
39
1
Proceeds from disposal of financial assets
871
Purchase of financial assets
(1,517)
(9)
Interest received
6
145
23
Acquisition of QCG Limited
32
(812)
Net cash from investing activities
(2,802)
(1,202)
Financing activities
Proceeds from issue of shares
1
Interest paid
2
Purchase of own shares by the SIP*
(54)
(35)
Proceeds from disposal of own shares by the SIP*
21
20
Payment of lease liabilities
30
(429)
(427)
Dividends paid
13
(3,310)
(3,244)
Net cash used in financing activities
(3,771)
(3,684)
Net change in cash and cash equivalents
(3,333)
2,702
Cash and cash equivalents, beginning of year
21
20,291
17,589
Cash and cash equivalents, end of year
21
16,958
20,291
*
PG Share Ownership Plan (SIP)
The accompanying accounting policies and notes form an integral part of these financial statements.
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Consolidated Cash Flow Statement
continued
Note
2022
£’000
2021
£’000
Operating activities
(Loss)/Profit after tax
(7,253)
3,597
Adjustments for
Depreciation
16
1,052
966
Amortisation of intangible assets
15
786
585
Goodwill impairment
14
10,575
Profit or loss on disposal of property, plant and equipment
12
11
Realised and unrealised investment losses
210
Interest received
(145)
(23)
Interest charge
20
32
Share-based payment expenses
5
291
169
Taxation expense recognised in income statement
11
493
745
Changes in working capital
Trade and other receivables
(1,637)
4,280
Trade and other payables
(1,010)
(1,817)
Inventories
172
(37)
Taxes paid
(326)
(920)
Net cash from operating activities
3,240
7,588
The accompanying accounting policies and notes form an integral part of these financial statements.
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Company Cash Flow Statement
Note
2022
£’000
2021
£’000
Net cash from operating activities (see below)
10
786
Investing activities
Dividends received
3,450
2,500
Net cash used in investing activities
3,450
2,500
Financing activities
Proceeds from issue of shares
1
Purchase of own shares by the SIP*
(54)
(35)
Proceeds from disposal of own shares by the SIP*
21
20
Dividends paid
13
(3,310)
(3,244)
Net cash used in financing activities
(3,342)
(3,259)
Net change in cash and cash equivalents
118
27
Cash and cash equivalents, beginning of year
21
119
92
Cash and cash equivalents, end of year
21
237
119
Operating activities
Profit after tax
3,364
2,278
Changes in working capital
Trade and other receivables
(129)
1,086
Trade and other payables
225
(78)
Dividends received
(3,450)
(2,500)
Net cash from operating activities
10
786
*
PG Share Ownership Plan (SIP)
The parent Company has cash and cash equivalents at 31 December 2022 including £168,000 (2021: £50,000) 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.
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Notes to the Financial Statements
1 General information
The principal activities of Personal Group Holdings Plc (“the Company”) and subsidiaries
(together “the Group”) include providing employee services and transacting short-term
accident and health insurance in the UK.
The Company is a limited liability company incorporated and domiciled in England.
The address of its registered office is John Ormond House, 899 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 27 March 2023.
2 Accounting policies
These financial statements of Personal Group Holdings Plc are for the year ended
31 December 2022. The financial statements are prepared in accordance with UK
endorsed IFRS in conformity with the requirements of Companies Act 2006.
IFRS 17 – Insurance Contracts
is to be effective for periods from 1 January 2023. IFRS 17
‘Insurance contracts’ provides comprehensive guidance on accounting for insurance
contracts and investment contracts with discretionary features and is expected to
have a significant impact on accounting for insurance contracts and presentation of the
insurance revenue and insurance service result for many insurers.
Under IFRS 17, different measurement approaches for the insurance contract liabilities apply,
depending on the length and nature of the insurance contracts being accounted for.
For certain contracts, IFRS 17 foresees a simplified (premium allocation) approach,
which can be applied to contracts that have a coverage period of 12 months or less or
for which such simplification would produce a measurement of the liability for remaining
coverage and liability for incurred claims, that would not differ materially from the one
obtained applying the general model.
All hospital plan, death benefit plan and convalescence plan policies written by the Group
are less than 12 months in length. While Employee Default policies may be longer than
12 months, calculations performed by the Group indicate that the application of the
simplified premium allocation approach under IFRS 17 does not yield a materially different
result than that obtained by applying the general model (profit difference identified for
2022 would have been circa £50k higher under the General Method).
The Group has, therefore, assessed that all insurance contracts issued, and held in force
as of the transition date, will be eligible for the application of the simplified approach
and will apply the simplified approach for such contracts under IFRS 17. Due to their
short-term nature such in-force contracts will typically use the fully retrospective
transition approach.
The Group will adopt IFRS 17 retrospectively and restate the comparative period of 2022
where required. The Group expects the impact of IFRS 17 on net equity at 1 January 2022
and 31 December 2022 to be immaterial.
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 application of 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 2022. 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.
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Notes to the Financial Statements
continued
2 Accounting policies
continued
2.1 Basis of preparation
continued
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 2022 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 27 March 2024. The Directors believe that projections have been prepared on
a prudent basis and have also considered the impact of a range of potential changes
to trading performance over the next 12 months ending 27 March 2024, 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.
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.
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Notes to the Financial Statements
continued
2 Accounting policies
continued
2.4 Revenue
continued
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.
Other Owned Benefits – 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 (Other Owned Benefits)
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 – Platform income (Benefits Platform)
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 resale 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.
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Notes to the Financial Statements
continued
2 Accounting policies
continued
2.4 Revenue
continued
IFRS 15 – Consultancy income (Pay and Reward)
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 hours spent.
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.
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 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.
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. When IFRS 17 becomes effective from
1st January 2023, the margin of prudence added to the claims provision will form the
basis of the risk adjustment for non-financial risk. 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.
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Notes to the Financial Statements
continued
2 Accounting policies
continued
2.7 Property, plant and equipment and intangible assets
continued
Research and development
continued
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.
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 lowest levels 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 from synergies 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 14 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.
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Notes to the Financial Statements
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2 Accounting policies
continued
2.10 Taxation
continued
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; equity investments, 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.
Equity investments are financial assets categorised as at fair value through profit and
loss and are initially recognised at fair value on the date acquired and are subsequently
re-measured at their fair value. Changes in the fair value of equity investments are
recognised in profit or loss.
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 expected to 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.
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Notes to the Financial Statements
continued
2 Accounting policies
continued
2.11 Financial assets
continued
Impairment of financial assets
continued
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 or loss.
A financial liability is de-recognised only when the obligation is extinguished, that is,
when the obligation is discharged or cancelled or expires.
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.
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”.
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Notes to the Financial Statements
continued
2 Accounting policies
continued
2.17 Share-based payment
continued
Equity-settled share-based payment
continued
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.
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Notes to the Financial Statements
continued
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.
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.
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
2022
£’000
2021
£’000
2022
£’000
2021
£’000
Insurance receivables
2,391
1,665
Reinsurance assets
95
108
Trade debtors
11,349
10,592
Accrued interest
14
10
Cash and cash equivalents
16,958
20,291
237
119
Equity investments
1,290
Bank deposits
1,741
2,596
Total credit risk
33,838
35,262
237
119
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.
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 £8.2m (2021: £8.4m) 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 2022 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 2022, 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 17.
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Notes to the Financial Statements
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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 2022, bank deposits and cash and cash equivalents were £18,700,000
(2021: £22,887,000). If UK interest rates increased by 2%, net finance income would
increase by approximately £374,000 with a corresponding increase to equity.
Market risk
The Group is exposed to market risk, in the form of equity price risk, in respect of its
equity investments in managed funds which are invested in worldwide equities and so
are valued via directly observable inputs (level 1 inputs). The assets are measured at fair
value through profit and loss.
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 2022, the Group’s and Company’s liabilities have contractual
maturities (including interest payments where applicable) as summarised below:
Within 6
months
£’000
6–12
months
£’000
1–5 years
£’000
Non-
cash
items*
£’000
Total
£’000
Group
At 31 December 2022
Trade and other payables
10,422
186
868
11,476
Insurance contract liabilities
2,321
1,153
3,474
Total liquidity risk
12,743
186
2,021
14,950
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
Company
At 31 December 2022
Amounts owed to Group
undertakings
431
431
Total liquidity risk
431
431
At 31 December 2022
257
257
Amounts owed to subsidiary
undertakings
257
257
*
Non-cash items relate to unearned premiums or unearned revenue across the different business segments.
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 2022 and 2021.
Insurance claim and related risks
During the year, Personal Assurance Plc (PA) underwrote two categories of business and
Personal Assurance (Guernsey) Ltd (PAGL) a further two categories, 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 2022, represent
99.1% (2021: 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 26.4% (2021: 19.2%). While the
loss ratio has increased year on year, historic losses have been consistent over the period
of time that these policies have been underwritten and therefore the Board has taken
the decision to continue to accept the underwriting risk in full and not to use reinsurance
as a way of managing insurance claim risk. This will continue to be reviewed to ensure
that this remains appropriate going forward.
At present the maximum payable on any one single claim is £91,375 (2021: £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 2022 was 174,887
(2021: 172,829) and the total annualised premium value of these policies was £20,720,000
(2021: £19,227,000). The average amount paid per claim in 2022 was £184 (2021: £205).
Governance
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Financial
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Notes to the Financial Statements
continued
3 Risk management objectives and policies
continued
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 2022 these policies represent 0.9% (2021: 1.2%) of PA’s gross premiums
written. The total annualised premium value of these policies was £208,000 (2021:
£231,000). The gross loss ratio (excluding claims handling costs) on these policies at
31 December 2022 was 41.1% (2021: 50.8%). The total number of these individual policies
in force at 31 December 2022 was 509 (2021: 674) and the average amount paid per claim
in 2022 was £8,908 (2021: £11,116).
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.
At 31 December 2022 these policies represent 90% (2021: 89%) of PAGL's gross premiums
written. The total annualised premium value of these policies was £7,068,000 (2021:
£5,929,000). The gross loss ratio (excluding claims handling costs) on these policies at
31 December 2022 was 23.6% (2021: 32.6%). 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 2022 was 54,497 (2021: 62,482) and the average amount
paid per death in 2022 was £9,365 (2021: £9,518).
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 2022 these policies represent 10% (2021: 11%) of PAGL’s gross premiums
written. The gross loss ratio (excluding claims handling costs) on these policies at
31 December 2022 was 3% (2021: 82.3%) and the average amount paid per individual
default in 2022 was £538 (2021: £750).
Group loss ratio
For the year ended 31 December 2022 the gross claims ratio of the Group was 26.9%
(2021: 24.9%), by taking claims incurred as a proportion of earned premium. A 2% increase
in the claims ratio would increase claims incurred by approximately £513,000.
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 £11.5m (2021: £12.6m) which was in excess of the estimated SCR of £3.5m
(2021: £3.5m). This represented an estimated solvency coverage ratio of 333% (2021:
357%). The movement year on year remains consistent and is in line with the Board’s
risk appetite of holding greater than 150% 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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Notes to the Financial Statements
continued
4 Capital management and requirements
continued
At 31 December 2022, 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
3,469
11,541
8,071
Personal Assurance Services
Limited
FCA
43
4,330
4,287
Personal Group Benefits Limited
FCA
51
521
470
Berkeley Morgan Limited
FCA
75
411
336
Personal Assurance (Guernsey)
Limited
GFSC
914
2,849
1,935
Personal Assurance Plc and Personal Assurance (Guernsey) Limited maintains the
majority of their assets in cash and short-term fixed interest rate deposits.
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
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 PG Let's Connect 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 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 the Group’s pay and reward consultancy Company
Innecto, purchased in 2019, and QCG, purchased in 2022. Revenue in this segment relates to
consultancy, surveys, and licence income derived from selling digital platform subscriptions.
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).
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Notes to the Financial Statements
continued
5 Segment analysis
continued
2022
£’000
2021
£’000
Revenue by segment
Affordable Insurance
25,257
24,670
Other Owned Benefits
16,800
18,214
Benefits Platform
7,446
6,051
Benefits Platform – Group Elimination
(2,627)
(2,748)
Pay & Reward
2,008
1,236
Other income
Voucher resale
37,389
26,852
Other
237
215
Investment income
145
23
Group Revenue
86,655
74,513
Adjusted EBITDA* contribution by segment
Affordable Insurance
9,032
11,012
Other Owned Benefits
664
730
Benefits Platform
2,866
2,098
Pay & Reward
495
303
Other
160
279
Group admin and central costs**
(7,107)
(8,228)
Charitable donations
(100)
(100)
Adjusted EBITDA*
6,010
6,094
Depreciation**
(1,052)
(966)
Amortisation**
(786)
(585)
Interest
(20)
(32)
Share based payments expenses
(291)
(169)
Impairment
(10,575)
Corporate acquisition costs
(46)
(Loss)/Profit before tax
(6,760)
4,342
*
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 costs constitute Group administration expenses on the face of the Consolidated Income Statement.
Segmental assets and liabilities
2022
2021
Assets
£’000
Liabilities
£’000
Assets
£’000
Liabilities
£’000
Insurance
25,080
8,419
28,205
8,168
Other Owned Benefits
9,608
4,794
10,910
6,176
Benefits Platform
2,410
1,325
2,055
1,400
Pay & Reward
1,190
17
471
Other
8,321
1,076
15,963
579
Total segment assets and liabilities
46,609
15,631
57,604
16,323
Other assets comprise mostly of goodwill, intangible assets, and assets associated with
the sale of e-vouchers through the platform. Other liabilities comprise mostly of liabilities
associated with the sale of e-vouchers.
5a Further segmental analysis
The following note provides additional analysis on Group segmental income and expenditure.
Employee benefits and services income
2022
£’000
2021
£’000
Other Owned Benefits
16,800
18,214
Benefits Platform
7,446
6,051
Benefits Platform Group elimination*
(2,627)
(2,748)
Pay & Reward
2,008
1,236
Total employee benefits and service income
23,627
22,753
Insurance operating expenses
2022
£’000
2021
£’000
Operating expenses
9,246
7,608
Group elimination*
(2,627)
(2,748)
Total insurance operating expenses
6,619
4,860
*
In order to properly assess the segments individually, this Group elimination apportions at 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.
5a Further segmental analysis
continued
Employee benefits and services expenses
2022
2021
Cost of
sales
£’000
Operating
expenses
£’000
Total
expenses
£’000
Cost of
sales
£’000
Operating
expenses
£’000
Total
expenses
£’000
Other Owned
Benefits
14,502
1,639
16,141
15,818
1,666
17,484
Benefits Platform
1,590
2,992
4,582
1,106
2,847
3,953
Pay & Reward
29
1,484
1,513
933
933
Total employee
benefits and
services expenses
16,121
6,115
22,236
16,924
5,446
22,370
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 £3,677,000 (2021: £6,668,000) of the total transaction value of
£40,830,000 (2021: £33,096,000).
2022
£’000
2021
£’000
Voucher revenue recognised as principal
37,153
26,428
Voucher resale for revenue recognised as agency
3,677
6,668
Gross transactional value
40,830
33,096
6 Investment income
2022
£’000
2021
£’000
Interest income from cash on deposit
145
23
Total investment income
145
23
7 Claims incurred
2022
£’000
2021
£’000
Claims paid
6,353
5,884
Reinsurers’ share of claims paid
(66)
(63)
Claims handling expenses paid
570
542
6,857
6,363
Increase in claims provision
132
(275)
Reinsurers’ share of movements in claims provision
1
(39)
133
(358)
Total claims incurred
6,990
6,049
8 Insurance operating expenses
2022
£’000
2021
£’000
Incurred acquisition costs
5,078
3,472
Administration expenses
1,541
1,388
Total Insurance operating expenses
6,619
4,860
Total commission incurred during the year in respect of direct insurance was £1,107,000
(2021: £762,000).
Notes to the Financial Statements
continued
92
Financial
Statements
Governance
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Notes to the Financial Statements
continued
9 Directors’ and employees’ remuneration
a) Staff costs (excluding Non-Executive Directors’ fees) during the year
were as follows:
2022
£’000
2021
£’000
Wages and salaries
11,289
11,151
Share-based payments expense
291
169
Social security costs
1,450
1,278
Other pension costs
561
504
Total staff costs
13,591
13,102
During the year the Group received £nil from the job retention scheme (2021: £126,000).
These government grants have been offset against the salary costs in the table above.
Average number of employees through the year was as follows:
2022
Number
2021
Number
Administration
161
160
Sales and marketing
101
73
Total number of employees
262
233
b) Directors’ remuneration:
2022
£’000
2021
£’000
Emoluments
916
1,024
Amounts paid to third parties in respect of Directors’
services
12
Gain on exercise of options
79
Pension contributions to Group and self-invested
personal pension schemes
29
26
Total Director’s remuneration
1,024
1,062
During the year, three Directors (2021: three 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.
2022
£’000
2021
£’000
Emoluments
332
416
Gain on exercise of options
79
Pension contributions to Group and self-invested
personal pension schemes
10
10
Total
421
426
Details of individual Director’s remuneration are given in the Remuneration Report on pages
54 to 57. 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:
2022
£’000
2021
£’000
Short-term employee benefits:
Salaries including bonuses
1,443
2,052
Social security costs
199
283
Gain on exercise of options
79
1,721
2,335
Post-employment benefits:
Defined contribution pension plans
62
66
Total remuneration
1,783
2,401
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Notes to the Financial Statements
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10 Profit before tax
2022
£’000
2021
£’000
Profit before tax is stated after:
Auditor’s remuneration (inclusive of non-recoverable
VAT):
Audit services:
Audit of Company financial statements – Current Year
158
172
Audit of subsidiary undertakings
139
120
Non-audit services
Depreciation of property, plant and equipment
1,052
966
Amortisation of intangibles
786
585
Rental income receivable
94
101
11 Tax
The relationship between the expected tax expense based on the effective tax rate of
Personal Group Holdings Plc at 19% (2021: 19%) and the tax expense recognised in the
income statement can be reconciled as follows:
2022
£’000
2021
£’000
Profit before tax
(6,760)
4,342
Tax rate
19%
19%
Expected tax expense
(1,284)
825
Adjustment for non-deductible expenses – Goodwill
impairment
2,009
Adjustment for non-deductible expenses – Other
122
68
Adjustment for tax exempt revenues
(254)
(101)
Other adjustments
Effect of tax rate changes on deferred tax
67
Tax credit in respect of prior years
(100)
(109)
Adjustment for previously non-deductible expenses
(5)
Actual tax expense
493
745
Continuing operations
493
745
Current tax expense
471
775
In respect of prior years
(100)
(109)
Deferred tax
Origination and reversal of temporary differences
122
12
Effect of tax rate changes
67
Total tax
493
745
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Notes to the Financial Statements
continued
12 Earnings per share
2022
2021
Earnings
£’000
Weighted
average
number
of shares
Pence
per
share
Earnings
£’000
Weighted
average
number of
shares
Pence
per
share
Basic
(7,253)
31,214,765
(23.2)
3,597
31,205,375
11.5
Dilutive effect of shares
in Employee Share-
based schemes
0.0
755,224
0.0
0.0
8,162
0.0
Diluted
(7,253)
31,969,989
(23.2)
3,597
31,213,537
11.5
The weighted average number of shares shown above excludes unallocated own Company
shares held by Personal Group Trustees Ltd. Excluding the goodwill impairment, the earnings
per share for 2022 were 10.9p (Diluted 10.6p).
13 Dividends
2022
Pence per
share
2021
Pence per
share
2022
£’000
2021
£’000
Equity dividends
Q2
5.300
5.100
1,655
1,591
Q4
5.300
5.300
1,657
1,654
10.600
10.400
3,312
3,245
Less: amounts paid on own
shares
(2)
(1)
Total dividends
10.600
10.400
3,310
3,244
The dividends listed above were paid in the calendar year. Dividends of 10.6p per share
were paid relating to the 2021 financial period and an interim payment of 5.3p has been
paid relating to the 2022 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
QCG
£’000s
Total
£’000s
Cost
At 1 January 2022
10,575
2,121
12,696
Additions in the year (note 32)
563
563
Disposal
At 31 December 2022
10,575
2,121
563
13,259
Impairment charged
At 1 January 2022
Impairment charge for year
10,575
10,575
At 31 December 2022
Net book value at
31 December 2022
2,121
563
2,684
PG Let’s
Connect
£’000s
Innecto
£’000s
QCG
£’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
The net carrying values at 31 December 2022 have been reviewed for impairment.
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Notes to the Financial Statements
continued
14 Goodwill
continued
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 a result in the change of the operational landscape at a key customer, PG Let's
Connect has lost access to a significant portion of its customer base from previous
years. This, combined with the ongoing impacts of COVID-19 on stock availability and
profit margins, has resulted in the revenue and profitability outlooks of the business
being lessened at the end of December 2022.
The value in use of the CGU was found to no longer support the recognition of any
goodwill. As such, an impairment of £10,575,000 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.
In line with previous years, an expected cash flow approach, based on various 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.
Discount rate
The long-term growth rate into perpetuity was determined as 2.5% (30-year average
of UK consumer price index). To reflect the increased uncertainty of the business
operations, the cash flows were then discounted using a post-tax discount rate of 18%
(2021: 13%) based on PG Let’s Connect weighted average cost of capital, using the capital
asset pricing model.
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.
Gross profit margin
Management applied an expected gross margin of 15% on its future revenue projections,
a slight increase on actual results for the year ended 31 December 2022 (14%). This is due
to the fact that the customer mix in future periods, as a result of the lost key customer,
is expected to result in a higher margin.
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 value
of the impairment. The Base column refers to the value of the impairment following the
review completed by management.
Sensitivity Analysis – Impact on impairment
- %
£’000s
Base
£’000s
+ %
£’000s
Discount Rate
( +/- 2%)
10,548
10,575
10,575
Gross Income
( +/- 5%)
10,575
10,575
10,071
Gross Profit Margin
( +/- 2%)
10,575
10,575
10,484
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Notes to the Financial Statements
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14 Goodwill
continued
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 2.3% (30-year average of UK consumer price index).
These cash flows were then discounted using a risk mitigating post-tax discount rate
of 22.4% (2021: 22.4%) 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.
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) 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%)
2,091
1,438
937
Terminal Growth Rate
(+/- 1%)
1,301
1,438
1,577
QCG
The third cash generating unit (CGU) considered was for QCG. 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 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 2.3% (30-year average of UK consumer price index).
These cash flows were then discounted using a risk mitigating post-tax discount rate of
24.8% based on QCG’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.
Sensitivity
While management are confident that QCG 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) 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
(+/- 3%)
382
141
(1)
Terminal Growth Rate
(+/- 1%)
109
141
174
Management believe that there is no cause for an impairment in either QCG 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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Notes to the Financial Statements
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15 Intangible assets
For the year ended 31 December 2022
Customer
value
£’000
Pay & Reward
customer
value and
trade name
£’000
Innecto
technology
£’000
Computer
software and
development
£’000
Internally
generated
computer
software
£’000
WIP
£’000
Total
£’000
Cost
At 1 January 2022
1,648
726
298
2,287
506
198
5,663
Acquisitions
337
337
Additions
201
995
1,196
Transfers
190
(190)
Disposals
At 31 December 2022
1,648
1,063
298
2,678
506
1,003
7,196
Amortisation
At 1 January 2022
1,648
411
170
1,293
504
4,026
Provided in the year
179
60
545
2
786
Eliminated on disposal
At 31 December 2022
1,648
590
230
1,838
506
4,812
Net book amount at 31 December 2022
473
68
840
1,003
2,384
Net book amount at 31 December 2021
315
128
994
2
198
1,637
The Pay & Reward customer values and trademark include acquired intangibles relating to Innecto and QCG. This, and the Innecto technologies, is being amortised through the
consolidated income statement over a five-year period. The net carrying values on 31 December 2022 have been assessed for impairment and no impairment was deemed necessary.
The assets were assessed in conjunction with the goodwill value in Note 14. The total value of amortisation relating to acquired intangibles was £238k (2021: £205k).
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Notes to the Financial Statements
continued
15 Intangible assets
continued
For the year ended 31 December 2021
Customer
value
£’000
Pay & Reward
customer
value and
trade name
£’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
726
298
2,287
506
198
5,663
Amortisation
At 1 January 2021
1,648
266
110
923
498
3,445
Provided in the year
145
60
374
6
585
Eliminated on disposal
(4)
(4)
At 31 December 2021
1,648
411
170
1,293
504
4,026
Net book amount at 31 December 2021
315
128
994
2
198
1,637
Net book amount at 31 December 2020
460
188
598
8
1,254
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Notes to the Financial Statements
continued
16 Property, plant and equipment
For the year ended 31 December 2022
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 2022
5,037
157
1,112
2,310
38
1,204
9,858
Acquisition
7
7
Additions
324
8
371
703
Disposals
(436)
(436)
At 31 December 2022
5,037
157
1,443
2,318
38
1,139
10,132
Depreciation
At 1 January 2022
1,828
125
786
1,265
37
784
4,825
Acquisition
2
2
Provided in the year
88
9
270
209
1
475
1,052
Eliminated on disposal
(386)
(386)
At 31 December 2022
1,916
134
1,058
1,474
38
873
5,493
Net book amount at 31 December 2022
3,121
23
385
844
266
4,639
Net book amount at 31 December 2021
3,209
32
326
1,045
1
420
5,033
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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Notes to the Financial Statements
continued
16 Property, plant and equipment
continued
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
157
1,085
2,303
38
1,459
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 2021
1,742
102
774
1,064
34
907
4,623
Provided in the year
86
23
194
221
3
439
966
Eliminated on disposal
(182)
(20)
(562)
(764)
At 31 December 2021
1,828
125
786
1,265
37
784
4,825
Net book amount at 31 December 2021
3,209
32
326
1,045
1
420
5,033
Net book amount at 31 December 2020
3,295
55
311
1,239
4
552
5,456
17 Financial investments
Group
Company
2022
£’000
2021
£’000
2022
£’000
2021
£’000
Bank deposits
1,742
2,596
Equity investments
1,289
Total financial investments
3,031
2,596
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17 Financial investments
continued
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.
All current equity investments are valued using Level 1 inputs.
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:
2022
£’000
2021
£’000
Finished Goods – IT Salary Sacrifice
699
835
Vouchers for resale
27
63
Total Inventories
726
898
19 Trade and other receivables
Group
Company
2022
£’000
2021
£’000
2022
£’000
2021
£’000
Loans and receivables:
Insurance receivables
2,391
1,665
Trade Debtors
11,349
10,592
Amounts due from subsidiary undertakings
41
21
Accrued interest
14
10
Other prepayments and accrued income
2,109
1,768
281
171
Total trade and other receivables
15,863
14,035
322
192
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.
Other receivables include non-insurance trade receivables, and receivables relating to
float payments on the e-voucher platform.
A weighted average ageing of the expected loss provision is shown below:
2022
2021
Trade/
Insurance
Debtor
£’000
Weighted
Average
Provision
Credit
Loss
Provision
£’000
Trade/
Insurance
Debtor
£’000
Weighted
Average
Provision
Credit
Loss
Provision
£’000
Not Invoiced
2,565
0.3%
6
6,633
0.3%
16
Current
10,288
0.1%
10
4,357
0.1%
4
30 Days
619
0.8%
5
723
1.0%
8
60 Days
168
1.6%
3
257
2.1%
5
90 Days
45
4.1%
2
153
7.8%
12
150 Days
106
23.7%
25
217
17.9%
39
Total
13,791
0.3%
51
12,340
0.7%
84
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Notes to the Financial Statements
continued
19 Trade and other receivables
continued
Credit Loss Provision
2022
£’000
2021
£’000
Stage 1
Stage 2
51
84
Stage 3
Total
51
84
Set out below is the movement in the allowance for expected credit losses of trade
receivables and contracted assets:
2022
£’000
2021
£’000
At 1 January
84
114
Provision for expected credit losses
51
84
Provision release
(84)
(114)
At 31 December
51
84
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 £90,000 (2021: £160,000).
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
2022
£’000
2021
£’000
Reinsurers share of claims incurred
55
57
Reinsurers share of unearned premiums
40
51
Total reinsurance assets
95
108
21 Cash and cash equivalents
2022
£’000
2021
£’000
2022
£’000
2021
£’000
Cash at bank and in hand
11,746
14,945
237
119
Short-term deposits
5,212
5,346
Total cash and cash equivalents
16,958
20,291
237
119
22 Share capital
2022
£’000
2021
£’000
Authorised 200,000,000 ordinary shares of 5p each
10,000
10,000
Allotted, called up and fully paid 31,248,822 (2021: 31,219,207)
ordinary shares of 5p each
1,562
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 2022
was 88,822 (2021: 87,288). Of this amount, there are 70,807 (2021: 76,135) SIP shares that
have been unconditionally allocated to employees.
As at 31 December 2022, the Group maintained two share-based payment schemes for
employee compensation.
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104
Notes to the Financial Statements
continued
22 Share capital
continued
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. Exceptions
are made 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:
2022
2021
Number
Weighted
average
exercise
price
Pence
Number
Weighted
average
exercise
price
Pence
Outstanding at 1 January
226,743
384.1
205,559
394.5
Options granted in year
69,968
343.0
Options exercised in year
Options cancelled or lapsed
(17,492)
343.0
(48,784)
368.9
Outstanding at 31 December
209,251
387.6
226,743
384.1
The weighted average exercise price of 121,007 (2021: 95,294) share options exercisable
at 31 December 2022 was pence per share 446.35 (2021: 472.35).
There were no options granted under the CSOP scheme in 2022.
The weighted average remaining contracted life of outstanding options at 31 December
2022 was five years and four months (2021: six years and three months). The underlying
expected volatility was determined by reference to historical data. No special features
imminent to the options granted were incorporated into the measurement of fair value.
In total, £20,000 of employee compensation by way of share-based payment expense
has been included in the consolidated income statement for 2022 (2021: £11,000).
The corresponding credit is taken to equity. No liabilities were recognised due to share-based
transactions.
b) Long Term Incentive Plan (LTIP)
The Remuneration Committee approved a new LTIP scheme 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 the Group.
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 Performance Period.
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 been met.
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.
Two tranches of awards have been made to date in April 2021 and April 2022.
In total, £291,000 of employee share-based compensation has been included in the
consolidated income statement to 31 December 2022 (2021: £158,000). The corresponding
credit is taken to equity. No liabilities were recognised from share-based transactions.
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105
Notes to the Financial Statements
continued
23 Deferred tax
2022
2021
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
19
664
17
429
Intangible Assets
102
66
Share Options
66
85
766
17
495
Offset
(85)
(85)
(17)
(17)
Total deferred tax
681
478
2022
£’000
2021
£’000
At 1 January
(478)
(399)
Business Acquisition
(81)
Current year movement
(122)
(12)
Movement in provisions due to tax rate changes
(67)
At 31 December
(681)
(478)
At 31 December 2022 the Group had tax losses of £940,000 (2021: £945,000) in one of
its subsidiaries 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
Current
Group
Company
2022
£’000
2021
£’000
2022
£’000
2021
£’000
Financial liabilities measured at amortised
cost:
Amounts owed to subsidiary undertakings
431
257
Other creditors
8,106
8,099
80
26
Right of use creditor
148
72
211
Accruals
1,964
3,290
214
Deferred income
1,128
895
Total trade and other payables
11,346
12,356
722
497
Non-Current
Group
Company
2022
£’000
2021
£’000
2022
£’000
2021
£’000
Right of use creditor
130
402
Total
130
402
These liabilities are not secured against any assets of the Group.
Other creditors include insurance and non-insurance trade creditors, and creditors
relating to e-vouchers from the platform.
25 Insurance contract liabilities
2022
£’000
2021
£’000
Provision for claims
2,194
2,061
Claims settlement expenses
127
127
Unearned premiums
1,153
899
Total insurance contract liabilities
3,474
3,087
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106
Notes to the Financial Statements
continued
25 Insurance contract liabilities
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 £1,298,000 (2021: £1,121,000) 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.
The valuation of the provision for claims outstanding in the Group's subsidiary, Personal
Assurance Group Guernsey Limited of £836,000 (2021: £933,000) is also estimated based
on the Company's past claims experience to predict future claims and claims costs.
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
2022
2021
Gross
£’000
Reinsurance
£’000
Net
£’000
Gross
£’000
Reinsurance
£’000
Net
£’000
Provision for claims at 1 January
2,061
(57)
2,004
2,336
(18)
2,318
Claims paid during the financial year
(6,353)
66
(6,287)
(5,884)
63
(5,821)
Increase/(decrease) in liabilities:
Arising from current year claims
6,627
(16)
6,611
6,469
(43)
6,426
Arising from prior year claims
(141)
(48)
(189)
(860)
(59)
(919)
Total movement
133
2
135
(275)
(39)
(314)
Provision for claims at 31 December
2,194
(55)
2,139
2,061
(57)
2,004
b) Unearned premiums
2022
2021
Gross
£’000
Reinsurance
£’000
Net
£’000
Gross
£’000
Reinsurance
£’000
Net
£’000
At 1 January
899
(51)
848
695
(60)
635
Increase in the financial year
25,660
(138)
25,522
25,050
(163)
24,887
Release in the financial year
(25,406)
149
(25,257)
(24,846)
172
(24,674)
Movement in the financial year
254
11
265
204
9
213
At 31 December
1,153
(40)
1,113
899
(51)
848
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107
Notes to the Financial Statements
continued
26 Company investment in subsidiary undertakings
Shares in subsidiary
undertakings
2022
£’000
2021
£’000
Cost
At 1 January
38,101
37,943
Acquired in the year
Share-based expenses
271
158
At 31 December
38,372
38,101
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
25,474
25,203
At 31 December 2022 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.
Subsidiary undertaking
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
Quintige Consulting Group Limited
*#
HR consultancy
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
Personal Group Holdings Plc |
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108
Notes to the Financial Statements
continued
26 Company investment in subsidiary undertakings
continued
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 2022.
>
Personal Assurance Services Limited – 3194988.
>
Personal Group Benefits Limited – 3195037.
>
Berkeley Morgan Group Limited – 3456258.
>
Quintige Consulting Group Limited – 3773926.
27 Capital commitments
The Group has no capital commitments at 31 December 2022 and 31 December 2021.
28 Contingent liabilities
There were no contingent liabilities at 31 December 2022 and 31 December 2021.
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 2022 includes
assets and liabilities relating to Right of Use (ROU) assets as detailed below:
2022 – Right of use assets & lease liabilities
Net Book
Value
of Assets
£000
Lease
Liability
£000
Motor vehicles
114
111
Buildings
152
167
Total
266
278
2021 – Right of use assets & lease liabilities
Net Book
Value
of Assets
£000
Lease
Liability
£000
Motor vehicles
177
222
Buildings
242
252
Total
419
474
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
Interest
Expense
£000
Motor vehicles
396
12
Buildings
79
3
Total
475
15
Total operating lease payments due until the end of the lease, or the first break clause,
total £295,000 (2021: £388,000).
Financial
Statements
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109
Notes to the Financial Statements
continued
30 Leasing commitments and rental income receivable
continued
An analysis of these payments due is as follows:
2022
£’000
2021
£’000
Total lease payments falling due:
Within one year
167
193
Within one to two years
66
79
Within two to five years
62
116
Total
295
388
Total operating rent receivable payments due until the end of the lease or the first break
clause, total £nil (2021: £13,000). An analysis of these receivable payments due is
as follows:
2022
£’000
2021
£’000
Future minimum lease payments:
Within one year
13
Within one to two years
Within two to five years
Total
13
Below is a reconciliation of changes in liabilities arising from financing activities:
1 January
2022
£’000
Cash
Flows
£’000
New
leases
£’000
Other
£’000
31 December
2022
£’000
Current lease liabilities
222
(429)
371
26
190
Non-current lease liabilities
252
(122)
130
Total liabilities from
financing activities
474
(429)
371
(96)
320
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.
31 Related party transactions
Personal Group Holdings Plc holds a bank account which it uses for payments to
Company specific creditors. During 2022 and 2021 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:
2022
2021
Receivable
£’000
Payable
£’000
Receivable
£’000
Payable
£’000
Personal Assurance Plc
10
Personal Assurance Services Limited
11
5
Personal Group Benefits Limited
1
Personal Assurance Financial Services Plc
137
137
Multiplelisting Limited
100
100
Personal Management Solutions Limited
7
Mutual Benefit Limited
12
12
Partake Services Limited
3
3
Personal Group Limited
178
Berkeley Morgan Group Limited
4
4
Innecto People Group Consulting Limited
16
4
Total
41
428
21
254
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.
Personal Group Holdings Plc |
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110
Notes to the Financial Statements
continued
32 Acquisition of Quintige Consulting Group Limited
Summary of acquisition
On 1 July 2022, the Group acquired 100% of the issued share capital of Quintige Consulting
Group Limited (QCG), a provider of HR Consultancy and HR Survey Platforms. The acquisition
has enhanced the Group’s offering in the employee benefits market.
Details of the purchase consideration, the net assets acquired and goodwill are as follows;
2022
£’000
Purchase Consideration:
Cash Paid
966
Total
966
The assets and liabilities recognised as a result of the acquisition are as follows:
Fair Value
£’000
Intangible assets – Customer relationships
281
Intangible assets – Trade Name
56
Tangible fixed assets
5
Cash
154
Trade debtors
143
Other debtors
33
Trade creditors
(14)
Other creditors
(174)
Deferred tax liability recognised on acquisition
(81)
Net identifiable assets acquired
403
Goodwill
563
Net assets acquired
966
The goodwill is attributable to the workforce, the high profitability of the acquired
business and the future synergies expected within the wider Group. It will not be
deductible for tax purposes.
Intangible Asset Recognition
In assessing the value of separably identifiable intangibles acquired on acquisition,
Personal Group performed the valuation using forecast information available at the time
of the acquisition. Assets were recognised only when separately identifiable and where
a reasonable valuation and proportion of the purchase price could be allocated to them.
The values of the intangible assets were calculated using several valuation methods
including the multi-period excess earnings method and the relief from royalty method.
Both required use of the acquisition forecasts and appropriate discount rates.
The recognised intangibles will be amortised through the income statement over
five years and the combined charge for the 6 months to 31 December 2022 was £33,000.
Acquired Receivables
The fair value of acquired trade receivables is £144,000. The gross contractual amount
for trade receivables was £144,000 of which the full amount is recoverable.
Revenue and Profit Contribution
The acquired business contributed revenues of £409,000 and net profit of £124,000 to the
Group for the period from 1 July to 31 December 2022. If the acquisition had occurred on
1 January 2022, the Group’s consolidated pro-forma revenue and loss for the year ended
31 December 2022 would have been £87,064,000 and £6,512,000 respectively.
Purchase Consideration – Cash Outflow
2022
£’000
Cash consideration paid
966
Less: Cash balances acquired
(154)
Total
812
Acquisition-related costs
In the period, acquisition-related costs of £47,000 that were not directly attributable to
the issue of shares are included within expenses in profit or loss in operating cash flows
in the statement of cash flows.
33 Post balance sheet events
There have been no post balance sheet events.
Company Information
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:
M Bennett – Non-Executive Chairman
D Frost – Chief Executive
S Mace – Chief Financial Officer
M Darby-Walker – Senior Non-Executive Director
B Head – Non-Executive Director
C Astin – Non-Executive Director
A Lothian – Non-Executive Director
Secretary:
D Kane
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
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111
Overview
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Personal Group Holdings Plc |
Annual Report and Accounts 2022
Personal Group Holdings Plc
John Ormond House
899 Silbury Boulevard
Central Milton Keynes
MK9 3XL
www.personalgroup.com