Personal Group Regulatory News (PGH)

Personal Group Holdings plc

("the Company" or the "Group")

Half Year Trading Update

Personal Group Holdings Plc (AIM: PGH), a technology-enabled employee services provider, is pleased to provide the following update for the six months ended 30 June 2020.

Trading Update

Given the current environment, the Company has had a positive start to the year, with EBITDA for the first six months of approximately £5 million*, ahead of the same period last year and comfortably ahead of the Company's expectations at the start of the pandemic. Revenue for the first six months was approximately £30.0 million* (H1 2019: £30.0 million*). Whilst much of the first half of 2020 was focused on preparing for and responding to the Covid-19 pandemic, the impact on the financial position of the Company in the first 6 months was relatively limited.

The core insurance business performed well in the first half of the year despite the constraint of being unable to sell insurance products face-to-face. Retention rates for existing policyholders improved slightly, reflecting the value of the Company's hospital plan and death benefit products during the pandemic, and claims levels remained relatively static, with reduced general activity within the NHS mitigating additional Covid-19 claims. The inability to write material new insurance sales during lockdown will impact premium income in the second half of 2020 and into 2021. In order to reduce the impact of the inability to return to face-to-face sales in the short-term, the Company has taken action to both reposition the salesforce to virtual interactions and to focus attention on retaining current policyholders. This new model will allow the business the flexibility to continue sales activity in the event of a second lockdown. The Claims and Customer Service Teams have been working effectively from home during lockdown and the Company is very proud of the support and service given to policyholders, mainly key workers making death and hospital in-patient claims.

Revenue from PG Let's Connect, the technology salary sacrifice business, held up well during the period, with lockdown resulting in strong sales of home computing and outdoor equipment, but it remains a Q4 dominated business.

The recurring revenue model for SaaS also meant that revenue was relatively unaffected during the first half of the year, other than for consultancy business within the pay and reward subsidiary, Innecto. Whilst new business activity slowed down as companies focussed on their own responses to Covid-19, sales opportunities are now starting to re-emerge, with a number of new clients engaged.

The Company has worked with Sage, its partner in the SME sector, to launch a limited free trial offer of Sage Employee Benefits to Sage's customer base. Using Personal Group's in-house sales team to help embed the product with SME employers and their staff, they aim to demonstrate value in the platform to convert SME businesses at the end of the free trial into monthly fee customers. So far, the initial trials have been positive, allowing Personal Group to showcase its platform to the vast Sage customer audience.

Whilst a number of employees remain on furlough, primarily sales employees, the Company hopes to be able to return as many as possible to the business over the coming months as client companies also start to return to their own new normality. Whilst the priority of client companies will continue to be the safety of their employees and customers, focus is starting to shift to recognise that they need to allow the Company access to its policyholder base to enable them to keep 'Protecting the Unprotected' - the core purpose for the insurance business.

*unaudited

Dividend

The Company paid a reduced quarterly dividend for Q2 as a result of the uncertainty around the impact of the Covid-19 crisis but intends to return to a full dividend payment for Q3 of 5.9p per share. Further details regarding dividend payment dates will be announced soon. The Board will consider the position for Q4 in due course.

Outlook

Despite the strong start to 2020, the second half will not be without its challenges. As alluded to above, the inability to write new insurance sales during lockdown will impact premiums in H2 2020 and 2021 in the insurance business. Looking forward into the latter part of 2020 and 2021 the Company, like many UK businesses, may be impacted by a recession following lockdown. However, health and wellbeing will undoubtedly become a significant focus for all employers going forwards and the Company remains well placed to help them deliver on this.

The Group has a strong balance sheet and no debt and is well placed to grow and capitalise on opportunities that may arise alongside the wider global recovery. The Board remains confident in the long-term outlook for the Company and will provide an update on strategy during the half year results in September.

Deborah Frost, Chief Executive of Personal Group, commented:

"Our robust recurring revenue model across the Group has enabled us to weather the initial storm of Covid-19 and perform comfortably ahead of expectations, following the initial outbreak of the pandemic, for the first 6 months of 2020. The crisis will not be without consequences for us however, and we are working hard to minimise the impact of both a period with minimal new sales activity and the predicted post Covid-19 recession by widening our product offer, developing more channels to market, and ensuring that our policyholders are supported if they experience job changes and redundancy. I am confident that we are in a strong position to deliver against these objectives and we have used the period of lockdown constructively to develop our business to deliver future stability.

"We are proud to have been paying out on Covid-19 claims and supporting bereaved families and hospitalised policyholders, as well as our own employees, through this difficult period."

Market Abuse Regulation (MAR) Disclosure

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

-ENDS-

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Notes to Editors

Personal Group Holdings Plc (AIM: PGH) is a technology enabled employee services business, working with employers to drive productivity though better employee engagement and a more motivated workforce. With over 35 years' experience, the Company provides employee benefits and services to a large number of employees across the UK.

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

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

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

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

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

For further information, please see www.personalgroup.com