Mark Scanlon – Chief Executive
In 2015, overall Profit Before Tax grew by 14% to £10.4m.
2015 was a very progressive year for the Company in many ways. Our revenue grew again, by 27% to £59.6m (2014: £47.0m). Our insurance business continued to grow, as did Lets Connect. We have now fully integrated the Lets Connect business, while taking the opportunity to make another bolt-on acquisition, with the establishment of PG Mobile. Our new digital platform, Hapi, is increasing client engagement with our business and we continue to attract and retain new clients. We introduced over 50 new clients across the Group in 2015.
The main insurance business grew its revenue 9% to £30.5m (2014: £28.0m), and grew EBITDA 11% to £9.5m (2014: £8.6m). Our quality remains high, creating a high level of customer satisfaction.
Remarkably through a period of great change in 2015 we saw our employee engagement rating increase.
Our existing clients are reacting very positively to our new digital capability, which is also attracting new clients.
Our technology salary sacrifice business, Lets Connect, grew revenue by 49% to £25.5m (2014: £17.0m), and EBITDA by 62%, to £2.3m (2014: £1.4m). We have begun to cross-sell to our existing client base, as well as opening up new third-party channels such as AON and Sodexo. We have broadened our product range to improve the attractiveness of our offering. Most importantly, this business now operates as an integral part of the Group. Its founders withdrew from daily operation in December 2015, though they will remain in an advisory capacity throughout 2016.
Overall profit before tax grew by 14% to £10.4m (2014: £9.2m).
Acquisition remains a key part of our growth strategy, and we took the opportunity to add airtime to our salary sacrifice offerings. Smartphones and airtime are an attractive product for employers, as they don’t attract any benefit-in-kind tax. As such, people can save up to 47% of the cost of their phone and airtime. We would not consider operating airtime schemes unless we can control the customer experience, and this is best achieved by operating as a Mobile Virtual Network Operator (MVNO). In April we acquired the trade and certain assets of shebang Technologies Group Ltd to establish our MVNO, PG Mobile. We relocated the business from Daventry to our main office in Milton Keynes, and we are now investing in the business so it is capable of performing to its full potential. The strategic relationship with Hutchinson 3G, the infrastructure provider, gives us a very solid basis from which to progress. In 2015 we saw a revenue level of £1.5m, with a EBITDA loss of £1.1m, in the nine months of ownership. We will continue to invest in this business as planned, to realise the potential we see in it.
There have been a number of challenges to overcome, none of which in isolation are an impediment, but collectively have delayed us, resulting in the business taking longer than anticipated to get a full trading position.
Our most significant achievement of 2015 was the completion of our Zeus programme, which saw the release, for the first time, of our own digital platform. This platform is named Hapi and is a comprehensive system through which we can provide all manner of services. This capability will revolutionise our position in the marketplace and thereby our business. Though only launched in the third quarter, we already have more than 50,000 users across 30 clients, and the system is proving of interest to potential new clients. We are now able to offer functionality previously not available in a single system: digital payslips, push notifications, salary sacrifice products and retail discounts, to name but a few services. All of this is available anywhere, on any device and, if required, through a bespoke smartphone app, which is in increasing demand from our clients. Providing this functionality through an app allows our clients to deliver right into the ‘pocket’ of their employees, avoiding potentially huge infrastructure costs while at the same time offering convenience. We can even provide the telephone handset with or without airtime, if a client wishes. All of this puts us in a strong position to take advantage of what looks like a fast emerging market opportunity and we will continue to invest in our technology accordingly.
Our Hapi system was designed to work with an employee count of just one. Therefore it allows us to target the SME market.
We outline our strategy on page 9. The strategy we laid out in 2012 is serving us well and we continue to review this regularly at Board level.
We continue to be able to attract, motivate and develop talent in our business. Remarkably through a period of great change in 2015 we saw our employee engagement rating increase. The willingness of our staff to work hard is a credit to the team, and for that I thank each and every one of our employees.
The contents of the Strategic Report covered in pages 1 to 31 have been agreed and approved by the Board as at 29 March 2016.
29 March 2016