PensionBee Group plc

Incorporated in England and Wales

Registration Number: 13172844

LEI: 2138008663P5FHPGZV74

ISIN: GB00BNDRLN84

Interim Results

for the six months ended 30 June 2021

PensionBee Group plc ("PensionBee" or the "Company"), a leading online pension provider, today announces interim results for the six month period ended 30 June 2021 (1H 2021).

The Company is pleased to announce that it has delivered strong financial and operational performance during the first half of the year, with high levels of growth achieved across all of its key metrics, in line with the trading update released on 22 July 2021.

Performance Overview

●    Revenue increased by 109% to £5.4m (1H 2020: £2.6m)

●    Annual Run-Rate Revenue increased by 114% to £12.3m (1H 2020: £5.7m)

●    Loss before tax was £(12.8)m (1H 2020: £(5.2)m)

●    Adjusted EBITDA decreased by 89% to £(7.6)m (1H 2020: £(4.0)m)

●    Adjusted EBITDA Margin was (141)% (1H 2020: (155)%)

●    Basic Earnings per Share was (6.54)p

●    Assets under Administration ("AUA") increased by 117% year on year to £2.0bn (1H 2020: £915m), substantially driven by total Net Inflows

●    Invested Customers ("IC") increased by 81% to 92,000 (1H 2020: 51,000)

●    Active Customers increased by 78% to 155,000 (1H20: 87,000)

●    Customer Retention Rate and AUA Retention Rate both stable at >95% (HY20: >95%)

●    4.7★ Excellent Trustpilot rating maintained

●    Strong cash position of £55m (December 2020: £6.7m)

Romi Savova, Chief Executive Officer of PensionBee, commented:

"We are very pleased to have achieved continued strong financial and operational performance in line with our expectations during the first half of the year, together with having made our successful debut on the High Growth Segment of the London Stock Exchange in April. Our Initial Public Offering ("IPO") raised £55m from institutional investors and customers to facilitate continued investment in innovation and our rapid growth trajectory, supporting the path to profitability.

Our strategy of always putting the customer first continues to resonate with both new and existing customers as demonstrated by our strong growth in the Invested Customer base, AUA and Revenue, together with the maintenance of our industry-leading customer retention rates.

We continue to implement our strategy to expand our reach across the UK, driving further growth. The first half of the year saw us scale-up our marketing spend, as we rolled out a new national brand campaign and launched a new data platform to support efficient deployment of marketing spend, keeping Cost per Invested Customer in line with desired thresholds. We also continued to invest in product innovation, in our technology platform and in our people.

Our scalable and resilient business model, combined with our strong financial position, means that we are well placed to capitalise on the significant market growth opportunity. We expect to maintain our strong momentum, deliver high double-digit Revenue growth for the current financial year 2021 and to reach monthly EBITDA breakeven by the end of 2023, in line with the guidance we set out at the time of our IPO."

Contacts

Forward-Looking Statements

Statements that are not historical facts, including statements about PensionBee's or management's beliefs and expectations, are forward-looking statements. The interim results contain forward-looking statements, which by their nature involve substantial risks and uncertainties as they relate to events and depend on circumstances which will occur in the future and actual results and developments may differ materially from those expressly stated or otherwise implied by these statements.

These forward-looking statements are statements regarding PensionBee's intentions, beliefs or current expectations concerning, among other things, its results of operations, financial condition, prospects, growth, strategies and the industry and markets within which it operates.

These forward-looking statements relate to the date of these interim results and PensionBee does not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of the interim results.

CEO's Report

We delivered strong continued financial and operational performance for the first half of the year, reflected in the growth rates of our Invested Customer base, Assets under Administration and Revenue.

Our customer-centric offering (combining technological innovation, exceptional customer service and transparent and straightforward fees) continued to resonate with the UK population. We benefited from the ability to grow into the vast UK Defined Contribution pension market, in line with our ambition to help more people across the UK look forward to a happy retirement.

Overview

We achieved strong year-on-year growth in the first half of 2021.

Assets under Administration (AUA) increased by 117% to £1,987m (1H 2020: £915m) and our Annual Run Rate Revenue increased by 114% to £12.3m (H1 2020: £5.7m), led by an increase in Invested Customers of 81% to 92,000 (1H 2020: 51,000). Active Customers grew to 155,000 and Registered Customers grew to 538,000 underscoring the strength of the future customer pipeline.

Loss before tax was £(12.8)m (1H 2020: £(5.2)m) reflecting the increased investment in marketing, the technology platform and our people to drive rapid growth. Adjusted EBITDA reached £(7.6)m (1H 2020: £(4.0)m) and Adjusted EBITDA Margin was (141)% (1H 2020: (155)%), highlighting the scalability of the business model expected over time.

We demonstrated the continued strength of PensionBee's customer value proposition by maintaining a Customer Retention Rate in excess of 95% (1H 2020: > 95%), by achieving a 4.7★ Excellent Trustpilot rating (1H 2020:  4.6★) and by winning multiple industry awards.

The Company raised £55m of capital in its successful IPO on the High Growth Segment of the London Stock Exchange in April of this year, enabling further innovation and growth and supporting a path to profitability by the end of 2023. PensionBee expects to transition to the Premium Segment of the London Stock Exchange's Main Market in 2022.

Strategic Update

Our mission is to make pensions simple so that everyone can look forward to a happy retirement. We continue to successfully execute our five-point strategy designed around this mission, as communicated at the time of the IPO. This strategy has continued to underpin our rapid growth:

Efficient investment in customer acquisition and brand awareness

During the first half of the year, we continued to scale-up our marketing spend and as was the case in 2020, the majority of our marketing spend was deployed across our top three channels: TV, Out Of Home and Paid Search.

We were delighted to roll out a new brand campaign nationally, across Out of Home, Radio, TV and Online channels. The "feels so good" campaign featured across the UK. We advertised on over 4,500 billboards across the country and created close to 450 million impressions.

Our ongoing use of data allows us to optimise our digital channels and to attract more and more customers efficiently. We benefited from the launch of our new data platform (as mentioned below), which supported continued deployment of marketing spend on digital channels to grow rapidly, whilst keeping Cost per Invested Customer in line with our desired thresholds.

We were also pleased to become the official pension partner for Brentford Football Club ('Brentford Bees'), shortly before their historic admission into the Premier League.

Leadership in product innovation

During the first half of the year, we continued to invest in product innovation, with a particular focus on improving our efficiency.

Our new transfer tracker enables more effective and detailed tracking of transfers, allowing our customers to see exactly which stage their pension transfer is at, enhancing the customer experience and reducing the need for inbound queries. Similarly, our new push notifications will enable customers to take direct actions in the app without the need to interact with our team. In addition, we deepened our integrations with several pension providers, extending our proprietary relationships and the efficiency of our mutual communication.

Continued investment in and development of an industry leading technology platform

We continued to invest in our technology over the first half of the year. We place great importance on our data capabilities and as noted above, have invested in a new data platform that is now in operation. This is based on best-of-breed open source and proprietary data warehouse and data pipeline components, allowing us to monitor and visualise all of our data in real time, providing insight into return on marketing investment to help optimise the decision making process.

The first use case for the data platform was the real time tracking of our customer journey with the objective of optimising our Cost per Invested Customer while continuing to deploy marketing capital rapidly. We increasingly foresee a transition from Cost per Invested Customer to cost per AUA in our future KPI tracking.

Continued focus on excellent customer service

We pride ourselves on our excellent customer service and want to create the best pension experience possible for our customers. We pay close attention to our Trustpilot rating which has remained at 4.7★ Excellent, with more than 5,000 reviews from our customers. We also continue to maintain strong response times across all channels, including live chat, phone and email.

Ensuring excellent levels of customer satisfaction, reflected in the maintenance of our industry-leading customer retention levels, is central to our ambition of retaining and serving our customers throughout their lifetime. We demonstrated the continued strength of our customer value proposition by maintaining a Customer Retention Rate in excess of 95%. The high levels of recurring revenues generated as a result of this high customer retention, combined with the scalability of our technology platform underpin the generation of operating leverage over time.

PensionBee's customer-focused offering received further industry recognition during the period, named as a 'Best Buy' in five categories at the Boring Money 2021 Awards, which commended the quality of our customer service and communications, our commitment to sustainability, website and ease of use.

Continued focus on investment solutions designed for customers

We continued our ongoing engagement with our asset management partners to determine the optimal product range for our customers.

Earlier this year we confirmed that we had received £724k from State Street Global Advisors ('SSGA') in relation to an error made by FTSE Russell in the composition of one of their indices that affected numerous SSGA funds, including one fund offered to PensionBee. As we had previously paid £664k to affected customers on an entirely ex-gratia basis, we were able to use the £724k to further invest in our team and product capabilities, in order to deliver on our growth strategy.

Regulatory Developments

We are known in the industry as a supporter of consumer rights and we continue to actively campaign for greater levels of transparency, easier switching and fairer charging across all pension products.

During the first half of the year, we continued to actively engage with both the Government and the Financial Conduct Authority ("FCA") on proposed changes to the legislative and regulatory framework that we operate within.

We remain supportive of the initiatives of the FCA, the Department for Work and Pensions and the Pensions Regulator, leading to improvements in the pension landscape for consumers. We believe the overall changes are supportive of PensionBee's business model, its mission and its vision.

Dividend

In line with its stated dividend policy, the Company does not intend to pay any dividends as it continues to invest in growth and execute on its strategy. Whilst the Company has not paid dividends since incorporation, it intends to revisit its dividend policy in future years and may revise its dividend policy from time to time.

Outlook

Following our successful IPO in April of this year, we have a strong cash position that will enable us to continue to invest in our rapid future growth and to capitalise on the vast and growing UK Defined Contributions pension market opportunity that we operate within. We expect to accelerate progress, acquiring more customers and enabling them to become 'Pension Confident'.

For the remainder of 2021, we expect to deliver high double-digit Revenue growth in line with the guidance provided at the time of IPO. We will continue our investment in marketing and product innovation, rolling out new features to optimise customer experience, and will continue to invest in our people and our technology platform as we prepare for 2022. Our Adjusted EBITDA Margin is expected to be in line with market expectations for the year and we remain committed to achieving monthly breakeven by the end of 2023.

We will continue to engage in good corporate behaviour that supports healthy long-term returns for our customers' pensions and promotes their health, as well as the health of our environment. We will also stand up for the rights of consumers, enabling them to have better, more transparent pension products - resulting in a happy retirement for all.

Romi Savova

Chief Executive Officer

20 September 2021

Financial Review

We continued executing on our growth strategy and by the first half of 2021 as compared to the previous period, Revenue increased by 109% to £5.4m (1H 2020: £2.6m), Invested Customers grew by 81% YoY to 92,000 (1H 2020: 51,000), AUA increased by 117% to £1,987m (1H 2020: £915m) and Annual Run Rate Revenue rose by 114% to £12.3m (1H 2020: £5.7m). This success was primarily driven by new customer acquisition and asset growth from existing customers(1).

Summary Financial Highlights*

Business Performance

Customers

We increased our AUA from £915m to £1,987m, an increase of 117% on the prior year. This was driven by a combination of new customer acquisition, existing customers increasing their savings with us and market growth. Over the first half of 2021, our pension asset base increased from £1,358m to £1,987m, a total increase of £629m (1H 2020: £170m). More than 75% of this increase (£482m) was generated by Net Flows from New Customers and Net Flows from Existing Customers, with the balance (£148m) being accounted for by market appreciation. The 1H 2020 increase (£170m) was wholly attributed to Net Flows from New Customers and Net Flows from Existing Customers.

Growth from new customers represented the majority of asset growth in the first half of 2021 with Net Flows from New Customers of £316m (1H 2020: £142m), reflecting our strategy of cost-disciplined new customer acquisition. Over this period we acquired 23,000 (1H 2020: 13,000) revenue-generating Invested Customers. A higher proportion of these new Invested Customers were observed to be older customers with a corresponding higher average pension size. As such, we have seen an increase in the average pension pot size from £18,000 in 1H 2020 to £21,600 in 1H 2021.

Our existing customers have continued to see their savings grow, with Net Flows from Existing Customers of £166m over the first half of the year (1H 2020: £66m). Since inception, we have consistently enjoyed a high Customer Retention Rate of over >95% and this trend has continued into the first half of the year. We saw existing customers consolidating additional pensions into their PensionBee online pension plan and customers contributing to their pensions while maintaining relatively low levels of withdrawals. As a result, existing customers' together with new customers' net flows contributed >75% of total asset growth in 1H 2021.

AUA growth also reflected an element of market growth of £148m over the first half of the year. As is customary in the pensions industry, our customers' pensions are invested predominantly in global equity capital markets, which experienced strong performance during the year, and as such our asset base benefited from this market appreciation.

Financial Performance

Revenue

We have translated strong year on year AUA growth of 117% into 114% growth in Annual Run Rate Revenue, owing to the stable Contractual Revenue Margin. The Contractual Revenue Margin is the headline fee paid by customers before applying discounts for incremental pension savings above £100,000. The Contractual Revenue Margin increased by 1bp to 0.69% (1H 2020: 0.68%).

Profitability Metrics

Over the first half of 2021, we were able to demonstrate operating leverage, due to the scalability of the technology platform.

One of the key profitability metrics that we measure is Adjusted EBITDA before Marketing. This measure includes Money Manager Costs and Technology Platform Costs and Other Operating Expenses, but excludes Advertising and Marketing Expenses (which generate long-term returns through long-standing customer relationships), Share-based Payments and Transactions Costs. A change in Adjusted EBITDA before Marketing is therefore an indicator of short term operating leverage. Adjusted EBITDA Margin before Marketing improved to (28)% for 1H 2021 from (45)% for 1H 2020, underscoring the scalability of the technology platform and the effectiveness of new feature releases that improved the efficiency of customer operations.

The second profitability metric that we measure is Adjusted EBITDA, which captures Advertising and Marketing Expenses but excludes Share-based Payments and Transaction Costs. Adjusted EBITDA Margin improved to (141)% for 1H 2021 from (155)% for 1H 2020.

Money Manager Costs, Technology Platform Costs and Other Operating Expenses

Money Manager Costs increased to £0.9m at a slightly higher rate than Revenue, which was due to an increase in the number of new customers selecting funds with incrementally higher money manager fees.

Employee Benefits Expense increased to £3.4m primarily driven by an increase in the headcount in the second half of 2020. In contrast, we only grew headcount incrementally in the first half of 2021. Overall, headcount increased to 151 full-time employees as at 30 June 2021 from 99 full time employees as at 30 June 2020.

Other Operating Expenses increased to £2.6m owing to investments in technology, professional services and other corporate costs.

Marketing Costs

In line with our growth strategy, we continued to invest substantially in customer acquisition activities through a diversified marketing approach. The majority of the £55m primary capital raised as part of the IPO is earmarked for marketing expenditure. We monitor the customer acquisition cost (CPIC) very closely to ensure continued disciplined, data-led decision making and the maintenance of CPIC within our desired threshold of £200-250. Our increasingly sophisticated data platform tooling and our historical experience with brand and performance channels helped ensure the CPIC objective was achieved. 

Other Costs

Share-based Payment costs increased due to the accelerated vesting of options and the revision of the estimate on the occurrence of a liquidity event (being the IPO) in 1H 2021, which was not previously highly likely when assessed during 1H 2020. Another contributor to the cost increase was the introduction of the PensionBee new post IPO compensation regime, Deferred Share Bonus Plan (DSBP) in 1H 2021, for which an accrual was recorded.

Transaction Costs primarily consist of fees and expenses incurred in relation to the preparation for our IPO (which commenced at the end of 2020) and admission to trading on the London Stock Exchange.

Finance Costs are fees associated with a £10m Revolving Credit Facility (the "RCF") that we entered into with National Westminster Bank Plc on 22 March 2021, as part of a prudent liquidity management strategy. The RCF remains undrawn.

Tax Credit relates to enhanced tax credits in relation to routine Research and Development refunds. No deferred tax asset has been recognised for the carried forward losses.

Basic Earnings per Share (EPS)

Basic and diluted EPS was (6.54)p for 1H 2021 (1H 2020: (2,389.88)p). These two EPS figures are not directly comparable due to a change in share capital as part of the reorganisation ahead of the IPO, together with the issuance of new shares as part of the IPO itself in April 2021.

Adjusting the 1H 2020 EPS for the impact of the IPO gives a comparable EPS of (2.99)p.

Regulatory Capital and Financial Position

PensionBee Limited, a subsidiary of the Company, is authorised and regulated by the FCA and therefore adheres to capital requirement set by the FCA. As of June 2021, the capital resources stood at £41m as compared to a capital resource requirement of £0.8m, resulting in a coverage of 52x.

As of June 2021, the cash and cash equivalents balance was £55m (December 2020: £6.7m).

Romi Savova

Chief Executive Officer

20 September 2021

Responsibility Statement

We confirm that to the best of our knowledge:

·      the condensed set of financial statements, prepared in accordance with IAS 34 'Interim Financial Reporting', give a true and fair view of the assets, liabilities, financial position and profit or loss of the group and the undertakings included in the consolidation taken as a whole as required by DTR 4.2.4R;

·      the interim management reports includes a fair review of the information required by DTR 4.2.7R (indication of important events and their impact during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and

·      the interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties' transactions and changes therein).

By order of the board

Romi Savova

Chief Executive Officer

20 September 2021

Company Information

PensionBee Executive Directors

Romi Savova (Chief Executive Officer)

Jonathan Lister Parsons (Chief Technology Officer)

PensionBee Non-Executive Directors

Mark Wood CBE (Independent Chairman)

Mary Francis CBE (Senior Independent Non-Executive Director)

Michelle Cracknell CBE (Independent Non-Executive Director)

Company Secretary

Prism Cosec Limited

Highdown House

Yeoman Way

Worthing

West Sussex

BN99 3HH

United Kingdom

Registered Number

13172844

Registered Office

City Place House

55 Basinghall Street

London

EC2V 5DX

United Kingdom

Auditor

Deloitte LLP

4 Brindley Pl

Birmingham

B1 2HZ

United Kingdom