Personal Group Holdings Plc (PGH) Earnings Call Transcript & Summary

Good afternoon, and welcome to the Personal Group Holdings plc interim results investor presentation. [Operator Instructions] The company may not be in a position to answer every question it received during the meeting itself; however, the company can review all the questions submitted today and publish those responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to CEO, Paula Constant. Good afternoon.

Thank you very much. We're very happy to be coming to you on this wet Friday, but with a good set of results that we are very proud to talk about. So I'm going to talk a bit about what we're doing in the company, and just for anyone that's new to the company and what we stand for, what we're about. Sarah will press into a bit more of the financial results in detail, and then I'd like to talk to you at the end about our aspirations and where we're taking the company to going forward. So I think people will know Sarah, my CFO, who has been in the business for some time, just in case you missed the first slide. So who are we? For anyone that's new to this audience, we're really about providing affordable insurance and employee benefit to a vast number of employees via their businesses. So we work predominantly with employers directly, taking our benefit proposition and the permission to engage with their employees on insurance. And then we go and visit people on site, talking to employees one-to-one about a whole suite of benefits that we'll provide in the benefit solution, but also the insurance policies that are available to them. So it's a B2B2C conversation, and at it's kind of extreme with the insurance conversation in that. We're very proud to be quite unique across both the insurance offerings in the space that we play, but also the benefit solution offering. So we are a benefit SaaS provider, but we're the only benefit SaaS provider that sends people in to talk to employees face-to-face, offering the insurance solutions that we do. And we believe that's a really great point of unique differentiation for us and a foundation for our strategy. And of course, we also sell our benefits platform to client bases that might not be the right make up for insurance, and that's also very important to us too, 50% of our clients that take our benefit solution and probably not the right sectors or the right size to take insurance, but we're really proud that we've got an offering that transcend sectors. And where we tend to play in the insurance space, it's more transport logistics, manufacturing, blue collar. So we're very proud that we've got a proposition that really appeals to employees that really need what we've got to offer. As well as some great unique points of differentiation and a strong proposition in that affordable insurance and employee benefit space. We are built on strong financial foundations, and we continue to deliver. So we're very proud that makeup of our revenue is predominantly recurring revenue, 80% plus across our entire base. And we are also highly cash generative. So you can see that we've generated again a good sum of money in H1 to date. We have a very strong balance sheet. So we hold absolutely what is necessary and a bit more for prudency around insurance liability, but we probably have about GBP 10 million to GBP 12 million at least on that balance sheet, that we can use more creatively going forward. So we're going to talk about how we move from the phase that we've been in, simplifying the business and really focusing on benefits proposition and insurance proposition, clearing the way with a strategy going forward and some really good options for us, which obviously are predominantly built on organic growth, but do offer some M&A and inorganic opportunities to accelerate where we want to go to. So that's a little bit about who we are. Just some detail on what we do, again, for anyone that's not familiar with the business. And on the insurance side, we have some very strong affordable insurance policies. We offer a hospital plan and a recovery plan, which compensates people for the money that they would have received if they were employment needing to go into a hospital or recover from the hospital visit. So I think this is particularly prevalent for, again, blue collar workers that might get some elements of sick pay cover or no elements of sick pay cover, but clearly not enough sick pay cover in the event that something happens where they need to be a hospital and then recover. So we feel that this is a continuing vital offer for employees and to really support gaps in income. And then we also offer a death benefit plan, is a very straightforward death benefit, up to GBP 20,000. And it's also accessible very quickly in the event of death. So it cuts through some of the bureaucracy that you might find in other funeral death plans in providing cash very instantly. And the premise of all 3 of our insurance plans really is that we want to be able to cover people easily, quickly, so particularly for hospital and recovering plan, preexisting conditions don't exclude you from the policy. The policy is kicking very quickly. The premise is to be transparent, to be available, to be speedy and to provide people real material cover. On the benefit and reward side, we obviously have the SaaS benefit platform. We built our own platform over a number of years. We're just in the very final months of upgrading on to our version 2, Hapi 2. Our platform is called Hapi, and we offer the platform directly to a number of customers. We've got over 200 customers that we would sell directly to and they would be predominantly enterprise and some smaller customers. And then we go to market with a SME proposition, which we, in the main sell through, our relationship with Sage, so we white label our platform with Sage employee benefits and to Sage customers. A long-term relationship for Sage, 5-plus years, which we're extremely proud and continue to grow with additional opportunities in segments of product variation, which certainly is enabled through the release of Hapi to our upgraded platform. And then we also have a Pay and Reward consulting division. We would offer in person, again, face-to-face consulting, but we also have a suite of digital propositions to assess pay and reward and we're really pleased that we've got an increasing amount of ARR coming from those digital propositions as well. So that's a bit about what we do. And we're very proud of our customer base, which we continue to add to. We have some tremendous brands, as you can see, and have really enjoyed being able to add brands in all areas of the business and consulting in the Hapi SaaS platform and in insurance, and of course, in combination with Hapi insurance. I've talked a bit about our unique offering with insurance. We've done a lot of primary research this year to really understand the relationship between benefits and insurance. And it's very clear when we've spoken to a nucleus of enterprise clients, some of which use our Hapi platform, some of which use many of our competitor platforms, that the proposition of going on-site face-to-face with a benefit platform and the suite of benefits and also a suite of insurance offers, talking to employees about the things that really matter in terms of employee benefits, but also the messages that HR directors want us to land is overwhelmingly a #1 proposition. 90% plus of the people that we spoke to you said that this was something that was really interesting for them to take forward. And then I think finally, on this slide, we have started to win some highly coveted technology awards, which really, I think, again, strengthens the belief that we've got a cutting-edge leading technology platform. And once we finish the rollout for our existing customers this year, we will be formally launching that to the marketplace in November. But as important as the technology awards, we have spent a lot of time this year really focusing on what we need to do in the consumer duty space. We're very proud of our insurance propositions already with the transparency and the availability and benefits. But we've also taken the opportunity with Consumer Duty to look really holistically across the way that we offer service and support to customers. We've spent a lot of time, really looking at how we become best-in-class on claims. And we're super proud of the speed that we are responding and turning around claims. You can see the results in our very strong Trustpilot scores of 4.7 and above. And this year, we won a Consumer Duty award for the way that we are looking at managing vulnerable customers. So very proud to win an award against many big competitors, some big FTSE players for the efforts that we're putting in to really making Consumer Duty very front and center of our plans going forward. So I think this is a compelling story of really strong clients, good, solid, deliverable, dependable growth, very strong ARR in our business and also us really focusing on doing the absolute right thing on every dimension for customers. A little bit about the market. So I think when I came into role 14 months ago, it was really important for me to understand how much we've got to play out in both insurance and benefits. The good news on this in summary is there's a lot to go at. On insurance, if we characterize our hospital and recovery plans as sick pay cover and there are over 10 million U.K. employees with no or partial sick pay. The presence that we have across the companies and employees today is probably 12% of that 10 million. Within that 12%, we've got an average of 12% penetration. So within the 12% of employees take up our insurance products. So clearly, 12%, 12%, 10 million is a small area that we're playing today, and there's a huge opportunity for future growth really with the propositions that we've got and the way that we go to market with our face-to-face team, but also broadening further in terms of our proposition, our reach to market in terms of channels. So there's lots to go out there, which is really exciting for us to fine tune a strategy that we already have huge belief in. On the benefit and reward space, I mean, this is a huge market. So it's at least a GBP 33 billion global market for benefits SaaS solutions alone. The growth is really strong. The growth will continue to be in the prevalent markets of the U.K. and the U.S. and Germany. Our focus is still very much on what we need to capitalize in the U.K. before we look at international expansion. And I think we've been very clear that we will look at international expansion down the line with partners. But for now, really, our opportunities predominantly in SME, our Sage offering, which is highly favorable to employees is something that, again, we continue to expand with Sage, but we also look at other different types of partnerships to capture the SME space, where over 50% of SMEs really have no benefit platform at all. And there is still some reasonable space for us play in the enterprise space if we've got the right price platform with the right tech, which we believe, we really do, and we're at the top of the market in terms of that combination. So lots to play for in summary, which is a good position to be in. Okay. So a couple more slides for me. This slide really illustrates the importance of our insurance revenue even in the event that we're not in front of a client, in front of their employees for a year or even several years. So the graph really tries to explain that with this particular client who we've been with for some time, there was a period, where we weren't able to gain access to employees. It wasn't about anything that we did. It was a principle that the client applied that no external parties could come in and talk to their people about other policies or options. And of course, the kind of salmon pink color is the existing book of business. So all of the customers that have taken up insurance policies prior to these years. And you can see that even when we're not in a client generating new business opportunities, the strength of our book takes a really, really long time to decline. Of course, in 2021, we were able to sign a new contract and be back in with employees and the impacts we've clearly made from that point forward with new business obviously has an impact on the back book as well. So it gives us a lot of comfort that this is a very resilient business. And we have a very high retention rate with existing clients, over 80% for insurance. And from a B2B perspective with our SaaS proposition over 95% with the clients that we sell direct face-to-face and a similarly competitive level of retention and churn with our SME base. So we feel that's just another element and another way of showing that we run a very robust, predictable, dependable business. And then I think on the SaaS side, we've talked a bit about these numbers already. The 2,000 clients that take Hapi that we would sell direct to. We've got well over 4,000 SME customers through Sage. We're really proud of the market-leading features and functionality that we've built with Hapi 2. But as critically as the elements of improved user experience, the ability to personalize in favorite things, the carousel scrolling facility and a lot of those extra modules, including what we've been told is a leading reward and recognition piece of functionality. We've also been able to obviously rebuild a platform that allows us to modularize. It allows us to turn functionality on and off. And therefore, we can price differently invariably. We can offer premium products, we can offer lower-cost products for certain customers. It gives us a whole range of flexibility that we never had before. And critically, it means that we can operate on one single platform going forward instead of a separate platform that we would run for SME and a separate platform for enterprise. So there are huge benefits for us in terms of our ability to go to market, but also our ability to run our platform more efficiently and effectively going forward. And then finally, before I hand over to Sarah, I think it's just worth really summarizing the success that we've had in this half year and the trajectory that gives us. So on insurance, we've done a huge amount of work and particularly since the new COO, Hywel arriving at the beginning of the year on the forensics of running the business. We are really clear on the profitability by sector. We are really clear on the level of competency we should expect from different quartiles and in the field. We're really clear on the support that we need to give on recruitment and the support that we need to give through training. We're very clear on the experience that really senior people in the field bring to certain sectors. So we have a whole range of analysis now that has allowed us to plan more effectively and deliver on the day more effectively. And we can see that in the various measures of uplift, 20% up on sales year-on-year. We're presenting 10 more times to customers. We're enrolling customers 7% more than we were at the end of last year. We've already again had our best day, week, month versus last year. And I think critically, we're still doing this on the backdrop of our existing client base. The difference this year, which will impact next year is we've started to really go out and market and win some new insurance client opportunities. So some of that's come from our existing base, where they take our Hapi product. Some of that is new clients in entirety that are taking both our Hapi products and insurance. And actually, some are insurance clients that we used to work with years and years ago that we have managed to be able to recontract with and start work again. So we will be going out at the end of this year, next year to new clients that haven't seen us at all or at least for a very long time. And we're really excited to see what that's going to do to propel us forward in our insurance journey. On Benefit and Rewards, I think we're extremely proud of the growth that we've seen in this half year versus last half year versus the end of the year against the backdrop of migrating over 4,000 clients onto a new platform. We're seeing really strong ARR growth. And again, we've won the recognition of awards as well. And as we mentioned in March when we were presenting our 2023 results, we've really won such a significant contract with British Airways on Pay & Reward, building a great digital product. So not only is a good sizable opportunity for us in terms of contract duration, but it's also a really great digital products that we're building as well. So really good success on all sides. And then finally, organizational simplification, which I set out clearly is an agenda item this time last year when I was here. We have thought really hard about going to business with just fewer, simpler consistent, dependable revenue streams. We've now a benefit business and an insurance business, which have all the parallels of 80% plus recurring revenue, and we've explained how they're inextricably in-twined in terms of how we go to market and sell them. Let's Connect was an important decision for us, and we evaluated a number of strategic options earlier in the year. And one of them was to sell the company to a home, which are focused very clearly on technology salary sacrifice. So we're very pleased to have completed the sale in a number of dimensions, and not just in terms of simplifying our business going forward, but the right place for customers and employees to land in an area which will continue to grow. And we continue to work with the buyer of Let's Connect on an ongoing relationship, still selling Let's Connect products into our client base going forward on the commission base going forward. So of course, in the construct of that contract, we feel very carefully about how we protect customer relationships going forward. You would do that in any contract, but also the makeup of Let's Connect customers was predominantly public sector, where we play predominantly in the private sector. So the entanglement of relationships going forward is rather minimal in terms of customers that we would serve with our products that would also have Let's Connect from the base that we've moved over. So I hope that addresses one of the questions that we have in the charts beforehand, but do let me know at the end if I need to elaborate. And again, more simplification across the organization, the right capability in role. There's still a little bit to do on that around my table in the sales and marketing space, but we are really set up to attack our aspirations and great plan with bigger going forward. So I think that's enough for me for now. If there's anything left in your financial presentation to share, I'll hand over to you.

Okay. Thanks, Paula. Good afternoon, everybody. So I think in terms of the financial highlights, obviously, we are really pleased to have a strong H1 performance. We saw double-digit revenue growth across all areas of the business. And as Paula has already mentioned, really strong element now of recurring revenue such that these results have stated, which excludes the results of Let's Connect, which we're now passing as discontinued operations. So the continuing operations that we've got left. Over 80% of that revenue came from one of those recurring revenue streams, the premium income or the ARR that we get with the SaaS business. We also announced an interim dividend of 6.5p, so that was up 11% on last year in the second year in a row that we've had double-digit growth in terms of the dividend. Those of you that are holders of our stock at the moment will know that we tend to look at the expected dividend for the full year and broadly try and keep it equal first half, second half. So we've obviously considered the level of that dividend in the context of our expectations for the full year. And then Paula has already mentioned, I think we remain in a very strong financial position, highly cash generative, cash and deposits of just over GBP 23 million at the end of June. So just for those of you that perhaps on the call who don't know our business, this is just really just to summarize the types of income streams that we get in the business. So insurance, obviously, report in 2 segments, Insurance and Benefits and Reward. Insurance, it's very straightforward in terms of premium income that we get from the products. In terms of the Benefits platform, there are 2 different streams that the income that we get through there. And the majority of it, so best about 95%, probably is the SaaS subscriptions that we get on the products or whether that's from the Hapi clients or the SME clients via Sage employee benefits. But we also generate an element of income through monetization of the platform. So that might be from taking a small margin on the discounts that we offer through the platform. We're also getting commissions from some of the third-party products that sit on there. So a cycle to work scheme, for instance, we would get some commission for any bikes that are taken out through that scheme through the provider that ultimately provides the bike. And then similarly, on Pay & Rewards, I think Paula has already mentioned, some face-to-face consultancy income that comes through there, but also increasing amount of SaaS income through the digital platforms, that division has whether that's job valuation tools or pay benchmarking. We get an increasing amount of ARR on that side of the business as well. So just looking in summary then across those 2 areas, certainly, probably the red box is the area to focus on. So these are those recurring revenue streams. So size of the insurance book up to just under GBP 34 million at the end of June. The majority of all of those policies are on rolling weekly or monthly contracts. Premiums are collected through payroll, again, in the main, so very repeatable business coming through. And then GBP 7 million of ARR across the SaaS platforms and the Pay & Reward solutions that we have. Just in terms of some of the other income, obviously, the cash balances and interest rates in the year were favorable to us in terms of the amount of revenue generated there. And then, I guess, on the EBITDA contribution, admin costs and central costs, which cover our sales and marketing costs because we have a more holistic route to market across Benefits and Insurance. We don't allocate those costs directly to each of the segments. But also, we have all of our sort of head office support costs, so finance, HR, cost of being a listed business, all those kind of costs fall into our group admin costs, which remain fairly flat year-on-year despite some obvious salary increases coming into play there. We also had a few one-off costs in the previous year associated with failed acquisition costs and also the onboarding of a new CEO, so flat year-on-year. And if I just move on to the insurance, look at that in a little bit more detail. I think Paula has already mentioned some of the best that we've seen this year, but our new insurance sales were up to GBP 6.9 million, up by 20% year-on-year, majority of which came from face-to-face activity and new best week, month coming through there as well. Retention of existing policyholders also remained strong at over 80%. And we've continued to see that, I think, post COVID and post our ability to maintain policyholders when they leave their employer through our ability to transfer them on to direct debit payments at that point. So those 2 factors combined meant the book increased to GBP 33.8 million at the end of June. Just a little bit on our claims ratio. So we saw that go up year-on-year to just over 30%. A couple of things coming into play there in terms of, I think, last year, H1, our debt benefit loss ratio was particularly low, probably that in itself a rebound to the higher levels that we saw during COVID, mainly driven by activity through the NHS as they continue to address waiting list. I think I saw one of the questions that was presubmitted around this. I mean, we do track the NHS admissions data very closely, both outpatient and in inpatient levels. And our claims activity is mirroring what we're seeing there. I think in the question it about other hospital plan, hospital benefit providers. I mean, I think our hospital plan is probably slightly different than most other cash plans. In most of the cash plans will have a broader coverage that include other things like hospital, dental and probably restrict the amount that you can pay out on the hospital visits to maybe 5 or 10 days. Our plans are quite different because you can actually claim for up to a 2-year period in hospital for the same conditions. So it's probably not quite like with like. But certainly, one of the other points, I think, was around -- it's not the new business. It's not our new -- our levels of new business that have been generated that are increasing the loss ratio there. Although, we do cover preexisting conditions, the way we sell by going in face-to-face at the time by choosing, people can't just decide they want to take out policy because they know they're going to be -- going to the hospital. It's just fortuitous if that's the case when we happen to have our sales team on site. And then finally, just in terms of EBITDA. So obviously saw a slight decrease in terms of the underwriting profit coming through. But in terms of our cost base, certainly in terms of customer acquisition costs, we're seeing quite a lot of operational efficiencies coming through there. So that despite the fact of a 12% increase in the size of the field sales team, we saw the customer acquisitions with our costs held year-on-year. Moving on to Benefits. I think we've probably already spoken about the combined ARR there up to GBP 6.3 million at the end of June. That's coming through from both the Hapi platform, Sage Employee Benefits. External revenue was up slightly higher percentage, 21% versus last year. Again, some of those third-party commissions and other monetization of the platform starting to come through. And although this doesn't really come into the numbers, it's just a bit here that really highlights, I guess, one of the value messages that we're able to give to our employers in terms of the amount of savings that their employees made through the platform in the first half. So you can see that GBP 25 million worth of spend through the platform buying discounted vouchers, which meant that those employees saved over GBP 1.3 million in the first half of the year. And then just in terms of Pay and Rewards, I think Paula mentioned earlier Innecto and QCG which were a couple of acquisitions that we've done over the last 5 years and now we're functioning as one group. So we're obviously getting operational efficiencies there. They have the significant contract win in the first half, which is obviously contributing to the results this year and the ARR from those SaaS products now up to GBP 0.7 million. And then I think my last slide is just around capital allocation. And again, this might address one of the questions that sort of come in whilst we've been talking. So I think, obviously, we underwrite our own insurance. So we have 2 subsidiaries within the group that do the underwriting. So we have an element of cash that we need to hold for our regulatory capital, probably in the order of say over GBP 5 million across the 2 entities. But as a business, we conservatively tend to hold around double that set aside just to cover that requirement. Obviously still leaves us in a good position in terms of the GBP 23 million on our balance sheet to both the CapEx investment to help with our organic strategy, also enable us to continue with our progressive dividend policy and then subsequently any M&A that we feel will help us accelerate our growth going forward. But equally, at point in time, it may be that we start to consider any buyback or special dividends, but we're probably not at that point at the moment. One of the other points just on here, I guess, around the disposal of Let's Connect. There's a few things, that's obviously brought us to the simplification of the business that Paula has spoken about is beneficial in terms of bandwidth of our senior team. But also what it's done is probably remove that lower margin element of income from the business as well as stripping out seasonality and really just help us to focus on how much of our business is coming from recurring revenues. Okay. So I'll answer any more questions that comes at the end, but I will hand back to Paula to talk about the strategy.

Great. Thank you. So we have spent a lot of time over the last few months since the sale of Let's Connect really fine-tuning our strategy. I think we've had really positive feedback about setting out some aspirations to 2030. And of course, we've spent a fair amount of time looking at what needs to be true to deliver these and underpinning these with a level of maths. So our strategy on the insurance side, clearly, with the employee paid insurance proposition that we offer today, improving penetration is a key element. If we're an average of 12% penetration today across our client base, you will also know that we've got clients in the 18%, 19%, 20%. So some of that comes with time and tenure of revisiting a client, but there are lots of other ways to increase penetration as well. So even a couple of percentage points of our overall penetration from 12% up would make a sizable difference to our number and our output. And again, the forensics of how we run the operation, how we get access into clients and how we're effective on the site. All of those elements are really important for us. There are opportunities to broaden our portfolio and we've already looked at options this year in terms of enhancing some smaller elements of our benefits. So again, opportunities to kind of progress there. And then simplifying our digital offering as well. So we do have a digital offering today. It's in some of our enterprise clients. We absolutely want to put a particular focus on how we simplify that digital offering for our SME base, but there's also an opportunity to do the same across enterprise in our own client base and more broadly. And finally, I think partnering white labeling with other benefits providers. We're in conversations already about taking both face-to-face and digital insurance. And the uniqueness, as I mentioned, is what we offer on insurance, we can offer face-to-face, and we also have some really great elements of our proposition that Sarah has talked about in terms of our hospital cover that make us quite different to anything else that you find online. So I think the question that came in during this presentation about what's unique about your benefits and insurance, you can get that from a number of other players. And then I can't find from the example that's been sent -- any example of selling that face-to-face. And certainly, I think when we've looked to what we offer in a hospital plan, we are different and competitive. But having said that, it makes sense for us to also be able to play in the digital insurance space as well as the uniqueness of our face-to-face. And clearly, there are lots of opportunities there. Partnering on white label, be that face-to-face or digital gets us into big insurance opportunities and probably in large volume and possibly in areas that we wouldn't play directly. For example, public sector, large-scale customers that would want to take insurance would be something that we would approach direct with a Hapi and insurance proposition. So I think that really just opens up lots of avenues. I mean, it's clear that our benefit provider competitors recognize the real uniqueness of what we offer on insurance. And then employer paid insurance, so we have a group cash plan today, we sell that successfully into a number of our clients, either in combination with our employee paid or in isolation. We think it's important to strengthen our proposition there. We've done a lot of work around what we need to do on that in terms of the benefits that we offer and the price that we offer, and of course, our USP as well as being a cost-effective, modulized employer pay cash plan will mainly focus on the fact that we can obviously then come in and have conversations to sell the hospital and recovery plans, which don't typically tend to be offered or at least not offered in the holistic way that we offer them in an employer paid cash plan. So there's clearly opportunity there. The upside on EBITDA will be more likely to come from that upsell opportunity of the employee paid on the employer paid, but there is still a stream of revenue that we've modeled on employer paid in isolation. So again, another opportunity to progress that. And what we sell today on an employer paid proposition is all direct client to client, but we will be exploring other avenues such as brokers, et cetera. On the benefit side, I mean, clearly, our opportunity in SME means let's do more with our current relationship with Sage, new segments, new product variants. We're really excited to be progressing conversations on that front. We spend a lot of time with Sage this year, really fine-tuning the process between us, which has been a great collaborative effort. And so we've got much more automation. We're slicker around how we market and sell the proposition. But clearly, additional SME partners of a different characteristic and makeup than a big Sage player, but there's plenty of other technology routes to selling to SMEs and be that HR technology, accountancy technology or a number of really, frankly, unrelated HR options to go to market. So lots of opportunity there that we need to capitalize on, more that we can do as any benefit player would to monetize e-commerce partnerships and options across our platform. We've spent a huge amount of energy building what we believe is a really compelling Hapi 2.0 version of our platform, but there will be some mini releases that we want to do next year because we want to lead on elements like AI and gamification. And then, of course, our digital consulting propositions which continue to grow. Sarah talked about the amount that we're generating on ARR is an opportunity for us as well. So lots of routes on benefits. And I think everyone that we've spoken to this week would agree that there's plenty to go out in insurance and benefits. There's some stretch there, but there's a lot of fingertips that's really a case of now getting into the detail and making the plan happen as quickly as we can. Some people have asked us about M&A. We haven't had much time on our hands this year. And with the work around Let's Connect and really underpinning the fundamentals across our business to think about where we go with M&A, I think we were quite clear that we needed to get 12 months to set out our store and be clear on our strategy. We've got very strict criteria about what we would want to focus on and clearly earnings accretive, recurring revenue. We know want to buy businesses that would have a uniform pattern of ARR because that just makes things much easier to manage and much easier to go to market. There are some really interesting vertical integrations along the benefit spectrum. They could be buy options. They could also be partner options. There are likely to be build options. And then I think in the insurance space, clearly, there's some work that we need to do on that insurance that is build. It's minimal amounts of spend on CapEx to build versus something like a Hapi replatforming. And then we continue to have a watching brief on some interesting elements across that kind of health and well-being space. And so really our task for H2 is to scrub down that M&A list and think clearly about the types of businesses that fit that priority. And that GBP 10 million to GBP 12 million that we could spend on M&A, we certainly need to be coming back this time next year with a view of whether there's an opportunity to spend that money on M&A or whether there's an opportunity to do more with the money. So it's clear that we need to really think in the next 6 months about the right use of that money to grow the business. Okay. And then for anyone that's tried to bottom-up model our aspirations already, and we've enjoyed conversations this week with a number of investors that have and to really stress test this, which has been super useful. What this really means for us in 2030 is access to 300,000 new employees, a really compelling level of premium income. The work on digital insurance products and the group cash plan, we've modeled to be about 10% of our EBITDA. So I think that's a powerful story that 10% of our EBITDA comes in new insurance. And then on the benefit side, that gives you a view of the scale that we need to achieve on the platform. The additional partnerships, a number of client leads that we need to get through. So -- and of course, we've started to work to bottom up build this across the year and to get us very focused on what needs to be true. And our 2030 aspirations then, revenue in excess of GBP 100 million, EBITDA to GBP 30 million. A sizable portion of increase and absolute on our ARR across both the Hapi and Reward digital propositions. And just in case you wanted to look at the impact in a different way, and this gives you a view of the waterfall, the contribution of those various elements. So clearly, a big portion of the increase still comes on that employee paid cash plan, the work that we continue to win new clients and the work we can do to penetrate within clients. The second element is that new insurance revenue and EBITDA. And then 3 and 4 are how we sell direct on our benefits platform and then obviously, how we go to market with partners as well. So -- and it would be foolish to build a plan and predicated on any M&A. So our route to GBP100 million is clearly organic, and we believe achievable organically. And any M&A would really just accelerate how quickly we get to that end goal on the EBITDA front. Okay. So just to conclude, and then we will address some of the questions that we haven't addressed already. We're very happy and confident with the results. We remain on track for the full year and market expectation. Really proud of the double-digit growth across all areas, highly cash generative and focused again on what we can do with the accessible cash that we don't need to hold to cover the insurance liability. We're very confident now of the strategy work that we operate and really in a fraction of a large growing and unpenetrated market. And we have a very clear strategy for growth, which we are keen to get on with.

Right. Shall we spend a few minutes going through some of the questions. There's a couple on kind of insurance underwriting. Do you want to take some of those first, and then I can come back on some of the others.

Yes. Did you retain all underwriting risk on balance sheet? Or are you able to reinsure this? How would you characterize the key risks around your insurance business. So yes, we underwrite -- I think Paula mentioned earlier, we underwrite all of the plans within the group to within the U.K. insurance subsidiary, one within offshore subsidiary out in Guernsey. We don't reinsure generally, which we've had these products for a long period of time with very stable metrics in terms of retention and loss ratios. We -- probably the biggest risk, I guess, is because we tend to go into employers, places of work where a large number of employees are operating in 1 site, I guess some kind of concentration risk is probably and some kind of catastrophic event is the key risk. So that is one element of reinsurance that we do have on our death benefit policies where we basically ensure if anything happening in a single site. That's one. There's one around recurring revenue, now accounting for 81% of total revenue. How do you expect percentage to evolve over the next few years? Well, probably from the piece Paula has just been through there in terms of our aspirations, obviously, growth at the insurance book is a significant element of that. Now we've no longer got Let's Connect, the only nonrecurring elements, if you like, the consultancy income from the Pay and Reward division and then the monetization of the platform through the third-party commissions. So we certainly expect the recurring revenues to continue to grow as we move forward. Do you want?

Yes, there's one on consumer duty. Congratulations on the awards. How much engagement have you had with the FCA on your route to market, vulnerable customers, pressurized selling as areas and they're obviously laser-focused on value for money. You can talk about value for money in a second. But I think, I mean, the award we won was for our thinking on vulnerable customers, but we've now replicated something that I did throughout my telco career and particularly from BT, which is a vulnerable customer forum. So we held the first one. I think it was a couple of weeks ago, inviting a number of charities to come and talk to us about additional things that we need to think about and be aware of. So we really want to be leading in the way that we manage vulnerable customers across not just our interaction in the field, but particularly customer service and claims handling as well. So we're expecting to run those forums at least once a quarter and really get some outside in feedback to keep the lens very focused. So that is forefront for us and something that we absolutely want to lead on. Do you want to talk about value for money?

Yes, I can probably I was going to say there's a few questions around consumer duty, including there was a presubmitted one, I think, around the impact of the FCA's latest thematic review into pure protection product. I mean, most of the things that come out from the FDA are centered around fair value even the latest pure protection one is really variational theme in terms of value for money for the consumer. That review in particular is in its very early stages. And it seems to be based around the distribution model and the focus on whether people could potentially receive more than they pay in premiums or they need to get to potentially receive more than they're paying in premiums. I think because our premiums are so low in a very low premium products, it's fairly unlikely that people couldn't receive more than they pay in, particularly the hospital plans I mentioned earlier, making up to 2 years claim for a single condition. But obviously, value is something we talk about a lot as a Board. We have had to do our first sort of review of the annual consumer duty report. We look at fair value, not just in the context of the levels of claims that we're paying out, but all of the other bits that sit around. But obviously, we're selling insurance to an element of the population who probably don't have easy access to insurance without those face-to-face conversations that we bring into play. But we have no underwriting on the policies, similar premium, whether you're 20 and healthy or 16 with a preexisting condition. We can cancel in time, fast low complaint levels, good service. So all of those things come into the mix when we're looking at fair value. And as a Board, we're comfortable that we -- are comfortable with the level of claims, et cetera, that we pay out. But obviously, all of the reviews that come out we take seriously. We'll be doing the gap analysis and consideration for what the FCA put into play and acting accordingly.

Yes. I think I'm going to do a couple of points that I probably forgot to add on vulnerable customers. We've got a number of charities actually coming in and sitting with our customer service and claims handlers as well. So it's not just kind of the forums to gain advice, but it's getting people to come in and look and listen. So for example, Dementia UK are coming in, I think, at the beginning of October to deliver an awareness session for all of our claims handlers. And then I think that kind of brings to life a bit more of the issues and a bit more in a meaningful way. And that's a lens we haven't kind of shown into the business in terms of that engagement on the part of which is really exciting. Yes, there some questions about how much face-to-face work, have you won? I mean, we've -- I think I've talked. We've got 5 new opportunities that we've landed and signed up and now just thinking about how we're rolling out in the field on insurance and at least 2 of those are over the kind of 2,000-employee mark and a very big scale, and some of them are probably around 1,000, 1,500. But obviously, they have to be of a certain size anyway for face-to-face to make sense for us. Otherwise, we're never going to get the economies of scale. And of course, part of the composition of our costs for insurance anyway is the cost of running a face-to-face team on the ground, running the support mechanism that sits around that business in terms of people doing the planning of site visits and all of the associated claims and customer service handling as well. So there's a fair amount of cost that we put into servicing insurance from a face-to-face model, but we believe that, that creates a really unique way of engaging with customers and reassuring and asking their questions on the ground and bringing that kind of personal experience to their particular need. Hopefully, that's a wiz through of the questions.

Paula, Sarah, I'm actually jumping in. Thank you very much for answering those questions that come from investors. Of course, the company can't review all the questions submitted today, and we will publish those responses on the Investor Meet company platform. But just before redirecting investors, provide you with their feedback, so it's particularly important to you both. Paula, could I just ask you for a few closing comments.

Yes. I think -- I mean, our last slide sums it up perfectly. We've got good solid results again. We're predicting good solid results against expectations for the end of the year. We're a simplified, streamlined business going forward with a clear strategy and a huge opportunity to go out. We're really excited and geared up for the future. So thank you very much for listening.

Thank you very much.

Paula, Sarah, thank you once again for updating investors today. Could I please ask investors not to close the session as you'll now be automatically redirected to provide your feedback in order the management team can better understand your views and expectations. This will take a few moments to complete, but I am sure will be greatly valued by the company. On behalf of the management team's Personal Group Holdings Plc, we'd like to thank you for attending today's presentation, and good afternoon to you all.