Annual Report and
Financial Statements
2020
www.pensionbee.com
1
Contents
Strategic Report
01
PensionBee at a Glance
02
03
04
05
06
07
08
09
10
11
12
13
Chairman’s Statement
Chief Executive Officer’s Review
About Us
Business Model
Market Opportunity
Operating and Financial Review
Managing our Risks
Our People
Environmental, Social and Governance Considerations
Directors’ Report
Statement of Directors’ Responsibilities
Independent Auditor’s Report to the Members of PensionBee Limited
Financial Statements
14
Statement of Other Comprehensive Income
15
16
17
18
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to Financial Statements
3
4
5
6
13
15
17
22
25
28
31
33
34
38
39
40
41
42
01
PensionBee at a Glance
PensionBee is a leading online pension provider. Our mission
is to make pensions simple, so that everyone can look
forward to a happy retirement.
PensionBee is a leading online pension provider1 in the UK,
with approximately 119,000 Active Customers and £1.4bn of
AUA, in each case as at 31 December 20202. PensionBee is
a direct-to-consumer financial technology company, with a
PensionBee elicits reviews from its customers through
Trustpilot, a well-known website which hosts reviews of
businesses worldwide. PensionBee’s customers rate its service
highly, and as at 31 December 2020 it had a Trustpilot score
mission to make pensions simple, so that everyone can look
of 4.7 stars out of 5, based on 3,784 reviews.
forward to a happy retirement. It delivers a leading customer
proposition to pension holders in the UK defined contribution
For the year ended 31 December 2020, PensionBee’s
pensions market, catering for the many people who have
Revenue was £6.3m, compared to £3.5m for the year ended
historically struggled to understand, prepare for and manage
31 December 2019, representing a 77% growth rate from
their retirement confidently.
2019 to 2020. Net operating cash loss for 2020 was £10.4m,
reflecting strong investment in PensionBee’s future growth
PensionBee seeks to make its customers ‘Pension Confident’ by
compared to £5.2m in 2019.
giving them control and clarity over their retirement savings.
PensionBee’s technology platform allows its customers to
combine their pensions and invest in a range of online plans,
forecast how much they are expected to have saved by the
time they retire, and make withdrawals from the age of 55.
119k
2020 Active Customers2
69k
2020 Invested Customers2
>95%
2020 Customer Retention2
+86% on 2019
+83% on 2019
£1.4bn
2020 Assets under Administration2
+82% on 2019
£6.3m
2020 Revenue2
+77% on 2019
Excellent 4.7 out of 5 Rating
1 Supported by PensionBee’s Trustpilot TrustScores as at 31 December 2020 with 4.7/5.0 stars based on 3,784 reviews. This compares favorably to other key pension providers in the
UK Defined Contribution pensions market and based on PensionBee’s industry awards as set out on page 12 (Our Awards)
2 See definitions of Active Customers, Invested Customers, Customer Retention, Assets under Administration and Revenue on page 17 (Operating and Financial Review)
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02
Chairman’s Statement
As PensionBee has grown over the years, we have stayed true to our core principle of putting our
customers first. This year, with all of its disruptions and challenges, was no different and we
continued our strong trajectory with more customers choosing to put their trust in us.
The World Health Organisation (“WHO”) declared coronavirus, also known as Covid-19,
a global public health emergency on 30 January 2020. The sudden constraints imposed
on all our lives accelerated the application of technology to countless routines, and
transformed our attitude to the use of technology in everyday life. This time last year,
even after the WHO’s pronouncement, few if any of us had a global pandemic on our list
of worries. As the seriousness of the contagion became apparent, as so often in human
history, we adapted and innovated. Scientists confounded sceptics with a panoply of
vaccines. Technology became our primary enabler. Companies in every market invested
to transform their practices and procedures.
As a digital-first company, PensionBee needed minimal investment to adapt, choosing to
invest in our team and in our growth. Over the past twelve months we have seen the number
of those with retirement savings invested through PensionBee once again double. The assets we
administer on their behalf have climbed in value to £1.4bn, a market leading annual increase of 82%.
Although our technology is fundamental to our success, our progress through 2020 is a reflection of the
energies, efforts and agility of our people. They seamlessly switched to remote working and adapted swiftly to the
change in circumstances. I would like to thank each of them for their diligence and commitment to the business throughout the
period. My thanks also to our independent directors, Mary Francis and Michelle Cracknell, and to Joe Suddaby, a director and early
investor in PensionBee, for all he has contributed to the business.
Our formidable progress makes a public market listing of shares in PensionBee the natural next step. A key advantage of listing on the
London Stock Exchange is the opportunity it gives our customers to share in our growth journey. We are delighted at the response from
customers so far. The additional capital that we plan to raise will help to fund sustainable future growth and allow us to continue to
create value for all our stakeholders.
Governance
The Board is committed to upholding high standards of corporate governance across the business, including maintaining the right
balance of skills, experience and diversity. In November 2020, we were delighted to confirm the appointment of Mary Francis CBE as
the Senior Independent Director of the Company. Mary has extensive and diverse board-level experience across a range of industries,
including previous non-executive directorships at the Bank of England, Aviva and Swiss Re Group. Through her former senior executive
positions with H M Treasury, the Prime Minister’s Office and as Director General of the Association of British Insurers, Mary brings strong
governance values to the board, a strong understanding of the interaction between public and private sectors and skills in strategic
decision-making and reputation management. The Board continues to provide strong support and appropriate challenge to the
management team to ensure that the strategy is sound, achievable and delivered.
Outlook
The Directors believe that growth in the UK pensions market will continue to be driven by favourable policy changes, the acceleration
of the transition to digital technology and underlying trends in the employment market. New opportunities and developments in
technology are expected to continue to accelerate change in the pensions industry in ways that will ultimately benefit all consumers.
PensionBee has built a technology platform to capture this ‘mass-market’ opportunity, allowing individuals to manage all their
pensions in one place, through an efficient and scalable platform. I am confident that 2021 will be another exciting year of growth
and development for PensionBee.
Mark Wood CBE
Chairman
April 2021
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03
Chief Executive
Officer’s Review
PensionBee has grown rapidly in recent years but 2020 has been our busiest year yet; the
pandemic has brought about a cultural shift to “online” which has seen an increasing number
of customers turning to us to help them manage their pensions online.
2020 saw PensionBee continuing on its impressive growth trajectory, delivering an annual rise in Assets
under Administration of 82% from £745m at the end of 2019 to £1.4bn at the end of 2020 as compared to a
rise in the value of the FTSE All-Share index of 11% over the same period. Our asset growth is attributable to healthy
new business volume, with Active Customers increasing 86%, from 64.2k at the end of 2019 to 119.3k at the end of 2020.
Our customer-centric approach has been particularly important this year. The immense uncertainty and challenges that so many are
facing has meant that the care we have for our customers has resonated with savers during this period. Our rapid transition to remote
working enabled us to continue delivering the type of service our customers expect to receive and our Trustpilot score remained high
at 4.7 stars out of 5.
Despite the challenges caused by coronavirus, we followed our customers and our marketing campaigns adapted with a sustained uptick
in app-based advertising, national billboard sprints over the outdoor months and television advertising while people stayed home. Asset
growth translated into a year-on-year increase of 77% in Revenue, which was £6.3m for 2020. By December 2020 we had achieved an
Annual Run Rate Revenue of £8.8m3.
Contributing to our growth was the launch of our Fossil Fuel Free Plan, which was created to give consumers further opportunities
to invest their pensions in line with their values. The voice of our customers continues to drive our product development roadmap.
Following our research report Drawdown Doldrums, which showed that accessing a pension as a retiree is complex and burdensome,
we were excited to commence building our innovative new withdrawal proposition, PensionBee Access. PensionBee Access will enable
retirees to make on-demand withdrawals from their pensions using a current account and Mastercard®.
Our cost discipline remained throughout the year. While we continued to invest in our marketing activities, our scalable, modern
technology enabled us to continue generating operating leverage. Therefore, despite the significant increase in marketing expenditure
from £4.2m in 2019 to £8.2m in 2020, our Adjusted EBITDA margin4 remained flat at (166)% and indeed our Adjusted EBITDA before
Marketing margin improved from (49)% in 2019 to (35)% in 2020.
Towards the end of the year we announced that we would be exploring a listing on the High Growth Segment of the London Stock
Exchange. Designed exclusively for high growth companies, this segment of the London Stock Exchange offers a launchpad for the
further growth of the Company. Crucially, our prospective IPO will enable our customers to participate in our growth. We published our
Confirmation of Intention to Float (CITF) on 30 March 2021 and expect to publish our Prospectus in April 2021 at the time of signing the
accounts.
None of these achievements would have been possible without our team, our commitment to our customers and to achieving our vision.
Throughout the year I have been proud of our continued closeness and our ability to maintain our spirit even in the face of uncertainty.
We owe much to our diversity and our desire to represent the society we live in.
Outlook
In the year ahead, we expect to accelerate progress on our mission of making pensions simple. We expect to acquire more customers,
enabling them to become ‘Pension Confident’, while investing in the technology that has enabled us to serve them and to scale our
Company. We expect to continue promoting good corporate behaviour that supports healthy long-term returns for our customers’
pensions and promotes their health and the health of our environment. We will also stand up for the rights of pension consumers to
have better, more transparent pension products that truly enable a happy retirement for all.
Romi Savova
Chief Executive Officer
April 2021
3 Annual Run Rate Revenue is calculated using the Recurring Revenue for the month of December 2020, multiplied by 12 to get a full year estimate
4 “Adjusted EBITDA” means the loss for the year before taxation, finance costs, depreciation, share based compensation and transaction costs. Please see note 62 in the Financial Statements
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04
About us
A leading online pension provider
Our History
Since its inception, PensionBee has
been a consumer champion in a
highly complex industry, ripe for
disruption
PensionBee was co-founded in 2014 by Romi Savova, its current
Chief Executive Officer (CEO) and Jonathan Lister Parsons, its
current Chief Technology Officer (CTO), to simplify pension
savings in the UK, following a difficult pension transfer
experience for Romi Savova using traditional platforms.
Since then, PensionBee has been challenging the
status quo of an industry that has evolved without
sufficient focus on consumer needs, characterised
by poor communication, opaque fees and
cumbersome processes. PensionBee is on a
mission to change the industry for the better.
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Our Vision
PensionBee strives to help its customers achieve a happy
retirement in the form of financial freedom, good health
and social inclusion.
PensionBee’s vision acts as a blueprint for all its business
activities, from outstanding customer service and intuitive
product design, to investment solutions with some of the
world’s largest money managers and impactful corporate
and social responsibility initiatives. As a pensions company
with a long-term horizon for its customers, PensionBee
seeks to look beyond short-term gains to help its
customers achieve a sustainable retirement income.
Social Inclusion
The Directors believe that the Company’s product must
be built to help people from all backgrounds to save for
retirement. The UK’s statutory secondary school national
Financial Freedom
PensionBee’s customers have a large variety of retirement
goals and ambitions, whether purchasing homes close to their
children, travelling around the world or simply living without
any financial worries. Each customer is unique, but to achieve
their ideal retirement, they all need sufficient income to cover
their living expenses for the rest of their lives. This, at its core,
is the concept of financial freedom.
For too long consumers have struggled to manage their
retirement savings. Pensions are often complicated and,
combined with the added intricacies that can result from the
accrual of multiple pension plans from different employers
over the course of a career, present a significant obstacle for
curriculum contains little formal financial education, and over
consumers wanting to take control of their savings.
the course of their lives, individuals do not all have the same
exposure to financial concepts. As a result, many struggle
PensionBee’s technology platform is designed to make it
to navigate the pensions system as adults. By designing
and building its product in recognition of these realities,
PensionBee seeks to help its customers overcome these
educational barriers.
easy for customers to both understand and consolidate their
pensions, invest in a range of diversified plans and, from the
age of 55, make on-demand and appropriate withdrawals.
Through its access to pension calculators and retirement
forecasting tools, PensionBee seeks to help its customers
In addition, PensionBee is an advocate for greater gender
understand how much they need to save in order to achieve
equality in UK companies. There is a large body of research
their desired income in retirement.
suggesting that women have been held back by a lack of
equal opportunities and systemic inequalities that prevent
career progression. Research conducted by PensionBee
suggests that these inequalities are perpetuated in later life
Good Health
The Directors believe that good physical and mental health
with men having significantly larger pensions than women
can be a major determinant of happiness in later life. Whilst
after the age of 45, despite having a shorter life expectancy.
quality nutrition and safe living conditions are important
In recognition of these inequalities, PensionBee’s first Charter
contributors to good health, the Directors also believe that
pledge taken in 2019 was to maintain at least 50% gender
financial wellbeing can have a significant role to play.
diversity in its senior management team through to 2021. By
31 December 2020, PensionBee had achieved more than 50%
PensionBee’s platform has been designed in a user-friendly
female representation across the employee base and 57%
way so as to limit the stresses of engaging with one’s pension
across its senior management team, meaning it is on track
and to help customers exercise greater control over their
to maintain this target going forwards. PensionBee’s female
financial future.
representation on its Board is currently 60%.
Similarly, PensionBee also wants to give its customers greater
PensionBee is also committed to encouraging other forms
peace of mind by offering more ethically and environmentally
of equality in UK companies. Efforts to include, nurture and
conscious investment alternatives. Not only is there
progress employees from all backgrounds and especially
quantitative evidence from industry experts suggesting
diverse ethnic backgrounds, can translate into higher
that sustainable investments yield greater returns, but there
engagement and lower attrition rates. The Directors therefore
are significant financial risks associated with investing in
believe that there is a strong moral and economic case for
pollutants such as oil and tobacco producers. These financial
increased diversity in UK companies. Greater equality can
risks can be aggravated by government action (whether
translate into improved company performance, which in turn
through outright bans or taxes), civil lawsuits, and adverse
supports the pension growth of PensionBee’s customers.
media coverage. In facilitating sustainable investments,
PensionBee seeks to enhance its customers’ long-term
pension wealth as well as their mental wellbeing.
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Our Customer Proposition
We are revolutionising the pensions industry through innovative
technology, product leadership and excellent customer service
Pensions are often complicated and difficult to understand, presenting an obstacle for consumers to engage with their savings.
Against this backdrop, PensionBee has developed a simple and easy to use mass-market proposition that provides a solution to
the consumer problem of saving for and managing their income throughout retirement.
PensionBee’s customer proposition can be summarised as follows:
Combine
The average adult switches jobs approximately 11 times 5 over the course of their career. In doing so, they may accrue a
number of disparate pensions with differing providers and cost structures which, as a result of a variety of factors which
could include infrequent reporting, limited online functionality, and cumbersome communications processes, can prove
difficult to manage effectively. By signing up with PensionBee, either via PensionBee’s website or by using PensionBee’s app,
PensionBee’s customers are able to combine and transfer their existing pensions into the PensionBee Personal Pension with
ease. Once their pensions have been transferred, customers are able to start managing their new pension online and can
monitor their live balance via PensionBee’s website or by using PensionBee’s app.
Contribute
PensionBee customers can make one-off or regular contributions to their PensionBee pension via
bank transfer or direct debit. For customers who make a personal pension contribution and are
eligible for tax relief, PensionBee will automatically claim their 25% tax top-up from HMRC and
add this to their pension balance. Customers can also make use of PensionBee’s retirement
calculator, which provides an estimate of retirement income based on a number of
assumptions including the size of the pension plan, chosen retirement age, and ongoing
contributions, to plan ahead for their retirement. Self-employed customers can open a
new pension plan without transferring any old pensions.
Withdraw
From the age of 55, PensionBee’s customers can use the PensionBee
website to withdraw a portion of their pension online in just a few
clicks, bypassing a process which can in some cases involve many
weeks filling out paperwork and jargon-filled forms, which are often
sent only through the post. Customers may choose to take up to
25% of their pension free of tax, withdrawing their chosen amount
either as a lump sum or in portions.
5 ‘Meeting future workplace pension challenges: Improving transfers and dealing with small pension pots’, DWP, December 2011.
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Our Strategy
PensionBee’s strategy is to be the best
universal online pension provider
PensionBee’s strategy starts with the consumer, putting them at the heart of everything it
does. Consequently, the strategy focuses on further growth of the customer base, offering
customers an excellent lifetime product and service experience, powered by industry-
leading technology and world-class investing solutions.
PensionBee’s strategy is to drive growth through a combination of factors, including continued:
(i) efficient investment in customer acquisition and growing brand awareness; (ii) leadership in
product innovation; (iii) investment in and development of its industry leading technology platform;
(iv) focus on excellent customer service; and (v) focus on investment solutions designed for customers.
Efficient Investment in Customer Acquisition and Growing Brand Awareness
Continued investment in marketing will drive further growth in customers, AUA and revenues, by attracting more customers with
pensions to consolidate, making ongoing contributions and further compounding growth in AUA. Due to PensionBee’s broad
customer appeal focusing on the mass market, the Company can adopt large, mass market advertising channels. PensionBee remains
focused on continuing to build its mass market brand identity and becoming a UK household brand name.
Leadership in Production Innovation
Continued product innovation is central to PensionBee’s strategy. The PensionBee customer proposition has been enabled by
investment in continuous innovation and automation, allowing easy onboarding of customers and intuitive lifetime self-service.
The Company has a proven track record in innovating and leading the pensions industry and will continue to develop products and
features to cater for consumer demand.
Investment in and Development of its Industry Leading Technology Platform
PensionBee’s proprietary technology is modern, scalable and secure. The cloud-based and API-driven platform provides the
foundations on which to continue to build dynamic and innovative products, while maintaining full control over the experience
delivered to customers in a cost-efficient manner. The security and compliance of the technology is a priority, and the Company
maintains a robust information security assurance framework that is independently audited and certified under ISO27001. PensionBee
has made, and will continue to make, investments in technology to drive further automation and improve the customer experience.
Focus on Excellent Customer Service
PensionBee is focused on making pensions easy to understand and accessible to everyone through simple, straightforward
language and engaging visuals. Industry-leading ratings evidence the excellent customer service track record. PensionBee’s
scalable technology-led platform is supported by easily accessible human interaction with “BeeKeepers”, providing customers with
a dedicated account manager from the moment they are on the platform, assisting them through the on-boarding process and
helping them understand the platform functionality.
Focus on Investment Solutions Designed for Customers
PensionBee has partnered with some of the world’s largest money managers (BlackRock, HSBC, Legal & General and State Street
Global Advisors) to manage its customers’ pensions. PensionBee continuously uses the feedback it receives from its customers to
tailor its investment plan offering to its customers’ preferences. In 2020, PensionBee responded to customer demand to exclude oil
producers from their pensions by partnering with Legal & General to create one of the UK’s first mainstream fossil fuel free plans.
PensionBee will continue to develop investment solutions that meet its customer needs.
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Our Team
Our team has the breadth and depth of experience across
all disciplines to deliver the best customer outcomes, drive
growth and performance
Led by our founders Romi Savova and Jonathan Lister Parsons, we have a strong and established senior management team. Our
diverse and inclusive workforce of 149 employees (as at 31 December 2020) is motivated and empowered to achieve great results
across all areas of the business, including customer service, brand and marketing, product development, technology, finance and risk.
We develop and support our talent and strive to ensure our people are actively engaged. Our strong culture and values enable us to
attract and retain people who passionately believe in our vision. All employees participate in our share option scheme which further
helps to drive engagement and an ownership mentality. We have a deep and experienced board, led by our Chairman Mark Wood
(former CEO of Prudential).
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Our Values
PensionBee lives by its core values, focused on doing the right
thing for our customers
We are dedicated to ensuring that our five core values remain as guiding principles behind everything we do so that everyone in the
Company remains focused on always doing the right thing for our customers. As the Company continues on its growth path, there is a
particular focus on protecting and maintaining the culture associated with these values–a strong focus on well-being, including regular
‘Happiness! Meetings’ between employees and managers, helps to embed this approach.
Honesty
We strive for total transparency around the pensions our customers get,
what service they can expect and our fees.
Innovation
We are always seeking to “wow” our customers (and colleagues)
through new and improved ways of doing things.
Love
From engaging with our customers to product delivery, we go above
and beyond to create an exceptional customer experience.
Quality
We deliver top notch quality, on-time work, and we do what we say
we’ll do. People trust us with their pension savings, and we need to
show them that we deserve that trust.
Simplicity
Whether we are picking up the phone or building our product, we keep
things simple, avoiding confusing jargon and complicated processes.
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Our Awards
2020 has been an incredibly strong year for PensionBee and the
industry has recognised its innovation, customer service and
diverse workplace
PensionBee has received a high level of recognition from its customers and third parties for its differentiated customer offering and high
standard of customer service. Since inception, PensionBee has received a total of 20 awards, including the following awards received in
2020 alone:
Winner
DIY Pension
Sustainable Investors
Beginner Investors
Winner
DC Pension Provider of the Year
Winner
Pension Provider of the Year
Winner
European Pensions Innovation
★ Winner: ‘Employer of the Year’ Diversity in Finance Awards 2020
★ Winner: ‘Pensions Innovation’ Finder Investing & Saving Innovation Awards 2020
★ Winner: ‘FinTech of the Year’ AltFi Awards 2020
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05
Business Model
We drive value by growing our recurring revenues through
growing our customer base supported by our scalable
operational platform
PensionBee provides an easy-to-use technology platform for the mass-market, enabling customers to have control over their
pensions. PensionBee adopts a simple, transparent fee structure based on the pension plan an individual chooses after their
pensions have been consolidated on the platform. PensionBee does not provide financial advice and charges no fee for the
initial consolidation of pensions, no additional platform fee and no one-off fees for switching investments. The ongoing annual
management fee ranges from 0.50% to 0.95% of an individual’s pension plan depending on the plan chosen, with no minimum
pension size requirements. PensionBee’s business model is built around the following key tenets:
Efficient Direct-to-Consumer Distribution
PensionBee has a direct-to-consumer acquisition model, reflecting the importance of managing the end-to-end relationship with its
customers and having total control over the quality of experience, which is key to customer retention.
PensionBee’s direct-to-consumer distribution model encompasses scalable marketing channels, including search, social media,
television, out-of-home advertising and radio. The branding and digital proposition resonates with a mass-market audience, allowing
PensionBee to advertise efficiently across most prevailing media.
PensionBee is disciplined and responsive in its approach to marketing, focusing on deploying spend across channels to solve for rapid
payback, on average within the first few years of acquiring a customer.
Recurring Asset-Based Revenue
PensionBee offers a lifetime customer proposition, designed to enable individuals to fulfil their retirement savings goals and withdrawal
needs. Invested Customers generate growing lifetime value, with PensionBee’s straightforward charging structure driving predictable,
recurring revenue growth that increases with Invested Customers’ wealth.
PensionBee earns Revenue through the administration of its customers’ retirement savings. PensionBee’s Revenue is substantially
recurring in nature as the annual charges are calculated daily as a percentage (basis points) of the value of Assets under Administration
(AUA) and will continue to be earned on an ongoing basis whilst PensionBee administers those assets. The mix of investment plans has
an impact on the levels of fees charged and therefore Revenue.
AUA and Revenue have historically displayed a very high degree of stability and predictability, testament to the strength of the
customer proposition and PensionBee’s leading market position. Revenue growth reflects customers’ attitudes and behaviours with
respect to contributions, consolidation of pensions and withdrawals over time. AUA and therefore Revenue grows through existing
and new clients adding more investments into their accounts through pension consolidation and contributions. PensionBee aims
to minimise asset outflows with a constant focus on excellent customer service and product innovation. The direct nature of the
relationship between PensionBee and its customers has resulted in PensionBee achieving high levels of Customer and AUA Retention
Rates (each in excess of 95% as at 31 December 2020) generating predictable lifetime revenues and cashflows.
AUA and Revenue are also importantly linked to growth in the underlying market value of the investments customers hold in their
accounts. Stock markets give an indication of investment growth and the most relevant proxy measure tends to be the movement in
the major global stock market indices, including in the United States and in the United Kingdom. Whilst short-term fluctuations may
decrease the value of AUA, customers’ exposure to the stock market has historically increased their retirement savings, and therefore
our AUA and Revenue, over the longer run.
13
Scalability of Operations
PensionBee only offers its customers highly liquid, scalable investment management solutions from the world’s largest asset managers.
The investment solutions track prominent global indices and provide unrestricted capacity for inflows and the highest levels of liquidity.
PensionBee continually invests in its technology, people and product development in an efficient and disciplined manner. PensionBee’s
operations are highly scalable and the Company expects to benefit from operating leverage and increasing cost efficiency as it grows.
The customer proposition is tech-enabled, allowing easy onboarding of customers and intuitive self-service throughout a customer’s
lifetime. PensionBee utilises technology to ensure its service is as efficient and automated as possible, such that adding new customers
and assets has only a marginal cost impact. The technology is scalable and built on dynamic, world-class cloud-native platforms.
PensionBee prides itself on its excellent customer service, complementing its digital offering with dedicated customer account
managers who offer lifetime customer support. The customer success team benefits from a single view of the customer, enabling
efficient and personalised service.
PensionBee’s Business Model
Proven Customer Acquisition
Customer solution
Revenue
Customer Fees: c. 50-95bps(1)
AUA: £1.4bn(2)
1
2
3
Money
Managers Fee
BlackRock, Legal & General, HSBC,
State Street Global Advisors
Technology &
Product
Development
People
1 Customer fees paid based on the range of funds on offer
2 AUA as per Management Information as at 31 December 2020
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06
Market Opportunity
We operate in the vast, growing pension landscape with a
significant addressable market opportunity
UK Pensions & Retirement
A pension is typically a tax-efficient way to save money
for later in life, providing an income for retirement. Whilst
individuals in the UK may rely on a number of sources from
which to draw income during retirement, pensions are
the largest component of wealth in the UK, representing
approximately 43%. of total UK wealth6 (with other types
including property, financial and other physical wealth). Total
UK wealth was estimated by the ONS in 2016-2018 to be
approximately £14.6 trillion7 and PensionBee estimates this to
have risen to approximately £17 trillion8 today.
UK Private Pensions Market
The UK private pensions market is vast. The Office for
National Statistics (“ONS”) estimated the UK’s total private
pension wealth to be approximately £6.1 trillion9 in 2018 and
PensionBee estimates that this has grown to approximately
£7.3 trillion10 today.
PensionBee’s product proposition is focused on Defined
Contribution schemes and customers. Defined contribution
pensions build up a pension pot using personal and employer
contributions (if applicable) plus investment returns and tax
relief. The ONS estimated the UK’s DC wealth at approximately
£0.8 trillion11 across the average of the 2016-2018 period and
PensionBee estimates that this total pension wealth today
has grown to approximately £1.1 trillion. The number of
individuals in the DC market is also vast. In December 2020,
the FCA estimated that there were 26.7 million individuals in
contract-based workplace and non-workplace DC schemes12
within its regulatory perimeter. The DC market can be further
The growth in the UK Preserved Pensions market has been
driven by a number of supportive trends such as: increased
working life, individuals being more likely to move jobs more
frequently (the average adult switches jobs approximately 11
times14), further job market fragmentation and the advent of
auto-enrolment. The total number of individuals automatically
enrolled in workplace pensions grew from approximately 1
million in 2013 to 10 million in 2019, with 87%. of UK employees
now saving into a workplace pension scheme15. According to
the ONS Occupational Pension Scheme Survey, there were
17.5 million DC workplace pension accounts in the UK in
2018. Applying historical average growth rates, PensionBee
estimates there could be 28.1 million16 workplace pension
accounts today in addition to the 12.7 million17 non-workplace
accounts, totalling 40.8 million DC schemes. PensionBee
management data suggests that every DC saver has an average
of two pension accounts, suggesting an estimated 20.4 million
individuals with a DC scheme as part of its addressable market.
c. £0.5tn
55%
c. £1.1tn
60%
42%
Jul 12 - Jun 14
Jul 14 - Jun 16
Apr 16 - Mar 18
Est. 18 - 20
Preserved Defined Contribution Pension Wealth (£bn)
Active Defined Contribution Pension Wealth (£bn)
6 ONS: Pension Wealth: Wealth in Great Britain, April 2016 to March 2018
7 ONS: Pension Wealth: Wealth in Great Britain, April 2016 to March 2018
8 PensionBee estimate based on: ONS: Pension Wealth in Great Britain: April 2016 to
March 2018. PensionBee estimate of £17 trillion for 2018-2020 calculated by applying a
historical CAGR of 9% (achieved from the average of July 2012-June 2014 to the average
segmented into Active Pensions and Preserved Pensions:
of April 2016-March 2018) for 2 years
Active Pensions - approximately £0.5 trillion of wealth held in
pensions into which individuals or employers are regularly or
actively contributing, usually during working life; and
Preserved Pensions - approximately £0.6 trillion of wealth
held in personal and workplace pensions into which
contributions are no longer being made, but which are not
yet in payment, having accrued rights that will come into
payment in the future.
9 ONS: Pension Wealth: Wealth in Great Britain, April 2016 to March 2018
10 PensionBee estimate based on: ONS: Pension Wealth: Wealth in Great Britain: April 2016
to March 2018. PensionBee estimate of £7 trillion for 2018-2020 calculated by applying
a historical CAGR of 9% to April 2016-March 2018 (achieved from the average of July
2012 - June 2014 to the average of April 2016-March 2018) for 2 years
11 ONS: Pension Wealth: Wealth in Great Britain: April 2016 to March 2018
12 FCA - Evaluation of the impact of the Retail Distribution Review and the Financial
Advice Market Review – December 2020
13 PensionBee estimate based on: ONS: Pension Wealth in Great Britain: April 2016 to
March 2018. PensionBee estimate of £0.6 trillion for 2018-2020 calculated by applying
a historical CAGR of 9% (achieved from the average of July 2012- June 2014 to the
average of April 2016-March 2018) for 2 years
14 ‘Meeting future workplace pension challenges: Improving transfers and dealing with
PensionBee’s core target market is the UK DC Preserved
small pension pots’, DWP, December 2011
Pensions market. UK DC Preserved Pension wealth has grown
15 The Pensions Regulator – Automatic Enrolment: Commentary and Analysis April 2018
significantly from the average across 2012-2014 to the
– March 2019
estimated £0.6 trillion today (average across the 2018-2020
period) with a CAGR of approximately 23%.13
16 PensionBee estimate based on: ONS Occupational Pension Scheme Survey 2018,
calculated by applying average of annual growth rates for 2017 and 2018 to the number
of members of occupational pensions schemes in 2018, rolling forward to 2020
17 FCA – Effective Competition in non-workplace pensions – July 2019
15
Market Trends
Government and Regulatory
For at least the last two decades, successive UK Governments
have focused on ensuring that individuals in the UK are saving
appropriately for retirement, with a series of major regulatory
and policy initiatives during this period. There is now broad
consensus across the political spectrum that the state pension
alone will not provide sufficient retirement income and there
is a growing awareness of a related issue, the ‘savings gap’,
whereby individuals are not saving enough to provide for the
retirement they expect.
Digital Adoption of Financial Services
The development of technology has changed the financial
services landscape significantly over recent years. The ability
of financial technology focused firms to develop direct means
of accessing consumers has allowed non-traditional firms
to enter all areas of the financial services sector, competing
with or working alongside more traditional financial services
businesses. By harnessing the power of nascent technological
developments in areas such as cloud computing and Big Data,
many such firms have experienced significant growth in a short
span of time.
Market Outlook
Since the onset of the coronavirus pandemic and the associated
The growth in the UK DC pension market, both in terms
restrictions on movement, digital adoption has taken a further
of number of individual savers and the aggregate wealth
leap forward, with many interactions which would previously
managed within schemes, is expected to continue. The broad
have taken place face-to-face being no longer viable. This has
shift from DB to DC pensions and the simultaneous increase
forced both consumers and companies alike to adapt even
in DC contributions supported by UK Government regulation
faster to new technologies.
Employment Trends
In addition to living longer, embracing technology and
taking greater ownership of financial decisions, individuals
are increasingly moving jobs more frequently. The average
person now moves jobs 11 times18 in their career and therefore
stands to be auto-enrolled in a large number of pension plans,
requiring a consolidation solution. In addition to growth in the
number of employed individuals, there has been strong growth
in the number of self-employed individuals from 3.3 million
people (12.0%. of the labour force) in 2001 to 4.8 million
(15.1.% of the labour force) in 201719. In response, PensionBee
has recently launched a dedicated self-employed pension
product in January 2021 to support those individuals in saving
for their retirement.
through auto-enrolment, is expected to continue to support
an increase in the number of active schemes, the number of
individuals saving for retirement in this market and the total
DC pension wealth.
Recent research by Nest Insight (which the Directors believe is
an accurate barometer of the state of auto-enrolment in the UK
since one in three employees have a pension with Nest) found
that the DC contribution levels were consistent between April
2020 and September 2020 with mean pension pots increasing
from £1,106 as at 31 March 2020 to £1,475 as at 30 September
2020.
In the first wave of the pandemic, the government paid
minimum pension contributions of 3% for furloughed
employees whilst from August onwards, auto-enrolment
pension contributions were paid for by the employers of
furloughed staff20. In the medium to long-term, the restrictions
in movement associated with the pandemic are expected to
accelerate growth in the UK Preserved DC pensions market,
given an increased level of job market dislocation and the
associated proliferation of pension plans that may be suited
to a consolidation solution.
18 ‘Meeting future workplace pension challenges: Improving transfers and dealing with small pension pots’, DWP, December 2011
19 ONS: Trends in self-employment in the UK: 7 February 2018
20 Nest Insight – ‘Retirement saving in the UK 2020’, February 2021
16
07
Operating and Financial
Review
2020 Performance
Continued growth across all metrics for another year in 2020
All of PensionBee’s major KPIs have continued to grow significantly. Over the last two years, we have grown 4.0x our Invested
Customer base, 4.1x our AUA and 4.4x our Revenue.
High Growth in Invested Customers
(000s)1...
... Translates to Increasing AUA Levels
(£m)2...
... Which Drive Recurring Revenue
(£m)3
69.1
4.0x
37.8
1,358
Recurring revenue
Non-recurring revenue
6.3
4.1x
745
4.4x
3.5
17.4
328
1.4
FY2018
FY2019
FY2020
FY2018
FY2019
FY2020
FY2018
FY2019
FY2020
Even despite the coronavirus pandemic, we have grown strongly in 2020 compared to 2019 with Invested Customer growth of 83%
to 69k, AUA growth of 82% to £1.4bn and Revenue growth of 77% to £6.3m.
1 Management Information as at 31 December 2020. “Invested Customers” (“IC”) means those customers who have transferred pension assets or made contributions into one of
PensionBee’s investment plans
2 AUA as per Management Information at 31 December 2020
3 Revenue as at FY2018, FY2019, FY2020
Marketing initiatives to make PensionBee a household name resulted in
strong top-line growth for the Company
In 2020, we continued to diversify our marketing channel mix by investing more in brand-led channels. We increased our TV and
radio advertisements and ran extensive out-of-home advertising campaigns during the outdoor months. We continued scaling our
marketing activities on our core digital channels, including search, social media and online partnerships. Advertising and marketing
costs therefore increased from £4.2m in 2019 to £8.2m in 2020.
Over the course of the year we were delighted to see these initiatives bear fruit. Our Active Customer base grew by 86% on the
previous year, to 119k. Similarly, we grew our number of Invested Customers by 83% to 69k by the end of 2020. This was achieved
within our tolerance threshold of cumulative Cost per Invested Customer of £200-250, demonstrating our ability to scale our
marketing and distribution channels effectively.
The increase in new customers resulted in an 82% increase in Assets under Administration to £1.4bn and a resulting 77% increase
in our Revenue to £6.3m for 2020.
17
Continued high customer retention drove an overwhelming majority
of recurring revenue
We continued to benefit from high customer retention rates that reflect our unique customer proposition. Building the best online
pension product in the UK market allows us to grow the customer base, but also serve customers for longer. We are proud that
>95% of our customers stay and build their wealth with PensionBee, benefitting from new product and technology innovations.
As the vast majority of Revenue is derived from annual management fees charged as a percentage of AUA, the high retention of
customers and AUA makes the overwhelming majority of our Revenue recurring in nature, in fact as at 31 December 2020, almost
two thirds of our AUA was derived from customer cohorts acquired in prior financial years. This in turn allows for greater visibility
and predictability of future years’ Revenue.
We grew our business by investing in our
people, product offering and scalability
During the course of 2020, we made investments in our technology
platform to position PensionBee for future growth.
2020 saw an increase in our pace of innovation, with more than
4 product updates every working day throughout the year.
We refreshed and simplified our journey for making pension
contributions, including creating an online portal for employers
to set up employees’ contributions. We also refreshed our brand
and improved the organisation of the website to make it easier to
navigate and find content. Our mobile app received a number of
updates to bring its functionality further in line with the website,
with its ratings rising to 4+ on both the iOS and Android app stores.
In another industry first, 2020 saw us launch one of the UK’s
first mainstream fossil fuel free pension plans, which excludes
all companies that own proven or probable reserves in coal, oil or
gas, as well as tobacco companies, arms companies, controversial
weapons manufacturers and persistent violators of the UN Global
Compact. This plan arose as a direct result of customer feedback, gathered
through survey data and interviews, which demonstrated that a growing
number of customers no longer wanted to be invested in oil companies. We
worked with the investment management industry to create this new type of
exclusionary product and a customer campaign to seed the fund received tens of
millions of demand in less than a week.
For our customers aged 55 and older who can withdraw from their pensions, we collated a range of plans that meet four clear
retirement objectives. These are in line with the Financial Conduct Authority’s Investment Pathways initiative to improve retirement
outcomes for consumers who do not wish to seek financial advice before entering drawdown. In August, we also launched a
partnership with Legal & General to help customers obtain a quote for an annuity if they want the guarantee of a lifelong income
instead of drawing from their pension pot. Customers also benefit from increased security due to the introduction of a facial
similarity (or “selfie”) identity check when they make their first withdrawal.
Like so many businesses, we responded to the coronavirus pandemic by preparing the team to work from home. We facilitated
a secure and productive work-at-home environment within 48 hours in March without any interruption to our customer service
channels or operations.
Investments in internal automations continued through 2020, seeing improvements to our machine reading technology for
processing incoming letters, automations in our core banking processes and pension payroll, and simplified communications and
workflow management in our customer success team. Automation is a key pillar of our strategy that allows us to onboard a rapidly
growing customer base while maintaining high standards of customer service.
18
Our financial performance continued to demonstrate growth and
operating leverage
2020 saw PensionBee continuing on its growth trajectory, delivering an annual rise in Assets under Administration of 82% from
£745m at the end of 2019 to £1.4bn at the end of 2020. Asset growth translated into a year-on-year increase of 77% in Revenue,
which was £6.3m for 2020. By December 2020 we had achieved an Annual Run Rate Revenue of £8.8m21.
Technology Platform Costs and Other Operating Expenses consist of employee benefits expenses
(excluding share-based payments) and other operating expenses including external
technology costs (but excluding money manager costs). As mentioned above, we
invested into our scalable technology platform and hired top talent in order to
give customers an outstanding experience. Our Technology Platform Costs
and Other Operating Expenses thus increased from £4.6m to £7.5m.
The largest component of Technology Platform Costs and Other
Operating Expenses is employee benefits expense (excluding
share-based payments) which comprises wages and salaries,
social security costs and pension costs of PensionBee’s
employees. The vast majority of PensionBee’s employee
benefits expense is basic-salary as opposed to bonus
related. The employee benefits expense (excluding
share-based payments) increased from £2.6m for 2019
to £4.5m for 2020. This increase was due to the
increase in the average headcount of PensionBee’s
employees which grew from 67 in 2019 to 110 in
2020, principally due to increases in PensionBee’s
customer service, operations and technology
functions to support the growth in its business.
PensionBee’s other expenses, which include money
manager fees, in 2020 were £4.0m compared to £2.7m
in 2019. These increases were principally as a result
of the increase in PensionBee’s other administrative
expenses and money managers fee.
PensionBee’s share-based payment for 2020 was £2.2m,
an increase of £1.3m, compared to £0.9m in 2019. This was
principally due to the change in the anticipated timing of an exit
event under the terms of the Company’s share-based incentive
scheme which is an exercise condition for a share-based payment.
Advertising and marketing is key in our ability to grow PensionBee’s top line
over time, but is predominantly discretionary in nature and can be reduced without
any significant adverse impact on Revenue owing to PensionBee’s high retention rate.
PensionBee’s Operating Loss was £13.5m in 2020 compared to £7.0m in 2019. This difference of
£6.5m was predominantly driven by our investment into growth as advertising and marketing increased by c.£4m from £4.2m in
2019 to £8.2m in 2020. The decrease in Earnings per Share from £(33.38) to £(61.39) was mainly due to the increase in the loss for
the year.
In conclusion, set against the backdrop of an increase in Revenue of 77% from £3.5m in 2019 to £6.3m in 2020, the Adjusted EBITDA
Margin remained flat at (166)% due to significant marketing expenditure towards the end of the year which positioned PensionBee
well into the 2021 financial year. Adjusted EBITDA before Marketing is a good approximation of operating scalability of the platform;
the margin improved from (49)% in 2019 to (35)% in 2020.
21 Annual Run Rate Revenue is calculated using the Recurring Revenue for the month of December 2020, multiplied by 12 to get a full year estimate
19
We maintained a strong capital position
By the end of the year we had raised a total of £30.3m of capital over the history of the Company, closing 2020 with a cash position
of £6.7m22. Our capital resources position of £6.5m represented c.10x cover of our statutory capital requirement of £659k.
By December 2020 we had achieved an Annual Run Rate Revenue of £8.8m23.
Financial Highlights
£ m, unless otherwise stated
Annual Run Rate Revenue for December23
Recurring Revenue full year
Revenue
Employee benefit expense (ex. SBP)
Advertising and marketing
Other expenses
Adjusted EBITDA*
Adjusted EBITDA Margin24
Advertising and marketing
Adjusted EBITDA Before Marketing*
Adjusted EBITDA before Marketing Margin25
2019
4.7
3.3
3.5
(2.6)
(4.2)
(2.7)
(5.9)
(166)%
4.2
(1.7)
(49)%
2020
8.8
6.2
6.3
(4.5)
(8.2)
(4.0)
(10.4)
(166)%
8.2
(2.2)
(35)%
* PensionBee’s KPIs include alternative performance measures (APMs), which are indicated with an asterisk. APMs are not defined by International Financial Reporting Standards (IFRS)
and should be considered together with the Group’s IFRS measurements of performance. PensionBee believes APMs assist in providing greater insight into the underlying
performance of PensionBee and enhance comparability of information between reporting periods.
Outlook
Over 2021 we expect to continue investing in our marketing activities, product development and service, thereby providing our
customers with the leading online pension proposition they expect. Our commitment to our strategy sustains our positive reviews and
customer retention rates. We are emerging from the global pandemic in a position of strength, allowing us to maintain a sustained rate
of growth across our key performance indicators.
Aegon
Nest
Aviva
Willis
Towers
Watson
NOW
Pensions
AON
Prudential
22 Cash and Cash Equivalents as set out in the Statement of Cash Flows
23 Annual Run Rate Revenue is calculated using the Recurring Revenue for the month of December 2020, multiplied by 12 to get a full year estimate
24 Adjusted EBITDA Margin means Adjusted EBITDA as a percentage of Revenue for the relevant year
25 Adjusted EBITDA Margin Before Marketing means Adjusted EBITDA as a percentage of Revenue for the relevant year excluding marketing cost
20
Key Performance Indicators
When looking at the overall performance of PensionBee, we use a range of key performance indicators (KPIs) to monitor and assess our
progress against our strategy
Assets under
Administration
(AUA)
2020: £1.4bn
2019: £745m
AUA Retention
Rate (% of AUA)
2020: >95%
2019: >95%
Registered
Customers (RC)
2020: 403k
2019: 232k
Active
Customers (AC)
2020: 119k
2019: 64k
Invested
Customers (IC)
2020: 69k
2019: 38k
+82%
Stable
+74%
+86%
+83%
AUA is the total invested value of pension assets within PensionBee Invested Customers’ pensions at
the year end. It measures the new inflows less the outflows and records a change in the market value
of the assets. AUA is a measurement of the growth of the business and is the primary driver of Revenue.
AUA Retention Rate measures the percentage of retained PensionBee AUA from Transfer Outs over
the average of the year. High AUA retention provides more certainty of future Revenue. This measure
can also be used to monitor customer satisfaction.
Registered Customers measures customers who have started the sign-up process and have
submitted at least a name and an email address and includes those customers who are classified
as Active Customers.
Active Customers means all customers who have requested to become an Invested Customer by
accepting PensionBee’s terms of business but for whom the transfer or contribution process is
not yet completed and all customers who are classified as Invested Customers.
Invested Customers means those customers who have transferred pension assets or made
contributions into one of PensionBee’s investment plans.
Customer
Retention
Rate (% of IC)
2020: >95%
2019: >95%
Stable
Customer Retention Rate measures the percentage of retained PensionBee Invested Customers
over the average of the year. High customer retention provides more certainty of future
Revenue. This measure can also be used to monitor customer satisfaction.
Cost per IC
(CPIC)
2020: £232
2019: £206
Within
Threshold
Cost per Invested Customer” (“CPIC”) means the cumulative advertising and marketing costs incurred
since PensionBee commenced trading up until the relevant point in time divided by the cumulative
number of Invested Customers at that point in time. This measure monitors cost discipline of
customer acquisition. PensionBee aspires to maintain its CPIC between £200 and £250.
Same-year
RC:IC
Conversion
2020: 17%
2019: 16%
Same-year RC:IC conversion percentage is calculated by dividing the number of Invested Customers
+1ppt
as at the end of the year by the number of Registered Customers as at the end of the year in the same
year. This measure monitors PensionBee’s ability to convert customers through the acquisition funnel.
Contractual
Revenue Margin
(% of AUA)
2020: 0.69%
2019: 0.68%
+1bps
Contractual Revenue Margin means the weighted average contractual fee rate across PensionBee’s
investment plans (before applying any size discount) calculated by reference to the amount of AUA
held in each plan as at 31 December of the relevant year. This measure monitors PensionBee’s ability
to maintain a stable top line margin.
Revenue
2020: £6.3m
2019: £3.5m
+77%
Revenue means the income generated from the asset base of PensionBee’s customers, essentially
annual management fees charged on the AUA, together with a minor revenue contribution from
other services.
Net Operating
Cash Loss
2020: £(10.4)m
2019: £(5.2)m
+100%
Net Operating Cash Loss is the ‘Net cash flow used in operating activities’ set out on the Statement
of Cash Flows within the Financial Statements. The Net Operating Cash Loss reflects the amount of
cash utilised by the Company to generate revenue.
Adjusted EBITDA*
2020: £(10.4)m
2019: £(5.9)m
+77%
Adjusted EBITDA is the loss for the year before taxation, finance costs, depreciation, share based
compensation and transaction costs.
Adjusted EBITDA
Margin*
2020: (166)%
2019: (166)%
Stable
Adjusted EBITDA Margin means Adjusted EBITDA as a percentage of Revenue for the relevant year.
* PensionBee’s KPIs include alternative performance measures (APMs), which are indicated with an asterisk. APMs are not defined by International Financial Reporting Standards
(IFRS) and should be considered together with the Group’s IFRS measurements of performance. PensionBee believes APMs assist in providing greater insight into the underlying
performance of PensionBee and enhance comparability of information between reporting periods
21
08
Managing our Risks
Overview of Risks
PensionBee has identified seven types of potential risks which could have a material impact on PensionBee’s long term performance.
These arise from internal or external events, acts or omissions. The risk factors mentioned below do not purport to be exhaustive as
there may be additional risks that PensionBee has not yet identified or has deemed to be immaterial that could have a material adverse
effect on the business.
Credit Risk
PensionBee is dependent on third-party financial services providers for the provision of investment management and banking services.
PensionBee is reliant upon these third parties for the safekeeping of its own and its customers’ assets. Any default by one of these third
parties would have a material adverse effect on PensionBee’s reputation and financial position.
Information Security Risk
PensionBee is subject to strict data protection and privacy laws in the UK including the General Data Protection Regulation (GDPR). If
PensionBee’s information security processes, policies and procedures relating to personal data are not fully implemented and followed
by employees, or if any of its third party service providers has historically failed to manage data in a compliant manner or fails in the
future, PensionBee could face financial sanctions and reputational damage.
Furthermore, PensionBee’s operations are susceptible to cybercrime and loss or misuse of data. Failure to prevent such actions, or
circumvention of our information security processes, policies and procedures could result in financial losses, business interruption and
unauthorised access to personal data.
Market Risk
PensionBee’s business may be adversely affected by negative sudden or prolonged fluctuations in the capital markets. PensionBee
generates the vast majority of its Revenue in the form of fees charged on a recurring basis calculated by reference to the value of its
AUA. PensionBee’s Revenue and profitability is therefore directly influenced by global stock markets. A general deterioration in the
global economy and a resulting capital market decline may have a negative impact on the value of PensionBee’s customers’ pensions
and overall confidence to make new contributions to their PensionBee pensions.
Operational Risk
PensionBee’s employees may make errors or omissions during the course of providing its services, resulting in misrepresentations and
breaches of applicable laws or regulations. PensionBee’s systems may not always detect or prevent such acts, which may only come
to light in the future. Any current or historical errors, omissions, or misconduct by PensionBee or its employees in connection with the
provision of our services, could have a material adverse effect on its business and financial condition.
PensionBee is dependent on third-party technology and financial services providers for the provision of investment management,
banking and technology services. Any termination, interruption or reduced performance in the services provided by these third parties
could negatively impact the provision of PensionBee’s services and have a material adverse effect on its reputation and profitability.
PensionBee’s operational infrastructure and business continuity may be affected by other failures or interruption from events, some of
which are beyond its control. PensionBee’s systems and the systems of our third-party providers may be vulnerable to fire, flood and
other natural disasters; power loss or telecommunications or data network failures; improper or negligent operation by employees or
service providers, or unauthorised physical or electronic access; and interruptions to network or wider system integrity generally. There
can be no guarantee that PensionBee’s preventative measures will protect it from all potential damage arising from any of the events
described above.
22
Regulatory Risk
PensionBee’s business is subject to risks relating to changes in UK government policy and applicable regulations. While PensionBee has
historically benefitted from favourable regulatory changes, including through the introduction of Automatic Enrolment and Pension
Freedoms, any regulatory changes which are negative for PensionBee’s business could have a material adverse effect on our prospects.
PensionBee’s operations are subject to authorisation and supervision from the Financial Conduct Authority, and supervision from
HMRC and the Information Commissioner’s Office. PensionBee may fail, or be held to have failed, to comply with regulations and
such regulations and approvals may change, making compliance more onerous and costly. The Financial Conduct Authority, or other
regulators, could conclude that PensionBee has breached applicable regulations, which could result in a public reprimand, fines,
customer redress or other regulatory sanctions.
PensionBee may be subject to complaints or claims from customers and third parties in the normal course of business. If a large number
of complaints, or complaints resulting in substantial customer and third party losses, were upheld against PensionBee, it could have a
material adverse effect on PensionBee’s business and financial condition.
Reputational Risk
PensionBee could be subject to adverse publicity, including if PensionBee or its customers become targets for actual and attempted
financial crime and fraud arising from the actions of third parties, customers and staff. Criminals may attempt to use PensionBee’s
service to facilitate financial crimes. If PensionBee does not continue to develop and implement preventative financial crime and fraud
measures, practices and strategies, its ability to combat financial crime and fraud could be adversely affected. There is no guarantee that
PensionBee’s proactive measures will be successful in the prevention or detection of financial crime and fraud and any failure to combat
these matters effectively could adversely affect its profitability.
Strategic Risk
The pensions market is competitive and there is no guarantee that PensionBee will be able to continue to achieve the growth levels
it has enjoyed to date or that it will be able to maintain its financial performance either at historical or anticipated future levels.
PensionBee’s competitors include a variety of financial services firms and its market is characterised by ongoing technological
progression, including to the underlying infrastructure and user experience. There is no guarantee that PensionBee will continue to
outpace its competitors. In addition, the pension market remains cost-sensitive and competitors could materially undercut PensionBee’s
fees, thereby generating pressure on its revenues. Any failure of PensionBee to maintain its competitive position could lead to a
reduction in revenues and profitability as well as lower future growth.
PensionBee is dependent upon the experience, skills and knowledge of its directors and senior managers to implement its strategy. The
loss of a significant number of directors, senior managers and/or other key employees, or the inability to recruit suitably experienced,
qualified and trained staff, as needed, may cause significant disruption to its business and ability to grow.
The Risk Management Framework
PensionBee maintains a comprehensive risk management process designed to identify, monitor and mitigate risks that arise from
its business activities and thereby assist PensionBee in meeting its obligations to key stakeholders, including customers, employees,
shareholders, regulators and broader society.
The risk management framework adopts the standard first, second and third line of defence model in segregating risk management
activities and reporting lines. The Board of Directors oversees the risk management process.
The first line of defence is directly embedded in the business activities and is managed by department heads or other sufficiently senior
employees at PensionBee. Risks are brought to the attention of the first line by the second line and vice versa. The first line of defence is
required to implement PensionBee’s risk management policies.
The second line of defence is delivered by PensionBee’s risk management team, which documents and maintains PensionBee’s
appetite and perceived exposure to risk through a risk register. PensionBee’s risk appetite is generally low to medium. PensionBee has
put in place mitigations to achieve a residual risk exposure that is in line with its risk appetite. As part of its mitigatory activities,
PensionBee maintains a set of policies that document the steps it takes to help reduce the likelihood (and in some cases, the impact)
of a risk occurring. Each policy is reviewed at least once annually.
As part of the third line of defence, PensionBee employs external parties to perform independent audits. In early 2021, PensionBee was
subject to an audit by a third party of its information security practices resulting in PensionBee receiving ISO 27001 certification,
following the receipt of a Gold Standard in the IASME Governance Framework in 2019.
23
Summary of Risks and Mitigations
Through the risk management process described above, PensionBee has implemented mitigations to reduce risk in accordance with its
risk appetite. The summary of mitigations is presented below.
Risk Type
Risks
Mitigations
Credit
Default by a key financial partner could
materially damage the capital position and
ability to generate Revenue.
•
•
Only contract with the world’s largest and most
reputable asset managers.
Only bank with large and reputable institutions.
Information
security
Serious or prolonged breaches, errors or
breakdowns in PensionBee’s technology
systems or exposure to an external attack
could materially breach data protection laws,
which could render it liable to governmental
or regulatory disciplinary action, as well as to
claims by customers.
Market
Fluctuations in capital markets may adversely
affect trading activity and/or the value of
PensionBee’s Assets under Administration, from
which it derives Revenue.
Operational
Serious or recurrent breaches and errors
in manual processes and systems, including
those provided by third parties, could
render PensionBee liable to governmental
or regulatory disciplinary action, as well as
claims by customers.
Regulatory
PensionBee may be materially adversely
affected as a result of new or revised
legislation or regulations, or by changes in the
interpretation or enforcement of existing laws
and regulations.
ISO 27001 certification.
•
• Maintain a robust policy set and physical
controls to keep information secure.
•
•
•
Rely on global partners for data storage
and encryption.
Regular training for employees.
Rely on recurring Revenue from
long-duration assets.
• Maintain asset diversification
through appropriate fund range.
•
Extensive automation program in place
to reduce manual procedures.
• Maintain a robust policy set of document
procedures.
•
•
Regular training for employees.
Strong culture of fair treatment of customers
and purposeful business model.
• Maintain a robust risk management framework.
•
Regular interactions with industry bodies to
monitor trends.
Reputational
There is a risk of reputational damage including
as a result of employee misconduct, failure to
manage our risks, fraud or improper practice.
•
Strong culture of fair treatment of customers
and purposeful business model.
• Maintain a robust risk management framework.
Strategic
PensionBee operates in a competitive
environment and its continued growth
depends on its ability to respond to external
changes.
•
•
Embedded processes to gather and absorb
customer feedback.
Rapid implementation and product
development cycles.
24
09
Our People
Talent Management and Retention
PensionBee is committed to managing and investing in its
talent – a team of unique, diverse, and innovative individuals
who want to make a real difference
PensionBee’s diverse and inclusive workforce of 149 employees (at the end of 2020) reflects its customer base. PensionBee’s team is
motivated and empowered to achieve great results across all areas of the business. PensionBee’s strong culture and values enable it to attract
and retain people who passionately believe in PensionBee’s vision. PensionBee’s talent management strategy ensures that it nurtures staff
and provides them with the appropriate training, development and support to ensure they can progress as the business continues
to grow. All employees participate in the share option scheme which further helps to drive engagement and an ownership mentality.
Recruitment
Engagement
The PensionBee Talent Program is a two year development program for employees who join the Customer
Success Team. PensionBee encourages people to enter the pensions industry who might not usually do
so, or who may not be able to join a traditional graduate scheme. PensionBee then supports those people
to progress within PensionBee by providing continuous training across a range of skills and departments,
enabling those on the program to follow their interests and grow their skillset.
It is critical that PensionBee’s people are engaged in the growth and development of its business and as
such, PensionBee is committed to providing them with opportunities to learn, develop, gain new skills and
to progress their careers. PensionBee hosts company-wide ‘Stand Up’ sessions every morning to provide
daily business updates, weekly company ‘Show ’n’ Tell’ sessions and a calendar of informal activities,
including frequent ‘Lunch & Learn’ workshops that are widely attended. PensionBee provides training
to keep staff informed of significant changes in regulation, legislation and updates within the business.
PensionBee encourages an environment of regular communication within teams, feedback, surveys and
social news to foster engagement from all.
Promotions
PensionBee is committed to nurturing internal talent, in line with the Company values of Love and Quality.
PensionBee prioritises internal hiring and career development, allowing it to further boost engagement,
increase retention and encourage high performance at all levels of the Company. PensionBee’s employees
understand its expectations and culture, and already know its customers, product and processes in detail,
so providing training in discipline-specific skills allows for a very flexible career path that builds value within
the business.
Well-being
PensionBee is keen to invest in the health and well-being of our staff, providing a wide range of benefits
and increasing activities and levels of support to ensure that everyone is catered for. PensionBee’s
comprehensive policies are reviewed annually. Initiatives currently in place include regular ‘Happiness!
Meetings’, the presence of Mental Health First Aiders and free counselling sessions.
Remuneration
PensionBee’s goal is to ensure fair, competitive and appropriate compensation for all its employees.
PensionBee has made a commitment to be an accredited Living Wage Employer, believing employees
should earn the financial resources needed to maintain health, well-being and a good quality of life. Key to
attracting and retaining the best talent is to ensure the correct approach to compensation and alignment
within the team. As such, in addition to a base salary, full-time employees participate in a year-end bonus
scheme linked to the success of PensionBee and their individual performance and behaviours in line with
the values. Options form an important part of the long-term compensation at PensionBee in recognition
of the contribution each individual makes, encouraging individuals to think and behave like owners and
enabling all employees to share in the success of PensionBee as it reaches its goals.
25
Diversity and Inclusion
PensionBee is a champion of diversity and believes the
financial services industry should reflect broader
society for the benefit of consumers
The Directors believe that the make-up of PensionBee’s employees should reflect
the diversity of PensionBee’s customer base. PensionBee is committed to promoting
equality, diversity and inclusion, preventing unlawful discrimination and
ensuring that our colleagues all feel respected and safe at work. PensionBee’s
aim is for its team to be representative of all areas of society, across all levels
of the business, to better reflect and represent its diverse customer base.
PensionBee welcomes everyone regardless of gender, race, origin, religion,
size, age, sexuality or disability.
PensionBee is committed to The Women in Finance Charter, and as well
as achieving more than 50% female representation across its employee
base, PensionBee is proud that approximately 40% of its employees are
from ethnic minorities. In addition to diversity data, PensionBee uses
regular confidential surveys to measure workplace inclusivity
across its employee base. In PensionBee’s 2020 Diversity
and Inclusion Survey, 97% of employees stated
that they feel aligned with PensionBee’s vision,
mission and values.
PensionBee is committed to promoting
diversity and inclusion across the business,
both through formal unconscious bias
training and anonymised promotion
cycles but also informally through its
five diversity and inclusion ‘champions’,
who lead a range of different activities
to promote the inclusion of all people in
PensionBee. In 2020, following the Black
Lives Matter campaigns across the world,
PensionBee began an internal series of talks
led by, and for, employees on the history of anti-
racism, to serve as a platform for education and
as a focus for uniting against racism. Employees were
encouraged to come forward to talk about experiences
of racism in their own communities to increase awareness,
encourage debate and foster a deeper sense of belonging and well-being in
the PensionBee workplace.
Over the course of 2021/ 2022, PensionBee has set itself the following broad goals:
•
•
To maintain at least 50% women and minority gender balance at all levels
To increase representation of all minority ethnicities to at least match the UK population
across all levels of the business
In recognition of PensionBee’s promotion of diversity and inclusion in the workplace, PensionBee was named Employer of the Year at
the Financial Adviser ‘Diversity in Finance’ Awards 2020.
PensionBee reports internally on its progress at least annually and expects to issue an external report once its employee base exceeds
the 250 individual mark.
26
“
As a female Chief Executive, I
am extremely proud to commit
our organisation to promoting
gender equality in the UK. For
far too long, pension products
and services have not been
representative of our diverse
society. Excluding women
from financial services is a
social and economic failure
that every organisation should
strive to change!
–Romi Savova
”
27
10
Environmental, Social and
Governance Considerations
We want to ensure that we have a positive impact on society,
leading by example
PensionBee looks to ensure that it has a positive impact on the pensions industry, its local community, society and the planet through
a number of different initiatives which it has started or in which it is otherwise involved.
Environmental Responsibility
The Directors believe that pension providers have a key role to play in the transition from the carbon economy to one based on
renewable energy sources. The Directors also believe that companies which focus on their contribution to society and the planet
have a better long-term chance of being financially sustainable and bringing stronger returns to their members.
PensionBee is a key supporter of reforms to make pension investments more sustainable, working
with organisations like ShareAction and Make My Money Matter to achieve meaningful changes
for consumers. In 2020, PensionBee became the first pension pledge partner in the Make My
Money Matter campaign, which calls for ‘pensions with intention’, seeking to drive up levels
of understanding of and power in the investment industry.
PensionBee was one of the first pension providers in the country to offer a mainstream
responsible investment option, Legal & General’s Future World Plan, in 2017. In 2019,
following feedback from its customers, PensionBee wrote an open letter to Legal &
General, to challenge the inclusion of Shell in the Future World Plan. As a result of
widespread media attention, PensionBee and Legal & General agreed to launch
an entirely fossil fuel free pension plan, which was announced in early 2020
and which is now live. This was one of the first mainstream plans of its type
on the UK market.
Throughout 2020, PensionBee worked very closely with Money
Managers to introduce a range of baseline screens for controversial
weapons and UN Global Compact violators across their
investments. Going forward, PensionBee expects to further
advance its strategy on integrating environmental, social
and governance considerations within its investments by
increasing exclusionary screens throughout its entire
investment range, where appropriate.
Whilst exclusions work for some types of companies,
the Directors believe in the engagement and
active ownership approach. PensionBee’s role is
to be a responsible and vigilant asset owner,
to help challenge undesirable corporate
behaviour and seek to take money away
from companies that will not engage or
propose timelines for appropriate change.
28
Social Responsibility
Pensions industry
PensionBee is a supporter of consumer rights and actively campaigns for greater levels of transparency, easier switching and fairer
charging across all pension products. In 2019, PensionBee was the first UK pension provider to voluntarily adopt the government
endorsed two-page Simpler Annual Benefit Statement, designed to help consumers understand and compare their pension plans
with different providers more easily. In 2020, PensionBee became the first UK provider to publish individualised member pounds and
pence costs and charges information on the Simpler Annual Benefit Statement. Furthermore, throughout 2020 Romi Savova served on
the UK government’s Pensions Dashboards Steering Group contributing to the debate and progression of the government’s Pensions
Dashboards Programme. Pension dashboards, once established, will help consumers find their lost pensions and PensionBee expects
digital services such as its own to thrive in an environment of increased transparency.
In 2019, PensionBee organised and led a pension scams ‘Hackathon’ for the pensions industry, where it gathered together
representatives from government, pension scams groups, subject matter experts and the press to create a tool that would raise public
awareness of pension scams. In 2020, PensionBee developed and launched the winning idea into an interactive game, ‘Scam Man &
Robbin’, to help educate and protect consumers from scams.
Local community
PensionBee strives for social equality, in the workplace and wider society. PensionBee is dedicated to creating a more diverse pensions
industry, one that reflects the UK’s diverse society. As such PensionBee supports a number of initiatives aimed at improving both social
mobility and financial literacy.
For example, in 2020, PensionBee began a partnership with a state secondary school in Poplar, East London to offer ongoing career
support and opportunities that enable students to develop professional skills and increase levels of financial literacy. PensionBee’s aim
is to address the lack of diversity in the pensions industry (and financial services more generally) by increasing understanding of and
familiarity with the sector amongst students, who traditionally may not have considered this career route open to them or who may
have come from disadvantaged backgrounds.
PensionBee seeks to inspire and support local students in their future career journeys by broadening their exposure to different
employees and areas of the business. Volunteering opportunities are open to all PensionBee employees, who can use a set number of
working hours each quarter to participate.
In 2020, PensionBee also partnered with The Careers & Enterprise Company, an organisation whose mission is to facilitate a world class
careers education. All of PensionBee’s employees are encouraged to participate in this endeavour by volunteering at schools across
the UK. The Company also participates in the ‘Give An Hour’ campaign, which aims to change the lives of young people through skill
sharing and mentoring.
PensionBee also encourages its employees to give generously, facilitating fundraising to support national causes such as ‘Shelter’, ‘Save
the Children’ and the Trussell Trust Food Bank network in 2019 and 2020.
In 2020, PensionBee became an accredited Living Wage employer to formalise its existing commitment to paying a Living Wage.
PensionBee is also proud to pay its employees a London Living Wage and campaigns for all UK companies to pay their staff a fair wage.
PensionBee does this as part of ShareAction’s Good Work Coalition, a small group of institutional investors who collectively call for the
UK’s biggest companies to pay their staff a wage based on the real cost of living.
29
Corporate Governance
The Board is committed to the highest standards of corporate governance. The board executes standards of good practice in relation
to board leadership and effectiveness, remuneration, accountability and relations with shareholders.
PensionBee has an experienced board, led by our Chairman Mark Wood CBE (former CEO of Prudential). As at 31 December 2020,
PensionBee’s Board of Directors consisted of six directors in total, including Mark Wood CBE, Mary Francis CBE, Michelle Cracknell
CBE, Joseph Suddaby (Investor Director)*, Romi Savova (CEO) and Jonathan Lister Parsons (CTO).
The Board has established Audit and Risk, Remuneration, Nomination and Investment Committees, each with formally delegated
duties and responsibilities with written terms of references.
Audit and Risk Committee
The Audit and Risk Committee assists the Board in, amongst other matters, discharging its responsibilities with regard to financial
reporting, external and internal audits and controls, including reviewing PensionBee’s annual financial statements, reviewing and
monitoring the extent of the non-audit work undertaken by external auditors, advising on the appointment, reappointment, removal
and independence of external auditors, and reviewing the effectiveness of PensionBee’s internal audit activities, internal controls and
risk management systems.
Nomination Committee
The Nomination Committee assists the Board in discharging its responsibilities relating to the composition and make-up of the Board.
The Nomination Committee is responsible for, amongst other matters, evaluating the balance of skills, experience, independence
and knowledge on the Board, the size, structure and composition of the Board, retirements and appointments of additional and
replacement Directors, and will make appropriate recommendations to the Board on such matters. The Nomination Committee also
considers succession planning, taking into account the skills and expertise that will be needed on the board in the future.
Remuneration Committee
The Remuneration Committee assists the Board in determining its responsibilities in relation to remuneration, including, amongst other
matters, making recommendations to the Board on the Company’s policy on executive remuneration and determining the individual
remuneration and benefits package of each of the executive directors.
Investment Committee
The Investment Committee assists the Board in discharging its oversight of PensionBee’s investment proposition. The Investment
Committee is responsible for reviewing the Company’s product offering. This includes the range of options available to customers,
the selection or change of asset managers, the pricing of the plans, as well as the performance and the risk profile of each plan. It also
reviews the performance of fund managers. The Investment Committee also assists the Board by overseeing the relationship with the
governance advisory arrangement.
The Strategic Report was approved by the Board and signed on its behalf by:
R Savova
Director
April 2021
26 Joseph Suddaby resigned as a Director on 19 March 2021
30
PensionBee Limited
Directors' Report
The directors present their report and the financial statements for the year ended 31 December 2020.
Directors of the Company
The Directors, who held office during the year and up to the date of approval of the financial statements, were as
follows:
M A Cracknell CBE
J R Lister Parsons
R Savova
J P H Suddaby (resigned 19 March 2021)
G M Wood CBE
M E Francis (appointed 2 November 2020)
Dividends
No dividends have been paid or proposed during the year ended 31 December 2020 (2019: £nil).
Going concern
PensionBee's financial statements have been prepared on a going concern basis on the grounds that current
sources of funding will be more than adequate for PensionBee’s ongoing cash requirements. The Directors have
reviewed PensionBee’s trading budget and cash flow forecasts and considered PensionBee’s principal risks, and
following this review, have a reasonable expectation that PensionBee will be able to meet its minimum capital
requirements and all its obligations as they fall due for a minimum of 12 months from the date of approval of
these financial statements.
On 22 March 2021, PensionBee entered into a revolving credit facility of up to £10 million with National
Westminster Bank Plc, which has a term of 3 years. Under the terms of the facility, an aggregate amount of £10
million is available. This amount reduces over time, with availability in excess of £8 million across the going
concern period. The facility includes financial covenants in relation to minimum consolidated revenues, a
minimum cash balance of £3 million, and a number of operational covenants. The Directors have considered
covenant compliance in their assessment of the going concern assumption.
The COVID-19 pandemic has been considered in the Directors'; assessment of going concern. The impact of
COVID-19 on PensionBee's revenue has mainly been translated through the volatility of the equity markets and
the value of Assets Under Administration ("AUA"). Given that growth in customer numbers has continued
throughout the COVID-19 pandemic and that customer retention has remained high, coupled with the recurring
nature of PensionBee's revenue, the pandemic is not considered to have a material effect on PensionBee's ability
to generate revenue.
In considering the above, based on the continuing demand for PensionBee's customer proposition, PensionBee’s
ability to exercise further discipline around expenditure and PensionBee’s current cash reserves alongside
available liquidity from the revolving credit facility, the Directors reasonably expect that PensionBee will
generate sufficient cash to meet its ongoing requirements for at least the next 12 months, and accordingly, the
going concern basis of preparation has been adopted.
Disclosure of information to the auditor
Each Director has taken steps that they ought to have taken as a Director in order to make themselves aware of
any relevant audit information and to establish that PensionBee's auditor is aware of that information. The
Directors confirm that there is no relevant information that they know of and of which they know the auditor is
unaware.
31
PensionBee Limited
Directors' Report
Appointment of auditors
Deloitte LLP have expressed their willingness to continue in office. A resolution to reappoint them will be
proposed at the forthcoming Audit and Risk Committee
Matters covered in the strategic report
PensionBee's future developments, research and development activities and use of financial instruments are all
disclosed within the Strategic Report.
Impact of Brexit
PensionBee has carefully evaluated the potential impact of the UK’s withdrawal from the EU (“Brexit”) on its
ability to continue as a going concern. Uncertainty and unpredictability arising as a result of Brexit could
adversely affect the UK’s equity markets and result in a decline in the value of AUA. As PensionBee’s AUA are
diversified across global markets, Brexit is not expected to have a significant impact on PensionBee’s revenues.
PensionBee’s operating costs are incurred in Pounds Sterling and Brexit could result in adverse currency
fluctuations and devaluation of Pounds Sterling. As PensionBee’s AUA is mainly denominated in foreign
currencies, any devaluation of Pounds Sterling is not expected to have a material adverse impact on
PensionBee's revenues.
Approved by the Board on ..April
..........2021..... and signed on its behalf by:
R Savova
Director
32
PensionBee Limited
Statement of Directors' Responsibilities
The Directors acknowledge their responsibilities for preparing the Annual Report and the financial statements in
accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the
Directors have elected to prepare the financial statements in accordance with International Financial Reporting
Standards (IFRSs) as adopted by the European Union. 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
Company and of the profit or loss of the Company for that period. In preparing these financial statements, the
Directors are required to:
(cid:127)
select suitable accounting policies and apply them consistently;
(cid:127) make judgements and accounting estimates that are reasonable and prudent;
(cid:127)
(cid:127)
state whether applicable International Financial Reporting Standards (IFRSs) as adopted by the European
Union have been followed, subject to any material departures disclosed and explained in the financial
statements; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the
Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain
the Company's transactions and disclose with reasonable accuracy at any time the financial position of the
Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They
are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information
included on the Company's website. Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation in other jurisdictions.
33
PensionBee Limited
Independent Auditor's Report to the Members of
PensionBee Limited
In our opinion the financial statements of PensionBee Limited (the ‘Company’):
give a true and fair view of the state of the Company’s affairs as at 31 December 2020 and of its loss for the
(cid:127)
year then ended;
(cid:127)
have been properly prepared in accordance with international accounting standards in conformity with the
requirements of the Companies Act 2006 and International Financial Reporting Standards (IFRSs) as issued by
the International Accounting Standards Board (IASB); and
(cid:127)
have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements which comprise:
(cid:127)
(cid:127)
(cid:127)
(cid:127)
(cid:127)
(cid:127)
the statement of comprehensive income;
the statement of financial position;
the statement of changes in equity;
the statement of cash flows;
the statement of accounting policies; and
the related notes 1 to 25.
The financial reporting framework that has been applied in their preparation is applicable law, and international
accounting standards in conformity with the requirements of the Companies Act 2006 and IFRSs as issued by
the IASB.
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.
We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of
the financial statements in the UK, including the Financial Reporting Council’s (the ‘FRC’s’) Ethical Standard,
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.
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 Company’s ability to continue as
a going concern for a period of at least twelve months from when the financial statements are authorised for
issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the
relevant sections of this report.
34
PensionBee Limited
Independent Auditor's Report to the Members of
PensionBee Limited
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.
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 Company’s ability to continue as
a going concern for a period of at least twelve months from when the financial statements are authorised for
issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the
relevant sections of this report.
Other information
The other information comprises the information included in the annual report, other than the financial
statements and our auditor’s report thereon. The directors are responsible for the other information contained
within the annual report. Our opinion on the financial statements does not cover the other information and,
except to the extent otherwise explicitly stated in our report, we do not express any form of assurance
conclusion thereon.
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 course of 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 themselves. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Responsibilities of directors
the directors are responsible for the
As explained more fully in the directors’ responsibilities statement,
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 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 Company or to cease operations, or
have no realistic alternative but to do so.
35
PensionBee Limited
Independent Auditor's Report to the Members of
PensionBee Limited
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.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s
website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Extent to which 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 material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is
detailed below.
We considered the nature of the Company’s industry and its control environment, and reviewed the Company’s
documentation of their policies and procedures relating to fraud and compliance with laws and regulations. We
also enquired of management about their own identification and assessment of the risks of irregularities.
We obtained an understanding of the legal and regulatory framework that the Company operates in, and
identified the key laws and regulations that:
• had a direct effect on the determination of material amounts and disclosures in the financial statements. These
included UK Companies Act and pensions legislation, and
• do not have a direct effect on the financial statements but compliance with which may be fundamental to the
Company’s ability to operate or to avoid a material penalty.
We discussed among the audit engagement team including relevant internal specialists such as IT, share based
reward and industry specialists regarding the opportunities and incentives that may exist within the organisation
for fraud and how and where fraud might occur in the financial statements.
As a result of performing the above, we identified the greatest potential for fraud in the following areas, and our
specific procedures performed to address it are described below:
• Revenue accuracy of fee percentages that are charged to customers:
• We have tested the design and implementation of relevant controls
• We have tested that fee percentages have been calculated and applied consistently in the period.
36
PensionBee Limited
Independent Auditor's Report to the Members of
PensionBee Limited
In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to
the risk of management override. In addressing the risk of fraud through management override of controls, we
tested the appropriateness of journal entries and other adjustments; assessed whether the judgements made in
making accounting estimates are indicative of a potential bias; and evaluated the business rationale of any
significant transactions that are unusual or outside the normal course of business.
In addition to the above, our procedures to respond to the risks identified included the following:
• reviewing financial statement disclosures by testing to supporting documentation to assess compliance with
provisions of relevant laws and regulations described as having a direct effect on the financial statements;
• performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of
material misstatement due to fraud;
• enquiring of management, and external legal counsel concerning actual and potential litigation and claims, and
instances of non-compliance with laws and regulations; and
• reading minutes of meetings of those charged with governance and reviewing regulatory correspondence.
Report on other legal and regulatory requirements
Opinions on other matters prescribed by 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 the directors’ report have been prepared in accordance with applicable legal
requirements.
In the light of the knowledge and understanding of the Company and its environment obtained in the course of
the audit, we have not identified any material misstatements in the strategic report or the directors’ report.
Matters on which we are required to report by exception
Under the Companies Act 2006 we are required to report in respect of the following matters if, in our opinion:
• adequate accounting records have not been kept, or returns adequate for our audit have not been received from
branches not visited by us; or
• the financial statements 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.
We have nothing to report in respect of these matters.
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.
David Rozier (Senior Statutory Auditor)
For and on behalf of Deloitte LLP, Statutory Auditor
5 Callaghan Square
Cardiff
CF10 5BT
Date: April 2021
37
PensionBee Limited
Statement of Other Comprehensive Income
for the year ended 31 December 2020
Revenue
Employee benefits expense (excluding share-based payment)
Share based payment
Depreciation expense
Advertising and marketing
Other expenses
Transaction costs
Operating loss
Finance costs
Loss before tax
Taxation
Loss for the year
Total comprehensive loss for the year
The above results were derived from continuing operations.
Note
4
6
6, 20
11, 12
5
7
10
2020
£ 000
6,268
(4,475)
(2,174)
(240)
(8,223)
(3,991)
(637)
(13,472)
(11)
(13,483)
220
(13,263)
(13,263)
Restated
2019
£ 000
3,545
(2,603)
(923)
(182)
(4,172)
(2,670)
-
(7,005)
(21)
(7,026)
265
(6,761)
(6,761)
38
PensionBee Limited
Statement of Financial Position
at 31 December 2020
Assets
Non-current assets
Property, plant and equipment
Right of use assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
Equity and liabilities
Equity
Share capital
Share premium
Share based payment reserve
Retained earnings
Total equity
Non-current liabilities
Lease liability
Deferred tax liabilities
Current liabilities
Trade and other payables
Lease liability
Total liabilities
Total equity and liabilities
Note
11
12
13
14
15
16
16
16
17
10
18
17
2020
£ 000
195
118
313
1,506
6,736
8,242
8,555
-
30,322
4,378
(28,245)
6,455
-
-
-
1,991
109
2,100
2,100
8,555
Restated
2019
£ 000
249
236
485
1,092
10,191
11,283
11,768
-
23,111
2,204
(14,982)
10,333
139
26
165
1,161
109
1,270
1,435
11,768
The financial statements were approved by the Board of Directors and authorised for issue on April
were signed on its behalf by:
2021
....................
they
R Savova
Director
39
PensionBee Limited
Statement of Changes in Equity
for the Year Ended 31 December 2020
At 1 January 2019
Loss for the year (As restated)
Total comprehensive loss (As restated)
Issued share capital
Share based payment transactions (As restated)
At 31 December 2019 (As restated)
At 1 January 2020 (As restated)
Loss for the year
Total comprehensive loss
Issued share capital
Share based payment transactions
At 31 December 2020
Note
20
Note
20
Share capital
£ 000
-
-
Share premium
£ 000
17,122
-
-
-
-
-
-
5,989
-
23,111
Share capital
£ 000
-
-
Share premium
£ 000
23,111
-
-
-
-
-
-
7,211
-
30,322
Share based
payment reserve
£ 000
1,281
-
-
-
923
2,204
Share based
payment reserve
£ 000
2,204
-
-
-
2,174
4,378
Retained
earnings
£ 000
(8,221)
(6,761)
(6,761)
-
-
(14,982)
Retained
earnings
£ 000
(14,982)
(13,263)
(13,263)
-
-
(28,245)
Total
£ 000
10,182
(6,761)
(6,761)
5,989
923
10,333
Total
£ 000
10,333
(13,263)
(13,263)
7,211
2,174
6,455
40
PensionBee Limited
Statement of Cash Flows
for the Year Ended 31 December 2020
Cash flows used in operating activities
Loss for the year
Adjustments to cash flows from non-cash items
Depreciation
Loss/(profit) on disposal
Finance costs
Share based payment transactions
Taxation
Working capital adjustments
Increase in trade and other receivables
Increase in trade and other payables
Cash used in operations
Income taxes received
Net cash flow used in operating activities
Cash flows used in investing activities
Purchase of property, plant and equipment
Net cash flows used in investing activities
Cash flows from financing activities
Proceeds from issue of ordinary shares
Repayment of lease liabilities
Net cash flows from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
Note
11, 12
7
11
17
14
Income taxes received relates solely to Research and Development tax credits.
2020
£ 000
Restated
2019
£ 000
(13,263)
(6,761)
240
7
11
2,174
(220)
182
(18)
21
923
(265)
(11,051)
(5,918)
(627)
831
(10,847)
406
(10,441)
(75)
(75)
7,211
(150)
7,061
(3,455)
10,191
6,736
(316)
904
(5,330)
171
(5,159)
(236)
(236)
5,989
(99)
5,890
495
9,696
10,191
41
PensionBee Limited
Notes to the Financial Statements
for the Year Ended 31 December 2020
1 General information
PensionBee is a private company limited by shares, incorporated and domiciled in England and Wales.
The address of its registered office is:
City Place House
55 Basinghall Street
London
EC2V 5DX
Principal activity
The principal activity of PensionBee is that of a direct to consumer online pension provider. PensionBee seeks
to make its UK customers ‘Pension Confident’ by giving them complete control and clarity over their retirement
savings. PensionBee helps its customers to combine their pensions into one new online plan where they can
contribute, forecast outcomes, invest effectively and withdraw their pensions (from the age of 55), all from the
palm of their hand.
2 Accounting policies
Basis of preparation
The financial statements have been prepared in accordance with International Financial Reporting Standards as
adopted by the European Union (“IFRS”), IFRIC interpretations, and with those parts of the Companies Act
2006 as applicable to companies reporting under IFRS. The financial statements have been prepared on the
historical cost basis. All accounting policies have been applied consistently, unless otherwise stated.
The financial statements are presented in GBP and all values are rounded to the nearest pound (£), except when
otherwise indicated.
The functional currency of the entity is GBP because it is the primary currency in the economic environment in
which the entity operates.
Summary of significant accounting policies and key accounting estimates
The principal accounting policies applied in the preparation of these financial statements are set out below.
These policies have been consistently applied to all the years presented, unless otherwise stated.
42
PensionBee Limited
Notes to the Financial Statements
for the Year Ended 31 December 2020
2 Accounting policies (continued)
Going concern
PensionBee's financial statements have been prepared on a going concern basis on the grounds that current
sources of funding will be more than adequate for PensionBee’s ongoing cash requirements. The Directors have
reviewed PensionBee’s trading budget and cash flow forecasts and considered PensionBee’s principal risks, and
following this review, have a reasonable expectation that PensionBee will be able to meet its minimum capital
requirements and all its obligations as they fall due for a minimum of 12 months from the date of approval of
these financial statements.
On 22 March 2021, PensionBee entered into a revolving credit facility of up to £10 million with National
Westminster Bank Plc, which has a term of 3 years. Under the terms of the facility, an aggregate amount of £10
million is available. This amount reduces over time, with availability in excess of £8 million across the going
concern period. The facility includes financial covenants in relation to minimum consolidated revenues, a
minimum cash balance of £3 million, and a number of operational covenants. The Directors have considered
covenant compliance in their assessment of the going concern assumption.
PensionBee has carefully evaluated the potential impact of the UK’s withdrawal from the EU (“Brexit”) on its
ability to continue as a going concern. Uncertainty and unpredictability arising as a result of Brexit could
adversely affect the UK’s equity markets and result in a decline in the value of Assets Under Administration
(“AUA”). As PensionBee’s AUA are diversified across global markets, Brexit is not expected to have a
significant impact on PensionBee’s revenues. PensionBee’s operating costs are incurred in Pounds Sterling and
Brexit could result in adverse currency fluctuations and devaluation of Pounds Sterling. As PensionBee’s AUA
is mainly denominated in foreign currencies, any devaluation of Pounds Sterling is not expected to have a
material adverse impact on PensionBee’s revenues.
The COVID-19 pandemic has been considered in the Directors'; assessment of going concern. The impact of
COVID-19 on PensionBee's revenue has mainly been translated through the volatility of the equity markets and
the value of AUA. Given that growth in customer numbers has continued throughout the COVID-19 pandemic
and that customer retention has remained high, coupled with the recurring nature of PensionBee's revenue, the
pandemic is not considered to have a material effect on PensionBee's ability to generate revenue.
In considering the above, based on the continuing demand for PensionBee's customer proposition, PensionBee’s
ability to exercise further discipline around expenditure and PensionBee’s current cash reserves alongside
available liquidity from the revolving credit facility, the Directors reasonably expect that PensionBee will
generate sufficient cash to meet its ongoing requirements for at least the next 12 months, and accordingly, the
going concern basis of preparation has been adopted.
43
PensionBee Limited
Notes to the Financial Statements
for the Year Ended 31 December 2020
2 Accounting policies (continued)
Changes in accounting policy
None of the standards, interpretations and amendments effective for the first time from 1 January 2020 have had
a material effect on the financial statements.
New standards, interpretations and amendments not yet effective
Standard
Effective
annual
date,
period beginning on or
after
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 Interest Rate
Benchmark reform - Phase 2
Amendments to IFRS 4 Insurance contracts - deferral of IFRS 9
IFRS 17 Insurance Contracts
Amendments to IAS 1 - Presentation of Financial Statements
Amendments to IFRS 3 Business Combinations
Amendments to IAS 16 Property, Plant and Equipment
Amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets
Annual improvements 2018 - 2020
1 January 2021
1 January 2021
1 January 2023
1 January 2023
1 January 2023
1 January 2023
1 January 2023
1 January 2023
None of the standards, interpretations and amendments which are effective for periods beginning after 1 January
2021 and which have not been adopted early, are expected to have a material effect on the financial statements.
44
PensionBee Limited
Notes to the Financial Statements
for the Year Ended 31 December 2020
2 Accounting policies (continued)
Revenue recognition
Revenue represents amounts receivable for services net of VAT. Revenue is derived from administration of our
customers’ retirement savings and the provision of one-off ancillary services to customers'. PensionBee operates
a service to combine and transfer customers' old pensions into new online plans, which are subsequently
managed by third party money managers. PensionBee has applied the 5-step model outlined in IFRS 15
Revenue from contracts with customers as is set out below:
Identification of the contract with a customer - during account opening, the customer is made aware of the
promises PensionBee is making. Rights and obligations of each party are outlined. The point at which the
customer agrees to the terms and conditions is the point at which both PensionBee and the customer have
approved the contract.
Identification of the performance obligations in the contract - PensionBee makes one promise to its
customers, the administration of the customers’ retirement savings through its third-party money managers.
PensionBee performs administrative tasks during the process of on-boarding its customers to its technology
platform which are necessary for the fulfilment of administration of the customers’ retirement savings.
PensionBee does not consider these administrative tasks to be a separate performance obligation. As a result, it
is considered that PensionBee has a single performance obligation which is, the administration of the customers’
retirement savings.
Determination of the transaction price - PensionBee charges an annual management fee that is charged daily
against the units held by each customer. The annual management fee is based on a fixed percentage (%) which
varies for each of the PensionBee Plans, the fees start from 0.50%-0.95%. There is a further fixed discount of
50% provided to customers who have over £100,000 in their pension pots. The discount is applied to the
incremental amount over and above £100,000.
Allocation of the transaction price - as there is only one performance obligation, the whole transaction price is
allocated to this performance obligation.
Recognition of revenue when a performance obligation is satisfied - the administration of customers’
retirement savings is continuous until the customer draws down their pension pot or transfers it to another UK
registered provider. Revenue is recognised over time as the customer simultaneously receives and consumes the
benefits provided by PensionBee’s performance as PensionBee performs them. Revenue is calculated daily as a
percentage (basis points) of the value of Assets under Administration (AUA) as agreed by the customer.
45
PensionBee Limited
Notes to the Financial Statements
for the Year Ended 31 December 2020
2 Accounting policies (continued)
Recurring revenue
PensionBee's revenue is recurring in nature as the annual charges are calculated daily as a percentage (basis
points) of the value of Assets under Administration (AUA) and will continue to be earned on an ongoing basis
whilst PensionBee administers those assets. Recurring revenue is derived from management fees and is
recognised based on daily accruals of customers' pension balances as the performance obligation, being the
provision of pension scheme administration services to customers, is met. These management fees are charged
daily and collected by PensionBee on a monthly basis.
Other revenue
Other revenue relates to one-off ancillary and ad-hoc services including pension splitting on divorce, early
withdrawals owing to ill-health, and full draw-down within one year of becoming an invested customer. For this
revenue stream, the performance obligation is the execution of the requested task. There are fee structures in
place which are used to determine the transaction price. Revenue is recognised at a point in time when the
requested task is executed (when the service is provided to the customer).
Foreign currency transactions and balances
Transactions in foreign currencies are translated to PensionBee's functional currency at the foreign exchange
rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the
balance sheet date are retranslated to the functional currency at the foreign exchange rate ruling at that date.
Foreign exchange differences arising on translation are recognised in the statement of comprehensive income.
There are no material foreign exchange transactions in the financial statements.
Tax
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the statement of
comprehensive income except to the extent that it relates to items recognised directly in equity or other
comprehensive income, in which case it is recognised directly in equity or other comprehensive income.
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to
the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or
substantively enacted at the reporting date in the countries where PensionBee operates and generates taxable
income.
Current income tax relating to items recognised directly in equity is recognised in equity and not in the
statement of profit or loss. Management periodically evaluates positions taken in the tax returns with respect to
situations in which applicable tax regulations are subject to interpretation and establishes provisions where
appropriate.
46
PensionBee Limited
Notes to the Financial Statements
for the Year Ended 31 December 2020
2 Accounting policies (continued)
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets
and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax
credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable
profit will be available against which the deductible temporary differences, and the carry forward of unused tax
credits and unused tax losses can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is
no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to
be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the
extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the
asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted at the reporting date.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax
items are recognised in correlation to the underlying transaction either in Other Comprehensive Income or
directly in equity.
PensionBee offsets deferred tax assets and deferred tax liabilities if and only if it has a legally enforceable right
to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate
to income taxes levied by the same taxation authority on either the same taxable entity or different taxable
entities which intend either to settle current tax liabilities and assets on a net basis, or to realise the assets and
settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities
or assets are expected to be settled or recovered.
Property, plant and equipment
Tangible assets are stated at cost less accumulated depreciation and accumulated impairment losses.
PensionBee assesses at each reporting date whether tangible fixed assets are impaired.
Depreciation is charged to the statement of comprehensive income on a straight-line basis over the estimated
useful lives of each part of an item of tangible fixed assets. The estimated useful lives are as follows:
Asset class
Computer equipment
Fixtures & fittings
Leasehold improvements
Right of use asset
Depreciation method and rate
3 years straight line
4 years straight line
over life of the lease
over life of the lease
47
PensionBee Limited
Notes to the Financial Statements
for the Year Ended 31 December 2020
2 Accounting policies (continued)
An item of property, plant and equipment and any significant part initially recognised is derecognised upon
disposal (i.e., at the date the recipient obtains control) or when no future economic benefits are expected from its
use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the
net disposal proceeds and the carrying amount of the asset) is included in the statement of other comprehensive
income when the asset is derecognised.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at
each financial year end and adjusted prospectively, if appropriate.
Impairment of non-financial assets
PensionBee assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any
such indication exists, the recoverable amount of the asset is estimated based on future cashflows with a suitable
range of discount rates and the expectations of future performance.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and short term highly liquid deposits with a maturity of less
than 3 months.
Trade receivables
Trade and other receivables are recognised initially at the transaction price less attributable transaction costs.
Subsequent to initial recognition they are measured at amortised cost using the effective interest method, less
any impairment losses in the case of trade receivables.
Trade payables
Trade and other payables are recognised initially at transaction price plus attributable transaction costs.
Subsequently they are measured at amortised cost using the effective interest method.
Trade and other payables are obligations to pay for goods or services that have been acquired in the ordinary
course of business from suppliers. Trade payable are classified as current liabilities if payment is due within one
year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current
liabilities.
Leases
Initial recognition and measurement
PensionBee initially recognises a lease liability for the obligation to make lease payments and a right-of-use
asset for the right to use the underlying asset for the lease term.
The lease liability is measured at the present value of the lease payments to be made over the lease term. The
lease payments include fixed payments, purchase options at exercise price (where payment is reasonably
certain), expected amount of residual value guarantees,
is
considered reasonably certain) and variable lease payments that depend on an index or rate.
The right-of-use asset is initially measured at the amount of the lease liability, adjusted for lease prepayments,
lease incentives received, PensionBee’s initial direct costs (e.g., commissions) and an estimate of restoration,
removal and dismantling costs.
termination option penalties (where payment
48
PensionBee Limited
Notes to the Financial Statements
for the Year Ended 31 December 2020
2 Accounting policies (continued)
Subsequent measurement
After the commencement date, PensionBee measures the lease liability by:
(a) Increasing the carrying amount to reflect interest on the lease liability;
(b) Reducing the carrying amount to reflect the lease payments made; and
(c) Re-measuring the carrying amount to reflect any reassessment or lease modifications or to reflect revised in
substance fixed lease payments or on the occurrence of other specific events.
Interest on the lease liability in each period during the lease term is the amount that produces a constant periodic
rate of interest on the remaining balance of the lease liability. Interest charges are included in finance cost in the
income statement, unless the costs are included in the carrying amount of another asset applying other
applicable standards. Variable lease payments not included in the measurement of the lease liability, are
included in operating expenses in the period in which the event or condition that triggers them arises.
Repayment of lease liabilities within financing activities in the cashflow statement include both the principal
and interest.
The related right-of-use asset is accounted for using the cost model in IAS 16 and depreciated and charged in
accordance with the depreciation requirements of IAS 16 Property, Plant and Equipment as disclosed in the
accounting policy for Property, Plant and Equipment. Adjustments are made to the carrying value of the right of
use asset where the lease liability is re-measured in accordance with the above. Right of use assets are tested for
impairment in accordance with IAS 36 Impairment of assets as disclosed in the accounting policy in impairment
of non-financial assets.
Short term and low value leases
PensionBee has made an accounting policy election, by class of underlying asset, not to recognise lease assets
and lease liabilities for leases with a lease term of 12 months or less (i.e., short-term leases).
PensionBee has made an accounting policy election on a lease-by-lease basis, not to recognise lease assets on
leases for which the underlying asset is worth £5,000 or less (i.e., low value leases).
Lease payments on short term and low value leases are accounted for on a straight line bases over the term of
the lease or other systematic basis if considered more appropriate. Short term and low value lease payments are
included in operating expenses in the income statements.
Defined contribution pension obligation
PensionBee operates a defined contribution plan for its employees, under which PensionBee pays fixed
contributions into the PensionBee Personal Pension. Once the contributions have been paid PensionBee has no
further payment obligations.
The contributions are recognised as an expense in the statement of other comprehensive income when they fall
due. Amounts not paid are shown in creditors as a liability in the statement of financial position. The assets of
the plan are held separately from PensionBee.
49
PensionBee Limited
Notes to the Financial Statements
for the Year Ended 31 December 2020
2 Accounting policies (continued)
Share based payments
The cost of equity-settled transactions with employees is measured by reference to the fair value of the equity
instruments granted at the date at which they are granted and is recognised as an expense over the vesting
period, which ends on the date on which the relevant employees become fully entitled to the award. Fair value is
determined by using the market price of the shares at a point in time adjacent to the issue of the award. In
valuing equity-settled transactions, no account is taken of any vesting conditions, other than conditions linked to
the price of the shares of PensionBee (market conditions) and non-vesting conditions. No expense is recognised
for awards that do not ultimately vest, except for awards where vesting is conditional upon a market or
non-vesting condition, which are treated as vesting irrespective of whether the market or non-vesting condition
is satisfied, provided that all other vesting conditions are satisfied. At each balance sheet date before vesting, the
to which the vesting period has expired and
cumulative expense is calculated, representing the extent
management's best estimate of the achievement or otherwise of non-market conditions and of the number of
equity instruments that will ultimately vest or in the case of an instrument subject to a market condition, be
treated as vesting as described above. The movement in cumulative expense since the previous balance sheet
date is recognised in the income statement, with a corresponding entry in equity.
Where the terms of an equity-settled award are modified, or a new award is designated as replacing a cancelled
or settled award, the cost based on the original award terms continues to be recognised over the original vesting
period. In addition, an expense is recognised over the remainder of the new vesting period for the incremental
fair value of any modification, based on the difference between the fair value of the original award and the fair
value of the modified award, both as measured on the date of the modification. No reduction is recognised if this
difference is negative. Where an equity-settled award is cancelled, it is treated as if it had vested on the date of
cancellation, and any cost not yet recognised in the profit and loss account for the award is expensed
immediately. Any compensation paid up to the fair value of the award at the cancellation or settlement date is
deducted from equity, with any excess over fair value expensed in the profit and loss account.
Research and development
Research and development expenditure is written off as incurred, except that development expenditure incurred
on an individual project is capitalised as an intangible asset when PensionBee can demonstrate the technical
feasibility of completing the intangible asset so that it will be available for use or sell the asset, how the asset
will generate future economic benefits, the availability of resources to complete the asset and the ability to
measure reliably the expenditure during development. No development expenditure has been capitalised during
the years 2019 and 2020, on the basis that the specified criteria for capitalisation has not been met, as costs spent
on the development phase of projects cannot be reliably estimated. All research and development costs are
therefore expensed as incurred.
50
PensionBee Limited
Notes to the Financial Statements
for the Year Ended 31 December 2020
2 Accounting policies (continued)
Financial instruments
Impairment of financial assets
Expected credit losses (ECLs) are based on the difference between the contractual cash flows due in accordance
with the contract and all the cash flows that PensionBee expects to receive, discounted at an approximation of
the original effective interest rate.
For trade receivables, PensionBee applies a simplified approach in calculating the ECLs. Therefore, PensionBee
does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECL's at each
reporting date.
Prior year restatement
In 2019, the share based payment charge was spread over the service vesting condition, being four years. This
methodology did not consider the expected date of a liquidity event, which has now been identified as a vesting
condition and should therefore also have been factored into the vesting period. For certain options issued, the
expected timing of a liquidity event was later than the four year service vesting condition period. Therefore, this
has had the impact of spreading the share based payment charge over a longer period than previously
recognised.
The error has been corrected by restating each of the financial statement line items for the prior period as
follows:
Impact on reserves
There was no impact on reported total equity, however, the impact on individual reserves is shown below.
As previously stated
Prior year restatement
As restated
Share based
payment
£ 000
3,035
(831)
2,204
Retained
earnings
£ 000
(15,813)
831
(14,982)
51
PensionBee Limited
Notes to the Financial Statements
for the Year Ended 31 December 2020
Impact on Statement of Other Comprehensive Income
Revenue
Employee benefits expense
Share based payment
Depreciation expense
Advertising and marketing
Other expenses
Finance costs
As previously
restated
£ 000
3,545
(3,377)
(980)
(182)
-
(6,842)
(21)
(7,857)
Reclassification
£ 000
-
774
(774)
-
(4,172)
4,172
-
Prior year
adjustment
£ 000
-
-
831
-
-
-
-
-
831
As restated
£ 000
3,545
(2,603)
(923)
(182)
(4,172)
(2,670)
(21)
(7,026)
Advertising and marketing costs and the share based payment expense have been reclassified to their own
individual cost classification to give greater detail and clarity on the nature of annual costs. This is a
presentational change only and does not impact PensionBee's profit.
3 Critical accounting judgements and key sources of estimation uncertainty
In the application of PensionBee's accounting policies, the Directors are required to make judgements, estimates
and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other
sources. The estimates and associated assumptions are based on historical experience and other factors that are
considered to be relevant. Actual results may differ from these estimates. The estimates and underlying
assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in
which the estimate is revised where the revision affects only that period, or in the period of the revision and
future periods where the revision affects both current and future periods.
The following are the key sources of estimation uncertainty that the directors have made in the process of
applying PensionBee's accounting policies and that have the most significant effect on the amounts recognised
in the financial statements.
52
PensionBee Limited
Notes to the Financial Statements
for the Year Ended 31 December 2020
3 Critical accounting judgements and key sources of estimation uncertainty
(continued)
Share based payments
PensionBee recognises an expense based on the likelihood of options vesting under the EMI and non-EMI Share
Options Scheme. The total expense is recognised over the vesting period, which is the period over which all the
specified vesting conditions are to be satisfied. At the end of each period, estimates are revised to determine the
charge for the year. The impact of the revision to original estimates, if any, are recognised in the Statement of
Comprehensive Income, with a corresponding adjustment to equity.
The options vest in tranches over a service period of four years, or if later, upon the occurrence of an exit event
such as, a takeover, IPO, reconstruction, liquidation, and sale of the business. The exercise period is up to ten
years from the grant date. In the event that there has been no exit event before the tenth anniversary of the date
of grant, the Directors may determine that an option holder may exercise their option in the 30-day period before
such anniversary.
At each reporting date, an estimate is made of:
(cid:127) the number of employees that will remain in service until their options vest;
(cid:127) the probability of an exit event occurring and when it would occur; and
(cid:127) the number of options that will be approved for exercise by the Directors in the event that management
estimate the probability of an exit event was below 50% (not probable) before the tenth anniversary of the date
of grant.
If the probability of an exit event occurring and approval of exercise by the Directors in the absence of an exit
event was below 50% (not probable), no charge would be recorded in the current year and the full cumulative
amount to date would be reversed. In the years ended 31 December 2020 and 2019, the likelihood of an exit
event occurring before the tenth anniversary of the date of the grants was deemed to be probable and
share-based payment charges of £2,174,000 and £923,000 were recognised in the Statement of Comprehensive
Income in the years ended 31 December 2020 and 2019, respectively.
4 Revenue
The analysis of PensionBee's revenue for the year from continuing operations is as follows:
Recurring revenue
Other revenue
2020
£ 000
6,155
113
6,268
2019
£ 000
3,313
232
3,545
The revenue was wholly derived from the United Kingdom.
The Directors have reclassified recurring revenue to only include revenue from the annual management fee
charged to customers.
53
PensionBee Limited
Notes to the Financial Statements
for the Year Ended 31 December 2020
5 Other expenses
Loss / (profit) on disposal
Auditor's remuneration
Money managers fee
Other administrative expenses
Total other expenses
6 Employee benefits expense
The aggregate payroll costs (including directors' remuneration) were as follows:
Wages and salaries
Social security costs
Pension costs, defined contribution scheme
Share Based Payment
2020
£ 000
7
70
940
2,974
3,991
2020
£ 000
3,957
385
133
4,475
2,174
6,649
2019
£ 000
(18)
40
666
1,982
2,670
Restated
2019
£ 000
2,335
225
43
2,603
923
3,526
The average number of persons employed by PensionBee (including directors) during the year, analysed by
category was as follows:
Customer service
Operations
Technology
Marketing
Management
Administration and other
2020
No.
54
18
14
13
7
4
110
2019
No.
30
11
10
8
6
2
67
54
PensionBee Limited
Notes to the Financial Statements
for the Year Ended 31 December 2020
7 Finance costs
Interest expense on lease liabilities
8 Directors' remuneration
The directors' remuneration for the year was as follows:
Remuneration
Company contributions to defined contribution pension schemes
2020
£ 000
11
2020
£ 000
288
5
293
During the year the number of directors who were receiving benefits and share incentives was as follows:
Exercised share options
Members of defined contribution pension schemes
2020
No.
-
3
2019
£ 000
21
2019
£ 000
259
2
261
2019
No.
1
3
55
PensionBee Limited
Notes to the Financial Statements
for the Year Ended 31 December 2020
8 Directors' remuneration (continued)
In respect of the highest paid director:
Remuneration
Company contributions to defined contribution pension schemes
During the year the highest paid director did not exercise any share options.
9 Auditor's remuneration
Audit of the financial statements
Tax advisory services
Fees payable for audit related services
2020
£ 000
98
2
100
2020
£ 000
70
38
315
423
2019
£ 000
98
1
99
2019
£ 000
40
-
-
40
The 2020 audit related services relate to reporting accountant fees payable to Deloitte of £275,000, fees related
to the 2018 audit (which was conducted in 2020) of £40,000. All fees payable for audit related services and tax
advisory services are recorded in transaction costs.
56
PensionBee Limited
Notes to the Financial Statements
for the Year Ended 31 December 2020
10 Tax
Tax credited in the Statement of Comprehensive Income
Current taxation
UK corporation tax
UK corporation tax adjustment to prior periods
Deferred taxation
Arising from origination and reversal of temporary differences
Arising from changes in tax rates and laws
Adjustment in respect of previous periods
Total deferred taxation
Tax credit in the Statement of Comprehensive Income
2020
£ 000
(194)
-
(194)
(29)
-
3
(26)
(220)
2019
£ 000
(231)
(60)
(291)
17
(3)
12
26
(265)
The tax on loss before tax for the year is different to the standard rate of corporation tax in the UK of 19% (2019
- 19%).
The differences are reconciled below:
Loss before tax
Corporation tax at standard rate
Adjustments in respect of prior periods
Tax rate changes
Increase from effect of expenses not deductible in determining taxable
profit
Tax losses on which no deferred tax asset is recognised
Decrease from effect of adjustment in research development tax credit
Total tax credit
2020
£ 000
(13,483)
(2,562)
-
3
636
1,897
(194)
(220)
2019
£ 000
(7,026)
(1,335)
(48)
(3)
308
1,044
(231)
(265)
57
PensionBee Limited
Notes to the Financial Statements
for the Year Ended 31 December 2020
10 Tax (continued)
Deferred tax
Deferred tax movement during the year:
Deferred tax
Fixed assets
Temporary difference trading
Total deferred tax liability
Losses available for offsetting against future taxable income
Total deferred tax asset
Total deferred tax
At 1 January
2020
£ 000
(26)
Recognised in
statement of
comprehensive
income
£ 000
26
2020
£ 000
(24)
6
(18)
18
18
-
At
31 December
2020
£ 000
-
2019
£ 000
(30)
4
(26)
-
-
(26)
PensionBee has £21,419,000 of carried forward tax losses at 31 December 2020 (2019: £11,352,000) against
which no deferred tax has been recognised. A deferred tax asset has not been recognised on the basis that there
is insufficient certainty over the recovery of these tax losses in the near future.
58
PensionBee Limited
Notes to the Financial Statements
for the Year Ended 31 December 2020
11 Property, plant and equipment
Cost
At 1 January 2019
Additions
At 31 December 2019
Additions
Disposals
Transfers
At 31 December 2020
Depreciation
At 1 January 2019
Charge for year
At 31 December 2019
Charge for the year
Eliminated on disposal
At 31 December 2020
Carrying amount
At 31 December 2020
At 31 December 2019
At 1 January 2019
Fixtures and
fittings
£ 000
Leasehold
Improvements
£
Computer
equipment
£ 000
Total
£ 000
49
20
69
-
2
71
11
17
28
15
-
43
28
41
38
-
128
128
8
(8)
(2)
126
-
10
10
63
(2)
71
55
118
-
45
88
133
67
(2)
-
198
18
25
43
44
(1)
86
112
90
27
94
236
330
75
(10)
-
395
29
52
81
122
(3)
200
195
249
65
59
PensionBee Limited
Notes to the Financial Statements
for the Year Ended 31 December 2020
12 Right of use assets
Cost
At 1 January 2019
Additions
Disposals
At 31 December 2019 and 31 December 2020
Depreciation
At 1 January 2019
Charge for year
Eliminated on disposal
At 31 December 2019
Charge for the year
At 31 December 2020
Carrying amount
At 31 December 2020
At 31 December 2019
13 Trade and other receivables
Trade receivables
Prepayments and accrued income
Other receivables
Property
£ 000
312
295
(312)
295
-
130
(71)
59
118
177
118
236
2020
£ 000
708
371
427
1,506
Total
£ 000
312
295
(312)
295
-
130
(71)
59
118
177
118
236
2019
£ 000
388
200
504
1,092
Trade and other receivables are measured at amortised cost and management assessed that the carrying value is
approximately their fair value due to the short term maturities of these balances.
14 Cash and cash equivalents
Cash at bank
2020
£ 000
6,736
2019
£ 000
10,191
60
PensionBee Limited
Notes to the Financial Statements
for the Year Ended 31 December 2020
15 Share capital
Allotted, called up and fully paid shares
2020
2019
2018
No. 000
£ 000
No. 000
£ 000
No. 000
£ 000
Ordinary shares of
£0.001 each
221
-
214
-
198
-
During the year PensionBee made the following issues of shares:
On 7 September 2020 PensionBee issued 4,778 new ordinary shares of £0.001 each for £1,055.02.
On 5 October 2020 PensionBee issued 66 new ordinary shares of £0.001 each for £1,055.02.
On 18 November 2020 PensionBee issued 1,828 new ordinary shares of £0.001 each for £1,148.80.
Each ordinary share carries one vote per share and ranks pari passu with respect to dividends and capital.
16 Reserves
Share premium
The share premium account represents the excess of the issue price over the par value on shares issued, less
transaction costs arising on the issue.
Share based payment reserve
The share-based payments reserve is used to recognise the value of equity-settled share-based payments
provided to employees, including key management personnel, as part of their remuneration.
Retained Earnings
The balance in the retained earnings account represents the total reserves of PensionBee.
61
PensionBee Limited
Notes to the Financial Statements
for the Year Ended 31 December 2020
17 Leases
On 1 January 2019 PensionBee transitioned to IFRS 16. During 2019 PensionBee exited from one property
lease and entered into a separate lease with regards to its office building following a premises relocation.
On adoption of IFRS 16, the right of use asset was adjusted for rental prepayments of £22,077 that existed at 1
January 2019. At 31 December 2020, PensionBee has a single property lease which expires in December 2023.
The lease term has been determined to end in December 2021 as a break option is expected to be exercised. On
inception, the lease liability was determined using a discount rate linked to London office rental yields, adjusted
for a small premium for certain company specific factors.
The carrying amounts of right-of-use assets recognised and the movements during each year are set out in Note
12.
Set out below are the carrying amounts of lease liabilities and the movements during the year:
As at 1 January
Additions
Accretion of interest
Disposal
Payments
As at 31 December
Lease liabilities included in the statement of financial position
Current
Non-current
2020
£ 000
248
-
11
-
(150)
109
109
-
109
2019
£ 000
290
295
22
(260)
(99)
248
109
139
248
The above £150,000 (2019: £99,000) cash outflow represents the only cash flow in respect of liabilities from
financing activities.
The maturity analysis of lease liability is shown in note 21.
62
PensionBee Limited
Notes to the Financial Statements
for the Year Ended 31 December 2020
17 Leases (continued)
The following are the amounts recognised in profit or loss:
Depreciation expense of right-of-use assets
Interest expense on lease liabilities
Low value leases
Total amount recognised in profit or loss
18 Trade and other payables
Trade payables
Accrued expenses
Social security and other taxes
Other payables
2020
£ 000
118
11
6
135
2020
£ 000
749
1,200
-
42
1,991
2019
£ 000
130
22
1
153
2019
£ 000
72
906
162
21
1,161
Trade and other payables are measured at amortised cost and management assessed that the carrying value is
approximately their fair value due to the short term maturities of these balances.
19 Defined contribution pension scheme
PensionBee operates a defined contributions pension scheme. The assets of the scheme are held separately from
those of PensionBee. The pension cost charge for the year represents contributions payable by PensionBee to the
scheme and amounted to £133,000 (2019 - £43,000).
Contributions totalling £34,000 (2019 - £21,000) were payable to the scheme at the end of the year and are
included in creditors.
63
PensionBee Limited
Notes to the Financial Statements
for the Year Ended 31 December 2020
20 Share-based payments
PensionBee 2015 EMI Share Option Scheme
Under the PensionBee 2015 EMI Share Option Scheme share options were granted to the senior management of
PensionBee. The exercise price of the share options was £0.001 on the date of grant.
The share options vested as follows:
(a) 33% of the shares on the first anniversary of the vesting commencement date; and
(b) the remaining 67% of the shares monthly in equal instalments over the following two years, so the options
were fully vested on the third anniversary of the vesting commencement date.
At 31 December 2020 all options have been fully exercised and there is no intention to issue any further options
under this scheme.
The fair value of equity-settled share options granted is estimated as at the date of grant, considering the terms
and conditions upon which the options were granted.
The fair value of the share options granted is estimated at the date of grant by reference to the market value of
the share. This market value is determined by that set by periodic funding valuations.
The exercise period is up to ten years from the grant date. There are no cash settlement alternatives.
The movements in the number of share options during the year were as follows:
Outstanding, start of period
Exercised during the period
2020
Number
-
-
2019
Number
3,417
(3,417)
The weighted average share option exercise price at date of exercise was £0.001. No shares were exercised in
2020.
64
PensionBee Limited
Notes to the Financial Statements
for the Year Ended 31 December 2020
20 Share-based payments (continued)
PensionBee EMI and Non EMI Share Option Scheme
Under the PensionBee EMI and Non-EMI Share Option Scheme share options were granted to eligible
employees who have passed their probation period at PensionBee. The exercise price of all share options is
£0.001 per share.
The share options normally vest on the later of the following:
(a) 25% of the shares vest on the first anniversary of the vesting commencement date with the remaining 75% of
the shares vesting quarterly in equal instalments over the following three years; and
(b) the occurrence of an exit event, such as a takeover, IPO, reconstruction, liquidation, and sale of the business.
The fair value of equity-settled share options granted are estimated as at the date of grant, considering the terms
and conditions upon which the options were granted.
The fair value of the share options granted is estimated at the date of grant by reference to the market value of a
share. This market value is determined by reference to the price paid by external investors as part of periodic
funding rounds.
The weighted average fair value of share options during the year of grant was £1,081.36 in 2020 (2019 -
£620.19)
Share options can be exercised upon the occurrence of an exit event, a takeover, reconstruction, liquidation and
sale of the business, to the extent they have vested. In the event that there has been no exit event before the tenth
anniversary of the date of grant, the Directors may determine that an option holder may exercise their option in
the 30 day period before such anniversary. The exercise period is up to ten years from the grant date.
Prior to 2019, PensionBee's management assessed the likelihood of the options vesting under these schemes as
being less than 50% and, on this basis, no share-based payment expense was recognised in 2018 in relation to
these schemes. In the year ended 31 December 2019, given the continuous strong performance of PensionBee,
management deemed the likelihood of a liquidity event to be probable and because of this change in assumption,
the 2019 share based payment charge included an amount for the share-based payment charges relating to
accounting periods prior to 2019 since the date of grant of the share options.
The movements in the number of share options during the year were as follows:
Outstanding, start of period
Granted during the period
Exercised during the period (1)
Expired during the period
Outstanding, end of period
2020
Number
11,059
4,394
-
(160)
15,293
2019
Number
8,891
2,708
(200)
(340)
11,059
65
PensionBee Limited
Notes to the Financial Statements
for the Year Ended 31 December 2020
20 Share-based payments (continued)
(1) The 200 options exercised in 2019 relate to a single grant made in July 2018, which vested in November 2019 and were exercised in
December 2019, for which the only vesting condition was that the holder holds the options across the vesting period.
No share options were exercisable at the end of each period
The expected weighted average remaining life of the share options was 7.36 years (2019 - 7.42 years).
The total charge for the year for share-based payments was £2,174,000 (2019 - £923,000).
21 Financial risk management and impairment of financial assets
PensionBee is exposed to market risk, credit risk and liquidity risk.
Market risk
Market risk is the risk that the fair value or future cash flows of financial instruments will fluctuate because of
changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and price
risk.
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in market interest rates. PensionBee considers interest rate risk to be insignificant due to low
debt and no interest bearing assets.
Price risk
As a main source of revenue is based on the value of assets under administration (Assets under administration
(AUA) is a measure of the total assets for which a financial institution provides administrative services),
PensionBee has an indirect exposure to price risk on investments held on behalf of clients. These assets are not
onPensionBee's statement of financial position. The risk of lower revenues is partially mitigated by asset class
diversification. PensionBee does not hedge its revenue exposure to movements in the value of client assets
arising from these risks, and so the interests of PensionBee are aligned to those of its clients.
A 1% change in equity markets would have an approximate 0.7% impact on revenue.
The 1% change in equity markets is a reasonable approximation of possible change.
66
PensionBee Limited
Notes to the Financial Statements
for the Year Ended 31 December 2020
21 Financial risk management and impairment of financial assets (continued)
Credit risk
Credit risk is defined as the risk exposure to financial losses if a counterparty fails to perform their financial
contractual obligation. PensionBee’s trade receivables are the contractual cashflow obligations that the payors
must meet. The payors are BlackRock, Legal & General, and State Street Corporation which are highly credit
rated financial institutions whose assets they hold on behalf of PensionBee are a small percentage of their net
assets and on this basis credit risk is considered to be low. Utilising the Simplified Approach PensionBee has
shown there is no expected credit loss due to no historic credit losses, and no material need for a lifetime loss
allowance.
At the end of the reporting period no assets were determined to be impaired and there was no balance past due.
In certain cases, PensionBee may also consider a financial asset to be in default when internal or external
information indicates that PensionBee is unlikely to receive the outstanding contractual amounts in full. A
financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.
Due to PensionBee's financial assets primarily being trade receivables which all have an expected lifetime of
less than 12 months, PensionBee has elected to measure the expected credit losses at 12 months only.
Set out below is the information about the credit risk exposure on PensionBee's trade receivables:
31 December 2020
Gross trade receivables
Current
£ 000
708
< 30 days
£ 000
-
30-60 days
£ 000
-
61-90 days
£ 000
-
>91 days
£ 000
-
Days past due
31 December 2019
Gross trade receivables
Current
£ 000
386
< 30 days
£ 000
1
30-60 days
£ 000
-
61-90 days
£ 000
-
>91 days
£ 000
1
Days past due
Total
£ 000
708
Total
£ 000
388
Liquidity risk
Liquidity risk is the risk that PensionBee will encounter difficulty in meeting obligations to settle its liabilities.
This is managed through cash flow forecasting.
67
PensionBee Limited
Notes to the Financial Statements
for the Year Ended 31 December 2020
21 Financial risk management and impairment of financial assets (continued)
Maturity analysis
The maturity profile of PensionBee's financial liabilities based on contractual and undiscounted payments is as
follows:
2020
Trade and other payables
Lease liabilities
2019
Trade and other payables
Lease liabilities
Within 1 year
£ 000
1,991
112
Between 1 and
5 years
£ 000
-
-
After more than
5 years
£ 000
-
-
2,103
-
-
Within 1 year
£ 000
1,161
149
Between 1 and
5 years
£ 000
-
112
After more than
5 years
£ 000
-
-
1,310
112
-
Total
£ 000
1,991
112
2,103
Total
£ 000
1,161
261
1,422
Capital risk management
For the purpose of PensionBee's capital management, capital includes issued capital, share premium and all
other equity reserves attributable to the equity holders of the parent.
The primary objective of PensionBee's capital management is to maximise the shareholder value.
PensionBee manages its capital structure and makes adjustments considering changes in economic conditions.
To maintain or adjust the capital structure, PensionBee may adjust the dividend payment to shareholders, return
capital to shareholders or issue new shares.
Externally imposed capital requirements
The capital adequacy of the business is monitored on a quarterly basis as part of general business planning by
the finance team. PensionBee conducts a capital adequacy assessment process, as required by the Financial
Conduct Authority (‘FCA’) to assess and maintain the appropriate levels.
68
PensionBee Limited
Notes to the Financial Statements
for the Year Ended 31 December 2020
22 Related party transactions
Compensation of key management personnel
Salaries and other short term employee benefits
Pension contributions
Share-based payments
2020
£ 000
643
16
863
1,522
Restated
2019
£ 000
492
9
391
892
Related party - Trustee's
The following related party transactions occur between PensionBee and PensionBee Trustees Limited:
(i) Payment of the PensionBee Trustees Limited bank fees on a quarterly basis. During the year bank fees
amounted to £20,000 (2019: £12,000). There was no outstanding balance at year end (2019: £nil).
(ii) Compensation payments as a gesture of goodwill to customers that prefer to be compensated via a pension
contribution or the purchasing additional units. During the year, these costs amounted to £45,000 (2019:
£20,000). There was no outstanding balance at year end (2019: £nil).
(iii) Other payments to customers (e.g., referral rewards) Payments are made from PensionBee and invested into
the customers fund from the PensionBee Trustees account. These payments can be found in 'Other Expenses'
and 'Advertising and Marketing'. During these costs amounted to £141,000 (2019: £104,000). There was no
outstanding balance at year end (2019: £nil).
Transactions with Directors
During the year ended 31 December 2020, PensionBee was repaid in full an outstanding balance of £200 from R
Savova. R Savova is a director and shareholder in PensionBee. The loan was interest free and repayable upon
demand. This amount is included in other debtors in the year ended 31 December 2019.
69
PensionBee Limited
Notes to the Financial Statements
for the Year Ended 31 December 2020
23 Non adjusting events after the financial period
Ex-gratia payment to PensionBee Trustees Limited
Over the period 18 November 2020 to 5 February 2021 FTSE Russell incorrectly excluded certain eligible
constituents from an index (FTSE All Share ex Controversies, ex CW) widely used by State Street Global
Advisors across several of its funds. This incorrect exclusion resulted in an adverse effect on the returns of
consumers invested in the affected funds. The incorrect exclusion affected PensionBee customers who were
invested in the PensionBee Tracker Plan. The error is estimated to have reduced the performance of the affected
plan by 0.3% which equates to approximately £664,000 for c.8,500 customers (c.£78 per customer).
Recognising that this was an exceptional event and wishing to ensure that its customers were not adversely
affected, PensionBee paid for, on an ex-gratia basis, the balances of its affected customers to be restored to the
position they would have been in had FTSE Russell included all eligible constituents. This payment was not out
of obligation but PensionBee’s desire to protect its customers and reputation. PensionBee is seeking redress
from the responsible parties.
Issue of ordinary shares
In January and February 2021, PensionBee issued shares totalling, 3,762 ordinary shares of £0.001 each, which
resulted in an increase in share premium of £4.8 million.
Revolving Credit Facility
On 22 March 2021, PensionBee entered into a revolving credit facility for up to £10 million with National
Westminster Bank Plc as part of prudent capital management to provide it with further liquidity resources going
forward.
Acquisition of PensionBee by PensionBee Group Limited
On 24 March 2021, PensionBee Group Limited acquired all the issued shares of PensionBee through a share for
share transaction. From the acquisition date, PensionBee became a subsidiary of PensionBee Group Limited. On
the same date, all the share options granted by PensionBee to its employees were cancelled and replaced by
share options granted by PensionBee Group Limited.
24 Controlling party
In the opinion of the Directors, there is no controlling party.
70
PensionBee Limited
Notes to the Financial Statements
for the Year Ended 31 December 2020
25 Alternative performance measures
PensionBee uses a variety of alternative performance measures (‘APM’s’) which are not defined or specified by
IFRS, in particular Adjusted Earnings Before Interest, Taxes, Depreciation and Amoritisation ("EBITDA"). The
Directors use a combination of APMs and IFRS measures when reviewing the performance and position of
PensionBee and believe that each of these measures provides useful information with respect to PensionBee’s
business and operations. The Directors consider that these APMs illustrate the underlying performance of the
business by excluding items considered by management not to be reflective of the underlying trading operations
of PensionBee.
The APMs used by PensionBee are defined below and reconciled to the related IFRS financial measures:
Adjusted EBITDA
Adjusted EBITDA represents loss for the year before taxation, finance costs, depreciation, share based
compensation and transaction costs.
Operating loss
Depreciation expense
Share based payment (1)
Transaction costs (2)
Adjusted EBITDA
2020
£ 000
(13,472)
240
2,174
637
(10,421)
2019
£ 000
(7,005)
182
923
-
(5,900)
(1) Relates to total annual charge in relation to share based payment expense as detailed in note 20 to the Annual Report.
(2) Relates to expenses incurred in relation to preparation for admission to the London Stock Exchange.
71
PensionBee Limited
Directors:
M A Cracknell CBE
J R Lister Parsons
R Savova
J P H Suddaby (resigned 19 March 2021)
G M Wood CBE
M E Francis CBE (appointed 2 November 2020)
Registered number: 09354862
Registered office: City Place House, 55 Basinghall Street, London, EC2V 5DX
Auditor: Deloitte LLP, 5 Callaghan Square, Cardiff, CF10 5BT
© Copyright 2020 PensionBee Ltd. FCA Reference Number: 744931. Information Commissioner’s Office registration: ZA131262
PensionBee Limited / Annual Report 2020