The profit slide at Personal Group (PGH), which underwrites hospital and convalescence plans for blue-collar workers, isn't as grim as it seems. Adjusting for such factors as reorganisation costs and a £2.1m goodwill write-off at its Berkeley Morgan unit, pre-tax profit fell by a less severe 12 per cent to £8.3m in 2013.
That slippage was partly down to higher claims, reflecting the increased scale of the group's Hospital Cash plan business. But it was also driven by investment in such areas as the group's technology platform in order to better prepare for growth. That effort appears to be paying off. New business sales rose 18 per cent in 2013 and management highlighted a string of new customer wins, including Network Rail, 2 Sisters, Young’s Seafood and Four Seasons Healthcare. Personal also renewed its contract with Stagecoach and says a number of other transport businesses are in the pipeline.
The group is spending up to £12m buying Lets Connect IT Solutions, which helps employees buy electronic gadgets through salary-sacrifice schemes. The company's 100-strong blue-chip client base should deliver cross-selling opportunities. The only bad news was at Berkeley Morgan. The implementation of the Retail Distribution Review has hit that business hard, and it is now effectively in run-down.
Broker Cenkos expects adjusted pre-tax profit of £10.4m for 2014, giving adjusted EPS of 26.2p (from 21p ni 2013).
PERSONAL GROUP (PGH) | ||||
|---|---|---|---|---|
| ORD PRICE: | 473p | MARKET VALUE: | £142m | |
| TOUCH: | 465-480p | 12-MONTH HIGH: | 520p | LOW: 335p |
| DIVIDEND YIELD: | 3.9% | PE RATIO: | 68 | |
| NET ASSET VALUE: | 84p | NET CASH: | £7m | |
| Year to 31 Dec | Gross premiums (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p)* |
|---|---|---|---|---|
| 2009 | 17.6 | 5.5 | 11.1 | 16.6 |
| 2010 | 18.4 | 9.4 | 22.6 | 17 |
| 2011 | 20.6 | 10.0 | 24.8 | 17.4 |
| 2012 | 22.3 | 8.3 | 20.2 | 17.8 |
| 2013 | 23.0 | 3.7 | 7.0 | 18.6 |
| % change | +3 | -55 | -65 | +4 |
*Dividends paid quarterly; final dividend paid on 25 March | ||||
