A record first half for the core insurance business at Personal Group (PGH), where premium income from the various employee benefit plans rose 12.5 per cent to £6.3m, was masked by a sharp increase in reorganisation and acquisition costs, which left cash profits down by nearly a third at £3.2m.
Work continued on building its new technology platform, called hapi, in conjunction with the Sage employee benefits platform. This will allow penetration into the small- and medium-sized enterprise sector, which the current distribution model does not. The 2014 acquisition of Let's Connect, which allows employees to buy computers and smart televisions, saw like-for-like sales up 14 per cent. However, plans have been pulled to proceed with PG Mobile, a facility designed to offer additional mobile airtime products, and the operation is being wound down by the end of 2016.
Further headwinds were reflected in a rise in insurance premium tax, the cost of which can only be recouped on new insurance business. And proposals to limit tax advantages associated with salary sacrifice-delivered benefits in kind, while still at the consultation stage, are expected to have an impact on the Lets Connect full-year performance, as some clients may await the outcome of any decision.
Analysts at Cenkos are keeping their full-year estimates for adjusted pre-tax profits of £9m and EPS of 21.9p (from £11.1m and 27.2p in 2015).
PERSONAL GROUP (PGH) | ||||
---|---|---|---|---|
ORD PRICE: | 457.5p | MARKET VALUE: | £140m | |
TOUCH: | 450-465p | 12-MONTH HIGH: | 620p | LOW: 448p |
DIVIDEND YIELD: | 4.7% | PE RATIO: | 16 | |
NET ASSET VALUE: | 99p** | NET CASH: | £7.6m |
Half-year to 30 Jun | Gross premiums (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p*) |
---|---|---|---|---|
2015 | 13.9 | 2.9 | 7.8 | 10.45 |
2016 | 15.7 | 1.9 | 4.8 | 11 |
% change | +13 | -33 | -38 | +5 |
Ex-div:- Payment:- Interim dividends paid quarterly; third interim dividend paid 23 September **Includes intangible assets of £11.9m, or 39p a share |