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Personal Group Holdings PLC: DEEP DIVE

Personal Group targets new opportunities in employee rewards sector

The group provides various programmes including insurance plans, salary sacrifice schemes, discounts and rewards
Employee benefits
OVERVIEW: PGH The Big Picture
The company also operates Hapi, an employee engagement app that is included with all the platforms it designs, as well as Hapi Hub, a HR management tool that compiles statistics on how employees are using the benefits on offer

• Specialises in the provision of employee benefit schemes
• Recently appointed new CEO Deborah Frost
• Profits in 2018 rose by 5.8% as expected

What Personal Group does

Personal Group Holdings PLC (LON:PGH) specialises in the provision of employee services, including  engagement programmes provided to corporate clients for their employees use and insurance products sold directly to client employees.

Insurance products include hospital cash plans, convalescence plans and death benefit, while employee engagement services focus more on salary sacrifice schemes, retail and leisure discounts and rewards, as well as other services like electronic payslips and app push notifications to help communicate with employees.

Personal Group’s business is currently divided into four main segments:

• An insurance business that currently provides most of the Group’s profits

• Let’s Connect – A service that allows employees to buy home technology through payroll deduction and salary sacrifice

• Software-as-a-Service (SaaS) business – which includes Hapi, a benefits platform and app, enabling client employees to access their benefits

• Innecto – A pay and reward consultancy that provides support to employers setting up pay and reward schemes for their staff

Inflexion points

• In its full year results for 2018, the group reported a 5.8% increase in adjusted earnings (EBITDA) to £11.4mln, in line with market expectations, while revenues were up 22% at £55.3mln. The firm also upped its dividend for the year by 1.3% to 23p per share, as part of a progressive dividend policy

• In February, Personal Group’s shareholders approved the acquisition of pay and reward consultancy Innecto for £3mln, in a deal that the Group expected to immediately enhance earnings

• In conjunction with the acquisition, Deborah Frost, Innecto’s co-founder, became chief executive of Personal Group at the start of March, having previously served as a non-executive director for four years. Frost has a diverse background in industry and consultancy, having worked for Marks and Spencer, Nationwide Building Society and US HR and financial services specialist Towers Perrin

Blue Sky

Speaking to Proactive in March, Frost said that her background at Innecto provided an understanding of how the HR community thinks and that this has presented opportunities to develop the company’s sales and marketing functions in line with what is received well by customers.

Mike Dugdale, Personal Group’s finance boss, said that the sales and marketing expertise from Innecto’s team, headed by Frost, combined with Personal Group’s product suit would be “a rich combination”.

Going forward, Frost says there are opportunities for investment across the company, with a key focus on increasing the penetration level of the company's Let's Connect offering among its existing customers.

“We can sell more to the [clients] we’ve got … at the moment our penetration is quite low so increasing it would not be a big stretch. It is a prime area where we could grow profits without too much investment.”

Frost added that the Innecto team would also be bringing several clients over to Personal Group, allowing for more selling opportunities.

With shares trading at around 454p as of 9 May, Personal Group has a market cap of £142.7mln.

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