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Personal Group eyes potential acquisitions after good pandemic run

The employee benefits firm continues to work with Royal Mail and Sage Group

Personal Group Holdings PLC - Personal Group eyes potential acquisitions after good pandemic run

Personal Group Holdings PLC (LON:PGH) is eyeing potential acquisitions following a decent run during the pandemic. 

Chief executive Deborah Frost told Proactive the board has been scanning the market to see what would fit the group’s model.

READ: Personal Group weathers the COVID-19 storm to grow profits and revenues

Any potential additions would have recurring revenue to help accelerate entry into new customers and new markets that will thrive in the “post-COVID world”.

Personal Group is an employee services business that specialises in incentives.

The AIM-listed firm, which also provides hospital cash plans including hospitalisation, convalescence plans and death benefit, has added new company-wide pandemic insurance products for its clients.

Frost said the first six months of 2020 have been a “surprisingly good period” considering the pandemic, with revenue rising 1% to £30mln and profit before tax advancing 2% to £4mln. 

After paying a reduced quarterly dividend for the three months to June, the plan is to return to a “full-fat” dividend of 5.9p per share for the third quarter; no decision has yet been made on the fourth-quarter dividend.

The half-year ended with no debt and £19mln in the bank.

The group's core insurance division saw adjusted EBITDA jump by 16% to £4.5mln from £3.6mln despite revenue dipping a little from last year’s level.

Claims ratios remained fairly static, with additional COVID-19 claims mitigated by reduced levels of general activity within the NHS more widely. 

The company's face-to-face sales activity was put on hold during the pandemic lockdown, resulting in reduced new insurance sales of £2.1mln, which will have an impact on premium income in the second half of 2020 and into 2021.

On the plus side, the lockdown restrictions also resulted in reduced employee and associated costs while team members were off the road.

Sales in PG Let's Connect, the company's salary sacrifice technology business, eased to £5.2mln (2019: £5.8m). The group has widened the product range to capitalise on people spending more time at home.

The company's software-as-a-service (SaaS) business saw revenues climb to £10.2mln from £8.8mln in the first half of 2019.

More recently it secured a contract extension with Royal Mail PLC (LON:RMG), “a strategic win” as it continues its long-term relationship with the postal delivery firm through their salary sacrifice technology scheme, but also allows it to offer insurance policies to its circa 140,000 employees.

READ: Personal Group secures three-year contract extension with Royal Mail

A digital solution will integrate into Royal Mail's existing benefits platform, giving their entire workforce the ability to apply for insurance products online as well as via a traditional face-to-face and roadshow approach.

In the three-year arrangement, the employee firm will visit sorting offices and depots to talk to the FTSE 250 firm’s employees about taking up insurance as well as expanding the use of Let’s Connect in the business.

“We have a strong relationship with them but it’s only 10% of Royal Mail staff that take up the opportunity of Let’s Connect so there is plenty of room there to grow the business by introducing it to more people,” Frost noted.

Personal Group has also been working with Sage Group plc (LON:SGE) to jointly develop a programme to add employee benefits to the enterprise software provider’s offer.

The FTSE 100 firm dominates the small and medium size enterprise sector for accountancy and payroll software and Personal Group is targeting small businesses especially those who with owner-managers such as restaurants and hairdressers.

Frost said that during lockdown they tried a limited free trial which has “taken off well”.

Between end of November and end of January the companies will be asked to start paying for it, “so far we have seen a good take-up and what it really means is that we can just see that this offer is attractive to the small and medium enterprise market at scale,” she told Proactive.

Shares were trading at x on Friday, having recovered by 20% since the March trough.

Quick facts: Personal Group Holdings PLC

Price: 216.25 GBX

AIM:PGH
Market: AIM
Market Cap: £67.51 m
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