Personal Group upbeat after HMRC uncertainty

10th Jan 2017 08:28

(ShareCast News) - Employee benefits and employee related insurance product provider Personal Group issued a trading update post the financial year ended 31 December 2016 on Tuesday, reporting that the underlying performance of the business remained strong, with EBITDA for the year marginally ahead of expectations despite a lower than expected top line out turn.The AIM-traded firm said that performance reflected the continued strength of the company's core insurance business, which during the period saw its fifth consecutive year of record sales.As the board had previously highlighted, HMRC undertook a review of salary sacrifice during 2016, the results of which were announced towards the end of the year.That reportedly caused some uncertainty, which meant a proportion of employers delayed contract decisions at a crucial time of year for the Lets Connect business.While Lets Connect represents a small percentage of the group's overall profit, by its nature, it represents a higher proportion of group revenue.As a result of that period of uncertainty, Personal said it now expects a one-off adverse impact to 2017 sales and profits guidance, but 2017 to be a profit growth year, and it remains confident for the outlook in the longer term.Personal Group also welcomed what it called "clarity" from the Autumn Statement, saying it allowed the Company to progress on a sound footing.The continued attractiveness of the Lets Connect product to employers and employees was reflected in the signing of a significant contract with the Royal Mail Group in October, the board said, adding that none of the key attractions of the Lets Connect service were impacted by the outcome of the review, including convenience, absence of credit checks, no upfront costs, affordability and trusted provision from their employer.Through the development of its technology platform, Hapi, the company said it has opened up new opportunities in the SME market, increasing its available market in the private sector by 15.7 million employees to 26.2 million.Personal Group said it is now well positioned to service over 85% of the UK working population.In particular, it claimed that the partnership contract signed with Sage in November 2016 offers a significant first introduction to this market.Sage had since established a specific team within their business to sell the Company's tailored SME offering into their "very considerable" customer base, Personal said, representing a significant opportunity for the group."It is encouraging to see the underlying core business continuing to perform well in the face of some challenges in 2016," said chief executive Mark Scanlon."The attractiveness of the Lets Connect offer remains strong, and while the uncertainty caused by the HMRC consultation into salary sacrifice has been frustrating in the short run, and will impact 2017 sales and profit guidance. We look forward to growing this business in the future."Scanlon said that, with the signing of the Sage agreement, 2016 also saw the firm make significant progress in developing its available markets."We have more than doubled our market opportunity to over 26 million private sector employees."This gives us a strong platform from which to develop the business further in 2017 and beyond."