Chesnara's (CSN) overseas acquisitions became even more important during the first half of the year. A reduction in gilt yields pushed up the value of liabilities in its S&P business in the UK, which offers guaranteed returns on some of its products. This forced the division into a pre-tax loss of £13.9m. However, beneficial foreign exchange movements from Swedish operation Movestic and Netherlands-based Waard provided £15.3m in profits. This helped stem the reduction in cash generated, which dropped by £3.2m to £13.6m, if you exclude the one-off cash gain from last year's Waard acquisition.
This ensured the closed book life insurance consolidator was able to make its 12th successive interim dividend increase. The core Countrywide Assured business generated a slight uplift in pre-tax profits to £14.2m. This included a reduction in future expected returns, which was marginally offset by a better investment performance during the period.
The group has switched to valuing its business to shareholders according to an economic value (EV) metric. Management says this is based on the funds the group is required to hold under the new regulatory regime, with adjustments for contract boundaries and risk margins. This value stood at £460m, up from £453m at the end of December due to foreign exchange gains.
Analysts at Canaccord Genuity expect an enterprise value per share of 365p at December 2016, from 360p a year earlier.
CHESNARA (CSN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 350p | MARKET VALUE: | £442m | |
| TOUCH: | 343-350p | 12-MONTH HIGH: | 365p | LOW: 248p |
| DIVIDEND YIELD: | 5.5% | PE RATIO: | 37 | |
| NET ASSET VALUE: | 234p* | SOLVENCY RATIO: | 148% | |
| Half-year to 30 Jun | Net premiums (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 34.3 | 30.4 | 22.4 | 6.61 |
| 2016 | 32.9 | 0.2 | 0.4 | 6.80 |
| % change | -4 | -99 | -98 | +3 |
Ex-div: 8 Sep Payment: 14 Oct *Includes intangible assets of £119m, or 94p a share | ||||
