Phoenix (PHNX) remains on track to meet its long-term financial targets despite a steep fall in the usual performance metrics at the half-year mark. Phoenix, which manages life funds that are closed to new business, generated operating profits of £135m - roughly half the 2014 interim figure - and, more tellingly, cash flow of £110m compared with £332m in 2014.
That's because Phoenix is essentially still in a transitional phase as it moves towards a higher-capital model to meet Solvency II requirements. The funds consolidator has been allowing its subsidiaries to bolster their balance sheets, rather than pay out cash flows to the parent, in order to comply with the beefed-up regulatory regime. In the short term, this implies that Phoenix, like its industry peers, is finding it more difficult to stump up the cash to buy further closed life books.
Yet the group has already made significant progress on the capital front, reducing its debt levels and simplifying its once-tangled operating structure. This resulted in ratings agency Fitch awarding Phoenix's credit investment-grade status earlier this month, which will shave 50 basis points off the interest margin on the group's bank debt.
Separately, the group named Henry Staunton as its new chairman, replacing Howard Davies, who is stepping down at the end of August to join the Royal Bank of Scotland.
JPMorgan Cazenove expects adjusted EPS of 52.5p this year, down from 138p in 2014.
| PHOENIX GROUP (PHNX) | ||||
|---|---|---|---|---|
| ORD PRICE: | 881p | MARKET VALUE: | £2.0bn | |
| TOUCH: | 881-883p | 12-MONTH HIGH: | 935p | LOW: 693p |
| DIVIDEND YIELD: | 6.1% | PE RATIO: | 19 | |
| NET ASSET VALUE: | 1,019p* | EMBEDDED VALUE: | 1,142p | |
| Half-year to 30 June | Gross premiums (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 513 | 290 | 72.3 | 26.7 |
| 2015 | 415 | 48 | 22.7 | 26.7 |
| % change | -19 | -83 | -69 | - |
Ex-div: 27 Aug Payment: 1 Oct *Includes intangible assets of £1.64bn, or 726p a share | ||||
