Closed-life assurance run-off specialist Phoenix Group (PHNX) has been busy raising funds and reducing debt to get round the covenants that have restricted dividend growth up until now. Indeed, a recent refinancing package has achieved just that - it can now pay out £125m in dividends this year, which broker Investec Securities reckons will be worth 55.8p a share, meaning a tasty 8.6 per cent yield.
The group was formed after Liberty Acquisition Holdings bought closed-life specialist Pearl, which had previously bought the business assets of Resolution. But the combined group was saddled with a hefty debt pile and steps to reduce this included a £250m equity raising, which was used to help repay £450m of debt in February. Moreover, bullet repayments that were due in 2014, 2015 and 2016 have been replaced by a single tranche, due in 2019. A further £252m of capital was released following an agreement to transfer £5bn of annuity in-payment liabilities to Guardian Assurance.
At the operating level, cash generated fell from £810m to £690m - although this is still towards the top end of the £600m-£700m target range and, for the coming year, the target has been raised to £650m-£750m.
Investec expects IFRS operating profit of £437.6m for 2013, giving EPS of 195.4p (226p in 2012) and embedded value of 1,026p a share.
| PHOENIX (PHNX) | ||||
|---|---|---|---|---|
| ORD PRICE: | 647p | MARKET VALUE: | £1.45bn | |
| TOUCH: | 646-648p | 12-MONTH HIGH: | 669p | LOW: 395p |
| DIVIDEND YIELD: | 7.4% | PE RATIO: | 3 | |
| NET ASSET VALUE: | 738p | EMBEDDED VALUE: | 945p | |
| Year to 31 Dec | Gross premiums (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009* | 0.55 | 11.0 | 103 | nil |
| 2010 | 1.53 | 91.0 | 20.1 | 42.0 |
| 2011 | 1.47 | -4.00 | -76.2 | 42.0 |
| 2012 | 1.61 | 323 | 226 | 47.7 |
| % change | +10 | - | - | +14 |
Ex-div: 3 Apr Payment: 3 May *Pro-forma basis | ||||
