Closed-life assurance run-off specialist Phoenix Group (PHNX) delivered a strong first-half performance that saw cash generation jump from £119m to £416m, while gearing fell from 55 per cent to 48 per cent. This puts the group well on the way to achieving a full-year cash generation target of £650m-£750m and a 40 cent gearing target by the end of 2016. And lower debt frees up restrictive covenants on dividends, so shareholders have been rewarded with a bumper rise in the payout to give one of the best yields in the sector.
There was no further news on discussions with Swiss Re's Admin Re business unit regarding a possible combination of the two businesses, although Phoenix stressed that talks were continuing, and that any successful outcome would result in Swiss Re taking a minority stake in Phoenix.
In the latest six-month period, operating profits on an IFRS basis were down from £217m to £186m, although the previous year was boosted by a contribution from management actions (principally the transfer of annuity liabilities) of £59m, which this year contributed just £24m. On the asset management side, profits at Ignis were flat at £19m, mainly due to the run-off of life company assets which left assets under management slightly down from £66bn to £64.9bn.
Analysts at Deutsche Bank expect full-year adjusted EPS of 30p and a 17 per cent increase in the dividend to 55.6p.
| PHOENIX (PHNX) | ||||
|---|---|---|---|---|
| ORD PRICE: | 757p | MARKET VALUE: | £1.7bn | |
| TOUCH: | 757-758p | 12-MONTH HIGH: | 771p | LOW: 464p |
| DIVIDEND YIELD: | 7.1% | PE RATIO: | 4 | |
| NET ASSET VALUE: | 803p | EMBEDDED VALUE | 1,000p* | |
| Half-year to 30 Jun | Gross premiums (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 808 | -3.0 | 5.7 | 21.0 |
| 2013 | 672 | -41.0 | -13.1 | 26.7 |
| % change | -17 | - | - | +27 |
Ex-div: 4 Sep Payment: 3 Oct *Calculated on a market consistent embedded value basis | ||||
