Acquisitions are a vital part of income play Phoenix’s (PHNX) ability to continue growing its cash generation and therefore its dividend. However, last year’s acquisition of Axa Wealth has proved more beneficial than expected, generating another £165m during the first six months of the year. That takes the total amount generated by the closed book life assurer’s latest purchase to £282m, above the £250m targeted within the six months of completion. Annual cost synergies are also expected to be between £13m and £15m, up from the £10m anticipated.
That helped take total cash generation up to £360m, more than double the same time last year and beating consensus expectations of £333m. Management actions, including reducing expenses contributed £69m to operating profit, which also doubled year on year. Actuarial assumptions were updated to reflect lower longevity rates experienced across the industry, which also contributed.
Management also announced plans to cut annual fees on its workplace pension products to 1 per cent at the end of 2017. It took a resultant £28m provision against the profit impact.
The capital surplus increased from £1.1bn at the year-end to £1.7bn at the end of June, leaving plenty of space for further acquisitions. Analysts at Shore Capital expect adjusted net assets of 617p a share at 31 December 2017, down from 684p at the same time in 2016.
| PHOENIX GROUP HOLDINGS (PHNX) | ||||
| ORD PRICE: | 781p | MARKET VALUE: | £3.07bn | |
| TOUCH: | 781-781.5p | 12-MONTH HIGH: | 812p | LOW: 695p |
| DIVIDEND YIELD: | 6.3% | PE RATIO: | na | |
| NET ASSET VALUE: | 811p* | SOLVENCY II RATIO: | 166% | |
| Half-year to 30 Jun | Gross premiums (£m) | Pre-tax profit (£bn) | Earnings per share (p) | Dividend per share (p) |
| 2016* | 449 | 60 | 0.1 | 23.7 |
| 2017 | 563 | -69 | -24.5 | 25.1 |
| % change | +25 | - | - | +6 |
| Ex-div: | 07 Sep | |||
| Payment: | 02 Oct | |||
| *Includes intangible assets of £1.6bn, or 414p a share **Restated following 7:12 rights issue | ||||
