Picture supply: Getty Photographs
By late afternoon right this moment (8 September), the Phoenix Group Holdings (LSE:PHNX) share worth was the most important faller on the FTSE 100.
Regardless of reporting a “sturdy first half efficiency with progress in opposition to all key monetary metrics” traders weren’t impressed. They wiped over £400m off the market cap of the group.
The monetary companies group additionally introduced that it’s going to vary its title to ‘Normal Life’ in March 2026. Personally, I believe this can be a good thought. The model has been round since 1825.
A complicated image
The issue with assessing the monetary efficiency of teams like these is that accounting requirements require sure key objects to be introduced otherwise to the way in which wherein administration groups desire to report issues.
The upshot is that there’s usually a big differential between statutory (accounting) and administration numbers.
For instance, throughout the six months ended 30 June (H1 25), diluted working earnings (web of financing prices) per share have been 25.1p. In distinction, the group’s revenue assertion is displaying a lack of 18.2p a share.
Money is king
Happily, money is much less affected by the vagaries of the accountancy career. In spite of everything, it both exists or it doesn’t.
The group claims that working money technology (OCG) is “the metric which finest demonstrates the long-term underlying worth technology from our enterprise”.
Throughout H1 25, its OCG elevated by 9% to £705m. The consensus of analysts was for £690m. And the group anticipates “mid-single digit share” development on this quantity for the foreseeable future. At this degree, it says its dividend is “effectively lined”. Additionally, it means there’s money left over to assist additional scale back its debt.
Nonetheless, relating to whole money technology, it was £22m wanting expectations, which seems to have disillusioned traders.
However I believe there’s excellent news for revenue hunters. Even earlier than right this moment’s share worth fall, the inventory was within the prime three of FTSE 100 yielders. As a part of its outcomes announcement, it declared a 2.6% improve in its interim dividend. Add this to final 12 months’s ultimate payout and the inventory’s at present yielding 8.7%. After all, there aren’t any ensures relating to dividends.
Nonetheless, so long as it might develop its OCG in step with expectations, this could assist safe an increase in its payout.
Some challenges
However identical to the remainder of us who spend money on shares and shares, the group’s susceptible to wider market uncertainty. At 30 June, it had equities of £98.2bn and debt securities of £91.6bn on its stability sheet.
It additionally operates in a aggressive trade. A few of the smaller gamers have decrease working prices, which provides them a aggressive benefit.
Nonetheless, Phoenix Group seems to be in good condition to me. It has a Solvency II ratio of 175%, which suggests it’s holding 75% extra reserves than it’s obliged to.
And through H1 25, it noticed a 3.1% improve in property underneath administration to £295.1bn.
To be sincere, I believe right this moment’s share worth fall is a little bit of an over-reaction to a comparatively small miss on one money measure. Based mostly on its newest outcomes, the group’s doing higher than I assumed it was right now final week, and but its shares are actually 7% cheaper. On this foundation, I believe it’s a inventory to contemplate, not least for its above-average dividend.
