Phoenix unveils strong results underpinned by solid cash generation

published 22 March 2013

FTSE 250-listed closed life fund consolidator Phoenix Group has unveiled strong results for the financial year ended December 31st underpinned by solid cash generation from its operating companies.

The group's operating companies' cash generation was valued at £690m, compared to £810m, at the upper end of the £600-to-£700m target range and £1.1bn of cash was recorded at the group's holding companies as of December 31st. This compared to £837m in 2011.

Phoenix reported a 27% increase in its recommended final dividend to 26.7p per share and reported that gearing had reduced from 57%, as of December 31st 2011, to 48% on a pro forma basis as of December 31st 2012.

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The group IRFS operating profit was worth £410m, up from £395m in the previous year and group assets under management were worth £68.6bn, excluding an additional £1.6bn of assets expected to transition back to Ignis during 2013 under the investment management mandate agreed with Guardian Assurance.

Over the course of the year, the group accelerated the release of £252m of capital through an agreement to transfer approximately £5.0bn of annuity in payment liabilities to Guardian Assurance.

The life company structure was further streamlined through the completion of two funds mergers, leaving three UK life companies and accelerating the release of £192m of capital.

An additional 780,000 policies were transferred from legacy systems to modern policy administration platform and investment performance at Ignis continued with 79% of assets outperforming against benchmark and peer group.

Group Chief Executive Officer Clive Bannister said: "Phoenix delivered strong financial performance in 2012. We have achieved all of our 2012 financial targets including cash generation, gearing reduction and MCEV [Market Consistent Embedded Value] enhancement, demonstrating the resilience of the Phoenix business model and our ability to generate long term shareholder value.

"The debt re-terming and equity raising announced in January 2013 has significantly strengthened our balance sheet, improved our capital structure, and allowed us to increase shareholder dividends," he added.