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By late afternoon as we speak (8 September), the Phoenix Group Holdings (LSE:PHNX) share worth was the largest faller on the FTSE 100.
Regardless of reporting a “strong first half performance with progress against all key financial metrics” traders weren’t impressed. They wiped over £400m off the market cap of the group.
The monetary providers group additionally introduced that it’s going to vary its identify to ‘Standard Life’ in March 2026. Personally, I feel this can be a good concept. 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 in another way to the best way wherein administration groups choose to report issues.
The upshot is that there’s typically a big differential between statutory (accounting) and administration numbers.
For instance, through the six months ended 30 June (H1 25), diluted working earnings (internet of financing prices) per share had been 25.1p. In distinction, the group’s earnings assertion is displaying a lack of 18.2p a share.
Money is king
Luckily, money is much less affected by the vagaries of the accountancy career. In any case, it both exists or it doesn’t.
The group claims that working money technology (OCG) is “the metric which best demonstrates the long-term underlying value generation from our business”.
Throughout H1 25, its OCG elevated by 9% to £705m. The consensus of analysts was for £690m. And the group anticipates “mid-single digit percentage” progress on this quantity for the foreseeable future. At this stage, it says its dividend is “well covered”. Additionally, it means there’s money left over to assist additional cut back its debt.
Nevertheless, in the case of complete money technology, it was £22m in need of expectations, which seems to have disillusioned traders.
Nevertheless, so long as it could 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 put money into shares and shares, the group’s weak 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 number of the smaller gamers have decrease working prices, which provides them a aggressive benefit.
Nevertheless, Phoenix Group seems to be in fine condition to me. It has a Solvency II ratio of 175%, which implies it’s holding 75% extra reserves than it’s obliged to.
And through H1 25, it noticed a 3.1% improve in belongings beneath administration to £295.1bn.
To be trustworthy, I feel as we speak’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 believed it was presently final week, and but its shares are actually 7% cheaper. On this foundation, I feel it’s a inventory to think about, not least for its above-average dividend.
