Phoenix Group reiterates full-year cash-generation target

Phoenix Group Holdings saw its profitability slide during the first half of the year, even as it closed the acquisition of rival Axa's pensions and protections business, but stuck to its cash generation target for the year.

The closed life fund consolidator reported a 21% drop in IFRS operating profits for the first six months of the year to reach £107m.

"Phoenix remains on track to deliver its cash target for the year, despite very significant market volatility and a sharp fall in long-term interest rates over the year to date. The Group continues to maintain a resilient capital position and has further management actions planned for the second half of the year," said Clive Bannister, the group's chief executive officer.

Surplus capital as measured under Solvency II, a closely-watched gauge of the sector's health, slipped from £1.3bn at year-end 2015 to £1.1bn, including the impact of its interim divdiend.

Cash generation improved from £110m to £147m at the half-year stage and the company said it was on track to reach its previously stated full-year target for between £350m to £450m.

During the period, the firm acquired Axa's pensions and protections business financed via a share placing which raised £190m in fresh funds and a short-term bank facility.

Net capital synergies of £250m were expected to accrue to the group in the six months following completion of the transaction.

Cash-flows were also to receive a boost of £0.3bn between 2016 and 2020 as a result of the above purchase and of £0.2bn from 2021 onwards.

Phoenix declared an interim dividend of 26.7p, in line with the 2015 pay-out.