Financial Highlights
332 million of cash generation in H1 2014 (HY13: £416 million). A further £390 million was received on completion of the divestment of Ignis to Standard Life Investments on 1 July 2014
− Group remains on track to achieve cash generation targets of £500 million - £550 million in 2014 and £2.8 billion between 2014 and 2019
− MCEV of £2.6 billion on a pro forma basis at 30 June 2014 (FY13: £2.4 billion), with £153 million of incremental MCEV enhancement achieved in H1 2014
− Gearing reduced from 44% at 31 December 2013 to 35% on a pro forma basis at 30 June 2014, meeting the Group's target of 40% gearing 18 months ahead of schedule. The future level of gearing will be consistent with the achievement and maintenance of an investment grade rating
− IGD surplus of £1.1 billion and IGD headroom of £0.4 billion on a pro forma basis at 30 June 2014 (FY13: £1.2 billion and £0.5 billion respectively)
− PLHL ICA surplus of £0.7 billion and PLHL ICA headroom of £0.6 billion on a pro forma basis at 30 June 2014 (FY13: £1.2 billion and £1.1 billion respectively)
− Group IFRS operating profit of £266 million in H1 2014 including £114 million from management actions (HY13: £186 million, including £24 million from management actions)
− Interim dividend of 26.7p per share, in line with 2013 interim and final dividends
Divestment of Ignis and debt refinancing
− Completed divestment of Ignis Asset Management to Standard Life Investments on 1 July for £390 million in cash
− Comprehensive debt refinancing achieved:
- Divestment of Ignis supported a £250 million prepayment of bank debt
- Successful £300 million 7 year unsecured bond issue, at an attractive annual coupon, the net proceeds of which were used to prepay bank debt
- The refinancing of the Group's remaining senior bank debt and PIK notes into a single £900 million facility, in conjunction with a £206 million associated debt prepayment made from internal resources
- Senior debt reduced from over £1.7 billion at the start of 2014 to £1.2 billion on a pro forma basis as at 30 June 2014
- Strengthens Phoenix's financial flexibility to pursue its growth strategy of acquiring closed life funds
Operational highlights
− Progressed Phoenix Life transformation with outsourcing partner HSBC to consolidate investment fund accounting, unit pricing and custody arrangements, with completion expected in 2015
− Continued the migration of in-force policies to the BaNCS administration platform, with the transfer of a further 65,000 policies following the expiry of our outsourcing contract with Capita Employee Benefits (formerly Capita Hartshead)
− Vesting and recently annuitised customers given options to take advantage of the extensive changes introduced by the 2014 Budget
− Continued initiatives to de-risk with-profit funds and accelerate distribution of estate to stakeholders
