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11 August 2022

M&G plc half year 2022 results

2022

Improved fund flows underpin a resilient operational and financial performance 
Solid start to new £2.5bn operating capital generation target by 2024

John Foley, Chief Executive, said: “This is an encouraging set of results and provides evidence that M&G is continuing to build momentum. Improved client flows underpinned a resilient operational and financial performance despite a period of volatility when many investors reduced their exposure to markets.

“The turnaround in flows builds on the progress we made in 2021. In only 12 months, we have reversed our position from being £2 billion in net client outflows, to achieving £1.2 billion in net client inflows excluding Heritage.

“Importantly, Wholesale Asset Management achieved net client inflows for the first time since 2018 totaling £0.8 billion.

“Our continued investment in M&G Wealth positions it to become a major player in the UK wealth market. In addition to recently announcing an agreement to acquire Continuum Financial Services, M&G Wealth has also launched PruFund Planet on its digital platform, the first time that PruFund has been offered as a choice on any investment platform in the UK.

“The current macro-economic environment is creating uncertainty in the markets in which we operate. However, our diversified sources of earnings and strong shareholder Solvency II coverage ratio protects our ability to invest in the business and, as today's interim dividend of 6.2 pence per share shows, deliver attractive shareholder returns.”

H1 financial highlights

  • Operating capital generation of £433 million, up 40% on the same period last year, representing a solid start to the
    achievement of our new operating capital generation target of £2.5 billion by the end of 2024
  • Shareholder Solvency II coverage ratio remains very strong at 214% despite total capital generation falling to £24 million (30
    June 2021: £869 million) as a result of increasing yields and falling equity markets
  • Adjusted operating profit before tax decreased to £182 million, impacted by current market conditions
  • IFRS loss after tax of £1,045 million; impacted by short-term fluctuation losses in the fair value of the surplus assets in our
    annuity portfolio and derivatives used to hedge the Solvency II balance sheet caused by increasing yields
  • Assets under management and administration decreased by £21.1 billion to £348.9 billion, driven mainly by adverse market
    movements, with net client inflows (excluding Heritage) of £1.2 billion
  • We are well on track with our buy-back programme having deployed almost £150 million to date
  • Interim dividend of 6.2 pence per share, in line with our policy of paying one-third of the previous year’s total dividend, with the
    dividend per share up 2% as a result of the share buy-back programme

H1 operational highlights

  • Wholesale Asset Management returned to net client inflows for the first time in four years with a total of £0.8 billion, compared
    to £3.4 billion of net client outflows in the same period last year reflecting the measures taken to improve investment
    performance and offer better value to customers and clients
  • Improved performance in Wholesale Asset Management, with 62% of funds in upper two performance quartiles over one year
    (31 December 2021: 45%) and 61% over three years (31 December 2021: 36%)1
  • Continued growth in our Institutional Asset Management business with net client inflows of £0.3 billion
  • Improved net client flows for M&G Wealth, with gross inflows into PruFund increasing to £2.5 billion (30 June 2021: £1.9 billion)
    following strong investment performance, digitisation, with PruFund Planet being launched on the M&G Wealth platform, and
    better service levels
  • Roll out of PruFund-type products in Europe progressing with the launch of Future+ in Italy in February, and in Ireland later this
    year
  • Further strengthened M&G Wealth with the recently announced agreement to acquire Continuum Financial Services which
    broadens our independent advice footprint
  • Completed the acquisition of Swiss impact investor responsAbility and published our position on thermal coal, which included
    our intention to phase out investment in thermal coal by 2030 for OECD and EU countries and 2040 for developing countries

1 Source M&G plc and Morningstar Inc.

Outlook

  • Cautiously optimistic about the turnaround in Wholesale Asset Management in light of continued action on investment
    performance and net inflows into our new generation of thematic funds but remain mindful of the challenging external
    environment
  • Institutional Asset Management well-placed given consistent strong performance with £4.4 billion of committed client capital
    for private assets and further client wins yet to be funded
  • Following recent acquisitions and partnerships, we believe M&G Wealth now has all the building blocks required to progress on
    its journey to become a major player in the UK wealth market
  • On-going macro economic uncertainty has the potential to disrupt markets further and impact our results
  • Strong Solvency II ratio of 214% underpins dividend polic

 

Performance highlights For the six months ended 30 June 2022 For the six months ended 30 June 2021 For the year ended 31 December 2021
 Adjusted operating profit before tax (£m)       182    327    721
 IFRS (Loss)/profit after tax (£m)  (1,045)  (248)      92
 Assets under management and administration (£bn)    348.9 370.0 370.0
 Net client flows (excluding Heritage) (£bn)        1.2   (2.0)     0.6
 Operating capital generation (£m)       433

   309

1,117
Total capital generation (£m)         24    869 1,822
 Shareholder Solvency II coverage ratio (%)    214%  198% 218%

Media enquiries

Notes to editors

Open1
The condensed consolidated financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting ('IAS 34'), as adopted by the UK, and the Disclosure and Transparency Rules of the Financial Conduct Authority based on the consolidated financial statements of M&G plc.
Open2
All key performance measures relate to continuing operations.
Open3
The shareholder view and regulatory view of the Solvency II coverage ratio as at 30 June 2022 assumes transitional measures on technical provisions which have been recalculated using management’s estimate of the impact of operating and market conditions at the valuation date.
Open4
Total number of M&G plc shares in issue as at 30 June 2022 was 2,559,999,056.
Open5
A Q&A webcast will be hosted by John Foley (CEO) and Kathryn McLeland (CFO) on Thursday 11 August at 10:00 BST. You can register for the Q&A and view the investor presentation here (the presentation will be available from 07:00 BST):
Dial in: UK freephone 0800 640 6441/ All other locations +44 203 936 2999 Participant code: 784094
Ex-dividend date August 18, 2022
Record date August 19, 2022
Payment of dividend September 29, 2022

M&G plc is a leading international savings and investments business, managing money for both individual savers and institutional investors in 28 markets. With a heritage dating back more than 170 years, M&G plc has a long history of innovation in savings and investments, combining asset management and insurance expertise to offer a wide range of solutions. We serve our savings and insurance customers under the M&G Wealth and Prudential brands in the UK and Europe, and under the M&G Investments brand for asset management clients in the rest of the world.

M&G plc, a company incorporated in the United Kingdom, is the ultimate parent company of The Prudential Assurance Company Limited. The Prudential Assurance Company Limited is not affiliated in any manner with Prudential Financial, Inc., a company whose principal place of business is in the United States of America or Prudential plc, an international group incorporated in the United Kingdom.
This announcement may contain certain ‘forward-looking statements’ with respect to M&G plc and its affiliates (the “M&G Group”), its plans, its current goals and expectations relating to its future financial condition, performance, results, operating environment, strategy and objectives. Statements that are not historical facts, including statements about M&G plc’s beliefs and expectations and including, without limitation, statements containing the words ‘may’, ‘will’, ‘should’, ‘continue’, ‘aims’, ‘estimates’, ‘projects’, ‘believes’, ‘intends’, ‘expects’, ‘plans’, ‘seeks’, ‘outlook’ and ‘anticipates’, and words of similar meaning, are forwardlooking statements. These statements are based on plans, estimates and projections as at the time they are made, and therefore persons reading this announcement are cautioned against placing undue reliance on forward-looking statements. By their nature, all forward-looking statements involve inherent assumptions, risk and uncertainty, as they generally relate to future events and circumstances that may be beyond the M&G Group’s control. A number of important factors could cause M&G plc’s actual future financial condition or performance or other indicated results to differ materially from those indicated in any forward-looking statement. Such factors include, but are not limited to, UK domestic and global economic and business conditions (including the political, legal and economic effects of the UK’s decision to leave the European Union); market-related conditions and risk, including fluctuations in interest rates and exchange rates, the potential for a sustained low-interest rate environment, corporate liquidity risk and the future trading value of the shares of M&G plc; investment portfolio-related risks, such as the performance of  financial markets generally; the policies and actions of regulatory authorities, including, for example, new government initiatives; the impact of competition, economic uncertainty, inflation and deflation; the effect on M&G plc's business and results from, in particular, mortality and morbidity trends, longevity assumptions, lapse rates and policy renewal rates; the timing, impact and other uncertainties of future acquisitions or combinations within relevant industries; the impact of internal projects and other strategic actions, such as transformation programmes, failing to meet their objectives; the impact of operational risks, including risk associated with third party arrangements, reliance on third party distribution channels and disruption to the availability, confidentiality or integrity of M&G plc's IT systems (or those of its suppliers); the impact of changes in capital, solvency standards, accounting standards or relevant regulatory frameworks, and tax and other legislation and regulations in the jurisdictions in which the M&G Group operates; and the impact of legal and regulatory actions, investigations and disputes. These and other important factors may, for example, result in changes to assumptions used for determining results of operations or re-estimations of reserves for future policy benefits. Any forward-looking statements contained in this document speak only as of the date on which they are made. M&G plc expressly disclaims any obligation to update any of the forward-looking statements contained in this document or any other forward-looking statements it may make, whether as a result of future events, new information or otherwise except as required pursuant to the UK Prospectus Rules, the UK Listing Rules, the UK Disclosure Guidance and Transparency Rules, or other applicable laws and regulations. Nothing in this announcement shall be construed as a profit forecast, or an offer to sell or the solicitation of an offer to buy any securities.
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M&G plc, incorporated and registered in England and Wales. Registered office: 10 Fenchurch Avenue, London EC3M 5AG. Registered number 11444019. M&G plc is a holding company, some of whose subsidiaries are authorised and regulated, as applicable, by the Prudential Regulation Authority and the Financial Conduct Authority.

M&G plc is a company incorporated and with its principal place of business in England, and its affiliated companies constitute a leading savings and investments business. M&G plc is the direct parent company of The Prudential Assurance Company Limited. The Prudential Assurance Company Limited is not affiliated in any manner with Prudential Financial, Inc, a company whose principal place of business is in the United States of America or Prudential plc, an international group incorporated in England and Wales.

M&G plc は、イングランド及びウェールズで設立・登録。本社登録地は10 Fenchurch Avenue, London EC3M 5AG。登録番号11444019。M&G plcは持ち株会社で、その子会社の一部はPRA(健全性監督機構)及びFCA(金融行為規制機構) に認可され、それらの規制対象となっています。

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M&G plc is a company incorporated and with its principal place of business in England, and its affiliated companies constitute a leading savings and investments business. M&G plc is the direct parent company of The Prudential Assurance Company Limited. The Prudential Assurance Company Limited is not affiliated in any manner with Prudential Financial, Inc, a company whose principal place of business is in the United States of America or Prudential plc, an international group incorporated in England and Wales.