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09 March 2023

M&G plc full year 2022 results

2023
  • Positive net client flows in Asset Management and Wealth in a year of significant market uncertainty

  • Returned nearly £1 billion to shareholders through dividends and share buy-back

  • On track to achieve £2.5 billion operating capital generation target by 2024

  • Launched transformation programme to drive simplification, unlock growth and deliver £200 million cost savings

£0.3bn
Net client flows excl. Heritage
2021: £0.6bn
£529m
Adjusted Operating Profit
2021: £721m
£821m
Operating Capital Generation
2021: £1,117m
199%
Shareholder Solvency II ratio
2021: 218%
£968m
Shareholder returns1
2021: £466m

Andrea Rossi, Group Chief Executive Officer, said:

“I am pleased with how M&G has performed in 2022. Through exceptional market volatility we have clearly demonstrated the diversification and resilience of our business model, which has enabled us to deliver consistently attractive returns for both our shareholders and for our clients.

“We achieved positive net client flows in Asset Management and Wealth for the second year in a row driven by the ongoing turnaround in Wholesale Asset Management and increased client inflows into PruFund. Adjusted operating profit has been impacted by market volatility but benefited from Wealth's contribution more than doubling, as we continue to invest in the propositions offered by this business. We have also made a solid start to the achievement of our operating capital generation target of £2.5 billion by the end of 2024.

“We now have a clear strategy to build on the inherent strengths of our differentiated business model. We will maintain our financial strength, simplify our business and deliver profitable growth. We are at the start of the next phase for M&G and I am encouraged by the progress we are already making.

“Looking ahead, despite the uncertainty of the external environment, our diversified business model and strong financial position will underpin our ability to invest in the growth of our business and continue to deliver attractive shareholder returns.”

Strong capital position underpins resilient financial performance

  • Operating capital generation of £821 million (2021: £1,117 million) with improved underlying capital generation of £628 million (2021: £484 million) demonstrating the resilience of our business model offset by a lower benefit from management actions
  • Shareholder Solvency II coverage ratio remained strong at 199% (2021: 218%) which includes the impact of dividends, the share buy-back and the dilutive impact from the recognition of deferred tax assets due to mark to market losses on our assets
  • Adjusted operating profit (AOP) before tax of £529 million (2021: £721 million), affected by £(172) million non-cash items from duration mismatching losses in the annuity portfolio and foreign exchange losses on our USD denominated subordinated debt
  • Assets under management and administration decreased by £28 billion to £342 billion (2021: £370 billion), predominantly driven by adverse market movements
  • IFRS loss after tax of £1,619 million (2021: £92 million profit), impacted by non-cash 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
  • Second interim dividend of 13.4 pence per share, in line with our policy of stable or increasing dividends, with a total dividend per share of 19.6 pence per share, up 7% year-on-year (2021: 18.3 pence per share)

Positive flows and improved investment performance despite adverse market conditions

  • Positive net client flows excl. Heritage of £0.3 billion (2021: £0.6 billion) despite significant market volatility
  • Wholesale Asset Management returned to net client inflows for the first time since 2018 of £0.5 billion (2021: £3.8 billion outflows) reflecting the measures taken to improve investment performance - 68% of Wholesale funds now in upper two performance quartiles over one year (31 December 2021: 45%)2
  • Net client inflows of £0.2 billion (2021: £1.4 billion outflows) into Wealth driven by continued operational improvements and a strong performance from PruFund
  • Roll out of PruFund-type products in Europe progressing with the launch of Future+ in Italy and Ireland

Outlook

  • Simplify the operating model and unlock growth through a new transformation programme and by the end of 2025:
    • Generate £200 million of cost savings, gross of inflation; and
    • Reduce core Asset Manager cost/income ratio to sustainably lower than 70%,
  • Deliver increased adjusted operating profit from Asset Management and Wealth to more than 50% of the Group total by end of 2025;
  • On track to achieve £2.5 billion operating capital generation target by 2024
  • Aim to reduce our leverage ratio to below 30% by 20253
Performance highlights4  2022  2021 
 Adjusted operating profit before tax (£m)      529    721
 IFRS (loss)/profit after tax (£m)  (1,619)     92 
 Assets under management and administration (£bn)  342.0 370.0 
 Net client flows excluding Heritage (£bn)        0.3      0.6 
 Operating capital generation (£m)      821  1,117 
 Total capital generation (£m)    (397)  1,822 
 Shareholder Solvency II coverage ratio (%)    199%   218% 

1Includes ordinary dividends paid in the year and the total consideration for the share buy-back programme
2Source M&G plc and Morningstar Inc.
3Leverage ratio is defined as nominal value of debt as a percentage of M&G plc’s shareholder Solvency II own funds
4Definitions of key performance measures are provided in the Supplementary information section of this preliminary announcement

Media enquiries

Irene Chambers

Media Relations

Investors/Analysts

Luca Gagliardi

Director of Investor Relations

Notes to editors

Open1.
The results in this preliminary announcement are prepared in accordance with UK-adopted international accounting standards, and are based on the consolidated financial statements of M&G plc.
Open2.
The shareholder view and regulatory view of the Solvency II coverage ratio as at 31 December 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.
Open3.
Total number of M&G plc shares in issue as at 31 December 2022 was 2,374,712,121.
Open4.
A Live webcast of the Full Year 2022 Results presentation and Q&A will be hosted by Andrea Rossi (CEO) and Kathryn McLeland (CFO) on Thursday 9 March at 11:00 GMT. You can register to view the webcast live and results presentation here (results presentation will be available from 07:00 GMT):
https://mngresults.connectid.cloud/register.
Dial in: UK freephone 0800 640 6441/ All other locations +44 203 936 2999 Participant code: 928303
Open5.
The person responsible for arranging the release of this announcement on behalf of M&G plc is Alan Porter, General Counsel and Company Secretary.
 Ex-dividend date   16 March 2023
 Record date  17 March 2023
 Payment of dividend     27 April 2023

M&G plc is a leading international savings and investments business, managing money for around 5 million retail clients and more than 800 institutional clients in 26 markets. As at 31 December 2022, we had £342 billion of assets under management and administration. 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 retail and savings clients under the M&G Wealth and Prudential brands in the UK and Europe, and under the M&G Investments brand for asset management clients globally.
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 forward-looking 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 M&G plc 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 M&G plc 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 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.
LEI: 254900TWUJUQ44TQJY84 Classification: 1.1 Annual Financial and Audit Reports
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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.

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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, 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.