9 March 2023
M&G plc full year 2022 results
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
| Net client flows excl. Heritage £0.3bn 2021: £0.6bn | Adjusted Operating Profit £529m 2021: £721m | Operating Capital Generation £821m 2021: £1,117m | Shareholder Solvency II ratio 199% 2021: 218% | Shareholder returns 1 £968m 2021: £466m |
1 Includes ordinary dividends paid in the year and the total consideration for the share buy-back programme
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 1 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 |
2 Source M&G plc and Morningstar Inc.
Outlook
| – | Simplify the operating model and unlock growth through a new transformation programme, and by 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 2025 3 |
3 Leverage ratio is defined as nominal value of debt as a percentage of M&G plc’s shareholder Solvency II own funds
| 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% |
4 Definitions of key performance measures are provided in the Supplementary information section of this preliminary announcement
Enquiries:
| Media | Investors/Analysts | ||
| Jonathan Miller | +44(0)20 8162 1699 | Luca Gagliardi | +44(0)20 8162 7307 |
| Irene Chambers | +44(0)7825 696815 |