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M&G to pay special dividend despite slip in profits

John Foley

John Foley: ‘clear focus’ (pic: Terry Murden)

Asset management firm M&G is to pay a special dividend as total assets rise. 

The company, which split from Prudential last October, reported a drop in adjusted operating profit before tax from £1.62bn in 2018 to £1.15bn.

IFRS profit after tax increased from £811m to £1.06bn.

Assets under management and administration increased from £321bn to £352bn last year, and savings and asset management net client flows reduced from £1.7bn to £1.3bn.

The company said that its five-year transformation programme includes a voluntary redundancy scheme to cut staff costs by 10% in 2020. 

“Active managers continue to face pressure on profitability because of the popularity of passives and changes in the distribution landscape,” the company said.

It will continue to grow its business in the Asia Pacific region after establishing a team of fund managers in the area last year. 

John Foley, chief executive, said: “We have achieved much in 2019. As well as executing a successful demerger, we have maintained a clear focus on the day-to-day management of our business as indicated by a positive set of financial results in a challenging market.

“Adjusted operating profit before tax of £1,149 million and total capital generation of £1,509 million for the year represent a resilient performance in line with our expectations.

“Total assets under management and administration increased to £352 billion, largely reflecting investment returns over the year.  Across Savings and Asset Management, we saw modest total net client outflows of £1.3 billion.

“Flows into our UK Retail Savings business, including PruFund, largely offset flows out of our Retail Asset Management business. This demonstrates the value of our diversified business model and the appeal of our smoothed investment propositions.

“We have made a good start to life as an independent business and we are strongly positioned for growth. Our diversified investment capabilities, coupled with our client relationships in 28 markets, mean we are well positioned to meet the growing global demand for savings and investment solutions, supported by favourable long-term economic and social trends that offer growth opportunities for many years to come.”

“Global markets continue to be unnerved by a series of factors, including most recently the spread of COVID-19 and its potential economic impact. While there remains significant uncertainty, our balance sheet continues to be resilient. As at 6 March 2020, our shareholder Solvency II coverage ratio was estimated at 166%, which is firmly within our risk appetite.”

The company is recommending an ordinary dividend of 11.92 pence per share and a special demerger dividend of 3.85 pence per share

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