M&G plc (MNG) Earnings Call Transcript & Summary

Welcome. It has been an extraordinary year for all of us. I'm sure we've all been deeply shocked by the economic hardship, illness, isolation and loss that the pandemic has created. I hope that you have all stayed well and safe. That said, we should not lose sight of some unexpected benefits as well. We have a new, more flexible approach to working, a hybrid of working from home and being in the office, as an ability to deliver a more agile response for customers, clients and colleagues, whatever the world in 2021 and beyond may bring. At M&G, our priority this year has been to support our clients and customers to the best of our abilities and to help our colleagues cope with the exceptional circumstances we found ourselves in since last spring. I am very proud of what our people have delivered this year, and I know John will want to say more about that shortly. But on behalf of the Board, I would like to say a very big thank you to all our colleagues for their continuing commitment and hard work. This hasn't been an easy year for anyone. So I'm also very proud of how M&G has supported our communities and the businesses in which we invest. We've encouraged colleagues to take advantage of our volunteering leave so they can contribute to their local communities. And we have given over GBP 1.3 million to charitable causes, helping those most impacted by the pandemic as part of our GBP 3.2 million community investment program. Before I hand over to John, I also wanted to note that despite the external environment, we were pleased to have delivered a resilient performance last year. We generated very strong levels of cash, and we're able to maintain the dividend, which was paid to you in April. We are very grateful for shareholders' continued support, and we look forward to delivering another strong performance in the coming year. I'll now hand over to John. Thank you.

Thanks, Fiona. What a year this has been, certainly the most eventful in my career. Yet despite the pandemic, we have achieved a great deal in our first full year as an independent business. As our financial results show, this worldwide crisis in public health has demonstrated the resilience of our diversified and integrated business model. The pandemic has also brought out the best in our colleagues. The leadership team and I are immensely proud of their commitment and hugely grateful for their efforts. And I want to thank everyone else who has supported us in these difficult times, customers and clients, shareholders and business partners, the communities we serve. Our combination as asset manager and asset owner meant we were well positioned for the economic and market disruption, which came with the pandemic. It enabled us to generate high levels of capital and to pay our annual dividend in full at a time when income from dividends has been difficult to obtain. Throughout the crisis, the business has remained financially strong, with our shareholder solvency ratio of 182%, well above our risk appetite and higher than at demerger. Over the year, we also made good progress on returning the business to sustainable growth through a number of initiatives. And those included the launch of M&G Wealth in September, following the acquisition of the Ascentric platform earlier in the year. With GBP 28 billion of assets under management and administration, this is a powerful new force in U.K. financial advice. And a revamp of our retail funds offering, we took a series of actions to position the business for a return to net inflows, including more competitive management fees, new products and improved performance. We have also seen further growth in our institutional asset management business with continued innovation in fields such as private assets and impact investing. During the year, we won significant new mandates with GBP 5 billion net client inflows. An expansion of our international presence, with new investment teams in the U.S. and Singapore and more local origination of private assets. We also took majority control of our South African operation. We made good progress on modernization. We remain on track to achieve annual savings of GBP 145 million in 2022 through our 5-year transformation program. And we strengthened our culture. I personally led a company-wide program to create a stronger sense of one M&G, built around our core values of care and integrity. Of course, there have been challenges. I'm pleased to say that this month, we reopened the property portfolio fund after a 17-month suspension in trading. While we regret the inconvenience this has caused our clients, we do believe suspension was the best way to protect all the fund's shareholders. Suspension allowed us to raise cash through an orderly disposal of assets, selling properties at or very close to their net asset value. In our Prudential Corporate Pensions business, lockdown restrictions have had an impact on service levels, but we are working extremely hard to return service to the standard customers expect of us. By far, the most important initiative this year has been the pivot of the entire business to sustainability. Earlier this month, we published our first-ever sustainability report, setting out our 10-point plan to embed the principles of sustainability throughout M&G. The report includes our commitments on climate, net 0 on carbon emissions for our operations by 2030 and across our investment portfolios by 2050 at the latest. While we are keen to accelerate this transition, we must be thoughtful in our approach to ensure it also is a just transition. And as the stewards of savers' capital, we also have a responsibility and the opportunity to direct investment to those who can make a positive difference. In February, we announced that our With-Profits Fund is allocating GBP 5 billion to a new strategy we have called Catalyst. This is an international team of investment specialists who are directing customer savings to private companies and organizations with social or environmental purposes at their heart. We expect Catalyst to be the first of a series of initiatives that will see M&G direct more and more capital to sustainable and impact investments. So a year in which we made good progress on our return to growth, overcame a number of challenges and delivered attractive returns to shareholders. A year in which we continue to put customers and clients at the center of our business, while also ensuring the safety and well-being of our colleagues. And a year in which we put the business on a more sustainable footing, in the belief that a sustainably run and well-governed company will deliver better outcomes for customers and stronger, more resilient returns for shareholders. Thank you again for all your support. Now before I finish, I want to pay tribute to our colleague, Roddy Thomson, who died very suddenly last month. Roddy was an exceptional colleague and friend, and he will be greatly missed. Our thoughts are with his family and friends at this very sad time. And now I'll hand you back to Fiona and look forward to your questions.