M&G announces £500m share buyback

M&G announced a £500m share buyback as the investment manager posted reduced annual operating profit resulting partly from changes to the expected death rate.

Adjusted operating pretax profit fell to £721m in the year to the end of December from £788m a year earlier as assets under management rose to £370m from £367.2m. Profit fell partly because of lower benefits from changes to longevity assumptions.

M&G said it would buy back £500m of shares after generating £2.8bn of capital over two years, beating its £2.2bn target. The FTSE 100 group set a new target of £2.5bn capital generation by the end of 2024.

The company proposed an unchanged second interim dividend of 12.2p a share, taking the annual payout to 18.3p a share - up from 18.2p in 2020.

M&G shares rose 14.3% to 203.8p at 12:06 GMT.

John Foley, chief executive, said: "It has been another year of robust operational and financial performance. In light of this performance and our strong capital generation we are able to announce today £500m to be returned to shareholders by way of a buyback programme. I am confident that 2022 will be an inflection point for us."

M&G split from Prudential in 2019 and is seeking to overhaul its business after disappointing results. The company said it achieved its £145m cost savings target ahead of schedule and that improved fund flows were the result of measures to offer better value and returns.

Richard Hunter, head of markets at Interactive Investor, said: "M&G has further underlined the strength of its capital position, boosted by an increase of 16.7% in revenues. The [dividend] yield of 10.3% is not only the highest in the FTSE100, but is also a clear invitation to income-seeking investors, as opposed to growth investors who have not been rewarded in recent times."