TIDMMNG
RNS Number : 6452I
M&G PLC
03 April 2020
M&G plc NEWS RELEASE
3 April 2020
M&G plc
Annual Report and Accounts 2019
Following the release by M&G plc (the "Company") on 10 March
2020 of the Company's 2019 Full Year Results Announcement for the
year ended 31 December 2019, the Company announces that it has
today issued the 2019 Annual Report and Accounts ("Annual Financial
Report").
The document is available to view on the Company's website and,
in accordance with Listing Rule 9.6.1, a copy has been submitted to
the National Storage Mechanism and will shortly be available for
inspection at http://www.morningstar.co.uk/uk/NSM
Printed copies of the Annual Financial Report are expected to be
mailed to shareholders on 15 April 2020, together with the
Company's 2020 Notice of Annual General Meeting, in line with
shareholder communication preferences.
Enquiries:
Alan Porter, Group General Counsel and Company Secretary - +44
(0)203 977 4064
Helen Archbold, Head of Group Secretariat - +44 (0)203 977
0057
Jonathan Miller, Head of External Communications - +44 (0)203
977 0165
Sophie Redburn, External Communications Manager - +44 (0)203 977
6300
Information required under the Disclosure & Transparency
Rules ("DTR")
The following information is extracted from the M&G plc
Annual Report 2019 (page references are to pages in the Annual
Report) and should be read in conjunction with M&G plc's Full
Year Results announcement issued on 10 March 2020. Together they
constitute the material required by DTR 6.3.5(1) to be communicated
to the media in unedited full text through a Regulatory Information
Service. This material is not a substitute for reading the M&G
plc Annual Report 2019 in full.
Principal risks and uncertainties
Principal risk Management and mitigation Outlook
Business environment, environmental and market forces
Changing customer We conduct an annual We believe competition
preferences and strategic planning process, will intensify in response
economic, political which is subject to oversight to consumer demand,
and environmental by the Risk and Resilience technological advances,
conditions could function and the Board, the need for economies
adversely impact and results in an approved of scale, regulatory
our ability to deliver strategy. The process actions and new market
our strategy and considers the potential entrants.
have implications impact of the wider business We have launched a number
for the profitability environment and, throughout of new products, including
of our business the year, we monitor the PruFolio range of
model. and report on the delivery funds, to broaden our
The markets in which of the plan. offering to customers,
we operate are highly We continue to diversify and work is ongoing
competitive while our savings and investments to develop new propositions
customer needs and business to respond to and expand into international
expectations are developing customer needs markets.
changing rapidly. in terms of products, Given that our investment
At the same time, distribution and servicing, horizons are long term,
economic factors and a significant digital we are potentially more
(including GDP growth transformation programme exposed to the long-term
and savings rates) is being undertaken to implications of climate
may impact the demand deliver a more diversified change risks. In the
for our products distribution strategy. shorter term, our stakeholders
and our ability Prior to and since the increasingly require
to generate an appropriate UK's decision to leave responsible investment
return. In addition, the EU, we have run a principles to be adopted
the risk of a hard Brexit programme to identify to demonstrate that
Brexit at the end and mitigate the risks ESG considerations (including
of the Brexit transition to our business, and climate change) are
period persists, ensure that we can continue effectively integrated
potentially acting to serve our customers into investment decisions,
as a drag on growth. and access markets. This fiduciary and stewardship
Our key savings has included preparations duties and corporate
proposition, PruFund, for a hard Brexit and values.
accounts for a high the expansion of our We continue to focus
proportion of our presence in Luxembourg. on minimising the impact
total sales, and We are building our capability of Brexit on the service
we are also heavily to understand the implications we provide to our customers.
reliant on the intermediated of climate change and We are working with
channel for savings climate-related financial regulators and industry
solutions sales. risks and opportunities. bodies to prepare for
This heightens our the end of the transition
exposure to changing period.
economic conditions
and customer preferences.
Increased geopolitical
and environmental
risks and policy
uncertainty may
also impact our
products, investments
and operating model.
Our success depends
upon our capacity
to anticipate and
respond appropriately
to such external
influences.
Investment performance and risk
The investment objectives Our fund managers are Fund liquidity will
and risk profiles accountable for the performance be a key theme in the
of our funds and of the funds they manage near term, with the
segregated mandates and the management of Financial Conduct Authority
are agreed with the risks to the funds. considering changes
our customers. A An independent Investment to rules in how funds
failure to deliver Risk and Performance invest in unquoted and
against these objectives team monitors and oversees hard-to-trade assets.
(including sustained fund performance, liquidity Ensuring our customers
underperformance and risks, reporting understand the risks
of funds), maintain to the Chief Risk and to which they are exposed,
risk profiles that Resilience Officer. including liquidity
are consistent with Such activities feed risk, and delivering
our customers' expectations, into established oversight strong fund performance
or ensure that fund and escalation forums will be key to our success.
liquidity profiles to identify, measure
are appropriate and oversee investment
for expected redemptions performance, investment
may all lead to risk and fund liquidity
poor customer outcomes risks.
and result in fund
outflows. If these
risks materialise
for our larger funds
or a range of funds,
our profitability,
reputation and plans
for growth may be
impacted.
Financial risks
Credit
M&G plc is exposed Our Credit Risk Framework Our credit risk exposure
to the risk that sets standards for the is expected to reduce
a party to a financial assessment, measurement over time as our annuity
instrument, banking and management of credit business runs off. However,
transaction or reinsurance risk, which are monitored we do not expect the
contract causes by a dedicated, independent nature of our exposure
a financial loss team. We set and regularly to credit risk, nor
to us by failing review limits for individual our framework and processes
to discharge an counterparties, issuers for managing and measuring
obligation. In the and ratings, and monitor the risk will materially
case of invested exposures against these change in the short
assets, this relates limits. Our policy is term.
to the risk of an to undertake transactions
issuer being unable with counterparties and
to meet their obligations, invest in instruments
whilst for trading of high quality. Collateral
or banking activities arrangements are in place
this relates to for derivative, secured
the risk that the lending, reverse repurchase
counterparty to and reinsurance transactions.
any contract the
business enters
into is unable to
meet their obligations.
Our solvency is
also exposed to
changes in the value
of invested credit
assets arising from
credit spread widening
and/or credit rating
downgrades.
Market
M&G plc's profitability Market risk appetite Our market risk exposure
and solvency are is set and monitored is expected to increase,
sensitive to market to limit our exposure as the increase expected
fluctuations. Significant to key market risks, from the growth of the
changes in the level and we have prescribed PruFund business outweighs
or volatility of limits on the seed capital the reduction in market
prices in equity, provided for new funds. risk that occurs from
property or bond Where appropriate, and the run-off of the Heritage
markets could have subject to risk limits book. However, the risks
material adverse and procedures, we use are well understood,
effects on our revenues derivatives for risk and closely managed
and returns from reduction, for example, and monitored. As such,
our savings and to hedge equities, interest we do not expect our
investment management rates and currency risks, market risk exposure,
businesses, and and we carry out regular net of risk reduction
exchange rate movements reviews of hedging and activity, to be materially
could impact fee investment strategies, impacted in the short
and investment income including asset-liability term.
denominated in foreign matching, informed by
currencies. Furthermore, stress testing.
material falls in
interest rates may
increase the amount
that we need to
set aside in order
to be able to meet
our future obligations.
Corporate liquidity
Even as a profitable, Risk appetite is set We expect the nature
financially resilient such that we maintain of our exposure to liquidity
business, we must adequate liquid resources risk, and our approach
carefully manage and our liquidity position to managing the risk,
the risk that we is regularly monitored will remain materially
have insufficient and stressed. Detailed unchanged in the short
cash resources to liquidity contingency term.
meet our obligations funding plans are in
to policyholders place to manage a liquidity
and creditors as crisis.
they fall due. This Liquidity, cash and collateral
includes ensuring is managed for the Group
each part of our by Prudential Capital,
business and M&G which holds liquid, high
plc as a whole has grade assets and has
sufficient resources access to external funding.
to cover outgoing
cash flows, under
a range of extreme
scenarios.
Longevity
We make assumptions We conduct annual reviews The pace of longevity
regarding the life of longevity assumptions, improvements among the
expectancy (longevity) supported by detailed annuitant population
of our customers assessments of actual has slowed in recent
when determining mortality experience, years. Additionally,
the amount that and have a team of specialists our existing business
should be set aside undertaking longevity will continue to run
to pay future benefits research. off, reducing our longevity
and expenses. Unexpected Regular stress and scenario exposure over the longer
changes in the life testing is performed term. However, the pace
expectancy of our to understand the size of run-off is relatively
customers could of the longevity risk slow and therefore we
have a material exposure. expect no material change
adverse impact on We have undertaken longevity in our exposure in the
both profitability risk transfer transactions, short term.
and solvency. This where attractive financial
risk mainly arises terms are available from
from our large annuity suitable market participants.
book and, although
we no longer write
new annuity business
in the open market,
the size of the
back-book remains
significant.
Operational
A material failure We have put in place an Attempts by external
in the processes Operational Risk Framework parties to disrupt our
and controls supporting in order to identify, operations and inappropriately
our activities, assess, manage and report access and obtain customer
that of our third-party on the operational risks data and funds will remain
suppliers or of and associated controls an ongoing threat.
our technology could across the business, including At the same time, regulatory
result in poor customer IT, data and outsourcing scrutiny of, and reputational
outcomes, reputational arrangements. damage from issues arising
damage, increased We have established a from the processing of
costs and regulatory programme of activity customer data, and the
censure. We have to ensure that the Group security and resilience
a high dependency remains resilient as a of our technology and
on technology, and result of material operational processes, will remain
the loss or sustained incidents or business high.
unavailability of disruption. Like many of our peers,
key hardware or We continue to maintain, our increasing dependency
software, inadequate test and upgrade our IT on third parties for
information security environment, processes critical activities such
arrangements and and controls to maintain as customer engagement,
ineffective use IT performance and resilience investment management,
of digital solutions and prevent, detect and fund administration and
could impact our recover from security technology will increase
ability to operate incidents, including cyber the importance of managing
effectively. Additionally, attacks. third-party risks, including
serious failings We have undertaken a programme having contingency planning
in the delivery of work to standardise in case of outage or
and/or persistent and enhance our oversight failure.
underperformance and risk management of Our operational resilience
of third-party supplier third parties across the programme has been designed
arrangements could Group, including our approach to respond to material
impact the delivery to selection, contracting business disruption issues
of services to our and on-boarding, management including those from
customers. and monitoring, and termination third-party suppliers,
and exiting. IT incidents or other
causes (eg pandemic).
Change
We have a number Strong project governance Our exposure to change
of significant transformation is in place for all aspects risk will remain material
programmes underway of the transformation through 2020 and beyond.
to deliver our strategy programme (including A significant volume
for growth, improve oversight), with reporting of activity and benefits
customer experiences and escalation of risks are due to be delivered
and outcomes, strengthen to management and the in the year, whilst
our resilience and Board. further transformation
control environment We employ a suite of delivery is planned
and support scalable metrics to monitor and for subsequent years,
growth. A failure report on the delivery, in addition to those
to deliver these costs and benefits of change programmes that
programmes within our transformation programmes. are always required
timelines, scope We conduct regular deep-dive to meet ongoing business
and cost may impact assessments of transformation and regulatory developments.
our business model programmes, individually
and ability to deliver and collectively.
our strategy.
People
The success of our Our HR Framework includes Competition for top
operations is highly policies for Diversity talent is expected to
dependent on the and Inclusion, Employee remain intense. We continue
ability to attract, Relations, Talent and to increase our investment
retain and develop Resourcing, Remuneration, in leadership and manager
highly qualified and Performance and Learning. development in order
professional people The framework is designed to be successful and
with the right mix to align staff objectives drive the right culture,
of skills and behaviours and remuneration to our behaviour and norms
to support our business business strategy and in today's fast-changing
strategy and culture. culture. world.
As a large and newly Our management and Board Our growth strategy
listed public company, receive regular reporting (including international
and as we continue on people issues and expansion), significant
to implement our developments, for example, change agenda and a
change programme, the succession plans challenging cost environment
our people risk for critical talent, mean that people risk
and associated reputational the management of industrial is expected to remain
impact is heightened relations, pay, culture elevated, requiring
in a number of areas and diversity. close management and
including our pay We conduct regular surveys monitoring.
practices, staff to better understand
workloads and morale, colleagues' views on
the conduct of individuals our business and culture,
or groups of individuals the findings of which
and industrial relations drive actions to improve
(our own and that the experience of our
of key third-party staff. The Risk and Resilience
providers). team has begun monitoring
and reporting a series
of indicators of behavioural
risk.
Regulatory compliance
We operate in highly Our dedicated Compliance Significant progress
regulated markets function co-ordinates has been made in addressing
and interact with regulatory activities, historic regulatory
a number of regulators including interactions issues, including those
across the globe, with our regulators, identified through the
in an environment recognising the obligation Legacy Review and the
where the nature of our regulated subsidiaries Thematic Review of Annuity
and focus of regulation to meet their distinct Sales Practices. However,
and laws remain regulatory requirements the legacy book will
fluid. There are and to take decisions remain an area of considerable
currently a large independently in the management and regulatory
number of national interests of their customers. focus.
and international The function provides Furthermore, as we continue
regulatory initiatives guidance to, and oversight to expand our international
in progress, with of, the business in relation presence, our engagement
a continuing focus to regulatory compliance and compliance with
on solvency and and conflicts regulatory regimes beyond
capital standards, of interest, and carries the United Kingdom will
conduct of business out routine monitoring become more material.
and systemic risks. and deep-dive activities
The consequences to assess compliance
of non-compliance with regulations and
can be wide-ranging legislation.
and include customer National and global regulatory
detriment, reputational developments are monitored
damage, fines and and form part of our
restrictions on engagement with government
operations or products. policy teams and regulators,
which includes updates
on our responses to the
changes.
Reputational
Our reputation is We view reputational We could face an increasing
the sum of our stakeholders' risk not as a secondary range and severity of
perceptions, which risk that arises from reputational events
are shaped by the the crystallisation of as the business and
nature of their expectations primary risk events (eg its social media presence
and our ability to a process failure), but evolve. A number of
meet them. Consequently, instead as a standalone factors mean that such
there is a risk that risk in its own right pressures will increase,
through our activities, that can also arise from including the greater
behaviours or communications people's behaviours and focus of customers,
we fail to meet stakeholder an inability to communicate regulators and investors
expectations in ways effectively. on ESG issues and social
which adversely impact We have developed a bespoke media providing the
trust and reputation. Reputational Risk Management means for opinions to
Failure to effectively Framework and established be stated and shared
manage reputational a dedicated Reputational instantaneously.
risk could therefore Risk team, reporting
have an adverse impact directly to the Chief
on our revenues and Risk and Resilience Officer.
cost base, which
could also result
in regulatory intervention
or action.
A Risk management and sensitivity analysis is also set out in
Note 34 of the Consolidated Financial Statements.
Statement of Directors' Responsibilities
Statement of Directors' responsibilities in respect of the
Annual Report and the financial statements
The Directors are responsible for preparing the Annual Report
and the Group and Parent Company financial statements in accordance
with applicable law and regulations.
Company law requires the Directors to prepare Group and Parent
Company financial statements for each financial year. Under that
law they are required to prepare the Group financial statements in
accordance with International Financial Reporting Standards as
adopted by the European Union (IFRSs as adopted by the EU) and
applicable law and have elected to prepare the Parent Company
financial statements in accordance with UK accounting standards,
including FRS 101 Reduced Disclosure Framework.
Under company law the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Group and Parent Company and of
their profit or loss for that period. In preparing each of the
Group and Parent Company financial statements, the Directors are
required to:
- select suitable accounting policies and then apply them
consistently.
- make judgements and estimates that are reasonable, relevant,
reliable and prudent.
- for the Group financial statements, state whether they have
been prepared in accordance with IFRSs as adopted by the EU;
- for the Parent Company financial statements, state whether
applicable UK accounting standards have been followed, subject to
any material departures disclosed and explained in the Parent
Company financial statements.
- assess the Group and Parent Company's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern.
- use the going concern basis of accounting unless they either
intend to liquidate the Group or the Parent Company or to cease
operations, or have no realistic alternative but to do so.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Parent
Company's transactions and disclose with reasonable accuracy at any
time the financial position of the Parent Company and enable them
to ensure that its financial statements comply with the Companies
Act 2006. They are responsible for such internal control as they
determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to
fraud or error, and have general responsibility for taking such
steps as are reasonably open to them to safeguard the assets of the
Group and to prevent and detect fraud and other irregularities.
Under applicable law and regulations, the Directors are also
responsible for preparing a Strategic Report, Directors' Report,
Directors' Remuneration Report and Corporate Governance Statement
that complies with that law and those regulations.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in the UK governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions.
Responsibility statement of the Directors in respect of the
annual financial report
We confirm that to the best of our knowledge:
- The financial statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair view
of the assets, liabilities, financial position and profit or loss
of the Company and the undertakings included in the consolidation
taken as a whole.
- The Strategic Report includes a fair review of the development
and performance of the business and the position of the issuer and
the undertakings included in the consolidation taken as a whole,
together with a description of the principal risks and
uncertainties that they face.
We consider the Annual Report and Accounts, taken as a whole, is
fair, balanced and understandable, and provides the information
necessary for shareholders to assess the Group's position and
performance, business model and strategy.
Clare Bousfield
Chief Financial Officer
9 March 2020
37 Related party transactions
The Group and its related parties comprise members of the
M&G plc Group, as well as the Group's joint ventures and
associates, and any entity controlled by those parties.
37.1 Transactions with Prudential plc
The following transactions were carried out with members of the
Prudential plc group who were considered related parties until
demerger on 21 October 2019:
For the year
ended
31 December
=================
2019 2018
GBPm GBPm
========== ========= ======
Revenue 16 13
Expenses 63 68
========== ========= ====
As at
31 December
==============
2018
GBPm
================================== ==============
Amounts due from related parties 1,207
Amounts due to related parties 3,291
================================== ============
Details of related party capital support arrangements are
included in Note 35
37.2 Transactions with the Group's joint ventures and
associates
The Group received dividends of GBP192m for the year ended 31
December 2019 (2018: GBP9m) and made additional capital injections
of GBP4m in the year ended 31 December 2019 (2018: GBP181m) from/to
joint ventures or associates accounted for using the equity
method.
In addition, the Group had balances due from joint ventures or
associates accounted for using the equity method of GBP132m as
at
31 December 2019 (2018: GBP163m) and balances due to joint
ventures or associates accounted for using the equity method of
GBPnil as at
31 December 2019 (2018: GBP29m).
Furthermore, in the normal course of business a number of
investments into/divestments from investment vehicles managed by
the Group were made. This includes investment vehicles which are
classified as investments in associates and joint ventures measured
at FVTPL.
The Group entities paid amounts for the issue of shares or units
and received amounts for the cancellation of shares or units. These
transactions are not considered to be material to the Group.
37.3 Compensation of key management personnel
Key management personnel for the year ended 31 December 2018
included Directors of the Company and their compensation was based
on their role within the Group prior to the establishment of the
Company. For the year ended 31 December 2019 the members of the
Executive Committee, which was formed in 2019, are deemed to have
power to influence the direction, planning and control the
activities of the Group, and hence are also considered to be key
management personnel.
Key management personnel of the Company may from time to time
purchase insurance, asset management or annuity products marketed
by the Group companies in the ordinary course of business on
substantially the same terms as those prevailing at the time for
comparable transactions with other persons.
Other transactions with key management personnel are not deemed
to be significant either by virtue of their size or in the context
of the key management personnel's respective financial positions.
All of these transactions are on terms broadly equivalent to those
that prevail in arm's length transactions.
The summary of compensation of key management personnel is as
follows:
For the year
ended
31 December
=================
2019 2018
GBPm GBPm
================================== ======== =======
Salaries and short-term benefits 11.1 5.1
Post-employment benefits 0.6 0.4
Share-based payments 5.9 1.5
================================== ======== =======
Total 17.6 7.0
================================== ======== =====
Information concerning individual Directors' emoluments,
interests and transactions are provided in the single figure tables
in the Remuneration Report on pages 88 and 98
LEI: 254900TWUJUQ44TQJY84
Classification: 1.1 Annual Financial Report
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
ACSSSAFIEESSEDL
(END) Dow Jones Newswires
April 03, 2020 04:30 ET (08:30 GMT)
Grafico Azioni M&g (LSE:MNG)
Storico
Da Feb 2024 a Mar 2024
Grafico Azioni M&g (LSE:MNG)
Storico
Da Mar 2023 a Mar 2024