Rocky start for M&G after split from Prudential

Firm sticks to its dividend after narrowly beating City profit forecasts

Profits plunged at M&G in the first half of 2020 as the fund manager sought to plough its own furrow following a £5.6bn spin-off from Prudential in October. 

Retail investors pulled a net £7.7bn from M&G funds after the pandemic triggered market turmoil and sent customers running for the the hills.

An increase in demand from  institutional investors was not enough to offset the mass exodus, meaning the overall business suffered outflows of £4.1bn. 

John Foley, chief executive of M&G, said the pandemic was “not the backdrop we would have wished as a newly independent company”.

The FTSE 100 company reported a pre-tax profit of £665m for the first half of 2020, down from more than £1.4bn a year earlier.

Mr Foley insisted the business is resilient, and said it is unfair to compare the results with last year’s figures because M&G now has extra costs as an independent company. 

Adjusted operating profit, the firm’s preferred measure of performance, fell by more than half to £309m but was slightly better than City forecasts. 

The value of assets managed by M&G dropped by £13bn to £339bn in the first half, which the firm blamed on plunging markets in March.

A round of job cuts were postponed during the pandemic but 250 staff applied for voluntary redundancy, Mr Foley said. 

He said the company had no plans for significant redundancies, and is more likely to transfer staff to outsourcing firms than sack them outright. 

M&G, which includes Prudential's former UK and European asset management and life insurance arms, said that a deal to buy investment platform Ascentric from Royal London has been approved by regulators and is scheduled to complete on Sept 1. 

Mr Foley said he could not predict when the firm’s commercial property fund will reopen after its suspension in December following a slew of withdrawals as investors fretted over the high street's retail crisis.

M&G will pay an interim dividend of £155m, or 6p per share, in line with its policy of paying shareholders one-third of the previous year's final dividend. 

Shares rose 3.3pc to 179.5p in morning trading, valuing the firm at £4.7bn.