More info on the demerger can be found here:
www.prudentialplc.com/investors/shareho ... -documents8. Dividend policy
8.1 Dividend policy for the Post-Demerger Prudential Group
The Prudential Board currently expects to declare a 2019 second interim ordinary dividend of around £510 million, equivalent to around 19.60 pence per share based on the number of Prudential Shares in issue as at the Latest Practicable Date, subject to market conditions and financial performance remaining in line with expectations. The dividend is expected to be approved by the Prudential Board in the first quarter of 2020 and paid to Shareholders in May 2020, in accordance with the Prudential Group’s normal financial calendar.
As explained in section 4.4 of this Part I, the Post-Demerger Prudential Group will change the presentation currency for its consolidated financial statements to US dollars for the full year ending 31 December 2019 and Prudential will determine and declare its dividend in US dollars commencing with dividends paid in 2020. Accordingly, the 2019 second interim ordinary dividend will be calculated in pounds sterling and converted into a declared dividend amount using the US dollar foreign exchange rate at 31 December 2019.
In total, the Prudential Board currently expects the combined dividends paid by Prudential and M&G in respect of 2019 to total around £1,345 million, representing a 5% increase on the Prudential 2018 dividend. Of the £1,345 million, £410 million (of which £100 million represents a one-off Demergerrelated dividend) is expected to be paid by M&G in May 2020, as set out in the M&G Prospectus, £185 million is anticipated to be paid by Prudential in May 2020 using remittances paid from M&G to Prudential prior to completion of the Demerger, and the remaining £750 million represents the contribution to the total 2019 dividend from the Post-Demerger Prudential Group.
The Prudential Board considers dividends to be an important component of total shareholder return and has approved a progressive dividend policy for the Post-Demerger Prudential Group following the Demerger. The level of dividend growth will be determined after taking into account the Post-Demerger Prudential Group’s capital generation capacity, financial prospects and investment opportunities, as
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well as market conditions. The £750 million 2019 dividend forms the base from which the Prudential Board expects to apply its progressive dividend policy. This is expected to result, over the medium term, in future central outflows i.e. dividends, debt interest costs and other central expenses (including central payments for bancassurance distribution agreements and restructuring costs) net of tax recoverables, being covered by remittances from business units. The Prudential Board intends to maintain Prudential’s existing formulaic approach to first interim dividends, which are calculated as one third of the previous year’s full year dividend.
8.2 Dividend policy for the Demerging Group
The M&G Directors consider dividends to be an important component of total shareholder return. Dividends will be set by the M&G Directors taking into account M&G’s overall financial position, including its level of regulatory surplus, liquidity position, leverage position, level of interest cover and quality of capital. Subject to M&G’s overall financial position, the M&G Directors would typically expect:
• dividends to be stable or increasing in absolute terms over time; and
• interim dividends to be formulaic and calculated as one third of the previous year’s full year dividend.
Over the longer term, the level of dividend is expected to develop broadly in line with M&G’s ability to generate capital.
At the M&G Directors’ discretion, special dividends may be paid to shareholders of M&G in addition to ordinary dividends. Any such special dividends would be expected to be paid only if the M&G Directors consider that M&G’s overall financial position, as defined above, was stronger than necessary to support its business and financial needs.
The M&G Directors currently expect to declare a 2019 ordinary dividend of around £310 million, subject to M&G’s financial performance and overall financial position remaining in line with expectations. Based on the expected number of M&G Shares at Admission, this is equivalent to about 11.92 pence per share. The dividend is expected to be paid to shareholders of M&G in May 2020, in accordance with M&G’s proposed financial calendar. The expected 2019 ordinary dividend is consistent with M&G’s dividend policy, as described above, being broadly two thirds of the amount that the M&G Directors would have anticipated paying in respect of 2019 on a standalone basis under its new dividend policy.
At the same time and subject to the same conditions, the M&G Directors expect to declare a one-off Demerger-related dividend of around £100 million. Based on the expected number of M&G Shares at Admission, this is equivalent to about 3.85 pence per share. This is in recognition that, for the majority of the 2019 financial year, M&G was operating without incurring certain costs, e.g. debt interest costs, which it would expect to bear in future and which have been allowed for in determining the initial level of ordinary dividend.