Revenue grew by 8 per cent to £164m and operating profit increased to £58.2m from £51.9m, an increase of 12 per cent.
Net Pep sales were £217m compared with £210m in 1997.
Redemptions continue to hurt M&G's business. There was a net outflow of £111m from its unit and investment trusts, although this was an improvement on the previous year's figure of £220m.
Funds under management fell during the year to £16.8bn, down from £18.1bn. Since the end of September they have risen to £18.4bn as at November 26.