TIDMJUST
RNS Number : 5666F
Just Group PLC
11 July 2023
A PDF copy of this announcement is
available here > http://www.rns-pdf.londonstockexchange.com/rns/5666F_1-2023-7-10.pdf
NEWS RELEASE www.justgroupplc.co.uk
11 July 2023
JUST GROUP plc
IFRS 17 FY 2022 and H1 22 restatement
Just Group plc ("Just", the "Group") has today made presentation
slides available on the Group's website www.justgroupplc.co.uk ,
and below, provides a restatement of its financial results for the
year ended 31 December 2022 and the six months ended 30 June 2022
under IFRS 17. IFRS 17 is a new accounting standard for insurers,
which was implemented on 1 January 2023.
We remain committed to our ambition to target 15% growth in
underlying operating profit.
Under IFRS 17, we will continue our commitment to deliver 15%
growth in underlying operating profit per annum over the medium
term. In 2022, we delivered 19% growth in underlying operating
profit under IFRS 4. Our IFRS 17 measure for underlying operating
profit is explained further below.
Our target to deliver a greater than 10% return on equity will
also continue under IFRS 17(1) .
No change in strategy, growth ambition, capital, cash or
dividend policy
IFRS 17 is an accounting change and does not affect the
underlying economics of our business or our strategy
-- Our commitment and ability to invest in future growth is unchanged
-- The capital strength of the Group is unchanged
-- Our new and existing business cashflows are unchanged
-- The Group's dividend policy is unchanged
-- The Group's debt leverage is unchanged
Effect of transition to IFRS 17
Under IFRS 17 total economic profits do not change, but how
these are accounted for does. IFRS 17 introduces two new balance
sheet concepts - the Contractual Service Margin ("CSM") and Risk
Adjustment ("RA"), which are stocks of discounted future value that
are released into reported profit over time. These stocks of future
value are added to by future new business, which in turn also
releases over time.
* Underlying operating profit is broadly unchanged for
FY22: GBP257m under IFRS 17 versus GBP249m under IFRS
4. To provide a meaningful measure of business
performance, we add back the net underlying CSM
increase during the year to derive underlying
operating profit under IFRS 17.
* The Group's shareholder value is broadly unchanged
with TNAV per share at 31 December 2022 under IFRS 17
of 190p per share versus 172p under IFRS 4
o IFRS 17 Adjusted shareholders equity on 31 December 2022 of GBP2.0bn
(31 December 2021: GBP2.1bn) is comprised GBP783m of IFRS 17 Equity
attributable to shareholders (31 December 2021: GBP1,175m) and
GBP1,212m of CSM net of tax (31 December 2021: GBP966m).
o The CSM growth was driven by the addition of new business, whilst
the IFRS 17 equity fell largely due to economic losses resulting
from the interest rate hedging programme. During 2022, we actively
reduced the level of interest rate hedging as the capital position
strengthened, with the sensitivity remaining close to zero in 2023.
o The increase in TNAV per share includes 6p (GBP80m pre-tax) which
arises from the reversal of a negative investment timing impact
on the large volume of business written in Q4 22 that was recognised
under IFRS 4, but is not recognised under IFRS 17
-- Return on Equity is broadly unchanged: 10.3% under IFRS 17 vs
10.7% under IFRS 4
o Under IFRS 17, the Return on Equity was 10.3%. The slightly higher
IFRS 17 Underlying operating profit has been offset by a slightly
higher IFRS 17 Adjusted shareholders equity.
o Our intention is to continue growing the Return on Equity from
this level.
IFRS 17 - Results for the Year Ended 31 December 2022
All figures presented are unaudited.
IFRS 17 based Key Performance Indicators
Year ended Six months
31-Dec 30-Jun
2022 2022
GBPm GBPm
New business profit(1) 266 76
================================ ================================ =================================
Underlying operating profit(1) 257 68
================================ ================================ =================================
IFRS (loss)/profit before tax (494) (237)
================================ ================================ =================================
Return on equity(1,2) 10.3% 5.4%
================================ ================================ =================================
TNAV per share(1) 190p 187p
================================ ================================ =================================
Underlying Operating Profit
Year ended Six months
31-Dec 30-Jun
2022 2022
GBPm GBPm
New business profits 266 76
========================================== ================================ =================================
CSM amortisation(3) (61) (27)
========================================== ================================ =================================
Net underlying CSM increase 205 50
========================================== ================================ =================================
In-force operating profit(4) 156 72
========================================== ================================ =================================
Other Group companies' operating results (16) (7)
========================================== ================================ =================================
Development expenditure(5) (15) (9)
========================================== ================================ =================================
Finance costs (73) (37)
========================================== ================================ =================================
Underlying operating profit(1) 257 68
========================================== ================================ =================================
Operating Profit METRICS
Year ended Six months
31-Dec 30-Jun
2022 2022
Retirement Income sales(1) (GBPm) 3,131 879
==================================== ================================= ==================================
New business margin(1) (%) 8.5% 8.6%
==================================== ================================= ==================================
Underlying Operating EPS(1) (p per
share) 20.2p 5.3p
==================================== ================================= ==================================
Reconciliation of Underlying Operating Profit to Statutory
IFRS
Year ended Six months
31-Dec 30-Jun
2022 2022
GBPm GBPm
Underlying operating profit (1) 257 68
================================================== ========================== ====================================
Operating experience and assumption changes(6) 104 (4)
================================================== ========================== ====================================
Adjusted operating profit/(loss) before
tax (1) 361 64
================================================== ========================== ====================================
Investment and economic movement (537) (255)
================================================== ========================== ====================================
Strategic expenditure(5) (7) (3)
================================================== ========================== ====================================
Interest adjustment to reflect IFRS accounting
for Tier 1 notes as equity 16 9
================================================== ========================== ====================================
Profit/(loss) before tax prior to deferral
of profit to CSM (167) (185)
================================================== ========================== ====================================
Deferral of profit in CSM(7) (327) (52)
================================================== ========================== ====================================
Profit/(loss) before tax (494) (237)
================================================== ========================== ====================================
See notes at the end of the release
Reconciliation from IFRS4 to IFRS17
Underlying operating profit Year ended Six months
31-Dec 30-Jun
2022 2022
GBPm GBPm
As presented in 2022 Annual Report
and Accounts under IFRS 4 249 74
=========================================== ================================= ==================================
Changes in allowances for credit defaults 25 5
=========================================== ================================= ==================================
Changes attributable to replacement
of IFRS 4 prudent reserves with IFRS
17 risk adjustment (9) (4)
=========================================== ================================= ==================================
Reclassification of expenses (6) (3)
=========================================== ================================= ==================================
Other differences (3) (4)
=========================================== ================================= ==================================
Restated underlying operating profit(1) 257 68
=========================================== ================================= ==================================
Tangible Net Assets and Return on Equity
31-Dec-22 30-Jun-22 31-Dec-21
GBPm GBPm GBPm
Total equity
attributable to
ordinary shareholders
of Just
Group plc 783 979 1,175
======================= ================================== =================================== ===================================
Less intangible assets (47) (46) (45)
======================= ================================== =================================== ===================================
Tax on intangibles 3 3 3
======================= ================================== =================================== ===================================
Add back contractual
service
margin 1,611 1,336 1,284
======================= ================================== =================================== ===================================
Adjust for tax on
contractual
service margin (399) (331) (318)
======================= ================================== =================================== ===================================
IFRS 17 Tangible Net
Assets(1) 1,951 1,941 2,099
======================= ================================== =================================== ===================================
IFRS 17 Tangible Net
Assets
per share(1) 190p 187p 203p
======================= ================================== =================================== ===================================
Return on equity %
(underlying)
(1) 10.3% 5.4%
======================= ================================== =================================== ===================================
Tangible Net Asset Value per share (pence) is the Tangible Net
Asset Value of the Group divided by the number of shares in issue,
adjusted for the treasury shares held by the Group
Condensed Consolidated Statement of Financial Position
31-Dec-22 30-Jun-22 31-Dec-21
GBPm GBPm GBPm
Assets
=================================================== ========= ========= =========
Financial investments 23,477 22,789 24,682
=================================================== ========= ========= =========
Reinsurance contract assets 776 599 716
=================================================== ========= ========= =========
of which CSM 107 51 54
=================================================== ========= ========= =========
Other assets 1,285 1,062 1,003
=================================================== ========= ========= =========
Total assets 25,538 24,450 26,401
=================================================== ========= ========= =========
Share capital and share premium 199 199 199
=================================================== ========= ========= =========
Other reserves 585 780 977
=================================================== ========= ========= =========
Total equity attributable to ordinary shareholders
of Just Group plc 783 979 1,175
=================================================== ========= ========= =========
Tier 1 notes 322 322 322
=================================================== ========= ========= =========
Non-controlling interest (2) (2) (2)
=================================================== ========= ========= =========
Total equity 1,103 1,299 1,496
=================================================== ========= ========= =========
Liabilities
=================================================== ========= ========= =========
Insurance contract liabilities 19,647 19,559 23,086
=================================================== ========= ========= =========
of which CSM 1,943 1,523 1,489
=================================================== ========= ========= =========
Reinsurance contract liabilities 121 146 165
=================================================== ========= ========= =========
of which CSM (225) (136) (151)
=================================================== ========= ========= =========
Other financial liabilities 4,378 3,302 1,529
=================================================== ========= ========= =========
Other liabilities 289 144 125
=================================================== ========= ========= =========
Total liabilities 24,435 23,151 24,905
=================================================== ========= ========= =========
Total equity and liabilities 25,538 24,450 26,401
=================================================== ========= ========= =========
Total Contractual Service Margin included
above 1,611 1,336 1,284
=================================================== ========= ========= =========
Contractual Service Margin net of deferred
tax 1,212 1,006 966
=================================================== ========= ========= =========
Note 1: Alternative performance measure (APM). In addition to
statutory IFRS performance measures, the Group has presented a
number of non-statutory alternative performance measures. The Board
believes that the APMs used give a more representative view of the
underlying performance of the Group. There have been changes to
APMs since the 2022 Annual Report and Accounts. The tables and
footnotes above explain the basis of their calculation. Net
underlying CSM increase is added back to calculate underlying
operating profit as the Board considers the value of new business
is significant in assessing business performance.
Note 2: Return on equity is IFRS 17 underlying operating profit
after attributed tax divided by the average IFRS 17 adjusted
shareholders equity less goodwill.
Note 3: CSM amortisation represents the net release from the CSM
reserve into profit as services are provided. The figures are net
of accretion (unwind of discount), and the release is computed
based on the closing CSM reserve balance for the period.
Note 4: In-force operating profit represents profits from the in
force portfolio before investment and insurance experience
variances, and assumption changes. It mainly represents release of
risk adjustment for non-financial risk and of allowances for credit
default in the period, investment returns earned on shareholder
assets, together with the value of the CSM amortisation.
Note 5: Following a review of expense allocation to bring
consistency with Solvency II KPIs, non recurring costs have been
reallocated to development expenditure and strategic expenditure.
Development expenditure relates to the development of existing
products, markets, technology, and transformation projects.
Strategic expenditure relates to major strategic investment, new
products and business lines, and major regulatory projects.
Note 6: Operating experience and assumption changes represent
changes to cash flows in the current and future periods valued
based on end of period economic assumptions.
Note 7: Deferral of profit in CSM represents the total movement
on CSM reserve in the year. The figure represents CSM recognised on
new business, accretion of CSM (unwind of discount), transfers to
CSM related to changes to future cash flows at locked-in economic
assumptions, less CSM release in respect of services provided.
Note 8: All the figures are unaudited.
Further Information
Please contact the Investor Relations team, details below.
FINANCIAL CALENDAR AND DATE BASIS
TIMELINES
Interim results for the 15 August 2023 First financial reporting
six months ended 30 June under IFRS 17
2023
=============== ==========================
Enquiries
Investors / Analysts Media
Alistair Smith, Investor Relations Stephen Lowe, Group Communications
Telephone: +44 (0) 1737 232 792 Director
alistair.smith@wearejust.co.uk Telephone: +44 (0) 1737 827 301
press.office@wearejust.co.uk
Paul Kelly, Investor Relations
Telephone: +44 (0) 20 7444 8127 Temple Bar Advisory
paul.kelly@wearejust.co.uk Alex Child-Villiers
William Barker
Telephone: +44 (0) 20 7183 1190
A copy of this announcement will be available on the Group's
website www.justgroupplc.co.uk
JUST GROUP PLC
GROUP COMMUNICATIONS
Enterprise House
Bancroft Road
Reigate
Surrey RH2 7RP
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