146 | Just Group PLC | Annual Report and Accounts 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
1. MATERIAL ACCOUNTING POLICIES continued 1.4. Consolidation principles The consolidated financial statements incorporate the assets, liabilities, results and cash flows of the Company and its subsidiaries, joint ventures and associates. Subsidiaries are those investments over which the Group has control. The Group has control over an investee if all of the following are met: • it has power over the investee; • it is exposed, or has rights, to variable returns from its involvement with the investee; and • it has the ability to use its power over the investee to affect its own returns. Subsidiaries are consolidated from the date on which control is transferred to the Group and are excluded from consolidation from the date on which control ceases. All inter-company transactions, balances and unrealised surpluses and deficits on transactions between Group companies are eliminated on consolidation. Accounting policies of subsidiaries are aligned on acquisition to ensure consistency with Group policies. The Group uses the acquisition method of accounting for business combinations. Under this method, the cost of acquisition is measured as the aggregate of the fair value of the consideration at the date of acquisition and the amount of any non-controlling interest in the acquiree. The excess of the consideration transferred over the identifiable net assets acquired is recognised as goodwill. The Group uses the equity method of accounting to consolidate its investments in joint ventures and associates. Under the equity method the investment is initially recognised at fair value and adjusted thereafter for the post-acquisition change in the Group’s share of net assets of the joint ventures and associates. 1.5. Segments The Group’s segmental results are presented on a basis consistent with internal reporting used by the Chief Operating Decision Maker (“CODM”) to assess the performance of operating segments and the allocation of resources. The CODM has been identified as the Group Executive Committee. An operating segment is a component of the Group that engages in business activities from which it derives income and incurs expenses. The results of operating segments that do not meet the Reportable segment criteria within IFRS 8 “Operating segments” are not disclosed on a standalone basis. Operating segments, where certain materiality thresholds in relation to total results from operating segments are not exceeded, are combined when determining reportable segments. For segmental reporting, the arranging of guaranteed income for life contracts, providing intermediary mortgage advice and arranging, plus the provision of licensed software are included in the Other segment along with Group activities, such as capital and liquidity management, and investment activities. 1.6. Foreign currencies Transactions in foreign currencies are translated to sterling at the rates of exchange ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated into sterling at the rates of exchange ruling at the end of the financial year. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss. The assets and liabilities of foreign operations are translated to sterling at the rates of exchange at the reporting date. The revenues and expenses are translated to sterling at the average rates of exchange for the year. Foreign exchange differences arising on the translation of foreign operations to sterling are accounted for through other comprehensive income. 1.7. Insurance contracts The Group uses the General Measurement Model to measure all insurance and reinsurance contracts and consequently does not apply the Variable Fee Approach or the Premium Allocation Approach to the measurement of any of its liabilities. IFRS 17 is only applied to insurance and reinsurance contracts and not to any other ancillary agreements which represent the provision of distinct non-insurance services including LTM servicing as part of reinsurance arrangements, see note 28(c)(iii). 1.7.1. Classification of insurance and investment contracts The measurement and presentation of assets, liabilities, income and expenses arising from Retirement Income contracts issued and associated reinsurance contracts held is dependent upon the classification of those contracts as either insurance or investment contracts. A contract is classified as insurance only if it transfers significant insurance risk. Insurance risk is significant if an insured event could cause an insurer to pay significant additional benefits to those payable if no insured event occurred. A contract that is classified as an insurance contract remains an insurance contract until all rights and obligations are extinguished or expire. The primary products written by the Group of Defined Benefit (“DB”) and Guaranteed Income for Life (“GIfL”) are classified as insurance contracts. Any contracts not considered to be insurance contracts under IFRS are classified as investment contracts. Deposits collected are not accounted for through the income statement, but are accounted for directly through the statement of financial position as an adjustment to the investment contract liability. IFRS 17 includes an election to treat lifetime mortgages as either financial instruments or insurance contracts, Just has chosen to report lifetime mortgages as financial assets, measured at FVTPL in accordance with IFRS 9.
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