FINANCIAL STATEMENTS
STRATEGIC REPORT
GOVERNANCE
AREA OF DECISION
MATTER CONSIDERED
WHAT WE DID
S172 FACTOR/ KEY STAKEHOLDERS
Long term and investors
The Board considered and refined the Group’s strategy with clear, specific goals driven by appropriate priorities to be delivered sustainably and following the Just way.
Following on from becoming capital self-sufficient in 2020, the Board has focused on further refining the Group’s strategy by increasing its growth ambitions, building a sustainable capital model and setting environmental sustainability goals. The Board agreed specific goals driven by appropriate priorities to fulfil its purpose of helping people achieve a better later life. Key actions by the Group during the year included: • the sale of a portfolio of lifetime mortgages to further reduce the Group’s exposure to UK residential property risk. It also reduces the sensitivity of the solvency capital coverage ratio to movements in UK residential property prices; • expanding Just’s proposition in the defined benefit de-risking market to fully meet the needs of deferred members of pension schemes; • building a pipeline of companies for Just’s pioneering automated financial advice and integrated retirement service, Destination Retirement, to guide and support customers who need help to structure their financial plans for life after work; • the introduction of medical underwriting on our Just for You Lifetime Mortgage, which revolutionises the lifetime mortgage market by offering customers the ability to secure a more competitive interest rate and/or a higher loan-to-value mortgage; and • progressed plans to expand our Secure Lifetime Income proposition onto an additional platform in 2022.
STRATEGY
Further information on the Group’s strategy can be found on pages 16 to 17.
Long term and investors, community and environment
The Board explored potential opportunities for the Group to reduce the on-going cost of its debt.
Given more favourable market conditions, the Board considered whether it should reorganise the Group’s debt and explored various options to determine the most appropriate form of debt reorganisation. As part of its deliberations, the Board considered and concluded that it would like to pursue a sustainability bond classification for a new issue to broaden the Group’s sustainability credentials. The Board took into consideration feedback from various investors on the potential opportunity to refinance debt to reduce on-going interest costs, lengthen the duration profile of debt to better match the cash flows in the business and provide underlying organic capital generation. In August 2021, the Board issued a circular to shareholders containing a notice convening a general meeting for the purpose of seeking approval to confer on the Directors the power to allot ordinary shares and grant rights to subscribe for or convert any security into ordinary shares in connection with any issue of Restricted Tier 1 (“RT1”) Bonds. The resolutions were approved by shareholders on 31 August 2021. After considering its options, the Board approved its refinancing arrangements, which included the issuance of a new RT1 Bond that was designated as sustainable. The refinancing exercise reduces the pre-tax interest costs of the Group by £12m per annum and improves the Group’s Solvency II post-tax organic capital generation by £10m per annum. Given the stronger capital position of the Group and its focus on delivering profitable and sustainable growth while generating capital, the Board decided to review the dividend policy and concluded to recommence dividend payments fromMay 2022. As part of its deliberations on whether to declare a dividend for the year ended 31 December 2021, the Board considered the ability of the Group to continue to generate capital, the impact on its solvency capital ratio, and its stakeholders’ views.
DEBT REFINANCING
Shareholders
The Board considered whether to recommend the payment of a final dividend taking into consideration the key focus on delivering profitable and sustainable growth.
DIVIDEND AND CAPITAL MANAGEMENT
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