JUST GROUP PLC Annual Report and Accounts 2021
BUSINESS REVIEW CONTINUED
GIfL sales increased by 17% to £688m for 2021, recovering strongly following the COVID-19 related sales disruption in the first half of 2020. Retail sales (GIfL and Care) in 2021 were 8% higher than 2019 levels. In recognition of the outstanding service we deliver, we were named Company of the Year at the recent Financial Adviser Service Awards, as well as achieving five stars in both the Pensions and Protection, and Mortgages categories. Economic uncertainty has demonstrated to customers the importance and security of a guaranteed income. We continue to invest in our proposition, and launched a refreshed version of our medical underwriting engine PrognoSys TM during 2021. Care sales were subdued and remain impacted by customer behaviour changes due to the pandemic, remaining at less than 2% of Retirement Income sales. Other new business sales Lifetime Mortgage advances were £528m for 2021 (2020: £512m), an increase of 3%. The LTM backing ratio for new business was 18%, which is below our target of 20%, and aided by the change in sales mix as DB deferred sales are fully backed by bonds and non-LTM illiquids. 2021 also includes £40m of LTM origination on behalf of a third party (2020: £36m). The Group does not hold an economic exposure for these assets; instead it earns a fee for originating and administering these loans. In line with other assets, LTM spreads compressed somewhat during the first half of the year as risk-free rates rose, which impacted the new business margin. In the second half, the market repriced and LTM spreads partially widened back out. We continue to be selective in the mortgages we originate, as we use our market insight and distribution to target certain sub-segments of the market, for example shorter duration loans to older borrowers, and/or customers with sufficient income to service interest on their borrowings. During 2021, we introduced medical underwriting across the entire lifetime mortgage range and also signed an exclusive distribution agreement with Saga. Increased investment in LTM digital capabilities and proposition has been well received by financial advisers, and contributed to the five star awards mentioned above.
ADJUSTED EARNINGS PER SHARE Adjusted EPS (based on adjusted operating profit after attributed tax) has decreased from 18.8 pence for 2020, to 18.7 pence for 2021.
Year ended 31 December 2021
Year ended 31 December 2020
193
Adjusted earnings (£m)
194
1,034
Weighted average number of shares (million)
1,031
18.7
Adjusted EPS 1 (pence)
18.8
1 Alternative performance measure, see glossary for definition.
EARNINGS PER SHARE
Year ended 31 December 2021
Year ended 31 December 2020
(35)
Earnings (£m)
166
1,034
Weighted average number of shares (million)
1,031
(3.4)
EPS (pence)
16.1
RECONCILIATION OF OPERATING PROFIT TO STATUTORY IFRS RESULTS The tables on the following pages present the Group’s results on a statutory IFRS basis. Year ended 31 December 2021 £m Year ended 31 December 2020 £m Adjusted operating profit before tax 238 239 Non-recurring and project expenditure (15) (13) Implementation of cost saving initiatives – (8) Investment and economic (losses)/profits (251) 9 Interest adjustment to reflect IFRS accounting for Tier 1 notes as equity 25 28 Amortisation costs (18) (18) IFRS (loss)/profit before tax (21) 237 Non-recurring and project expenditure Non-recurring and project expenditure was £15m (2020: £13m). This included support for the internal model change to incorporate recent regulatory changes for LTMs, and updating for best practice since the model was first incorporated in December 2015. We plan to move PLACL from standard formula onto a Group internal model over the next 12-18 months. There were also a number of smaller project costs such as LTM portfolio sales. The Group continues to improve its business processes, and increase efficiency by investing in systems, which will lead to long-term cost and control benefits.
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