Strategic Report | Governance | Financial Statements | 221
NOTES TO THE COMPANY FINANCIAL STATEMENTS
1. MATERIAL ACCOUNTING POLICIES General information Just Group plc (the “Company”) is a public company limited by shares, incorporated and domiciled in England and Wales. 1.1.Basis of preparation The financial statements have been prepared in accordance with UK adopted international accounting standards in conformity with the requirements of the Companies Act 2006 and the disclosure guidance and transparency rules sourcebook of the United Kingdom’s Financial Conduct Authority. The accounting policies followed in the Company financial statements are the same as those in the consolidated accounts. Values are expressed to the nearest £1m. 1.2. Net investment income Investment income is accrued up to the balance sheet date. Investment expenses and charges are recognised on an accruals basis. 1.3. Taxation Taxation is based on profits for the year as determined in accordance with the relevant tax legislation, together with adjustments to provisions for prior periods. Deferred taxation is provided on temporary differences that have originated but not reversed at the balance sheet date, where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred at the balance sheet date. A net deferred tax asset is regarded as recoverable and therefore recognised only when, on the basis of all available evidence, it can be regarded as more likely than not that there will be sufficient taxable profits to utilise carried forward tax losses against which the reversal of underlying timing differences can be deducted. Deferred tax is measured at the average tax rates that are expected to apply in the periods in which the temporary differences are expected to reverse, based on tax rates and laws that have been enacted or substantially enacted by the balance sheet date. Deferred tax is measured on an undiscounted basis. 1.4 Investments in Group undertakings Shares in subsidiary undertakings are stated at cost less any provision for impairment. 1.5 Loans to Group undertakings Investments in subordinated debt issued by subsidiary companies are valued at amortised cost net of impairment for expected credit losses. Expected credit losses are calculated on a 12-month forward-looking basis where the debt has low credit risk or has had no significant increase in credit risk since the debt originated. 1.6 Financial investments Financial investments are designated at fair value through profit or loss on initial recognition and subsequently measured at Fair Value Through Profit or Loss (“FVTPL”). 1.7 Share-based payments The Group offers share award and option plans for certain key employees and a Save As You Earn scheme for all employees. The share-based payment plans operated by the Group are all equity-settled plans. Under IFRS 2, Share-based payment, where the Company, as the Parent Company, has the obligation to settle the options or awards of its equity instruments to employees of its subsidiary undertakings, and such share-based payments are accounted for as equity-settled in the Group financial statements, the Company records an increase in the investment in subsidiary undertakings for the value of the share options and awards granted with a corresponding credit entry recognised directly in equity. The value of the share options and awards granted is based upon the fair value of the options and awards at the grant date, the vesting period and the vesting conditions. 1.8 Classification of intra-Group loan arrangements The Company assesses the commercial substance of its intra-Group lending arrangements to determine the classification as either a financial asset (that gives rise to a financial liability or equity instrument in the subsidiary) or whether the lending arrangement forms part of the Company’s investment in the subsidiary. In making the assessment the Company considers evidence of past principal and coupon payments, planned payments and the contractual terms of the arrangement. Intra-Group loans that bear a market rate of interest and have fixed repayment dates are classified as financial liabilities by the subsidiary and as financial assets by the Company. The Company also issued Restricted Tier 1 notes in the external market in 2019 and on-lent the proceeds from these instruments to its subsidiaries JRL and PLACL under the same commercial terms as the Company obtained in the external market. These instruments are classified as equity instruments by the issuer as explained in note 25 to the Group financial statements; classification by the subsidiaries is consistent with this. As the on-lending of this instrument was on the same commercial terms, the Company does not consider that the transaction represents an action in its capacity as shareholder, and therefore the asset recognised in the Company’s financial statements is classified as a financial asset in the scope of IFRS 9.
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