222 | Just Group PLC | Annual Report and Accounts 2023
NOTES TO THE COMPANY FINANCIAL STATEMENTS continued
2. INVESTMENTS IN GROUP UNDERTAKINGS
Shares in Group undertakings £m
849
At 1 January 2023
6
Additions
At 31 December 2023
855 843
At 1 January 2022
Additions
6
At 31 December 2022
849
Details of the Company’s investments in the ordinary shares of subsidiary undertakings are given in note 36 to the Group financial statements. Additions to shares in Group undertakings relate to shares issued by Just Retirement Group Holdings Limited and the cost of share-based payments for services provided by employees of subsidiary undertakings to be satisfied by shares issued by the Company. Investments in Group undertakings are assessed annually to assess whether there is any indication of impairment. As at 31 December 2023, the market capitalisation of the Group at £892m was slightly less than its net assets attributable to equity holders of £897m. The shortfall between the market capitalisation and net assets of the Group was an indicator of possible impairment of Just Group plc’s investments in its life company subsidiaries, JRL and PLACL. Impairment testing was therefore carried out to assess the recoverable amount of the investments in JRL and PLACL at 31 December 2023. The testing assessed the recoverable amount for each subsidiary through a value-in-use calculation based on the expected emergence of excess capital under Solvency II for each subsidiary. The carrying amount of the investment at 31 December 2023 for JRL was £513m and for PLACL was £272m. The recoverable amounts for both entities were calculated to be in excess of this amount, indicating that no impairment of the Company’s investment in JRL or PLACL was required. The calculation of value-in-use for JRL and PLACL uses cash flow projections based on the emergence of surplus for in-force business on a Solvency II basis, together with new business cash flows on a Solvency II basis set out in the Group’s business plan approved by the Board. The pre-tax discount rates used were 11.4% for JRL and 11.1% for PLACL. The discount rates were determined using a weighted average cost of capital approach, adjusted for specific risks attributable to the businesses, with the lower rate used for PLACL reflecting that it is largely closed to new business. A one percentage point increase in the discount rates used would reduce the headroom of the excess of the value-in-use above the cost of investment of JRL and PLACL by 11% and 20% respectively. The Directors have not identified a reasonably possible change in assumptions which would result in the carrying amount of the Group’s investment in JRL or PLACL to exceed its recoverable amount.
3. LOANS TO GROUP UNDERTAKINGS
Loans to Group undertakings £m
1,000
At 1 January 2023
13
Additions
(2)
Less: Loss allowance At 31 December 2023 At 1 January 2022 At 31 December 2022
1,011 1,000 1,000
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