Just Annual Report and Accounts 2022

STRATEGIC REPORT

GOVERNANCE

financial statements

We have determined three components which were subject to full scope audits. This included Just Group plc, Just Retirement Limited and Partnership Life Assurance Company Limited. In addition, we performed a limited scope audit covering specific financial statement line items for a further four components. For the residual components, we performed analysis at an aggregated Group level to re-examine our assessment that there were no significant risks of material misstatements. Our scoping resulted in 93% coverage of consolidated total assets, 98% coverage of consolidated total liabilities and 96% coverage of consolidated loss before tax. The impact of climate risk on our audit As part of our audit we made enquiries of management to understand the governance and process adopted to assess the extent of the potential impact of climate risk on the Group’s financial statements and support the disclosures made within the Annual Report. In addition to enquiries with management, we also read the Group’s climate risk assessment documentation, reviewed board minutes and considered disclosures in the annual report and accounts in relation to climate change (including the Task Force on Climate-related Financial Disclosures (“TCFD”)) in order to assess the completeness of management’s climate risk assessment. Management has made commitments to aim for the operations of the Group to be carbon net zero by 2025 and for emissions from the investment portfolio, properties on which lifetime mortgages are secured and supply chain to be net zero by 2050, with a 50% reduction in emissions from the portfolio by 2030. The key areas of the financial statements where management evaluated that climate risk has a potential impact are Lifetime Mortgage and investment portfolios. Whilst management has assessed the risks, no allowances or changes have been made to current valuation methodology as the estimated potential impact is not expected to be material. We have assessed the risks of material misstatement to the Annual Report and Accounts as a result of climate change and concluded that for the year ended 31 December 2022, the main audit risks are related to disclosures included within the ‘Sustainability and the environment’, ‘Sustainable investment strategy’ and ‘Sustainability strategy: TCFD disclosure framework’ sections. We also considered the consistency of the disclosures in relation to climate change (including the disclosures in the Task Force on Climate-related Financial Disclosures section) within the Annual Report with the financial statements and our knowledge obtained from our audit. Our procedures did not identify any material impact in the context of our audit of the financial statements as a whole, or our key audit matters for the year ended 31 December 2022. Materiality The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both individually and in aggregate on the financial statements as a whole.

Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:

Financial statements – Group

Financial statements – Company

Overall materiality How we determined it Rationale for benchmark applied

£21,778,000 (2021: £24,400,000).

£12,852,000 (2021: £12,574,000).

1% of Total equity

Based on the benchmarks used in the Annual Report, we consider total equity to be the most appropriate benchmark for our materiality. It represents the residual interest that can be ascribed to shareholders after policyholder assets and corresponding liabilities have been accounted for and is aligned to the primary focus of the business and users of the financial statements, being the capital position of the Group. We compared our materiality against other relevant benchmarks, such as total assets, total revenue and profit or loss before tax to ensure the materiality selected was appropriate for our audit.

In determining our materiality, we considered financial metrics which we believed to be relevant and concluded that total equity was the most appropriate benchmark. The primary use of the financial statements is to determine the entity’s ability to pay dividends and the users will therefore be focussed on distributable reserves, a balance captured using a total equity benchmark.

For each component in the scope of our Group audit, we allocated a materiality that is less than our overall Group materiality. The range of materiality allocated across components was between £3.6 million and £14.6 million. We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope of our audit and the nature and extent of our testing of account balances, classes of transactions and disclosures, for example in determining sample sizes. Our performance materiality was 75% (2021: 75%) of overall materiality, amounting to £16,333,500 (2021: £18,300,000) for the Group financial statements and £9,639,000 (2021: £9,430,000) for the Company financial statements. In determining the performance materiality, we considered a number of factors - the history of misstatements, risk assessment and aggregation risk and the effectiveness of controls - and concluded that an amount at the upper end of our normal range was appropriate. We agreed with the Group Audit Committee that we would report to them misstatements identified during our audit above £1.1 million (Group audit) (2021: £1.25 million) and £0.7 million (Company audit) (2021: £0.6 million) as well as misstatements below those amounts that, in our view, warranted reporting for qualitative reasons.

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