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FINANCIAL STATEMENTS
GLOSSARY
Acquisition costs – acquisition costs comprise the direct costs (such as commissions) of obtaining new business. Adjusted earnings per share – an APM, this measures earnings per share based on adjusted operating profit after attributed tax, rather than IFRS profit before tax. This measure is calculated by taking the adjusted operating profit APM, reduced for the effective tax rate (19% for 2019), and dividing this result by the weighted average number of shares in issue by the Group for the year. Adjusted operating profit before tax – an APM and one of the Group’s KPIs, this is the sum of new business operating profit, in-force operating profit, operating experience and assumption changes, other Group companies’ operating results, development expenditure and reinsurance and financing costs. The Board believes it provides a better view of the longer term performance of the business than profit before tax because it excludes the impact of short-term economic variances and other one-off items. It excludes the following items that are included in profit before tax: non-recurring and project expenditure, implementation costs for cost-saving initiatives, investment and economic profits and amortisation and impairment costs. In addition it includes Tier 1 interest (as part of financing costs) which is not included in profit before tax (because the Tier 1 notes are treated as equity rather than debt in the IFRS financial statements). Adjusted operating profit is reconciled to IFRS profit before tax in the Financial Review. Alternative performance measure (“APM”) – in addition to statutory IFRS performance measures, the Group has presented a number of non-statutory alternative performance measures (“APMs”) within the Annual Report and Accounts. The Board believes that the APMs used give a more representative view of the underlying performance of the Group. APMs are identified in this glossary together with a reference to where the APM has been reconciled to its nearest statutory equivalent. APMs which are also KPIs are indicated as such. Amortisation and impairment of intangible assets – amortisation costs relate to the amortisation of the Group’s intangible assets, including the amortisation of intangible assets recognised in relation to the acquisition of Partnership Assurance Group plc by Just Retirement Group plc. Auto-enrolment – new legal duties being phased in that require employers to automatically enrol workers into a workplace pension. Buy-in – an exercise enabling a pension scheme to obtain an insurance contract that pays a guaranteed stream of income sufficient to cover the liabilities of a group of the scheme’s members. Buy-out – an exercise that wholly transfers the liability for paying member benefits from the pension scheme to an insurer which then becomes responsible for paying the members directly. Capped Drawdown – a non-marketed product from Just Group previously described as Fixed Term Annuity. Capped Drawdown products ceased to be available to new customers when the tax legislation changed for pensions in April 2015. Care Plan – a specialist insurance contract contributing to the costs of long-term care by paying a guaranteed income to a registered care provider for the remainder of a person’s life. Change in insurance liabilities – change in insurance liabilities represents the difference between the year-on-year change in the carrying value of the Group’s insurance liabilities and the year-on-year change in the carrying value of the Group’s reinsurance assets including the effect of the impact of reinsurance recaptures. Combined Group/Just Group – following completion of the merger with Partnership Assurance Group plc, Just Group plc and each of its consolidated subsidiaries and subsidiary undertakings comprising the Just Retirement Group and the Partnership Assurance Group.
Defined benefit pension scheme – a pension scheme, usually backed or sponsored by an employer, that pays members a guaranteed level of retirement income based on length of membership and earnings. Defined contribution (“DC”) pension scheme – a work-based or personal pension scheme in which contributions are invested to build up a fund that can be used by the individual member to provide retirement benefits. De-risk/de-risking – an action carried out by the trustees of a pension scheme with the aim of transferring investment, inflation and longevity risk from the sponsoring employer and scheme to a third party such as an insurer. Development expenditure – development expenditure captures costs relating to the development of new products and new initiatives, and is included within adjusted operating profit. Drawdown (in reference to Just Group sales or products) – collective term for Flexible Pension Plan and Capped Drawdown. Economic capital coverage ratio – economic capital is a risk-based capital measure and expresses the Board’s view of the available capital as a percentage of the required capital. Embedded value – this represents the sum of shareholders’ net assets and the value of in-force business, and is a measure in assessing the future profit streams of the Group’s long-term business. It also recognises the additional value of profits in the business that has been written but not yet recognised under IFRS accounting. Employee benefits consultant – an adviser offering specialist knowledge to employers on the legal, regulatory and practical issues of rewarding staff including non-wage compensation such as pensions, health and life insurance and profit sharing. Equity release – products and services enabling homeowners to generate income or lump sums by accessing some of the value of the home while continuing to live in it. Finance costs – finance costs represent interest payable on reinsurance deposits and financing, the interest on the Group’s Tier 2 Debt, and, in the prior year, bank finance costs. Flexi-access drawdown – the option introduced in April 2015 for DC pension savers who have taken tax-free cash to take a taxable income directly from their remaining pension with no limit on withdrawals. Gross premiums written – gross premiums written are the total premiums received by the Group in relation to its Retirement Income and Protection sales in the year, gross of commission paid. Guaranteed Guidance – see Pension Wise. Guaranteed Income for Life (“GIfL”) – retirement income products which transfer the investment and longevity risk to the Company and provide the retiree a guarantee to pay an agreed level of income for as long as a retiree lives. On a “joint-life” basis, continues to pay a guaranteed income to a surviving spouse/partner. Just provides modern individually underwritten GIfL solutions. IFRS net assets – one of the Group’s KPIs, representing the assets attributable to equity holders. IFRS profit before tax – one of the Group’s KPIs, representing the profit before tax attributable to equity holders. In-force operating profit – an APM and one of the Group’s KPIs, capturing the expected margin to emerge from the in-force book of business and free surplus, and results from the gradual release of prudent reserving margins over the lifetime of the policies. In-force operating profit is reconciled to IFRS profit before tax in the Financial Review.
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