GOVERNANCE REPORT
97
Directors’ Report
Amendment of articles of association The Company may make amendments to the Articles by way of special resolution in accordance with the Companies Act. GOING CONCERN AND VIABILITY STATEMENT The Directors are required to assess the prospect of the Group as a going concern over the next 12 months in accordance with Provision 30 of the 2018 UK Corporate Governance Code (the “Code”), and also its longer-term viability in accordance with Provision 31 of the Code. The 2019 viability statement is contained within the Strategic Report and can be found on page 35. Going concern Under the Code, the Directors are required to state whether, in their assessment, the business is a going concern. In considering this requirement, the Directors have taken into account the following: • The impact of complying with the updated regulatory expectations set out in SS3/17 “Solvency II: matching adjustment – illiquid unrated assets and equity release mortgages” and PS19/19 “Solvency II: Equity release mortgages – Part 2”, including the restructuring of the Group’s internal LTM securitisation, which was effected on 31 December 2019. The Board does not consider that there are any other significant areas of known regulatory uncertainty at 31 December 2019 associated with new policy statements or supervisory statements. • The benefit of the equity, Restricted Tier 1 and Tier 2 capital raised during 2019, a total of £500m new capital (before issue costs), £100m of which has been used to re-finance the Partnership Life Assurance Company Limited 9.5% Tier 2 loan notes. • Steps to improve capital efficiency during 2019, including reduction in new business volumes and cost saving initiatives. • The projected liquidity position of the Group, current financing arrangements and contingent liabilities. • A range of forecast scenarios with differing levels of new business and associated additional capital requirements to write anticipated levels of new business. • Eligible own funds being in excess of minimum capital requirements in stressed scenarios, including no further capital strengthening and reduced new business volumes. • The findings of the 2019 Group Own Risk and Solvency Assessment (“ORSA”). • Risks arising from the UK’s withdrawal from the European Union. • Stress and scenario testing to consider the Group’s capacity to respond to a series of relevant financial, insurance, or operational shocks or changes to financial regulations should future circumstances or events differ from current assumptions. Such testing includes assessment of the impact of a property price shock on the Group, given that the Group holds a significant proportion of its assets in Lifetime Mortgages. • Scenarios, including those in the ORSA, where the Company ceases to write new business. However, in such a run-off scenario the going concern basis would continue to be applicable because the Group would be continuing to trade with its existing business (for example, collect premiums and administer policies) rather than ceasing to trade. • The Group plan, which was approved by the Board in the first quarter of 2020, and in particular the forecast regulatory solvency position calculated on a Solvency II basis, which includes the impact of SS3/17 and PS19/19 outlined above, together with regular updates to the Group’s Capital Plan. Having due regard to these matters and after making appropriate enquiries, the Directors confirm that they consider it appropriate to prepare the financial statements on the going concern basis.
The Directors present their Annual Report and the audited financial statements for Just Group plc, registered in England & Wales No: 8568957, for the year ended 31 December 2019. The Annual Report contains forward-looking statements. These forward-looking statements are not guarantees of future performance. Rather they are based on current views and assumptions and involve known and unknown risks, uncertainties and other factors that may cause actual results to differ from any future results or developments expressed in, or implied by, the forward-looking statements. Each forward-looking statement speaks only as of the date of that particular statement. GOVERNANCE The Directors’ Report of the Group for the year ended 31 December 2019 is set out on pages 97 to 100 inclusive. Additional information which is incorporated by reference into this Directors’ Report, including information required in accordance with the Companies Act 2006 and the Listing Rule 9.8.4R of the UK Financial Conduct Authority’s Listing Rules, can be located as follows:
Disclosure
Location
Corporate Governance Statement and Report
Corporate Governance Report (pages 54 to 101) Throughout the Strategic Report (pages 1 to 53)
Description of the Group’s business model and information relating to the performance of the Group’s business during the financial year, the position of the Group at the end of the year, and likely future developments Employee, customer, suppliers and others reporting requirements under The Companies (Miscellaneous Reporting) Regulations 2018
Strategic Report: Stakeholder Report, page 22, Section 172 Statement, page 48, People and Culture, page 40
Workforce engagement, communication and equal opportunities
People and Culture (page 40)
Directors serving during the year Governance Report, pages 56 to 59 Financial risk management objectives and policies (including hedging policy and use of financial instruments) Note 33 to the financial statements (pages 148 to 152) Details of long-term incentive schemes Note 10 to the financial statements (pages 128 to 131) Greenhouse gas emissions
Information on our reporting of greenhouse gas emissions and the methodology used to record these is given in the Environment Report on page 46
Directors’ Responsibility Statement
Page 101
Both the Directors’ Report and the Strategic Report have been drawn up and presented in accordance with, and in reliance upon, applicable English company law. The liabilities of the Directors in connection with those reports shall be subject to the limitations and restrictions provided by such law. Overseas branches The Company does not have any overseas branches within the meaning of the Companies Act 2006. Modern slavery In compliance with section S4(1) of the Modern Slavery Act 2015, the Group published its slavery and human trafficking statement online.
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