Rethink JRP GroupJRP plc Annual Report and 2016 Accounts Retirement JRP Group plc Annual Report and Accounts 2016 JRP Group plc – Annual Report and Accounts 2016 Overview We believe everyone deserves a fair, fulfilling and secure retirement Contents The financial results for the Group for the Strategic Report Financial Statements period to 31 December 2016 incorporate 01 Pro forma financial and operational 94 Independent Auditor’s report the merger of Just Retirement Group with highlights 100 Consolidated statement of Partnership Assurance Group accounted for 02 At a glance – how we create value comprehensive income as an acquisition. The results also include 04 Chairman’s Statement 101 Consolidated statement of changes in a change in accounting reference date from 06 Business model equity 30 June to 31 December. The financial 10 Our market 102 Consolidated statement of financial statements therefore cover an 18 month 18 Key resources and relationships position period with Partnership’s results included 21 Strategic objectives 103 Consolidated statement of cash flows from April 2016. Comparative information 24 Chief Executive Officer’s Operating Review 104 Notes to the consolidated financial for 2015 is for a 12 month period. 30 Key performance indicators statements 32 Financial Review 148 Parent Company (“Company”) statement As a result, in the Strategic Report, the 40 Corporate Social Responsibility Review of changes in equity Directors have reported pro forma financial 44 Principal risks and uncertainties 149 Company statement of financial position information as if the two businesses were 150 Company statement of cash flows merged from 1 January 2015 in order to Governance 151 Notes to the Company financial better explain the operating and financial 50 Board of Directors statements performance of the Group and eliminate 54 Chairman’s introduction to Governance 154 European embedded value (“EEV”) distortions, as far as practicable, due to the 55 Corporate Governance Report 2016 Independent Auditor’s report merger and the longer period of account. 60 Nomination Committee Report 155 Statement of Directors’ responsibilities in 61 Audit Committee Report respect of the EEV basis supplementary The KPIs, IFRS results, and financial 64 Risk and Compliance Committee Report financial statements performance, with Partnership accounted 66 Directors’ Remuneration Report 156 Reconciliation of IFRS shareholders’ net for as an acquisition and its results included 86 Directors’ Report equity to EEV from 1 April 2016, are set out from 91 Directors’ Responsibilities 157 Statement of change in Group EEV page 30 onwards. 160 Notes to the EEV supplementary financial statements A reconciliation between pro forma 167 Pro forma statement of change in performance measures and KPIs is on page 29. Group EEV Reconciliations between KPIs and IFRS results 168 Information for shareholders are in note 7 to the financial statements. 170 Directors and advisers 171 Glossary and definitions Subject to shareholder approval, JRP Group will be renamed Just Group. All JRP Group plc regulatory announcements, Cross linking shareholder information and news releases Throughout this document we have linked content together in order to provide a more comprehensive report can be found on our Group website, inside the Strategic Report, Governance Report and Financial Statements. These sections, taken together, www.jrpgroup.com comprise the Strategic Report in accordance with the UK Companies Act 2006 (Strategic Report and Directors Report) Regulations 2013. JRP Group plc – Annual Report and Accounts 2016 01 Overview Report Strategic 2016 highlights Governance Formed in 2016 by the merger of Just Retirement and Partnership Financial Statements Assurance, JRP Group is a specialist UK financial services group focussing on attractive segments of the UK retirement income market. The Group is a leading and established provider of retirement income products and services to individual and corporate clients Pro forma financial and operational highlights Dividend in respect of calendar Adjusted operating profit1 Merger synergies year 2016 £30m £164m of £45m 3.5p 2015: £104m Delivered and ahead of schedule Growth of 6% on a calendar year basis Solvency II capital coverage ratio (estimated) Solvency II internal model Economic capital coverage ratio 151% Approved 216% Just Retirement Limited is one of the few companies to achieve authorisation in the first wave 185% at 30 June 2016 Group embedded value2 Retirement Income sales1 Lifetime Mortgage advances £2.0bn £1.8bn £559m £1.8bn at 31 December 2015 2015: £2.1bn 2015: £598m IFRS financial highlights IFRS profit before tax IFRS net equity Basic earnings per share £199m £1.6bn 20.2p £(30)m loss in 2015 2015: £0.8bn 2015: (5.0)p loss 1 The KPIs are set out on pages 30 and 31 and a reconciliation of pro forma measures to KPIs is on page 29. 2 The Group embedded value is reconciled to IFRS net assets on page 156. JRP Group plc – Annual Report and Accounts 2016 02 At a glance How we create value ■ The Group is an established provider of retirement income products and services to individual and corporate clients 1. Who we serve 2. What we do Individuals: Marketed products Providing retirement income Defined Benefit De-risking People who have built up defined Solutions (“DB”) contribution (“DC”) pension savings Solutions for pension scheme trustees to throughout their career and want remove the financial risks of operating a guaranteed income, flexible income pension schemes and create certainty that or a combination in retirement. members’ pensions will be paid in the future. Market value of DC pension savings Guaranteed Income for Life (“GIfL”) A solution for a person (or couple) who want the security of knowing they will receive > £1 trillion a guaranteed income for life. Flexible Pension Plan (“FPP”) Homeowners: A solution for a customer wanting to retain Accessing property wealth greater flexibility of their pension savings and enabling irregular withdrawals. People aged 60+ who want to access wealth locked up in their property. Care Plans Property wealth owned by people A solution for people moving to residential aged over 50 care who want the security of knowing a regular payment will be made to the £2.3 trillion care provider for the rest of their life. Protection A solution for people wanting to support Corporate clients: a residential mortgage, for business Solving problems for companies or inheritance tax planning purposes or simply to have financial peace of mind. We develop scalable retirement-focussed solutions for banks, building societies, life Lifetime Mortgages (“LTM”) assurance companies, pension scheme Solutions designed for people who want to trustees, other corporate clients and for release some of the value of their home. their customers, clients and members. Competitive position: Integrated retirement services A leader New entrant Developing Trustees and scheme sponsors: Professional services Providing member security and A regulated financial advice service de-risking pension liabilities for people who want a personal Defined benefit pension schemes de-risking recommendation on how to use their their liabilities by securing member benefits pension savings, or when considering with an insurance contract. releasing some of the value from their home. Addressable market Support for organisations wanting to deliver whole-of-market shopping around services to source retirement income products for > £600 Billion their customers, employees or pension scheme members. JRP Group plc – Annual Report and Accounts 2016 03 Strategic Report Strategic 3. How we do it 5. Generating value for Our strategy Investors Governance 1 Grow our addressable markets By managing our resources effectively and and broaden our distribution reach; creatively we create profits, which benefit shareholders through dividend payments Increase profitability through superior 2 and share value. risk selection; Financial Statements 3 Ensure expenses are aligned with the capital model; Dividends paid in 2016 4 Improve cost and efficiency of capital; and £21m 5 Reduce dependency on any single business line or market. Retail customers We improve our customers’ lives by providing Strategic enablers products and services that are simple to use A Developing and engaging our people; and better value than our competitors’. B Establishing and strengthening Number of customers at 31 December 2016 our brand; C Delivering a customer experience built 0.5m on our customer understanding that delivers our brand promise; Business customers D Continuously evolving and enhancing our longevity intellectual property (“IP”) We deliver effective solutions to solve the and customer insight; and challenges and capture the opportunities of E Building our digital capabilities. our corporate customers and their clients. 4. Using our Colleagues Developing, recognising and rewarding our colleagues secures a skilled and DEL motivated workforce. MO Su G pe IN r T io A r R Staff numbers at 31 December 2016 E r i P s O k E s L e B l e A c L t A 1,045 i C o S n Communities ST RO NG EL When our business is profitable and FINA MOD NCIAL sustainable, the communities where we operate benefit through job creation Scalable Superior risk Strong financial and tax payments to national and operating model: selection: model: local governments. Progressive Unrivalled Capital efficient Corporation tax paid in 2016 multi-channel proprietary data model distribution £36m Automated Experienced Investment